# Bulletin No. 2024–50

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## Record

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

## Text

HIGHLIGHTS
OF THIS ISSUE




Bulletin No. 2024–50
December 9, 2024

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
T.D. 10013, page 1220.

This document contains amendments to the regulations
relating to the disclosure of specified return information to
the Census Bureau. The amendments would ensure the efficient and appropriate disclosure of return information to the
Census Bureau and would permit the disclosure of additional
return information pursuant to a request from the Secretary
of Commerce.

EMPLOYEE PLANS
Announcement 2024-38, page 1230.

This announcement notifies the public that the IRS intends
to issue opinion letters on November 29, 2024, or as soon
as possible thereafter, for § 403(b) pre-approved plans that
were updated for changes with respect to the requirements
of § 403(b), including the 2022 Cumulative List, and that
were filed during the second remedial amendment cycle for
§ 403(b) pre-approved plans. This announcement also notifies the public of the date by which an adopting employer
intending to maintain a § 403(b) pre-approved plan for the
second cycle must adopt that plan, and announces the beginning and ending dates of the period during which an adopting
employer may file for an individual determination letter under
the second remedial amendment cycle. This announcement
also discusses a procedural restatement rule that applies to
all pre-approved plans and provides a reminder for adopting
employers of § 403(b)(9) retirement income account plans of
a requirement provided by § 403(b)(9).

EXEMPT ORGANIZATIONS
Announcement 2024-39, page 1231.

Revocation of IRC 501(c)(3) Organizations for failure to meet
the code section requirements. Contributions made to the

Finding Lists begin on page ii.

organizations by individual donors are no longer deductible
under IRC 170(b)(1)(A).

INCOME TAX
Notice 2024-84, page 1229.

This notice extends the transition process for claiming a statutory exception to the elective payment phaseouts contained
in section 5 of Notice 2024-9, 2024-2 I.R.B. 358. Thus, if an
Applicable Entity provides an attestation described in section
5.02 of Notice 2024-9 with respect to an Applicable Credit
Property the construction of which begins before the later
of January 1, 2027, or the issuance of further guidance, the
Department of the Treasury and the Internal Revenue Service
will treat the attestation as establishing that a Domestic Content Exception is met with respect to such Applicable Credit
Property.

REG-116017-24, page 1232.

These proposed regulations would provide certain administrative requirements for unincorporated organizations taking
advantage of modifications to the rules governing elections
to be excluded from the application of partnership tax rules.
They would also require all organizations to submit additional
information before making such an election. These proposed
regulations would affect unincorporated organizations and
their members, potentially including tax-exempt organizations, the District of Columbia, State and local governments,
Indian Tribal governments, Alaska Native Corporations, the
Tennessee Valley Authority, rural electric cooperatives, and
certain agencies and instrumentalities. The proposed regulations would also update the procedure for obtaining permission to revoke a section 761(a) election.

T.D. 10012, page 1207.

These final regulations would modify existing requirements
regarding elections by certain unincorporated organizations
to be excluded from the application of otherwise applicable
partnership tax rules. These modifications would apply to

certain unincorporated organizations owned, in whole or in
part, by one or more “applicable entities,” including tax-exempt organizations, the District of Columbia, State and
local governments, Indian Tribal governments, Alaska Native
Corporations, the Tennessee Valley Authority, rural electric

cooperatives, and certain agencies and instrumentalities.
After making an election under the modified rules, such owners would be permitted to make elective payment elections
under section 6417(a) of the Code with respect to certain
property held by the unincorporated organization.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
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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.

December 9, 2024 

Bulletin No. 2024–50

Part I
26 CFR 1.761-2: Exclusion of certain unincorporated organizations from the application of all or
part of subchapter K of chapter 1 of the Internal
Revenue Code.

SUPPLEMENTARY INFORMATION:

T.D. 10012

This document contains amendments
to the Income Tax Regulations (26 CFR
part 1) under section 761(a) of the Internal
Revenue Code (Code) issued by the Secretary of the Treasury (Secretary) pursuant to the authority granted under sections
761(a), 6031(a), 6417(d) and (h), and
7805(a) of the Code (final regulations).
Section 761(a) provides, in part, an
express grant of regulatory authority for
section 761(a) stating, “[u]nder regulations the Secretary may, at the election
of all the members of an unincorporated
organization, exclude such organization
from the application of all or a part of this
subchapter.”
Section 6031(a) provides an express
grant of regulatory authority for the Secretary to prescribe in forms or regulations
partnership reporting information required
“for the purpose of carrying out the provisions of subtitle A.”
Section 6417(d) provides several
express delegations of authority to the
Secretary to enforce requirements for
elective payments of applicable credits
under section 6417 and recapture excessive payments. Section 6417(h) provides
an express delegation of authority with
respect to elective payments under section
6417, stating, in part, that “[t]he Secretary
shall issue such regulations or other guidance as may be necessary to carry out the
purposes of this section.”
Finally, section 7805(a) authorizes the
Secretary to “prescribe all needful rules
and regulations for the enforcement of
[the Code], including all rules and regulations as may be necessary by reason of
any alteration of law in relation to internal
revenue.”

DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Election to Exclude
Certain Unincorporated
Organizations Owned by
Applicable Entities from
Application of the Rules on
Partners and Partnerships
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document sets forth
final regulations that modify existing
regulations to allow certain unincorporated organizations that are owned in
whole or in part by applicable entities to
be excluded from the application of partnership tax rules. These regulations affect
unincorporated organizations and their
members, including tax-exempt organizations, the District of Columbia, State and
local governments, Indian Tribal governments, Alaska Native Corporations, the
Tennessee Valley Authority, rural electric
cooperatives, and certain agencies and
instrumentalities. The final regulations
also update certain outdated language in
the existing regulations.
DATES: Effective date: These regulations
are effective on January 19, 2025.
Applicability date: For the date of applicability, see §1.761-2(f).
FOR FURTHER INFORMATION
CONTACT: Concerning these final regulations, contact Cameron Williamson at
(202) 317-6684 (not a toll-free number).

Bulletin No. 2024–50

Authority

Background
I. Elective payment of applicable credits
Section 6417 was added to the Code
by section 13801(a) of Public Law 117–
169, 136 Stat. 1818, 2003 (August 16,
2022), commonly referred to as the Inflation Reduction Act of 2022 (IRA). Sec-

1207

tion 6417 allows an “applicable entity”
(including tax-exempt organizations,
the District of Columbia, State and local
governments, Indian Tribal governments,
Alaska Native Corporations, the Tennessee Valley Authority, rural electric cooperatives, and certain agencies and instrumentalities) to make an election to treat
an “applicable credit” (as defined in section 6417(b)) determined with respect to
such entity as making a payment by such
entity against the tax imposed by subtitle
A of the Code, for the taxable year with
respect to which such credit is determined,
equal to the amount of such credit. Section
6417 also provides special rules relating
to partnerships and directs the Secretary to
provide rules for making elections under
section 6417. Section 13801(g) of the IRA
provides that section 6417 applies to taxable years beginning after December 31,
2022.
On March 11, 2024, the Department of
the Treasury (Treasury Department) and
the IRS published in the Federal Register (88 FR 40528) final regulations (TD
9988) providing guidance on the section
6417 elective payment election (section
6417 regulations). Section 1.6417-2(a)
(1)(iv) provides that partnerships are not
applicable entities described in section
6417(d)(1)(A) or §1.6417-1(c), regardless
of how many of their partners are themselves applicable entities. Accordingly,
any partnership making an elective payment election must be an electing taxpayer (as defined in §1.6417-1(g)), and,
as such, the only applicable credits with
respect to which the partnership could
make an elective payment election would
be credits determined under sections 45Q,
45V, and 45X for the time periods allowed
in section 6417(d). However, §1.64172(a)(1)(iii) provides that if an applicable
entity is a co-owner in an applicable credit
property (as defined in §1.6417-1(e)),
through an organization that has made a
valid election under section 761(a) (section 761(a) election) to be excluded from
the application of the partnership tax rules
of subchapter K of chapter 1 of the Code
(subchapter K), then the applicable entity’s undivided ownership share of the
applicable credit property is treated as a
separate applicable credit property owned

December 9, 2024

by such applicable entity. As a result,
the applicable entity may make an elective payment election for the applicable
credit(s) determined with respect to such
applicable credit property.
Also on March 11, 2024, the Treasury Department and the IRS published
in the Federal Register (89 FR 17613)
proposed amendments (REG-101552-24)
to the regulations under section 761(a)
to carry out the purposes of section
6417 (proposed regulations). Generally,
the proposed regulations would have
amended certain provisions of §1.761-2 as
in effect and contained in 26 CFR part 1 to
provide that unincorporated organizations
meeting certain requirements (applicable
unincorporated organizations) are eligible
for certain modifications (referred to in
the proposed regulations as “exceptions”)
to the existing requirements for making a
section 761(a) election. The provisions of
the proposed regulations are explained in
greater detail in the preamble to the proposed regulations.
Concurrently with the publication
of these final regulations, the Treasury
Department and the IRS are publishing
in the Proposed Rules section of this edition of the Federal Register a notice of
proposed rulemaking (REG-116017-24)
proposing to further add to and revise the
provisions of §1.761-2 (November 2024
proposed regulations). The proposed revisions to the provisions of §1.761-2 by the
November 2024 proposed regulations are
explained in greater detail in the preamble
to the November 2024 proposed regulations.
II. Overview of section 761(a) and prior
§1.761-2(a)(3)
Section 761(a) provides, in part, that
under regulations the Secretary may, at
the election of all of the members of an
unincorporated organization, exclude
such organization from the application of
all or part of subchapter K if the organization is availed of: (1) for investment purposes only and not for the active conduct
of a business, (2) for the joint production,
extraction, or use of property, but not for
the purpose of selling services or property
produced or extracted, or (3) by dealers in
securities for a short period for the purpose
of underwriting, selling, or distributing a

December 9, 2024

particular issue of securities, provided that
the income of the members of the organization may be adequately determined
without the computation of partnership
taxable income.
As discussed in the preamble to the
proposed regulations, unincorporated
organizations seeking to be excluded
from the application of subchapter K so
that one or more of their members can
make an election under section 6417 are
likely to be availed of for the purposes
listed in section 761(a)(2), that is, for
the joint production, extraction, or use
of property, but not for the purpose of
selling services or property produced
or extracted. Pursuant to the authority
in section 761(a), prior §1.761-2(a)(3)
provides additional requirements for an
unincorporated organization to elect to
be excluded from the application of subchapter K under section 761(a)(2). Specifically, prior §1.761-2(a)(3) requires
that the participants in the joint production, extraction, or use of property: (i)
own the property as co-owners, either in
fee or under lease or other form of contract granting exclusive operating rights
(co-ownership requirement), (ii) reserve
the right separately to take in kind or
dispose of their shares of any property
produced, extracted, or used (severance
requirement), and (iii) do not jointly sell
services or the property produced or
extracted (joint marketing requirement),
although each separate participant may
delegate authority to sell the participant’s share of the property produced or
extracted for the time being for the participant’s account, but not for a period
of time in excess of the minimum needs
of the industry, and in no event for more
than one year (one-year exception).
These additional regulatory requirements are hereinafter referred to as the
“existing regulatory requirements” and,
along with the previously discussed
statutory requirements, are referred to
herein as the “existing requirements” to
be eligible to elect out of the application
of subchapter K.
As discussed in the Summary of Comments and Explanation of Revisions, the
proposed regulations would have modified
some of the existing regulatory requirements for unincorporated organizations
that meet certain requirements.

