Bulletin No. 2025–43

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2025–43

October 20, 2025

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE, INCOME TAX

Notice 2025-46, page 533.

This notice provides interim guidance regarding the application of the Corporate Alternative Minimum Tax to domestic

corporate transactions, financially troubled companies, and

tax consolidated groups.

EXCISE TAX

Notice 2025-55, page 625.

This notice provides relief for the first three calendar quarters

of 2026 regarding the failure to deposit penalties imposed by

section 6656 of the Internal Revenue Code (Code) as those

penalties relate to the remittance transfer excise tax imposed

by section 4475 of the Code. This notice also provides that

a remittance transfer provider’s ability to use the deposit safe

harbor under § 40.6302(c)-1(b)(2) of the Excise Tax Procedural

Regulations (26 CFR part 40) (part 40) will not be affected

by a failure during the first three calendar quarters of 2026

to make deposits of the remittance transfer tax as required

under part 40, provided the remittance transfer provider satisfies the reasonable cause standard for those quarters.

INCOME TAX

Notice 2025-50, page 542.

This notice provides a definition for “rural area” under

§ 1400Z-2(b)(2)(C)(ii) of the Internal Revenue Code (Code),

as amended by Public Law 119-21, 139 Stat. 72 (July 4,

2025), commonly known as the One, Big, Beautiful Bill Act

(OBBBA). This notice is also intended to provide guidance to

taxpayers applying the substantial improvement provisions

of § 1400Z-2(d)(2)(D)(ii), as amended by OBBBA.

T.D. 10034, page 523.

This document contains final regulations that remove the

associated property rule and similar rules from the existing

Finding Lists begin on page ii.

regulations regarding the interest capitalization requirements

for improvements to designated property. In addition, this

document contains final regulations that modify the definition

of “improvement” for purposes of applying those existing

regulations. Lastly, this document contains final regulations

that modify other rules in those existing regulations in light

of the removal of the associated property rule. The final regulations affect taxpayers making improvements to real or

tangible personal property that constitute the production of

designated property.

T.D. 10036, page 525.

These final regulations provide recordkeeping and reporting

requirements for the average income test for purposes of

the section 42 low-income housing credit. If a building is

part of a residential rental project that satisfies this test, the

building may be eligible to earn low-income housing credits.

These final regulations affect owners of low-income housing

projects and State or local housing credit agencies that monitor compliance with the requirements for low-income housing credits.

SPECIAL ANNOUNCEMENT

Notice 2025-53, page 624.

This notice grants relief under section 7508A for persons that the Secretary of the Treasury has determined

to be affected by the 2024-2025 terroristic action in the

State of Israel. The notice postpones deadlines for certain time-sensitive taxpayer acts, such as filing and paying taxes, and government acts, such as assessing and

collecting taxes, for affected taxpayers for a full year,

until September 30, 2026. The covered area includes the

State of Israel, the West Bank and Gaza. The separate

determination of terroristic action and grant of relief in this

notice will also postpone the taxpayer acts and government acts that were postponed by Notice 2024-72 (or by

both Notice 2024-72 and Notice 2023-71) until September 30, 2026, for taxpayers eligible for relief under both

(or all) notices.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and

enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

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

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

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

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

modify, or amend any of those previously published in the

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

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

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

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

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

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

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

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

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

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

Secretary (Enforcement).

Part IV.—Items of General Interest.

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

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

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

October 20, 2025 

Bulletin No. 2025–43

Part I

26 CFR Part 1

SUPPLEMENTARY INFORMATION:

T.D. 10034

Authority

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 1

This document amends the regulations under section 263A(f) of the Internal Revenue Code (Code) regarding the

interest capitalization requirements for

improvements that constitute the production of designated property under

§ 1.263A-8 (final regulations). The final

regulations are issued under the express

delegation of authority to the Secretary

of the Treasury or the Secretary’s delegate (Secretary) under section 263A(j),

which provides, in part, that “[t]he Secretary shall prescribe such regulations as

may be necessary or appropriate to carry

out the purposes of [section 263A].” The

final regulations are also issued under

the express delegation of authority to the

Secretary under section 7805(a) of the

Code, which provides that “the Secretary shall prescribe all needful rules and

regulations for the enforcement of [the

Code], including all rules and regulations as may be necessary by reason of

any alteration of law in relation to internal revenue.”

Interest Capitalization

Requirements for

Improvements that

constitute Designated

Property

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final rule.

SUMMARY: This document contains

final regulations that, with regard to

the interest capitalization requirements

for improvements constituting designated property, remove the associated

property rule and similar rules from the

existing regulations. In addition, this

document contains final regulations that

modify the definition of “improvement”

for purposes of applying those existing

regulations. Lastly, this document contains final regulations that modify other

rules in those existing regulations in

light of the removal of the associated

property rule. The final regulations

affect taxpayers making improvements

to real or tangible personal property

that constitute the production of designated property.

DATES: Effective date: These regulations

are effective on October 2, 2025.

Applicability date: For the applicability date, see § 1.263A-15(a)(6).

FOR FURTHER INFORMATION

CONTACT: Elizabeth Boone or Max

Fishman of the Office of the Associate

Chief Counsel (Income Tax and Accounting) at (202) 317-7007 (not a toll-free

number).

Bulletin No. 2025–43

Background and Summary of

Comments

On May 15, 2024, the Department of

the Treasury (Treasury Department) and

the IRS published in the Federal Register (89 FR 42404) a notice of proposed

rulemaking (REG-133850-13) proposing amendments to regulations under 26

CFR part 1 (proposed regulations). The

proposed regulations would remove the

“associated property rule” and similar rules in § 1.263A-11(e) from the

interest capitalization requirements for

improvements that constitute the production of designated property under

section 263A(f) and § 1.263A-8(d)(3).

In addition, the proposed regulations

would modify the mid-production purchases rule of § 1.263A-11(f) to clarify that the rule applies only to property purchased and further produced

before it is placed in service. Finally,

the proposed regulations would amend

§ 1.263A-8(d)(3) to update the defini-

523

tion of “improvement” so that it is consistent with the definition of “improvement” in § 1.263(a)-3, including the

exceptions, safe harbors, and elections

provided under § 1.263(a)-3.

On July 24, 2024, the Treasury Department and the IRS published a correction

to the proposed regulations in the Federal

Register (89 FR 59864) to amend a citation error in the preamble of REG-13385013. No public hearing was requested or

held on the proposed regulations.

The Treasury Department and the IRS

received two comments in response to

the notice of proposed rulemaking. Both

comments are available at https://www.

regulations.gov or upon request. The

first comment did not address the proposed regulations. The second comment

expressed support for the proposed regulations without suggesting any modifications to the proposed regulations. Accordingly, this Treasury Decision adopts the

proposed regulations as final regulations

with only minor, clarifying changes. Specifically, the final regulations make minor

changes to proposed § 1.263A-8(d)(3)(i)

to clarify the scope of improvements that

constitute the “production of property” for

purposes of determining whether any such

improvement is designated property under

§ 1.263A-8.

Special Analyses

I. Regulatory Planning and Review

The Office of Management and Budget’s Office of Information and Regulatory Analysis has determined that the final

regulations are not significant and are not

subject to review under section 6(b) of

Executive Order 12866. Therefore, a regulatory impact assessment is not required.

II. Paperwork Reduction Act

1. Collections of Information

These final regulations do not impose

additional recordkeeping or reporting burden related to section 263A for taxpayers. A change in a taxpayer’s treatment

of interest to a method consistent with

§§ 1.263A-8(d)(3) and 1.263A-11(e) and

October 20, 2025

(f), as applicable, is a change in method

of accounting to which sections 446 and

481 of the Code apply. Taxpayers change

methods of accounting by filing Form

3115, Application for Change in Accounting Method (Office of Management and

Budget 1545-2070). For purposes of the

Paperwork Reduction Act of 1995 (44

U.S.C. 3507(d)) (PRA), the reporting burden associated with Form 3115 will be

reflected in the PRA submission for Form

3115 (OMB 1545-2070).

