Bulletin No. 2025–44

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2025–44

October 27, 2025

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE

INCOME TAX

Rev. Proc. 2025-27, page 646.

Notice 2025-49, page 627.

General Rules and Specifications for Substitute Forms and

Schedules.

This procedure provides guidelines and general requirements for the development, printing, and approval of the

2025 substitute tax forms. This procedure will be reproduced as the next revision of Publication 1167. Rev. Proc.

2024-33 is superseded.

Finding Lists begin on page ii.

This notice provides additional interim guidance to reduce

the compliance burdens and costs associated with the application of the corporate alternative minimum tax (CAMT). Specifically, this notice provides rules for certain adjustments to

adjusted financial statement income and rules for proposed

applicability dates and reliance on the CAMT Proposed Regulations.

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 27, 2025 

Bulletin No. 2025–44

Part III

Additional Interim Guidance

for the Application of the

Corporate Alternative

Minimum Tax

Notice 2025-49

SECTION 1. OVERVIEW

This notice provides additional interim

guidance regarding the application of

the corporate alternative minimum tax

(CAMT) under §§ 55, 56A, and 59 of the

Internal Revenue Code (Code).1 Prior to

the publication of any final regulations

relating to the CAMT, the Department of

the Treasury (Treasury Department) and

the Internal Revenue Service (IRS) intend

to partially withdraw the CAMT Proposed

Regulations (as defined in section 2.03 of

this notice) and to issue revised proposed

regulations (forthcoming proposed regulations) that, in part, are anticipated to

include rules similar to the interim guidance described in sections 3 through 10

of this notice, Notice 2025-27, 2025-26

I.R.B. 1611 (June 23, 2025), Notice 202528, 2025-34 I.R.B. 316 (August 18, 2025),

and Notice 2025-46, 2025-43 I.R.B. ____

(October 20, 2025).

Section 3 of this notice addresses the

applicability dates and reliance rules provided in the CAMT Proposed Regulations. Section 4 of this notice addresses an

adjustment to adjusted financial statement

income (AFSI)2 for a taxpayer with regulated operations that capitalizes certain

costs as regulatory assets under Accounting Standards Codification (ASC) 980 in its

applicable financial statement (AFS). Section 5 of this notice addresses adjustments

to AFSI for certain items measured at fair

value. Section 6 of this notice addresses an

adjustment to AFSI for CAMT entities that

are subject to the tonnage tax regime. Section 7 of this notice addresses an adjustment to AFSI for certain depreciation

deductions that previously gave rise to a

carryover of a net operating loss (NOL),

1

2

as defined in § 172(c), for regular tax purposes. Section 8 of this notice addresses

an adjustment to AFSI for nonlife insurance companies that carry back an NOL

for regular tax purposes. Section 9 of this

notice addresses an adjustment to AFSI

for § 197 amortization attributable to tax

goodwill acquired in certain transactions.

Section 10 of this notice addresses adjustments to AFSI for accounting principle

change adjustments and restatements of a

prior-year AFS. Section 11 of this notice

requests comments on the issues relating

to section 5 of this notice.

SECTION 2. BACKGROUND

.01 Overview of the CAMT. Section

10101 of Public Law 117-169, 136 Stat.

1818, 1818-1828 (August 16, 2022), commonly known as the Inflation Reduction

Act of 2022, amended § 55 to impose the

CAMT based on the AFSI of an applicable

corporation for taxable years beginning

after December 31, 2022. Section 59(k)

(1)(A) provides that, for purposes of §§ 55

through 59, the term “applicable corporation” means, with respect to any taxable

year, any corporation (other than an S corporation, a regulated investment company,

or a real estate investment trust) that meets

the average annual AFSI test provided in

§ 59(k)(1)(B) for one or more taxable

years that (1) are prior to that taxable year,

and (2) end after December 31, 2021.

.02 AFSI under § 56A.

(1) General definition of AFSI. For

purposes of §§ 55 through 59, § 56A(a)

provides that the term “AFSI” means,

with respect to any corporation for any

taxable year, the net income or loss of the

taxpayer set forth on the taxpayer’s AFS

for that taxable year, adjusted as provided

in § 56A. Section 56A(c) provides general

adjustments to be made to AFSI.

(2) Provisions under § 56A relevant to

the items described in this notice.

(a) Adjustments under § 56A(c) disregarding certain financial statement gains

and losses for certain items measured at

fair value.

(i) With respect to investment(s) in

certain corporations, § 56A(c)(2)(C) generally provides that a taxpayer’s AFSI

with respect to another corporation that

is not included on the taxpayer’s consolidated return is determined by taking into

account only the dividends received from

such other corporation and certain other

amounts includible in income or deductible as a loss with respect to such corporation.

(ii) With respect to investment(s) in a

partnership, § 56A(c)(2)(D)(i) generally

provides that, except as provided by the

Secretary of the Treasury or the Secretary’s delegate (Secretary), a taxpayer

that is a partner in a partnership adjusts its

AFSI with respect to such partnership to

take into account only the taxpayer’s distributive share of such partnership’s AFSI.

(iii) With respect to investment(s) in a

controlled foreign corporation (as defined

in § 957 or, if applicable, § 953(c)(1)(B))

(CFC), § 56A(c)(3)(A) generally provides

that a taxpayer that is a United States

shareholder of one or more CFCs adjusts

its AFSI with respect to the CFC to take

into account the taxpayer’s pro rata share

of items taken into account in computing

the net income or loss set forth on the AFS

of each such CFC.

(b) Authority of the Secretary to provide

necessary adjustments. Section 56A(c)

(15) authorizes the Secretary to issue regulations or other guidance to provide for

such adjustments to AFSI as the Secretary

determines necessary to carry out the purposes of § 56A, including adjustments to

prevent the omission or duplication of any

item.

(c) Adjustment for financial statement

net operating losses (FSNOLs). Section

56A(d)(1) provides that AFSI is reduced

by an amount equal to the lesser of (i) the

aggregate amount of FSNOL carryovers to

the taxable year, or (ii) 80 percent of AFSI

computed without regard to the adjustment under § 56A(d)(1) (FSNOL adjustment). Section 56A(d)(2) provides that an

FSNOL for any taxable year is a FSNOL

carryover to each taxable year following

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

Unless otherwise specified, terms used in this notice have the same meaning as in the CAMT Proposed Regulations described in section 2.03 of this notice.

Bulletin No. 2025–44

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October 27, 2025

the taxable year of the loss. The portion of

the FSNOL carried to subsequent taxable

years is the amount of the FSNOL remaining after subtracting the adjustments to

AFSI made under § 56A(d)(1) for previous years. Section 56A(d)(3) defines an

“FSNOL” as the amount of the net loss (if

any) set forth on a corporation’s AFS as

adjusted by § 56A(c), and without regard

to the FSNOL deduction, for taxable years

ending after December 31, 2019.

(d) General authority of the Secretary.

Section 56A(e) authorizes the Secretary to

provide such regulations and other guidance as necessary to carry out the purposes of § 56A.

.03 CAMT Proposed Regulations.

(1) Overview. On September 13, 2024,

the Treasury Department and the IRS published a notice of proposed rulemaking

(REG-112129-23) in the Federal Register (89 F.R. 75062) that addressed the

application of the CAMT and permitted

taxpayers to rely on the proposed regulations contained therein subject to certain

conditions and limitations. On December

26, 2024, the Treasury Department and

the IRS published in the Federal Register

(89 F.R. 104909) technical corrections to

the proposed regulations set forth in REG112129-23, which together with such proposed regulations are referred to as the

“CAMT Proposed Regulations” in this

notice. Numerous comments were submitted in response to the CAMT Proposed

Regulations, which the Treasury Department and the IRS continue to consider and

study.

(2) Provisions of the CAMT Proposed Regulations relevant to the items

described in this notice.

(a) AFSI adjustments for changes in

accounting principles and AFS restatements in proposed § 1.56A-17.

(i) Overview of proposed § 1.56A-17.

Under the authority provided in § 56A(c)

(15)(A), proposed § 1.56A-17 would provide rules regarding AFSI adjustments

to prevent the duplication or omission of

income, including rules under proposed

§ 1.56A-17(c) for adjusting AFSI to prevent duplications or omissions arising

from a change in accounting principle

and proposed § 1.56A-17(d) for adjusting

AFSI to prevent duplications or omissions

arising from the restatement of a prior

year’s AFS (AFS restatement).

October 27, 2025

(ii) Accounting principle changes. Proposed § 1.56A-17(c)(1) generally would

require a CAMT entity that implements a

change in accounting principle in its AFS

for a taxable year to adjust its AFSI by the

accounting principle change amount, as

described in proposed § 1.56A-17(c)(2)

(i), subject to the adjustment spread period

rules under proposed § 1.56A-17(c)(3) and

(4) that prescribe the taxable year in which

the accounting principle change amount

is taken into account to determine AFSI.

Under proposed § 1.56A-17(c)(2)(i),

the accounting principle change amount

would be equal to the net cumulative

adjustment to the CAMT entity’s beginning retained earnings for the taxable year

that results from the change in accounting

principle. Under proposed § 1.56A-17(c)

(2)(i)(A), the accounting principle change

amount would be adjusted to disregard

any portion of the cumulative retained

earnings adjustment attributable to taxable years ending on or before December

31, 2019. Under proposed § 1.56A-17(c)

(2)(i)(B), the accounting principle change

amount also would be adjusted to reflect

any AFSI adjustments provided elsewhere

in the CAMT Proposed Regulations, to

the extent the retained earnings difference

is attributable to FSI items to which those

AFSI adjustments apply.

Proposed § 1.56A-17(c)(2)(ii) would

provide rules for determining the accounting principle change amount when a

CAMT entity is treated as implementing

a change in accounting principle under

proposed § 1.56A-17(c)(5) because the

priority of the CAMT entity’s AFS (as

determined under proposed § 1.56A-2(c))

for the taxable year is different from the

priority of the CAMT entity’s AFS for the

immediately preceding taxable year. In

this case, the accounting principle change

amount would be equal to the difference

between the CAMT entity’s beginning

retained earnings reflected in the CAMT

entity’s current AFS as of the beginning

of the taxable year and the CAMT entity’s ending retained earnings reflected in

its former AFS as of the end of the immediately preceding taxable year (retained

earnings difference). Under § 1.56A-17(c)

(2)(ii)(A), the accounting principle

change amount would be adjusted to

disregard any portion of the cumulative

adjustment attributable to taxable years

628

ending on or before December 31, 2019.

Under proposed § 1.56A-17(c)(2)(ii)(B),

the accounting principle change amount

also would be adjusted to reflect any

AFSI adjustments provided elsewhere in

the CAMT Proposed Regulations, to the

extent the retained earnings difference is

attributable to FSI items to which those

AFSI adjustments apply.

(iii) AFS restatements. Proposed

§ 1.56A-17(d) would provide an adjustment to AFSI when a CAMT entity issues

a restated AFS and the CAMT entity’s FSI

for a taxable year ending after December

31, 2019, is restated on or after the date

that the CAMT entity files its original

Federal income tax return for such taxable year (restatement year). Proposed

§ 1.56A-17(d)(1)(i) would require the

CAMT entity to adjust its AFSI for the

taxable year in which the restated AFS

is issued (AFSI restatement adjustment).

The AFSI restatement adjustment would

be equal to the cumulative effect of the

restatement on the CAMT entity’s FSI

for the restatement year, including any

restatement of the CAMT entity’s beginning retained earnings for the restatement

year. However, under § 1.56A-17(d)(1)(i),

the AFSI restatement adjustment would

not take into account any retained earnings restatement attributable to taxable

years ending on or before December 31,

2019. Under proposed § 1.56A-17(d)

(1)(ii), the AFSI restatement adjustment

also would be adjusted to reflect any

AFSI adjustments provided elsewhere in

the CAMT Proposed Regulations, to the

extent the retained earnings difference is

attributable to FSI items to which those

AFSI adjustments apply.

(b) AFSI adjustments for FSNOLs in

proposed § 1.56A-23. Consistent with

§ 56A(d), proposed § 1.56A-23 would

provide that, if the AFSI of a corporation

for a taxable year is positive (determined

after application of all other CAMT Proposed Regulations), the corporation’s

AFSI is reduced by an amount equal to

the lesser of (i) the aggregate amount of

FSNOL carryovers to the taxable year,

or (ii) 80 percent of the AFSI of the corporation (determined after application

of the CAMT Proposed Regulations

except proposed § 1.56A-23). Proposed

§ 1.56A-23(d)(1) would provide that an

FSNOL for any taxable year is carried

Bulletin No. 2025–44

forward to each taxable year following

the taxable year of the loss, and that any

remaining FSNOL is carried forward to

the subsequent taxable year.

(c) AFSI adjustments for hedging transactions and hedged items in proposed

§ 1.56A-24. Under the authority provided in § 56A(c)(15) and (e), proposed

§ 1.56A-24 would provide adjustments to

AFSI for certain hedging transactions and

hedged items to address distortions in the

determination of AFSI as a result of mismatches between the timing of inclusion

of gain or loss on the hedging transaction

and the hedged item. Under proposed

§ 1.56A-24(c)(2), if a CAMT entity has

a fair value measurement adjustment for

either an AFSI hedge or the hedged item,

but not both, the fair value measurement

adjustment generally would be disregarded if neither the AFSI hedge nor the

hedged item is marked to market for regular tax purposes. However, under proposed

§ 1.56A-24(e)(1), if a fair value measurement adjustment that is disregarded in

a taxable year includes amounts corresponding to items of income, gain, deduction, or loss under chapter 1 of the Code in

that taxable year, the CAMT entity would

include those amounts in AFSI in that taxable year. Under proposed § 1.56A-24(e)

(2), the inclusion in AFSI of a fair value

measurement adjustment that is disregarded under proposed § 1.56A-24(c)(2)

generally would be delayed until the AFSI

hedge or hedged item, or its corresponding hedged item or AFSI hedge (as applicable), matures or is sold, disposed of,

or otherwise terminated. Under proposed

§ 1.56A-24(d), to the extent a CAMT

entity marks to market a net investment

hedge for regular tax purposes, the CAMT

entity would include in AFSI the gain or

loss resulting from marking to market the

net investment hedge for regular tax purposes.

(3) Proposed applicability dates and

reliance on the CAMT Proposed Regulations.

(a) Proposed applicability dates. The

sections of the CAMT Proposed Regulations that are “specified regulations”

(as defined in the Proposed Applicability Dates and Reliance on the Proposed

Regulations section of the preamble to

the CAMT Proposed Regulations) were

proposed to apply to taxable years ending

Bulletin No. 2025–44

after September 13, 2024. The sections of

the CAMT Proposed Regulations that are

not specified regulations were proposed

to apply to taxable years ending after the

date final regulations are published in the

Federal Register. Proposed §§ 1.15022, 1.1502-53, and 1.1502-56A were proposed to apply to consolidated return

years for which the date of the income

tax return (without extensions) is after the

date final regulations are published in the

Federal Register.

(b) Reliance on the CAMT Proposed

Regulations.

(i) Reliance on the specified regulations. The CAMT Proposed Regulations

provided that a taxpayer may rely on the

specified regulations for any taxable year

ending on or before September 13, 2024,

provided that the taxpayer and each member of its test group determined under proposed § 1.59-2 consistently follow all of

the specified regulations (and other enumerated proposed rules) in their entirety

for that taxable year and each subsequent

taxable year until the first taxable year that

the final regulations are applicable.

(ii) Reliance on non-specified regulations. The CAMT Proposed Regulations

provided that taxpayers may rely on one

or more sections of the CAMT Proposed

Regulations that are not specified regulations for any taxable year ending on or

before the date final regulations are published in the Federal Register, provided

that the taxpayer and each member of

its test group determined under proposed

§ 1.59-2 consistently follow that section

and all of the specified regulations (and

other enumerated proposed rules) in their

entirety in that taxable year and each subsequent taxable year until the first taxable

year that the final regulations are applicable.

.04 Notices issued subsequent to CAMT

Proposed Regulations.

(1) Notice 2025-27 provides interim

guidance regarding an optional simplified

method for determining applicable corporation status and provides a limited waiver

of certain additions to tax under § 6655

with respect to a corporation’s CAMT liability for taxable years beginning during

2025.

(2) Notice 2025-28 provides interim

guidance on determining a CAMT entity’s

AFSI with respect to an investment in a

629

partnership, reporting by partnerships of

information needed to compute AFSI, and

the treatment of partnership contributions

and distributions. Notice 2025-28 also

announced that the Treasury Department

and the IRS anticipate that forthcoming

proposed regulations will provide that, for

taxable years beginning before the applicability date of final regulations addressing §§ 56A(c)(2)(D) and 56A(c)(15)(B)

as applied to partnership investments, a

taxpayer may rely on proposed § 1.56A-5

(excluding proposed § 1.56A-5(l)(2)

(ii) and (iii)) as contained in the CAMT

Proposed Regulations without also being

required to rely on proposed § 1.56A20 as contained in the CAMT Proposed

Regulations, or vice versa, subject to

certain requirements. In addition, for taxable years beginning before the date the

forthcoming proposed regulations are

published in the Federal Register, Notice

2025-28 provides that a taxpayer may

rely on proposed § 1.56A-5 (excluding

proposed § 1.56A-5(l)(2)(ii) and (iii)) as

contained in the CAMT Proposed Regulations without also being required to rely

on proposed § 1.56A-20 as contained in

the CAMT Proposed Regulations, or vice

versa, subject to certain requirements.