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Summary of Comments and
Explanation of Revisions
The Treasury Department and the IRS
received 11 written comments in response
to the proposed regulations. The comments are available for public inspection
at www.regulations.gov or upon request.
A public hearing on the proposed regulations was scheduled for May 20, 2024.
There were no requests to speak at the
scheduled public hearing. Consequently,
the public hearing was cancelled. See
Election To Exclude Certain Unincorporated Organizations Owned by Applicable
Entities From Application of the Rules on
Partners and Partnerships; Hearing Cancellation, 89 FR 43349 (May 17, 2024).
After full consideration of the comments
received, these final regulations adopt the
proposed regulations with modifications
in response to the comments described in
this Summary of Comments and Explanation of Revisions. The provisions of
§1.761-2 as amended by the final regulations are referred to as “revised §1.761-2”
in this Summary of Comments and Explanation of Revisions.
Comments merely summarizing the
statute or proposed regulations, recommending statutory revisions to section
761 or other statutes, addressing unrelated issues, or recommending changes
to IRS forms or procedures are generally
not addressed in this Summary of Comments and Explanation of Revisions
or adopted in these final regulations.
These comments included recommendations and questions regarding fact
patterns specific to section 6417, the
domestic content rules of section 45(b)
(10), the credit for qualified commercial
clean vehicles of section 45W, and the
credit for alternative fuel vehicle refueling property of section 30C. While
the Treasury Department and the IRS
are studying some of those issues and
intend to issue future guidance on those
provisions, those recommendations and
questions are unrelated to the purpose of
these final regulations. Unless otherwise
indicated in this Summary of Comments
and Explanation of Revisions, provisions of the proposed regulations with
respect to which no comments were
received are adopted without substantive change.

Bulletin No. 2024–50

I. Overview
Proposed §1.761-2(a)(4)(ii) would
have defined “applicable unincorporated
organizations” as unincorporated organizations that meet several requirements.
Proposed §1.761-2(a)(4)(iii) would have
modified the regulatory requirements in
prior §1.761-2(a)(3)(i) and (iii) for an
applicable unincorporated organization
that also met the regulatory requirements
of prior §1.761-2(b) and (e).
Part II of this Summary of Comments
and Explanation of Revisions discusses
comments received concerning the general effects of a section 761(a) election.
Part III of this Summary of Comments and
Explanation of Revisions discusses the
comments received on the definition of an
applicable unincorporated organization.
Part IV of this Summary of Comments and
Explanation of Revisions discusses the
comments received on the modifications
to the existing regulatory requirements.
Part V of this Summary of Comments
and Explanation of Revisions discusses
the applicability date of these final regulations, the elimination of certain obsolete language, and certain administrative
requirements that are under consideration
for organizations taking advantage of the
modifications to the existing regulatory
requirements. Part VI of this Summary of
Comments and Explanation of Revisions
summarizes two comments not addressed
in these final regulations.
II. Effects of an Election under Section
761(a)
A. General
Subchapter K provides rules governing
the taxation of partners and partnerships.
When an unincorporated organization
makes a valid section 761(a) election out
of subchapter K, the rules of subchapter
K no longer apply to that organization.
As a result, for purposes of subchapter K,
the unincorporated organization ceases to
be a partnership and each member of the
unincorporated organization is generally
treated as a co-owner, that is, as directly
owning its proportionate share of the organization’s assets.
For example, an unincorporated organization that has made a valid section 761(a)

Bulletin No. 2024–50

election is not subject to section 704, which
provides the rules for determining a partner’s distributive share of a partnership’s
tax items. Instead, each member of an
unincorporated organization that has made
a valid section 761(a) election takes into
account directly its ownership share of the
organization’s tax items. Accordingly, if an
unincorporated organization with a valid
section 761(a) election purchases depreciable property, an owner of a 30 percent interest in the organization may claim depreciation deductions as if it owned an undivided
30 percent interest in the organization’s
property (provided the owner is otherwise
eligible for such deductions). That member cannot claim depreciation deductions
beyond that member’s ownership interest
in the organization’s property. Thus, any
agreement among the members to specially
allocate one member’s depreciation deductions to another member would make the
organization ineligible for a section 761(a)
election.
One commenter asked for clarification of whether the following fact pattern is compatible with an election under
section 761(a). A church (an applicable
entity) forms a partnership with a nonprofit investor and a for-profit developer.
The church contributes a site for energy
property, which generates electricity and
reduces the church’s energy bill. The nonprofit investor makes grants and loans to
the organization and is repaid by virtue of
renewable energy credits or net metering
from the clean energy property. The forprofit developer enters into a contract to
maintain the system in exchange for a fee.
The facts described in the comment letter do not provide sufficient information to
determine whether this situation is compatible with a section 761(a) election. If the
investor receives all payments in its capacity as a lender and the for-profit developer
receives its profits in its capacity as a thirdparty service provider, there might not be
an unincorporated organization at all. If
there is an unincorporated organization and
it intends to make a section 761(a) election,
each of its members must reserve the right
separately to take in kind or dispose of their
shares of any property produced, extracted,
or used. If the investor or developer
receives payments in excess of its pro rata
ownership interests, this requirement will
not be met. Moreover, if the contributions

1209

mentioned in this situation are intended
to be non-recognition transfers for Federal income tax purposes, the contributing
members would generally need to make
such contributions under section 721(a),
which is part of subchapter K. However,
if a section 761(a) election is made, the
organization is not subject to subchapter K,
and thus, section 721(a) is inapplicable to
transfers to the organization. Without section 721(a), the transfers would generally
be taxable events.
One commenter asked how certain capital stacking combinations (including loans,
forgivable loans, and grants) affect an
organization’s eligibility to make a section
761(a) election. To make a valid section
761(a) election, an unincorporated organization must comply with the requirements
of section 761(a) and revised §1.761-2.
Provided that those requirements are met,
the structure of an organization’s capital
stack would not appear to preclude it from
making a valid section 761(a) election.
Federal income tax law governs the treatment of these arrangements for purposes
of determining whether an arrangement
violates the requirements of section 761(a).
For example, loans between members of
the organization will be treated as debt to
the extent they are treated as debt under
Federal income tax law. Likewise, loans by
a member to an organization would not be
treated as a partnership liability under section 752, but a loan to each member of the
organization in proportion to the member’s
ownership interest.
One commenter asked that applicable
entities who are members in an applicable
unincorporated organization that makes a
761(a) election be permitted to claim all
applicable tax credit bonuses and adders.
Bonus credit amounts, such as amounts
for applicable credit properties located
in energy communities, apply to property
co-owned through an applicable unincorporated organization. The Treasury
Department and the IRS have determined
that no change to the final regulations is
required to clarify this issue.
B. Effect of a Section 761(a) Election
on Sections of the Code Outside of
Subchapter K
One commenter requested a discussion
of the effects of a section 761(a) election

December 9, 2024

on provisions of the Code outside of subchapter K that reference partnerships,
including section 6417. A detailed discussion of the effects of a section 761(a)
election on provisions of the Code outside
of subchapter K would require a careful
examination of numerous provisions of
the Code apart from those relevant to these
final regulations and is not necessary for
purposes of these final regulations. However, the application of a section 761(a)
election to section 6417 is fundamental
to the purpose of these final regulations,
which is to carry out the purposes of section 6417 and thus, is addressed herein.
An organization with a valid section
761(a) election may be treated as a partnership for purposes of sections of the
Code outside of subchapter K. In Bryant v.
Commissioner, 46 T.C. 848 (1966), aff’d,
399 F.2d 800 (5th Cir. 1968), the Tax Court
concluded that an organization that made
a section 761(a) election was still a partnership for purposes of other parts of the
Code, including the $50,000 investment
tax credit limit on partnership assets provided by then section 48(c)(2)(D) of the
Code. See also Cokes v. Commissioner,
91 T.C. 222 (1988) (section 761 election
did not affect partnership status under the
self-employment tax provisions of section
1402(a) of the Code); Madison Gas and
Electric Company v. Commissioner, 72
T.C. 521 (1979), aff’d, 633 F.2d 512 (7th
Cir. 1980) (notwithstanding a section 761
election, the startup costs of a joint venture were attributable to the partnership
business and were not deductible under
section 162(a) of the Code as the ordinary
and necessary business expenses of the
individual partners).
Though section 6417 is not in subchapter K, a section 761(a) election affects
whether an entity is treated as a partnership for purposes of section 6417. Section
6417(h) provides that the Secretary shall
issue such regulations or other guidance
as may be necessary to carry out the purposes of section 6417. Pursuant to this
broad authority, the Treasury Department
and the IRS published §1.6417-2(a)(1)
(iii), which provides that if an applicable
entity is a co-owner in an applicable credit
property through an organization that
has made a valid section 761(a) election,
then the applicable entity’s undivided
ownership share of the applicable credit

December 9, 2024

property will be treated as a separate
applicable credit property owned by such
applicable entity, and the applicable entity
may make an elective payment election
for the applicable credits determined with
respect to such applicable credit property.
This means that a section 761(a) election
effectively causes an unincorporated organization not to be treated as a partnership
for purposes of section 6417, including
section 6417(c). Thus, the effect of a valid
section 761(a) election for purposes of
section 6417 is that each member of the
organization is treated as directly owning
its proportionate share of the applicable
credit property. As a result, each applicable entity member of the organization may
make an elective payment election (or, if
not an applicable entity member, a transfer
election under section 6418) with respect
to its proportionate share of the applicable
credit property.
Another commenter requested confirmation that a Tribal Energy Development
Organization that makes a section 761(a)
election is not a partnership for purposes
of sections 168(h)(5) and (6) and 50(b)(3).
Section 168(h) describes tax-exempt
use property (generally, certain property leased to a tax-exempt entity), the
cost recovery of which is subject to
special rules. Section 168(h)(5) generally provides that the determination of
whether property leased to a partnership
is tax-exempt use property shall be made
by treating each tax-exempt entity partner’s proportionate share as being leased
to such partner. Section 168(h)(6) generally provides that, if any property which
is not tax-exempt use property is owned
by a partnership that has as partners both
a tax-exempt entity and a person who is
not a tax-exempt entity, an amount equal
to such tax-exempt entity’s proportionate
share of such property is treated as tax-exempt use property. This rule applies only
if any allocation to the tax-exempt entity
of partnership items is not a “qualified
allocation,” which (i) is consistent with
such entity’s being allocated the same
distributive share of each item of income,
gain, loss, deduction, credit, and basis and
such share remains the same during the
entire period the entity is a partner in the
partnership, and (ii) has substantial economic effect within the meaning of section 704(b)(2). See section 168(h)(6)(B).