2. Burden Estimates

These final regulations impose 0 hours

and $0 of additional recordkeeping or

reporting burden related to section 263A

for taxpayers. Taxpayers who change their

accounting method based on the revised

requirements do so by filing Form 3115

(OMB 1545-2070). For purposes of the

PRA, the reporting burden associated with

Form 3115 will be reflected in the PRA

submission for Form 3115 (OMB 15452070).

Because businesses with gross receipts

of up to $25 million (as adjusted for inflation pursuant to sections 263A(i) and

446(c)) are exempted from the requirement to capitalize costs, including interest, under section 263A, businesses with

gross receipts in excess of $25 million

(as adjusted for inflation) are impacted

by these final regulations. Approximately

30,000 taxpayers with gross receipts in

excess of $25 million (as adjusted for

inflation) reported that they were subject

to section 263A during the past five years.

This number is based upon the number

of taxpayers who reported that they were

subject to section 263A on Form 1120,

U.S. Corporation Income Tax Return,

Form 1125-A, Cost of Goods Sold, and

Form 4562, Depreciation and Amortization (Including Information on Listed

Property).

It is estimated that no more than 1

percent of these businesses will make

improvements to real or tangible personal

property that constitute the production of

designated property for which a change

in accounting method will be made in

any one year. Therefore, it is estimated

that approximately 300 taxpayers may be

impacted by the changes in these final regulations.

October 20, 2025

III. Regulatory Flexibility Act

Taxpayers with gross receipts of up

to $25 million (as adjusted for inflation)

are exempted from the requirement to

capitalize costs, including interest, under

section 263A. Therefore, very few, if any,

small entities will be affected by these

regulations. The Secretary of the Treasury

hereby certifies that these final regulations will not have a significant economic

impact on a substantial number of small

entities within the meaning of section

601(6) of the Regulatory Flexibility Act

(5 U.S.C. chapter 6).

IV. Section 7805(f)

Pursuant to section 7805(f) of the

Code, the notice of proposed rulemaking preceding these final regulations was

submitted to the Chief Counsel of the

Office of Advocacy of the Small Business

Administration for comment on its impact

on small business. No comments on that

notice of proposed rulemaking were

received from the Chief Counsel for the

Office of Advocacy of the Small Business

Administration.

V. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates

Reform Act of 1995 (UMRA) requires

that agencies assess anticipated costs and

benefits and take certain other actions

before issuing a final rule that includes

any Federal mandate that may result in

expenditures in any one year by a State,

local, or Tribal government, in the aggregate, or by the private sector, of $100

million (updated annually for inflation).

These final regulations do not include any

Federal mandate that may result in expenditures by State, local, or Tribal governments, or by the private sector in excess of

that threshold.

VI. Executive Order 13132: Federalism

Executive Order 13132 (Federalism)

prohibits an agency from publishing any

rule that has federalism implications if

the rule either imposes substantial, direct

compliance costs on State and local governments, and is not required by statute,

or preempts State law, unless the agency

524

meets the consultation and funding

requirements of section 6 of the Executive

order. These final regulations do not have

federalism implications and do not impose

substantial direct compliance costs on

State and local governments or preempt

State law within the meaning of the Executive order.

VII. Congressional Review Act

Pursuant to the Congressional Review

Act (5 U.S.C. 801 et seq.), the Office of

Information and Regulatory Affairs designated this rule as not a major rule, as

defined by 5 U.S.C. 804(2).

Drafting Information

The principal authors of these regulations are Elizabeth Boone and Max Fishman of the Office of the Associate Chief

Counsel (Income Tax and Accounting).

However, other personnel from the Treasury Department and IRS participated in

their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the

Regulations

Accordingly, the Treasury Department

and the IRS amend 26 CFR part 1 as follows:

PART 1--INCOME TAXES

Paragraph 1. The authority citation

for part 1 continues to read, in part, as follows:

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

*****

Section 1.263A-8 also issued under 26

U.S.C. 263A(j).

Section 1.236A-11 also issued under

26 U.S.C. 263A(j).

*****

§ 1.263A-0 [Amended]

Par. 2. Section 1.263A-0 is amended by

removing the entries for § 1.263A-11(e)

(1) and (2).

Bulletin No. 2025–43

Par. 3. Section 1.263A-8 is amended

by revising paragraph (d)(3)(i) to read as

follows:

§ 1.263A-8 Requirement to capitalize

interest.

*****

(d) * * *

(3) Improvements to existing property—(i) In general. Any improvement

to real or tangible personal property

under § 1.263(a)-3, or any improvement

to tangible personal property as defined

in § 1.263A-2(a)(2)(ii), constitutes the

production of property. Generally, any

improvement to designated property constitutes the production of designated property. An improvement is not treated as the

production of designated property, however, if the de minimis exception described

in paragraph (b)(4) of this section applies

to the improvement. Paragraph (d)(3)(iii)

of this section provides an exception for

certain improvements to tangible personal

property. In addition, improvements to

designated property under this paragraph

(d)(3)(i) do not include repairs and maintenance described in § 1.162-4(a).

*****

Par. 4. Section 1.263A-11 is amended

by revising paragraphs (e) and (f) to read

as follows:

§ 1.263A-11 Accumulated production

expenditures.

*****

(e) Improvements. If an improvement

constitutes the production of designated

property under § 1.263A-8(d)(3), accumulated production expenditures with respect

to the improvement consist of all direct

and indirect costs required to be capitalized with respect to the improvement. See

§ 1.263A-12(d)(1) to determine when the

production period for a unit of property

has ended.

(f) Mid-production purchases. If a taxpayer purchases a unit of property for further production before the purchased unit

of property is placed in service, the taxpayer’s accumulated production expenditures include the full purchase price of

the purchased unit of property plus all the

additional direct and indirect production

costs incurred by the taxpayer that are

Bulletin No. 2025–43

required to be capitalized with respect to

the purchased unit of property.

*****

Par. 5. Section 1.263A-15 is amended

by adding paragraph (a)(6) to read as follows:

§ 1.263A-15 Effective dates,

transitional rules, and anti-abuse rule.

(a) * * *

(6) Sections 1.263A-8(d)(3) and

1.263A-11(e) and (f) apply to taxable years

beginning after October 2, 2025. A change

in a taxpayer’s treatment of interest to a

method consistent with §§ 1.263A-8(d)(3)

and 1.263A-11(e) and (f), as applicable,

is a change in method of accounting to

which sections 446 and 481 of the Internal

Revenue Code apply.

*****

Edward T. Killen,

Acting Chief Tax Compliance Officer.

Approved: August 12, 2025

Kenneth J. Kies,

Assistant Secretary of the Treasury (Tax

Policy).

(Filed by the Office of the Federal Register October

1, 2025, 8:45 a.m., and published in the issue of the

Federal Register for October 2, 2025, 90 FR 47581)

26 CFR Part 1

T.D. 10036

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 1

Section 42, Low-Income

Housing Credit Average

Income Test Procedures

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations and removal

of temporary regulations.

525

SUMMARY: This document contains

final regulations setting forth recordkeeping and reporting requirements for the

average income test for purposes of the

low-income housing credit. If a building is

part of a residential rental project that satisfies the average income test, the building

may be eligible to earn low-income housing credits. These final regulations affect

owners of low-income housing projects,

State or local housing credit agencies that

monitor compliance with the requirements

for low-income housing credits, and, indirectly, tenants in low-income housing

projects.

DATES: Effective date: These regulations

are effective on September 30, 2025.

Applicability date: For dates of applicability, see §1.42-19(f).

FOR FURTHER INFORMATION

CONTACT: Waheed Olayan at (202)

317-4137 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Authority

This document contains amendments

to the Income Tax Regulations (26 CFR

part 1) under section 42 of the Internal

Revenue Code (Code) relating to recordkeeping and reporting requirements for

the average income test for purposes of

the low-income housing credit (final regulations). The final regulations are issued

under the authority granted to the Secretary of the Treasury or the Secretary’s

delegate (Secretary) in sections 42(n) and

7805(a) of the Code.

Section 42(n) provides, in part, “The

Secretary shall prescribe such regulations

as may be necessary or appropriate to

carry out the purposes of [section 42] …”

Section 7805(a) provides, “[T]he Secretary shall prescribe all needful rules

and regulations for the enforcement of

[the Code], including all rules and regulations as may be necessary by reason of

any alteration of law in relation to internal

revenue.”