(3) Notice 2025-46 provides interim

guidance on the application of the CAMT

to domestic corporate transactions, troubled companies, tax consolidated groups,

acquired FSNOLs, and certain built-in

items.

.05 Comments received on the CAMT

Proposed Regulations relevant to items in

this notice.

(1) Proposed applicability dates and

reliance on the CAMT Proposed Regulations. Commenters stated that having different applicability dates for the specified

regulations and non-specified regulations

is confusing and inappropriately burdens

taxpayers by proposing that certain complex rules contained in the specified regulations would apply based on the date the

CAMT Proposed Regulations were published in the Federal Register as opposed

to the date final regulations are published

in the Federal Register. In addition, commenters stated that the rules for relying on

the CAMT Proposed Regulations, which,

among other requirements, generally prohibit a taxpayer from relying on a particular section of the CAMT Proposed Regu-

October 27, 2025

lations unless the taxpayer also applies all

of the specified regulations, impose additional compliance burdens and costs on

taxpayers seeking to apply relevant sections of the CAMT Proposed Regulations

for taxable years ending on or before final

regulations are published in the Federal

Register. Commenters requested guidance

providing that, for taxable years ending

on or before the date the final regulations

are published in the Federal Register, a

taxpayer may rely on any section of the

CAMT Proposed Regulations without

also being required to apply the specified regulations or any additional sections

of the CAMT Proposed Regulations, as

applicable.

(2) CAMT entities with regulated operations. Commenters recommended that

an adjustment to AFSI be allowed for

certain repair or maintenance costs of

CAMT entities with regulated operations

because those CAMT entities are subject

to special financial accounting rules under

U.S. generally accepted accounting principles (GAAP). As defined in proposed

§ 1.56A-1(b)(27), GAAP are a common

set of accounting rules, standards, and

procedures that are generally issued by

the Financial Accounting Standards Board

(FASB) and, where applicable, the U.S.

Securities and Exchange Commission.

ASC 980 contains the FASB’s financial

accounting rules and principles applicable

to regulated operations.

ASC 980-10-15-2 provides that an

entity is required to apply the ASC 980

financial accounting rules to any regulated

operations that meet certain criteria. First,

the entity’s rates for regulated services

or products provided to its customers are

established by or are subject to approval

by an independent, third-party regulator

or by its own governing board empowered

by statute or contract to establish rates

that bind customers. Second, the regulated

rates are designed to recover the specific

entity’s costs of providing the regulated

services or products. Third, based on the

demand for the regulated services or products and the level of competition (direct

and indirect), it is reasonable to assume

that rates set at levels that will recover the

entity’s costs can be charged to and collected from customers. Companies with

regulated operations may include utilities

regulated by a state public utility commis-

October 27, 2025

sion or energy companies regulated by the

Federal Energy Regulatory Commission.

An entity that is required to apply ASC

980 to its regulated operations must capitalize for AFS purposes all or part of an

incurred cost (including a repair expenditure) that otherwise would be expensed

when incurred under GAAP, if the cost

meets the following criteria of ASC 980340-25-1 (regulatory asset): (i) it is probable that future revenue in an amount that

equals or exceeds the capitalized cost

will result from inclusion of that cost in

allowable costs for rate-making purposes;

and (ii) based on available evidence, that

future revenue will be provided to permit the recovery of that cost, rather than

to provide for expected levels of similar,

future costs.

Neither § 56A(c) nor the CAMT Proposed Regulations provide an adjustment to AFSI for costs capitalized to, and

included in the basis of, a regulatory asset,

unless that asset also constitutes property

to which § 168 applies for purposes of

§ 56A(c)(13) and proposed § 1.56A-15.

Comments submitted in response to the

CAMT Proposed Regulations recommended that an adjustment to AFSI be

allowed for repair or maintenance costs

with respect to tangible property that are

capitalized under ASC 980-340-25-1 as

regulatory assets. The commenters indicated that regulated utilities have elevated

AFSI compared to non-regulated companies because ASC 980 requires entities

with regulated operations to capitalize and

depreciate the cost of repair or maintenance costs that are regulatory assets for

AFS purposes to spread the rate impact

of such costs for their customers. The

commenters explained that CAMT entities that do not have regulated operations

under ASC 980-10-15-2 are not subject

to ASC 980, and, thus, generally expense

such costs when incurred under GAAP.

The commenters observed that this elevated AFSI for regulated utilities due to

the application of ASC 980 may result in

increased CAMT liability for such taxpayers and, thus, an increased tax expense that

would be includible in allowable costs for

rate-making purposes.

(3) Items measured at fair value for FSI

purposes. Section 56A provides for adjustments to AFSI to disregard certain financial statement gains and losses for certain

630

items that are measured at fair value. For

example, § 56A(c)(2)(C), (c)(2)(D)(i) and

(c)(3)(A) provide adjustments to AFSI to

disregard certain financial statement gains

and losses attributable to certain investments in domestic corporations, partnerships, and CFCs that are measured at fair

value. Further, the CAMT Proposed Regulations contain additional adjustments

to AFSI for certain other items measured

at fair value for FSI purposes, including

adjustments under proposed § 1.56A-24.

Comments submitted in response to

the CAMT Proposed Regulations, including proposed § 1.56A-24, generally recommended expanding the scope of the

rules governing adjustments to items

measured at fair value for FSI purposes.

For example, one commenter recommended expanding the scope of the rule

disregarding FSI resulting from the equity

or fair value methods for certain stock

investments to apply to all investment

assets, including debt, debt-like securities, warrants, and options. In addition,

commenters recommended expanding the

scope of proposed § 1.56A-24 to disregard a fair value measurement adjustment

when either the hedged item or the AFSI

hedge (but not both) is reflected in FSI at

fair value, but both the hedged item and

the AFSI hedge are marked to market for

regular tax purposes. One commenter recommended expanding the scope to disregard a fair value measurement adjustment

when an item is marked to market for

regular tax purposes but a deferral rule

applies to the mark-to-market gain or loss,

such as due to § 1092. Commenters also

recommended guidance that would clarify

and modify the definitions, rules related to

the application to prior years, subsequent

adjustment rules, and net investment

hedge rules in proposed § 1.56A-24.

Other commenters made broader recommendations. Three commenters recommended disregarding fair value measurement adjustments for additional items

that are reflected in FSI at fair value and

that are not marked to market for regular

tax purposes, including digital assets. Two

commenters stated that Congress did not

intend for fair value measurement adjustments on assets held by a CAMT entity

to be taken into account in determining

AFSI. Two commenters indicated that

including in AFSI unrealized gains and

Bulletin No. 2025–44

losses attributable to the fair value measurements would lead to distortions that

should be alleviated with an adjustment to

FSI to avoid the non-economic results that

would arise absent such an adjustment.

Two commenters stated that requiring

fair value measurement adjustments to be

taken into account in determining AFSI

would disadvantage domestic corporations compared to foreign corporations

as a result of different financial accounting rules. One commenter also noted that

the proposed regulations would disregard

fair value measurement adjustments for

some assets and stated that it would be

good policy to treat all assets in the same

manner. Commenters suggested issuing

guidance that would disregard fair value

measurement adjustments for AFSI purposes unless the gains and losses attributable to the adjustments are taken into

account for regular tax purposes. One

commenter requested guidance that would

allow CAMT entities to elect out of the

rules disregarding fair value measurement

adjustments and instead follow FSI.

(4) CAMT and tonnage tax regime.

The CAMT Proposed Regulations did

not propose rules addressing the provisions of subchapter R of chapter 1 of the

Code (tonnage tax regime). However, the

preamble to the CAMT Proposed Regulations requested comments on the interaction between the CAMT and the tonnage

tax regime, including comments on how

best to provide AFSI adjustments for

CAMT entities that are subject to the tonnage tax regime to meet the United States

national security policy goals of the tonnage tax regime and the Maritime Security Program (MSP), while appropriately

imposing the CAMT with respect to other

AFSI of such entities.

Under § 1354(a), any corporation

that is a “qualifying vessel operator,” as

defined in § 1355(a)(3), may elect to be

subject to the tonnage tax imposed under

§ 1352. An election made by a member of

a controlled group, as defined in § 1355(a)

(2)(B), applies to all qualifying vessel

operators that are members of that group.

See § 1354(c). Any corporation subject to

this election (electing corporation) is subject to tax on a notional amount of income

from qualifying shipping activities in lieu

of the Federal income tax that otherwise

would be imposed under § 11 on the tax-

Bulletin No. 2025–44

able income from those activities. See

H.R. No. 108-548 Part 1 (2004) at 177.

The notional amount of shipping income

is determined under § 1353(b) based on

the net tonnage of qualifying vessels (as

defined in § 1355(a)(4)) that the electing

corporation operates in United States foreign trade during the taxable year. Section

1358(b) prevents an electing corporation

from claiming any deductions against

notional shipping income and limits the

use of an NOL attributable to qualifying

shipping activities in certain instances.

As a result of an election under § 1354,

an electing corporation does not include

income from qualifying shipping activities in its gross income for regular tax purposes. See § 1357(a). Further, a member of

an electing group (as defined in § 1355(a)

(2)) that is not an electing corporation

(and, thus, is not subject to tax on notional

shipping income under § 1352(2)) does

not include its income from qualifying

shipping activities in gross income for

regular tax purposes. See § 1357(b). In

addition, and subject to special rules for

depreciation and interest in § 1357(c)(2)

and (3), respectively, § 1357(c)(1) disallows each item of loss, deduction (other

than for interest expense), or credit of any

taxpayer with respect to any activity that

generates income excluded under § 1357.

The disallowance for interest expense is

based on the ratio of the fair market value

of the corporation’s qualifying vessels to

the fair market value of the corporation’s

total assets or, in the case of a member

of an electing group, the electing group’s

total assets. See § 1357(c)(3)(A) and (B).

For purposes of determining gain of any

qualifying vessel, § 1357(c)(2) provides

that the adjusted basis of a qualifying

vessel is determined as if a deduction for

depreciation had been allowed.

The Treasury Department and the IRS

received comments noting that, without further guidance addressing how the

CAMT interacts with the tonnage tax

regime, the CAMT would result in both

tax regimes applying simultaneously,

which could undermine the national security purposes of the tonnage tax regime.

Commenters further noted that this outcome could decrease the global competitiveness of U.S.-flag vessels. Commenters

requested that AFSI be adjusted for corporations subject to the tonnage tax regime

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so as not to undermine the tonnage tax

regime’s purpose.

(5) Depreciation deductions and NOL

carryovers. Depreciation deductions

allowed under § 167 with respect to section 168 property for a taxable year that

give rise to an NOL (embedded depreciation deductions) for that taxable year

generally are carried forward as part of

the corresponding NOL carryover. The

embedded depreciation deductions ultimately reduce a CAMT entity’s regular

tax liability in the taxable year in which

the corresponding NOL carryover is

allowed as a deduction under § 172(a).

See § 172(a) and 172(b)(1)(A)(ii).

Neither § 56A(c) nor the CAMT Proposed Regulations provide an adjustment

to AFSI for embedded depreciation deductions in the taxable year such amounts are

allowed as a deduction under § 172(a).

Commenters requested that an adjustment

be allowed to reduce AFSI by embedded

depreciation deductions attributable to an

NOL arising in a taxable year ending on

or before December 31, 2019 (pre-2020

embedded depreciation deductions), in the

taxable year the NOL carryover containing those embedded depreciation deductions is allowed as a deduction under

§ 172(a). Commenters noted that a CAMT

liability under § 55 could arise in a taxable

year in which an NOL carryover containing embedded depreciation deductions is

allowed as a deduction under § 172, given

that (i) neither § 56A(c) nor the CAMT

Proposed Regulations provide a corresponding adjustment to AFSI for embedded depreciation deductions, and (ii) no

corresponding AFSI adjustment is available under § 56A(d) or proposed § 1.56A23 given that the AFSI adjustment under

§ 56A(d) and proposed § 1.56A-23 is limited to FSNOLs arising in taxable years

ending after December 31, 2019.

(6) Application of FSNOL rules to

nonlife insurance companies. The preamble to the CAMT Proposed Regulations

noted that the § 56A(d) rules regarding

the adjustment to AFSI for FSNOLs generally matches the rules regarding the use

of NOLs applicable to most corporations

for regular tax purposes under § 172, in

that both FSNOLs and NOLs generally

(i) may be carried forward for an indefinite number of years but may not be carried back, and (ii) may be used to reduce

October 27, 2025

only 80 percent of AFSI (as provided in

§ 56A(d)(1)) or taxable income (as provided in § 172(a)(2)), respectively. However, § 172 provides exceptions to the

general rule for nonlife insurance companies that are not found in § 56A(d). In

particular, § 172 provides that a nonlife

insurance company’s NOLs (i) may be

carried back for two years and carried forward 20 years, and (ii) are not subject to

the 80-percent limit provided in § 172(a)

(2). See § 172(b)(1)(C) and (f). The preamble to the CAMT Proposed Regulations noted that this disparity could create

a mismatch between AFSI and regular

taxable income for CAMT entities that

are nonlife insurance companies that does

not exist for other CAMT entities. In the

preamble to the CAMT Proposed Regulations, the Treasury Department and the

IRS requested comments on how substantial this mismatch may be and the severity

of the economic effects of such mismatch,

whether rules should be provided to

address this potential mismatch, and how

the rules might operate.

Commenters confirmed that a mismatch between regular tax NOLs and

FSNOLs (book-tax NOL mismatch) may

arise for nonlife insurance companies.

Commenters asserted that this mismatch

could cause nonlife insurance companies to have higher CAMT liability in a

carryback year, and that this outcome is

contrary to Congress’s objective in preserving NOL carrybacks for nonlife insurance companies. Commenters further

noted that nonlife insurers provide relief

to the economy from catastrophic losses,

and that regular tax NOL carrybacks give

these companies timely access to capital

(via tax refunds for the carryback year)

to help pay claims and replenish capital quickly after loss years. Commenters

requested that adjustments be made in

the final regulations to address the booktax NOL mismatch for nonlife insurance

companies.

(7) Goodwill amortization. Commenters requested that an adjustment to AFSI

be allowed for amortization of goodwill

under § 197. In general, amounts paid

to another party to acquire goodwill are

required to be capitalized in the taxable

year paid or incurred. See § 1.263(a)-4(c)

(1)(x). Once capitalized, such amounts are

generally recovered through amortization

October 27, 2025

deductions ratably over a 15-year period

beginning with the month in which the

goodwill is acquired (§ 197 amortization).

See § 197(a), (c) and (d)(1)(A).

In general, amounts paid or incurred

to acquire goodwill are capitalized for

AFS purposes in the year paid or incurred.

Once capitalized, those amounts generally

are not recoverable through amortization,

but rather are recoverable to the extent the

goodwill is impaired (in which case an

impairment loss would be recognized) or

upon disposition of the goodwill. See ASC

350-20-35-1; IAS 36. However, goodwill

may be recoverable through amortization

for AFS purposes under certain circumstances. See, e.g., ASC 350-20-35-63,

which allows certain private companies

and not-for-profit entities to amortize

goodwill on a straight-line basis over a

10-year period.

Neither § 56A(c) nor the CAMT Proposed Regulations provide an adjustment

to AFSI for § 197 amortization of goodwill. Commenters requesting an adjustment to AFSI for § 197 amortization of

goodwill explained that goodwill may not

be amortizable under IFRS or GAAP and,

as a consequence, a CAMT liability under

§ 55 could arise in taxable years in which

amortization of goodwill is deducted for

regular tax purposes under § 197. In addition, commenters observed that CAMT

entities could not have considered the

consequences of the CAMT, including the

treatment of goodwill under the CAMT,

in their financial modeling for business

acquisitions or in the allocation of the

purchase price among acquired assets

for acquisitions that occurred before the

CAMT was in effect and, therefore, should

be allowed an adjustment to AFSI for the

amortization of goodwill acquired prior to

that time.

(8) AFSI adjustments to retained earnings for accounting principle changes.

Commenters expressed concerns with

the rules in proposed § 1.56A-17(c)(2)

(i)(A), (c)(2)(ii)(A), and (d)(1)(i) that

would require CAMT entities to disregard any portion of the adjustment to

retained earnings attributable to taxable

years ending on or before December 31,

2019. Commenters indicated that bifurcating the adjustments between amounts

attributable to pre-2020 taxable years and

amounts attributable to subsequent tax-

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able years could create higher compliance

costs and increased compliance burdens

if such amounts were not already bifurcated for AFS purposes. Commenters recommended permitting CAMT entities to

calculate these adjustments based on the

entire cumulative adjustment to retained

earnings rather than based on only the portion of the retained earnings adjustment

attributable to taxable years ending on or

after January 1, 2020.

SECTION 3. PROPOSED

APPLICABILITY DATES AND

RELIANCE ON THE CAMT

PROPOSED REGULATIONS AND

FORTHCOMING PROPOSED

REGULATIONS

.01 Purpose. In response to numerous

comments received with respect to the

CAMT Proposed Regulations outlining

the concerns described in section 2.05(1)

of this notice, the Treasury Department

and the IRS have reconsidered the proposed applicability dates and reliance

rules set forth in the “Proposed Applicability Dates and Reliance on the Proposed

Regulations” section of the CAMT Proposed Regulations (see 89 F.R. 75127).