1210

Section 50(b)(3) and (4) preclude certain
property used by tax-exempt organizations, governmental entities, and foreign
persons from qualifying for an investment
tax credit. For these purposes, section
50(b)(4)(D) provides that rules similar to
those in section 168(h)(5) and (6) apply.
The existence of a partnership for purposes of these sections does not change
the amount of depreciation deductions
attributable to each member of an unincorporated organization that has validly
made a section 761(a) election. A valid
section 761(a) election requires the shares
of property leased to or owned by an organization to be treated as leased to or owned
by the members of the organization in proportion to their shares of the organization.
This is how partnership property would be
treated under section 168(h)(5) and would
cause all allocations to the partners to be
treated as “qualified allocations” for purposes of section 168(h)(6). Similarly, the
IRS has determined in other areas of the
law that co-owners of property may make
independent elections with respect to
deductions affecting their taxable income.
See Rev. Rul. 83-129, 1983-2 C.B. 105,
in which the IRS ruled that the co-owners of mineral leases that make a section
761(a) election may independently elect
to deduct or capitalize their shares of mining development costs under section 616
of the Code; see also Rev. Rul. 81-261,
1981-2 C.B. 60, where the IRS noted that
if a partnership makes a section 761(a)
election, each partner is deemed to own
directly its proportionate share of the partnership property for purposes of computing depreciation. Moreover, in the case of
an applicable entity that makes an election
under section 6417(a), section 6417(d)
(2)(A) provides that applicable credits
are determined without regard to section
50(b)(3) and (4)(A)(i).
III. Applicable Unincorporated
Organizations
A. Applicable Entity Owner
Proposed §1.761-2(a)(4)(ii)(A) would
have required an applicable unincorporated organization to be owned, in whole
or in part, by one or more applicable entities, as defined in section 6417(d)(1)(A)
and §1.6417-1(c). The Treasury Depart-

Bulletin No. 2024–50

ment and the IRS received no comments
related to this section and adopt the proposed language without changes.
B. Joint Operating Agreements
Proposed §1.761-2(a)(4)(ii)(B) would
have provided that an applicable unincorporated organization must be an organization the members of which enter into a
joint operating agreement (JOA) in which
the members reserve the right separately
to take in kind or dispose of their pro
rata shares of the electricity produced,
extracted, or used, and any associated
renewable energy credits or similar credits. Proposed §1.761-2(a)(4)(ii)(C) would
also have provided, in part, that an applicable unincorporated organization must
be organized pursuant to a JOA.
1. General
Commenters requested more information about the types of JOAs required
by these provisions. Some commenters requested examples of permissible
JOAs, and another commenter requested
identification of any JOA provisions that
would “create issues” for a JOA. One
commenter asked whether JOAs that satisfy the requirements of §1.761-2(a)(3)
would also satisfy the requirements of
proposed §1.761-2(a)(4)(ii)(B) and (C)
and requested that any specific rules applicable to JOAs solely for purposes of the
proposed regulations apply prospectively
so as to avoid any uncertainty with respect
to existing JOAs.
As used in the proposed regulations,
the term “joint operating agreement” is
intended to refer to agreements similar to
those used by organizations that made an
election under section 761(a) prior to the
proposed regulations. Such agreements
typically provide the terms by which the
members of the unincorporated organization will meet the existing requirements
to make a section 761(a) election. JOAs
should continue to serve this purpose
under the final regulations, regardless of
whether an applicable unincorporated
organization holds its property in an entity
organized under local law. Accordingly,
as a general matter, a JOA that satisfies
the requirements of revised §1.761-2(a)
(1) and (3) will satisfy the requirements in

Bulletin No. 2024–50

revised §1.761-2(a)(4)(ii)(B) and (C), provided that the organization to which that
JOA applies satisfies the existing regulatory requirements, as modified by revised
§1.761-2(a)(4)(iii), if applicable. Because
the final regulations do not change the
rules currently applicable to JOAs, these
final regulations do not need to make such
rules apply prospectively. For the same
reason, further clarification of the JOA
requirements is unnecessary.
2. Right to Pro Rata Share
Commenters requested clarification
of how credits and ownership interests
would be allocated when members of an
unincorporated organization reserve the
right separately to take in kind or dispose
of their pro rata shares of the electricity
produced, extracted, or used, and any
associated renewable energy credits or
similar credits.
Pursuant to proposed §1.761-2(a)(4)
(ii)(B), each member of an applicable
unincorporated organization would have
been required to reserve the right separately to take in kind or dispose of their
pro rata shares of any property produced,
extracted, or used, and any associated
renewable energy credits or similar credits. The determination of each member’s
ownership interest of an unincorporated
organization (and, accordingly, each
member’s proportionate share of property produced, extracted, or used) must be
made by the members and based on their
ownership interests in the same manner as
if they were co-owners in the underlying
properties.
To illustrate, a co-owner of 40 percent
of an unincorporated organization that
has made a section 761(a) election must
reserve the right separately to take in kind
or dispose of its 40 percent pro rata share
of the property produced, extracted, or
used by the co-owners. This is true even
when the members of an applicable unincorporated organization own property
through an entity, as permitted by revised
§1.761-2(a)(4)(iii)(A). Example 1 has
been added in revised §1.761-2(a)(5)(i) to
illustrate the general rule.
One commenter requested clarification
that renewable energy certificates (RECs)
produced through the generation of clean
energy qualify as “similar credits” for

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these purposes. The Treasury Department
and the IRS clarify that RECs are included
as “renewable energy credits or similar
credits” pursuant to revised §1.761-2(a)
(4)(ii)(B) and thus, each member of an
unincorporated organization must reserve
the right separately to take in kind or dispose of their pro rata shares of any RECs
generated as a result of the organization’s
activities.
3. Joint Marketing
Some commenters asked whether specific JOA provisions or activities would
violate requirements that apply to applicable
unincorporated
organizations,
including that the organization’s members
do not jointly sell services or property
produced or extracted. One commenter
asked whether appointing a manager, creating an ownership committee, having
expense-sharing agreements or incurring
project-level debt would violate the existing requirements to make a section 761(a)
election. Another commenter requested
clarification that a managing member or
general partner-equivalent (presumably,
if the unincorporated organization takes
advantage of the modification in proposed
§1.761-2(a)(4)(iii)(A)) can conduct normal project management functions for
an unincorporated organization without
violating the joint marketing requirement.
That commenter requested, in the alternative, a “roadmap” setting forth how a
managing member or general partner can
comply with the joint marketing requirement in a practical manner. The same
commenter also requested allowing representatives of an unincorporated organization to perform pre-filing and other ministerial services on behalf of the entities
jointly owning applicable credit property.
An applicable unincorporated organization must meet all applicable requirements, including the existing requirements with the modifications contained
in these final regulations, to elect out of
subchapter K under section 761(a) and to
maintain a section 761(a) election. Generally, the members of an unincorporated
organization are permitted to have a representative handle management and ministerial duties typical of a managing member of a limited liability company (LLC)
or general partner of a limited partnership

December 9, 2024

without violating these requirements. The
Treasury Department and the IRS understand that representatives with such duties
may be required by local law for entities
that may hold the organization’s property
under §1.761-2(a)(4)(iii)(A) of these final
regulations. These final regulations, however, do not provide a “roadmap” for permissible arrangements or rights and duties
of such representatives as the list would
not be exhaustive and could cause unintentional inferences to be drawn.
One commenter proposed allowing an
applicable entity to direct some or all of
its elective payments of applicable credit
amounts under section 6417 to a separate
account jointly owned by the applicable
entity and other members of an applicable unincorporated organization to pay
expenses directly related to the underlying
applicable credit property’s co-ownership.
The commenter suggested applying rules
similar to those applicable to assignments
of payments under section 1603 (regarding grants for specified energy properties
in lieu of tax credits) of the American
Recovery and Reinvestment Act of 2009,
Public Law 111-5, 123 Stat. 115 (2009),
including that each payment be assigned to
a bank or other financing institution, that
the assignment cover all amounts payable
and not be subject to further assignment
(except that any assignment may be made
to one party acting as an agent or trustee
for the co-owners), and that the assignee
file a Notice of Assignment.
As already discussed, §1.6417-2(a)(1)
(iii) provides that if an applicable entity
is a co-owner in an applicable credit
property through an organization that
has made a valid section 761(a) election, then the applicable entity’s undivided ownership share of the applicable
credit property will be treated as a separate applicable credit property owned by
such applicable entity, and the applicable
entity may make an election under section 6417(a) for the applicable credits
determined with respect to such applicable credit property. When an applicable
entity makes an election under section
6417(a), such entity is treated as making
a payment against the tax imposed by
subtitle A of the Code. If this payment
causes the entity to have an “overpayment” of tax in a taxable year, section
6402(a) generally provides that the entity

December 9, 2024

may receive a refund equal to the amount
of the overpayment over the entity’s tax
liability. This refund must be made to the
person who made the overpayment (i.e.,
the applicable entity). If that applicable
member is a partnership or S corporation,
section 6417(c)(1)(A) specifies that the
payment for such election is made to the
partnership or S corporation that made
the section 6417(a) election. Accordingly, similar to the general rule under
section 6417(a), refunds or payments
under section 6417(c) generally cannot
be paid to accounts in the name of someone other than the entity making the election. A valid section 761(a) election does
not affect the application of this general
rule and, therefore, these final regulations
do not adopt the commenter’s proposal.
C. Purpose of Organization
Proposed §1.761-2(a)(4)(ii)(C) would
have provided that an organization is an
applicable unincorporated organization
if it “is organized exclusively to produce
electricity from its applicable credit property (as defined in §1.6417-1(e)) and with
respect to which one or more applicable
credits listed in section 6417(b)(2), (4),
(8), (10), and (12) is determined.” The
scope of this rule was intended to remove
certain impediments for these types of
applicable unincorporated organizations
that would otherwise comply with existing requirements. The Treasury Department and the IRS sought comments on the
scope and requirements of the proposed
regulations, including whether modifications similar to those in proposed §1.7612(a)(4)(iii) are needed for applicable entities that own applicable credit properties
that do not produce electricity.
Commenters generally recommended
that the modifications in proposed §1.7612(a)(4)(iii) are also needed for organizations organized to own applicable
credit property with respect to which any
other applicable credit listed in section
6417(b) is determined. Some commenters requested clarity that certain facilities, especially battery storage facilities,
“produce electricity” for purposes of the
definition of an applicable unincorporated
organization. One commenter asserted
that the “non-generative” credits from
section 6417(b) that were not included in

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proposed §1.761-2(a)(4)(ii)(C) could be
claimed by organizations “availed of…
for the joint…use of property” and that
such organizations should therefore be
permitted to make a section 761(a) election if other existing requirements are met.
The same commenter requested clarification that certain activities with respect to
applicable credits, including time-limited
delegations of relevant powers, would
not violate the existing requirements to
make a section 761(a) election. Another
commenter asked for clarification that
common, non-electricity revenue streams
related to jointly owned projects, such
as revenues from the sale of capacity
and ancillary services, do not violate the
requirement that an organization must be
organized exclusively to produce electricity.
The Treasury Department and the
IRS agree that organizations formed
to own applicable credit property with
respect to which any applicable credits
(including non-generative credits) are
determined should be permitted to apply
the modifications to the existing section
761(a) rules contained in the proposed
regulations. Section 761(a)(2) refers to
organizations availed of “for the joint
production, extraction, or use of property,” which is not limited to activities
that produce electricity. Accordingly,
pursuant to the authority in sections
761(a) and 6417(h), the final regulations
revise the definition of an applicable
unincorporated organization to include
organizations organized exclusively to
own and operate applicable credit property (as defined in §1.6417-1(e)). The
adoption in the final regulations of this
definition of applicable unincorporated
organization should not be read to imply
that any particular factual arrangement
permits a valid section 761(a) election.
To make a valid section 761(a) election,
an unincorporated organization, including an applicable unincorporated organization, must meet all the requirements
of section 761(a) and the regulations
thereunder.
D. Section 6417 Election
Proposed §1.761-2(a)(4)(ii)(D) would
have provided that an unincorporated
organization is an applicable unincorpo-

