Bulletin No. 2023–49

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HIGHLIGHTS

OF THIS ISSUE

Bulletin No. 2023–49

December 4, 2023

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

Rev. Rul. 2023-22, page 1301.

that maintain one or more DAFs, and to other persons

involved with the DAFs, including donors, donor-advisors,

related persons, and certain fund managers.

Interest rates: underpayments and overpayments. The rates

for interest determined under Section 6621 of the code for

the calendar quarter beginning January 1, 2024, will be 8

percent for overpayments (7 percent in the case of a corporation), 8 percent for underpayments, and 10 percent for

large corporate underpayments. The rate of interest paid on

the portion of a corporate overpayment exceeding $10,000

will be 5.5 percent.

EXEMPT ORGANIZATIONS

EMPLOYEE PLANS

Notice 2023-76, page 1320.

REG-112916-23, page 1323.

This notice sets forth updates on the corporate bond

monthly yield curve, the corresponding spot segment rates

for November 2023 used under § 417(e)(3)(D), the 24-month

average segment rates applicable for November 2023, and

the 30-year Treasury rates, as reflected by the application of

§ 430(h)(2)(C)(iv).

EXCISE TAX, EXEMPT

ORGANIZATIONS

REG-142338-07, page 1363.

This document contains proposed regulations regarding

excise taxes on taxable distributions made by a sponsoring

organization from a donor advised fund (DAF), and on the

agreement of certain fund managers to the making of such

distributions. The proposed regulations provide guidance

regarding DAFs and taxable distributions. The proposed regulations generally apply to certain organizations, including

community foundations and other charitable organizations,

Finding Lists begin on page ii.

Announcement 2023-34, page 1385.

Revocation of IRC 501(c)(3) Organizations for failure to meet

the code section requirements. Contributions made to the

organizations by individual donors are no longer deductible

under IRC 170(b)(1)(A).

This document contains proposed regulations concerning

the statutory disallowance rule enacted by the SECURE 2.0

Act of 2022 to disallow a Federal income tax deduction for

a qualified conservation contribution made by a partnership

or an S corporation after December 29, 2022, if the amount

of the contribution exceeds 2.5 times the sum of each partner’s or S corporation shareholder’s relevant basis. The

proposed regulations would provide guidance regarding this

statutory disallowance rule, including definitions, appropriate methods to calculate the relevant basis of a partner or

an S corporation shareholder, the three statutory exceptions

to the statutory disallowance rule, and related reporting

requirements. In addition, the proposed regulations would

provide reporting requirements for partners and S corporation shareholders that receive a distributive share or pro

rata share of any noncash charitable contribution made by

a partnership or S corporation, regardless of whether the

contribution is a qualified conservation contribution (and

regardless of whether the contribution is of real property or

other noncash property)

REG-128276-12, page 1362.

The Department of the Treasury and the IRS are reopening the comment period for REG-128276-12, published in

the Federal Register on December 8, 2016, relating to the

determination and recognition of taxable income or loss and

foreign currency gain or loss with respect to a qualified business unit.

Rev. Rul. 2023-21, page 1299.

Federal rates; adjusted federal rates; adjusted federal

long-term rate, and the long-term tax exempt rate. For purposes of sections 382, 1274, 1288, 7872 and other sections of the Code, tables set forth the rates for December

2023.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and

enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

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

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

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

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

modify, or amend any of those previously published in the

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

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

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

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

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

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

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

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

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

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

Secretary (Enforcement).

Part IV.—Items of General Interest.

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

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

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

December 4, 2023

Bulletin No. 2023–49

Part I

Section 1274.—

Determination of Issue

Price in the Case of Certain

Debt Instruments Issued for

Property

Rev. Rul. 2023-21

This revenue ruling provides various

prescribed rates for federal income tax

AFR

110% AFR

120% AFR

130% AFR

AFR

110% AFR

120% AFR

130% AFR

150% AFR

175% AFR

AFR

110% AFR

120% AFR

130% AFR

Short-term adjusted AFR

Mid-term adjusted AFR

Long-term adjusted AFR

Bulletin No. 2023–49

purposes for December 2023 (the current

month). Table 1 contains the short-term,

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

purposes of section 1274(d) of the Internal

Revenue Code. Table 2 contains the shortterm, mid-term, and long-term adjusted

applicable federal rates (adjusted AFR) for

the current month for purposes of section

1288(b). Table 3 sets forth the adjusted

federal long-term rate and the long-term

tax-exempt rate described in section

382(f). Table 4 contains the appropriate

percentages for determining the low-income housing credit described in section

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

during the current month. However, under

section 42(b)(2), the applicable percentage for non-federally subsidized new

buildings placed in service after July 30,

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

Table 5 contains the federal rate for determining the present value of an annuity, an

interest for life or for a term of years, or

a remainder or a reversionary interest for

purposes of section 7520.

REV. RUL. 2023-21 TABLE 1

Applicable Federal Rates (AFR) for December 2023

Period for Compounding

Annual

Semiannual

Quarterly

Short-term

5.26%

5.19%

5.16%

5.79%

5.71%

5.67%

6.33%

6.23%

6.18%

6.86%

6.75%

6.69%

Mid-term

4.82%

4.76%

4.73%

5.31%

5.24%

5.21%

5.79%

5.71%

5.67%

6.29%

6.19%

6.14%

7.27%

7.14%

7.08%

8.50%

8.33%

8.25%

Long-term

5.03%

4.97%

4.94%

5.54%

5.47%

5.43%

6.05%

5.96%

5.92%

6.56%

6.46%

6.41%

REV. RUL. 2023-21 TABLE 2

Adjusted AFR for December 2023

Period for Compounding

Annual

Semiannual

3.98%

3.94%

3.64%

3.61%

3.81%

3.77%

1299

Quarterly

3.92%

3.59%

3.75%

Monthly

5.13%

5.64%

6.15%

6.66%

4.71%

5.18%

5.64%

6.11%

7.04%

8.19%

4.92%

5.41%

5.89%

6.37%

Monthly

3.91%

3.58%

3.74%

December 4, 2023

REV. RUL. 2023-21 TABLE 3

Rates Under Section 382 for December 2023

Adjusted federal long-term rate for the current month

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

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

3.81%

REV. RUL. 2023-21 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for December 2023

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

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

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

8.15%

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

3.49%

REV. RUL. 2023-21 TABLE 5

Rate Under Section 7520 for December 2023

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

remainder or reversionary interest

Section 42.—Low-Income

Housing Credit

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month

of December 2023. See Rev. Rul. 2023-21,

page 1299.

Section 280G.—Golden

Parachute Payments

The applicable federal short-term, mid-term,

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

December 2023. See Rev. Rul. 2023-21, page 1299.

Section 382.—Limitation

on Net Operating Loss

Carryforwards and

Certain Built-In Losses

Following Ownership

Change

The adjusted applicable federal long-term rate

is set forth for the month of December 2023. See

Rev. Rul. 2023-21, page 1299.

December 4, 2023

Section 467.—Certain

Payments for the Use of

Property or Services

The applicable federal short-term, mid-term,

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

December 2023. See Rev. Rul. 2023-21, page 1299.

Section 468.—Special

Rules for Mining and Solid

Waste Reclamation and

Closing Costs

The applicable federal short-term rates are set

forth for the month of December 2023. See Rev.

Rul. 2023-21, page 1299.

Section 482.—Allocation

of Income and Deductions

Among Taxpayers

The applicable federal short-term, mid-term,

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

December 2023. See Rev. Rul. 2023-21, page 1299.

5.80%

Section 483.—Interest on

Certain Deferred Payments

The applicable federal short-term, mid-term,

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

December 2023. See Rev. Rul. 2023-21, page 1299.

Section 1288.—Treatment

of Original Issue Discount

on Tax-Exempt Obligations

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

December 2023. See Rev. Rul. 2023-21, page 1299.

Section 7520.—Valuation

Tables

The applicable federal mid-term rates are set

forth for the month of December 2023. See Rev.

Rul. 2023-21, page 1299.

Section 7872.—Treatment

of Loans With BelowMarket Interest Rates

The applicable federal short-term, mid-term,

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

December 2023. See Rev. Rul. 2023-21, page 1299.

1300

Bulletin No. 2023–49

Section 6621.—

Determination of Rate of

Interest

26 CFR 301.6621-1: Interest rate.

Rev. Rul. 2023-22

Section 6621 of the Internal Revenue

Code establishes the interest rates on

overpayments and underpayments of

tax. Under section 6621(a)(1), the overpayment rate is the sum of the federal

short-term rate plus 3 percentage points

(2 percentage points in the case of a corporation), except the rate for the portion of

a corporate overpayment of tax exceeding

$10,000 for a taxable period is the sum

of the federal short-term rate plus 0.5 of

a percentage point. Under section 6621(a)

(2), the underpayment rate is the sum of

the federal short-term rate plus 3 percentage points.

Section 6621(c) provides that for

purposes of interest payable under

section 6601 on any large corporate

underpayment, the underpayment rate

under section 6621(a)(2) is determined

by substituting “5 percentage points”

for “3 percentage points.” See section 6621(c) and section 301.6621-3

of the Regulations on Procedure and

Administration for the definition of a

large corporate underpayment and for

the rules for determining the applicable date. Section 6621(c) and section

301.6621-3 are generally effective for

periods after December 31, 1990.

Section 6621(b)(1) provides that the

Secretary will determine the federal

short-term rate for the first month in each

Bulletin No. 2023–49

calendar quarter. Section 6621(b)(2)(A)

provides that the federal short-term rate

determined under section 6621(b)(1) for

any month applies during the first calendar quarter beginning after that month.

Section 6621(b)(3) provides that the federal short-term rate for any month is the

federal short-term rate determined during

that month by the Secretary in accordance

with section 1274(d), rounded to the nearest full percent (or, if a multiple of 1/2 of

1 percent, the rate is increased to the next

highest full percent).

Notice 88-59, 1988-1 C.B. 546,

announced that in determining the quarterly interest rates to be used for overpayments and underpayments of tax

under section 6621, the Internal Revenue

Service will use the federal short-term rate

based on daily compounding because that

rate is most consistent with section 6621

which, pursuant to section 6622, is subject

to daily compounding.

The federal short-term rate determined

in accordance with section 1274(d) during

October 2023 is the rate published in

Revenue Ruling 2023-20, 2023-45 IRB

1221, to take effect beginning November

1, 2023. The federal short-term rate,

rounded to the nearest full percent, based

on daily compounding determined during

the month of October 2023 is 5 percent.

Accordingly, an overpayment rate of 8

percent (7 percent in the case of a corporation) and an underpayment rate of 8

percent are established for the calendar

quarter beginning January 1, 2024. The

overpayment rate for the portion of a corporate overpayment exceeding $10,000

for the calendar quarter beginning January

1, 2024, is 5.5 percent. The underpayment

rate for large corporate underpayments for

the calendar quarter beginning January 1,

1301

2024, is 10 percent. These rates apply to

amounts bearing interest during that calendar quarter.

Sections 6654(a)(1) and 6655(a)(1)

provide that the underpayment rate established under section 6621 applies in determining the addition to tax under sections

6654 and 6655 for failure to pay estimated tax for any taxable year. Thus, the

8 percent rate also applies to estimated tax

underpayments for the first calendar quarter beginning January 1, 2024. Pursuant

to section 6621(b)(2)(B), in determining

the addition to tax under section 6654 for

any taxable year for an individual, the

federal short-term rate that applies during

the third month following the taxable year

also applies during the first 15 days of the

fourth month following the taxable year.

In addition, pursuant to section 6603(d)

(4), the rate of interest on section 6603

deposits is 5 percent for the first calendar

quarter in 2024.

Interest factors for daily compound

interest for annual rates of 5.5 percent, 7

percent, 8 percent and 10 percent are published in Tables 64, 67, 69 and 73 of Rev.

Proc. 95-17, 1995-1 C.B. 618, 621, 623,

and 627.

Annual interest rates to be compounded

daily pursuant to section 6622 that apply

for prior periods are set forth in the tables

accompanying this revenue ruling.

DRAFTING INFORMATION

The principal author of this revenue

ruling is Casey R. Conrad of the Office of

the Associate Chief Counsel (Procedure

and Administration). For further information regarding this revenue ruling, contact

Mr. Conrad at (202) 317-6844 (not a tollfree number).

December 4, 2023

APPENDIX A

Days

Factor

0.000013699

0.000027397

0.000041096

0.000054796

0.000068495

0.000082195

0.000095894

0.000109594

0.000123294

0.000136995

0.000150695

0.000164396

0.000178097

0.000191798

0.000205499

0.000219201

0.000232902

0.000246604

0.000260306

0.000274008

0.000287711

365 Day Year

0.5% Compound Rate 184 Days

Days

Factor

0.000863380

0.000877091

0.000890801

0.000904512

0.000918223

0.000931934

0.000945646

0.000959357

0.000973069

0.000986781

0.001000493

0.001014206

0.001027918

0.001041631

0.001055344

0.001069057

0.001082770

0.001096484

0.001110197

0.001123911

0.001137625

0.000301413

0.000315116

0.000328819

0.000342522

0.000356225

0.000369929

0.000383633

0.000397336

0.000411041

0.000424745

0.000438449

0.000452154

0.000465859

0.000479564

0.000493269

0.000506974

0.000520680

0.000534386

0.000548092

0.000561798

100

101

102

103

December 4, 2023

0.001151339

0.001165054

0.001178768

0.001192483

0.001206198

0.001219913

0.001233629

0.001247344

0.001261060

0.001274776

0.001288492

0.001302208

0.001315925

0.001329641

0.001343358

0.001357075

0.001370792

0.001384510

0.001398227

0.001411945

1302

Days

125

126

127

128

129

130

131

132

133

134

135

136

137

138

139

140

141

142

143

144

145

Factor

0.001713784

0.001727506

0.001741228

0.001754951

0.001768673

0.001782396

0.001796119

0.001809843

0.001823566

0.001837290

0.001851013

0.001864737

0.001878462

0.001892186

0.001905910

0.001919635

0.001933360

0.001947085

0.001960811

0.001974536

0.001988262

146

147

148

149

150

151

152

153

154

155

156

157

158

159

160

161

162

163

164

165

0.002001988

0.002015714

0.002029440

0.002043166

0.002056893

0.002070620

0.002084347

0.002098074

0.002111801

0.002125529

0.002139257

0.002152985

0.002166713

0.002180441

0.002194169

0.002207898

0.002221627

0.002235356

0.002249085

0.002262815

Bulletin No. 2023–49

0.000575504

0.000589211

0.000602917

0.000616624

0.000630331

0.000644039

0.000657746

0.000671454

0.000685161

0.000698869

0.000712578

0.000726286

0.000739995

0.000753703

0.000767412

0.000781121

0.000794831

0.000808540

0.000822250

0.000835960

0.000849670

Bulletin No. 2023–49

104

105

106

107

108

109

110

111

112

113

114

115

116

117

118

119

120

121

122

123

124

0.001425663

0.001439381

0.001453100

0.001466818

0.001480537

0.001494256

0.001507975

0.001521694

0.001535414

0.001549133

0.001562853

0.001576573

0.001590293

0.001604014

0.001617734

0.001631455

0.001645176

0.001658897

0.001672619

0.001686340

0.001700062

1303

166

167

168

169

170

171

172

173

174

175

176

177

178

179

180

181

182

183

184

0.002276544

0.002290274

0.002304004

0.002317734

0.002331465

0.002345195

0.002358926

0.002372657

0.002386388

0.002400120

0.002413851

0.002427583

0.002441315

0.002455047

0.002468779

0.002482511

0.002496244

0.002509977

0.002523710

December 4, 2023

Days

Factor

0.000013661

0.000027323

0.000040984

0.000054646

0.000068308

0.000081970

0.000095632

0.000109295

0.000122958

0.000136620

0.000150283

0.000163947

0.000177610

0.000191274

0.000204938

0.000218602

0.000232266

0.000245930

0.000259595

0.000273260

0.000286924

366 Day Year

0.5% Compound Rate 184 Days

Days

Factor

0.000861020

0.000874693

0.000888366

0.000902040

0.000915713

0.000929387

0.000943061

0.000956735

0.000970409

0.000984084

0.000997758

0.001011433

0.001025108

0.001038783

0.001052459

0.001066134

0.001079810

0.001093486

0.001107162

0.001120839

0.001134515

0.000300590

0.000314255

0.000327920

0.000341586

0.000355252

0.000368918

0.000382584

0.000396251

0.000409917

0.000423584

0.000437251

0.000450918

0.000464586

0.000478253

0.000491921

0.000505589

0.000519257

0.000532925

0.000546594

0.000560262

0.000573931

100

101

102

103

104

December 4, 2023

0.001148192

0.001161869

0.001175546

0.001189223

0.001202900

0.001216578

0.001230256

0.001243934

0.001257612

0.001271291

0.001284969

0.001298648

0.001312327

0.001326006

0.001339685

0.001353365

0.001367044

0.001380724

0.001394404

0.001408085

0.001421765

1304

Days

125

126

127

128

129

130

131

132

133

134

135

136

137

138

139

140

141

142

143

144

145

Factor

0.001709097

0.001722782

0.001736467

0.001750152

0.001763837

0.001777522

0.001791208

0.001804893

0.001818579

0.001832265

0.001845951

0.001859638

0.001873324

0.001887011

0.001900698

0.001914385

0.001928073

0.001941760

0.001955448

0.001969136

0.001982824

146

147

148

149

150

151

152

153

154

155

156

157

158

159

160

161

162

163

164

165

166

0.001996512

0.002010201

0.002023889

0.002037578

0.002051267

0.002064957

0.002078646

0.002092336

0.002106025

0.002119715

0.002133405

0.002147096

0.002160786

0.002174477

0.002188168

0.002201859

0.002215550

0.002229242

0.002242933

0.002256625

0.002270317

Bulletin No. 2023–49

0.000587600

0.000601269

0.000614939

0.000628608

0.000642278

0.000655948

0.000669618

0.000683289

0.000696959

0.000710630

0.000724301

0.000737972

0.000751643

0.000765315

0.000778986

0.000792658

0.000806330

0.000820003

0.000833675

0.000847348

Bulletin No. 2023–49

105

106

107

108

109

110

111

112

113

114

115

116

117

118

119

120

121

122

123

124

0.001435446

0.001449127

0.001462808

0.001476489

0.001490170

0.001503852

0.001517533

0.001531215

0.001544897

0.001558580

0.001572262

0.001585945

0.001599628

0.001613311

0.001626994

0.001640678

0.001654361

0.001668045

0.001681729

0.001695413

1305

167

168

169

170

171

172

173

174

175

176

177

178

179

180

181

182

183

184

0.002284010

0.002297702

0.002311395

0.002325087

0.002338780

0.002352473

0.002366167

0.002379860

0.002393554

0.002407248

0.002420942

0.002434636

0.002448331

0.002462025

0.002475720

0.002489415

0.002503110

0.002516806

December 4, 2023

TABLE OF INTEREST RATES

PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986

OVERPAYMENTS AND UNDERPAYMENTS

PERIOD

RATE

Before Jul. 1, 1975

Jul. 1, 1975–Jan. 31, 1976

Feb. 1, 1976–Jan. 31, 1978

Feb. 1, 1978–Jan. 31, 1980

Feb. 1, 1980–Jan. 31, 1982

Feb. 1, 1982–Dec. 31, 1982

Jan. 1, 1983–Jun. 30, 1983

Jul. 1, 1983–Dec. 31, 1983

Jan. 1, 1984–Jun. 30, 1984

Jul. 1, 1984–Dec. 31, 1984

Jan. 1, 1985–Dec. 31, 1985

Jul. 1, 1985–Dec. 31, 1985

Jan. 1, 1986–Jun. 30, 1986

Jul. 1, 1986–Dec. 31, 1986

12%

20%

16%

11%

13%

11%

10%

In 1995-1 C.B.