The Treasury Department and the IRS

anticipate that the notice of proposed

rulemaking that will partially withdraw

the CAMT Proposed Regulations and contain the forthcoming proposed regulations

will include a new “Proposed Applicability Dates and Reliance on the Proposed

Regulations” section providing that no

section (for example, proposed § 1.56A1) of the CAMT Proposed Regulations

and the forthcoming proposed regulations

would be applicable for any taxable year

beginning before the date a corresponding

section of a final regulation is published

in the Federal Register. Accordingly, once

published as final regulations in the Federal Register, no section of the CAMT

Proposed Regulations will apply, and no

section of the forthcoming proposed regulations will apply, to any taxable year

beginning before the date a corresponding

section of a final regulation is published in

the Federal Register.

.02 Taxable years beginning before

final regulations.

(1) Reliance on CAMT Proposed Regulations.

Bulletin No. 2025–44

(a) In general. Except as provided in

section 3.02(1)(b) of this notice, a taxpayer may rely on any section of the

CAMT Proposed Regulations for a taxable year beginning before the date the

corresponding final regulation is published in the Federal Register, provided

the taxpayer consistently follows that

section in its entirety for all such taxable

years beginning with the first taxable year

with respect to which the taxpayer relies

on that section. In addition, a taxpayer

may rely on any section of the CAMT

Proposed Regulations, as modified by any

guidance (including the interim guidance

in this notice) subsequently published in

the Internal Revenue Bulletin, for a taxable year beginning before the date the

forthcoming proposed regulations are

published in the Federal Register, provided the taxpayer consistently follows

such section (as so modified) in its entirety

for all such taxable years beginning with

the first taxable year with respect to which

the taxpayer relies on such section.

(b) Certain related sections.

(i) In general. A taxpayer may rely on

proposed § 1.56A-4 (AFSI adjustments

and basis determinations with respect to

foreign corporations) or 1.56A-6 (AFSI

adjustments with respect to CFCs) of the

CAMT Proposed Regulations, as applicable, for taxable years beginning before the

date a corresponding final regulation section is published in the Federal Register,

provided the taxpayer (A) consistently follows proposed

§§ 1.56A-8 (AFSI adjustments for certain Federal and foreign income taxes)

and 1.59-4 (CAMT foreign tax credit) of

the CAMT Proposed Regulations for such

taxable years, and

(B) consistently follows each of proposed § 1.56A-4 or 1.56A-6 (as applicable), proposed § 1.56A-8, and proposed

§ 1.59-4 in their entirety for all such taxable years beginning with the taxable year

with respect to which the taxpayer relies

on proposed § 1.56A-4 or 1.56A-6 (as

applicable).

(ii) Special rule in determining eligible taxes. A taxpayer that relies on proposed § 1.59-4 may treat a tax that would

otherwise not qualify as an eligible tax

solely due to the applicability of section

3

245A(d) as an eligible tax for purposes of

proposed § 1.59-4 if the tax is a foreign

income tax paid or accrued by the taxpayer with respect to a dividend received

(or treated as received for purposes of section 245A) from a CFC in which the taxpayer is a United States shareholder. This

is the case notwithstanding that a section

245A deduction is allowed with respect to

the dividend for regular tax purposes and

therefore for CAMT purposes.

(c) Coordination with proposed

§ 1.56A-6(c)(1). If a taxpayer relies on

proposed § 1.56A-6 of the CAMT Proposed Regulations pursuant to section

3.02(1)(b) of this notice, for purposes of

relying on proposed § 1.56A-6(c)(1), the

term “section 56A regulations” means the

CAMT Proposed Regulations, as modified

by any guidance (including the interim

guidance in this notice) published in the

Internal Revenue Bulletin subsequent

to the CAMT Proposed Regulations that

the taxpayer has relied on for purposes of

making AFSI adjustments.

(2) Reliance on interim guidance provided in Notice 2025-27, Notice 2025-28,

and Notice 2025-46. For a taxable year

described in section 3.05 of Notice 202527, section 9 of Notice 2025-28, or section

9 of Notice 2025-46, as applicable, a taxpayer may rely on the guidance described

in section 3.03 of Notice 2025-27, sections 3 through 7 of Notice 2025-28, or

sections 3 through 6 of Notice 2025-46,

without being required to follow any section, or part thereof, of the CAMT Proposed Regulations (except to the extent

required by, or incorporated into, these

Notices). Consequently, a taxpayer’s reliance on any of the guidance provided in

section 3.03 of Notice 2025-7, sections 3

through 7 of Notice 2025-28, or sections 3

through 6 of Notice 2025-46 for a taxable

year described in this section 3.02(2) will

not cause the taxpayer to become subject

to, or to violate, the reliance rules, including the consistency requirements, provided in section 3.02(1) of this notice for

such taxable year and any other relevant

taxable years.

(3) Statement of guidance applied on

Form 4626. In addition to any reporting

required by a form, publication, or other

guidance, a corporation must include

with its Form 4626, Alternative Minimum Tax—Corporations, for a particular

taxable year a statement describing the

approach taken in completing Form 4626

for such taxable year and the guidance it

relied upon for such taxable year. See page

2 of the instructions to Form 4626.3

SECTION 4. AFSI ADJUSTMENT FOR

ELIGIBLE REGULATORY ASSETS

.01 Purpose. In response to comments

received on the CAMT Proposed Regulations, the Treasury Department and the

IRS anticipate that the forthcoming proposed regulations will include proposed

regulations under § 56A(c)(15) and (e)

consistent with the guidance provided in

this section 4 to allow a CAMT entity subject to ASC 980 to adjust AFSI for eligible

regulatory assets. In addition, the Treasury Department and the IRS anticipate

that the forthcoming proposed regulations

will propose a modification to proposed

§ 1.59-2(c) to provide that, for purposes

of applying the average annual AFSI test

in § 59(k)(1)(B) or proposed § 1.59-2(c),

AFSI is determined without regard to the

AFSI adjustment provided in this section

4.

.02 Definitions. For purposes of this

section 4:

(1) CAMT entity subject to ASC 980.

The term CAMT entity subject to ASC 980

means a CAMT entity that has regulated

operations that meet the criteria of ASC

980-10-15-2 and has an AFS prepared in

accordance with GAAP, including ASC

980.

(2) Eligible regulatory asset. The term

eligible regulatory asset means any cost

attributable to tangible property repairs or

maintenance that is capitalized under ASC

980-340-25-1 and subject to depreciation

for AFS purposes. An eligible regulatory

asset does not include any other costs

capitalized for AFS purposes under ASC

980 or any other provision of GAAP, as

defined in proposed § 1.56A-1(b)(27).

The term eligible regulatory asset includes

costs attributable to tangible property

repairs or maintenance that are capitalized

under ASC 980-340-25-01 and placed in

service by a CAMT entity subject to ASC

980 in any taxable year, including taxable

https://www.irs.gov/forms-pubs/about-form-4626

Bulletin No. 2025–44

633

October 27, 2025

years ending on or before December 31,

2019.

(3) Regulatory asset book COGS

depreciation. The term regulatory asset

book COGS depreciation means any of

the following items that are taken into

account as part of cost of goods sold (or

as part of the computation of gain or loss

from the sale or exchange of property held

for sale) in FSI with respect to an eligible

regulatory asset-(a) Depreciation expense;

(b) Other recovery of AFS basis

(including from an impairment loss) that

occurs either:

(i) Prior to the taxable year in which the

complete disposition of the eligible regulatory asset occurs for AFS purposes, or

(ii) In the taxable year in which the complete disposition of the eligible regulatory

asset occurs for AFS purposes to determine

any FSI gain or loss from the disposition of

the eligible regulatory asset; or

(c) Impairment loss reversal.

(4) Regulatory asset book depreciation expense. The term regulatory asset

book depreciation expense means any of

the following items other than regulatory

asset book COGS depreciation that are

taken into account in FSI with respect to

an eligible regulatory asset-(a) Depreciation expense;

(b) Other recovery of AFS basis

(including from an impairment loss) that

occurs either:

(i) Prior to the taxable year in which the

complete disposition of the eligible regulatory asset occurs for AFS purposes, or

(ii) In the taxable year in which the complete disposition of the eligible regulatory

asset occurs for AFS purposes to determine

any FSI gain or loss from the disposition of

the eligible regulatory asset; or

(c) Impairment loss reversal.

(5) Regulatory asset book inventoriable depreciation. The term regulatory

asset book inventoriable depreciation

means any of the following items that are

included in inventoriable cost (or capitalized as part of the cost of non-inventory

property held for sale) in the AFS of a

CAMT entity subject to ASC 980 with

respect to an eligible regulatory asset-(a) Depreciation expense;

(b) Other recovery of AFS basis

(including from an impairment loss) that

occurs either:

October 27, 2025

(i) Prior to the taxable year in which the

complete disposition of the eligible regulatory asset occurs for AFS purposes, or

(ii) In the taxable year in which the

complete disposition of the eligible regulatory asset occurs for AFS purposes to

determine any FSI gain or loss from the

disposition of the eligible regulatory asset;

or

(c) Impairment loss reversal.

.03 AFSI adjustment for eligible regulatory assets. The AFSI of a CAMT entity

subject to ASC 980 for a taxable year may

be adjusted as follows:

(1) Reduced by the amount of costs

incurred under GAAP and capitalized

under ASC 980-340-25-1 as eligible regulatory assets during such taxable year, but

only to the extent that such amounts are-(a) Not otherwise required to be capitalized for AFS purposes under any other

GAAP rule, standard, or procedure, and

(b) Not required to be capitalized under

§ 263(a) for regular tax purposes; and

(2) Adjusted to disregard any regulatory asset book COGS depreciation

and regulatory asset book depreciation

expense with respect to any eligible regulatory asset.

.04 Determining regulatory asset book

COGS depreciation adjustment.

(1) Except as provided in section

4.04(2) of this notice, a CAMT entity subject to ASC 980 is required to apply the

method(s) of accounting the CAMT entity

uses for AFS purposes to determine regulatory asset book inventoriable depreciation for purposes of determining the

regulatory asset book COGS depreciation

adjustment under section 4.03(2) of this

notice.

(2) A CAMT entity subject to ASC 980

is permitted to use any reasonable method

to determine regulatory asset book inventoriable depreciation for purposes of determining the regulatory asset book COGS

depreciation adjustment under section

4.03(2) of this notice, provided that such

reasonable method is consistent with and

reflects the method(s) of accounting the

CAMT entity uses for AFS purposes. In

the case of a CAMT entity subject to ASC

980 that uses the Last-In-First-Out (LIFO)

method to identify inventories for AFS

purposes, a reasonable method includes a

method similar to the method provided in

proposed § 1.56A-15(d)(3)(ii)(C).

634

(3) Reporting requirement. If a CAMT

entity makes the AFSI adjustment provided in section 4 of this notice for a

taxable year and is using a reasonable

method to determine regulatory asset

book inventoriable depreciation under

section 4.04(2) of this notice, it must

attach a statement to its Federal income

tax return for such taxable year. The statement must be titled “AFSI adjustment for

eligible regulatory assets” and include the

CAMT entity’s name, address, and taxpayer identification number, and a statement that the CAMT entity is using a reasonable method to determine regulatory

asset book inventoriable depreciation for

purposes of determining the regulatory

asset book COGS depreciation adjustment under section 4.03(2) of Notice

2025-49 for the taxable year. In addition,

the statement must describe the method

used to determine regulatory asset book

inventoriable depreciation and include a

declaration that the method used is consistent with and reflects the method(s)

of accounting the CAMT entity uses for

AFS purposes.

.05 Consistency requirement. If a

CAMT entity subject to ASC 980 makes

the AFSI adjustment provided in section

4.03 of this notice for a taxable year, it

must continue to make the adjustment

provided in section 4.03 of this notice for

all subsequent taxable years until all eligible regulatory assets are disposed of for

regular tax purposes or such time as prescribed by the Treasury Department and

IRS in regulations or other guidance.

.06 Determining applicable corporation status. For purposes of applying

the average annual AFSI test in § 59(k)

(1)(B) or proposed § 1.59-2(c), AFSI is

determined without regard to the AFSI

adjustment provided in section 4.03 of

this notice.

.07 Coordination with CAMT Proposed

Regulations. For purposes of coordinating

with relevant provisions of the CAMT

Proposed Regulations (for example, proposed § 1.56A-15), the reduction to AFSI

described in section 4.03(1) of this notice

is treated as if it were an expense for

FSI purposes. For example, the amount

described in section 4.03(1) may be

considered a covered book expense, as

defined in proposed § 1.56A-15(b)(4), if

applicable.

Bulletin No. 2025–44

.08 Applicability date and reliance. It

is anticipated that the forthcoming proposed regulations will provide that rules

consistent with the guidance described in

this section 4 will apply for taxable years

beginning on or after the date the final regulations addressing the AFSI adjustment

for eligible regulatory assets are published

in the Federal Register. For taxable years

beginning before the date such forthcoming proposed regulations are published

in the Federal Register, CAMT entities

may rely on the guidance in this section

4. A CAMT entity’s reliance on any of the

guidance in this section 4 for a taxable

year will not cause the CAMT entity to

become subject to, or to violate, the proposed reliance rules, including the consistency requirements, provided in section

3.02(1) of this notice.

SECTION 5. AFSI ADJUSTMENTS

FOR CERTAIN ITEMS MEASURED AT

FAIR VALUE

.01 Purpose. In response to comments,

the Treasury Department and the IRS

anticipate that the forthcoming proposed

regulations will propose modifications to

the rules in proposed § 1.56A-24, other

than the rules for net investment hedges,

that would be consistent with the interim

guidance provided in this section 5. The

Treasury Department and the IRS are providing this interim guidance prior to the

issuance of the forthcoming proposed

regulations to provide taxpayers with an

alternative approach to determine AFSI

with respect to certain gains and losses

that are included in FSI but generally are

not included in gross income for regular

tax purposes. Instead of being limited to

AFSI hedges and hedged items as in proposed § 1.56A-24, this interim guidance

applies more broadly to certain items that

are measured at fair value for FSI purposes. For example, depending on the

applicable financial accounting principles,

this interim guidance may apply to (1)

holdings of digital assets, (2) debt securities that are classified as trading securities, and (3) derivatives that are not part of

a hedging transaction, if those items are

measured at fair value for FSI purposes

but are not marked to market for regular tax purposes. However, this interim

guidance does not apply to a partnership

Bulletin No. 2025–44

investment, stock in a domestic corporation that is not a member of a tax consolidated group of which the CAMT entity is

a member, stock in a foreign corporation,

a net investment hedge, an asset or liability entered into as a hedging transaction

by a covered insurance company in certain circumstances, a covered insurance

company’s assets in a covered investment

pool, or a covered insurance company’s

covered obligations.

In general, the interim guidance in this

section 5 provides that for certain items

that are measured at fair value, a CAMT

entity may adjust AFSI to disregard gains

and losses that are unrealized for regular tax purposes (see section 5.03 of this

notice, which describes the FVI exclusion

option). The interim guidance in this section 5 also provides that a CAMT entity

may adjust AFSI to disregard certain

gains and losses for certain AFSI hedges

and hedged items (see section 5.04 of this

notice, which describes the hedge coordination option).

.02 Definitions. For purposes of this

section 5:

(1) Fair value item. The term fair value

item means an asset or liability of a CAMT

entity for which there are fair value measurement adjustments. The term fair value

item does not include-(a) Items subject to § 56A(c)(2)(C), (c)

(2)(D), or (c)(3) and the guidance thereunder, including the CAMT Proposed Regulations, Notice 2025-28, and Notice 202546 (for example, the term fair value item

does not include a partnership investment,

stock in a domestic corporation that is not

a member of a tax consolidated group of

which the CAMT entity is a member, or

stock in a foreign corporation);

(b) Assets or liabilities entered into as

a hedging transaction, as described in proposed § 1.56A-24(b)(1)(ii), by a covered

insurance company;

(c) A covered insurance company’s

assets in a covered investment pool; or

(d) A covered insurance company’s

covered obligations.

(2) Fair value measurement adjustment. The term fair value measurement

adjustment means a change in the value

of an asset or a liability due to required

periodic determinations at least annually of the increases or decreases in fair

value of that asset or liability included

635

in a CAMT entity’s FSI, regardless of

whether the determinations are required

due to the type of asset or liability or due

to an election by the CAMT entity. The

term fair value measurement adjustment

includes changes in value resulting from

the application of the lower of cost or market accounting method under GAAP or

the lower of cost and net realizable value

accounting method under IFRS. The term

fair value measurement adjustment does

not include an impairment loss or impairment loss reversal.