Bulletin No. 2024–50

rated organization only if one or more of
its applicable entity members will make
an elective payment election under section 6417(a) for the applicable credits
determined with respect to its share of the
applicable credit property.
One commenter recommended extending the modifications in proposed §1.7612(a)(4)(iii) to organizations for which
no applicable entity member will make
an election under section 6417. These
final regulations are of limited scope and
are promulgated, in part, pursuant to the
authority in section 6417(h) to carry out
the purposes of section 6417 by facilitating joint-ownership arrangements of
applicable credit property by applicable
entities. These final regulations do not
adopt this commenter’s recommendation
because it is not necessary for purposes of
these final regulations.
E. Other Requirements
Proposed §1.761-2(a)(4)(ii) would
have provided that an applicable unincorporated organization is an unincorporated
organization described in prior §1.7612(a)(1) that meets the requirements of
proposed §1.761-2(a)(4)(ii)(A) through
(D). The reference to prior §1.761-2(a)(1)
was intended to emphasize the statutory
requirements under section 761(a) and
prior §1.761-2(a)(1) that: (1) the members
of the unincorporated organization must
be able to compute their income without
the necessity of computing partnership
income, and (2) the unincorporated organization must not be a syndicate, group,
pool, or joint venture which is classifiable
as an association, or operate under an
agreement which creates an organization
classifiable as an association. For clarity,
the final regulations remove the reference to prior §1.761-2(a)(1) in proposed
§1.761-2(a)(4)(ii) and include the requirements of prior §1.761-2(a)(1) as revised
§1.761-2(a)(4)(ii)(E) and (F). In the final
regulations, therefore, an applicable unincorporated organization is an unincorporated organization that meets the requirements of revised §1.761-2(a)(4)(ii)(A)
through (F).
One commenter requested that a
Tribal Energy Development Organization
(TEDO) be permitted to make an elective
payment election regardless of its partner-

Bulletin No. 2024–50

ship status and be permitted to make special allocations. A TEDO that is formed as
a partnership and meets the requirements
may make a 761(a) election. Section
761 does not apply, however, to entities
formed as corporations. In addition, special allocations are inconsistent with a
section 761(a) election, which is available
under the statute only to organizations
that satisfy the severance requirement and
the members of which can compute their
income without the necessity of computing partnership taxable income. Accordingly, the final regulations do not adopt
these requested changes.
Another commenter requested clarity
about the eligibility of a “partnership flip”
structure to make a section 761(a) election.
Generally, these structures involve allocations of income, gains, losses, deductions,
or credits that change at some point after
the partnership has been formed. In the
commenter’s proposed structure, a taxable
member of an unincorporated organization does not control the organization but
owns a profits interest in the organization
that allows the member to earn preferred
returns over the course of its investment.
The commenter suggested that this type of
member should be permitted to individually elect out of partnership tax treatment
under subchapter K, and then elect back
into partnership treatment under subchapter K after it has recouped its investment.
Partnership flip structures, such as the
one described by the commenter, violate
the existing statutory requirements for
electing out of subchapter K, even as modified by proposed §1.761-2(a)(4)(iii). This
is because such structures provide members with disproportionate amounts of
income, gains, losses, deductions, or credits and thereby require an unincorporated
organization to compute partnership taxable income to determine each member’s
share of the organization’s income. These
arrangements are also incompatible with
the severance requirement, under which
members must reserve the right separately
to take in kind or dispose of their shares of
any property produced, extracted, or used
because members do not have a determinate “share” of the applicable credit
property. For these reasons, the Treasury
Department and the IRS clarify that partnership flip structures are not eligible to
make a section 761(a) election.

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IV. Specified Modifications for Applicable
Unincorporated Organizations
A. Modified Co-ownership Requirement
For applicable unincorporated organizations, proposed §1.761-2(a)(4)(iii)(A)
would have modified the co-ownership
requirement such that the participants in
the applicable unincorporated organization would be permitted to own applicable
credit property through an unincorporated
organization that is a legal entity, other
than one treated as a corporation under
any provision of the Code (modified
co-ownership requirement).
One commenter requested confirmation whether the following situation is
compatible with an election under section
761(a). A tax-exempt entity forms an LLC
to raise money and serve as a special purpose vehicle to own and operate a clean
energy project. The tax-exempt entity then
sells equity securities in the LLC to investors. Prior to submitting the pre-filing registration with the IRS, the LLC makes an
election under section 761(a). The tax-exempt entity or operator then decides if,
and when, investors should be paid dividends based on their fractional ownership.
This situation is inconsistent with
the modified co-ownership requirement.
Organizations that have made a section
761(a) election do not pay dividends for
Federal income tax purposes. Because
each member of such organization is generally treated as directly owning its proportionate share of the organization’s assets,
each member is entitled to payments or
credits with respect to the member’s share
of property produced, extracted, or used,
regardless of whether any other member
would have approved the distribution of
such amounts.
B. Joint Marketing Modification and
Agent Delegation Rule
For applicable unincorporated organizations, proposed §1.761-2(a)(4)(iii)(B)
would have modified the joint marketing
requirement in prior §1.761-2(a)(3)(iii)
to provide that a delegation of authority
to sell the participant’s share of the property produced may allow the delegee to
enter into contracts the duration of which
exceeds the minimum needs of the indus-

December 9, 2024

try and may be for longer than one year
(the joint marketing modification), provided that the delegation of authority to act
on behalf of the participant may not be for
a period of time that exceeds the minimum
needs of the industry, and in no event for
more than one year (the agent delegation
rule). Proposed §1.761-2(a)(4)(vi) would
have provided an example illustrating
this modification to the existing regulatory requirements, in which each member
of an unincorporated organization grants
to the same agent a one-year delegation
(not exceeding the minimum needs of
the industry) of the member’s authority
to sell the member’s share of electricity
produced by the organization. The agent
commits each member to a 15-year power
purchase agreement (PPA). Because the
delegation of authority is for a period no
longer than one year, the requirements of
proposed §1.761-2(a)(4)(iii)(B) are met.
Commenters requested clarification
on several issues relating to the joint
marketing modification. Some commenters asked whether two or more members
of an applicable unincorporated organization that has made a section 761(a)
election may sell their share of the organization’s output in the same contract.
Some commenters also asked whether
the 15-year period for the contract in the
example is intended to serve as a safe
harbor or limitation on the duration of
such agreements.
Provided that the agent delegation rule
and all other requirements under section
761(a) are satisfied, the joint marketing
modification allows members of an applicable unincorporated organization to enter
into contracts of any duration. Multiple
members of the same applicable unincorporated organization may be party to the
same contract. Members can also choose
to sell their shares without a multi-year
contract. The example merely illustrates
the joint marketing modification and is
not intended to be a safe harbor. No clarification is required to the joint marketing
modification in the final regulations.
Commenters also requested clarification of the agent delegation rule.
One commenter asked whether an agent
would be subject to the rule if it was
an Indian Tribal government or other
applicable entity. Some commenters
suggested eliminating the one-year lim-

December 9, 2024

itation on agent delegations or allowing
agent delegations to automatically renew
after each year. One commenter suggested that certain organizations would
need to sell their output into an organized market rather than pursuant to a
fixed PPA. In this situation, according
to the commenter, authority to sell the
output for each applicable entity may
need to be pursuant to an agreement that
automatically renews annually. Another
commenter suggested that the one-year
limitation on agent delegations will harm
applicable entities without technical
expertise because non-applicable entities
with their own expertise will not require
an agent and could be able to take advantage of an applicable entity that is only
able to use an agent for one year. Another
commenter asked for clarification that
a member of an unincorporated organization may delegate powers to an agent
without limitation as long as no other
member makes such a delegation.
The purpose of the agent delegation
rule is to fulfill the statutory requirement
in section 761(a)(2) that no organization making a section 761(a) election is
formed “for the purpose of selling services or property produced or extracted.”
This is a prohibition on joint marketing;
accordingly, any member of an unincorporated organization may have an agent
for any duration of time, provided that
the agent does not represent more than
one member of the applicable unincorporated organization. The agent delegation rule applies to any person or group
of people acting on behalf of more than
one member of an unincorporated organization, regardless of their status as an
applicable entity.
The longstanding one-year exception
to the joint marketing requirement in the
existing regulations reflects a balancing
of the statutory language with commercial necessities, and the proposed regulations reflected a similar balancing. Section 761(a)(2) does not permit an electing
organization to conduct sales through an
agent with indefinite authority on behalf
of multiple members. Such a structure is
necessarily “availed of…for the purpose
of selling services or property produced or
extracted” and is not eligible to elect out
of subchapter K. These final regulations,
therefore, do not adopt the suggestions

1214

to eliminate the agent delegation rule or
allow agent delegations to automatically
renew. However, in any given year, an
agent may be delegated authority on terms
identical to those in a past year, provided
that the delegation of authority to act is
not for a period of time that exceeds the
minimum needs of the industry and each
member delegating authority to that agent
consents to those terms in writing at least
once per year. Example 3 has been added
in revised §1.761-2(a)(5)(iii) to illustrate
this rule.
One commenter requested that the
phrase “minimum needs of the industry”
be either clarified or deleted. That phrase
is intended to be fact-sensitive; like the
rest of the joint marketing requirement,
the phrase is intended to balance statutory
requirements with commercial necessities. These final regulations, therefore, do
not adopt the commenter’s request to clarify or eliminate it.
C. Specific Examples
Several commenters generally asked
for more examples showing applications
of the proposed regulations. In response,
the Treasury Department and the IRS have
added two examples to the final regulations.
V. Additional Information
A. Applicability date
Except as provided in §1.761-2(d),
these final regulations apply to taxable
years ending on or after March 11, 2024,
the date on which the proposed regulations were published in the Federal
Register. An applicable unincorporated
organization that validly made a section
761(a) election meeting the requirements
of these final regulations for a taxable year
ending on or after March 11, 2024, will
be treated as having made a valid section
761(a) election even if the election was
made prior to the publication of these final
regulations in the Federal Register.
B. Administrative Requirements
The preamble to the proposed regulations noted that the Treasury Department
and the IRS were considering certain rules

Bulletin No. 2024–50

to prevent abuse of the modifications in
proposed §1.761-2(a)(4)(iii). One rule
described in the preamble to the proposed
regulations would have prevented the
deemed election rules in prior §1.761-2(b)
(2)(ii) from applying to any unincorporated organization relying on a modification in proposed §1.761-2(a)(4)(iii). One
commenter recommended against adopting such a rule, which the commenter
believed would be inconsistent with the
goals of the proposed regulations and
increase the likelihood of inadvertent disallowances of section 761(a) elections in
non-abusive situations.
Although these final regulations do
not adopt any rules regarding deemed
elections, more administrative guidance
is needed under section 761(a) to fulfill
the purposes of section 6417. As a result,
concurrently with the publication of these
final regulations, the Treasury Department and the IRS are publishing in the
Proposed Rules section of this edition of
the Federal Register the November 2024
proposed regulations under section 761(a)
(REG-116017-24), which would provide
rules affecting the validity of elections
under section 761(a) by applicable unincorporated organizations whose elections
would not have been valid without the
application of revised §1.761-2(a)(4)(iii).
C. Obsolete language
Section 1.761-2(b)(3)(i) provides, in
part, that an application for permission to
revoke a section 761(a) election must be
submitted to the Commissioner of Internal Revenue, Attention: T:I, Washington,
DC 20224, no later than 30 days after the
beginning of the first taxable year to which
the revocation is to apply. This language
no longer reflects the correct procedure for
obtaining permission to revoke a section
761(a) election and is therefore eliminated
by these final regulations. The November
2024 proposed regulations would instead
provide that such an application must be
made by submitting a letter ruling request
that complies with the requirements of
Rev. Proc. 2024-1 or successor guidance.
Section 1.761-2(b)(3)(i) also provides, in
part, that a section 761(a) will be effective
unless a member of the organization sends
proper notice to the Commissioner “within
90 days after the formation of the organi-

Bulletin No. 2024–50

zation (or by October 15, 1956, whichever
is later)…”. The final regulations would
strike the parenthetical language to update
and streamline the paragraph.

Special Analyses
I. Regulatory Planning and Review

Two comments received were related
to section 761 but outside the scope of
these final regulations. These comments
are summarized in this Part VI.

Pursuant to the Memorandum of
Agreement, Review of Treasury Regulations under Executive Order 12866 (June
9, 2023), tax regulatory actions issued by
the IRS are not subject to the requirements
of section 6 of Executive Order 12866, as
amended. Therefore, a regulatory impact
assessment is not required.