Background

The Tax Reform Act of 1986, Public

Law No. 99-514, 100 Stat. 2085 (1986

October 20, 2025

Act) created the low-income housing

credit under section 42. Section 42(a) provides that the amount of the low-income

housing credit for any taxable year in the

credit period is an amount equal to the

applicable percentage (effectively, a credit

rate) of the qualified basis of each qualified low-income building.

Section 42(c)(1)(A) provides that the

“qualified basis” of any qualified low-income building for any taxable year is an

amount equal to: (i) the applicable fraction, determined as of the close of the

taxable year, multiplied by (ii) the eligible

basis of the building (determined under

section 42(d)).

Section 42(c)(1)(B) defines the term

“applicable fraction” as the smaller of the

unit fraction or floor space fraction. The

unit fraction is the number of low-income

units in the building divided by the number

of residential rental units (whether or not

occupied) in the building. The floor space

fraction is the total floor space of low-income units in the building divided by the

total floor space of residential rental units

(whether or not occupied) in the building.

Subject to certain exceptions in section

42(i)(3)(B), section 42(i)(3) defines the

term “low-income unit” as any unit in a

building if the unit is rent-restricted and

the individuals occupying the unit meet

the income limitation under section 42(g)

(1) that applies to the project of which the

building is a part.

Section 42(d)(1) and (2) describe how

to calculate the eligible basis of a new

building or an existing building, respectively.

Section 42(c)(2) defines the term

“qualified low-income building” as any

building which is part of a qualified

low-income housing project at all times

during the compliance period (as defined

in section 42(i)(1), the period of 15 taxable years beginning with the first taxable

year of the credit period).

For a project to qualify as a low-income housing project, it must satisfy one

of the section 42(g) minimum set-aside

tests, as elected by the taxpayer. Prior to

the enactment of the Consolidated Appropriations Act of 2018, Public Law No.

115-141, 132 Stat. 348 (2018 Act), section

1

42(g) contained two minimum set-aside

tests, known as the 20-50 test and the

40-60 test. Under the 20-50 test, an electing taxpayer cannot earn any low-income

housing credits unless at least 20 percent

of the residential units in the project both

are rent-restricted and are occupied by

tenants whose gross income is 50 percent

or less of the area median gross income

(AMGI). Under the 40-60 test, an electing taxpayer cannot earn any low-income

housing credits unless at least 40 percent

of the residential units in the project both

are rent-restricted and are occupied by

tenants whose gross income is 60 percent

or less of AMGI.

The 2018 Act added section 42(g)(1)

(C), which gives taxpayers a third option

for their election of a minimum set-aside

test—the average income test. Under the

average income test, an electing taxpayer

cannot earn any low-income housing

credits unless—(i) 40 percent1 or more

of the residential units in the project both

are rent-restricted and are occupied by

tenants whose income does not exceed

the imputed income limitation that the

taxpayer designated with respect to the

specific unit; and (ii) the average of the

imputed income designations of these

units does not exceed 60 percent of AMGI.

Special rules in section 42(g)(1)(C)(ii)

(I) through (III) govern the income limitations of low-income units as well as the

role of those limitations in the average

income test. Under the 20-50 and 40-60

tests, the income limitations for all low-income units flow automatically from the

taxpayer’s election of one of those two setside tests. In contrast, under the average

income test, the electing taxpayer must

designate each unit’s imputed income

limitation, which will then be taken into

account in applying the test. In addition,

section 42(g)(1)(C)(ii)(III) requires the

imputed income limitation designated for

any unit to be 20, 30, 40, 50, 60, 70, or 80

percent of AMGI.

Under section 42(g), once a taxpayer

elects to use a particular set-aside test for a

project, that election is irrevocable. Thus,

once a taxpayer has elected to use any of

the three tests, the taxpayer may not subsequently elect to use one of the others.

Although a taxpayer may have elected

the 20-40 or 40-60 test before the average

income test became available, the later

availability of the average income test

does not affect the irrevocability of the

earlier election.

Under section 42(m)(1), every State

or local housing credit agency (Agency)

making allocations of the ability to earn

low-income housing credits must have a

qualified allocation plan (QAP) to guide it

in making those allocations.

Under section 42(m)(1)(B)(iii), a QAP

must also contain a procedure that the

Agency (or its agent) will follow in monitoring noncompliance with low-income

housing credit requirements and in notifying the IRS of any such noncompliance.

See §1.42-5 of the Income Tax Regulations for rules implementing this requirement.

Section 1.42-5(e)(2) provides that a

QAP must require an Agency to provide

prompt written notice to the owner of a

low-income housing project if the Agency

does not receive the certification described

in §1.42-5(c)(1), or does not receive, or is

not permitted to inspect, the tenant income

certifications, supporting documentation,

and rent records described in §1.42-5(c)

(2)(ii), or discovers by inspection, review,

or in some other manner, that the project

is not in compliance with the provisions

of section 42.

Section 1.42-5(e)(4) both sets the correction period after an Agency has notified an owner under §1.42-5(e)(2) and

provides that the correction period shall

be that period specified in the monitoring

procedure during which an owner must

supply any missing certifications and

bring the project into compliance with the

provisions of section 42. The correction

period is not to exceed 90 days from the

date of the notice to the owner described

in §1.42-5(e)(2). An Agency may extend

the correction period for up to 6 months,

but only if the Agency determines there is

good cause for granting the extension.

On October 30, 2020, the Department

of Treasury (Treasury Department) and

the IRS published a notice of proposed

rulemaking (REG-119890-18) in the Federal Register (85 FR 68816) proposing

In the case of a project described in section 142(d)(6), this “40 percent” is replaced with “25 percent.”

October 20, 2025

526

Bulletin No. 2025–43

regulations setting forth guidance on the

average income test under section 42(g)

(1)(C) (2020 proposed regulations). On

March 24, 2021, the Treasury Department

and the IRS held a public hearing on the

2020 proposed regulations.

The possibility of a “cliff” (as described

in following two paragraphs) was one

of the main concerns that commenters

expressed regarding the 2020 proposed

regulations. Almost all projects earning

low-income housing credits have more

than the minimum number of low-income

units needed for the project to qualify for

the credits. Thus, with the 20-50 or 40-60

tests, a later discovery that some unit

failed to be a low-income unit generally

would reduce the amount of credit earned

but would not totally preclude a project’s

eligibility.

By contrast, in response to the 2020

proposed regulations, commenters were

concerned about the following possibility

with respect to the average income test:

Suppose that a taxpayer identified well

over 40 percent of units whose income

limits averaged exactly 60 percent of

AMGI, and further suppose that one of

the units with the lowest income limit

turned out to fail the criteria for being a

low-income unit. In that case, the remaining units identified by the taxpayer would

have an average income above 60 percent.

The commenters were concerned that, in

this situation and except for time-limited mitigation measures described in the

2020 proposed regulations, the 2020 proposed regulations would apply the average income test to all remaining units.

Discovery of a single unit’s failure might

occur only after the proposed mitigation

measures were no longer available. Thus,

because no mitigation would be possible,

the entire project would fail the average

income set-aside test and would be denied

any low-income housing credits. Some

commenters called this total disqualification a “cliff,” and many believed that this

result was inappropriate since, despite

the loss of that unit, at least 40 percent of

the units in the project were units whose

income limits averaged to 60 percent or

less of AMGI.

2

On October 12, 2022, the Treasury

Department and the IRS published average-income-test final regulations (TD

9967) in the Federal Register (87 FR

61489) (2022 final regulations). In the

same Treasury decision, the Treasury

Department and the IRS published temporary regulations providing recordkeeping and reporting requirements needed to

facilitate administrability of, and compliance with, the 2022 final regulations (temporary regulations).

Under the 2022 final regulations, a

project for residential rental property

meets the requirements of the average

income test if the taxpayer’s project

contains a qualified group of units that

constitutes 40 percent2 or more of the

residential units in the project. Section

1.42-19(b)(2)(i) requires the units in

a qualified group to, first, individually

satisfy the criteria that would qualify

each unit as a low-income unit under

section 42(i)(3) (the same criteria that

apply to the 20-50 or 40-60 set-asides).