(3) Subsequent adjustment date. The

term subsequent adjustment date means

the earliest day the fair value item matures

or is sold, exchanged, terminated, or otherwise disposed of for regular tax purposes. For purposes of the hedge coordination option, a subsequent adjustment

date also includes the earliest day on

which the AFSI hedge or the hedged item

(as applicable) that corresponds to the

hedged item or the AFSI hedge with the

fair value measurement adjustment that

was disregarded under section 5.04 of

this notice matures or is sold, exchanged,

terminated, or otherwise disposed of for

regular tax purposes. In addition, a subsequent adjustment date includes the first

day of the taxable year in which the FVI

exclusion option or hedge coordination

option, as applicable, is no longer applied

by a CAMT entity that previously applied

the FVI exclusion option or hedge coordination option, as applicable.

.03 FVI exclusion option. Provided the

requirements described in section 5.03(1)

through (4) and section 5.05 of this notice

are satisfied, a CAMT entity may adjust

AFSI for a taxable year to disregard a

fair value measurement adjustment for a

fair value item for that taxable year if the

CAMT entity does not mark to market the

fair value item for regular tax purposes.

For purposes of the FVI exclusion option,

a CAMT entity marks to market the fair

value item for regular tax purposes to the

extent that the CAMT entity recognizes

unrealized gain or loss in a taxable year

for the fair value item and takes such gain

or loss into account in the taxable year.

For example, a CAMT entity may mark a

fair value item to market for tax purposes

due to the application of § 475, § 1256,

or a similar provision. The determination

regarding whether a CAMT entity rec-

October 27, 2025

ognizes unrealized gain or loss in a taxable year and takes such gain or loss into

account in the taxable year is made after

taking into account any elections made

by the CAMT entity and the application

of other applicable provisions that may

result in unrealized gain or loss not being

recognized.

(1) Consistency requirement. A CAMT

entity must consistently apply the FVI

exclusion option to all fair value items,

except for a hedged item or AFSI hedge

to which the hedge coordination option in

section 5.04 of this notice applies.

(2) Application of FVI exclusion option.

(a) In general. Except as provided in

section 5.03(2)(b) of this notice, a CAMT

entity (or a controlling domestic shareholder of a CFC under section 5.03(4) of

this notice) must indicate in a statement

attached to its Federal income tax return

that the CAMT entity intends to apply

the FVI exclusion option for purposes of

determining AFSI. The statement must be

titled “FVI Exclusion Option for CAMT”

and include the CAMT entity’s name,

address, taxpayer identification number,

and a statement that the CAMT entity is

choosing the FVI exclusion option under

section 5.03 of Notice 2025-49. The FVI

exclusion option will apply for the taxable

year beginning after the date on which the

CAMT entity files an original or amended

Federal income tax return containing that

statement.

(b) Transition period. A CAMT entity

may apply the FVI exclusion option for

purposes of determining AFSI for its first

taxable year beginning on any day during

2024, if the CAMT entity indicates in the

statement described in section 5.03(2)(a)

of this notice, attached to its original or

amended Federal income tax return for that

taxable year, that the CAMT entity intends

to apply the FVI exclusion option for that

taxable year. Alternatively, a CAMT entity

may apply the FVI exclusion option for

purposes of determining AFSI for its first

taxable year beginning on any day during

2025, if the CAMT entity indicates in the

statement described in section 5.03(2)

(a) of this notice attached to its Federal

income tax return for that taxable year that

the CAMT entity intends to apply the FVI

exclusion option for that taxable year.

(3) Duration of FVI exclusion option.

A CAMT entity applying the FVI exclu-

October 27, 2025

sion option for a taxable year must continue to apply the FVI exclusion option

for purposes of determining AFSI for

all subsequent taxable years beginning

before the date the forthcoming proposed

regulations addressing AFSI adjustments

for certain items measured at fair value

are published in the Federal Register or

until the CAMT entity (or a controlling

domestic shareholder of a CFC under section 5.03(4) of this notice) indicates in a

statement attached to its Federal income

tax return that the CAMT entity intends to

no longer apply the FVI exclusion option.

The statement must be titled “Cessation

of FVI Exclusion Option for CAMT” and

include the CAMT entity’s name, address,

taxpayer identification number, and a

statement that the CAMT entity intends to

no longer apply the FVI exclusion option

under section 5.03 of Notice 2025-49. The

FVI exclusion option ceases to apply for

the taxable year beginning after the date

on which the CAMT entity files an original or amended Federal income tax return

containing that statement.

(4) CFCs. In the case of a CAMT entity

that is a CFC, the controlling domestic

shareholders (as defined in § 1.964-1(c)

(5)) of the CFC must file a statement

described in section 5.03(2)(a), (2)(b), or

(3) of this notice on behalf of the CFC

in accordance with the procedures set

forth in § 1.964-1(c)(3). The statement

described in § 1.964-1(c)(3)(ii) must be

titled “FVI Exclusion Option for CAMT

on Behalf of CFC” or “Cessation of FVI

Exclusion Option for CAMT on Behalf of

CFC,” as applicable, and, in addition to

the information set forth in § 1.964-1(c)

(3)(ii), must include a statement that the

CFC intends to apply or cease to apply the

FVI exclusion option under Notice 202549. Applying or ceasing to apply the FVI

exclusion option on behalf of a CFC is

binding on all United States shareholders

(as defined in § 951(b) or, if applicable,

§ 953(c)(1)(A)) of the CFC.

.04 Hedge coordination option. Provided the requirements described in section 5.04(1) through (4) and 5.05 of this

notice are satisfied, if a CAMT entity has

a hedged item and a corresponding AFSI

hedge that are each marked to market for

regular tax purposes, as defined in section

5.03 of this notice, but either the hedged

item or the AFSI hedge (but not both)

636

does not have a fair value measurement

adjustment, the CAMT entity may adjust

AFSI for a taxable year to disregard the

fair value measurement adjustment on the

AFSI hedge or hedged item with the fair

value measurement adjustment.

(1) Consistency requirement. A CAMT

entity that applies the hedge coordination

option must apply the option to all transactions involving a hedged item and a

corresponding AFSI hedge that are each

marked to market for regular tax purposes

but either the hedged item or the AFSI

hedge (but not both) does not have a fair

value measurement adjustment.

(2) Application of hedge coordination

option.

(a) In general. Except as provided

in section 5.04(2)(b) of this notice, a

CAMT entity (or a controlling domestic shareholder of a CFC under section

5.04(4) of this notice) must indicate in a

statement attached to its Federal income

tax return that the CAMT entity intends

to apply the hedge coordination option

for purposes of determining AFSI. The

statement must be titled “Hedge Coordination Option for CAMT” and include

the CAMT entity’s name, address, taxpayer identification number, and a statement that the CAMT entity is choosing

the hedge coordination option under section 5.04 of Notice 2025-49. The hedge

coordination option will apply for the

taxable year beginning after the date on

which the CAMT entity files an original

or amended Federal income tax return

containing that statement.

(b) Transition period. A CAMT entity

may apply the hedge coordination option

for purposes of determining AFSI for its

first taxable year beginning on any day

during 2024, if the CAMT entity indicates in the statement described in section

5.04(2)(a) of this notice attached to its

original or amended Federal income tax

return for that taxable year that the CAMT

entity intends to apply the hedge coordination option for that taxable year. Alternatively, a CAMT entity may apply the

hedge coordination option for purposes of

determining AFSI for its first taxable year

beginning on any day during 2025, if the

CAMT entity indicates in the statement

described in section 5.04(2)(a) of this

notice attached to its Federal income tax

return for that taxable year that the CAMT

Bulletin No. 2025–44

entity intends to apply the hedge coordination option for that taxable year.

(3) Duration of hedge coordination

option. A CAMT entity applying the hedge

coordination option for a taxable year must

continue to apply the hedge coordination

option for purposes of determining AFSI

for all subsequent taxable years beginning

before the date the forthcoming proposed

regulations addressing AFSI adjustments

for certain items measured at fair value

are published in the Federal Register or

until the CAMT entity (or a controlling

domestic shareholder of a CFC under section 5.04(4) of this notice) indicates in a

statement attached to its Federal income

tax return that the CAMT entity intends

to no longer apply the hedge coordination option. The statement must be titled

“Cessation of Hedge Coordination Option

for CAMT” and include the CAMT entity’s name, address, taxpayer identification

number, and a statement that the CAMT

entity intends to no longer apply the hedge

coordination option under section 5.04 of

Notice 2025-49. The hedge coordination

option ceases to apply for the taxable year

beginning after the date on which the

CAMT entity files an original or amended

Federal income tax return containing that

statement.

(4) CFCs. In the case of a CAMT entity

that is a CFC, the controlling domestic

shareholders of the CFC must file a statement described in section 5.04(2)(a), (2)

(b), or (3) of this notice on behalf of the

CFC in accordance with the procedures

set forth in § 1.964-1(c)(3). The statement

described in § 1.964-1(c)(3)(ii) must be

titled “Hedge Coordination Option for

CAMT on Behalf of CFC” or “Cessation of Hedge Coordination Option for

CAMT on Behalf of CFC,” as applicable, and, in addition to the information set

forth in § 1.964-1(c)(3)(ii), must include

a statement that the CFC intends to apply

or cease to apply the hedge coordination

option under Notice 2025-49. Applying or

ceasing to apply the hedge coordination

option on behalf of a CFC is binding on

all United States shareholders (as defined

in § 951(b) or, if applicable, § 953(c)(1)

(A)) of the CFC.

.05 Adjustments for disregarded fair

value measurement adjustments. A CAMT

entity that disregards a fair value measurement adjustment under the FVI exclusion

Bulletin No. 2025–44

option or the hedge coordination option

must apply the guidance provided in this

section 5.05.

(1) Other adjustments to a CAMT

entity’s FSI. If a fair value measurement

adjustment disregarded by a CAMT entity

under section 5.03 or 5.04 of this notice

for a taxable year includes amounts corresponding to items of income, gain, deduction, or loss under chapter 1 of the Code in

that taxable year (other than gain or loss

from marking to market an item for regular tax purposes), then the CAMT entity

includes those amounts in AFSI in that

taxable year. See proposed § 1.56A-24(f)

(5) (Example 5) for an example of a disregarded fair value measurement adjustment

that includes taxable income from original

issue discount.

(2) Appropriate adjustments. If a

CAMT entity disregards a fair value

measurement adjustment from AFSI for

a taxable year under section 5.03 or 5.04

of this notice, appropriate adjustments

are made to any relevant CAMT attributes (for example, the CAMT basis of

the fair value item) to reflect that such fair

value measurement adjustment has not

been included in AFSI and to reflect any

amounts included in AFSI under section

5.05(1) of this notice.

(3) Inclusion of disregarded fair value

measurement adjustment. In the taxable

year of a subsequent adjustment date, the

CAMT entity includes in AFSI the cumulative fair value measurement adjustments

previously disregarded in determining

AFSI under section 5.03 or 5.04 of this

notice, net of any amounts included in

AFSI under section 5.05(1) of this notice.

The CAMT basis and any other relevant CAMT attributes of the fair value

item that was subject to section 5.03 or

5.04 of this notice are adjusted to reflect

the amounts included in AFSI under this

section 5.05(3). Following a subsequent

adjustment date, the CAMT entity uses

the CAMT basis of the fair value item that

was subject to section 5.03 or 5.04 of this

notice immediately following the subsequent adjustment date in order to determine any further income, gain, deduction,

and loss included in AFSI with respect to

the fair value item.

.06 Examples. The following examples

illustrate the application of the guidance

in section 5.03(2) and (3) of this notice.

637

For purposes of these examples, X is an

applicable corporation and uses the calendar year for its taxable year. The analysis in these examples similarly applies to

situations involving the application of the

guidance in section 5.04(2) and (3) of this

notice.

(1) Example 1: Application of FVI exclusion

option.

(a) Facts. X files its 2026 Federal income tax

return on April 15, 2027. X indicates in a statement

satisfying the requirements of section 5.03(2)(a) of

this notice attached to its 2026 Federal income tax

return that X intends to apply the FVI exclusion

option for purposes of determining AFSI.

(b) Analysis. For purposes of determining the

AFSI of X, X will begin to apply the FVI exclusion

option for its taxable year beginning January 1, 2028,

because this is the taxable year that begins after April

15, 2027, the date on which X filed a Federal income

tax return containing a statement indicating its intent

to apply the FVI exclusion option.

(2) Example 2: No longer applying the FVI

exclusion option.

(a) Facts. X previously indicated in a valid statement attached to its Federal income tax return its

intent to apply the FVI exclusion option and has continued to apply the FVI exclusion option. X files its

2027 Federal income tax return on April 15, 2028. X

indicates in a statement satisfying the requirements

of section 5.03(3) of this notice attached to its 2027

Federal income tax return that X intends to no longer apply the FVI exclusion option for purposes of

determining AFSI.

(b) Analysis. For purposes of determining the

AFSI of X, X will cease to apply the FVI exclusion

option for its taxable year beginning January 1, 2029,

because this is the taxable year that begins after April

15, 2028, the date on which X filed its Federal income

tax return containing a statement indicating its intent

to no longer apply the FVI exclusion option.

.07 Applicability date and reliance. It

is anticipated that the forthcoming proposed regulations will provide that rules

consistent with the guidance described in

this section 5 will apply for taxable years

beginning on or after the date the final regulations addressing AFSI adjustments for

certain items measured at fair value are

published in the Federal Register. For taxable years beginning before the date those

forthcoming proposed regulations are

published in the Federal Register, taxpayers may rely on the guidance described in

this section 5. A CAMT entity’s reliance

on the FVI exclusion option or the hedge

coordination option to determine AFSI for

a taxable year will not cause the CAMT

entity to become subject to, or to violate,

the reliance rules, including the consistency requirements, provided in section

3.02(1) of this notice for that taxable year.

A CAMT entity that does not rely on the

October 27, 2025

FVI exclusion option or hedge coordination option may continue to rely on proposed § 1.56A-24 until the first taxable

year in which the forthcoming proposed

regulations are published in the Federal

Register.

SECTION 6. AFSI ADJUSTMENTS

FOR CAMT ENTITIES SUBJECT TO

THE TONNAGE TAX REGIME

.01 Purpose. In response to comments, the Treasury Department and the

IRS anticipate that forthcoming proposed regulations will include proposed

regulations issued under § 56A(c)(15)

and (e) consistent with the guidance in

this section 6, which provides adjustments to AFSI for CAMT entities subject to subchapter R of chapter 1 of the

Code (tonnage tax regime). In addition,

the Treasury Department and the IRS

anticipate that the forthcoming proposed

regulations will propose modifications

to proposed § 1.59-2 to provide that, for

purposes of applying the average annual

AFSI test in § 59(k)(1)(B) or proposed

§ 1.59-2(c), AFSI is determined without

regard to the AFSI adjustments provided

in this section 6.

.02 Coordination of the CAMT rules

with the tonnage tax regime.

(1) CAMT entities to which this section applies. The guidance in this section applies only to a CAMT entity that

is an electing corporation as defined in

§ 1355(a)(1) or a corporation that is a

member of an electing group as defined in

§ 1355(a)(2).

(2) Gross income excluded under the

tonnage tax regime. The AFSI of a CAMT

entity is adjusted to disregard all or a portion of any item of income on the CAMT

entity’s AFS that corresponds to all or

a portion of any item of income that is

excluded from the CAMT entity’s gross

income under § 1357(a) or (b) for regular

tax purposes.

(3) Deductions, credits, and losses disallowed under the tonnage tax regime.

The AFSI of a CAMT entity is adjusted

to disregard all or a portion of any item

of expense, loss, or other reduction or

increase on the CAMT entity’s AFS that

corresponds to all or a portion of any item

of deduction, credit, or loss (including an

NOL deduction) that is disallowed under

October 27, 2025

§ 1357(c)(1) or 1358(b) for regular tax

purposes.

(4) Interest expense disallowed under

the tonnage tax regime. The AFSI of a

CAMT entity is adjusted to disregard the

portion of any item on the CAMT entity’s AFS that corresponds to an item of

interest expense that is disallowed under

§ 1357(c)(3) for regular tax purposes.

(5) Determination of gain or loss on

the disposition of a qualifying vessel. The

AFSI of a CAMT entity is adjusted to disregard any gain or loss on the CAMT entity’s AFS from the disposition of a qualifying vessel (as defined by § 1355(a)(4)).

The AFSI of a CAMT entity is further

adjusted to include any gain or loss, for

regular tax purposes, resulting from the

CAMT entity’s disposition of such qualifying vessel, taking into account the rules

of § 1357(c)(2).

(6) Increase to AFSI for notional shipping income. The AFSI of a CAMT entity

is increased by an amount equal to the

CAMT entity’s notional shipping income

for the taxable year as determined under

§ 1353.

.03 Determining applicable corporation status. For purposes of applying

the average annual AFSI test in § 59(k)

(1)(B) or proposed § 1.59-2(c), AFSI is

determined without regard to the AFSI

adjustments provided in section 6.02 of

this notice.

.04 Applicability date and reliance. It is

anticipated that the forthcoming proposed

regulations will provide that rules consistent with the guidance described in section

6 of this notice will apply for taxable years

beginning on or after the date the final regulations addressing AFSI adjustments for

CAMT entities subject to the tonnage tax

regime are published in the Federal Register. A CAMT entity that is subject to the

tonnage tax regime may rely on the guidance described in this section 6 for taxable

years ending before the date the final regulations addressing the coordination of the

CAMT rules with the tonnage tax regime

are published in the Federal Register. A

CAMT entity that relies on the guidance

described in this section 6 must apply

section 6 in its entirety. A CAMT entity’s

reliance on any of the guidance in this

section 6 for a taxable year will not cause

the CAMT entity to become subject to,

or to violate, the proposed reliance rules,

638

including the consistency requirements,

provided in section 3.02(1) of this notice

for such taxable year.