A. Implementation

II. Paperwork Reduction Act

One commenter asked for clarification
of how audits of joint structures would
take place, including by identifying the
specific parts of Treasury and the IRS
involved in such audits and the standard
of review for such audits. Another commenter requested the development of
educational materials, “office hours,” and
other guidance to improve understanding
of the regulations and uptake of applicable credits. Another commenter requested
that the Treasury Department and the IRS
provide clear rules for the pre-registration filing process for applicable credit
property co-owned by taxpayers making
transferability elections. These final regulations do not provide information about
audit procedures or the development of
further guidance, but the Treasury Department and the IRS will continue to monitor
the elective payment process to determine
whether there are areas in which more
efficiencies can be created.

The Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520) (PRA) generally
requires 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 control number.
These final regulations mention reporting and recordkeeping requirements that
must be satisfied for unincorporated organizations to elect out of subchapter K.
These collections of information are generally used by the IRS for tax compliance
purposes and by taxpayers to facilitate
proper reporting and recordkeeping. The
likely respondents to these collections are
businesses and tax-exempt organizations.
Unincorporated entities meeting the
requirements outlined in §1.761-2(a)(4)
of these final regulations satisfy relevant
reporting requirements by submitting a
statement attached to, or incorporated in,
a properly executed partnership return,
Form 1065, U.S. Return of Partnership
Income, containing, in lieu of the information required by Form 1065 and by the
instructions relating thereto, only the name
or other identification and the address
of the organization together with information on the return, or in the statement
attached to the return, showing the names,
addresses, and identification numbers of all
the members of the organization; a statement that the organization qualifies under
§1.761-2(a)(1) and either §1.761-2(a)(2)
or (3); a statement that all of the members

VI. Comments That Are Not Addressed in
These Final Regulations

B. Tribal organizations
One commenter noted that wholly
owned Tribal corporations appear to be
incapable of making an election under
section 761(a) because such entities are
corporations for Federal tax purposes.
The treatment of entities wholly owned by
Tribal governments is addressed by a separate rulemaking and is therefore outside
the scope of these final regulations. For
information on how to provide comments
in response to that separate rulemaking,
see the notice of proposed rulemaking
(REG-113628-21), Entities Wholly Owned
by Indian Tribal Governments, published
in the Federal Register (89 FR 81871) on
October 9, 2024.

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December 9, 2024

of the organization elect that it be excluded
from all of subchapter K; and a statement
indicating where a copy of the agreement
under which the organization operates is
available (or if the agreement is oral, from
whom the provisions of the agreement
may be obtained). These requirements and
associated forms are already approved by
OMB under 1545-0123 for business filers.
These final regulations are not changing or
creating new collection requirements not
already approved by OMB.
The
recordkeeping
requirements
mentioned in these final regulations are
considered general tax records under
§1.6001-1(e). These records are required
for the IRS to validate that electing taxpayers have consistently met the regulatory requirements outlined in §1.761-2.
For PRA purposes, general tax records are
already approved by OMB under 15450123 for business filers and 1545-0047 for
tax-exempt organizations.
III. Regulatory Flexibility Act
The Secretary of the Treasury hereby
certifies that the final regulations will not
have a significant economic impact on a
substantial number of small entities pursuant to the Regulatory Flexibility Act (5
U.S.C. chapter 6).
These final regulations would affect
unincorporated organizations that elect
out of subchapter K in connection with an
election under section 6417, as well as the
members of such organizations.
Data is not readily available about these
organizations. Such organizations could
not have made an election out of subchapter K under the preexisting regulations, so
information about existing organizations
that have made section 761(a) elections is
not instructive.
Even if these final regulations affect a
substantial number of small entities, such
impact will not be significant. The final
regulations do not make it more costly to
make or maintain an election under section 761(a).
These final regulations do not change
the procedural requirements under
§1.761-2(b) for making an election under
section 761(a). Other than to conform to
modern formatting conventions, the final
regulations would amend §1.761-2(b)
only by adding a parenthetical to clarify

December 9, 2024

that in making a valid section 761 election, which requires attaching certain
statements to a Form 1065 as required
in accordance with the preexisting regulations, §1.761-2(a)(4) should be taken
into account, as applicable, with regard
to the required statement that the organization qualifies under §1.761-2(a)(1) and
either §1.761-2(a)(2) or (3) “(taking into
account §1.761-2(a)(4), as applicable)”.
Otherwise, an unincorporated organization making an election under these final
regulations would not be required to submit anything additional or different than
required under the preexisting version of
§1.761-2(b).
These final regulations impose no new
ongoing compliance costs. Though any
unincorporated organization that has made
an election under section 761(a) should
ensure that it remains qualified under
§1.761-2(a)(1) and either §1.761-2(a)(2)
or (3) (taking into account §1.761-2(a)
(4), as applicable), the final regulations
do not add to this obligation. In fact, these
final regulations could make it simpler
for certain unincorporated organizations
to stay qualified, given their joint operating agreements that satisfy the modified
co-ownership and severance requirements
and multi-year contracts that satisfy the
modified joint marketing requirement.
For the reasons stated, a regulatory
flexibility analysis under the Regulatory
Flexibility Act is not required.
Pursuant to section 7805(f), the notice
of proposed rulemaking preceding these
regulations was submitted to the Chief
Counsel for the Office of Advocacy of the
Small Business Administration for comment on its impact on small business, and
no comments were received.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandate
Reform Act of 1995 requires that agencies
assess anticipated costs and benefits and
take certain other actions before issuing a
final rule that includes any Federal mandate that may result in expenditures in
any one year by a State, local, or Tribal
government, in the aggregate, or by the
private sector, of $100 million (updated
annually for inflation). These final regulations do not include any Federal mandate
that may result in expenditures by State,

1216

local, or Tribal governments or by the private sector in excess of that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on State and local governments, and is not required by statute,
or preempts State law, unless the agency
meets the consultation and funding
requirements of section 6 of the Executive
order. These final regulations do not have
federalism implications and do not impose
substantial, direct compliance costs on
State and local governments or preempt
State law within the meaning of the Executive order.
VI. Executive Order 13175: Consultation
and Coordination With Indian Tribal
Governments
Executive Order 13175 (Consultation
and Coordination With Indian Tribal Governments) prohibits an agency from publishing any rule that has Tribal implications if the rule either imposes substantial
direct compliance costs on Indian Tribal
governments, and is not required by statute, or preempts Tribal law, unless the
agency meets the consultation and funding requirements of section 5 of the Executive order. These final rules do not have
substantial direct effects on one or more
federally recognized Indian tribes and do
not impose substantial direct compliance
costs on Indian Tribal governments within
the meaning of the Executive order.
Nevertheless, on April 5, 2024, the
Treasury Department and the IRS held a
consultation with Tribal leaders requesting
assistance in addressing questions related
to the section 761(a) proposed rules published on March 11, 2024, which informed
the development of these final regulations.
VII. Executive Order 14112: Reforming
Federal Funding and Support for Tribal
Nations To Better Embrace Our Trust
Responsibilities and Promote the Next
Era of Tribal Self-Determination
Executive Order 14112 (Reforming
Federal Funding and Support for Tribal

Bulletin No. 2024–50

Nations to Better Embrace Our Trust
Responsibilities and Promote the Next Era
of Tribal Self-Determination) reaffirms
the executive branch’s support for Tribal
self-determination as the most effective
policy for the economic growth of Tribal
Nations and the economic well-being of
Tribal citizens. Executive Order 14112
requires agency heads to take certain
actions, consistent with applicable law
and to the extent practicable, to increase
access to “Federal funding and support
programs for Tribal Nations”; provide
Tribal Nations with the flexibility to
improve economic growth and address
the specific needs of their communities;
and reduce administrative burdens. Section 2(b) of the Executive order defines
“Federal funding and support programs
for Tribal Nations” as including “funding, programs, technical assistance, loans,
grants, or other financial support or direct
services that the Federal Government provides to Tribal Nations or Indians because
of their status as Indians.” As section 1
of the Executive order explains, “As we
continue to support Tribal Nations, we
must respect their sovereignty by better
ensuring that they are able to make their
own decisions about where and how to
meet the needs of their communities. No
less than for any other sovereign, Tribal
self-governance is about the fundamental
right of a people to determine their own
destiny and to prosper and flourish on their
own terms.” These commitments build on
a recognition of principles of sovereignty,
sovereign immunity, and self-governance
that have been repeatedly reaffirmed by
the Supreme Court. See, e.g., Three Affiliated Tribes of the Fort Berthold Reservation v. Wold Engineering, P.C., et al.,
476 U.S. 877, 890-91 (1986); Oklahoma
Tax Comm’n v. Citizen Band Potawatomi
Indian Tribe of Oklahoma, 498 U.S. 505,
510 (1991). The Treasury Tribal Advisory Committee has advised that Tribes
consider “financial support” in Executive
Order 14112 to include tax matters that
range from tax credits to Federal tax rules
that regulate Tribal revenue.
Consistent with Executive Order
14112, the Treasury Department and the
IRS recognize the importance of protecting and supporting Tribal sovereignty and
self-determination. These final regulations
would further Tribal self-determination

Bulletin No. 2024–50

and self-governance and reduce administrative burdens by providing Tribes the
ability to directly make section 6417 elections for applicable credit property held
through applicable unincorporated organizations provided all applicable statutory
and regulatory requirements are satisfied.
VIII. Congressional Review Act
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the Office of
Information and Regulatory Affairs has
designated this rule as a “major rule,” as
defined by 5 U.S.C. 804(2).
Statement of Availability of IRS
Documents
IRS notices and other guidance cited in
this preamble are published in the Internal
Revenue Bulletin (or Cumulative Bulletin)
and are available from the Superintendent
of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by
visiting the IRS website at https://www.
irs.gov.
Drafting Information
The principal author of these final regulations is Cameron Williamson. However, other personnel from the Treasury
Department and the IRS participated in
their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Amendments to the Regulations
Accordingly, the Treasury Department
and the IRS amend 26 CFR part 1 as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by revising the entry
for §1.761-2 to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
*****
Section 1.761-2 also issued under 26
U.S.C. 446(b), 761(a), 6031(a), 6417(d),
and 6417(h).