Specifically, the rules in §1.42-19(b)(1)

(i) through (iii) require that each unit

be rent-restricted, occupants of the unit

meet the income limitation for the unit,

and no other provision in section 42

(including section 42(i)(3)(B) through

(E)) or the regulations thereunder denies

low-income status to the unit. In addition,

§1.42-19(b)(2)(ii) requires that the average of the designated imputed income

limitations of the units in the group not

exceed 60 percent of AMGI. The qualified group of units must be identified as

required in §1.42-19(b)(3)(i).

The Treasury Department and the

IRS expected that commenters’ concerns

would be fully assuaged by the qualified

group approach in the 2022 final regulations, as implemented with the flexibility

in the temporary regulations.

In the same issue of the Federal Register in which the 2022 final and temporary regulations were published, the Treasury Department and the IRS published

a notice of proposed rulemaking (REG–

113068-22, 87 FR 61543) regarding the

administration of the average income test

(2022 proposed regulations). The text of

the temporary regulations served as the

text of the 2022 proposed regulations.

Four public comments were submitted

in response to the 2022 proposed regulations. The comments are available for

public inspection at www.regulations.gov

or upon request.

The Treasury Department and the IRS

considered all comments in the development of this Treasury decision, which

follows the basic framework of the 2022

proposed and temporary regulations, with

some revisions. The following Summary

of Comments and Explanation of Revisions discusses the comments received

and the revisions adopted.

In addition, the final regulations include

some minor, non-substantive revisions to

the 2022 proposed regulations that are not

discussed in the Summary of Comments

and Explanation of Revisions.

Summary of Comments and

Explanation of Revisions

These final regulations provide recordkeeping and reporting requirements for the

average income test under section 42(g)

(1)(C).

I. Impact of Noncompliant Unit Included

in Identified Qualified Group of Units

As with the 2020 proposed regulations,

commenters expressed concern that the

temporary regulations (and thus the 2022

proposed regulations) might be interpreted as again creating such a cliff effect

in circumstances where a taxpayer identified well over 40 percent of units whose

income limits averaged exactly 60 percent

of AMGI. The commenters stated that the

temporary regulations could be interpretated as meaning that a post-year-end discovery that one of the units with the lowest

income limit failed the criteria for being

a low-income unit could cause an entire

project to lose eligibility to earn low-income housing credits. Specifically, if the

later-discovered noncompliant unit was in

the qualified group of units reported to the

Agency to demonstrate compliance with

the average income test, then excluding

In the case of a project described in section 142(d)(6), this “40 percent” is replaced with “25 percent.”

Bulletin No. 2025–43

527

October 20, 2025

that unit’s (below-60 percent of AMGI)

income limit would cause the average of

the remaining units in the identified group

to exceed 60 percent of AMGI. Commenters also raised the possibility that the

reported qualified group might contain

exactly 40 percent of the units in the project, even though other units were available to include in the reported qualified

group. In that case, removing the now-disqualified unit would reduce the qualified

group of units to less than 40 percent of

the project’s total units.

In such cases, commenters suggested

that the taxpayer could have taken steps

to preserve the qualification of the project

if the regulations allowed other units to

be substituted in the qualified group that

is used to satisfy the requirements of the

average income test. Some of the comment

letters proposed revising §1.42-19T(c)(4),

regarding an Agency’s waiver authority,

to expressly allow a taxpayer to submit a

corrected group of qualified units.

The 2022 final regulations were

intended to eliminate the risk of a cliff.

Consistent with that intention, the temporary regulations were not intended to

cause disqualification because of a postyear-end discovery that one of the identified units failed the criteria for being a

low-income unit in circumstances where

the taxpayer could have identified a different group of qualified units. The purpose

of the recordkeeping and reporting rules

for the average income test is similar to

the rules for the other set-aside tests. Thus,

the rules in the temporary regulations are

intended to create a contemporaneous

record of the qualified groups of units.

This record helps document and later verify that the taxpayer met the requirements

of the average income test and correctly

calculated the applicable fraction of the

building.

The Treasury Department and the IRS

agree with commenters that the final regulations should more clearly allow the

submission of a corrected qualified group

when the taxpayer or Agency realizes that

a previously submitted group fails to be a

qualified group. For example, suppose that

a unit with a 40 percent imputed income

designation is included in a reported qualified group but is later determined to have

been noncompliant during the relevant

time period. In such a case, submitting a

October 20, 2025

revised qualified group can document both

the removal of that noncompliant unit and

any removal of other units. For example,

simultaneously removing the noncompliant unit and one or more higher-limitation

units may be needed to reduce the average

imputed income designations of units in

the identified group down to 60 percent

or less of AMGI. This updated reporting

requirement will be helpful for demonstrating that the average income test was

met as of the prior year end. It will also

be useful for identifying more clearly the

qualified group of units to be used for calculating the applicable fraction.

Accordingly, these final regulations

adopt the commenters’ suggestion to permit the submission of a corrected qualified

group of units. The Treasury Department

and the IRS note that allowing submission

of a revised qualified group does not allow

a taxpayer retroactively to change income

designations for any unit in a building after

a taxable year has closed. A change in an

income designation is not allowed even if

a tenant’s income would have supported a

lower designation prior to year end.

dential units in the project. This qualified

group of units demonstrates compliance

with the set aside, and data on the units in

each building represented in the group is

available to compute the applicable fraction(s) for each such building.

Section 1.42-19(c) of the 2022 proposed regulations would give Agencies

flexibility to determine the best time and

manner for taxpayers to communicate the

required information so that each Agency

can adopt a system that best serves that

particular Agency. This flexibility is

intended to enable the Agency to minimize burden on the Agency and taxpayers.

The Treasury Department and the IRS

agree with commenters that one list can

be sufficient. However, it is important to

maintain flexibility for any Agency that

finds two separate lists helpful. Thus, the

final regulations revise the language in the

2022 proposed regulations to provide that

Agencies have discretion to permit taxpayers to report either one or two qualified

groups of low-income units. The final regulations also include examples illustrating

the application of this rule.

II. Reporting of Two Groups of

Qualified Units

III. Timing of Agency Waiver

Proposed § 1.42-19(c)(1)(ii) would

require taxpayers to report two separate

groups of qualified units: (i) one for the

minimum set-aside test; and (ii) one for

computing the applicable fractions of

buildings in the project. Some commenters suggested that reporting two separate

groups of qualified units is unnecessary

because a single list of all units submitted for determining the applicable fraction

would include the information needed to

determine whether the minimum set-aside

is met. Under the definition of qualified

group, the designations of the low-income

units in the applicable-fraction qualified

group must average 60 percent or less

of AMGI. Thus, if that group includes at

least 40 percent of the units in the project,

that group of units is a qualified group that

satisfies the average-income set-aside.

The commenters recommended that

the final regulations streamline the reporting process to allow a taxpayer to report

to the Agency a single qualified group

of low-income units that is large enough

to include at least 40 percent of the resi-

528

Proposed § 1.42-19(c)(4) would provide Agencies with the discretion, on a

case-by-case basis, to waive in writing

any failure to comply with the proposed

regulations’ recordkeeping and reporting

requirements. The waiver may be granted

up to 180 days after discovery of the failure, whether by the taxpayer or Agency.

One commenter was concerned that

180 days may be insufficient to address

a failure, especially if the waiver discretion is being used to remedy the “cliff

test” reporting issue described earlier.

This commenter recommended revising

the final regulations so that the 180-day

period starts with the determination of a

designation or identification failure, rather

than a discovery of a failure. The commenter suggested that this determination

be defined as the Agency’s issuance to the

IRS of Form 8823 (Low-Income Housing

Credit Agencies Report of Noncompliance

or Building Disposition). Other commenters recommended that the 180-day period

start after the end of the correction period

in §1.42-5(e)(4) (90 days after notice from

Agency under §1.42-5(e)(2), plus up to an

Bulletin No. 2025–43

additional six months at Agency’s discretion).

The Treasury Department and the IRS

considered these recommendations, and

the final regulations adopt a revised version of the 2022 proposed regulations.

These revisions align the §1.42-19 reporting requirements with the rules in §1.42‑5.