SECTION 7. AFSI ADJUSTMENT

FOR CERTAIN EMBEDDED

DEPRECIATION DEDUCTIONS

.01 Purpose. In response to comments

provided on the CAMT Proposed Regulations, the Treasury Department and the

IRS anticipate that the forthcoming proposed regulations will include proposed

regulations under § 56A(c)(15) and (e)

consistent with the guidance provided in

this section 7 to allow a CAMT entity to

reduce AFSI for a taxable year by the portion of an NOL carryover attributable to

pre-2020 embedded depreciation deductions that is allowed as an NOL deduction

for such taxable year under § 172(a). In

addition, the Treasury Department and

the IRS anticipate that the forthcoming

proposed regulations will propose modifications to proposed § 1.59-2 to provide

that, for purposes of applying the average annual AFSI test in § 59(k)(1)(B) or

proposed § 1.59-2(c), AFSI is determined

without regard to the AFSI adjustments

provided in section 7.03 of this notice.

.02 Definitions. For purposes of this

section 7:

(1) Applicable depreciation percentage. The term applicable depreciation

percentage means the fraction determined

under section 7.03(4) of this notice.

(2) Deductible tax depreciation. The

term deductible tax depreciation has the

same meaning as provided in proposed

§ 1.56A-15(b)(5).

(3) Eligible NOL deduction. The term

eligible NOL deduction means, with

respect to any pre-CAMT NOL(s), the

amount of the pre-CAMT NOL(s) carried

forward and allowed as a deduction under

§ 172(a) in computing taxable income for

the taxable year.

(4) Historical tax depreciation. The

term historical tax depreciation means the

amount of deductible tax depreciation and

tax COGS depreciation taken into account

in determining the pre-CAMT NOL for a

pre-CAMT NOL year.

(5) Original depreciation carryforward. The term original depreciation carryforward means the amount determined

in section 7.03(5)(b)(i) of this notice.

Bulletin No. 2025–44

(6) Pre-CAMT NOL. The term preCAMT NOL means an NOL, as determined under § 172(c), arising in a taxable

year ending on or before December 31,

2019.

(7) Pre-CAMT NOL year. The term

pre-CAMT NOL year means, with respect

to any pre-CAMT NOL, the taxable year

in which such pre-CAMT NOL arose.

(8) Remaining depreciation carryforward. The term remaining depreciation

carryforward means the amount determined in section 7.03(5)(b) of this notice.

(9) Section 168 property. The term section 168 property has the same meaning

as provided in proposed § 1.56A-15(b)(6).

(10) Tax COGS depreciation. The

term tax COGS depreciation has the

same meaning as provided in proposed

§ 1.56A-15(b)(7), as determined under

proposed § 1.56A-15(d)(3).

.03 AFSI adjustment for pre-2020

embedded depreciation deductions.

(1) In general. A CAMT entity may

reduce its AFSI for a taxable year by an

amount equal to the portion of an eligible

NOL deduction for such taxable year that

is attributable to historical tax depreciation, as determined under section 7.03(2)

of this notice. This adjustment does not

apply for purposes of computing a CFC’s

adjusted net income or loss.

(2) Determination of the historical

depreciation portion of an eligible NOL

deduction. A CAMT entity may use any

reasonable approach to determine the portion of an eligible NOL deduction that is

attributable to historical tax depreciation

(historical depreciation portion). The

Proportional Approach described in section 7.03(4) and the Lesser-of Approach

described in section 7.03(5) are deemed

to be reasonable approaches. To the

extent a CAMT entity has an eligible

NOL deduction for a taxable year that is

attributable to more than one pre-CAMT

NOL, the CAMT entity may use different

approaches for determining the historical

depreciation portion of the eligible NOL

deduction with respect to each pre-CAMT

NOL.

(3) Reporting and consistency requirements.

(a) Reporting requirement. If a CAMT

entity makes the AFSI adjustment provided in section 7.03(1) of this notice for

a taxable year, it must attach a statement

Bulletin No. 2025–44

to its Federal income tax return for such

taxable year. The statement must be titled

“AFSI adjustment for embedded depreciation deductions” and include the CAMT

entity’s name, address, and taxpayer identification number, and a statement that

the CAMT entity is choosing to make the

AFSI adjustment for pre-2020 embedded

depreciation deductions under section

7.03(1) of Notice 2025-49 for the taxable

year. In addition, for each pre-CAMT NOL

comprising the AFSI adjustment for pre2020 embedded depreciation deductions,

the statement must provide the pre-CAMT

NOL year, the approach used to determine

the historical depreciation portion of an

eligible NOL deduction attributable to

such pre-CAMT NOL, and the amount

of the historical depreciation portion of

the eligible NOL deduction attributable

to such pre-CAMT NOL for the taxable

year. If the CAMT entity chooses to use

an approach for determining the historical depreciation portion other than the

Proportional Approach or the Lesser-of

Approach described in section 7.03(4)

and (5) of this notice, the statement must

include a description of the approach used.

(b) Consistency requirement. Once a

CAMT entity chooses to make the AFSI

adjustment under section 7.03(1) of this

notice for a taxable year with respect to

a pre-CAMT NOL, the CAMT entity

must continue making such AFSI adjustment for each subsequent taxable year

in which the CAMT entity is allowed an

eligible NOL deduction with respect to

that pre-CAMT NOL or until such time

as prescribed by the Treasury Department

and IRS in regulations or other guidance.

Further, for each taxable year in which a

CAMT entity makes the adjustment under

section 7.03(1) of this notice with respect

to a pre-CAMT NOL, the CAMT entity

must use the same approach for determining the historical depreciation portion of

an eligible NOL deduction with respect to

such pre-CAMT NOL.

(4) Proportional Approach. Under

the Proportional Approach, the historical

depreciation portion of an eligible NOL

deduction for a taxable year is calculated

by multiplying the eligible NOL deduction for the taxable year by the applicable

depreciation percentage for the corresponding pre-CAMT NOL. The applicable

depreciation percentage for a correspond-

639

ing pre-CAMT NOL means the fraction:

(i) the numerator of which is the CAMT

entity’s historical tax depreciation for the

pre-CAMT NOL year, and (ii) the denominator of which is the sum of the CAMT

entity’s total cost of goods sold taken into

account in computing gross income for

regular tax purposes for that pre-CAMT

NOL year and the CAMT entity’s total

deductions allowed in computing taxable

income for regular tax purposes for that

pre-CAMT NOL year.

(5) Lesser-of Approach.

(a) In general. Under the Lesser-of

Approach, the historical depreciation portion of an eligible NOL deduction for a

taxable year is the lesser of (i) the amount

of the remaining depreciation carryforward for the corresponding pre-CAMT

NOL as of the beginning of the taxable

year, as determined under section 7.03(5)

(b) of this notice, or (ii) the amount of the

eligible NOL deduction attributable to the

pre-CAMT NOL for such taxable year. If

the amounts in (i) and (ii) are equal, the

historical depreciation portion of an eligible NOL deduction for the taxable year

equals such equal amount.

(b) Determination of remaining depreciation carryforward as of the beginning

of the taxable year.

(i) Step 1. Calculate the amount of the

original depreciation carryforward for the

applicable pre-CAMT NOL as the lesser

of:

(A) the amount of the CAMT entity’s

historical tax depreciation for the preCAMT NOL year; or

(B) the amount of the pre-CAMT NOL

for such pre-CAMT NOL year.

(ii) Step 2. The amount of the remaining depreciation carryforward of the

pre-CAMT NOL as of the beginning of

a taxable year is the amount of the original depreciation carryforward described

in Step 1 minus the cumulative amounts

attributable to such pre-CAMT NOL that

reduced AFSI under section 7.03(1) of this

notice for taxable years preceding the current taxable year. For this purpose, such

cumulative amounts include amounts that

would have reduced AFSI if the CAMT

had been in effect in all taxable years preceding the taxable year and the CAMT

entity chose to make the adjustment under

this section 7.03(1) using the Lesser-of

Approach with respect to the correspond-

October 27, 2025

ing pre-CAMT NOL in all such preceding

taxable years, as applicable.

.04 Determining applicable corporation status. For purposes of applying the

average annual AFSI test in § 59(k)(1)(B)

or proposed § 1.59-2(c), AFSI is determined without regard to the AFSI adjustment provided in section 7.03(1) of this

notice.

.05 Examples. The following examples

illustrate the guidance in section 7.03 of

this notice. Unless otherwise specified, X

is an applicable corporation, uses the calendar year for its taxable year and for its

financial accounting period year, and none

of its NOLs may be carried back under

§ 172(b)(1).

(1) Example 1. Proportional Approach.

(a) Facts: Taxable year 2018. For regular tax

purposes, X had a pre-CAMT NOL of $100x for its

taxable year ending December 31, 2018 (2018 preCAMT NOL). For its taxable year ending December 31, 2018, X had $200x of total cost of goods

sold taken into account in computing gross income

and $300x of total deductions allowed in computing taxable income for regular tax purposes. The

amount of tax COGS depreciation and deductible

tax depreciation taken into account in determining

the 2018 pre-CAMT NOL (the historical tax depreciation for the 2018 pre-CAMT NOL) was $50x.

X carried its 2018 pre-CAMT NOL forward under

§ 172(b)(2).

(b) Facts: Taxable year 2024. X’s taxable year

ending December 31, 2024, was the first taxable year

in which X was eligible to claim an NOL deduction

under § 172(a) with respect to the 2018 pre-CAMT

NOL. For its taxable year ending December 31,

2024, X claimed an eligible NOL deduction under

§ 172(a) attributable to the 2018 pre-CAMT NOL

of $30x. As such, X’s unused 2018 pre-CAMT NOL

to carry forward to its taxable year ending December 31, 2025, and subsequent taxable years under

§ 172(b)(2) is $70x.

(c) Facts: Taxable year 2025. During its taxable year ending December 31, 2025, X claims its

remaining 2018 pre-CAMT NOL carryforward as an

eligible NOL deduction under § 172(a) ($70x).

(d) Facts: AFSI adjustment for taxable years

2024 and 2025. For the taxable years ending

December 31, 2024, and December 31, 2025, X

makes the AFSI adjustment provided in section

7.03(1) of this notice with respect to its 2018

pre-CAMT NOL, and X attaches the statement

described in section 7.03(3)(a) of this notice to its

Federal income tax returns for both taxable years.

X chose to use the Proportional Approach to determine its historical depreciation portion of the eligible NOL deductions that are attributable to the

2018 pre-CAMT NOL.

(e) Analysis: Determination of applicable depreciation percentage for 2018 pre-CAMT NOL. Under

section 7.03(4) of this notice, X’s applicable depreciation percentage for the 2018 pre-CAMT NOL is

10%, computed by dividing $50x, X’s historical tax

depreciation for the 2018 pre-CAMT NOL year, by

October 27, 2025

$500x, the sum of X’s total cost of goods sold taken

into account in computing gross income ($200x) and

X’s total deductions allowed in computing taxable

income for regular tax purposes ($300x) for the 2018

pre-CAMT NOL year ($50x / ($200x + $300x) =

10%).

(f) Analysis: AFSI adjustment for taxable year

ending December 31, 2024. Under the Proportional

Approach described in section 7.03(4) of this notice,

the historical depreciation portion of the eligible

NOL deduction for X’s taxable year ending December 31, 2024, is $3x, determined by multiplying the

amount of the eligible NOL deduction for 2024,

$30x, by the applicable depreciation percentage for

the 2018 pre-CAMT NOL, 10%. Accordingly, X

reduces AFSI for its taxable year ending December

31, 2024, under section 7.03(1) of this notice by $3x

($30x x 10%).

(g) Analysis: AFSI adjustment for taxable year

ending December 31, 2025. Since X chose to make

the AFSI adjustment under section 7.03(1) of this

notice with respect to the 2018 pre-CAMT NOL for

the taxable year ending December 31, 2024, X must

continue making the AFSI adjustment for the eligible

NOL deduction attributable to the 2018 pre-CAMT

NOL for its taxable year ending December 31, 2025.

Further, X must continue using the Proportional

Approach for determining the historical depreciation

portion of eligible NOL deductions attributable to

the 2018 pre-CAMT NOL. Thus, for its taxable year

ending December 31, 2025, X’s historical depreciation portion of the eligible NOL deduction attributable to the 2018 pre-CAMT NOL is $7x, calculated

by multiplying the eligible NOL deduction for its

taxable year ending December 31, 2025, $70x, by

the applicable depreciation percentage for the 2018

pre-CAMT NOL, 10%. Accordingly, X reduces

AFSI for its taxable year ending December 31, 2025,

under section 7.03(1) of this notice by $7x ($70x x

10%).

(2) Example 2. Lesser-of Approach.

(a) Facts: Taxable year 2019. For regular tax

purposes, X had a pre-CAMT NOL of $30x (2019

pre-CAMT NOL) and $60x of historical tax depreciation for its taxable year ending December 31, 2019.

X carried its 2019 pre-CAMT NOL forward under

§ 172(b)(2).

(b) Facts: Taxable year 2025. X’s taxable year

ending December 31, 2025, is the first taxable year

in which X is eligible to claim an NOL deduction under § 172(a) with respect to the 2019 preCAMT NOL. X claims an eligible NOL deduction

for its taxable year ending December 31, 2025,

with respect to its 2019 pre-CAMT NOL of $5x.

As of December 31, 2025, X has an unused 2019

pre-CAMT NOL of $25x, which is carried forward

under § 172(b).

(c) Facts: Taxable year 2026. During its taxable year ending December 31, 2026, X claims the

remaining amount of its 2019 pre-CAMT NOL

carryforward as an eligible NOL deduction under

§ 172(a) ($25x).

(d) Facts: AFSI adjustment for taxable years

2025 and 2026. For the taxable years ending

December 31, 2025, and December 31, 2026, X

makes the AFSI adjustment provided in section

7.03(1) of this notice with respect to its 2019

pre-CAMT NOL, and X attaches the statement

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described in section 7.03(3)(a) of this notice to its

Federal income tax returns for both taxable years.

X chooses to use the Lesser-of Approach to determine its historical depreciation portion of the eligible NOL deductions that are attributable to the

2019 pre-CAMT NOL.

(e) Analysis: Determination of original depreciation carryforward. Under section 7.03(5)(b)(i) of

this notice, X determines the amount of the original

depreciation carryforward for the 2019 pre-CAMT

NOL of $30x, which is the lesser of X’s historical

tax depreciation for the 2019 pre-CAMT NOL year,

$60x, or the amount of the pre-CAMT NOL for the

2019 pre-CAMT NOL year, $30x.

(f) Analysis: Determination of remaining depreciation carryforward as of the beginning of the

taxable year ending December 31, 2025. As of the

beginning of X’s taxable year ending December 31,

2025, the amount of remaining depreciation carryforward of the 2019 pre-CAMT NOL is $30x, computed by subtracting from the amount of the original

depreciation carryforward, $30x, the cumulative

amounts that reduced AFSI under section 7.03(1) of

this notice with respect to the 2019 pre-CAMT NOL

for taxable years preceding 2025, $0x.

(g) Analysis: AFSI adjustment for taxable year

ending December 31, 2025. Under the Lesser-of

Approach described in section 7.03(5) of this notice,

X’s historical depreciation portion of its eligible

NOL deduction attributable to its 2019 pre-CAMT

NOL is $5x, determined as the lesser of the remaining depreciation carryforward attributable to the

2019 pre-CAMT NOL as of the beginning of X’s

taxable year ending December 31, 2025, $30x, or the

amount of the eligible NOL deduction attributable

to the 2019 pre-CAMT NOL, $5x. Accordingly, X

reduces its AFSI under section 7.03(1) of this notice

for its taxable year ending December 31, 2025, by

$5x.

(h) Analysis: AFSI adjustment for taxable year

ending December 31, 2026. Since X chose to make

the AFSI adjustment under section 7.03(1) of this

notice with respect to the 2019 pre-CAMT NOL

for the taxable year ending December 31, 2025,

X must continue making the AFSI adjustment for

the eligible NOL deduction attributable to the 2019

pre-CAMT NOL for its taxable year ending December 31, 2026. Further, X must continue using the

Lesser-of Approach for determining the historical

depreciation portion of eligible NOL deductions

attributable to the 2019 pre-CAMT NOL. Thus, as

of the beginning of X’s taxable year ending December 31, 2026, X’s remaining depreciation carryforward under section 7.03(5) of this notice for the

2019 pre-CAMT NOL is $25x, computed as the

original depreciation carryforward, $30x, minus the

cumulative amounts that reduced AFSI under section 7.03(1) of this notice with respect to the 2019

pre-CAMT NOL for the taxable years preceding

X’s taxable year ending December 31, 2026, $5x.

Under section 7.03(5), X’s historical depreciation

portion of its eligible NOL deduction attributable

to its 2019 pre-CAMT NOL for its taxable year

ending December 31, 2026, is $25x, determined

as the lesser of the remaining depreciation carryforward for the 2019 pre-CAMT NOL as of the

beginning of the taxable year, $25x, or the amount

of the eligible NOL deduction for the taxable year

Bulletin No. 2025–44

ending ­December 31, 2026, attributable to the 2019

pre-CAMT NOL, $25x. Accordingly, X reduces its

AFSI under section 7.03(1) for its taxable year ending December 31, 2026, by $25x.