1217

*****
Par. 2. Section 1.761-2 is amended by:
a. Revising and republishing paragraphs (a)(1), (a)(2)(i), and (a)(3)(i);
b. Adding paragraphs (a)(4) and (5);
c. Revising and republishing paragraphs (b)(1) and (2), (b)(3)(i), (c), and
(e); and
d. Adding paragraph (f).
The revisions and additions read as follows:
§1.761-2 Exclusion of certain
unincorporated organizations from the
application of all or part of subchapter
K of chapter 1 of the Internal Revenue
Code.
(a) * * *
(1) In general. Under the conditions
set forth in this section, an unincorporated organization described in paragraph
(a)(2) or (3) of this section (taking into
account paragraph (a)(4) of this section,
as applicable) may be excluded from the
application of all or a part of the provisions of subchapter K of chapter 1 of
the Internal Revenue Code (subchapter
K). Such organization must be availed
of for investment purposes only and not
for the active conduct of a business, or
for the joint production, extraction, or
use of property, but not for the purpose
of selling services or property produced
or extracted. The members of such organization must be able to compute their
income without the necessity of computing partnership taxable income. Any
syndicate, group, pool, or joint venture
which is treated as a corporation for Federal tax purposes does not fall within the
provisions in this paragraph (a)(1).
(2) * * *
(i) Own the property as co-owners;
*****
(3) * * *
(i) Own the property as co-owners,
either in fee or under lease or other form
of contract granting exclusive operating
rights; and
*****
(4) Modifications for certain joint ownership arrangements of applicable credit
property—(i) Scope. Paragraph (a)(4)(iii)
of this section provides certain modifications to specified rules in paragraph (a)(3)
of this section in the case of an applicable

December 9, 2024

unincorporated organization meeting the
requirements of paragraph (a)(4)(ii) of
this section.
(ii) Applicable unincorporated organization. For purposes of this section, an
applicable unincorporated organization is
an unincorporated organization:
(A) That is owned, in whole or in
part, by one or more applicable entities,
as defined in section 6417(d)(1)(A) and
§1.6417-1(c);
(B) The members of which enter into
a joint operating agreement in which the
members reserve the right separately
to take in kind or dispose of their pro
rata shares of any property produced,
extracted, or used, and any associated
renewable energy credits or similar credits;
(C) That, pursuant to the joint operating agreement, is organized exclusively to
own and operate applicable credit property (as defined in §1.6417-1(e));
(D) For which one or more of the
applicable entities will make an elective
payment election under section 6417(a)
for the applicable credits determined with
respect to its share of the applicable credit
property;
(E) The members of which are able to
compute their income without the necessity of computing partnership taxable
income; and
(F) Which is not a syndicate, group,
pool, or joint venture which is classifiable
as an association, or any group operating under an agreement which creates an
organization classifiable as an association.
(iii) Specified modifications for applicable unincorporated organizations.
Solely for purposes of an election under
section 761(a) by an applicable unincorporated organization that meets the
requirements of paragraphs (b) and (e) of
this section:
(A) The requirement in paragraph (a)
(3)(i) of this section is modified such that
the participants are permitted to own the
applicable credit property through an
unincorporated organization that is an
entity, other than one that is treated as a
corporation for Federal tax purposes; and
(B) The requirement in paragraph (a)
(3)(iii) of this section is modified such
that the delegation of authority to sell the
participant’s share of the property pro-

December 9, 2024

duced or used may allow the delegee to
enter into contracts the duration of which
exceeds the minimum needs of the industry and may be for more than one year,
provided that the delegation of authority
to act on behalf of the participant may not
be for a period of time that exceeds the
minimum needs of the industry, and in no
event for more than one year.
(5) Examples. The following examples
are intended to illustrate the principles of
this section.

(i) Example 1—(A) Facts. G and H enter into
a joint operating agreement to own and operate a
facility that will produce solar energy. G, an applicable entity, is entitled under the joint operating
agreement to take in kind or dispose of 40% of
the energy produced by the unincorporated organization and H, which is not an applicable entity,
is entitled to the remaining 60%. G and H form
LLC, a limited liability company, to hold the solar
energy property that G and H intend to operate
pursuant to the joint operating agreement. In accordance with the joint operating agreement, G owns
a 40% ownership interest in LLC and H owns the
remaining 60% ownership interest. G will sell its
share of energy produced by the facility in a manner
designed to generate applicable credits under section 45(a) and will make an election under section
6417(a) with respect thereto. LLC makes a valid
election under section 761(a) to be excluded from
subchapter K.
(B) Analysis. G will be entitled to any credits
under section 45(a) generated by its sale of energy
produced by LLC that G has the right to take in
kind or dispose of (which, under the joint operating
agreement, is 40% of the energy produced by LLC).
Assuming all other requirements are met, G will be
able to make an elective payment election under section 6417 for the applicable credits determined with
respect to its ownership share of the solar energy
property.
(ii) Example 2—(A) Facts. T is an Indian Tribal
government as defined in §1.6417-1(c) and an applicable entity. Through a limited liability company
organized under T’s Tribal law (TLLC), T and Y own
and operate applicable credit property that will generate electricity the sale of which will generate applicable credits under section 45(a). TLLC is not treated
as an association taxable as a corporation for Federal
tax purposes and no election under §301.7701-3 of
this chapter has been made to treat TLLC as such.
T and Y enter into a joint operating agreement with
respect to the ownership and operation of the applicable credit property in which each of T and Y reserve
the right separately to take in kind or dispose of their
pro rata shares of property produced, extracted, or
used and any associated renewable energy credits
or similar credits. TLLC is formed exclusively to
own and operate an applicable credit property with
respect to which section 45(a) credits will be determined. On January 1st of year 1, T and Y enter into
delegation agreements with Q that delegate T’s and
Y’s authority to Q to sell the electricity generated

1218

by T’s and Y’s shares of the applicable credit property. The term of the delegation agreements is one
year, which does not exceed the minimum needs of
the industry. On June 1st of year 1, Q enters into a
power purchase agreement with Utility on T’s and
Y’s behalf that commits T and Y to sell the electricity
produced from their shares of the applicable credit
property to Utility for a term of 15 years. At the end
of the day on December 31st of year 1, the delegation
agreements terminate.
(B) Analysis. Because T and Y did not delegate
authority for a period of more than one year to sell
the output from their shares of the applicable credit
property, the requirements of paragraph (a)(3)(iii)
of this section (as modified by paragraph (a)(4)(iii)
(B) of this section) are met. Assuming that TLLC
otherwise qualifies as an applicable unincorporated
organization, TLLC is an organization described in
paragraph (a)(4)(iii)(A) of this section and can make
an election under paragraphs (b) and (e) of this section to be excluded from the application of all of subchapter K under section 761(a). As such, T can make
an elective payment election for the applicable credits determined with respect to its share of the applicable credit property held by TLLC, assuming the
requirements of section 6417 are otherwise met. The
analysis in this example would be the same whether
Y is also an Indian Tribal government, another applicable entity, or some other person.
(iii) Example 3—(A) Facts. The facts are the
same as in paragraph (a)(5)(ii)(A) of this section
(Example 2), except that at the end of the day on
December 31, T and Y each agree, in writing, to a
new agent delegation agreement with Q with substantively identical terms as the agent delegation
agreement in effect during year 1.
(B) Analysis. Because each of T and Y have
agreed, in writing, to engage Q in an agency relationship lasting no longer than one year, the results
are the same as in paragraph (a)(5)(ii)(B) of this
section (Example 2). In contrast, if the agent delegation agreement renewed automatically, T and Y have
effectively entered into an agent delegation agreement lasting longer than one year and have violated
the requirements of paragraph (a)(4)(iii)(B) of this
section. In that case, TLLC would not be eligible to
make or maintain an election under section 761(a).
As such, T could not make an elective payment
election for the applicable credits determined with
respect to its share of the applicable credit property
held through TLLC.

(b) * * *
(1) Time for making election for exclusion. Any unincorporated organization
described in paragraph (a)(1) of this section and either paragraph (a)(2) or (3) of
this section (taking into account paragraph (a)(4) of this section, as applicable) that wishes to be excluded from all
of subchapter K must make the election
provided in section 761(a) not later than
the time prescribed by §1.6031(a)–1(e)
(including extensions thereof) for filing
the partnership return for the first tax-

Bulletin No. 2024–50

able year for which exclusion from subchapter K is desired. Notwithstanding the
prior sentence, such organization may be
deemed to have made the election in the
manner prescribed in paragraph (b)(2)(ii)
of this section.
(2) Method of making election—(i) In
general. Except as provided in paragraph
(b)(2)(ii) of this section, any unincorporated organization described in paragraph (a)(1) of this section and either
paragraph (a)(2) or (3) of this section
(taking into account paragraph (a)(4) of
this section, as applicable) which wishes
to be excluded from all of subchapter K
must make the election provided in section 761(a) in a statement attached to,
or incorporated in, a properly executed
partnership return, Form 1065, U.S.
Return of Partnership Income, which
must contain the information required in
this paragraph (b)(2)(i). Such return must
be filed with the Internal Revenue Service Center where the partnership return,
Form 1065, would be required to be filed
if no election were made. To determine
the appropriate Internal Revenue Service
Center, the principal office or place of
business of the person filing the return
will be considered the principal office or
place of business of the organization. The
partnership return must be filed not later
than the time prescribed §1.6031(a)–1(e)
(including extensions thereof) for filing
the partnership return with respect to the
first taxable year for which exclusion
from subchapter K is desired. Such partnership return must contain, in lieu of the
information required by Form 1065 and
by the instructions relating thereto, only
the name or other identification and the
address of the organization together with
information on the return, or in the statement attached to the return, showing the
names, addresses, and taxpayer identification numbers of all the members of the
organization; a statement that the organization qualifies under paragraph (a)(1) of
this section and either paragraph (a)(2)
or (3) of this section (taking into account
paragraph (a)(4) of this section, as applicable); a statement that all of the members of the organization elect that it be
excluded from all of subchapter K; and a

Bulletin No. 2024–50

statement indicating where a copy of the
agreement under which the organization
operates is available (or if the agreement
is oral, from whom the provisions of the
agreement may be obtained).
(ii) Deemed election rule. If an
unincorporated organization described
in paragraph (a)(1) of this section and
either paragraph (a)(2) or (3) of this section (taking into account paragraph (a)
(4) of this section, as applicable) does
not make the election provided in section 761(a) in the manner prescribed
by paragraph (b)(2)(i) of this section,
it will nevertheless be deemed to have
made the election if it can be shown
from all the surrounding facts and circumstances that it was the intention of
the members of such organization at the
time of its formation to secure exclusion
from all of subchapter K beginning with
the first taxable year of the organization.
Although the following facts are not
exclusive, either one of such facts may
indicate the requisite intent:
(A) At the time of the formation of
the organization there is an agreement
among the members that the organization
be excluded from subchapter K beginning
with the first taxable year of the organization; or
(B) The members of the organization
owning substantially all of the capital
interests report their respective shares of
the items of income, deductions, and credits of the organization on their respective
returns (making such elections as to individual items as may be appropriate) in a
manner consistent with the exclusion of
the organization from subchapter K beginning with the first taxable year of the organization.
(3) * * *
(i) In general. An election under this
section to be excluded will be effective
unless within 90 days after the formation of the organization any member of
the organization notifies the Commissioner that the member desires subchapter K to apply to such organization, and
also advises the Commissioner that the
member has so notified all other members of the organization by registered or
certified mail. Such election is irrevoca-

1219

ble as long as the organization remains
qualified under paragraph (a)(1) of this
section and either paragraph (a)(2) or
(3) of this section (taking into account
paragraph (a)(4) of this section, as
applicable), or unless approval of revocation of the election is secured from the
Commissioner.
*****
(c) Partial exclusion from subchapter K. An unincorporated organization
which wishes to be excluded from only
certain sections of subchapter K must
submit to the Commissioner, no later
than 90 days after the beginning of the
first taxable year for which partial exclusion is desired, a request for permission
to be excluded from certain provisions of
subchapter K. The request must set forth
the sections of subchapter K from which
exclusion is sought and must state that
such organization qualifies under paragraph (a)(1) of this section and either
paragraph (a)(2) or (3) of this section
(taking into account paragraph (a)(4) of
this section, as applicable), and that the
members of the organization elect to be
excluded to the extent indicated. Such
exclusion will be effective only upon
approval of the election by the Commissioner and subject to the conditions the
Commissioner may impose.
*****
(e) Cross reference. For requirements
with respect to the filing of a return
on Form 1065 by a partnership, see
§1.6031(a)–1.
(f) Applicability date. Except as provided in paragraph (d) of this section, this
section applies to taxable years ending on
or after March 11, 2024.
Heather C. Maloy,
Acting Deputy Commissioner.
Approved: November 6, 2024.
Aviva R. Aron-Dine,
Deputy Assistant Secretary of
the Treasury (Tax Policy).
(Filed by the Office of the Federal Register November 19, 2024, 8:45 a.m., and published in the issue
of the Federal Register for November 20, 2024, 89
FR 91552)

December 9, 2024

26 CFR 301.6103(j)(1)-1 Disclosures of return information reflected on returns to officers and employees
of the Department of Commerce for certain statistical ...