The modification in §1.42-19(c)(4) is also

necessary because the final regulations

now allow owners of low-income housing

projects to submit a corrected list upon

discovery of a problem with a previously

submitted list, whether the discovery is by

the taxpayer or Agency.

The final regulations in §1.42-19(c)(4)

provide that a failure to comply with the

procedural requirements of §1.42-19(c)

(1), (c)(2), or (c)(3)(iv) is treated as corrected in three situations: (i) if a taxpayer

discovers the failure to comply, the taxpayer has up to 180 days after discovery

of the failure to give the Agency a revised

submission, such as a revised qualified

group of units; (ii) if an Agency discovers a failure to comply, the Agency should

provide prompt notification in a manner

similar to §1.42-5(e)(2), and then the taxpayer must satisfactorily address the failure within the correction period of §1.425(e)(4); or (iii) in all cases, an Agency has

discretion to waive in writing any failure to

comply with the procedural requirements

of §1.42-19(c)(1), (c)(2), or (c)(3)(iv).

This waiver must occur within the applicable time period (dependent on whether

a taxpayer or Agency discovered failure).

As indicated in the preceding paragraph,

the final regulations distinguish noncompliance discovered by an Agency and noncompliance discovered by a taxpayer. In

the case of a taxpayer discovery, providing

the taxpayer with 180 days after discovery

to give the Agency a revised submission

should provide sufficient time for taxpayers to comply, because the period does not

begin before taxpayers have knowledge,

or an appreciation, that there is, indeed, a

failure.

In contrast, when an Agency discovers

the failure, the final regulations align with

the rules that apply to an Agency discovery under §1.42-5. The Agency must provide prompt notice under §1.42-5(e)(2) to

start the correction period in §1.42-5(e)

(4). Aligning the §1.42-19 rules with the

notice provision in §1.42-5(e)(2) and the

Bulletin No. 2025–43

correction period provided by §1.42-5(e)

(4) places taxpayers and Agencies in the

same position with an Agency-discovered

average income issue as the taxpayer is

in when the Agency discovered that otherwise failed to certify under §1.42-5, or

when the Agency discovered any other

noncompliance. The final regulations do

not adopt commenters’ suggestion to start

the correction period after a “determination” by the Agency. Under that suggestion, determination means the issuance of

a Form 8823 as detailed in §1.42-5(e)(3).

Adopting such a late deadline would misalign these rules with the rules in §1.42-5.

For example, when an Agency “discovers”

that a project is not in compliance with

the provisions of section 42, §1.42-5(e)

(2) requires the Agency to provide prompt

written notice to start the correction period

in §1.42-5(e)(4). If, instead, a “determination” were required for an Agency-discovered error regarding average-income,

then the permitted correction period

would extend past the date of the correction period for other Agency-discovered

errors or failed certifications under §1.425(e)(4) (such as correcting the physical

noncompliance of a unit). The burden on

the taxpayer in this situation (submitting

a corrected list of units) does not justify

a longer or different period of time than

other Agency-identified issues.

Effect on Other Documents

The temporary regulations are removed

effective September 30, 2025.

Special Analyses

I. Regulatory Planning and Review –

Economic Analysis

These final regulations are not subject

to review under section 6(b) of Executive

Order 12866 pursuant to the Memorandum of Agreement (July 4, 2025) between

the Treasury Department and the Office

of Management and Budget regarding

review of tax regulations.

II. Paperwork Reduction Act

The Paperwork Reduction Act of 1995

(44 U.S.C. 3501-3520) (PRA) requires

that a Federal agency obtain the approval

529

of OMB before collecting information

from the public, whether such collection

of information is mandatory, voluntary,

or required to obtain or retain a benefit.

The collections of information contained

in these regulations has been approved by

OMB under control number 1545-0988.

Section 1.42-19(c)(1) provides recordkeeping and reporting requirements

related to the identification of a qualified

group of units for each of (i) satisfaction

of the average income set-aside test and

(ii) applicable fraction determinations.

Section 1.42-19(c)(2) provides reporting

requirements to the Agency with jurisdiction over a project. Section 1.42-19(c)(3)

(iv) provides recordkeeping and reporting

requirements related to designations of the

imputed income limitations for residential units. Section 1.42-19(d)(2) provides

recordkeeping and reporting requirements

related to changing a unit’s designated

imputed income limitation.

This information in the collections of

information will generally be used by the

IRS and Agencies for tax compliance purposes and by taxpayers to facilitate proper

reporting and compliance. Specifically,

the collections of information in §1.42-19

apply to owners of projects that receive the

low-income housing credit and elect the

average income set-aside. With respect to

the recordkeeping requirements in §1.4219(c)(3)(iv), and (d)(2), section 42(g)(1)

(C)(ii)(I) requires that the taxpayer designate the imputed income limitations of the

units taken into account for purposes of

the average income test. Thus, the recordkeeping requirements that are provided

allow for a process of designation that will

result in a reliable record of both the original designations of the imputed income

limitations of low-income units and any

redesignations of units’ limitations within

a project.

The recordkeeping rules in §1.42-19(c)

(1) with respect to a qualified group of

units are similarly needed to ensure there

is a reliable record to show that the units

used for purposes of the average income

set-aside test and for determining a building’s applicable fraction were part of a

group of units within the project whose

average designated imputed income

limitations do not exceed 60 percent of

AMGI. This limitation is consistent with

the requirement in section 42(g)(1)(C)(ii)

October 20, 2025

(II). The annual reporting requirements in

§1.42-19(c)(1), (c)(3), and (d)(2) are also

similar in substance to other annual certifications required of taxpayers. For example, minimum certifications by owners

are required in qualified allocation plans

as provided in §1.42-5(c). The reporting

requirements in these final regulations

also provide added flexibility by allowing

the applicable Agency to determine the

time and manner for the reporting under

§1.42-19(c)(2)(i). Also, §1.42-19(c)(4)

gives taxpayers the ability to correct failures and maintains the Agencies the ability to waive any failure of reporting on a

case-by-case basis.

A summary of paperwork burden estimates follows:

Estimated number of respondents:

Approximately 200 taxpayers elected the

average income test for just over 2,000

buildings between 2018 and 2022. When

viewed annually, we project that approximately 100 additional taxpayers will have

eligible buildings and 1,000 additional

buildings will be eligible under the average income test.

Estimated burden per response: We

estimate that identifying which units are

for use in the average income set-aside

test and applicable fraction determinations and designating a unit’s imputed

income limitation takes an average of 15

minutes per unit. Based on an estimated

average of 15 units per building and an

average 15 minutes of time per unit, an

impacted taxpayer will incur an average

of 225 minutes per building to record the

additional designations due to the flexibility under the regulations for the average income test. Total average annual

burden for recording the designations per

building is 11,250 hours (15 units x 15

minutes x 3,000 buildings).

Taxpayers are also required to report

redesignation of units, and why they are

required to redesignate units during the

year. For purposes of this analysis, we

assume that an average of 4 units per

building will be redesignated annually. We

estimate each redesignation will take an

average of 10 minutes. Thus, we estimate

the average number of minutes per year

to record redesignations for an impacted

taxpayers to be 40 minutes per building

for a total average annual burden of 2,000

hours (40 minutes x 3,000 buildings).

October 20, 2025

In addition, we estimate an annual

reporting burden related to the expanded

flexibility rules to average 20 minutes per

impacted taxpayers for a total burden of

100 hours (20 minutes x 300 taxpayers).

Estimated frequency of response:

Annual.

Estimated total burden hours: The

annual burden hours for this regulation

is estimated to be 13,350 hours. Using

a monetization rate of $56.60 per hour

(2024 dollars), the burden for this regulation is $755,610 for impacted taxpayers.

A Federal agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless the collection of information displays a valid control number.

III. Regulatory Flexibility Act

Pursuant to the Regulatory Flexibility

Act (RFA) (5 U.S.C. chapter 6), the Secretary of the Treasury hereby certifies that

this final regulation will not have a significant economic impact on a substantial

number of small entities. This certification is based on the fact that, prior to the

publication of this final regulation and

before the enactment of the 2018 Act,

taxpayers were already required to satisfy either the 20-50 test or the 40-60 test,

as elected by the taxpayer, in order to

qualify as a low-income housing project.