.06 Applicability date and reliance. It

is anticipated that the forthcoming proposed regulations will provide that rules

consistent with the guidance described

in this section 7 will apply for taxable

years beginning on or after the date the

final regulations addressing the adjustment to AFSI for pre-2020 embedded

depreciation deductions are published in

the Federal Register. For taxable years

beginning before the date such forthcoming proposed regulations are published in the Federal Register, taxpayers

may rely on the guidance in this section

7. A CAMT entity’s reliance on any of

the guidance in this section 7 for a taxable year will not cause the CAMT entity

to become subject to, or to violate, the

proposed reliance rules, including the

consistency requirements, provided in

section 3.02(1) of this notice for such

taxable year.

SECTION 8. AFSI ADJUSTMENTS

FOR NONLIFE INSURANCE

COMPANY NOL CARRYBACKS

.01 Purpose. In response to comments

received on the CAMT Proposed Regulations, the Treasury Department and the

IRS anticipate that the forthcoming proposed regulations will include proposed

regulations under § 56A(c)(15) and (e)

consistent with the guidance provided in

this section 8 to allow an eligible CAMT

entity to make certain adjustments to

AFSI for nonlife insurance company

NOL carrybacks. In addition, the Treasury Department and the IRS anticipate

that the forthcoming proposed regulations will propose a modification to proposed § 1.59-2(c) to provide that, for

purposes of applying the average annual

AFSI test in § 59(k)(1)(B) or proposed

§ 1.59-2(c), AFSI is determined without

regard to the AFSI adjustments provided

in this section 8.

.02 Definitions. For purposes of this

section 8:

(1) Eligible CAMT entity. The term eligible CAMT entity means a CAMT entity

that is a nonlife insurance company.

(2) Eligible return. The term eligible

return means either an amended return for

Bulletin No. 2025–44

an NOL carryback year or an application

for tentative carryback adjustment that

includes the carryback of a nonlife insurance company NOL to an NOL carryback

year.

(3) Financial statement net operating

loss (FSNOL). The term financial statement net operating loss has the meaning

provided in proposed § 1.56A-23(b).

(4) Loss year. The term loss year

means the taxable year in which an NOL

arose for regular tax purposes.

(5) NOL carryback year. The term

NOL carryback year means a taxable year

to which a nonlife insurance company

NOL is carried under § 172(b)(1)(C)(i).

(6) Nonlife insurance company. The

term nonlife insurance company means an

insurance company, as defined in § 816(a),

other than a life insurance company.

(7) Nonlife insurance company NOL.

The term nonlife insurance company NOL

means a net operating loss of a nonlife

insurance company subject to § 172(b)(1)

(C) for regular tax purposes.

.03 AFSI adjustments for nonlife insurance companies.

(1) AFSI adjustment for an NOL carryback year. If an eligible CAMT entity

takes an NOL deduction for regular tax

purposes on an eligible return for an NOL

carryback year, the AFSI for such taxable

year is reduced by an amount equal to the

NOL deduction taken for regular tax purposes for such taxable year (NOL carryback amount).

(2) AFSI adjustment for taxable years

succeeding a loss year.

(a) In general. If an eligible CAMT

entity reduces AFSI by an NOL carryback

amount for an NOL carryback year under

section 8.03(1) of this notice, that CAMT

entity has a corresponding increase to

AFSI in one or more later taxable years

under section 8.03(2)(b) of this notice

equal to the absolute value of the reduction to AFSI for the NOL carryback year

under section 8.03(1) of this notice (NOL

inclusion). If a nonlife insurance company

NOL results in an NOL deduction for

more than one NOL carryback year, the

NOL inclusions resulting from those NOL

carryback amounts must be combined and

treated as a single NOL inclusion for purposes of section 8.03(2)(b) of this notice.

(b) Timing and amount of NOL inclusion.

641

(i) In general. The entire amount of

an NOL inclusion is carried to the first

taxable year succeeding the loss year of

the nonlife insurance company NOL, the

carryback of which gave rise to the NOL

inclusion. For such taxable year and any

relevant subsequent taxable year, AFSI is

increased by the lesser of—

(A) The remaining NOL inclusion as of

the beginning of the taxable year; or

(B) The absolute value of any reduction to AFSI taken into account for the

taxable year under § 56A(d) or proposed

§ 1.56A-23(c), reduced (but not below

zero) by the amount of any other increase

to AFSI for an NOL inclusion for the taxable year that is attributable to an earlier

loss year.

(ii) Remaining NOL inclusion. For

purposes of section 8.03(2)(b)(i)(A) of

this notice, the remaining NOL inclusion

means the amount of the NOL inclusion

determined under section 8.03(2)(a) of

this notice, reduced (but not below zero)

by any amount of that NOL inclusion

taken into account as an increase to AFSI

under section 8.03(2)(b)(i) of this notice

in a prior taxable year.

.04 Determining applicable corporation status. For purposes of applying the

average annual AFSI test in § 59(k)(1)(B)

or proposed § 1.59-2(c) for any taxable

year, AFSI is determined without regard

to the AFSI adjustments provided in section 8.03 of this notice.

.05 Applicability date and reliance. It

is anticipated that the forthcoming proposed regulations will provide that rules

consistent with the guidance described

in section 8 of this notice will apply

for taxable years beginning on or after

the date the final regulations addressing AFSI adjustments related to nonlife

insurance company NOL carrybacks

are published in the Federal Register.

For taxable years beginning before the

date those forthcoming regulations are

published in the Federal Register, taxpayers may rely on the guidance in this

section 8. A taxpayer’s reliance on the

guidance in this section 8 for a taxable

year will not cause the corporation to

become subject to, or to violate, the

proposed reliance rules, including the

consistency requirements, provided in

section 3.02(1) of this notice for that

taxable year.

October 27, 2025

SECTION 9. AFSI ADJUSTMENT

FOR ELIGIBLE GOODWILL

AMORTIZATION

.01 Purpose. In response to comments

received on the CAMT Proposed Regulations, the Treasury Department and the

IRS anticipate that the forthcoming proposed regulations will include proposed

regulations under § 56A(c)(15) and (e)

consistent with the guidance provided in

this section 9 to allow a CAMT entity to

adjust AFSI for eligible goodwill that is

amortizable under § 197 and acquired in

a transaction that was announced to the

public on or before October 28, 2021 (the

date the House of Representatives Committee on Rules released the first version

of the legislative text of H.R. 5376 that

contained the CAMT), or if such transaction was not announced to the public,

closed and completed on or before October 28, 2021. In addition, the Treasury

Department and the IRS anticipate that

the forthcoming proposed regulations

will propose modifications to proposed

§ 1.59-2 to provide that, for purposes of

applying the average annual AFSI test in

§ 59(k)(1)(B) or proposed § 1.59-2(c),

AFSI is determined without regard to the

AFSI adjustments provided in sections

9.04 and 9.05 of this notice.

.02 Definitions. For purposes of this

section 9:

(1) Covered book goodwill amortization expense. The term covered book

goodwill amortization expense means any

of the following items that are taken into

account in FSI with respect to eligible

goodwill-(a) Amortization expense;

(b) Other recovery of AFS basis

(including from an impairment loss) that

occurs prior to the taxable year in which

the disposition of the eligible goodwill

occurs for regular tax purposes; or

(c) Impairment loss reversal.

(2) Covered book goodwill expense.

The term covered book goodwill expense

means an amount (if any), other than covered book goodwill amortization expense,

that‑‑

(a) Reduces FSI; and

(b) Is reflected in the basis for depreciation, as defined in §§ 1.167(g)-1 and

1.197-2(f)(1)(ii) (determined without

regard to any basis adjustments described

October 27, 2025

in § 1016(a)(2) and (3)), of eligible goodwill for regular tax purposes.

(3) Deductible goodwill tax amortization. The term deductible goodwill tax

amortization means eligible goodwill tax

amortization, as defined in section 9.02(5)

of this notice, that is allowed as a deduction in computing taxable income.

(4) Eligible goodwill. The term eligible

goodwill means goodwill that meets the

requirements of section 9.03 of this notice.

(5) Eligible goodwill tax amortization.

The term eligible goodwill tax amortization means amortization deductions

allowed under § 197 with respect to eligible goodwill.

.03 Eligible goodwill.

(1) In general. For purposes of section

9 of this notice, eligible goodwill is goodwill that is-(a) An amortizable section 197 intangible under § 197(c)(1) and (d)(1)(A); and

(b) Acquired in a transaction that was

either (i) announced to the public on or

before October 28, 2021, or (ii) if such

transaction was not announced to the public, closed and completed on or before

October 28, 2021.

(2) Eligible goodwill that is not depreciable under § 197 for regular tax purposes. Eligible goodwill does not include

goodwill that is not subject to amortization under § 197 for regular tax purposes.

.04 AFSI adjustment for eligible goodwill.

(1) In general. The AFSI of a CAMT

entity for a taxable year may be adjusted

as follows-(a) Reduced by deductible goodwill tax

amortization with respect to eligible goodwill, but only to the extent of the amount

allowed as a deduction in computing taxable income for the taxable year; and

(b) Adjusted to disregard covered book

goodwill amortization expense and covered book goodwill expense, and amounts

described in section 9.05(6) of this notice

with respect to eligible goodwill, including eligible goodwill placed in service

for regular tax purposes in a taxable year

subsequent to the taxable year the eligible

goodwill is treated as placed in service for

AFS purposes

(2) Eligible goodwill held by a partnership. If eligible goodwill is held by

a partnership, rules similar to proposed

§ 1.56A-16(d)(2) apply. However, if

642

the CAMT entity otherwise applies any

proposed modifications to the proposed

CAMT regulations in Notice 2025-28, the

CAMT entity must apply any applicable

modifications in determining the effect

of the partnership’s eligible goodwill on

AFSI for the taxable year.

(3) Consistency requirement. If a

CAMT entity chooses to make the adjustment to AFSI provided in this section

9.04 for a taxable year and has eligible

goodwill attributable to more than one

transaction described in section 9.03(1)

(b) of this notice as of the beginning of

such taxable year, the CAMT entity must

make the AFSI adjustment provided in

this section 9.04 with respect to all such

eligible goodwill. In addition, once a

CAMT entity chooses to make the AFSI

adjustment provided in this section 9.04

for a taxable year, such CAMT entity must

continue making such adjustment for all

subsequent taxable years until all such eligible goodwill is disposed of for regular

tax purposes or such time as prescribed by

the Treasury Department and IRS in regulations or other guidance.

.05 AFSI adjustment upon disposition

of eligible goodwill.

(1) In general. In the case of a CAMT

entity that makes the adjustment provided

in section 9.04 of this notice to determine

AFSI for any taxable year, except as otherwise provided in section 9.05(7) of this

notice, if such CAMT entity disposes of

eligible goodwill for regular tax purposes,

the CAMT entity must adjust AFSI for

the taxable year in which the disposition

occurs to redetermine any gain or loss

taken into account in the CAMT entity’s

FSI with respect to the disposition for the

taxable year (including a gain or loss of

zero) by reference to the CAMT basis (in

lieu of the AFS basis) of the eligible goodwill as of the date of the disposition (disposition date), as determined under section 9.05(2) of this notice. To the extent

the CAMT basis of the eligible goodwill is

negative (for example, because of differences between regular tax basis and AFS

basis), this negative amount is required to

be recognized as AFSI gain upon disposition of the eligible goodwill.

(2) Adjustments to the AFS basis of eligible goodwill. For purposes of applying

section 9.05(1) of this notice, the CAMT

basis of the eligible goodwill as of the dis-

Bulletin No. 2025–44

position date is the AFS basis of the eligible goodwill as of that date-(a) Decreased by the full amount of

eligible goodwill tax amortization with

respect to such goodwill as of the disposition date (regardless of whether any

amount of eligible goodwill tax amortization was capitalized for regular tax purposes and not yet taken into account as a

reduction to AFSI through an adjustment

described in section 9.04(1)(a) of this

notice as of the disposition date);

(b) Increased by the amount of any

covered book goodwill expense with

respect to such property;

(c) Increased by the amount of any covered book goodwill amortization expense,

if any, that reduced the AFS basis of such

property as of the disposition date;

(d) Decreased by any reduction to the

CAMT basis of such property under proposed § 1.56A-21, taking into account

the proposed modifications to proposed

§ 1.56A-21 contained in Notice 2025-46

if the CAMT entity otherwise applies such

modifications in determining AFSI for the

taxable year; and

(e) Increased or decreased, as appropriate, by the amount of any adjustments to

AFS basis that are disregarded for AFSI

and CAMT basis purposes under the

CAMT Proposed Regulations with respect

to such goodwill, taking into account any

proposed modifications to the CAMT Proposed Regulations contained in Notice

2025-46 if the CAMT entity otherwise

applies such modifications in determining

AFSI for the taxable year.

(3) Special rules regarding adjustments

to the AFS basis of eligible goodwill. For

purposes of determining the CAMT basis

of the eligible goodwill under section

9.05(2) of this notice, rules similar to proposed § 1.56A-16(e)(2)(ii) apply.

(4) Disposition of eligible goodwill by

a partnership. If a partnership disposes

of eligible goodwill, rules similar to proposed § 1.56A-16(e)(3) apply. However,

if the CAMT entity otherwise applies any

proposed modifications to the proposed

CAMT regulations in Notice 2025-28, the

CAMT entity must apply any applicable

modifications in determining the effect of

the disposition on AFSI for the taxable

year.

(5) Treatment of amounts recognized

in FSI upon the disposition of eligible

Bulletin No. 2025–44

goodwill. Except as otherwise provided

in the CAMT Proposed Regulations (or

as otherwise provided in Notice 2025-28

or Notice 2025-46 if the CAMT entity

applies a proposed modification to the

CAMT Proposed Regulations contained in

such notices), if a CAMT entity disposes

of eligible goodwill for regular tax purposes and recognizes gain or loss from the

disposition in its FSI, the gain or loss (as

redetermined under section 9.05(1) of this

notice) is recognized for AFSI purposes in

the taxable year of disposition, regardless

of whether any gain or loss with respect

to the disposition is realized, recognized,

deferred, or otherwise taken into account

for regular tax purposes.

(6) Subsequent AFS dispositions. If eligible goodwill is disposed of for regular

tax purposes before it is treated as disposed of for AFS purposes, any AFS basis

recovery with respect to such eligible

goodwill that is reflected in FSI following

the date such eligible goodwill is disposed

of for regular tax purposes is disregarded

in determining AFSI.

(7) Intercompany transactions. If a

member of a tax consolidated group disposes of eligible goodwill for regular tax

purposes in an intercompany transaction,

rules similar to proposed § 1.56A-16(e)

(6) apply, taking into account any applicable proposed modifications to proposed

§ 1.1502-56A contained in Notice 202546 if the member otherwise applies such

modifications in determining AFSI for the

taxable year.

.06 Determining applicable corporation status. For purposes of applying the

average annual AFSI test in § 59(k)(1)(B)

or proposed § 1.59-2(c), AFSI is determined without regard to the AFSI adjustments provided in sections 9.04 and 9.05

of this notice.

.07 Applicability date and reliance. It is

anticipated that the forthcoming proposed

regulations will provide that rules consistent with the guidance described in section

9 of this notice will apply for taxable years

beginning on or after the date of the final

regulations addressing the adjustment to

AFSI for eligible goodwill are published

in the Federal Register. For taxable years

beginning before the date such forthcoming proposed regulations are published in

the Federal Register, taxpayers may rely

on the guidance in this section 9. A CAMT

643

entity’s reliance on any of the guidance in

this section 9 for a taxable year will not

cause the CAMT entity to become subject to, or to violate, the proposed reliance

rules, including the consistency requirements, provided in section 3.02(1) of this

notice for such taxable year.

SECTION 10. AFSI ADJUSTMENTS

FOR ACCOUNTING PRINCIPLE

CHANGES AND RESTATEMENTS OF

A PRIOR YEAR AFS

.01 Purpose. In response to comments

received on the CAMT Proposed Regulations, the Treasury Department and the

IRS anticipate that the forthcoming proposed regulations will include modifications to proposed § 1.56A-17(c)(2) and (d)

(1) consistent with the guidance provided

in this section 10, which provides a simplified approach to determine the accounting principle change amount and the AFSI

restatement adjustment.

.02 Accounting principle change

amount.

(1) In general. (a) Except as provided in

section 10.02(2) of this notice, if a CAMT

entity implements a change in accounting

principle in its AFS for a taxable year, the

accounting principle change amount is

equal to the amount of the net cumulative

adjustment to the CAMT entity’s beginning retained earnings for the taxable year

that results from the change in accounting

principle, adjusted to-(i) Disregard any portion of the cumulative retained earnings adjustment attributable to taxable years ending on or before

December 31, 2019; and

(ii) Reflect the AFSI adjustments provided in § 56A, the CAMT Proposed Regulations, or other guidance to the extent

the cumulative retained earnings adjustment is attributable to FSI items to which

those AFSI adjustments apply.