DAILY RATE TABLE

pg.

37,

pg.

27,

pg.

75,

pg.

75,

pg.

31,

pg.

27,

pg.

25,

pg.

23,

pg.

Table

557

559

558

557

560

591

581

629

585

581

579

577

TABLE OF INTEREST RATES

FROM JAN. 1, 1987 – Dec. 31, 1998

Jan. 1, 1987–Mar. 31, 1987

Apr. 1, 1987–Jun. 30, 1987

Jul. 1, 1987–Sep. 30, 1987

Oct. 1, 1987–Dec. 31, 1987

Jan. 1, 1988–Mar. 31, 1988

Apr. 1, 1988–Jun. 30, 1988

Jul. 1, 1988–Sep. 30, 1988

Oct. 1, 1988–Dec. 31, 1988

Jan. 1, 1989–Mar. 31, 1989

Apr. 1, 1989–Jun. 30, 1989

Jul. 1, 1989–Sep. 30, 1989

Oct. 1, 1989–Dec. 31, 1989

Jan. 1, 1990–Mar. 31, 1990

Apr. 1, 1990–Jun. 30, 1990

Jul. 1, 1990–Sep. 30, 1990

Oct. 1, 1990–Dec. 31, 1990

Jan. 1, 1991–Mar. 31, 1991

Apr. 1, 1991–Jun. 30, 1991

RATE

10%

11%

10%

Jul. 1, 1991–Sep. 30, 1991

December 4, 2023

OVERPAYMENTS

1995-1 C.B.

TABLE

575

577

627

625

627

579

581

579

577

1306

577

UNDERPAYMENTS

1995-1 C.B. RATE

RATE

TABLE

577

10%

579

11%

629

10%

627

10%

627

11%

629

11%

581

12%

583

12%

583

11%

581

11%

581

11%

581

11%

581

11%

581

11%

581

10%

579

10%

579

Bulletin No. 2023–49

Oct. 1, 1991–Dec. 31, 1991

Jan. 1, 1992–Mar. 31, 1992

Apr. 1, 1992–Jun. 30, 1992

Jul. 1, 1992–Sep. 30, 1992

Oct. 1, 1992–Dec. 31, 1992

Jan. 1, 1993–Mar. 31, 1993

Apr. 1, 1993–Jun. 30, 1993

Jul. 1, 1993–Sep. 30, 1993

Oct. 1, 1993–Dec. 31, 1993

Jan. 1, 1994–Mar. 31, 1994

Apr. 1, 1994–Jun. 30, 1994

Jul. 1, 1994–Sep. 30, 1994

Oct. 1, 1994–Dec. 31, 1994

Jan. 1, 1995–Mar. 31, 1995

Apr. 1, 1995–Jun. 30, 1995

Jul. 1, 1995–Sep. 30, 1995

Oct. 1, 1995–Dec. 31, 1995

Jan. 1, 1996–Mar. 31, 1996

Apr. 1, 1996–Jun. 30, 1996

Jul. 1, 1996–Sep. 30, 1996

Oct. 1, 1996–Dec. 31, 1996

Jan. 1, 1997–Mar. 31, 1997

Apr. 1, 1997–Jun. 30, 1997

Jul. 1, 1997–Sep. 30, 1997

Oct. 1, 1997–Dec. 31, 1997

Jan. 1, 1998–Mar. 31, 1998

Apr. 1, 1998–Jun. 30, 1998

Jul. 1, 1998–Sep. 30, 1998

Oct. 1, 1998–Dec. 31, 1998

Bulletin No. 2023–49

1307

577

623

621

619

571

573

575

577

575

623

621

623

575

573

10%

579

625

623

621

573

575

577

579

577

625

623

625

577

575

December 4, 2023

TABLE OF INTEREST RATES

FROM JANUARY 1, 1999 - PRESENT

NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS

1995-1 C.B.

Jan. 1, 1999–Mar. 31, 1999

Apr. 1, 1999–Jun. 30, 1999

Jul. 1, 1999–Sep. 30, 1999

Oct. 1, 1999–Dec. 31, 1999

Jan. 1, 2000–Mar. 31, 2000

Apr. 1, 2000–Jun. 30, 2000

Jul. 1, 2000–Sep. 30, 2000

Oct. 1, 2000–Dec. 31, 2000

Jan. 1, 2001–Mar. 31, 2001

Apr. 1, 2001–Jun. 30, 2001

Jul. 1, 2001–Sep. 30, 2001

Oct. 1, 2001–Dec. 31, 2001

Jan. 1, 2002–Mar. 31, 2002

Apr. 1, 2002–Jun. 30, 2002

Jul. 1, 2002–Sep. 30, 2002

Oct. 1, 2002–Dec. 31, 2002

Jan. 1, 2003–Mar. 31, 2003

Apr. 1, 2003–Jun. 30, 2003

Jul. 1, 2003–Sep. 30, 2003

Oct. 1, 2003–Dec. 31, 2003

Jan. 1, 2004–Mar. 31, 2004

Apr. 1, 2004–Jun. 30, 2004

Jul. 1, 2004–Sep. 30, 2004

Oct. 1, 2004–Dec. 31, 2004

Jan. 1, 2005–Mar. 31, 2005

Apr. 1, 2005–Jun. 30, 2005

Jul. 1, 2005–Sep. 30, 2005

Oct. 1, 2005–Dec. 31, 2005

Jan. 1, 2006–Mar. 31, 2006

Apr. 1, 2006–Jun. 30, 2006

Jul. 1, 2006–Sep. 30, 2006

Oct. 1, 2006–Dec. 31, 2006

Jan. 1, 2007–Mar. 31, 2007

RATE

Apr. 1, 2007–Jun. 30, 2007

Jul. 1, 2007–Sep. 30, 2007

Oct. 1, 2007–Dec. 31, 2007

Jan. 1, 2008–Mar. 31, 2008

Apr. 1, 2008–Jun. 30, 2008

Jul. 1, 2008–Sep. 30, 2008

Oct. 1, 2008–Dec. 31, 2008

Jan. 1, 2009–Mar. 31, 2009

December 4, 2023

1308

TABLE

PAGE

573

575

623

625

577

575

573

571

569

567

615

617

615

617

569

571

573

575

621

619

617

619

569

Bulletin No. 2023–49

Apr. 1, 2009–Jun. 30, 2009

Jul. 1, 2009–Sep. 30, 2009

Oct. 1, 2009–Dec. 31, 2009

Jan. 1, 2010–Mar. 31, 2010

Apr. 1, 2010–Jun. 30, 2010

Jul. 1, 2010–Sep. 30, 2010

Oct. 1, 2010–Dec. 31, 2010

Jan. 1, 2011–Mar. 31, 2011

Apr. 1, 2011–Jun. 30, 2011

Jul. 1, 2011–Sep. 30, 2011

Oct. 1, 2011–Dec. 31, 2011

Jan. 1, 2012–Mar. 31, 2012

Apr. 1, 2012–Jun. 30, 2012

Jul. 1, 2012–Sep. 30, 2012

Oct. 1, 2012–Dec. 31, 2012

Jan. 1, 2013–Mar. 31, 2013

Apr. 1, 2013–Jun. 30, 2013

Jul. 1, 2013–Sep. 30, 2013

Oct. 1, 2013–Dec. 31, 2013

Jan. 1, 2014–Mar. 31, 2014

Apr. 1, 2014–Jun. 30, 2014

Jul. 1, 2014–Sep. 30, 2014

Oct. 1, 2014–Dec. 31, 2014

Jan. 1, 2015–Mar. 31, 2015

Apr. 1, 2015–Jun. 30, 2015

Jul. 1, 2015–Sep. 30, 2015

Oct. 1, 2015–Dec. 31, 2015

Jan. 1, 2016–Mar. 31, 2016

Apr. 1, 2016–Jun. 30, 2016

Jul. 1, 2016–Sep. 30, 2016

Oct. 1, 2016–Dec. 31, 2016

Jan. 1, 2017–Mar. 31, 2017

Apr. 1, 2017–Jun. 30, 2017

Jul. 1, 2017–Sep. 30, 2017

Oct. 1, 2017–Dec. 31, 2017

Jan. 1, 2018–Mar. 31, 2018

Apr. 1, 2018–Jun. 30, 2018

Jul. 1, 2018–Sep. 30, 2018

Oct. 1, 2018–Dec. 31, 2018

Jan. 1, 2019–Mar. 31, 2019

Apr. 1, 2019–Jun. 30, 2019

Jul. 1, 2019–Sep. 30, 2019

Oct. 1, 2019–Dec. 31, 2019

Jan. 1, 2020–Mar. 31, 2020

Apr. 1, 2020–Jun. 30, 2020

Bulletin No. 2023–49

1309

567

565

567

565

613

565

613

615

567

569

571

569

617

December 4, 2023

Jul. 1, 2020–Sep. 30, 2020

Oct. 1, 2020–Dec. 31, 2020

Jan. 1, 2021–Mar. 31, 2021

Apr. 1, 2021–Jun. 30, 2021

Jul. 1, 2021–Sep. 30, 2021

Oct. 1, 2021–Dec. 31, 2021

Jan. 1, 2022–Mar. 31, 2022

Apr. 1, 2022–Jun. 30, 2022

Jul. 1, 2022–Sep. 30, 2022

Oct. 1, 2022–Dec. 31, 2022

Jan. 1, 2023–Mar. 31, 2023

Apr. 1, 2023–Jun. 30, 2023

Jul. 1, 2023–Sep. 30, 2023

Oct. 1, 2023–Dec. 31, 2023

Jan. 1, 2024–Mar. 31, 2024

December 4, 2023

1310

613

565

567

569

571

573

575

623

Bulletin No. 2023–49

TABLE OF INTEREST RATES

FROM JANUARY 1, 1999 - PRESENT

CORPORATE OVERPAYMENTS AND UNDERPAYMENTS

Jan. 1, 1999–Mar. 31, 1999

Apr. 1, 1999–Jun. 30, 1999

Jul. 1, 1999–Sep. 30, 1999

Oct. 1, 1999–Dec. 31, 1999

Jan. 1, 2000–Mar. 30, 2000

Apr. 1, 2000–Jun. 30, 2000

Jul. 1, 2000–Sep. 30, 2000

Oct. 1, 2000–Dec. 31, 2000

Jan. 1, 2001–Mar. 31, 2001

Apr. 1, 2001–Jun. 30, 2001

Jul. 1, 2001–Sep. 30, 2001

Oct. 1, 2001–Dec. 31, 2001

Jan. 1, 2002–Mar. 31, 2002

Apr. 1, 2002–Jun. 30, 2002

Jul. 1, 2002–Sep. 30, 2002

Oct. 1, 2002–Dec. 31, 2002

Jan. 1, 2003–Mar. 31, 2003

Apr. 1, 2003–Jun. 30, 2003

OVERPAYMENTS

1995-1 C.B.

RATE

TABLE

571

573

621

623

575

573

571

569

567

UNDERPAYMENTS

1995-1 C.B.

RATE

TABLE

573

575

623

625

577

575

573

571

569

Jul. 1, 2003–Sep. 30, 2003

Oct. 1, 2003–Dec. 31, 2003

Jan. 1, 2004–Mar. 31, 2004

Apr. 1, 2004–Jun. 30, 2004

Jul. 1, 2004–Sep. 30, 2004

Oct. 1, 2004–Dec. 31, 2004

Jan. 1, 2005–Mar. 31, 2005

Apr. 1, 2005–Jun. 30, 2005

Jul. 1, 2005–Sep. 30, 2005

Oct. 1, 2005–Dec. 31, 2005

Jan. 1, 2006–Mar. 31, 2006

Apr. 1, 2006–Jun. 30, 2006

Jul. 1, 2006–Sep. 30, 2006

Oct. 1, 2006–Dec. 31, 2006

Jan. 1, 2007–Mar. 31, 2007

Apr. 1, 2007–Jun. 30, 2007

Jul. 1, 2007–Sep. 30, 2007

Oct. 1, 2007–Dec. 31, 2007

Jan. 1, 2008–Mar. 31, 2008

Apr. 1, 2008–Jun. 30, 2008

Jul. 1, 2008–Sep. 30, 2008

Oct. 1, 2008–Dec. 31, 2008

567

565

613

615

613

615

567

569

571

573

619

617

615

617

Bulletin No. 2023–49

1311

569

567

615

617

615

617

569

571

573

575

621

619

617

619

December 4, 2023

Jan. 1, 2009–Mar. 31, 2009

Apr. 1, 2009–Jun. 30, 2009

Jul. 1, 2009–Sep. 30, 2009

Oct. 1, 2009–Dec. 31, 2009

Jan. 1, 2010–Mar. 31, 2010

Apr. 1, 2010–Jun. 30, 2010

Jul. 1, 2010–Sep. 30, 2010

Oct. 1, 2010–Dec. 31, 2010

Jan. 1, 2011–Mar. 31, 2011

Apr. 1, 2011–Jun. 30, 2011

Jul. 1, 2011–Sep. 30, 2011

Oct. 1, 2011–Dec. 31, 2011

Jan. 1, 2012–Mar. 31, 2012

Apr. 1, 2012–Jun. 30, 2012

Jul. 1, 2012–Sep. 30, 2012

Oct. 1, 2012–Dec. 31, 2012

Jan. 1, 2013–Mar. 31, 2013

Apr. 1, 2013–Jun. 30, 2013

Jul. 1, 2013–Sep. 30, 2013

Oct. 1, 2013–Dec. 31, 2013

Jan. 1, 2014–Mar. 31, 2014

Apr. 1, 2014–Jun. 30, 2014

Jul. 1, 2014–Sep. 30, 2014

Oct. 1, 2014–Dec. 31, 2014

Jan. 1, 2015–Mar. 31, 2015

Apr. 1, 2015–Jun. 30, 2015

Jul. 1, 2015–Sep. 30, 2015

Oct. 1, 2015–Dec. 31, 2015

Jan. 1, 2016–Mar. 31, 2016

Apr. 1, 2016–Jun. 30, 2016

Jul. 1, 2016–Sep. 30, 2016

Oct. 1, 2016–Dec. 31, 2016

Jan. 1, 2017–Mar. 31, 2017

Apr. 1, 2017–Jun. 30, 2017

Jul. 1, 2017–Sep. 30, 2017

Oct. 1, 2017–Dec. 31, 2017

Jan. 1, 2018–Mar. 31, 2018

Apr. 1, 2018–Jun. 30, 2018

Jul. 1, 2018–Sep. 30, 2018

Oct. 1, 2018–Dec. 31, 2018

Jan. 1, 2019–Mar. 31, 2019

Apr. 1, 2019–Jun. 30, 2019

Jul. 1, 2019–Sep. 30, 2019

Oct. 1, 2019–Dec. 31, 2019

Jan. 1, 2020–Mar. 31, 2020

December 4, 2023

1312

567

565

563

565

563

611

563

611

613

565

567

569

567

615

569

567

565

567

565

613

565

613

615

567

569

571

569

617

Bulletin No. 2023–49

Apr. 1, 2020–Jun. 30, 2020

Jul. 1, 2020–Sep. 30, 2020

Oct. 1, 2020–Dec. 31, 2020

Jan. 1, 2021–Mar. 31, 2021

Apr. 1, 2021–Jun. 30, 2021

Jul. 1, 2021–Sep. 30, 2021

Oct. 1, 2021–Dec. 31, 2021

Jan. 1, 2022–Mar. 31, 2022

Apr. 1, 2022–Jun. 30, 2022

Jul. 1, 2022–Sep. 30, 2022

Oct. 1, 2022–Dec. 31, 2022

Jan. 1, 2023–Mar. 31, 2023

Apr. 1, 2023–Jun. 30, 2023

Jul. 1, 2023–Sep. 30, 2023

Oct. 1, 2023–Dec. 31, 2023

Jan. 1, 2024–Mar. 31, 2024

Bulletin No. 2023–49

1313

615

611

563

565

567

569

571

573

621

617

613

565

567

569

571

573

575

623

December 4, 2023

TABLE OF INTEREST RATES

FOR LARGE CORPORATE UNDERPAYMENTS

FROM JANUARY 1, 1991 - PRESENT

Jan. 1, 1991–Mar. 31, 1991

Apr. 1, 1991–Jun. 30, 1991

Jul. 1, 1991–Sep. 30, 1991

Oct. 1, 1991–Dec. 31, 1991

Jan. 1, 1992–Mar. 31, 1992

Apr. 1, 1992–Jun. 30, 1992

Jul. 1, 1992–Sep. 30, 1992

Oct. 1, 1992–Dec. 31, 1992

Jan. 1, 1993–Mar. 31, 1993

Apr. 1, 1993–Jun. 30, 1993

Jul. 1, 1993–Sep. 30, 1993

Oct. 1, 1993–Dec. 31, 1993

Jan. 1, 1994–Mar. 31, 1994

Apr. 1, 1994–Jun. 30, 1994

Jul. 1, 1994–Sep. 30, 1994

Oct. 1, 1994–Dec. 31, 1994

Jan. 1, 1995–Jun. 30, 1995

Apr. 1, 1995–Jun. 30, 1995

Jul. 1, 1995–Sep. 30, 1995

Oct. 1, 1995–Dec. 31, 1995

Jan. 1, 1996–Mar. 31, 1996

Apr. 1, 1996–Jun. 30, 1996

Jul. 1, 1996–Sep. 30, 1996

Oct. 1, 1996–Dec. 31, 1996

Jan. 1, 1997–Mar. 31, 1997

Apr. 1, 1997–Jun. 30, 1997

Jul. 1, 1997–Sep. 30, 1997

Oct. 1, 1997–Dec. 31, 1997

Jan. 1, 1998–Mar. 31, 1998

Apr. 1, 1998–Jun. 30, 1998

Jul. 1, 1998–Sep. 30, 1998

Oct. 1, 1998–Dec. 31, 1998

Jan. 1, 1999–Mar. 31, 1999

RATE

13%

12%

11%

10%

11%

12%

11%

10%

11%

10%

Apr. 1, 1999–Jun. 30, 1999

Jul. 1, 1999–Sep. 30, 1999

Oct. 1, 1999–Dec. 31, 1999

Jan. 1, 2000–Mar. 31, 2000

Apr. 1, 2000–Jun. 30, 2000

Jul. 1, 2000–Sep. 30, 2000

Oct. 1, 2000–Dec. 31, 2000

Jan. 1, 2001–Mar. 31, 2001

10%

11%

December 4, 2023

1314

1995-1 C.B.