The 2018 Act added a third minimum setaside test (the average income test) that

taxpayers may elect. This final regulation

sets forth requirements for the average

income test, and the costs associated with

the average income test are similar to the

costs associated with the 20-50 test and

40-60 test.

As described in more detail in the PRA

analysis section of the preamble, approximately 200 taxpayers elected the average

income test for just over 2,000 buildings

between 2018 and 2022. When viewed

annually, we project that approximately

100 additional taxpayers will have eligible

buildings and 1,000 additional buildings

will be eligible under the average income

test. We estimate that identifying which

units are for use in the average income setaside test and applicable fraction determinations and designating a unit’s imputed

income limitation takes an average of 15

minutes per unit. Based on an estimated

530

average of 15 units per building and an

average 15 minutes of time per unit, an

impacted taxpayer will incur an average

of 225 minutes per building to record the

additional designations due to the flexibility under the regulations for the average

income test. In addition, taxpayers are

also required to report redesignation of

units, and why they are required to redesignate units during the year. For purposes

of this analysis, we assume that an average of 4 units per building will be redesignated annually. We estimate each redesignation will take an average of 10 minutes.

Thus, we estimate the average number of

minutes per year to record redesignations

for an impacted taxpayer to be 40 minutes

per building for a total average annual

burden of 2,000 hours. We also estimate

an annual reporting burden related to the

expanded flexibility rules to average 20

minutes per impacted taxpayer for a total

burden of 100 hours.

IV. Section 7805(f)

Pursuant to section 7805(f), the proposed regulation was submitted to the

Chief Counsel for the Office of Advocacy

of the Small Business Administration for

comment on its impact on small business,

and no comments were received. The

Treasury Department and the IRS also

requested comments from the public.

V. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates

Reform Act of 1995 (UMRA) requires

that agencies assess anticipated costs and

benefits and take certain other actions

before issuing a final rule that includes

any Federal mandate that may result in

expenditures in any one year by a State,

local, or Tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for

inflation. This final rule does not include

any Federal mandate that may result in

expenditures by State, local, or Tribal

governments, or by the private sector in

excess of that threshold.

VI. Executive Order 13132: Federalism

Executive Order 13132 (Federalism)

prohibits an agency from publishing any

Bulletin No. 2025–43

rule that has federalism implications if

the rule either imposes substantial, direct

compliance costs on State and local governments, and is not required by statute,

or preempts State law, unless the agency

meets the consultation and funding

requirements of section 6 of the Executive order. These regulations do not have

federalism implications and do not impose

substantial direct compliance costs on

State and local governments or preempt

State law within the meaning of the Executive order.

VII. Congressional Review Act

Pursuant to the Congressional Review

Act (5 U.S.C. 801 et seq.), the Office of

Information and Regulatory Affairs designated this rule as not a “major rule,” as

defined by 5 U.S.C 804(2).

VIII. Executive Order 13175:

Consultation and Coordination With

Indian Tribal Governments

Executive Order 13175 (Consultation and Coordination With Indian Tribal

Governments) prohibits an agency from

publishing any rule that has Tribal implications if the rule either imposes substantial, direct compliance costs on Indian

Tribal governments, and is not required

by statute, or preempts Tribal law, unless

the agency meets the consultation and

funding requirements of section 5 of the

Executive order. This final rule does not

have substantial direct effects on one

or more Federally recognized Indian

tribes and does not impose substantial

direct compliance costs on Indian Tribal

governments within the meaning of the

Executive order.

Drafting Information

The principal author of these regulations is Waheed Olayan, Office of the

Associate Chief Counsel (Energy, Credits,

and Excise Tax). However, other personnel from the Treasury Department and the

IRS participated in their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Bulletin No. 2025–43

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 1 is amended

as follows:

PART 1‑‑INCOME TAXES

Paragraph 1. The authority citation for

part 1 is amended by removing the entry

for § 1.42–19T to read in part as follows:

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

*****

Section 1.42-19 also issued under 26

U.S.C. 42(n);

*****

Par. 2. Section 1.42-0 is amended by,

in the table of contents for §1.42-19, adding entries for (c)(1), (c)(1)(i) and (ii), (c)

(2), (c)(2)(i) and (ii), (c)(3)(iv), (c)(4), (c)

(4)(i) through (iv), (d)(2), and (f)(4) to

read as follows:

§1.42-0 Table of contents.

*****

§1.42-19 Average income test.

*****

(c) * * *

(1) Identification of low-income units

for use in the average income set-aside

test or the applicable fraction determination.

(i) In general.

(ii) Recording and communicating.

(2) Notifications to the Agency with

jurisdiction over a project.

(i) Agency flexibility.

(ii) Examples.

(3) * * *

(iv) Recording, retention, and annual

communications related to designations.

(4) Correcting failures to comply with

procedural requirements.

(i) In general.

(ii) Discovery by taxpayer.

(iii) Discovery by Agency.

(iv) Waiver by Agency.

(d) * * *

(2) Process for changing a unit’s designated imputed income limitation.

*****

(f) * * *

(4) Taxable years beginning on or after

September 30, 2025.

531

Par. 3. Section 1.42-19 is amended by:

1. Adding paragraphs (c)(1) and (2), (c)

(3)(iv), (c)(4), and (d)(2).

2. Revising paragraphs (f)(1) and (f)(2)

(ii).

3. Adding paragraph (f)(4).

The revisions and additions read as follows:

§1.42-19 Average income test.

*****

(c) * * *

(1) Identification of low-income units

for use in the average income set-aside

test or the applicable fraction determination--(i) In general. For a taxable year,

a taxpayer must follow the procedures

described in paragraph (c)(1)(ii) of this

section to identify-(A) A qualified group of units that satisfy the average income set-aside test; and

(B) A qualified group of units to be

used to determine the applicable fraction.

(ii) Recording and communicating. A

taxpayer must-(A) Record the identification in its

books and records, where the identification must be retained for a period not

shorter than the record-retention requirement under §1.42-5(b)(2); and

(B) Communicate the annual identifications to the applicable housing credit

agency (Agency) as provided in paragraph

(c)(2) of this section.

(2) Notifications to the Agency with

jurisdiction over a project--(i) Agency

flexibility. An Agency may establish the

time and manner in which information is

annually provided to it.

(ii) Examples. The following fact patterns illustrate some of the approaches

that paragraph (c)(2)(i) of this section

allows an Agency to use to establish the

time and manner in which a taxpayer

annually provides information to the

Agency.

(A) Example 1. Agency A requires taxpayers

annually to submit a single list reporting all low-income units in a qualified group to be used by the

taxpayer in determining the applicable fraction(s)

for all building(s) in the project. The identification of

each unit on the list must include the unit’s imputed

income designation. Consequently, Agency A can

identify within the list a group or groups of units that

constitute a qualified group that satisfies the average

income set-aside test and taxpayers are considered to

have identified a qualified group of units that satisfy

the average income test.

October 20, 2025

(B) Example 2. Agency B has the same requirements for taxpayers as Agency A in paragraph (c)

(2)(ii)(A) of this section (Example 1) for the initial

annual report, but thereafter Agency B permits taxpayers, in lieu of a full list, to submit a statement

describing the differences from the previous year’s

information (or, when applicable, by reporting that

there are no such differences).

(C) Example 3. Agency C requires taxpayers to

annually provide two separate lists of low-income

units: one list identifying the qualified group of units

for use in the average income set-aside; and a second

list identifying the qualified group of units for use in

the applicable fraction determination. The identification of each unit on the lists must include the unit’s

imputed income designation.

(3) * * *

(iv) Recording, retention, and annual

communications related to designations.

A taxpayer designates a unit’s imputed

income limitation by recording the limitation in its books and records, where it

must be retained for a period not shorter

than the record retention requirement

under §1.42-5(b)(2). The preceding sentence applies both to units whose first

occupancy is as a low-income unit and to

previously market-rate units that are converted to low-income status. The designation must also be communicated annually

to the applicable Agency as provided in

paragraph (c)(2) of this section.

(4) Correcting failures to comply with

procedural requirements--(i) In general.