T.D. 10013
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 301
Disclosures of Return
Information Reflected
on Returns to Officers
and Employees of the
Department of Commerce,
including the Bureau of
the Census, for Certain
Statistical Purposes and
Related Activities
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains
final regulations that amend existing
regulations relating to the disclosure
of specified return information to the
Bureau of the Census (Bureau). The
final regulations ensure the efficient and
appropriate transfer of return information
to the Bureau and permit the disclosure
of additional return information pursuant to a request from the Secretary of
Commerce. These regulations require no
action by taxpayers and have no effect on
their tax liabilities.
DATES: Effective date: These final regulations are effective on November 26,
2024.
Applicability date: For the date of applicability, see §301.6103(j)(1)-1.
FOR FURTHER INFORMATION
CONTACT: Elizabeth Erickson of the
Office of the Associate Chief Counsel
(Procedure and Administration), at (202)
317-6834; (not a toll-free number).

December 9, 2024

SUPPLEMENTARY INFORMATION:
Authority
This document amends the Procedure
and Administration Regulations, 26 CFR
part 301, relating to section 6103(j)(1)
(A) of the Internal Revenue Code (Code),
by adding final regulations under section
6103 (final regulations). Section 6103(j)
(1) provides an express delegation of
authority to the Secretary of the Treasury
or her delegate (Secretary), stating that,
“[u]pon request in writing by the Secretary of Commerce, the Secretary shall
furnish . . . such returns, or return information reflected thereon, to officers and
employees of the Bureau of the Census”
and “such return information reflected
on returns of corporations to officers and
employees of the Bureau of Economic
Analysis” “as the Secretary may prescribe
by regulation for the purpose of, but only to
the extent necessary in, the structuring of
censuses and national economic accounts
and conducting related statistical activities
authorized by law.” Section 6103(q) further authorizes the Secretary to “prescribe
such other regulations as are necessary to
carry out the provisions of” section 6103.
The final regulations are also issued under
the express delegation of authority under
section 7805(a) of the Code.
Background
There is a long history of providing
return information to the Bureau under
section 6103(j)(1)(A), and the regulations promulgated under this section have
been amended periodically to increase the
amount of return information provided to
facilitate the statistical activities of the
Bureau. See e.g., TD 9037, 68 FR 2693,
January 21, 2003; TD 9188, 70 FR 12141,
March 11, 2005; TD 9267, 71 FR 38263,
July 6, 2006; TD 9372, 72 FR 73262,
December 27, 2007; TD 9439, 73 FR
79361, December 29, 2008; TD 9500, 75
FR 52459, August 26, 2010; TD 9631, 78
FR 52857, August 27, 2013; TD 9754, 81
FR 9767, February 26, 2016; TD 9856, 84
FR 14011, April 9, 2019.
The existing regulations under section 6103(j)(1)(A) are set forth in 26
CFR 301.6103(j)(1)-1. They authorize
the Bureau to receive return information

1220

that supports many different Bureau projects and programs, including the Economic Census, the Longitudinal Employer-Household Dynamics program, and the
Small Area Income and Poverty Estimates
program, among others.
Pursuant to section 6103(p)(4), the
IRS sets stringent privacy and security
requirements for agencies receiving return
information, including the Bureau. These
requirements are currently detailed in IRS
Publication 1075, Tax Information Security Guidelines For Federal, State and
Local Agencies. See also §301.6103(p)
(4)-1.
By letter dated February 29, 2024, the
Secretary of Commerce requested the
Secretary amend existing §301.6103(j)
(1)-1 to provide for the disclosure of additional items of return information to the
Bureau to enable the Bureau to perform
mission critical statistical functions. The
Secretary of Commerce further stated
that the additional items would allow the
Bureau to conduct its economic, demographic, decennial, and research statistics programs, censuses, and related program evaluations. The amendments to
the existing regulations would permit the
Bureau to publish statistical information,
enhance the use of administrative records,
improve the quality of program estimates,
and support the reduction of burden. The
Secretary of Commerce’s letter lists the
additional items of return information
requested based on the Bureau’s specific
need for each item of information.
On March 29, 2024, a notice of proposed rulemaking (REG-123376-22) was
published in the Federal Register (89 FR
22101) (proposed regulations). The proposed regulations proposed amending the
regulations that authorize disclosure of
specified return information to the Bureau.
The proposed regulations would allow the
disclosure of additional items of return
information requested by the Secretary of
Commerce to enable the Bureau to perform mission critical statistical functions.
The proposed regulations would also permit the disclosure of return information
if an item of return information currently
listed in the regulations is subsequently
reported in a substantially similar format
or on a substantially similar document.
The proposed regulations would formalize existing practice to include (1) the

Bulletin No. 2024–50

requirement that all projects that use return
information disclosed under these regulations be approved by the IRS Director
of Statistics of Income, and (2) language
related to the IRS’s and the Bureau’s disclosure review obligations.
Summary of Comments and
Explanation of Revisions
The Department of the Treasury (Treasury Department) and the IRS received
eighteen comments in response to the
proposed regulations. The comments are
available for public inspection at https://
www.regulations.gov or upon request.
There was no request for a public hearing,
and none was held. After full consideration of the comments received, which are
described in this Summary of Comments
and Explanation of Revisions, these final
regulations adopt the proposed regulations
with minor changes.
A. Comments Supporting the Proposed
Regulations.
Nine of the comments received did not
seek to modify the items of return information permitted to be disclosed to the
Bureau pursuant to the proposed regulations. Of these comments, six were supportive of the proposed regulations. One
comment noted the importance of administrative tax data in measuring and understanding income and wealth in the United
States. Another comment noted that the
proposed regulations would improve the
Bureau’s ability to accurately estimate
household income and otherwise evaluate
and improve the Bureau’s statistical products. This same comment also encouraged
the IRS and the Bureau, along with the
Office of Management and Budget and
other statistical agencies, to explore additional pathways for increasing the statistical agencies’ access to Federal tax data, as
well as a greater sharing of administrative
data across statistical agencies, noting that
increased use of administrative data has
significant promise for improving statistics on U.S. households and businesses.
Finally, this comment noted its support for
further consideration of possible means of
expanding access to tax data for appropriate purposes in a reliably secure and confidential way.

Bulletin No. 2024–50

Another comment supported the proposed regulations and stated that the data
that could be disclosed as outlined in the
proposed regulations was crucial for the
IRS’s efforts to advance equity. As one
example, this comment noted that, if
finalized, the proposed regulations would
provide an important opportunity for government and independent researchers to
understand demographic trends regarding the Child Tax Credit (CTC) and other
refundable credits, as well as to identify and track potential disparities in tax
administration. Another comment noted
that the proposed changes to the existing
regulations would enable the Bureau to
produce data that provides more detail
about the economic conditions of various populations across the United States,
including populations that have been historically underserved, marginalized, and
adversely affected by health inequity.
These comments reflect support for
the proposed regulations’ items of return
information permitted to be disclosed to
the Bureau. The Treasury Department and
IRS agree that disclosure of this information will further the needs of the Bureau by
authorizing the Bureau to receive return
information that supports many different
Bureau projects and programs, including
the Economic Census, the Longitudinal
Employer-Household Dynamics program,
and the Small Area Income and Poverty
Estimates program, among others.
B. Comments Proposing that Additional
Items of Return Information be Disclosed
to the Bureau.
Two comments suggested that additional information on the variety of energy
credits under the Inflation Reduction Act
of 2022 (IRA) be furnished to the Bureau.
The IRA, Public Law 117-169, 136 Stat.
1818 (August 16, 2022), featured a significant number of new tax provisions related
to clean energy. Section 6103(j)(1)(A)
provides that the Secretary “shall furnish”
returns or return information requested
by the Secretary of Commerce “for the
purpose of, but only to the extent necessary in, the structuring of the censuses
and national economic accounts and conducting related statistical activities authorized by law.” In her request to the Secretary, the Secretary of Commerce did not

1221

request the furnishing of the return information recommended by the comments.
Because the Secretary of Commerce did
not request that information, the final regulations do not adopt these comments.
Similarly, two other comments recommended that additional data regarding
partnership returns be furnished to the
Bureau – specifically, the zip code of partners included on Form 1065, U.S. Return
of Partnership Income, Schedule K-1. The
Secretary of Commerce in her request to
the Secretary did not request the return
information recommended by the comments. Accordingly, the final regulations
do not adopt these comments.
One comment suggested that it is
important for the Bureau to have access
to the series of Forms 1099 for both filers
and non-filers because such information is
important for measuring and understanding income and its distribution, and that
the accuracy of income estimates would
improve. The comment in particular identified Forms 1099-INT, Interest Income,
and 1099-DIV, Dividends and Distributions, along with certain data from Form
1098-T, Tuition Statement (identifiers of
the college attended, and tuition amount).
The Secretary of Commerce in her request
to the Secretary did not request the disclosure of the Form 1099 series in general or the Forms 1099-INT or 1099-DIV
specifically. The proposed regulations
would permit the disclosure of payments
received for qualified tuition and related
expenses as well as the identity of the eligible educational institution filing Form
1098-T. Accordingly, no change to the
final regulations is necessary to adopt
these comments.
Two other comments requested that
payer and payee taxpayer identification
numbers (TINs) from information returns
be disclosed to the Bureau. Payer and
payee TINs may already be disclosed to
the Bureau under the existing regulations.
See §§301.6103(j)(1)-1(b)(1) (relating to
individual taxpayers); 301.6103(j)(1)-1(b)
(2)(i) (relating to taxpayers engaged in a
trade or business); 301.6103(j)(1)-1(b)
(3) (relating to business-related return
information); and 301.6103(j)(1)-1(b)(4)
(relating to tax-exempt organizations).
The proposed regulations similarly provide for the ability to disclose payer and
payee TINs. See proposed §§301.6103(j)

December 9, 2024

(1)-1(b)(1)(i)(A) (relating to individual taxpayers); 301.6103(j)(1)-1(b)(1)
(ii) (relating to returns filed on behalf of
a trade or business); 301.6103(j)(1)-1(b)
(1)(iii) (relating to tax-exempt organizations). Accordingly, no change to the final
regulations is necessary to adopt these
comments.
A comment supported the language
in the proposed regulations that would
provide the Bureau with information on
health coverage (such as marketplace
coverage parameters, and employer coverage on Forms 1095-A, Health Insurance Marketplace Statement, 1095-B,
Health Coverage, and 1095-C, Employer-Provided Health Insurance Offer
and Coverage) noting that the information reported on these forms provides a
comprehensive record of health coverage nationwide and fills important gaps
in data. The comment also noted that
information regarding health savings
accounts (HSAs) from Form 5498-SA,
HSA, Archer MSA, or Medicare Advantage MSA Information, would also be
valuable to policymakers, as the policy
considerations with respect to HSAs are
a frequent and important focus of ongoing research. The Treasury Department
and the IRS note that certain data from
Form 5498-SA are already included in
the information that would be permitted
to be disclosed to the Bureau under the
proposed regulations. The final regulations in this regard adopt the proposed
regulations without modification.
This same comment requested that
the Bureau release (a) enhanced Annual
Social and Economic Supplement (ASEC)
of the Current Population Survey (CPS)
data with new IRS data matched to it, and
(b) detailed cross tabulations of newly
released tax data by income, geographic
area, filing type, and other available tax
return statistics. In addition, this comment
also encouraged the IRS to continue to
carefully evaluate technical and policy
solutions for safely sharing the various
blended data and implement data governance principles such as accessibility and
transparency, through the blending of IRS
and Bureau data.
This same comment suggested that
various data elements should be disclosed to the Bureau to allow the Bureau
to have a more accurate understanding of