TABLE

585

583

629

627

625

577

579

581

583

581

629

627

629

581

579

577

579

627

629

581

Bulletin No. 2023–49

Apr. 1, 2001–Jun. 30, 2001

Jul. 1, 2001–Sep. 30, 2001

Oct. 1, 2001–Dec. 31, 2001

Jan. 1, 2002–Mar. 31, 2002

Apr. 1, 2002–Sep. 30, 2002

Jul. 1, 2002–Sep. 30, 2002

Oct. 1, 2002–Dec. 31, 2002

Jan. 1, 2003–Mar. 31, 2003

Apr. 1, 2003–Jun. 30, 2003

Jul. 1, 2003–Sep. 30, 2003

Oct. 1, 2003–Dec. 31, 2003

Jan. 1, 2004–Mar. 31, 2004

Apr. 1, 2004–Jun. 30, 2004

Jul. 1, 2004–Sep. 30, 2004

Oct. 1, 2004–Dec. 31, 2004

Jan. 1, 2005–Mar. 31, 2005

Apr. 1, 2005–Jun. 30, 2005

Jul. 1, 2005–Sep. 30, 2005

Oct. 1, 2005–Dec. 31, 2005

Jan. 1, 2006–Mar. 31, 2006

Apr. 1, 2006–Jun. 30, 2006

Jul. 1, 2006–Sep. 30, 2006

Oct. 1, 2006–Dec. 31, 2006

Jan. 1, 2007–Mar. 31, 2007

Apr. 1, 2007–Jun. 30, 2007

Jul. 1, 2007–Sep. 30, 2007

Oct. 1, 2007–Dec. 31, 2007

Jan. 1, 2008–Mar. 31, 2008

Apr. 1, 2008–Sep. 30, 2008

Jul. 1, 2008–Sep. 30, 2008

Oct. 1, 2008–Dec. 31, 2008

Jan. 1, 2009–Mar. 31, 2009

Apr. 1, 2009–Jun. 30, 2009

Jul. 1, 2009–Sep. 30, 2009

10%

Oct. 1, 2009–Dec. 31, 2009

Jan. 1, 2010–Mar. 31, 2010

Apr. 1, 2010–Jun. 30, 2010

Jul. 1, 2010–Sep. 30, 2010

Oct. 1, 2010–Dec. 31, 2010

Jan. 1, 2011-Mar. 31, 2011

Apr. 1, 2011–Jun. 30, 2011

Jul. 1, 2011–Sep. 30, 2011

Oct. 1, 2011–Dec. 31, 2011

Jan. 1, 2012–Mar. 31, 2012

Apr. 1, 2012–Jun. 30, 2012

Jul. 1, 2012–Sep. 30, 2012

Bulletin No. 2023–49

1315

579

577

575

573

571

619

621

619

621

573

575

577

579

625

623

621

623

573

571

569

571

569

617

December 4, 2023

Oct. 1, 2012–Dec. 31, 2012

Jan. 1, 2013–Mar. 31, 2013

Apr. 1, 2013–Jun. 30, 2013

Jul. 1, 2013–Sep. 30, 2013

Oct. 1, 2013–Dec. 31, 2013

Jan. 1, 2014–Mar. 31, 2014

Apr. 1, 2014–Jun. 30, 2014

Jul. 1, 2014–Sep. 30, 2014

Oct. 1, 2014–Dec. 31, 2014

Jan. 1, 2015–Mar. 31, 2015

Apr. 1, 2015–Jun. 30, 2015

Jul. 1, 2015–Sep. 30, 2015

Oct. 1, 2015–Dec. 31, 2015

Jan. 1, 2016–Mar. 31, 2016

Apr. 1, 2016–Jun. 30, 2016

Jul. 1, 2016–Sep. 30, 2016

Oct. 1, 2016–Dec. 31, 2016

Jan. 1, 2017–Mar. 31, 2017

Apr. 1, 2017–Jun. 30, 2017

Jul. 1, 2017–Sep. 30, 2017

Oct. 1, 2017–Dec. 31, 2017

Jan. 1, 2018–Mar. 31, 2018

Apr. 1, 2018–Jun. 30, 2018

Jul. 1, 2018–Sep. 30, 2018

Oct. 1, 2018–Dec. 31, 2018

Jan. 1, 2019–Mar. 31, 2019

Apr. 1, 2019–Jun. 30, 2019

Jul. 1, 2019–Sep. 30, 2019

Oct. 1, 2019–Dec. 31, 2019

Jan. 1, 2020–Mar. 31, 2020

Apr. 1, 2020–Jun. 30, 2020

Jul. 1, 2020–Sep. 30, 2020

Oct. 1, 2020–Dec. 31, 2020

Jan. 1, 2021–Mar. 31, 2021

Apr. 1, 2021–Jun. 30, 2021

Jul. 1, 2021–Sep. 30, 2021

Oct. 1, 2021–Dec. 31, 2021

Jan. 1, 2022–Mar. 31, 2022

Apr. 1, 2022–Jun. 30, 2022

Jul. 1, 2022–Sep. 30, 2022

Oct. 1, 2022–Dec. 31, 2022

Jan. 1, 2023–Mar. 31, 2023

Apr. 1, 2023-Jun. 30, 2023

Jul. 1, 2023–Sep. 30, 2023

Oct. 1, 2023–Dec. 31, 2023

Jan. 1, 2024–Mar. 31, 2024

10%

December 4, 2023

1316

617

569

617

619

571

573

575

573

621

617

569

571

573

575

577

579

627

Bulletin No. 2023–49

TABLE OF INTEREST RATES FOR CORPORATE

OVERPAYMENTS EXCEEDING $10,000

FROM JANUARY 1, 1995 – PRESENT

1995-1 C.B.

RATE

TABLE

Jan. 1, 1995–Mar. 31, 1995

6.5%

572

Apr. 1, 1995–Jun. 30, 1995

7.5%

574

Jul. 1, 1995–Sep. 30, 1995

6.5%

572

Oct. 1, 1995–Dec. 31, 1995

6.5%

572

Jan. 1, 1996–Mar. 31, 1996

6.5%

620

Apr. 1, 1996–Jun. 30, 1996

5.5%

618

Jul. 1, 1996–Sep. 30, 1996

6.5%

620

Oct. 1, 1996–Dec. 31, 1996

6.5%

620

Jan. 1, 1997–Mar. 31, 1997

6.5%

572

Apr. 1, 1997–Jun. 30, 1997

6.5%

572

Jul. 1, 1997–Sep. 30, 1997

6.5%

572

Oct. 1, 1997–Dec. 31, 1997

6.5%

572

Jan. 1, 1998–Mar. 31, 1998

6.5%

572

Apr. 1, 1998–Jun. 30, 1998

5.5%

570

Jul. 1, 1998–Sep. 30, 1998

5.5%

570

Oct. 1, 1998–Dec. 31, 1998

5.5%

570

Jan. 1, 1999–Mar. 31, 1999

4.5%

568

Apr. 1, 1999–Sep. 30, 1999

5.5%

570

Jul. 1, 1999–Sep. 30, 1999

5.5%

570

Oct. 1, 1999–Dec. 31, 1999

5.5%

570

Jan. 1, 2000–Mar. 31, 2000

5.5%

618

Apr. 1, 2000–Jun. 30, 2000

6.5%

620

Jul. 1, 2000–Sep. 30, 2000

6.5%

620

Oct. 1, 2000–Dec. 31, 2000

6.5%

620

Jan. 1, 2001–Mar. 31, 2001

6.5%

572

Apr. 1, 2001–Jun. 30, 2001

5.5%

570

Jul. 1, 2001–Sep. 30, 2001

4.5%

568

Oct. 1, 2001–Dec. 31, 2001

4.5%

568

Jan. 1, 2002–Mar. 31, 2002

3.5%

566

Apr. 1, 2002–Jun. 30, 2002

3.5%

566

Jul. 1, 2002–Sep. 30, 2002

3.5%

566

Oct. 1, 2002–Dec. 31, 2002

3.5%

566

Jan. 1, 2003–Mar. 31, 2003

2.5%

564

Apr. 1, 2003–Jun. 30, 2003

2.5%

564

Jul. 1, 2003–Sep. 30, 2003

2.5%

564

Oct. 1, 2003–Dec. 31, 2003

1.5%

562

Jan. 1, 2004–Mar. 31, 2004

1.5%

610

Apr. 1, 2004–Jun. 30, 2004

2.5%

612

Bulletin No. 2023–49

1317

December 4, 2023

Jul. 1, 2004–Sep. 30, 2004

1.5%

610

Oct. 1, 2004–Dec. 31, 2004

2.5%

612

Jan. 1, 2005–Mar. 31, 2005

2.5%

564

Apr. 1, 2005–Jun. 30, 2005

3.5%

566

Jul. 1, 2005–Sep. 30, 2005

3.5%

566

Oct. 1, 2005–Dec. 31, 2005

4.5%

568

Jan. 1, 2006–Mar. 31, 2006

4.5%

568

Apr. 1, 2006–Jun. 30, 2006

4.5%

568

Jul. 1, 2006–Sep. 30, 2006

5.5%

570

Oct. 1, 2006–Dec. 31, 2006

5.5%

570

Jan. 1, 2007–Mar. 31, 2007

5.5%

570

Apr. 1, 2007–Jun. 30, 2007

5.5%

570

Jul. 1, 2007–Sep. 30, 2007

5.5%

570

Oct. 1, 2007–Dec. 31, 2007

5.5%

570

Jan. 1, 2008–Mar. 31, 2008

4.5%

616

Apr. 1, 2008–Jun. 30, 2008

3.5%

614

Jul. 1, 2008–Sep. 30, 2008

2.5%

612

Oct. 1, 2008–Dec. 31, 2008

3.5%

614

Jan. 1, 2009–Mar. 31, 2009

2.5%

564

Apr. 1, 2009–Jun. 30, 2009

1.5%

562

Jul. 1, 2009–Sep. 30, 2009

1.5%

562

Oct. 1, 2009–Dec. 31, 2009

1.5%

562

Jan. 1, 2010–Mar. 31, 2010

1.5%

562

Apr. 1, 2010–Jun. 30, 2010

1.5%

562

Jul. 1, 2010–Sep. 30, 2010

1.5%

562

Oct. 1, 2010–Dec. 31, 2010

1.5%

562

Jan. 1, 2011–Mar. 31, 2011

0.5%*

Apr. 1, 2011–Jun. 30, 2011

1.5%

562

Jul. 1, 2011–Sep. 30, 2011

1.5%

562

Oct. 1, 2011–Dec. 31, 2011

0.5%*

Jan. 1, 2012–Mar. 31, 2012

0.5%*

Apr. 1, 2012–Jun. 30, 2012

0.5%*

Jul. 1, 2012–Sep. 30, 2012

0.5%*

Oct. 1, 2012–Dec. 31, 2012

0.5%*

Jan. 1, 2013–Mar. 31, 2013

0.5%*

Apr. 1, 2013–Jun. 30, 2013

0.5%*

Jul. 1, 2013–Sep. 30, 2013

0.5%*

Oct. 1, 2013–Dec. 31, 2013

0.5%*

Jan. 1, 2014–Mar. 31, 2014

0.5%*

Apr. 1, 2014–Jun. 30, 2014

0.5%*

Jul. 1, 2014–Sep. 30, 2014

0.5%*

Oct. 1, 2014–Dec. 31, 2014

0.5%*

December 4, 2023

1318

Bulletin No. 2023–49

Jan. 1, 2015–Mar. 31, 2015

0.5%*

Apr. 1, 2015–Jun. 30, 2015

0.5%*

Jul. 1, 2015–Sep. 30, 2015

0.5%*

Oct. 1, 2015–Dec. 31, 2015

0.5%*

Jan. 1, 2016–Mar. 31, 2016

0.5%*

Apr. 1, 2016–Jun. 30, 2016

1.5%

610

Jul. 1, 2016–Sep. 30, 2016

1.5%

610

Oct. 1, 2016–Dec. 31, 2016

1.5%

610

Jan. 1, 2017–Mar. 31, 2017

1.5%

562

Apr. 1, 2017–Jun. 30, 2017

1.5%

562

Jul. 1, 2017–Sep. 30, 2017

1.5%

562

Oct. 1, 2017–Dec. 31, 2017

1.5%

562

Jan. 1, 2018–Mar. 31, 2018

1.5%

562

Apr. 1, 2018–Jun. 30, 2018

2.5%

564

Jul. 1, 2018–Sep. 30, 2018

2.5%

564

Oct. 1, 2018–Dec. 31, 2018

2.5%

564

Jan. 1, 2019–Mar. 31, 2019

3.5%

566

Apr. 1, 2019–Jun. 30, 2019

3.5%

566

Jul. 1, 2019–Sep. 30, 2019

2.5%

564

Oct. 1, 2019–Dec. 31, 2019

2.5%

564

Jan. 1, 2020–Mar. 31, 2020

2.5%

612

Apr. 1, 2020–Jun. 30, 2020

2.5%

612

Jul. 1, 2020–Sep. 30, 2020

0.5%*

Oct. 1, 2020–Dec. 31, 2020

0.5%*

Jan. 1, 2021–Mar. 31, 2021

0.5%*

Apr. 1, 2021–Jun. 30, 2021

0.5%*

Jul. 1, 2021–Sep. 30, 2021

0.5%*

Oct. 1, 2021–Dec. 31, 2021

0.5%*

Jan. 1, 2022–Mar. 31, 2022

0.5%*

Apr. 1, 2022–Jun. 30, 2022

1.5%

562

Jul. 1, 2022–Sep. 30, 2022

2.5%

564

Oct. 1, 2022–Dec. 31, 2022

3.5%

566

Jan. 1, 2023–Mar. 31, 2023

4.5%

568

Apr. 1, 2023–Jun. 30, 2023

4.5%

568

Jul. 1, 2023–Sep. 30, 2023

4.5%

568

Oct. 1, 2023–Dec. 31, 2023

5.5%

570

Jan. 1, 2024–Mar. 31, 2024

5.5%

618

* The asterisk reflects the interest factors for daily compound interest for annual rates of 0.5 percent published in Appendix A of

this Revenue Ruling.

Bulletin No. 2023–49

1319

December 4, 2023

Part III

Update for Weighted

Average Interest Rates,

Yield Curves, and Segment

Rates

Notice 2023-76

This notice provides guidance on the

corporate bond monthly yield curve, the

corresponding spot segment rates used

under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the

Internal Revenue Code. In addition, this

notice provides guidance as to the interest rate on 30-year Treasury securities

under § 417(e)(3)(A)(ii)(II) as in effect for

plan years beginning before 2008 and the

30-year Treasury weighted average rate

under § 431(c)(6)(E)(ii)(I).

YIELD CURVE AND SEGMENT

RATES

Section 430 specifies the minimum

funding requirements that apply to single-employer plans (except for CSEC plans

Applicable Month

November 2023

under § 414(y)) pursuant to § 412. Section

430(h)(2) specifies the interest rates that

must be used to determine a plan’s target

normal cost and funding target. Under

this provision, present value is generally

determined using three 24-month average

interest rates (“segment rates”), each of

which applies to cash flows during specified periods. To the extent provided under

§ 430(h)(2)(C)(iv), these segment rates

are adjusted by the applicable percentage

of the 25-year average segment rates for

the period ending September 30 of the

year preceding the calendar year in which

the plan year begins.1 However, an election may be made under § 430(h)(2)(D)

(ii) to use the monthly yield curve in place

of the segment rates.

Notice 2007-81, 2007-44 I.R.B. 899,

provides guidelines for determining the

monthly corporate bond yield curve, and

the 24-month average corporate bond segment rates used to compute the target normal cost and the funding target. Consistent

with the methodology specified in Notice

2007-81, the monthly corporate bond yield

curve derived from October 2023 data is

in Table 2023-10 at the end of this notice.

The spot first, second, and third segment

rates for the month of October 2023 are,

respectively, 5.77, 6.14, and 6.19.

The 24-month average segment rates

determined under § 430(h)(2)(C)(i) through

(iii) must be adjusted pursuant to § 430(h)

(2)(C)(iv) to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates.

For this purpose, any 25-year average segment rate that is less than 5% is deemed to

be 5%. The 25-year average segment rates

for plan years beginning in 2022, 2023 and

2024 were published in Notice 2021-54,

2021-41 I.R.B. 457, Notice 2022-40, 202240 I.R.B. 266, and Notice 2023-66, 202340 I.R.B. 992, respectively. The applicable

minimum and maximum percentages are

95% and 105% for plan years beginning in

2022, 2023 and 2024.