If there is a failure to comply with the

requirements of paragraph (c)(1) or (2)

or (c)(3)(iv) of this section and any of the

procedures described in paragraph (c)(4)

(ii), (iii), or (iv) of this section are followed, then the failure is treated as corrected and the relevant requirements are

treated as having been satisfied. In such

case, the tax consequences under this section correspond to that deemed satisfaction.

(ii) Discovery by taxpayer. If a taxpayer discovers a failure to comply, the

taxpayer must submit a correction to the

October 20, 2025

Agency. Such a correction may be in the

form of a revised qualified group of units.

This submission must occur not more than

180 days after discovery of the failure.

(iii) Discovery by Agency. If an Agency

discovers a failure to comply, the Agency

must provide prompt notification to the

taxpayer in a manner similar to the one

described in §1.42-5(e)(2), and the taxpayer must submit a correction to the

Agency within a time period no longer

than the period described in §1.42-5(e)(4).

(iv) Waiver by Agency. In all cases, if

a correction is required due to a failure

to comply with the requirements of paragraph (c)(1) or (2) or (c)(3)(iv) of this section, then the Agency has the discretion

to waive that failure in writing. For the

waiver to be effective, this writing must be

provided to the taxpayer within the time

limit described in paragraph (c)(4)(ii) or

(iii) of this section, as applicable.

(d) * * *

(2) Process for changing a unit’s designated imputed income limitation. The taxpayer effects a change in a unit’s imputed

income limitation by recording the new

designation in its books and records, where

it must be retained for a period not shorter

than the record retention requirement

under §1.42-5(b)(2). The new designation

must also be communicated to the applicable Agency as provided in paragraph (c)

(2) of this section and must become part of

the annual report to the Agency of income

designations. The prior designation must

be retained in the books and records for

the period specified in paragraph (c)(3)

(iv) of this section. A designation under

this paragraph (d)(2) satisfies paragraph

(c)(3) of this section.

*****

(f) * * *

(1) In general. Except as provided in

paragraphs (f)(3) and (4) of this section,

532

this section applies to taxable years beginning after December 31, 2022.

(2) * * *

(ii) The designation required by paragraph (f)(2)(i) of this section must comply

with paragraphs (c)(3)(ii) and (iv) of this

section, without taking into account paragraph (c)(4) of this section. Paragraph (c)

(2) of this section applies to these designations, except that the Agency may allow

the notification to be made along with any

other notifications for the first taxable year

beginning after December 31, 2022.

*****

(4) Taxable years beginning on or

after September 30, 2025. Paragraphs (c)

(1) and (2), (c)(3)(iv), (c)(4), (d)(2), and

(f)(2)(ii) of this section apply to taxable

years beginning on or after September 30,

2025. For taxable years beginning before

September 30, 2025, see §1.42-19T as

contained in 26 CFR part 1, as revised

April 1, 2025. For taxable years beginning

before September 30, 2025, taxpayers,

however, may choose to apply the rules

of paragraphs (c)(1) and (2), (c)(3)(iv), (c)

(4), (d)(2), and (f)(2)(ii) of this section,

provided the taxpayers apply the rules in

their entirety and in a consistent manner.

§1.42-19T [Removed]

Par. 4. Section 1.42–19T is removed.

Edward T. Killen,

Acting Chief Tax Compliance Officer.

Approved: September 19, 2025.

Kenneth J. Kies,

Assistant Secretary of the Treasury

(Tax Policy).

(Filed by the Office of the Federal Register September 29, 2025, 8:45 a.m., and published in the issue

of the Federal Register for September 30, 2025, 90

FR 46756)

Bulletin No. 2025–43

Part III

Interim Guidance

Regarding the Application

of the Corporate

Alternative Minimum Tax to

Domestic Corporations

Notice 2025-46

SECTION 1. OVERVIEW

This notice provides interim guidance

regarding the application of the corporate alternative minimum tax (CAMT) to

domestic corporate transactions, financially troubled companies (troubled companies), and tax consolidated groups.1 The

Department of the Treasury (Treasury

Department) and the Internal Revenue

Service (IRS) intend to partially withdraw

the CAMT Proposed Regulations (as

described in section 2.03 of this notice)

and to issue revised proposed regulations

that include proposed rules similar to the

interim guidance provided in sections

3 through 6 of this notice (forthcoming

proposed regulations).2 The forthcoming

proposed regulations would reduce the

compliance burdens and costs associated with the application of the CAMT to

domestic corporate transactions, troubled

companies, and tax consolidated groups.

Taxpayers may rely on the interim guidance provided in sections 3 through 6 of

this notice as provided in section 7 of this

notice.

SECTION 2. BACKGROUND

.01 Overview of the CAMT. Section

10101 of Public Law 117-169, 136 Stat.

1818, 1818-1828 (August 16, 2022), commonly referred to as the Inflation Reduction Act of 2022, amended § 55 to impose

the CAMT based on the “adjusted financial statement income” (AFSI) of an applicable corporation for taxable years beginning after December 31, 2022. Section

59(k)(1)(A) provides that, for purposes

of §§ 55 through 59, the term “applicable

1

2

corporation” means, with respect to any

taxable year, any corporation (other than

an S corporation, a regulated investment

company, or a real estate investment trust)

that meets the average annual AFSI test

in § 59(k)(1)(B) for one or more taxable

years that (i) are before that taxable year,

and (ii) end after December 31, 2021.

.02 AFSI under § 56A.

(1) General definition of AFSI. For

purposes of §§ 55 through 59, the term

“AFSI” means, with respect to any corporation for any taxable year, the net income

or loss of the taxpayer set forth on the

taxpayer’s applicable financial statement

(AFS) for that taxable year, adjusted as

provided in § 56A. Section 56A(c) provides general adjustments to be made to

AFSI.

(2) Special rule regarding consolidated

returns. Section 56A(c)(2)(B) provides a

general rule that, if the taxpayer is part of

a tax consolidated group for any taxable

year, AFSI for that group for that taxable

year must take into account items on the

group’s AFS that are properly allocable to members of that group. However,

§ 56A(c)(2)(B) provides the Secretary of

the Treasury or the Secretary’s delegate

(Secretary) with authority to prescribe by

regulation exceptions to that general rule.

(3) Special rule regarding dividends

and other amounts. Section 56A(c)(2)

(C) provides a special rule that, if a corporation is not a member of the taxpayer’s consolidated group, the taxpayer’s

AFSI with respect to that other corporation includes only dividends received

from that other corporation (reduced to

the extent provided by the Secretary in

regulations or other guidance) and other

amounts includible in gross income or

deductible as a loss under chapter 1 of the

Code (other than amounts required to be

included under §§ 951 or 951A or such

other amounts as provided by the Secretary) with respect to the other corporation.

(4) Authority of the Secretary to provide

necessary adjustments. Section 56A(c)

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

such adjustments to AFSI as the Secretary

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

AFSI to prevent the omission or duplication of any item and adjustments to carry

out the principles of part II and part III

of subchapter C of chapter 1 of the Code

(subchapter C), relating to corporate liquidations and corporate organizations and

reorganizations, respectively.

(5) Financial statement net operating losses. Section 56A(d) provides that

AFSI is reduced by an amount equal to

the lesser of (i) the aggregate amount of

financial statement net operating loss

(FSNOL) carryovers to the taxable year,

or (ii) 80 percent of AFSI, computed without regard to FSNOLs. Section 56A(d)(3)

defines the term “financial statement net

operating loss” as the amount of the net

loss (if any) set forth on the corporation’s

AFS (determined after the application of

§ 56A(c) and without regard to § 56A(d)).

(6) General authority of the Secretary.

Section 56A(e) authorizes the Secretary to

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

.03 CAMT Proposed Regulations.

(1) Overview. On September 13, 2024,

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

(REG-112129-23) in the Federal Register (89 F.R. 75062) containing proposed

regulations addressing the application of

the CAMT. Technical corrections to the

proposed regulations were published in

the Federal Register (89 F.R. 104909) on

December 26, 2024. The proposed regulations contained in REG-112129-23,

as corrected on December 26, 2024, are

referred to herein as the “CAMT Proposed

Regulations.” Numerous comments were

submitted in response to the CAMT Proposed Regulations. The Treasury Department and the IRS continue to consider and

study these comments. Sections 2.03(2)

through (5) of this notice discuss the provisions of, and briefly summarize the comments received on, proposed §§ 1.56A-18

and 1.56A-19 (related to domestic corpo-

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

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

Bulletin No. 2025–43

533

October 20, 2025

rate transactions), proposed § 1.56A-21

(related to troubled companies), proposed

§ 1.1502-56A (related to tax consolidated

groups), and proposed § 1.56A-23(e) and

(f) (related to acquired FSNOLs and certain built-in items), respectively.