(b) Except as provided in section

10.02(2) of this notice, if a CAMT entity

is treated as implementing a change in

accounting principle under proposed

§ 1.56A-17(c)(5) for a taxable year, the

accounting principle change amount

is equal to the difference between the

CAMT entity’s beginning retained earnings reflected in the CAMT entity’s current AFS as of the beginning of the taxable year and the CAMT entity’s ending

October 27, 2025

retained earnings reflected in the CAMT

entity’s former AFS as of the end of the

immediately preceding taxable year

(retained earnings difference), adjusted

to-(i) Disregard any portion of the cumulative retained earnings adjustment attributable to taxable years ending on or before

December 31, 2019; and

(ii) Reflect the AFSI adjustments provided in § 56A, the CAMT Proposed Regulations, or other guidance to the extent

the cumulative retained earnings adjustment is attributable to FSI items to which

those AFSI adjustments apply.

(2) Simplified accounting principle

change amount. A CAMT entity that

implements a change in accounting

principle, or is treated as implementing

a change in accounting principle under

proposed § 1.56A-17(c)(5), for a taxable

year may use the simplified accounting principle change amount described

in this section 10.02(2) in place of the

accounting principle change amount.

The simplified accounting principle

change amount is the accounting principle change amount described in section 10.02(1)(a) or (b) of this notice, as

applicable, determined without regard to

section 10.02(1)(a)(i) or 10.02(1)(b)(i) of

this notice, respectively.

.03 AFSI restatement adjustment.

(1) In general. Except as provided in

section 10.03(2) of this notice, if a CAMT

entity issues a restated AFS and, as a

result, the CAMT entity’s FSI for a taxable year ending after December 31, 2019,

is restated on or after the date the CAMT

entity filed its original Federal income tax

return for such taxable year (restatement

year), the CAMT entity accounts for the

restatement by adjusting its AFSI for the

taxable year in which the restated AFS

is issued (AFSI restatement adjustment).

The AFSI restatement adjustment equals

the cumulative effect of the restatement on

the CAMT entity’s FSI for the restatement

year, including any restatement of the

CAMT entity’s beginning retained earnings for the restatement year, adjusted to-(a) Disregard any portion of the

retained earnings restatement attributable to taxable years ending on or before

December 31, 2019; and

(b) Reflect the AFSI adjustments provided in § 56A, the CAMT Proposed Reg-

October 27, 2025

ulations, or other guidance to the extent

the AFSI restatement adjustment relates

to one or more FSI items to which AFSI

adjustments provided in § 56A, the CAMT

Proposed Regulations, or other guidance

apply. For example, to the extent the AFSI

restatement adjustment includes a Federal

income tax component, § 56A(c)(5) and

proposed § 1.56A-8 apply to disregard

that component.

(2) Simplified AFSI restatement adjustment. A CAMT entity required to make

an AFSI restatement adjustment for a

taxable year, pursuant to section 10.03(1)

of this notice, may use the simplified

restatement adjustment described in this

section 10.03(2) in place of the AFSI

restatement adjustment. The simplified

AFSI restatement adjustment is the AFSI

restatement adjustment described in section 10.03(1) of this notice, determined

without regard to section 10.03(1)(a) of

this notice.

.04 Applicability date and reliance. It

is anticipated that the forthcoming proposed regulations will provide that rules

consistent with the guidance described

in section 10 of this notice will apply to

changes in accounting principle implemented in, and restated AFS issued in,

taxable years beginning on or after the

date the final regulations addressing AFSI

adjustments for accounting principle

change amounts and AFSI restatement

adjustments are published in the Federal Register. For changes in accounting

principle implemented in, and restated

AFS issued in, taxable years beginning

before the date such forthcoming proposed regulations are published in the

Federal Register, taxpayers may rely on

the guidance in this section 10. However,

regardless of when such forthcoming

proposed regulations are published in the

Federal Register, a taxpayer may rely on

the guidance provided in this section 10,

for accounting principle changes implemented in, and restated AFS issued in,

any taxable year beginning before January 1, 2026. A CAMT entity’s reliance on

any of the guidance in this section 10 for

a taxable year will not cause the CAMT

entity to become subject to, or to violate,

the proposed reliance rules, including

the consistency requirements, provided

in section 3.02(1) of this notice for such

taxable year.

644

SECTION 11. REQUEST FOR

COMMENTS

.01 Comments regarding guidance

provided in section 5 of this notice. The

Treasury Department and the IRS request

comments on the interim guidance set

forth in section 5 of this notice.

(1) Interim AFSI adjustments for

certain fair value items. The Treasury

Department and the IRS continue to study

whether the interim guidance described

in this section 5 creates unintended

results, including mismatches or distortions between AFSI and regular taxable

income, and request comments identifying those unintended results. Commenters are also encouraged to specify the

issues on which additional guidance is

needed for fair value items.

(2) Coordination with proposed

§ 1.56A-22. The Treasury Department

and the IRS request comments on how

the rules in proposed § 1.56A-22(c) and

proposed § 1.56A-22(d) and the guidance

described in section 5.02 through section

5.07 of this notice should be coordinated.

.02 Procedures for Submitting Comments.

(1) Deadline. Written comments should

be submitted by December 1, 2025. Consideration will also be given to any written comment submitted after December 1,

2025, although such comments may not

be considered in the development of the

forthcoming proposed regulations if such

consideration would delay the publication

of the forthcoming proposed regulations.

(2) Form and manner. The subject line

for the comments should include a reference to Notice 2025-49. All commenters

are strongly encouraged to submit comments electronically. Comments may be

submitted in one of two ways:

(a) electronically via the Federal

eRulemaking Portal at https://www.regulations.gov (type IRS-2025-0202 in the

search field on the https://www.regulations.gov homepage to find this notice and

submit comments); or

(b) by mail to: Internal Revenue Service, CC:PA:01:PR (Notice 2025-49),

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

Station, Washington, D.C., 20044.

(3) Publication of comments. The Treasury Department and the IRS will publish

for public availability any comment sub-

Bulletin No. 2025–44

mitted electronically and on paper to the

IRS’s public docket on https://www.regulations.gov.

SECTION 12. PAPERWORK

REDUCTION ACT

The Paperwork Reduction Act of 1995

(44 U.S.C. §§ 3501-3520) (PRA) required

that a Federal agency obtain the approval

of the Office of Management and Budget (OMB) before collecting information

from the public, whether such collection

of information is mandatory, voluntary, or

required to obtain or retain a benefit. An

agency may not conduct or sponsor, and a

person is not required to respond to, a collection of information unless the collection of information displays a valid OMB

control number.

The collections of information in this

notice are in sections 4.04(3), 5.03(2) and

(3), 5.04(2) and (3), and 7.03(3)(a) of this

notice.

Section 4.04(3) of this notice requires

a CAMT entity to file a statement with its

Federal income tax return if it chooses to

use a reasonable method to determine regulatory asset book inventoriable depreciation under section 4.04(2) of this notice

to make the AFSI adjustment described

in section 4 of this notice. The information requested in section 4.04(3) of this

notice is required to obtain the benefit of

making the AFSI adjustment described in

section 4 of this notice. This information

will be used by the IRS to confirm compliance with the guidance in section 4 of

this notice. The likely respondents are corporations.

Section 5.03(2) and 5.04(2) of this

notice requires a CAMT entity to file a

statement with its Federal income tax

return if it chooses to apply the FVI

exclusion option or hedge coordination

Bulletin No. 2025–44

option. The information requested in section 5.03(2) and 5.04(2) of this notice is

required to obtain the benefit of using the

FVI exclusion option or hedge coordination option. This information will be used

by the IRS to confirm compliance with the

FVI exclusion option or hedge coordination option. The likely respondents are

corporations.

Section 5.03(3) and 5.04(3) of this

notice requires a CAMT entity to file a

statement with its Federal income tax

return if it chooses to no longer apply the

FVI exclusion option or hedge coordination option. The information requested in

section 5.03(3) and 5.04(3) of this notice

is required to no longer obtain the benefit of using the FVI exclusion option or

hedge coordination option. This information will be used by the IRS to confirm

whether the CAMT entity ceases to apply

the FVI exclusion option or hedge coordination option. The likely respondents are

corporations.

Section 7.03(3)(a) of this notice requires

a CAMT entity to file a statement with its

Federal income tax return if it chooses to

make the AFSI adjustment described in

section 7.03 of this notice. The information requested in section 7.03(3)(a) of this

notice is required to obtain the benefit of

making the AFSI adjustment described in

section 7.03 of this notice. This information will be used by the IRS to confirm

compliance with the guidance in section

7 of this notice. The likely respondents are

corporations.

The reporting requirements in this

notice will be included within OMB control number 1545-0123 in accordance

with the PRA procedures under 5 CFR

§ 1320.10. The recordkeeping requirements are considered general tax records

under § 1.6001-1(e). For PRA purposes,

general tax records are already approved

645

by OMB under 1545-0123 for business

filers.

Books or records relating to a collection of information must be retained as

long as their contents may become material in the administration of any internal

revenue law. Generally, tax returns and

tax return information are confidential, as

required by § 6103.

SECTION 13. DRAFTING AND

CONTACT INFORMATION

The principal authors of this notice

are Samuel Terhaar of the Office of the

Associate Chief Counsel (Income Tax &

Accounting); Justin Karlin of the Office

of Associate Chief Counsel (Financial

Institutions & Products); and Timothy

Blauch of the Associate Chief Counsel

(International). Other personnel from the

Treasury Department and the IRS participated in its development. For further

information regarding sections 4, 7, and

9 of this notice, contact the Office of the

Associate Chief Counsel (Income Tax

& Accounting), Branch 7, at (202) 3177005 (not a toll-free number). For further

information regarding section 5 of this

notice, contact Justin Karlin at (202) 3176842 (not a toll-free number). For further

information regarding section 6 of this

notice, please contact Timothy Blauch at

(202) 317-3485 (not a toll-free number).

For further information regarding section

10 of this notice, contact James Yu at

(202) 317-4718. For further information

regarding sections 3 and 8 and all other

aspects of this notice, contact Madeline

Padner at (202) 317-7006 (not a toll-free

number).

October 27, 2025

NOTE. This revenue procedure will be reproduced as the next revision of IRS Publication 1167, General Rules and Specifications for Substitute Forms and Schedules.

Rev. Proc. 2025-27

TABLE OF CONTENTS

Part 1 – INTRODUCTION TO SUBSTITUTE FORMS

Section 1.1 – Overview of Revenue Procedure 2025-27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 647

Section 1.2 – IRS Contacts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 648

Section 1.3 – What’s New. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649

Section 1.4 – Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649

Section 1.5 – Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651

Part 2 – GENERAL GUIDELINES FOR SUBMISSIONS AND APPROVALS

Section 2.1 – General Specifications for Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 652

Section 2.2 – Highlights of Permitted Changes and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 654

Section 2.3 – Vouchers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 654

Section 2.4 – Restrictions on Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 657

Section 2.5 – Guidelines for Obtaining IRS Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 657

Section 2.6 – Office of Management and Budget (OMB) Requirements for All Substitute Forms. . . . . . . . . . . . . . . . . . . . . 660

Part 3 – PHYSICAL ASPECTS AND REQUIREMENTS

Section 3.1 – General Guidelines for Substitute Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 661

Section 3.2 – Paper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663

Section 3.3 – Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 664

Section 3.4 – Margins. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 666

Section 3.5 – Miscellaneous Information for Substitute Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 666

Part 4 – ADDITIONAL RESOURCES

Section 4.1 – Guidance From Other Revenue Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 667

Section 4.2 – Electronic Tax Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 667

Part 5 – REQUIREMENTS FOR SPECIFIC TAX RETURNS

Section 5.1 – Tax Returns (Forms 1040, 1040-SR, 1120, etc.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .668

Section 5.2 – Changes Permitted to Graphics (Form 1040 or 1040-SR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 669

Part 6 – FORMAT AND CONTENT OF SUBSTITUTE RETURNS

Section 6.1 – Acceptable Formats for Substitute Forms and Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 671

Section 6.2 – Additional Instructions for All Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 672

Part 7 – MISCELLANEOUS FORMS AND PROGRAMS

Section 7.1 – Specifications for Substitute Schedules K-1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674

Section 7.2 – Guidelines for Substitute Forms 8655. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 680

Section 7.3 – Guidelines for Substitute Image Character Recognition (ICR) Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 681

Part 8 – ADDITIONAL INFORMATION

Section 8.1 – Forms for Electronically Filed Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 682

Section 8.2 – Effect on Other Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 682

Section 8.3 – Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 683

October 27, 2025

646

Bulletin No. 2025–44

Part 1

Introduction to Substitute Forms

Section 1.1 – Overview of Revenue Procedure 2025-27

1.1.1

Purpose

The purpose of this revenue procedure is to provide guidelines and general requirements for the

development, printing, and approval of the 2025 substitute tax forms. Approval will be based on

these guidelines. After review and approval, submitted forms will be accepted as substitutes for

official IRS forms.

1.1.2

Unique Forms

Certain unique specialized forms require the use of other publications that supplement this

publication. See Part 4.

1.1.3

Scope

The IRS accepts quality substitute tax forms that are consistent with the official forms and have no

adverse impact on processing. The IRS Substitute Forms Program (the Program) administers the

formal acceptance and processing of these forms nationwide. While this Program deals with paper

documents, it also reviews for approval other processing and filing forms used in electronic filing.

Only those substitute forms that fully comply with these requirements are acceptable. This revenue

procedure is updated as required to reflect pertinent tax year form changes and to meet processing

and/or legislative requirements.

1.1.4

Forms Covered by This

Revenue Procedure

1.1.5

Forms Not Covered by This

Revenue Procedure

Bulletin No. 2025–44

The following types of forms are covered by this revenue procedure.

•

IRS tax forms and their related schedules.

•

Worksheets as they appear in the instructions.

•

Applications for permission to file returns electronically and forms used as required

documentation for electronically filed returns.

•

Powers of Attorney.

•

Over-the-counter estimated tax payment vouchers.

•

Forms and schedules relating to partnerships, exempt organizations, and employee plans.

The following types of forms are not covered by this revenue procedure. Refer to the publication

for questions.

•

W-2 and W-3. See Pub. 1141, General Rules and Specifications for Substitute Forms W-2 and

W-3.

•

W-2c and W-3c. See Pub. 1223, General Rules and Specifications for Substitute Forms W-2c

and W-3c.

647

October 27, 2025

1.1.6

Other Information Not

Covered by This Revenue

Procedure

•

941 and attached schedules. See Pub. 4436, General Rules and Specifications for Substitute

Form 941, Schedule B (Form 941), Schedule D (Form 941), Schedule R (Form 941), and

Form 8974.

•

1096, 1097-BTC, 1098 series, 1099 series, 3921, 3922, 5498 series, W-2G, and 1042-S. See

Pub. 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498,

and Certain Other Information Returns.

•

1095-A, 1094-B, 1095-B, 1094-C, and 1095-C. See Pub. 5223, General Rules and

Specifications for Affordable Care Act Substitute Forms 1095-A, 1094-B, 1095-B, 1094-C,

and 1095-C.

•

8027. See Pub. 1239, Specifications for Electronic Filing of Form 8027, Employer’s Annual

Information Return of Tip Income and Allocated Tips.

•

Forms 1040-ES (OCR) and 1041-ES (OCR), which may not be reproduced.

•

Form 5500 series (for more information on these forms, go to the Department of Labor

website at https://www.efast.dol.gov).

•

Forms used internally by the IRS.

•

State tax forms.

•

Forms developed outside the IRS.

The following information is not covered by this revenue procedure.

•

Requests for information or documentation initiated by the IRS.

•

General Instructions and Specific Instructions (these are not reviewed by the Program).

Section 1.2 – IRS Contacts

1.2.1

Where To Send Substitute

Forms

Send your substitute forms for approval to the following offices. Do not send forms with taxpayer

data.

Form

5500

Software developer vouchers

(see Sections 2.3.7–2.3.9)

ACA Forms 1094-B, 1095-B, 1094-C, and

1095-C (for more information, see Pub.

5223), and Schedule K-1 forms must be

emailed for scannability testing.

October 27, 2025

648

Office and Address

Check EFAST2 information at the Department

of Labor website at https://www.efast.dol.gov.

Internal Revenue Service

Attn: Jason Lane

3211 S. Northpointe Dr.

Santa Fe Bldg. Rm 3007

Fresno, CA 93725

Jason.L.Lane@irs.gov

mailto:scrips@irs.gov

Bulletin No. 2025–44

Form

Schedule K-1 2-D bar-coded forms

All others covered by this publication

(see Section 1.1.4)

Office and Address

For mailing addresses for sending

Schedule K-1

2-D bar-coded forms for testing, see

Section 7.1.6.

Internal Revenue Service

Attn: Substitute Forms Program

SE:W:CAR:MP:P:TP:TP

ATSC

4800 Buford Highway

Mail Stop: 061-N

Chamblee, GA 30341

substituteforms@irs.gov

Section 1.3 – What’s New

1.3.1

What’s New

The following changes have been made to this year’s revenue procedure.

•

.01 Editorial changes. We made editorial changes as needed and eliminated repetitive

information.

Section 1.4 – Definitions

1.4.1

Substitute Form

A tax form (or related schedule) that differs in any way from the official version and is intended to

replace the form that is printed and distributed by the IRS. This term also covers those approved

substitute forms exhibited in this revenue procedure.