24-MONTH AVERAGE CORPORATE

BOND SEGMENT RATES

The three 24-month average corporate

bond segment rates applicable for November

2023 without adjustment for the 25-year

average segment rate limits are as follows:

24-Month Average Segment Rates Without 25-Year Average Adjustment

First Segment

Second Segment

4.02

4.73

The adjusted 24-month average segment

rates set forth in the chart below reflect §

430(h)(2)(C)(iv) of the Code. The 24-month

averages applicable for November 2023,

adjusted to be within the applicable minimum and maximum percentages of the

Third Segment

4.75

corresponding 25-year average segment

rates in accordance with § 430(h)(2)(C)(iv)

of the Code, are as follows:

Adjusted 24-Month Average Segment Rates

For Plan Years

Beginning In

Applicable Month

First Segment

Second Segment

Third Segment

2022

November 2023

4.75

5.18

5.92

2023

November 2023

4.75

5.00

5.74

2024

November 2023

4.75

4.87

5.59

30-YEAR TREASURY SECURITIES

INTEREST RATES

Section 431 specifies the minimum

funding requirements that apply to

multiemployer plans pursuant to § 412.

Section 431(c)(6)(B) specifies a minimum amount for the full-funding limitation described in § 431(c)(6)(A), based on

the plan’s current liability. Section 431(c)

(6)(E)(ii)(I) provides that the interest rate

used to calculate current liability for this

purpose must be no more than 5 percent

above and no more than 10 percent below

the weighted average of the rates of interest

Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount

of the full funding limitation under § 433(c)(7)(C)).

December 4, 2023

1320

Bulletin No. 2023–49

on 30-year Treasury securities during the

four-year period ending on the last day

before the beginning of the plan year.

Notice 88-73, 1988-2 C.B. 383, provides

guidelines for determining the weighted

average interest rate. The rate of interest

on 30-year Treasury securities for October

2023 is 4.94 percent. The Service determined this rate as the average of the daily

determinations of yield on the 30-year

Treasury bond maturing in August 2053.

For plan years beginning in November

For Plan Years Beginning In

Treasury Weighted Average Rates

30-Year Treasury Weighted Average

Permissible Range 90% to 105%

November 2023

3.00

2.70 to 3.15

under § 417(e)(3)(D) are segment rates

computed without regard to a 24-month

average. Notice 2007-81 provides guidelines for determining the minimum

present value segment rates. Pursuant to

that notice, the minimum present value

segment rates determined for October

2023 are as follows:

MINIMUM PRESENT VALUE

SEGMENT RATES

In general, the applicable interest rates

Month

October 2023

Minimum Present Value Segment Rates

First Segment

Second Segment

5.77

6.14

DRAFTING INFORMATION

The principal author of this notice is

Tom Morgan of the Office of Associate

Bulletin No. 2023–49

2023, the weighted average of the rates

of interest on 30-year Treasury securities

and the permissible range of rates used to

calculate current liability are as follows:

Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). However, other personnel from

the IRS participated in the development

1321

Third Segment

6.19

of this guidance. For further information

regarding this notice, contact Mr. Morgan

at 202-317-6700 or Tony Montanaro at

626-927-1475 (not toll-free numbers).

December 4, 2023

Table 2023-10

Monthly Yield Curve for October 2023

Derived from September 2023 Data

Maturity

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

15.5

16.0

16.5

17.0

17.5

18.0

18.5

19.0

19.5

20.0

Yield

5.86

5.83

5.80

5.78

5.75

5.74

5.73

5.74

5.76

5.78

5.81

5.85

5.89

5.93

5.97

6.01

6.05

6.08

6.11

6.14

6.16

6.19

6.20

6.22

6.23

6.24

6.25

6.26

6.25

6.24

December 4, 2023

Maturity

20.5

21.0

21.5

22.0

22.5

23.0

23.5

24.0

24.5

25.0

25.5

26.0

26.5

27.0

27.5

28.0

28.5

29.0

29.5

30.0

30.5

31.0

31.5

32.0

32.5

33.0

33.5

34.0

34.5

35.0

35.5

36.0

36.5

37.0

37.5

38.0

38.5

39.0

39.5

40.0

Yield

6.24

6.23

6.22

6.21

6.20

6.19

6.18

Maturity

40.5

41.0

41.5

42.0

42.5

43.0

43.5

44.0

44.5

45.0

45.5

46.0

46.5

47.0

47.5

48.0

48.5

49.0

49.5

50.0

50.5

51.0

51.5

52.0

52.5

53.0

53.5

54.0

54.5

55.0

55.5

56.0

56.5

57.0

57.5

58.0

58.5

59.0

59.5

60.0

Yield

6.18

6.17

6.16

1322

Maturity

60.5

61.0

61.5

62.0

62.5

63.0

63.5

64.0

64.5

65.0

65.5

66.0

66.5

67.0

67.5

68.0

68.5

69.0

69.5

70.0

70.5

71.0

71.5

72.0

72.5

73.0

73.5

74.0

74.5

75.0

75.5

76.0

76.5

77.0

77.5

78.0

78.5

79.0

79.5

80.0

Yield

6.16

Maturity

80.5

81.0

81.5

82.0

82.5

83.0

83.5

84.0

84.5

85.0

85.5

86.0

86.5

87.0

87.5

88.0

88.5

89.0

89.5

90.0

90.5

91.0

91.5

92.0

92.5

93.0

93.5

94.0

94.5

95.0

95.5

96.0

96.5

97.0

97.5

98.0

98.5

99.0

99.5

100.0

Yield

6.16

6.15

Bulletin No. 2023–49

Part IV

Notice of Proposed

Rulemaking

Statutory Disallowance

of Deductions for Certain

Qualified Conservation

Contributions Made

by Partnerships and S

Corporations

REG-112916-23

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

SUMMARY: This document contains

proposed regulations concerning the statutory disallowance rule enacted by the

SECURE 2.0 Act of 2022 to disallow a

Federal income tax deduction for a qualified conservation contribution made by

a partnership or an S corporation after

December 29, 2022, if the amount of the

contribution exceeds 2.5 times the sum of

each partner’s or S corporation shareholder’s relevant basis. The proposed regulations would provide guidance regarding

this statutory disallowance rule, including

definitions, appropriate methods to calculate the relevant basis of a partner or

an S corporation shareholder, the three

statutory exceptions to the statutory disallowance rule, and related reporting

requirements. In addition, the proposed

regulations would provide reporting

requirements for partners and S corporation shareholders that receive a distributive share or pro rata share of any

noncash charitable contribution made by

a partnership or S corporation, regardless

of whether the contribution is a qualified

conservation contribution (and regardless of whether the contribution is of

real property or other noncash property).

These proposed regulations would affect

partnerships and S corporations that claim

qualified conservation contributions, and

partners and S corporation shareholders

Bulletin No. 2023–49

that receive a distributive share or pro rata

share, as applicable, of a noncash charitable contribution. This document also provides a notice of public hearing on these

proposed regulations.

DATES: Written or electronic comments

must be received by December 20, 2023.

The public hearing on these proposed regulations is scheduled to be held on January

3, 2024, at 10 a.m. ET. Requests to speak

and outlines of topics to be discussed at

the public hearing must be received by

December 20, 2023. If no outlines are

received by December 20, 2023, the public hearing will be cancelled. Requests to

attend the public hearing must be received

by 5 p.m. on December 29, 2023. The

public hearing will be made accessible to

people with disabilities. Requests for special assistance during the hearing must be

received by 5 p.m. on December 28, 2023.

ADDRESSES: Commenters are strongly

encouraged to submit public comments

electronically. Submit electronic submissions via the Federal eRulemaking Portal

at https://www.regulations.gov (indicate

IRS and REG-112916-23) by following

the online instructions for submitting

comments. Once submitted to the Federal

eRulemaking Portal, comments cannot be

edited or withdrawn. The Department of

Treasury (Treasury Department) and the

IRS will publish for public availability

any comments submitted, whether electronically or on paper, to the IRS’s public docket. Requests for a public hearing

must be submitted as prescribed in the

“Comments and Public Hearing” section.

Send paper submissions to: CC:PA:01:PR

(REG-112916-23), Room 5203, Internal

Revenue Service, P.O. Box 7604, Ben

Franklin Station, Washington DC 20044.

FOR FURTHER INFORMATION

CONTACT: Concerning the proposed

regulations under §§1.170A-14, 1.706-3,

and 1.706-4, contact Benjamin Weaver

at (202) 317-6850 (not a toll-free number); concerning the proposed regulations

under §1.170A-16 and issues regarding

section 170 other than section 170(h)(7),

1323

contact Elizabeth Boone at (202) 3175100 and Hannah Kim at (202) 317-7003

(not toll-free numbers); and concerning

submissions of comments and requests for

a public hearing, contact Vivian Hayes at

(202) 317-6901 (not a toll-free number)

or by email to publichearings@irs.gov

(preferred).

SUPPLEMENTARY INFORMATION:

Background

I. Overview

This document contains proposed regulations that would amend the Income Tax

Regulations (26 CFR part 1) under sections 170 and 706 of the Internal Revenue

Code (Code) to implement the provisions

of section 605(a) and (b) of the SECURE

2.0 Act of 2022 (SECURE 2.0 Act),

enacted as Division T of the Consolidated

Appropriations Act, 2023, Public Law

117-328, 136 Stat. 4459, 5393 (December

29, 2022), which apply to contributions of

property made after December 29, 2022.

II. Charitable Contribution Deductions

Section 170(a) provides, subject to certain limitations and requirements, a deduction for any charitable contribution, as

defined in section 170(c), of cash or other

property the payment of which is made

within the taxable year. Section 170(f) disallows charitable contribution deductions

in certain cases and provides special rules.

Section 170(f)(3)(A) provides that, in

the case of a contribution (not made by a

transfer in trust) of an interest in property

that consists of less than the taxpayer’s

entire interest in such property, a deduction will be allowed only to the extent that

the value of the interest contributed would

be allowable as a deduction under section

170 if such interest had been transferred

in trust. Section 170(f)(3)(B)(iii) provides

that section 170(f)(3)(A) does not apply

to a qualified conservation contribution

(discussed in part III of this Background

section).

Section 170(f)(11) requires a qualified

appraisal and other documentation for a

December 4, 2023

charitable contribution deduction to be

allowed with respect to certain contributions of property. Section 170(f)(11) also

includes special rules for contributions of

property other than cash (noncash charitable contributions) of more than $5,000

and for noncash charitable contributions

of more than $500,000. In addition, section 170(f)(11)(H) provides that the

Secretary of the Treasury or her delegate

(Secretary) may prescribe such regulations as may be necessary or appropriate

to carry out the purposes of section 170(f)

(11). Section 6001 provides that every

person liable for any tax imposed by title

26, United States Code (title 26) must

keep such records, render such statements,

make such returns, and comply with such

rules and regulations as the Secretary may

from time to time prescribe. In addition,

section 6011 provides, in part, that, whenever required by regulations prescribed

by the Secretary, any person made liable

for any tax imposed by title 26 must make

a return or statement according to the

forms and regulations prescribed by the

Secretary and include therein the information required by such forms or regulations.

Under the authority of sections 170(f)(11)

(H), 6001, and 6011, existing regulations

under §1.170A-16 provide substantiation

and reporting requirements that must be

satisfied for a deduction to be allowed

under section 170 with respect to noncash

charitable contributions.

III. Qualified Conservation Contributions

Section 170(h)(1) provides that, in

general, for purposes of section 170(f)(3)

(B)(iii), the term “qualified conservation

contribution” means a contribution (1) of

a qualified real property interest, (2) to a

qualified organization, (3) exclusively for

conservation purposes. Section 170(h)

(2) defines the term “qualified real property interest,” section 170(h)(3) defines

the term “qualified organization,” section

170(h)(4) defines the term “conservation

purpose,” and section 170(h)(5) defines

the term “exclusively for conservation

purposes.” In general, a qualified conservation contribution may include a contribution of a conservation easement.

The existing regulations under

§1.170A-14 provide rules for qualified

conservation contributions described in

December 4, 2023

section 170(h). Consistent with section

170(f)(3), §1.170A-14(a) provides that a

deduction under section 170 generally is

not allowed for a charitable contribution

of any interest in property that consists

of less than the donor’s entire interest in

the property other than certain transfers in

trust. However, by reason of section 170(f)

(3)(B)(iii), a deduction may be allowed for

the value of a qualified conservation contribution if the requirements of §1.170A14 are met. To be eligible for a deduction

under §1.170A-14, the conservation purpose of the contribution must be protected

in perpetuity. See §1.170A-14(a) and (g).

IV. Syndicated Conservation Easement

Transactions

On December 23, 2016, the Treasury

Department and the IRS released Notice

2017-10, 2017-4 I.R.B. 544, which identified transactions that are the same as

or substantially similar to certain syndicated conservation easement transactions

as “listed transactions” under §1.6011-4

subject to certain disclosure and list maintenance requirements. Notice 2017-10

explains that the Treasury Department

and the IRS are aware that some promoters are syndicating conservation easement

transactions that purport to give investors

the opportunity to obtain charitable contribution deductions in amounts that significantly exceed the amounts invested. In

addition, Notice 2017-10 provides that a

transaction is a listed transaction if (1) an

investor receives promotional materials

that offer a prospective investor in a passthrough entity the possibility of a charitable contribution deduction that equals or

exceeds an amount that is 2.5 times the

amount of the investor’s investment, (2)

the investor purchases an interest directly

or indirectly (through one or more tiers of

pass-through entities) in the pass-through

entity that holds real property, (3) the

pass-through entity contributes a conservation easement and allocates, directly or

through one or more tiers of pass-through

entities, a charitable contribution to the

investor, and (4) the investor reports on

the investor’s Federal income tax return

a charitable contribution deduction with

respect to the conservation easement.

Congress continued to be concerned

about abusive syndicated conservation

1324

easement transactions even after Notice

2017-10 was issued, and the transactions

were the subject of an investigation by

the U.S. Senate Committee on Finance,

which issued a report on August 25,

2020. S. Committee on Finance, Comm.

Print 116-44, Syndicated ConservationEasement Transactions, 116th Cong., 2nd

Sess. (2020) (Committee Report). The

Committee Report found that the syndicated conservation easement transactions

examined were nothing more than retail

tax shelters allowing taxpayers to buy

tax deductions at the end of any given

tax year. Id. at 3. The Committee Report

further stated that these tax deductions

could be purchased with no economic

risk. Id. As such, the Finance Committee

concluded that further action was necessary to preserve the integrity of the conservation easement tax deduction despite

ongoing efforts to combat this abuse such

as the issuance of Notice 2017-10 and IRS

enforcement action. Id. at 4.

In a separate report accompanying

an earlier proposal for amending section 170(h), in legislation proposed as

the “Enhancing American Retirement

Now Act,” the Committee on Finance

recognized charitable deductions for the

donation of conservation easements as

an important tool and incentive to protect

the environment and historic structures.

S. Rep. No. 117-142 on S. 4808, at 218,

117th Cong., 2nd Sess. (2022). Citing its

findings from the 2020 Committee Report,

the Committee noted, however, that abusive tax shelter transactions put the conservation easement tax deduction at risk.

The Committee ultimately found it appropriate to take legislative action to protect

the integrity of the conservation easement

tax deduction for easement donations with

a legitimate conservation purpose. Id.

On December 8, 2022, the Treasury

Department and the IRS published in the

Federal Register (87 FR 75185) a notice

of proposed rulemaking (REG-10613422) identifying syndicated conservation

easement transactions and substantially

similar transactions as listed transactions

(listing NPRM). The definition of a syndicated conservation easement transaction in proposed §1.6011-9 of the

listing NPRM is similar to the definition

in Notice 2017-10. The purpose of the listing NPRM was to eliminate any confusion

Bulletin No. 2023–49

and ensure consistent enforcement of

Federal tax laws throughout the nation in

light of certain judicial decisions holding

that, under the Administrative Procedure

Act, 5 U.S.C. chapter 5, subchapter II,

listed transactions may be identified only

after following notice and comment procedures. See, e.g., Mann Construction,

Inc. v. United States, 27 F.4th 1138 (6th

Cir. 2022), and Green Valley Investors,

LLC, et al. v. Commissioner, 159 T.C. No.

5 (2022). The Treasury Department and

the IRS are in the process of considering

the comments received and finalizing the

listing NPRM.

V. Section 605 of the SECURE 2.0 Act

Section 170(h)(7) was added to the

Code by section 605(a)(1) of the SECURE

2.0 Act. Section 170(h)(7)(A) states that

a contribution by a partnership (whether

directly or as a distributive share of a contribution of another partnership) is not

treated as a qualified conservation contribution for purposes of section 170 if the

amount of such contribution exceeds 2.5

times the sum of each partner’s relevant

basis in such partnership (Disallowance

Rule). Thus, a contribution of a qualified real property interest to a qualified

organization exclusively for conservation

purposes is not a qualified conservation

contribution if the Disallowance Rule

applies. Section 170(h)(7)(F) provides

that the rules of section 170(h)(7) “apply

to S corporations and other pass-through

entities in the same manner as such rules

apply to partnerships” except as the

Secretary may otherwise provide.

Section 170(h)(7)(B) defines the terms

“relevant basis” and “modified basis,”

section 170(h)(7)(C), (D), and (E) provide three exceptions to the Disallowance

Rule, and section 170(h)(7)(G) provides

a specific grant of regulatory authority to

the Secretary to issue regulations or other

guidance as the Secretary determines

are necessary or appropriate to carry out

the purposes of the Disallowance Rule,

including reporting requirements and

rules to prevent the avoidance of the

Disallowance Rule.

Section 605(a)(2) of the SECURE 2.0

Act modifies certain penalty provisions in

sections 6662, 6664, and 6751 of the Code

to provide special rules for charitable

Bulletin No. 2023–49

contribution deductions disallowed by

section 170(h)(7). Section 605(a)(3) of

the SECURE 2.0 Act provides that any

charitable contribution for which a deduction was disallowed under section 170(h)

(7) is treated, for purposes of the period of

limitations on assessment and collection

of tax in section 6501 of the Code and the

period of limitations on making adjustments in section 6235 of the Code, as a

transaction specifically identified by the

Secretary as a tax-avoidance transaction.

Section 605(b) of the SECURE 2.0

Act added section 170(f)(19) to the

Code, which provides that, in the case

of a partnership or S corporation claiming a qualified conservation contribution

for the preservation of a building that is

a certified historic structure (as defined in

section 170(h)(4)(C)) in an amount that

exceeds 2.5 times the sum of each partner’s or S corporation shareholder’s relevant basis (as defined in section 170(h)

(7)), no deduction under section 170 is

allowed unless, as provided in section

170(f)(19)(A)(i) and (ii), the partnership

or S corporation includes on its return for

the taxable year a statement that such contribution was made and any other information as the Secretary may require. A

contribution to preserve a certified historic

structure is one of the three exceptions to

the Disallowance Rule.