December 9, 2024

the impact of current tax benefits and the
potential impact of modifications to these
provisions. The suggested data elements
included: tax-filing status, income from
various sources, the number of earned
income tax credit (EITC) eligible qualifying children, the amount of tax credits like EITC and the CTC that families
receive, and tax liabilities. Each of these
data elements may be disclosed either
directly or indirectly under the existing
regulations and also under the proposed
regulations. See proposed §§301.6103(j)
(1)-1(b)(1)(i) (reflecting returns and
return information related to individual
taxpayers); 301.6103(j)(1)-1(b)(1)(i)(B)
(regarding tax-filing status); 301.6103(j)
(1)-1(b)(1)(i)(O)
(regarding
earned
income as defined under section 32(c)(2));
301.6103(j)(1)-1(b)(1)(i)(GG)
(regarding the EITC); 301.6103(j)(1)-1(b)(1)(i)
(P) (regarding EITC-eligible qualifying
children); 301.6103(j)(1)-1(b)(1)(i)(PP)
(regarding the CTC). The overall tax liability of an individual taxpayer, which the
Treasury Department and IRS interpret to
mean the total amount of tax due or paid
by an individual taxpayer, may be ascertained through the items of income, gain,
deduction, and credit, that may similarly
be disclosed under the proposed and final
regulations. Accordingly, the final regulations adopt the proposed regulations in
this respect without modification.
C. Comments Expressing Concerns
Regarding Data Security.
One comment suggested that in its
finalized form, the proposed regulations
should state affirmatively that, in addition to IRS data privacy protections, data
are and will remain confidential under 13
U.S.C. 9, whether in their original form or
when comingled or linked.
The final regulations do not adopt this
recommendation. The provision cited in
the comment, 13 U.S.C. 9, governs the
protection and use of confidential data by
the Department of Commerce. Section
214 of title 13, United States Code governs criminal penalties against employees
or staff members of the Bureau for prohibited disclosure of such confidential data.
The disclosures that would be permitted
by the proposed regulations concern disclosures made by the IRS under section

1222

6103(j) of Title 26, United States Code
(Title 26). The proposed regulations, as
well as these final regulations, do not govern data privacy or confidentiality requirements outside of Title 26. The Secretary
of Commerce affirmed the application of
13 U.S.C. 9 and 214 in her February 29,
2024, request to the Secretary.
Two other comments expressed concerns that the data sharing contemplated
by the proposed regulations would
weaken the confidentiality of personal tax
data held by the IRS, encourage the inappropriate release of personal tax information, and increase the vulnerability of
individual tax return information to data
breaches, intrusion, data theft, and abuse.
The Treasury Department and the IRS
take taxpayer confidentiality seriously.
Section 6103(a) prohibits the unauthorized disclosure of tax returns and return
information by officers or employees of
the United States, which includes officers
or employees of the Treasury Department,
the IRS, the Department of Commerce,
and the Bureau. Unauthorized disclosure
of returns and return information, if willful, is a felony. See section 7213 of the
Code. Unauthorized disclosure may also
be punishable through civil damages.
See section 7431 of the Code. Pursuant
to section 6103(p)(4), the IRS sets stringent privacy and security requirements
for agencies receiving return information,
including the Bureau. See §301.6103(p)
(4)-1. Proposed §301.6103(j)(1)-1(d)
did not propose to modify the requirements set forth in section 6103(p)(4) and,
instead, noted their applicability, stating
that if the IRS determines that the Bureau
fails to satisfy those requirements, the IRS
may take action to ensure that the requirements are satisfied, “including suspension
of disclosures of return information” until
the IRS determines that the requirements
of section 6103(p)(4) have been, or will
be, satisfied.
No comments were received regarding proposed §301.6103(j)(1)-1(d), and
accordingly, the final regulations adopt the
proposed regulation in this respect without modification. The regulation ensures
that disclosures of returns and return
information are made consistent with the
requirements set forth in the Code and
regulations, and that the IRS may suspend any disclosures to the Bureau should

Bulletin No. 2024–50

either entity fail to satisfy the requirements under section 6103(p)(4).
D. Comments Expressing Concerns
about the Impacts of the Use of Data for
Certain Classes of Taxpayers.
One comment requesting that the proposed regulations be withdrawn expressed
concerns that sharing additional tax data
with the Bureau would result in unintended
adverse consequences for immigrant communities. Specifically, the comment noted
that additional data sharing could result in
a “chilling effect” for immigrant taxpayers, suggesting that individuals may not
file tax returns because they are concerned
that their tax return data will be shared
with immigration enforcement agencies.
The comment also expressed a concern
that the proposed regulations could result
in the creation of a list of taxpayers who
file returns using Individual Taxpayer
Identification Numbers that could be
used to target individuals presumed to be
undocumented for immigration enforcement purposes. The comment noted that
the IRS should continue to assure taxpayers that their data is secure and that they
can safely file their taxes without being
concerned that their information will be
used for reasons beyond tax administration.
As discussed previously in this Summary of Comments and Explanation of
Revisions, return information that a taxpayer provides to the IRS may not be
disclosed unless otherwise permitted by
Title 26, and unauthorized disclosures of
returns or return information may be subject to criminal and civil penalties. There
is no provision in the United States Code
that authorizes the disclosure or redisclosure of returns or return information for
enforcement of immigration laws. Comments regarding other possible lawful disclosures of taxpayer information are outside the scope of these regulations because
the proposed regulations relate to the disclosure of specified return information to
the Bureau, as permitted by law, and not to
any other agency, such as U.S. Immigration and Customs Enforcement or the U.S.
Department of Homeland Security.
Another comment requested that
the proposed regulations be withdrawn
because sharing such personal and

Bulletin No. 2024–50

entity tax data encourages a racial and/
or gender diversity impact analysis of
tax policy decisions. The comment further stated that such a racial or gender
diversity impact analysis is inappropriate
where no discriminatory intent has been
demonstrated and where tax provisions
have been introduced by Congress based
on independent considerations of tax
policy without any design or purpose to
create disproportionate racial or gender
impact. The Treasury Department and the
IRS do not adopt this comment. As previously described in this preamble, section
6103(j) states that the Secretary “shall
furnish” returns and return information,
upon the request of the Secretary of Commerce, to the Bureau “for the purpose of,
but only to the extent necessary in, the
structuring of censuses and national economic accounts and conducting related
statistical activities authorized by law.”
These regulations provide for disclosure
to the Bureau that is fully consistent with
that statutory mandate.
E. Modification to Clarify “Taxpayer
Identity Information”.
No comments were received regarding
the definition of taxpayer identity information. Proposed §301.6103(j)(1)-1(b)
(1)(i)(A) is the first instance of where that
term is used and includes the parenthetical
“(as defined under section 6103(b)(6) of
the Code).” Other references to taxpayer
identity information in the proposed regulations lack that parenthetical descriptor.
To provide consistency, the final regulations modify the proposed regulations to
include that descriptor. See §§301.6103(j)
(1)-1(b)(1)(ii)(A) (regarding taxpayer
identity information of taxpayers engaged
in a trade or business); 301.6103(j)(1)1(b)(1)(ii)(P) (regarding taxpayer identity information of a parent corporation,
shareholder, partner, and employer identity information); 301.6103(j)(1)-1(b)(1)
(iii)(A) (regarding taxpayer identity information of a tax-exempt organization);
301.6103(j)(1)-1(b)(3)(i)(A)(1) (regarding taxpayer identity information reflected
on returns of corporations); 301.6103(j)
(1)-1(b)(3)(i)(B)(2) (regarding taxpayer
identity information from Form SS-4,
Application for Employer Identification
Number).

1223

Special Analyses
I. Regulatory Planning and Review
Pursuant to the Memorandum of
Agreement, Review of Treasury Regulations under Executive Order 12866 (June
9, 2023), tax regulatory actions issued by
the IRS are not subject to the requirements
of section 6 of Executive Order 12866, as
amended. Therefore, a regulatory impact
assessment is not required.
II. Regulatory Flexibility Act
Because these regulations would not
impose any requirements on small entities, the Regulatory Flexibility Act (5
U.S.C. chapter 6) does not apply. Pursuant
to section 7805(f) of the Internal Revenue
Code, the notice of proposed rulemaking
was submitted to the Chief Counsel for the
Office of Advocacy of the Small Business
Administration for comment on its impact
on small business. The Chief Counsel for
the Office of Advocacy of the Small Business Administration did not provide any
written comments.
III. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires
that agencies assess anticipated costs and
benefits and take certain other actions
before issuing a final rule that includes
any Federal mandate that may result in
expenditures in any one year by a State,
local, or Tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for
inflation. In 2024, that threshold was $200
million. This rule does not include any
Federal mandate that may result in expenditures by State, local, or Tribal governments, or by the private sector in excess of
that threshold.
IV. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial direct
compliance costs on State and local governments, and is not required by statute,
or preempts State law, unless the agency

December 9, 2024

meets the consultation and funding
requirements of section 6 of the Executive order. These regulations do not have
federalism implications and do not impose
substantial direct compliance costs on
State and local governments or preempt
State law within the meaning of the Executive order.
V. Congressional Review Act
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the Office of
Information and Regulatory Affairs designated this rule as not a major rule, as
defined by 5 U.S.C. 804(2).
Drafting Information
The principal author of these regulations is Elizabeth Erickson of the Office
of the Associate Chief Counsel (Procedure
and Administration). However, other personnel from the Treasury Department and
the IRS also participated in their development.
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes,
Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping
requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 301 is
amended as follows:
PART 301–PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation
for part 301 is amended by revising the
entry for §301.6103(j)(1)-1 and removing
the entry for §301.6103(j)(1)-1T to read in
part as follows:
Authority: 26 U.S.C. 7805.
*****
Section 301.6103(j)(1)-1 also issued
under 26 U.S.C. 6103(j)(1) and 6103(q).
*****
Par 2. Section 301.6103(j)(1)-1 is
amended by adding a sentence to the end
of paragraph (a) and revising paragraphs
(b), (d), and (e) to read as follows:

December 9, 2024

§301.6103(j)(1)-1 Disclosures of
return information reflected on
returns to officers and employees of
the Department of Commerce for
certain statistical purposes and related
activities.
(a) * * * To the extent a particular form,
schedule, or other document filed with the
Internal Revenue Service is referenced in
this section, such information shall continue to be disclosable pursuant to this
section even if subsequently reported in a
substantially similar format or on a substantially similar document filed with the
Internal Revenue Service.
(b) Disclosure of return information reflected on returns to officers and
employees of the Bureau of the Census.
(1) Officers or employees of the Internal
Revenue Service will disclose the following return information reflected on returns
to officers and employees of the Bureau
of the Census for purposes of, but only to
the extent necessary in, the structuring of
censuses and national economic accounts
and conducting related statistical activities
authorized by law.
(i) With respect to returns filed by individual taxpayers:
(A) Taxpayer identity information (as
defined in section 6103(b)(6) of the Internal Revenue Code (Code)), validity code
with respect to the taxpayer identifying
number (as described in section 6109 of
the Code), and taxpayer identity information of spouse and dependents, if reported.
(B) Filing status.
(C) Number and classification of
reported exemptions.
(D) Wage and salary income.
(E) Dividend income.
(F) Interest income.
(G) Gross rent and royalty income.
(H) Total of—
(1) Wages, salaries, tips, etc.;
(2) Interest income;
(3) Dividend income;
(4) Alimony received;
(5) Business income;
(6) Pensions and annuities;
(7) Income from rents, royalties, partnerships, estates, trusts, etc.;
(8) Farm income;
(9) Unemployment compensation; and
(10) Total Social Security benefits.
(I) Adjusted gross i

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A8da005af5d7921f1. Public record. Not legal advice.