1.4.2

Printed/Preprinted Form

A form produced using conventional printing processes or a printed form that has been reproduced

by photocopying or a similar process.

1.4.3

Preprinted Pin-Fed Form

A printed form that has marginal perforations for use with automated and high-speed printing

equipment.

1.4.4

Computer-Prepared

Substitute Form

A preprinted form in which the taxpayer’s tax entry information has been inserted by a computer,

a computer printer, or other computer-type equipment.

1.4.5

Computer- Generated

Substitute Tax Return or

Form

A tax return or form that is entirely designed and printed using a computer printer on plain white

paper. This return or form must conform to the physical layout of the corresponding IRS form,

although the typeface may differ. The text should match the text on the officially printed form as

closely as possible. Condensed text and abbreviations will be considered on a case-by-case basis.

Bulletin No. 2025–44

649

October 27, 2025

Exception. All jurats (perjury statements) must be reproduced verbatim.

1.4.6

Manually Prepared Form

A preprinted reproduced form in which the taxpayer’s tax entry information is entered by an

individual using a pen, a pencil, or other nonautomated equipment.

1.4.7

Graphics

Parts of a printed tax form that are not tax amount entries or required text. Examples of graphics

are line numbers, captions, shadings, special indicators, borders, rules, and strokes created by

typesetting, photographics, photocomposition, etc.

1.4.8

Acceptable Reproduced

Form

A legible photocopy or an exact replica of an original form.

1.4.9

Supporting Statement

(Supplemental Schedule)

A document providing detailed information to support a line entry on an official or approved

substitute form and filed with (attached to) a tax return.

Note. A supporting statement is not a tax form and does not take the place of an official form.

1.4.10

Specific Form Terms

The following specific terms are used throughout this revenue procedure in reference to all

substitute forms: format, sequence, line reference, item caption, and data entry field.

1.4.11

Format

The overall physical arrangement and general layout of a substitute form.

1.4.12

Sequence

Sequence is an integral part of the total format requirement. The substitute form should show the

same numeric and logical placement order of data as shown on the official form.

1.4.13

Line Reference

The line numbers, letters, or alphanumerics used to identify each captioned line on an official

form. These line references are printed to the immediate left of each caption and/or data entry

field.

1.4.14

Item Caption

The text on each line of a form that identifies the data required.

1.4.15

Data Entry Field

Designated areas for the entry of data such as dollar amounts, quantities, responses, and checkboxes.

1.4.16

Advance Draft

A draft version of a new or revised form may be posted to the IRS website (https://www.irs.gov/

draftforms) for information purposes. Substitute forms may be submitted based on these advance

October 27, 2025

650

Bulletin No. 2025–44

drafts, but any submitter who receives forms approval based on these early drafts is responsible

for monitoring and revising forms to reflect any revisions in the final forms provided by the IRS.

1.4.17

Approval

Generally, approval could be in writing or assumed after 20 business days from our receipt for

forms that have not been substantially changed by the IRS. This does not apply to newly created

or substantially revised IRS forms. However, the Program reserves the right to notify vendors of

any inaccuracies even after 20 business days have lapsed.

1.4.18

National Association

of Computerized Tax

Processors (NACTP)

The NACTP is a nonprofit association that represents tax processing software and hardware

developers, electronic filing processors, tax form publishers, tax processing service bureaus, and

payroll processors. The association promotes standards in tax processing to advance efficient and

effective tax filing. For more information, go to https://www.nactp.org.

Section 1.5 – Agreement

1.5.1

Important Stipulation of

This Revenue Procedure

1.5.2

Response Policy and

Stipulations

Any person or company who uses substitute forms and makes all or part of the changes specified

in this revenue procedure agrees to the following stipulations.

•

The IRS presumes that any required changes are made in accordance with these revenue

procedures and will not be disruptive to the processing of the tax return.

•

Should any of the changes be disruptive to the IRS’s processing of the tax return, the person or

company agrees to accept the determination of the IRS as to whether the form may continue

to be filed.

•

The person or company agrees to work with the IRS in correcting noted deficiencies.

Notification of deficiencies may be made by any combination of letter, email, or phone

contact and may include the request for the resubmission of unacceptable forms.

The Program will email confirmation of receipt of your forms submission, if possible. Even if

you do not receive emailed confirmation of receipt, you will receive an emailed “submission

receipt,” which will provide feedback on your submission. If the Program anticipates problems

in completing the review of your submission within the 20-business-day period, the Program will

send an interim email notifying you of the extended period for review.

Once the substitute forms have been approved by the Program, you can release them after the final

versions of the forms have been issued by the IRS. Before releasing the forms, you are responsible

for updating forms approved as draft and for making form changes requested.

The policy has the following stipulations.

Bulletin No. 2025–44

•

This 20-business-day policy applies to electronic submissions only. It does not apply to

substitute submissions mailed to the Program.

•

The policy applies to submissions of 15 (optimal) or fewer items and submissions containing

75 pages or less. Submissions of more than 15 items may require additional review time.

651

October 27, 2025

•

If you send a large number of submissions within a short period of time, processing may be

delayed.

•

Delays in processing could occur if the Program finds significant errors in your submission or

has experienced an increase in submissions. The Program will send you an interim email in

this case.

•

Any anticipated problems in processing your submission within the 20-business-day period

will generate an interim email on or about the 15th business day.

•

If any significant inaccuracies are discovered after the 20-business-day period, the Program

reserves the right to inform you and will require that changes be made to correct the

inaccuracies.

•

The policy does not apply to substantially revised forms or to new forms created by the IRS

for which you have already made an initial submission.

Part 2

General Guidelines for Submissions and Approvals

Section 2.1 – General Specifications for Approval

2.1.1

Overview

If you produce any substitute tax forms that fully comply or follow the changes specifically outlined

by the Program, then you can generate your own substitute forms without further approval. Also,

if your substitutes have received approval in the past, and there are no substantial formatting

or text changes for the tax year, then changes can be made without additional approval. If your

changes are more extensive, you must get IRS approval before using substitute forms. More

extensive changes include different font style; decreasing or increasing the font size of caption

titles; adjusting or omitting format/layout elements; changing page orientation; and repositioning

line items, tables, and legends.

2.1.2

Email Submissions

The Program accepts submissions of substitute forms for review and approval via email. The email

address is substituteforms@irs.gov. Include the term “PDF Submissions” on the subject line.

Follow these guidelines.

October 27, 2025

•

The emailed submission should include all the forms you wish to submit in one Portable

Document Format (PDF) file. Do not email or attach each form individually.

•

The emailed submission should include a maximum of 3 PDF files to include a checksheet,

a cover letter or accompanying statement, and a single PDF file that includes all of the forms

listed on your checksheet, cover letter, or accompanying statement.

•

A submission should contain a maximum of 15 forms.

•

An approval checksheet listing the forms you are submitting should always be included in

the PDF file along with the forms. Excluding the checksheet can slow the reviewing process

down, which can result in a delayed response to your submission. See a sample checksheet in

Exhibit B.

•

Optimize PDF files before submitting.

•

The maximum allowable email attachment is 2.5 megabytes.

652

Bulletin No. 2025–44

•

The Program accepts zip files.

•

To alleviate delays during the peak time of September through December, submit advance

draft forms as early as possible.

If the guidelines are not followed, you may need to resubmit.

Emailing PDF submissions will not expedite review and approval. Submitting your substitute forms

package via email is the preferred and suggested method for submitting forms for review. If, for

some reason, you are not able to email your submission(s), you can mail your submission(s) to:

Internal Revenue Service

Attn: Substitute Forms Program

SE:W:CAR:MP:P:TP:TP

ATSC

4800 Buford Highway

Mail Stop: 061-N

Chamblee, GA 30341

2.1.3

Expediting the Process

Follow these basic guidelines for expediting the process.

•

Always include a checksheet for the Program’s response.

•

Include an accompanying statement identifying most, if not all, of the deviations your

substitute forms may have from the official IRS versions.

•

Follow the guidance in this publication for general substitute form guidelines. Follow the

guidance in specialized publications produced by the Program for other specific forms.

•

To spread out the workload, send in draft versions of substitute forms when they are posted.

Note. Be sure to make any changes to approved drafts before releasing final versions.

2.1.4

Schedules

Some schedules are considered to be an integral part of a complete tax return and must be submitted

as part of the form. Other schedules may be submitted separately and do not need to be included

with the tax form.

2.1.5

Examples of Schedules That

Must Be Submitted With

the Return

Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is an example

of this situation. For the Form 706 to be considered for approval, all schedules that affect or are

applicable to any election or position taken by the filer, as well as all applicable schedules that

affect the tax, must be submitted.

2.1.6

Examples of Schedules

That Can Be Submitted

Separately

Schedules C, D, and E for Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S.

Tax Return for Seniors, are examples of schedules that can be submitted separately. Although

printed by the IRS as a supplement to Form 1040 or 1040-SR, these schedules are not required to

be submitted for approval with Form 1040 or 1040-SR. These schedules may be separated from

Form 1040 or 1040-SR and submitted as substitute forms.

Bulletin No. 2025–44

653

October 27, 2025

2.1.7

Use and Distribution of

Unapproved Forms

The IRS is continuing a program to identify and contact tax return preparers, forms developers,

and software publishers who use or distribute unapproved forms that do not conform to this

revenue procedure. The use of unapproved forms hinders the processing of the returns.

Section 2.2 – Highlights of Permitted Changes and Requirements

2.2.1

Methods of Reproducing

IRS Forms

There are methods of reproducing IRS printed tax forms suitable for use as substitutes without

prior approval.

•

You can photocopy most tax forms and use them instead of the official ones. The entire

substitute form, including entries, must be legible.

•

You can reproduce any current tax form as cut sheets, snap sets, and marginally punched,

pin-fed forms as long as you use an official IRS version as the master copy.

•

You can reproduce a form that requires a signature as a valid substitute form. Many tax

forms (including returns) have a taxpayer signature requirement as part of the form layout.

The jurat/perjury statement/ signature line areas must be retained and worded exactly as on

the official form. The requirement for a signature, by itself, does not prohibit a tax form from

being properly computer generated.

Section 2.3 – Vouchers

2.3.1

Overview

2.3.2

Scan Line Specifications

2.3.3

MFT Code

October 27, 2025

All payment vouchers (Forms 940-V, 941-V, 943-V, 944-V, 945-V, 1040-ES, 1040-V, 1041-V,

and 2290-V) must be reproduced in conjunction with their forms. Substitute vouchers must be

the same size as the officially printed vouchers. Vouchers that are prepared for printing on a laser

printer may include a scan line.

NNNNNNNNN

AA

XXXX

NN

N

NNNNNN

NNN

Item:

A

B

C

D

E

F

G

A.

Social Security Number/Employer Identification Number/Individual Taxpayer

Identification Number/Adoption Taxpayer Identification Number (SSN/EIN/ ITIN/ATIN)

has 9 numeric (N) spaces.

B.

Check Digits have 2 alpha (A) spaces.

C.

Name Control has 4 alphanumeric (X) spaces.

D.

Master File Tax (MFT) Code has 2 numeric (N) spaces (see Section 2.3.3).

E.

Taxpayer Identification Number (TIN) Type has 1 numeric (N) space (see Section 2.3.4).

F.

Tax Period has 6 numeric (N) spaces in year/month format (YYYYMM).

G.

Transaction Code has 3 numeric (N) spaces.

Code Number for Forms:

•

1040 (family) – 30,

•

940 – 10,

654

Bulletin No. 2025–44

2.3.4

TIN Type

•

941 – 01,

•

943 – 11,

•

944 – 14,

•

945 – 16,

•

1041-V – 05,

•

2290 – 60, and

•

4868 – 30.

Type Number for:

•

Form 1040 (family) and Form 4868 – 0; and

•

Forms 940, 941, 943, 944, 945, 1041-V, and 2290 – 2.

2.3.5

Voucher Size

The voucher size must be exactly 8.0″ x 3.25″ (Forms 1040-ES and 1041-ES must be 7.625″ x

3.0″). The document scan line must be vertically positioned 0.25 inch from the bottom of the scan

line to the bottom of the voucher. The last character on the right of the scan line must be placed

3.5 inches from the right leading edge of the document. The minimum required horizontal clear

space between characters is 0.014 inch. The line to be scanned must have a clear band 0.25 inch

in height from top to bottom of the scan line, and from border to border of the document. “Clear

band” means no printing except for dropout ink.

2.3.6

Print and Paper Weight

Vouchers must be imaged in black ink using OCR A, OCR B, or Courier 10. These fonts may not

be mixed in the scan line. The horizontal character pitch is 10 CPI. The preferred paper weight is

20 to 24 pound OCR bond.

2.3.7

Specifications for Software

Developers

Certain vouchers may be reproduced for use in the IRS lockbox system. These include the 1040-V,

1040-ES, 1041-V, 94X series, and 2290 vouchers. Software developers must follow these specific

guidelines to produce scannable vouchers strictly for lockbox purposes. Also see Exhibit A.

Bulletin No. 2025–44

•

The total depth must be 3.25 inches.

•

The scan line must be 0.5 inch from the bottom edge and 1.75 inches from the left edge of the

voucher and left justified.

•

Software developers’ vouchers must be 8.5 inches wide (instead of 8 inches with a cut line).

Therefore, no vertical cut line is required.

•

Scan line positioning must be exact.

•

Do not use the over-the-counter format voucher and add the scan line to it.

•

All scanned data must be in 12-point OCR A font.

655

October 27, 2025

•

The 4-digit NACTP ID code or IRS source code should be placed under the box designated

for the payment dollar amount.

•

Windowed envelopes must not display the scan line in order to avoid disclosure and privacy

issues.

Note. All software developers must ensure that their software uses OCR A font so taxpayers will

be able to print the vouchers in the correct font.

2.3.8

Specific Line Positions

2.3.9

How To Get Approval

Follow these line specifications for entering taxpayer data in the lockbox vouchers.

Start Row

Start Column

Width

End Column

56

57

6

6

41

Line Specifications for Taxpayer Data:

Taxpayer Name

Taxpayer Address, Apt.

Taxpayer City, State, ZIP

Foreign Country Name

Foreign Province/County

Foreign Postal Code

58

6

59

60

60

6

6

26

36

36

36

36

17

16

Line Specifications for Mail-To Data:

Mail Name

Mail Address

Mail City, State, ZIP

56

57

58

43

43

43

38

38

38

80

Line Specifications for:

Scan Line

63

26

n/a

n/a

41

41

41

22

41

80

80

Send an approval sheet with each form type for IRS signature to Jason Lane at Jason.L.Lane@irs.

gov. You should include in the email an example of each type of voucher the site will be testing.

Note. Do not mail any test vouchers to Jason Lane.

You are required to send 25 voucher samples of each form in PDF format by December 5, 2025.

You should email the test vouchers to raul.t.mariduena@jpmorgan.com. You can also print the

vouchers and send them to his mailing address at:

JP Morgan Chase

Attn: Raul Mariduena

830 Tyvola Road, Suite 114

Charlotte, NC 28217

For further information, contact Jason Lane at Jason.L.Lane@irs.gov, or at 559-550-8740 (not

toll free number).

October 27, 2025

656

Bulletin No. 2025–44

Section 2.4 – Restrictions on Changes

2.4.1

What You Cannot Do

to Forms Suitable for

Substitute Tax Forms

You cannot, without prior IRS approval, change any IRS tax form or use your own (nonapproved)

versions including graphics, unless specifically permitted by this revenue procedure. See Sections

2.5.7 through 2.5.11.

You cannot adjust any of the graphics on Form 1040 or 1040-SR (except in those areas specified

in Part 5 of this revenue procedure) without prior approval from the Program.

You cannot rearrange or redistribute data entry fields, and/or allow data entry fields to flow from

one page onto the next (that is, each page of a substitute form must contain the exact number of

data entry fields as there are on the official IRS form). The order of information on the substitute

form must be identical to the IRS version of the form. Publications for specific substitute forms

will state allowances for those respective forms.

Note. The 20-business-day turnaround policy may not apply to extensive changes.

Section 2.5 – Guidelines for Obtaining IRS Approval

2.5.1

Basic Requirements

Preparers who submit substitute privately designed, privately printed, computer-generated, or

computer-prepared tax forms must develop these substitutes using the guidelines established in

this part. These forms, unless there is an exception outlined by this revenue procedure, must be

approved by the IRS before being filed.

2.5.2

Conditional Approval

Based on Advance Drafts

The IRS cannot grant final approval of your substitute form until the official form has been

published. However, the IRS posts advance draft forms on its website at https://www.irs.gov/

draftforms.

Submission of proposed substitutes of these advance draft forms is encouraged, and conditional

approval will be granted based solely on these early drafts. These advance drafts are subject to

significant change before forms are finalized. If these advance drafts are used as the basis for your

substitute forms, you will be responsible for subsequently updating your final forms to agree with

the final official version. These revisions need not be resubmitted for further approval.

Note. Approval of forms based on advance drafts will not be granted after the final version of an

official form is published.

2.5.3

Submission Procedures

Bulletin No. 2025–44

Follow these general guidelines when submitting substitute forms for approval.

•

Any alteration of forms must be

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