Section 605(c) of the SECURE 2.0 Act

provides that the amendments made by

section 605 of the SECURE 2.0 Act apply

to contributions made after December 29,

2022, and that no inference is intended as

to the appropriate treatment of contributions made in taxable years ending on or

before that date, or as to any contribution

for which a deduction is not disallowed by

reason of section 170(h)(7).

VI. Overview of the Disallowance Rule

The Disallowance Rule provides that

a contribution by a partnership (whether

directly or as a distributive share of a contribution of another partnership) is not

treated as a qualified conservation contribution for purposes of section 170 if the

amount of such contribution exceeds 2.5

times the sum of each partner’s relevant

basis in such partnership. If such a contribution is not treated as a qualified conservation contribution, then the general rule

1325

under section 170(f)(3)(A) disallowing a

charitable contribution deduction under

section 170 for a contribution of a partial

interest in property applies. Thus, if the

Disallowance Rule applies, any amount of

deduction under section 170 for a qualified

conservation contribution is disallowed.

Section 170(h)(7)(B)(i) provides that,

for purposes of section 170(h)(7), the term

“relevant basis” means, with respect to

any partner, the portion of such partner’s

modified basis in the partnership that is

allocable (under rules similar to the rules

of section 755 of the Code for allocating

certain special basis adjustments to partnership property) to the portion of the

real property with respect to which the

contribution described in section 170(h)

(7)(A) is made. Section 170(h)(7)(B)

(ii) provides that, for purposes of section 170(h)(7), the term “modified basis”

means, with respect to any partner, such

partner’s adjusted basis in the partnership

as determined (1) immediately before the

contribution described in section 170(h)

(7)(A), (2) without regard to the treatment

of partnership liabilities in section 752,

and (3) by the partnership after taking into

account these first two adjustments and

such other adjustments as the Secretary

may provide.

Section 170(h)(7) contains three exceptions to the Disallowance Rule. First,

section 170(h)(7)(C) provides that the

Disallowance Rule does not apply to any

contribution made at least three years after

the latest of (1) the last date on which the

partnership that made such contribution

acquired any portion of the real property

with respect to which such contribution

is made, (2) the last date on which any

partner in the partnership that made such

contribution acquired any interest in such

partnership, and (3) if the interest in the

partnership that made such contribution is

held through one or more partnerships, the

last date on which any such partnership

acquired any interest in any other such

partnership, and the last date on which any

partner in any such partnership acquired

any interest in such partnership.

Second, section 170(h)(7)(D)(i) provides that the Disallowance Rule does not

apply to any contribution made by any partnership if substantially all of the partnership interests in such partnership are held,

directly or indirectly, by an individual and

December 4, 2023

members of the family of such individual.

Section 170(h)(7)(D)(ii) provides that, for

purposes of section 170(h)(7)(D), the term

“members of the family” means, with

respect to any individual (I) the spouse of

such individual, and (II) any individual

who bears a relationship to such individual that is described in section 152(d)(2)

(A) through (G) of the Code for purposes

of determining whether an individual is a

qualifying relative.

Third, section 170(h)(7)(E) provides

that the Disallowance Rule does not apply

to any qualified conservation contribution

the conservation purpose of which is the

preservation of any building that is a certified historic structure (as defined in section 170(h)(4)(C)).

Section 170(h)(7)(F) provides that,

except as may be otherwise provided by

the Secretary, the rules of section 170(h)

(7) apply to S corporations and other passthrough entities in the same manner as

such rules apply to partnerships.

Section 170(h)(7)(G) authorizes the

Secretary to prescribe such regulations

or other guidance as may be necessary or

appropriate to carry out the purposes of

section 170(h)(7), including regulations

or other guidance (1) to require reporting,

including reporting related to tiered partnerships and the modified basis of partners, and (2) to prevent the avoidance of

the purposes of section 170(h)(7).

These proposed regulations would provide specific rules for partnerships and

S corporations, but do not specifically

address other types of pass-through entities. The Treasury Department and the

IRS continue to study whether specific

rules are needed for other types of passthrough entities and request comments

on the application of section 170(f)(19)

and (h)(7) to pass-through entities other

than partnerships and S corporations. The

Treasury Department and the IRS intend

to issue future guidance on other issues

relating to section 605 of SECURE 2.0

Act, including additional guidance relating to the three statutory exceptions to the

Disallowance Rule.

Second, these proposed regulations

would make changes to the reporting

requirements in §1.170A-16 to address

substantiation of charitable contribution deductions as well as to implement

section 170(f)(19)(A)(i). The Treasury

Department and the IRS intend to issue

future guidance addressing section 170(f)

(19)(A)(ii).

Finally, these proposed regulations

propose new language in §§1.706-3 and

1.706-4 to facilitate the operation of the

Disallowance Rule in the case of a qualified conservation contribution made by a

partnership.

the Disallowance Rule to partnerships and

S corporations. Proposed §1.170A-14(j)

(3) would provide definitions. Consistent

with section 170(h)(7)(B), proposed

§1.170A-14(k) would provide that the

term “relevant basis” means, with respect

to any ultimate member (as defined in

proposed §1.170A-14(j)(3)(x)), the portion of such ultimate member’s modified basis (as determined under proposed

§1.170A-14(l)) that is allocable (under

the rules of proposed §1.170A-14(m))

to the portion of the real property with

respect to which the qualified conservation contribution is made. Proposed

§1.170A-14(l) would provide guidance

on the determination of modified basis.

Proposed §1.170A-14(m) would provide

guidance on the allocation of modified

basis to the portion of the real property

with respect to which the qualified conservation contribution was made. Proposed

§1.170A-14(m)(6) would impose recordkeeping requirements for substantiating

the computation of each ultimate member’s adjusted basis, modified basis, and

relevant basis by the due date, including

extensions, of the partnership’s or S corporation’s Federal income tax return.

Proposed §1.170A-14(n) would provide

guidance on the three statutory exceptions

to the Disallowance Rule.

II. Clarifying Change to §1.170A-14(a)

Explanation of Provisions

The second sentence of existing

§1.170A-14(a) provides that a deduction may be allowed under section 170(f)

(3)(B)(iii) for the value of a qualified

conservation contribution if the requirements of §1.170A-14 are met. Because

the Disallowance Rule provided in section 170(h)(7) is proposed to be contained

in §1.170A-14(j) through (n), proposed

§1.170A-14(a) would amend this sentence

to provide that a deduction may be allowed

under section 170(f)(3)(B)(iii) for the value

of a qualified conservation contribution if

the requirements of §1.170A-14 are met

and the contribution is not a disallowed

qualified conservation contribution within

the meaning of proposed §1.170A-14(j).

A. General Disallowance Rule for

Partnerships and S Corporations

I. Overview

These proposed regulations would

address several requirements added by

section 605 of the SECURE 2.0 Act and

make several related clarifying changes

to the existing regulations applicable to

qualified charitable contributions. First,

these proposed regulations would make

changes to existing §1.170A-14, including modifying paragraph (a) to reference

the Disallowance Rule and adding new

paragraphs (j) through (n) to §1.170A-14

to provide guidance on the application

of the Disallowance Rule to partnerships

and S corporations, the computation of

relevant basis and modified basis, including in tiered structures, and the three

statutory exceptions to the Disallowance

Rule.

December 4, 2023

III. Disallowance Rule and Its Exceptions

Proposed §1.170A-14(j) would provide

guidance on the general applicability of

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Consistent with section 170(h)(7)(A),

proposed §1.170A-14(j)(1) would provide

that proposed §1.170A-14(j) applies the

rules of section 170(h)(7), which disallow

a deduction under the Code and §1.170A14 for certain qualified conservation contributions, as defined in section 170(h)(1)

and §1.170A-14, made by, or allocated

to, partnerships or S corporations if the

amount of the qualified conservation contribution exceeds 2.5 times the sum of the

relevant bases, as determined by proposed

§1.170A-14(j) through (m). Proposed

§1.170A-14(j)(3)(vii) would define a contribution for which a deduction is disallowed by §1.170A-14(j) as a “disallowed

qualified conservation contribution.”

Proposed §1.170A-14(j)(2)(i) would provide that, except as provided in proposed

§1.170A-14(n), a qualified conservation

contribution by a contributing partnership

Bulletin No. 2023–49

or a contributing S corporation is a disallowed qualified conservation contribution

if the amount of the qualified conservation

contribution exceeds 2.5 times the sum of

each of the contributing partnership’s or

contributing S corporation’s ultimate member’s relevant basis as determined under

proposed §1.170A-14(j) through (m).

Proposed §1.170A-14(j)(2)(ii) would

provide that, except as provided in proposed §1.170A-14(n), an allocated portion

of a contribution received by an upper-tier

partnership or upper-tier S corporation

is a disallowed qualified conservation

contribution if either the contribution is

a disallowed qualified conservation contribution with respect to the partnership

that allocated the allocated portion to the

upper-tier partnership or upper-tier S corporation, or such allocated portion exceeds

2.5 times the sum of each of that uppertier partnership’s or upper-tier S corporation’s ultimate member’s relevant basis as

determined under proposed §1.170A-14(j)

through (m). Thus, if a contribution is a

disallowed qualified conservation contribution with respect to a partnership, then

the contribution is a disallowed qualified

conservation contribution with respect to

any upper-tier partnership or upper-tier

S corporation owning a direct or indirect

interest in that partnership. On the other

hand, if a contribution is not a disallowed

qualified conservation contribution with

respect to a partnership, then the rules of

proposed §1.170A-14(j) through (m) must

be applied to the next tier of upper-tier

partnerships and upper-tier S corporations

(which own a direct interest in the partnership) to determine if the Disallowance

Rule applies to those upper-tier partnerships and upper-tier S corporations. In

other words, the test of §1.170A-14(j)

through (m) must be applied at each tier

unless and until the test is failed at one

tier, in which case that portion of the contribution will be a disallowed qualified

conservation contribution to that tier and

any subsequent tiers.

“upper-tier partnership,” and “upper-tier S

corporation.”

B. Definitions

4. Contributing S corporation

Proposed §1.170A-14(j)(3) would

contain definitions, including definitions

of terms, including “contributing partnership,” “contributing S corporation,”

“ultimate member,” “allocated portion,”

Proposed

§1.170A-14(j)(3)(iv)

would provide that the term “contributing S corporation” means an S corporation that makes a qualified conservation

contribution.

Bulletin No. 2023–49

1. Allocated portion

Proposed §1.170A-14(j)(3)(i) would

provide that, in the case of an upper-tier

partnership or upper-tier S corporation that

receives, directly or indirectly, a distributive

share of a qualified conservation contribution, the phrase “allocated portion” means

the amount of such distributive share.

2. Amount of qualified conservation

contribution

Proposed §1.170A-14(j)(3)(ii) would

provide that the amount of a contributing

partnership’s or contributing S corporation’s qualified conservation contribution

is the amount claimed as a qualified conservation contribution on the return of the

contributing partnership or contributing S

corporation for the taxable year in which

the contribution is made. It would also

provide that, if the contributing partnership or contributing S corporation files an

amended return or administrative adjustment request under section 6227 of the

Code claiming a different amount with

respect to the qualified conservation contribution, the rules of §1.170A-14 must be

re-applied with respect to such different

amount to determine the application of

section 170(h)(7) and §1.170A-14.

3. Contributing partnership

The Disallowance Rule applies to a

partnership or S corporation that makes

a qualified conservation contribution,

as well as a partnership or S corporation

that is allocated a distributive share of a

qualified conservation contribution of

another partnership. For clarity, proposed

§1.170A-14(j)(3)(iii) would provide that

the term “contributing partnership” means

a partnership that makes a qualified conservation contribution.

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5. Direct interest

Proposed §1.170A-14(j)(3)(v) would

provide that the term “direct interest” refers

to an ownership interest in a contributing

partnership, upper-tier partnership, contributing S corporation, or upper-tier S

corporation that is held directly, or through

an entity disregarded as separate from its

owner for Federal income tax purposes,

a qualified subchapter S subsidiary as

defined in section 1361(b)(3) of the Code,

or through a grantor trust (under subpart

E of part 1 of subchapter J of chapter 1 of

the Code). In the case of a partner that is

a C corporation, non-grantor trust, or an

estate, or an S corporation shareholder that

is a non-grantor trust or an estate, the direct

interest in the partnership or S corporation, as applicable, would be considered to

be held by the C corporation, non-grantor

trust, or estate; the C corporation’s shareholders, trust beneficiaries, and estate beneficiaries would not be considered to hold

any interest in the partnership or S corporation, as applicable, for purposes of proposed §1.170A-14(j) through (n).

6. Directly

Proposed §1.170A-14(j)(3)(vi) would

provide that an ownership interest is held

“directly” if it is not held through one or

more upper-tier partnerships or upper-tier

S corporations. Similarly, a distributive

share or pro rata share of a qualified conservation contribution would be received

“directly” if it does not pass through one

or more upper-tier partnerships or uppertier S corporations.

7. Disallowed qualified conservation

contribution

Proposed §1.170A-14(j)(3)(vii) would

provide that the term “disallowed qualified conservation contribution” means

a qualified conservation contribution or

allocated portion for which no deduction

is allowed pursuant to section 170(h)(7)

and proposed §1.170A-14(j).

8. Indirect interest

Proposed §1.170A-14(j)(3)(viii) would

provide that the term “indirect interest” refers to an ownership interest in a

December 4, 2023

contributing partnership, contributing S

corporation, upper-tier partnership, or

upper-tier S corporation held through an

upper-tier S corporation or one or more

upper-tier partnerships.

9. Indirectly

Proposed §1.170A-14(j)(3)(ix) would

provide that an ownership interest is held

“indirectly” if it is held through one or

more upper-tier partnerships or upper-tier

S corporations. Similarly, a distributive

share or pro rata share of a qualified conservation contribution would be received

“indirectly” if it passes through one or

more upper-tier partnerships or upper-tier

S corporations.

10. Ultimate Member

Proposed §1.170A-14(j)(3)(x) would

provide that the term “ultimate member”

means, with respect to any partnership or

S corporation, any partner (that is not itself

a partnership or S corporation) or S corporation shareholder that receives a distributive share or pro rata share, directly

or indirectly, of a qualified conservation

contribution. Thus, ultimate members

would either be partners holding a direct

interest in a partnership, which may be

the contributing partnership or an uppertier partnership, or shareholders holding a

direct interest in an S corporation, which

may be the contributing S corporation

or an upper-tier S corporation. Proposed

§1.170A-14(j)(3)(x) would provide that

upper-tier S corporations and upper-tier

partnerships themselves are not considered ultimate members.

Several considerations played a role in

the decision of the Treasury Department

and the IRS to propose this rule that

looks to the relevant basis of the ultimate

members for determining whether a qualified conservation contribution will be

disallowed. Although section 170(h)(7)

(A) provides that the Disallowance Rule

applies in tiered structures, the statutory language does not explicitly explain

whether the determination of relevant

basis is made with respect to partners

(who may themselves be pass-through

entities) and S corporation shareholders

holding a direct interest in the contributing

partnership or contributing S corporation,

December 4, 2023

or whether the determination of relevant

basis is made with respect to the ultimate members. The Disallowance Rule is

meant to compare the amount of a claimed

qualified conservation contribution with

the equity investment made by those persons expected to claim a deduction with

respect to such contribution. Because it is

the ultimate members, such as individuals,

estates, and C corporations (that is, nonpass-through entities), who ultimately

claim a deduction for a qualified conservation contribution, the proposed regulations would require that the determination

of relevant basis be made with respect to

those ultimate partners and S corporation

shareholders. For example, assume a contributing partnership has two partners: (1)

an upper-tier S corporation, which has

two individual shareholders, and (2) an

upper-tier partnership, which has three

partners—a C corporation, an estate, and

an individual. Under these proposed regulations, relevant basis would be computed with respect to the three individuals,

C corporation, and estate, and not with

respect to the upper-tier S corporation or

upper-tier partnership. The proposed regulations would refer to these persons as the

“ultimate members.” In the case of a tiered

arrangement, the use of the term “partner”

to refer to such ultimate members might

be confusing or inaccurate because such

persons may not be partners of the contributing partnership, and in fact, may not

be partners at all, if they are shareholders

of an upper-tier S corporation that is itself

a partner in the contributing partnership.

As such, the proposed regulations use the

term “member.”

The Treasury Department and the IRS

considered alternatives to the ultimate

member rule. One possible approach

would be to determine the application of

the Disallowance Rule with respect to the

contributing partnership by looking only

to the relevant bases of the contributing

partnership’s direct partners. In the example in which a contributing partnership has

two partners, an upper-tier S corporation

and an upper-tier partnership, the direct

partners would be the upper-tier S corporation and the upper-tier partnership. The

modified basis (and thus, relevant basis)

of the upper-tier S corporation or uppertier partnership could include basis attributable to shareholders or partners of the

1328

upper-tier entity that will not be expected

to claim the deduction. For example, this

might be the case because the contributing

partnership allocates all of the qualified

conservation contribution to the upper-tier

S corporation. Because the Disallowance

Rule is meant to compare the amount of

a claimed qualified conservation contribution with the equity investment made by

those persons expected to claim a deduction with respect to such contribution, it is

more consistent with the purposes of the

Disallowance Rule to compute relevant

basis only using the basis of those persons

who are expected to claim a deduction

with respect to the contribution.

Additionally, in the example earlier,

if the contributing partnership’s qualified

conservation contribution was not disallowed by the Disallowance Rule, the

upper-tier S corporation and the uppertier partnership would each be required

to determine the application of the

Disallowance Rule by looking to their

direct owners. Because section 170(h)

(7)(B)(i) requires that relevant basis be

traced to the portion of the real property

with respect to which the contribution is

made, the upper-tier S corporation’s and

upper-tier partnership’s determinations

would necessarily involve computations

by both the upper-tier entity and the

contributing partnership. Thus, in many

cases, computing relevant basis only with

respect to direct partners would not simplify the computations required to apply

the Disallowance Rule, because it would

still be necessary to carry the computations through each tier.

These proposed regulations would

provide numerous examples to determine

who is an ultimate member. Comments

are requested on the definition of ultimate

member, and whether additional examples

for specific situations would be helpful.

11. Upper-tier partnership

Proposed §1.170A-14(j)(3)(xi) would

provide that the term “upper-tier partnership” means a partnership that receives an

allocated portion.

Where appropriate, the proposed regulations would provide separate rules for

contributing partnerships, contributing S

corporations, upper-tier partnerships, and

upper-tier S corporations. The Treasury

Bulletin No. 2023–49

Department and the IRS are aware that

sometimes different naming conventions

are used to refer to tiered partnership

arrangements. For example, some may

refer to the contributing partnership as

the “property partnership” or “top-tier

partnership,” and in fact the IRS has used

that naming convention in some correspondence. That naming convention is

not inherently wrong, as different practitioners refer to the “bottom” and “top” of

a tiered structure differently. However, the

regulations under subchapter K of chapter

1 of the Code generally would refer to the

contributing partnership as the lower-tier

partnership, and to a partnership that owns

an interest in the contributing partnership

(either directly or indirectly) as an uppertier partnership. Accordingly, in a tiered

partnership ownership structure, these

proposed regulations reflect a naming

convention under which the contributing partnership would be the “lower-tier

partnership,” and a partnership receiving

a distributive share of a qualified conservation contribution from the contributing partnership would be an “upper-tier

partnership.”

12. Upper-Tier S Corporation

Proposed §1.170A-14(j)(3)(xii) would

provide that the term “upper-tier S corporation” means an S corporation that

receives an allocated portion.

C. Effect of the Disallowance Rule

As noted previously, section 170(h)(7)

(A) applies the Disallowance Rule to both

contributing partnerships and upper-tier

partnerships. Section 170(h)(7) does not

explicitly address what effect the application of the Disallowance Rule to one

partnership or S corporation in a tiered

structure has on the other partnerships

or S corporations in the tiered structure.

These proposed regulations would provide that if the Disallowance Rule applies

to a partnership or S corporation, then the

qualified conservation contribution is a

disallowed qualified conservation contribution to that entity as well as to any person receiving a distributive share or pro

rata share, directly or indirectly, of that

entity’s disallowed qualified conservation

contribution; however, the disallowance

Bulletin No. 2023–49

would not affect the qualified conservation contribution with respect to any

lower-tier entities. In other words, if the

application of the Disallowance Rule with

respect to an upper-tier partnership or

upper-tier S corporation results in a disallowed qualified conservation contribution, that would affect Federal income tax

consequences up the chain of tiers, but not

down the chain of tiers, so, for example,

the contributing partnership would not be

affected.

The Treasury Department and the IRS

considered other approaches, such as

always re-testing the application of the

Disallowance Rule to an upper-tier partnership’s or upper-tier S corporation’s

allocated portion, even when the contribution is a disallowed qualified conservation

contribution with respect to the lower-tier partnership. Under this approach,

if the allocated portion does not exceed

2.5 times the sum of each of the uppertier partnership’s or upper-tier S corporation’s ultimate member’s relevant basis,

the allocated portion would be a qualified conservation contribution and not

disallowed to the upper-tier partnership’s

non-pass-through partners or the uppertier S corporation’s shareholders, even

though the contribution was a disallowed

qualified conservation contribution to the

non-pass-through partners of the lower-tier partnership. Allowing re-testing of

contributions that have already failed the

Disallowance Rule would be inconsistent

with the purposes of the Disallowance

Rule because it would inappropriately

encourage the creation of tiered structures

to allow some ultimate members to avoid

the Disallowance Rule. These proposed

regulations are intended to prevent avoidance of the purposes of section 170(h)

(7) and ensure disallowance of deductions attributable to disallowed qualified

conservation contributions. The Treasury

Department and the IRS request comments

on the application of the Disallowance

Rule in tiered structures.

Under the authority of section 170(h)

(7)(G)(ii) to issue regulations or other

guidance to prevent the avoidance of the

purposes of section 170(h)(7), proposed

§1.170A-14(j)(4)(i) would provide that,

if a contributing partnership’s or contributing S corporation’s qualified conservation contribution is a disallowed

1329

qualified conservation contribution, then:

(1) any upper-tier partnership’s or uppertier S corporation’s allocated portion of

such contribution is a disallowed qualified

conservation contribution, regardless of

whether such allocated portion exceeds

2.5 times the sum of each of the uppertier partnership’s or upper-tier S corporation’s ultimate member’s relevant basis;

and (2) no person (whether holding a

direct or indirect interest in such contributing partnership or contributing S corporation) may claim a deduction under

any provision of the Code with respect to

any amount of such disallowed qualified

conservation contribution, regardless of

whether that person’s distributive share

or pro rata share of the disallowed qualified conservation contribution exceeds 2.5

times its relevant basis. The reference to

“any provision of the Code” is necessary

to prevent taxpayer attempts to avoid the

Disallowance Rule by claiming a deduction with respect to any amount of a qualified conservation contribution under a

provision of the Code other than section

170 in cases in which no deduction is

allowable under section 170 by reason of

section 170(h)(7). For example, this proposed rule would disallow a deduction

under section 642(c) of the Code for a

trust that is a partner in a partnership with

respect to a distributive share of a disallowed qualified conservation contribution

from the partnership.

Proposed §1.170A-14(j)(4)(ii) would

provide that if a contributing partnership’s

or contributing S corporation’s qualified

conservation contribution is not a disallowed qualified conservation contribution, then: (1) the distributive share or pro

rata share of any ultimate member holding

a direct interest in the contributing partnership or contributing S corporation is

not a disallowed qualified conservation

contribution; and (2) any upper-tier partnership or upper-tier S corporation that

receives an allocated portion of such qualified conservation contribution must separately apply the rules of section 170(h)

(7) and proposed §1.170A-14(j) through

(m) to determine whether that upper-tier

partnership’s or upper-tier S corporation’s

allocated portion is a disallowed qualified

conservation contribution.

Proposed §1.170A-14(j)(4)(iii) would

provide that, if an upper-tier partnership’s

December 4, 2023

or upper-tier S corporation’s allocated

portion is a disallowed qualified conservation contribution, then: (1) any subsequent

upper-tier partnership’s or upper-tier

S corporation’s allocated portion of such

allocated portion would be a disallowed

qualified

conservation

contribution,

regardless of whether the subsequent

upper-tier partnership’s or upper-tier

S corporation’s allocated portion exceeds

2.5 times the sum of each of the subsequent upper-tier partnership’s or uppertier S corporation’s ultimate member’s

relevant basis; and (2) no person (whether

holding a direct or indirect interest in that

upper-tier partnership or upper-tier S corporation) would be able to claim a deduction under any provision of the Code with

respect to any amount of that upper-tier

partnership’s or upper-tier S corporation’s

allocated portion, regardless of whether

that person’s distributive share or pro rata

share of the allocated portion exceeds

2.5 times its relevant basis. Similar to

proposed §1.170A-14(j)(4)(i), proposed

§1.170A-14(j)(4)(iii) would be issued

under the authority of section 170(h)

(7)(G)(ii) to issue regulations or other

guidance to prevent the avoidance of the

purposes of section 170(h)(7). However,

this proposed rule would not affect the

application of proposed §1.170A-14(j)

through (m) to another partner of the contributing partnership; for example, if the

qualified conservation contribution is not

a disallowed qualified conservation contribution with respect to the contributing

partnership, then the distributive share of

such contribution of an ultimate member holding a direct interest in the contributing partnership is not a disallowed

qualified conservation contribution, notwithstanding that the qualified conservation contribution is a disallowed qualified

conservation contribution with respect

to one or more upper-tier partnerships or

upper-tier S corporations.

Proposed §1.170A-14(j)(4)(iv) would

provide that, if an upper-tier partnership’s

or upper-tier S corporation’s allocated

portion is not a disallowed qualified conservation contribution, then: (1) the distributive share or pro rata share of such

allocated portion of any ultimate member

holding a direct interest in the upper-tier

partnership or upper-tier S corporation is

not a disallowed qualified conservation

December 4, 2023

contribution; and (2) any subsequent

upper-tier partnership or upper-tier S corporation that receives an allocated portion

of such allocated portion must separately

apply the rules of section 170(h)(7) and

proposed §1.170A-14(j) through (m)

to determine whether that subsequent

upper-tier partnership’s or upper-tier S

corporation’s allocated portion is treated

as a disallowed qualified conservation

contribution.

The proposed regulations contain

examples illustrating the rules with

respect to tiers of entities. The Treasury

Department and the IRS request comments on whether additional examples

would be helpful.

D. No inference

The Treasury Department and the IRS

are aware that, even though section 605(c)

(2) of the SECURE 2.0 Act plainly states

that no inference is intended as to any

contribution for which a deduction is not

disallowed by reason of section 170(h)(7),

some practitioners have taken the position

that section 170(h)(7) operates as a “safe

harbor.” According to these practitioners,

a qualified conservation contribution that

is not disallowed by the Disallowance

Rule is somehow immune to a challenge

on other grounds, including failure to

comply with other rules under section

170 and overvaluation of the contribution.

Such a position is baseless and contradicted by the statutory language.

To clarify this issue, proposed

§1.170A-14(j)(5) would provide that

there is no presumption that a qualified

conservation contribution that is not a

disallowed qualified conservation contribution is compliant with section 170, any

other section of the Code, the regulations,

or any other guidance thereunder. It would

also provide that compliance with section

170(h)(7) and proposed §1.170A-14(j)

through (n) is not a safe harbor for purposes

of any other provision of law, including

the other requirements of section 170 and

the value of the contribution. Such transactions are subject to adjustment or disallowance for any other reason, including

failure to satisfy the requirements of section 170 and the overvaluation of the contribution; for example, failure to properly

execute Form 8283, Noncash Charitable

1330

Contributions, violation of the partnership

anti-abuse rule of §1.701-2, lack of economic substance, or other rules or judicial doctrines. In addition, compliance

with proposed §1.170A-14(j) through (n)

would not preclude the application of any

penalty, including penalties for valuation misstatement, negligence, and fraud.

Proposed §1.170A-14(j)(5) would also

provide that taxpayers who engage in such

transactions may be required to disclose

under §1.6011-4 the transactions as listed

transactions.

E. Determination of Relevant Basis

Consistent with section 170(h)(7)(B)

(i), proposed §1.170A-14(k) would provide that, for purposes of §1.170A-14, the

term “relevant basis” means, with respect

to any ultimate member, the portion of

such ultimate member’s modified basis

(as defined in proposed §1.170A-14(l))

that is allocable (under the rules of proposed §1.170A-14(m)) to the portion of

the real property with respect to which

the qualified conservation contribution is

made.

1. Modified Basis

Proposed §1.170A-14(l)(1) would

provide that, in the case of an ultimate

member holding a direct interest in a partnership, the ultimate member’s modified

basis is determined by such partnership

immediately before the qualified conservation contribution is made in the manner

described in §1.170A-14(l)(2). In the case

of an ultimate member holding a direct

interest in an S corporation, the ultimate

member’s modified basis would be determined by such S corporation in the manner described in §1.170A-14(l)(3).

a. Modified basis of ultimate members

that are partners

Consistent with section 170(h)(7)(B)

(ii), the proposed regulations would provide rules that are designed to determine a

partner’s modified basis immediately prior

to the qualified conservation contribution.

Without additional guidance under section

706, there may be situations in which the

contribution is allocated to partners that

did not hold an interest at the time of the

Bulletin No. 2023–49

qualified conservation contribution. Such

partners would not have any bases in their

partnership interests immediately before

the contribution, and thus, without additional rules, their modified bases and relevant bases would be zero. As discussed

later in this preamble, these proposed regulations would contain rules under section

706 that would treat a qualified conservation contribution as an extraordinary item

under §1.706-4(e) that must be allocated

only to partners holding an interest in the

partnership at the time of the contribution.

Proposed rules under §1.706-3 would

ensure that only partners holding an interest in an upper-tier partnership at the

time of the contribution would receive a

distributive share of an allocated portion.

Thus, all ultimate members who are partners would be partners at the time of day

the contribution is made. In other words,

for a partner to be an ultimate member,

the partner must have been a partner at the

time of day the contribution is made and

must have been allocated a distributive

share of that contribution. These proposed

rules are intended to facilitate the computation of modified basis immediately

before the contribution, consistent with

section 170(h)(7)(B)(ii)(I).

The proposed regulations would provide a process for determining a partner’s

modified basis. Proposed §1.170A-14(l)

(2)(i) would provide that, for purposes

of §1.170A-14, the term “modified

basis” means, with respect to any ultimate member that is a direct partner in

either a contributing partnership or an

upper-tier partnership, such ultimate

member’s adjusted basis in its interest

in the partnership in which the ultimate

member holds a direct interest as of the

beginning of the first day of the partnership’s taxable year in which the qualified

conservation contribution is made with

adjustments as determined under proposed §1.170A-14(l)(2)(ii) through (v).

However, if the ultimate member was not

a partner as of the beginning of the first

day of the partnership’s taxable year, then

the term “modified basis” would mean

such ultimate member’s adjusted basis

in its interest in the partnership immediately after the transaction that resulted in

the ultimate member becoming a partner

with adjustments as determined under

proposed §1.170A-14(l)(2)(ii) through

Bulletin No. 2023–49

(v). The Treasury Department and the

IRS considered alternatives to this rule,

including simply requiring that “adjusted

basis” be computed immediately prior to

the contribution. However, adjusted basis

is typically computed as of the beginning

of a taxable year, and it may be unclear

to taxpayers how to compute adjusted

basis as of another time during the year.

Current regulations generally do not

require partners to compute their adjusted

bases in their partnership interests as of

the time events, such as the making of

a qualified conservation contribution,

occur. Accordingly, these proposed regulations would start with a calculation of

adjusted basis that partners are familiar

with computing, and then make adjustments to arrive at an amount that reflects

the partner’s modified basis immediately

before the contribution.

Proposed §1.170A-14(l)(2)(ii) through

(v) would provide four adjustments that

must be made to a partner’s adjusted basis

to arrive at modified basis. These adjustments would be required to be made in

the order in which they are listed. First,

proposed §1.170A-14(l)(2)(ii) would

provide that the computation of modified basis must start with the ultimate

member’s adjusted basis under proposed

§1.170A-14(l)(2)(i) and then reflect an

increase for any contributions made by the

ultimate member to the partnership during

the portion of the year commencing with

the beginning of the taxable year of the

partnership and ending immediately prior

to the time of day at which the qualified

conservation contribution is made as provided in section 722 of the Code.

Second, proposed §1.170A-14(l)(2)

(iii) would provide that the amount determined under proposed §1.170A-14(l)

(2)(ii) must be adjusted, as provided in

section 705 of the Code, by the ultimate

member’s hypothetical distributive share

of partnership items attributable to the

portion of the year commencing with

the beginning of the taxable year of the

partnership and ending immediately prior

to the time of day at which the qualified

conservation contribution is made. For

example, if a calendar-year partnership

makes a qualified conservation contribution at 9:17 a.m. on November 19 of Year

1, then the hypothetical distributive share

would be required to be made based on

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the partnership items attributable to the

period between the beginning of the

day on January 1 Year 1 and 9:16 a.m.

on November 19 Year 1. In making this

determination, the partnership would be

required to apply the rules of §1.706-4

and apply a hypothetical interim closing

method to allocate the partnership’s items

attributable to the portion of the year commencing with the beginning of the taxable

year of the partnership and ending immediately prior to the time of day at which

the qualified conservation contribution

is made. Proposed §1.170A-14(l)(2)(iii)

would provide that the partnership cannot apply any convention in §1.706-4(c)

to the hypothetical determination of the

partners’ distributive shares, but rather

must perform the calculation as though

the determination occurred immediately

prior to the time of day at which the qualified conservation contribution is made.

Proposed §1.170A-14(l)(2)(iii) would

clarify that this hypothetical determination of the partners’ distributive shares

is only for purposes of calculating modified basis. Proposed §1.170A-14(l)(2)

(iii) would also make clear that proposed

§1.170A-14(l) does not require the partnership to use the interim closing method

with respect to the determination of its

partners’ actual distributive shares for

the taxable year in which the qualified

conservation contribution is made or otherwise. See section 706(d) and the regulations thereunder for the permissible

methods that may be used in the determination of the partners’ distributive shares

for a partnership taxable year in which

there is a variation in a partner’s interest

in the partnership. As described later this

preamble, proposed §§1.706-3(a) and

1.706-4(e)(2)(ix) would provide special

rules for the allocation of qualified conservation contributions.

The Treasury Department and the IRS

considered using the partners’ actual

distributive shares, determined as of the

time of the contribution. In the case of a

partnership using the proration method,

however, such an approach would result

in the partners’ modified bases reflecting a portion of partnership items earned

or incurred by the partnership after the

time of the contribution, and thus would

be inconsistent with the requirement in

section 170(h)(7)(B)(ii)(I) that partners’

December 4, 2023

modified bases be determined immediately before the contribution. The

Treasury Department and the IRS request

comments on the approach taken in the

proposed regulations to determine the

partners’ distributive shares of partnership items attributable to the portion of

the year commencing with the beginning

of the taxable year of the partnership and

ending immediately prior to the time of

day at which the qualified conservation

contribution is made.

Third, proposed §1.170A-14(l)(2)(iv)

would provide that the amount determined

under proposed §1.170A-14(l)(2)(iii)

must be reduced (but not below zero) by

any distributions made by the partnership

to the ultimate member during the portion

of the year commencing with the beginning of the taxable year of the partnership

and ending immediately prior to the time

of day at which the qualified conservation

contribution is made as provided in section 733 of the Code.

Fourth, consistent with section 170(h)

(7)(B)(ii)(II), proposed §1.170A-14(l)(2)

(v) would provide that the amount determined under proposed §1.170A-14(l)(2)

(iv) must be reduced by the full amount of

the ultimate member’s share of §1.752-1

liabilities of any partnership (including

a lower-tier partnership). The remaining

amount would be such ultimate member’s

modified basis. Thus, under the proposed

regulations, an ultimate member’s modified basis may be less than zero. Under

the formulas for the determination of relevant basis discussed later in this preamble,

a negative modified basis will result in a

negative relevant basis. Because the application of the Disallowance Rule is based

on the sum of each ultimate member’s

relevant basis, if one ultimate member’s

relevant basis is negative, it will be added

to all other ultimate members’ relevant

bases, and the sum may be a positive or

negative number.

b. Modified basis of ultimate members

that are shareholders in an S corporation

Unlike the rules for partnerships discussed previously, S corporations do

not have extraordinary items that must

be allocated only to shareholders as of

the time of day the item occurs. Instead,

section 1377 of the Code and existing

December 4, 2023

§1.1377-1 generally require pro rata allocations. Section 1.1377-1(a) provides

that each shareholder’s pro rata share of

any S corporation item described in section 1366(a) of the Code for any taxable

year is the sum of the amounts determined with respect to the shareholder by

assigning an equal portion of the item

to each day of the S corporation’s taxable year, and then dividing that portion

pro rata among the shares outstanding

on that day. If a shareholder disposes

of its entire interest in an S corporation,

§1.1377-1(b) allows the S corporation

to make a terminating election, under

which the S corporation will determine

the terminating shareholder’s share as

though the S corporation’s taxable year

closed on the day of the termination.

However, there is no extraordinary item

rule for S corporations similar to §1.7064(e). As such, it may be the case that an S

corporation allocates a portion of a qualified conservation contribution to someone that was not a shareholder at the

time of the contribution, but that shareholder would still be treated as an ultimate member because the shareholder

received a pro rata share of the qualified

conservation contribution.

As described previously, the rules for

determining a partner’s modified basis

start with the partner’s adjusted basis at

the start of the partnership’s taxable year

and work forward to determine modified

basis immediately before the contribution. However, the Treasury Department

and the IRS are concerned that such an

approach is not appropriate for S corporation shareholders, as it could be unnecessarily burdensome and, in some cases,

impossible to determine each shareholder’s modified basis immediately prior to

the qualified conservation contribution

(because some ultimate members may

not be shareholders at the time of the contribution). To provide an administrable

standard consistent with the purposes of

section 170(h)(7), these proposed regulations would require the computation of

an S corporation shareholder’s modified

basis under an approach that is similar in

purpose to the approach for partners but

different in application.

Proposed §1.170A-14(l)(3)(i) would

provide that, for purposes of §1.170A14, the term “modified basis” means,

1332

with respect to any ultimate member that

is a shareholder of either a contributing

S corporation or an upper-tier S corporation, such ultimate member’s adjusted

basis in its shares in the S corporation as

of the end of the S corporation’s taxable

year in which the qualified conservation

contribution is made with adjustments as

determined under proposed §1.170A-14(l)

(3)(ii) and (iii). However, if the ultimate

member was not a shareholder at the end

of the S corporation’s taxable year in

which the qualified conservation contribution is made, then the term “modified

basis” would mean such ultimate member’s adjusted basis in its shares in the

S corporation immediately prior to the

transaction that terminated its interest

in the S corporation with adjustments as

determined under proposed §1.170A-14(l)

(3)(ii) and (iii).

The Treasury Department and the IRS

considered several alternatives to this

rule. One method would be to require a

determination of a portion of modified

basis for every day during the S corporation’s taxable year, because S corporations generally allocate the contribution

on a pro rata basis among the shareholders on each day of the taxable year.

These proposed regulations do not take

that approach because the Treasury

Department and the IRS are concerned

that such an approach, although technically accurate and consistent with the

purposes of section 170(h)(7), would

be too burdensome for taxpayers and

difficult for the IRS to administer. The

Treasury Department and the IRS also

considered using the shareholders’

adjusted bases as of the beginning of

the S corporation’s taxable year (rather

than as of the end of the year). However,

because qualified conservation contributions are typically made in the second

half of the year, especially in syndicated

transactions, the Treasury Department

and the IRS determined that such an

approach would be less accurate than

using the shareholders’ adjusted bases as

of the end of the year (or a shareholder’s

adjusted basis immediately prior to the

transaction that terminated their interest

in the S corporation).

Proposed §1.170A-14(l)(3)(i) would

also clarify that modified basis does not

include the ultimate member’s adjusted

Bulletin No. 2023–49

basis of any indebtedness of the S corporation to the ultimate member.1

Proposed §1.170A-14(l)(3)(ii) and

(iii) would provide two adjustments that

must be made to arrive at modified basis.

These adjustments would be required to

be made in the order in which they are

listed. First, proposed §1.170A-14(l)(3)

(ii) would provide that the computation

of modified basis must start with the ultimate member’s adjusted basis under proposed §1.170A-14(l)(3)(i) and then must

reflect an increase for the extent to which

the adjusted basis reflects a reduction as

a result of the qualified conservation contribution. Thus, the ultimate member’s

modified basis with respect to a qualified conservation contribution would

not reflect any reduction for the ultimate

member’s pro rata share of the S corporation’s basis in the conservation easement or other property contributed in the

qualified conservation contribution. This

adjustment in proposed §1.170A-14(l)(3)

(ii) would be made because it would not

be appropriate or consistent with section

170(h)(7)(B)(ii)(I) for modified basis, and

thus relevant basis, to reflect a reduction

for the very contribution that is being

analyzed under the Disallowance Rule as

such an approach might result in deductions being inappropriately disallowed by

the Disallowance Rule.

Second, proposed §1.170A-14(l)(3)

(iii) would provide that the amount determined under proposed §1.170A-14(l)(3)

(ii) must be multiplied by the number of

days during the S corporation’s taxable

year in which the ultimate member was

a shareholder and divided by the total

number of days during the S corporation’s taxable year. The resulting amount

would be such ultimate member’s modified basis. Inappropriate double counting

of relevant basis might occur unless the

proposed regulations provide this rule.

For example, assume individual A owns

a portion of the outstanding shares of an

S corporation. In early July, A sells all

its shares to B. In December, the S corporation makes a qualified conservation

contribution. Absent a terminating election under §1.1377-1(b), the S corporation would allocate some of the qualified

conservation contribution to each of A and

B. Unless A’s and B’s modified bases (and

thus, their relevant bases) are adjusted

to reflect that each was a shareholder for

approximately half of the year, the S corporation’s computation of the sum of each

of its ultimate member’s relevant basis

would be inappropriately overstated. The

Treasury Department and the IRS request

comments on whether there are certain situations in which the divisor should be less

than the full number of days in the S corporation’s taxable year. In particular, the

Treasury Department and the IRS request

comments on whether, and how, elections

under §§1.1368-1(g)(2) and 1.1377-1(b)

should result in the divisor being less than

the full number of days in the S corporation’s taxable year. It would be particularly

helpful for commenters to address situations in which elections under §§1.13681(g)(2) and 1.1377-1(b) affect some, but

not all, of the shareholders.

Section 170(h)(7)(B)(ii)(III) provides

authority for the Secretary to provide for

other adjustments in the computation of

modified basis. The Treasury Department

and the IRS request comments on whether

any additional adjustments to arrive at

modified basis would be appropriate.

The proposed regulations also contain

examples illustrating the determination of

modified basis. Comments are requested

on whether it would be helpful to add

examples with other factual scenarios.

2. Allocation of Modified Basis and

Determination of Relevant Basis

Proposed §1.170A-14(m) would provide rules for determining the portion of

an ultimate member’s modified basis that

is allocable to the portion of the real property with respect to which the contribution is made, which is the final step in the

determination of relevant basis. Section

170(h)(7)(B)(i) provides that the allocation is made under rules similar to the

rules of section 755. Section 755 provides

rules for allocating special basis adjustments to partnership property resulting

from partnership distributions or transfers

of partnership interests, such as adjustments under section 734(b) of the Code

and adjustments under section 743(b) of

the Code.

Section 755(a) generally provides that

any increase or decrease in the adjusted

basis of partnership property under section

734(b) (relating to the optional adjustment

to the basis of undistributed partnership

property) or section 743(b) (relating to the

optional adjustment to the basis of partnership property in the case of a transfer

of an interest in a partnership) is allocated

(1) in a manner that reduces the difference

between the fair market value and the

adjusted basis of partnership properties,

or (2) in any other manner permitted by

regulations. The regulations under section

755 provide rules for performing these

allocations. Those rules can be complex

and involve several different methods for

allocating basis adjustments among the

partnership’s properties, including:

(1) Allocating in a manner that reduces

the difference between the fair market

value and the adjusted basis of partnership

properties. See §1.755-1(b)(2)(i) and (b)

(3).

(2) Allocating in proportion to the

transferee’s share of the amount that

would be realized by the partnership upon

the hypothetical sale of each property. See

§1.755-1(b)(5)(iii)(A).

(3) Allocating in proportion to the fair

market values of the partnership’s properties. See §1.755-1(c)(2)(i).

(4) Allocating in proportion to the partnership’s adjusted bases in its properties.

See §1.755-1(c)(2)(ii).

(5) Allocating in proportion to the partner’s share of the adjusted bases in the

partnership’s properties. See §1.755-1(b)

(5)(iii)(B).

In considering which of these allocation rules would be most appropriate to

determine relevant basis, the Treasury

Department and the IRS considered the

As described previously, section 170(h)(7)(B)(ii)(II) provides that the determination of modified basis is to be made without regard to section 752. However, the Code does not contain a rule

substantially similar to section 752 for S corporations. Unlike a partner’s basis in the partner’s interest in the partnership, an S corporation shareholder’s basis in stock of the S corporation

does not include any share of the S corporation’s liabilities. Under section 1367(b)(2)(A) of the Code and §1.1367-2(b), if an S corporation shareholder’s pro rata share of the S corporation’s

losses, deductions, noncapital, nondeductible expenses, and certain oil and gas depletion deductions exceed the shareholder’s stock basis, then these items may reduce the shareholder’s basis

in indebtedness owed to them by the S corporation (but not below zero). Under section 1367(b)(2)(B) and §1.1367-2(c), if the basis in indebtedness has been so reduced, then any future net

increase must be applied to restore such reduction in indebtedness basis before any of it may be used to increase the shareholder’s basis in its stock of the S corporation.

Bulletin No. 2023–49

1333

December 4, 2023

special basis adjustment and loss limitation rules for charitable contributions.

Those rules look to a partner’s or shareholder’s share of the partnership’s or S

corporation’s basis in the contributed

property.

Generally, section 705(a)(2) provides

that the adjusted basis of a partner’s interest in a partnership is decreased (but not

below zero) by distributions by the partnership and by the sum of the partner’s

distributive share for the taxable year

and prior taxable years of (1) losses of

the partnership, and (2) expenditures of

the partnership not deductible in computing its taxable income and not properly

chargeable to capital account. Generally,

when a partnership makes a charitable

contribution, the partners are not required

to reduce their adjusted bases in their partnership interests by the fair market value

of the contribution. Instead, Revenue

Ruling 96-11, 1996-1 C.B. 140, provides

that after a partnership makes a charitable contribution of property, the basis of

each partner’s interest in the partnership

is decreased (but not below zero) by the

partner’s share of the partnership’s basis in

the property contributed. Revenue Ruling

96-11 explains that reducing the partners’

bases in their partnership interests by

their respective shares of the permanent

decrease in the partnership’s basis in its

properties preserves the intended benefit of providing a deduction (in circumstances not under section 170(e)) for the

fair market value of appreciated property

without recognition of the appreciation.

In contrast, reducing the partners’ bases

in their partnership interests by the fair

market value of the contributed property

would subsequently cause the partners

to recognize gain (or a reduced loss), for

example, upon a disposition of their partnership interests, attributable to the unrecognized appreciation in the contributed

property at the time of the contribution.

The partnership loss limitation rules

in section 704(d) of the Code have a

similar rule for charitable contributions.

Generally, section 704(d)(1) provides that

a partner’s distributive share of partnership loss is allowed only to the extent such

partner’s adjusted basis in its partnership

interest at the end of the partnership year in

which such loss occurred. Section 704(d)

(3)(A) provides, in part, that in determining the amount of any loss under section

704(d)(1), the partner’s distributive share

of charitable contributions as defined in

section 170(c) must be taken into account.

However, section 704(d)(3)(B) provides

that, in the case of a charitable contribution of property whose fair market value

exceeds its adjusted basis, section 704(d)

(3)(A) does not apply to the extent of the

partner’s distributive share of such excess.

The rules for S corporations also look

to the shareholder’s share of the S corporation’s basis in the contributed property.

Section 1367(a)(2)(B) of the Code provides that the basis of each shareholder’s

stock is reduced by the items of loss and

deduction described in section 1366(a)

(1)(A). However, the second sentence

of section 1367(a)(2) provides that the

decrease in basis under section 1367(a)(2)

(B) by reason of a charitable contribution

(as defined in section 170(c)) of property

is the amount equal to the shareholder’s

pro rata share of the adjusted basis of such

property.2

Generally, section 1366(d)(1) provides that the aggregate amount of losses

and deductions taken into account by a

shareholder under section 1366(a) for

any taxable year cannot exceed the sum

of (1) the adjusted basis of the shareholder’s stock in the S corporation, and (2)

the shareholder’s adjusted basis of any

indebtedness of the S corporation to the

shareholder. However, section 1366(d)

(4) provides that, in the case of any charitable contribution of property to which

the second sentence of section 1367(a)

(2) applies, section 1366(d)(1) does not

apply to the extent of the excess (if any)

of (1) the shareholder’s pro rata share of

such contribution, over (2) the shareholder’s pro rata share of the adjusted basis of

such property. See also Rev. Rul. 2008-16,

2008-1 C.B. 585.

Therefore, generally partnerships and

S corporations making charitable contributions are already required to track

each partner’s and shareholder’s share of

the entity’s basis in the contributed property. And as noted previously, in certain

circumstances the rules under section

755 also look to the partner’s share of

the partnership’s basis in its properties.

Accordingly, as described in this section

of the preamble, these proposed regulations would require the allocation of an

ultimate member’s modified basis to the

portion of the real property with respect

to which the qualified conservation contribution is made to be based on the ultimate

member’s share of the entity’s bases in its

properties. This provides an administrable

standard consistent with the purposes of

section 170(h)(7).

The Treasury Department and the IRS

considered alternatives to this rule. In particular, the Treasury Department and the

IRS considered simply cross-referencing

the rules under section 755. Under that

alternative approach, the amount of each

partner’s modified basis would be treated

for purposes of the computation of relevant basis as a special basis adjustment

under section 734(b) or section 743(b);

relevant basis would be the portion of

modified basis that would be allocated

under the rules of section 755 to the portion of the real property with respect to

which the contribution was made. Such

an approach would be less consistent with

the purposes of the Disallowance Rule. As

noted previously, basis allocations under

section 755 are sometimes made in a way

to reduce or eliminate built-in gain or

loss in partnership property. The relevant

basis rule of section 170(h)(7) is designed

to determine the portion of a partner’s

modified basis that is allocable to the portion of the real property with respect to

which the contribution is made, which is

a broader and, generally, different concept

than determining the partner’s share of

built-in gain or loss in that property. The

approach in the proposed regulations is

similar to the rules of section 755 and consistent with the rule of section 170(h)(7)

(B)(i). The Treasury Department and the

IRS request comments on whether another

acceptable allocation approach would be

easier or more administrable.

Proposed §1.170A-14(m)(1) would

provide that the allocation of an ultimate

member’s modified basis to the portion

of the real property with respect to which

Whether a qualified conservation contribution is a disallowed qualified conservation contribution has no effect on the application of sections 705 and 1367 to the contribution. These basis

reductions remain required regardless of whether a qualified conservation contribution is a disallowed qualified conservation contribution.

December 4, 2023

1334

Bulletin No. 2023–49

the qualified conservation contribution is

made must be made in accordance with

proposed §1.170A-14(m). Rules for allocating an ultimate member’s modified

basis in a contributing partnership would

be provided in proposed §1.170A-14(m)

(2). Rules for allocating an ultimate member’s modified basis in a contributing S

corporation would be provided in proposed §1.170A-14(m)(3). Rules for allocating an ultimate member’s modified

basis in an upper-tier partnership would

be provided in proposed §1.170A-14(m)

(4). Rules for allocating an ultimate

member’s modified basis in an upper-tier

S corporation would be provided in proposed §1.170A-14(m)(5). Records would

be required to be kept in accordance with

proposed §1.170A-14(m)(6).

a. Determination of relevant basis for an

ultimate member holding a direct interest

in a contributing partnership

Proposed §1.170A-14(m)(2)(i) through

(iii) would provide a narrative rule applicable in the case of an ultimate member

holding a direct interest in a contributing

partnership and would provide that a contributing partnership must determine each

such ultimate member’s relevant basis as

provided therein. Relevant basis would

equal each ultimate member’s modified basis as determined under proposed

§1.170A-14(l)(2) multiplied by a fraction

(1) the numerator of which is the ultimate

member’s share of the contributing partnership’s adjusted basis in the portion of

the real property with respect to which

the qualified conservation contribution

is made as determined under proposed

§1.170A-14(m)(2)(ii); and (2) the denominator of which is the ultimate member’s

portion of the adjusted basis in all the contributing partnership’s properties as determined under proposed §1.170A-14(m)(2)

(iii).

The Treasury Department and the IRS

note that this numerator determines the

ultimate member’s share of the contributing partnership’s adjusted basis in the

portion of the real property with respect to

which the qualified conservation contribution is made, which is what is required by

the statute, but may be different than the

ultimate member’s share of the contributing partnership’s adjusted basis in the

Bulletin No. 2023–49

contributed property. As noted previously,

section 704(d) and Revenue Ruling 96-11

require a partner’s basis in its interest in the

partnership to be decreased (but not below

zero) by the partner’s share of the partnership’s basis in the contributed property.

For example, assume a partnership owns

100 acres of real property, and grants a

conservation easement that is a qualified

conservation contribution on 60 of those

acres. Assume the partnership’s adjusted

basis in the 100 acres is $100,000, its

adjusted basis in the 60 acres is $60,000,

and its adjusted basis in the conservation

easement itself is $45,000. Section 705(a)

(2)(B) and Revenue Ruling 96-11 would

require each partner’s basis in its interest

in the partnership to be decreased (but not

below zero) by the partner’s share of the

partnership’s $45,000 basis in the easement. On the other hand, the computation

of each ultimate member’s relevant basis

would look to the ultimate member’s

share of the partnership’s $60,000 basis

in the 60 acres (the portion of the real

property with respect to which the qualified conservation contribution was made).

As described in the following paragraphs,

these proposed regulations would provide

computational rules for determining an

ultimate member’s share of the contributing partnership’s adjusted basis in the

portion of the real property with respect

to which the qualified conservation contribution is made. The Treasury Department

and the IRS request comments on whether

these computations generally align with

the methods used by partnerships to determine each partner’s share of the partnership’s basis in the contributed property for

purposes of sections 704(d) and 705(a)(2)

(B) and Revenue Ruling 96-11. In terms

of the example in this paragraph, the

Treasury Department and the IRS request

comments on whether the rules in the proposed regulations for determining each

ultimate member’s share of the partnership’s $60,000 basis in the 60 acres align

with the way in which the partnership

would determine each partner’s share of

the partnership’s $45,000 basis in the conservation easement for purposes of applying sections 704(d) and 705(a)(2)(B) and

Revenue Ruling 96-11.

Proposed §1.170A-14(m)(2)(ii) would

provide that, for purposes of proposed

§1.170A-14(m), an ultimate member’s

1335

share of the contributing partnership’s

adjusted basis in the portion of the real

property with respect to which the qualified conservation contribution is made

equals the contributing partnership’s

adjusted basis in the portion of the real

property with respect to which the qualified conservation contribution is made

multiplied by a fraction (1) the numerator

of which is the ultimate member’s distributive share of the qualified conservation

contribution; and (2) the denominator of

which is the total amount of the contributing partnership’s qualified conservation

contribution.

The Treasury Department and the IRS

considered several alternatives to this

rule, including determining the ultimate

member’s share of the contributing partnership’s adjusted basis in the property

based on the ultimate member’s share of

gain, loss, and cash distributions attributable to the property. However, there may

be situations in which the allocation of a

qualified conservation contribution does

not match the partners’ shares of gain,

loss, or cash distributions with respect to

the property. Accordingly, the Treasury

Department and the IRS determined that

such an approach would be less accurate.

In addition, the proposed rule would be

less burdensome for taxpayers and more

easily administrable for the IRS because it

would be based on the partnership’s actual

allocation of the contribution, rather than

on a hypothetical sale of the property.

Proposed §1.170A-14(m)(2)(iii)

would provide that, for purposes of proposed §1.170A-14(m), an ultimate member’s portion of the adjusted basis in all

the contributing partnership’s properties

is equal to the sum of: (1) the ultimate

member’s share of the contributing partnership’s adjusted basis in the portion of

the real property with respect to which

the qualified conservation contribution

is made as determined under proposed

§1.170A-14(m)(2)(ii), plus (2) the ultimate member’s portion of the adjusted

basis in all the contributing partnership’s

properties other than the portion of the

real property with respect to which the

qualified conservation contribution is

made. Proposed §1.170A-14(m)(2)(iii)

would provide that, to determine the

ultimate member’s share of the adjusted

basis in all the contributing partnership’s

December 4, 2023

properties, the contributing partnership

must apportion among its partners in

accordance with their interests in the partnership under section 704(b) its adjusted

basis in each of its properties (except the

portion of the real property with respect

to which the qualified conservation contribution is made), using the adjusted bases

immediately before the qualified conservation contribution, without duplication

or omission of any property, and by treating the adjusted basis in each property as

not less than zero.

The Treasury Department and the

IRS considered alternatives to this rule,

including determining the ultimate member’s portion of the partnership’s adjusted

basis in all its properties in accordance

with §1.743-1(d), which provides for the

determination of a transferee partner’s

share of the partnership’s adjusted basis

of its property for purposes of computing

special basis adjustments under section

743(b). The Treasury Department and

the IRS also considered determining the

ultimate member’s portion of the partnership’s adjusted basis in all its properties

in proportion to the ultimate member’s

share of the built-in gain in each of the

partnership’s properties. The Treasury

Department and the IRS determined that

these approaches would be more complex and could reach results that are less

accurate for purposes of the Disallowance

Rule. In particular, as previously mentioned, the partnership’s allocation of

the qualified conservation contribution

might differ from the way that the partnership would allocate gain and loss and

make cash distributions with respect

to the contributed property. Moreover,

these approaches would require the partnership to obtain a valuation of each of

its properties at the time of the qualified

conservation contribution. The Treasury

Department and the IRS also considered

an approach under which each ultimate

member’s portion of the partnership’s

adjusted basis in all its properties would

be determined in proportion to the ultimate member’s share of the qualified

conservation contribution. Although

such an approach would be simpler than

using the partners’ interests in the partnership, it would be less accurate. The

Treasury Department and the IRS also

considered an approach based on section

December 4, 2023

704(b) capital accounts. However, not

all partnerships use the section 704(b)

capital account safe harbor, and such an

approach would also require a revaluation of partnership properties as of the

time of the contribution. The Treasury

Department and the IRS also considered a

rule based on how the partnership would

allocate depreciation from the properties,

similar to the rule in §1.199A-2(a)(3)(ii).

However, such a rule would not address

property that is not depreciable. The

Treasury Department and the IRS request

comments on these proposed rules and

alternatives.

Proposed §1.170A-14(m)(2)(iv) would

provide a formulaic version of the narrative rules in proposed §1.170A-14(m)(2)

(i) through (iii).

b. Determination of relevant basis for an

ultimate member holding a direct interest

in a contributing S corporation

Proposed §1.170A-14(m)(3)(i) would

provide a narrative rule for the determination of relevant basis for an ultimate

member holding a direct interest in a

contributing S corporation. It would provide that a contributing S corporation

must determine each such ultimate member’s relevant basis as provided therein.

Relevant basis would equal each ultimate

member’s modified basis as determined

under proposed §1.170A-14(l)(3) multiplied by a fraction (1) the numerator of

which is the ultimate member’s pro rata

portion of the contributing S corporation’s

adjusted basis in the portion of the real

property with respect to which the qualified conservation contribution is made;

and (2) the denominator of which is the

ultimate member’s pro rata portion of

the adjusted basis in all the contributing

S corporation’s properties (including the

portion of the real property with respect

to which the qualified conservation contribution is made). The Treasury Department

and the IRS request comments on whether

this rule is sufficiently clear, and whether

additional rules are needed regarding the

time at which the pro rata portions of

bases are determined. For example, the

regulations could provide that these determinations are made as of the time of the

qualified conservation contribution; however, in the event that an ultimate member

1336

is not a shareholder at that time, it would

be unclear when the determination is to be

made.

Proposed §1.170A-14(m)(3)(ii) would

provide a formulaic version of the narrative rules in proposed §1.170A-14(m)(3)

(i).

c. Determination of relevant basis for an

ultimate member holding a direct interest

in an upper-tier partnership

Proposed §1.170A-14(m)(4) would

provide rules for determining the relevant

basis of an ultimate member holding a

direct interest in an upper-tier partnership.

Proposed §1.170A-14(m)(4)(i) would

provide that each such ultimate member’s

modified basis must be traced through

all upper-tier partnerships to the contributing partnership, and the contributing

partnership must determine the relevant

basis. This would involve a multi-step

process under which, beginning with the

upper-tier partnership in which the ultimate member holds a direct interest, each

upper-tier partnership would be required

to perform calculations, and then finally

the contributing partnership would be

required to use those calculations to compute the ultimate member’s relevant basis.

For simplicity, proposed §1.170A-14(m)

(4) would describe a situation in which

there are two tiers of partnerships—a

contributing partnership and an uppertier partnership. Proposed §1.170A-14(m)

(4)(i) would provide that, in a situation

involving more tiers, each partnership

must apply the rules and principles of

proposed §1.170A-14(m)(4) iteratively

to determine relevant basis. In a tiered

structure, the determination of relevant

basis should reflect the basis of the ultimate members that intend to claim a portion of the deduction and thus, cannot be

done without computations at the level of

each entity. The Treasury Department and

the IRS request comments on whether,

and how, these rules can be simplified,

and whether any additional rules are necessary to prevent the avoidance of the

Disallowance Rule in tiered structures.

Proposed

§1.170A-14(m)(4)(ii)(A)

would provide a narrative rule for the

upper-tier partnership. It would provide that the upper-tier partnership must

determine the portion of each ultimate

Bulletin No. 2023–49

member’s modified basis that is allocable

to the upper-tier partnership’s interest in

the partnership in which it holds a direct

interest (in a situation involving only two

tiers of partnerships, that would be the

contributing partnership). This proposed

regulation would require this determination to be made in accordance with the

principles of proposed §1.170A-14(m)

(2), and the formula provided in proposed §1.170A-14(m)(4)(ii)(B). In other

words, the formula provided in proposed §1.170A-14(m)(4)(ii)(B) would

be similar to the formula provided in

proposed §1.170A-14(m)(2)(iv), except

that, instead of determining the portion

of modified basis that is allocable to the

portion of the real property with respect

to which the qualified conservation contribution is made, the formula in proposed

§1.170A-14(m)(4)(ii)(B) would determine the portion of modified basis that is

allocable to the upper-tier partnership’s

interest in the next lower-tier partnership.

As explained in proposed §1.170A-14(m)

(4)(iii), the contributing partnership then

would be required to use the amount determined as the result of the formula in proposed §1.170A-14(m)(4)(ii)(B) in another

set of computations that would determine

the portion of modified basis that is allocable to the portion of the real property with

respect to which the qualified conservation contribution is made.

Proposed

§1.170A-14(m)(4)(ii)(B)

would provide that the rule of proposed

§1.170A-14(m)(4)(ii) is also expressed in

the following formula:3

G = M × (U ÷ (J + U))

Where:

G = The portion of the ultimate member’s modified basis that is allocable to

the upper-tier partnership’s interest in the

contributing partnership.

M = Modified basis as determined

under proposed §1.170A-14(l).

J = Ultimate member’s portion of the

adjusted basis in all the upper-tier partnership’s properties (other than the upper-tier

partnership’s interest in the contributing

partnership), determined by apportioning

among the partners of the upper-tier partnership in accordance with their interests

in the partnership under section 704(b)

its adjusted basis in each of its properties

(other than the upper-tier partnership’s

interest in the contributing partnership),

using the adjusted bases immediately

before the qualified conservation contribution, without duplication or omission of

any property, and by treating the adjusted

basis in each property as not less than zero.

U = Ultimate member’s share of the

upper-tier partnership’s adjusted basis in

its interest in the contributing partnership,

determined according to the following

formula: H × (B ÷ K).

H = Upper-tier partnership’s adjusted

basis in its interest in the contributing

partnership.

B = Ultimate member’s distributive share of the qualified conservation

contribution.

K = Upper-tier partnership’s allocated

portion of the qualified conservation

contribution.

After this formula is computed, then

the contributing partnership must perform

computations using the amount determined for item “G” to determine relevant

basis. Proposed §1.170A-14(m)(4)(iii)

(A) would provide a narrative rule for the

contributing partnership to complete this

second step. It would provide that the contributing partnership must determine the

portion of the amount determined under

proposed §1.170A-14(m)(4)(ii) with

respect to each ultimate member that is

allocable to the portion of the real property

with respect to which the qualified conservation contribution is made. The proposed

regulations would require this determination to be made in accordance with the

principles of proposed §1.170A-14(m)

(2), and the formula provided in proposed

§1.170A-14(m)(4)(iii)(B).

Proposed

§1.170A-14(m)(4)(iii)(B)

would provide that the rule of proposed

§1.170A-14(m)(4)(iii) is also expressed in

the following formula:

R = G × (V ÷ (L + V))

Where:

R = Relevant basis.

G = Amount determined with respect

to item G as described previously under

proposed §1.170A-14(m)(4)(ii)(B).

L = Upper-tier partnership’s portion

of adjusted basis in all the contributing

partnership’s properties (other than the

portion of the real property with respect

to which the qualified conservation contribution is made), determined by apportioning among the partners of the contributing

partnership in accordance with their interests in the partnership under section 704(b)

its adjusted basis in each of its properties

(except the portion of the real property

with respect to which the qualified conservation contribution is made), using the

adjusted bases immediately before the

qualified conservation contribution, without duplication or omission of any property, and by treating the adjusted basis in

each property as not less than zero.

V = Upper-tier partnership’s share of

the contributing partnership’s adjusted

basis in the portion of the real property

with respect to which the qualified conservation contribution is made, determined

according to the following formula: A ×

(K ÷ C).

A = Contributing partnership’s adjusted

basis in the portion of the real property

with respect to which the qualified conservation contribution is made.

K = Upper-tier partnership’s allocated

portion of the qualified conservation

contribution.

C = Total amount of the contributing partnership’s qualified conservation

contribution.

d. Determination of relevant basis for an

ultimate member holding a direct interest

in an upper-tier S corporation

Proposed §1.170A-14(m)(5) would

provide rules for determining relevant

basis for an ultimate member holding a

direct interest in an upper-tier S corporation. Proposed §1.170A-14(m)(5)(i)

would provide that each such ultimate

member’s modified basis must be traced

through the upper-tier S corporation and

any upper-tier partnerships to the contributing partnership, and the contributing

partnership must determine the relevant

basis. This would involve a multi-step

process under which, beginning with

the upper-tier S corporation, the uppertier S corporation and any upper-tier

Under the order of operations for mathematical computations, operations contained in parenthesis (such as the addition of J and U) are performed before the rest of the equation.

Bulletin No. 2023–49

1337

December 4, 2023

partnerships would be required to perform

calculations, and then finally the contributing partnership would be required

to use those calculations to compute the

ultimate member’s relevant basis. For

simplicity, proposed §1.170A-14(m)(5)

would describe a situation in which there

are two tiers – a contributing partnership

and an upper-tier S corporation. Proposed

§1.170A-14(m)(5)(i) would provide that,

in a situation involving more tiers, each

partnership and the upper-tier S corporation must apply the rules and principles

of proposed §1.170A-14(m) iteratively to

determine relevant basis.

Proposed

§1.170A-14(m)(5)(ii)(A)

would provide a narrative rule for the

upper-tier S corporation. It would provide

that the upper-tier S corporation must

determine the portion of each ultimate

member’s modified basis that is allocable

to the upper-tier S corporation’s interest in the partnership in which it holds

a direct interest (in a situation involving only two tiers, that would be the

contributing partnership). The proposed

regulations would require this determination to be made in accordance with the

principles of proposed §1.170A-14(m)

(3), and the formula provided in proposed §1.170A-14(m)(5)(ii)(B). In other

words, the formula provided in proposed §1.170A-14(m)(5)(ii)(B) would

be similar to the formula provided in

proposed §1.170A-14(m)(3)(ii), except

that, instead of determining the portion

of modified basis that is allocable to the

portion of the real property with respect

to which the qualified conservation contribution is made, the formula in proposed §1.170A-14(m)(5)(ii)(B) would

determine the portion of modified basis

that is allocable to the upper-tier S corporation’s interest in the next lower-tier

partnership. As explained in proposed

§1.170A-14(m)(5)(iii), the contributing

partnership then would be required to use

the amount determined as the result of

the formula in proposed §1.170A-14(m)

(5)(ii)(B) in another set of computations

that would determine the portion of modified basis that is allocable to the portion

of the real property with respect to which

the qualified conservation contribution is

made.

Proposed

§1.170A-14(m)(5)(ii)(B)

would provide that the rule of proposed

December 4, 2023

§1.170A-14(m)(5)(ii) is also expressed in

the following formula:

N = M × (P ÷ Q)

Where:

N = Portion of the ultimate member’s

modified basis that is allocable to the

upper-tier S corporation’s interest in the

contributing partnership.

M = Modified basis as determined

under proposed §1.170A-14(l).

P = Ultimate member’s pro rata portion

of the upper-tier S corporation’s adjusted

basis in its interest in the contributing

partnership.

Q = Ultimate member’s pro rata portion of the adjusted basis in all the uppertier S corporation’s properties (including

the upper-tier S corporation’s interest in

the contributing partnership).

After this formula is computed, then

the contributing partnership must perform

computations using the amount determined for item “N” to determine relevant

basis. Proposed §1.170A-14(m)(5)(iii)

(A) would provide a narrative rule for the

contributing partnership to compute this

second step. It would provide that the contributing partnership must determine the

portion of the amount determined under

proposed §1.170A-14(m)(5)(ii) with

respect to each ultimate member that is

allocable to the portion of the real property

with respect to which the qualified conservation contribution is made. The proposed

regulations would require this determination to be made in accordance with the

principles of proposed §1.170A-14(m)

(2), and the formula provided in proposed

§1.170A-14(m)(5)(iii)(B).

Proposed

§1.170A-14(m)(5)(iii)(B)

would provide that the rule of proposed

§1.170A-14(m)(5)(iii) is also expressed in

the following formula:

R = N × (W ÷ (S + W))

Where:

R = Relevant basis.

N = Amount determined with respect

to item N as described previously under

proposed §1.170A-14(m)(5)(ii)(B).

S = Upper-tier S corporation’s portion

of the adjusted basis in all the contributing partnership’s properties (other than the

portion of the real property with respect

1338

to which the qualified conservation contribution is made), determined by apportioning among the partners of the contributing

partnership in accordance with their interests in the partnership under section 704(b)

its adjusted basis in each of its properties

(other than the portion of the real property with respect to which the qualified

conservation contribution is made), using

the adjusted bases immediately before the

qualified conservation contribution, without duplication or omission of any property, and by treating the adjusted basis in

each property as not less than zero.

W = Upper-tier S corporation’s share

of the contributing partnership’s adjusted

basis in the portion of the real property

with respect to which the qualified conservation contribution is made, determined

according to the following formula: A ×

(Y ÷ C).

A = Contributing partnership’s adjusted

basis in the portion of the real property

with respect to which the qualified conservation contribution is made.

Y = Upper-tier S corporation’s distributive share of the qualified conservation

contribution.

C = Total amount of the contributing partnership’s qualified conservation

contribution.

The proposed regulations would provide examples illustrating these rules. The

Treasury Department and the IRS request

comments on the determination of relevant basis.

3. Recordkeeping Requirements

Proposed §1.170A-14(m)(6) would

provide that contributing partnerships,

contributing S corporations, upper-tier

partnerships, and upper-tier S corporations must each maintain dated, written

statements in their books and records,

by the due date, including extensions,

of their Federal income tax returns, substantiating the computation of each ultimate member’s adjusted basis, modified

basis, and relevant basis. It would also

provide that these statements need not

be maintained (nor does modified basis

or relevant basis need to be computed)

with respect to contributions that meet an

exception in proposed §1.170A-14(n)(2)

(contributions outside a three-year holding period) or (n)(3) (family pass-through

Bulletin No. 2023–49

entities). However, these statements must

be maintained with respect to contributions that meet the exception in proposed

§1.170A-14(n)(4) for certified historic

structures because section 170(f)(19)

imposes special reporting requirements

for such contributions if they exceed 2.5

times the sum of relevant basis.

F. Exceptions to the Disallowance Rule

Consistent with section 170(h)(7)

(C), (D), and (E), the rules in proposed

§1.170A-14(n) would provide definitions and additional guidance relating to

the three exceptions to the Disallowance

Rule. It would also provide that there is no

presumption that such a contribution otherwise is compliant with section 170, any

other section of the Code, or the regulations

or any other guidance thereunder; being

described in proposed §1.170A-14(n)

is not a safe harbor for purposes of any

other provision of law or with respect to

the value of the contribution; such transactions are subject to adjustment or disallowance for any other reason, including

failure to satisfy the other requirements of

section 170 and overvaluation of the contribution; and taxpayers who engage in

such

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