(2) Domestic corporate transactions.

(a) Proposed §§ 1.56A-18 and 1.56A19. Proposed §§1.56A-18 and 1.56A-19

would provide rules for determining the

CAMT consequences of (i) investments in

domestic corporations that are not members of the CAMT entity’s tax consolidated group, and (ii) covered transactions

(as defined in proposed §1.56A-18(b)

(11)). Specifically, proposed §§1.56A-18

and 1.56A-19 would apply § 56A(c)(2)

(C) to conform the treatment of investments in domestic corporations to the

Federal income tax treatment of such

investments. Proposed §§ 1.56A-18 and

1.56A-19 would further provide that

financial accounting treatment governs

the computation of a domestic corporation’s AFSI resulting from a covered

recognition transaction. If a transaction

qualifies as a covered nonrecognition

transaction, the CAMT entity would

determine its AFSI using the rules that

apply “for regular tax purposes” (within

the meaning of proposed § 1.56A-1(b)

(22)) with CAMT inputs, such as CAMT

basis and CAMT earnings. Whether a

transaction is a covered recognition transaction or a covered nonrecognition transaction would be determined on a transaction-by-transaction basis for each party

to the transaction. A transaction would

be a covered recognition transaction to

a party if the party recognized any gain

or loss for regular tax purposes. Additionally, proposed § 1.56A-19(g)(5)(iii)

would provide an anti-abuse rule for certain “section 351 exchanges” (as defined

in proposed § 1.56A-18(b)(25)) in which

a “section 351 transferor” (as defined in

proposed § 1.56A-18(b)(27)) that is not an

applicable corporation receives a de minimis amount of boot in addition to stock

of the “section 351 transferee” (as defined

in proposed § 1.56A-18(b)(26)). The proposed regulations under §§ 1.56A-18 and

1.56A-19 would not apply to the ownership of stock of a foreign corporation

or to transactions involving foreign corporations. See proposed §§ 1.56A-4 and

1.56A-18(a)(2)(ii).

October 20, 2025

(b) Comments received. Commenters

recommended conforming the rules in

proposed §§ 1.56A-18 and 1.56A-19 to

follow more closely the rules that apply

for regular tax purposes, with CAMT

inputs. Commenters also disagreed with

the design of certain proposed rules,

which certain commenters described as

resulting in a “cliff effect.” Those proposed “cliff effect” rules would result in

the CAMT consequences of a transaction

being determined under either (i) the general rule of § 56A(a), which would determine CAMT consequences by applying

the taxpayer’s AFS, or (ii) the proposed

rules issued under § 56A(c)(15), which

would determine CAMT consequences by

applying certain rules of part II and part III

of subchapter C applicable for regular tax

purposes. The commenters recommended

bifurcating transactions to allow for partial

gain recognition or permitting a specified

percentage of the consideration received

in a covered nonrecognition transaction to

be boot without causing the transaction to

become a covered recognition transaction.

In addition, commenters requested clarification regarding the CAMT treatment

of various corporate transactions. Specifically, commenters requested: (i) a clear

set of rules (based on either the rules that

apply for regular tax purposes or financial

accounting rules) to identify which party

to a transaction is the distributing corporation or the controlled corporation, and

which party to a transaction is the acquiring corporation or the target corporation;

(ii) clarification regarding the treatment

of transactions that qualify for nonrecognition treatment under multiple Code

sections (such as §§ 351 and 368(a)(2)

(E)); and (iii) clarification as to whether

the CAMT rules incorporate certain concepts that apply for regular tax purposes

(for example, the “F in a bubble” concept

for transactions that qualify as reorganizations under § 368(a)(1)(F)).

(3) Troubled companies.

(a) Proposed § 1.56A-21. Proposed

§ 1.56A-21 would provide rules under

§ 56A for determining the CAMT consequences resulting from an insolvency or

bankruptcy of a CAMT entity (including

a foreign corporation), including rules for

determining any resulting AFSI and for

determining adjustments to CAMT basis

or other CAMT attributes from the dis-

534

charge of indebtedness. Proposed § 1.56A21 (i) would exclude income from the

discharge of indebtedness from AFSI of

insolvent CAMT entities (to the extent of

their insolvency) and for CAMT entities

in a title 11 case, and (ii) would require

CAMT entities that exclude income from a

discharge of indebtedness under proposed

§ 1.56A-21 to reduce CAMT attributes in

a specified order. These and other rules in

proposed § 1.56A-21 generally are based

on certain rules in § 108 that apply for regular tax purposes.

(b) Comments received. Commenters

generally supported the overall approach

in proposed § 1.56A-21, which incorporated the general rules of §§ 108 and 1017

applicable for regular tax purposes. Consistent with their support of the overall

approach of proposed § 1.56A-21, commenters requested additional clarifications

and revisions to the proposed attribute

reduction rules (for example, aligning

those rules more closely with § 1.10171(a)). Commenters also recommended that

the Treasury Department and the IRS prescribe the application of financial accounting standards in lieu of rules that apply for

regular tax purposes (regular tax rules) in

certain cases, and the application of regular tax rules in lieu of financial accounting standards in other cases, to provide

greater tax certainty and minimize CAMT

tax liabilities for troubled companies. In

addition, commenters requested clarity

on the application of the proposed rules

to tax consolidated groups (for example,

whether the attribute reduction rules in

§ 1.1502-28 apply for a CAMT entity that

is a tax consolidated group member, and

whether the insolvency and bankruptcy

exclusions apply on a member-by-member basis or at the tax consolidated group

level).

(4) Tax consolidated groups.

(a) Proposed § 1.1502-56A. Proposed

§ 1.1502-56A would provide rules for the

computation of the AFSI and CAMT attributes of a tax consolidated group, including rules for: (i) the treatment of intercompany transactions; (ii) the determination

of basis of stock of tax consolidated group

members; and (iii) the allocation of CAMT

attributes (such as FSNOLs) when a member leaves the tax consolidated group. The

rules in proposed § 1.1502-56A generally

are simplified versions of the rules for tax

Bulletin No. 2025–43

consolidated groups that apply for regular

tax purposes and that are set forth in other

regulations issued under the authority of

§ 1502 (consolidated return regulations).

(b) Comments received. Commenters

recommended removing the simplified

rules in proposed § 1.1502-56A and incorporating by reference (with appropriate

adjustments) the rules for tax consolidated

groups that apply for regular tax purposes,

particularly § 1.1502-19 (regarding excess

loss accounts) and §§ 1.1502-31 and

1.1502-32 (regarding basis adjustments),

in order to reduce compliance costs and

prevent inadvertent omissions of certain

rules under § 1502.

(5) Acquired FSNOLs and certain

built-in items.

(a) Proposed § 1.56A-23(e) and (f).

Proposed § 1.56A-23(e) would place limitations on the use of FSNOLs acquired

in successor transactions. Proposed

§ 1.56A-23(f) would treat certain recognized built-in losses as acquired FSNOLs

for purposes of proposed § 1.56A-23(e).

Proposed § 1.56A-23(e) would permit a

successor corporation or successor group

to use acquired FSNOLs to offset the

successor’s AFSI: (i) only if the acquired

business was separately tracked in the successor’s books and records; and (ii) only

to the extent of the AFSI generated by the

separately tracked business after the successor transaction. If the acquired business were integrated into the acquiror’s

business, proposed § 1.56A-23(e) would

permit the acquired FSNOLs to be used

only to the extent of AFSI that would have

been generated had the acquired business

remained separately tracked.

(b) Comments received. Commenters

generally recommended removing the

proposed “separate tracking” requirement

and following the rules that apply for regular tax purposes (for example, the limitation on net operating loss carryforwards

and certain built-in losses in § 382, or the

separate return limitation year rules in

§§ 1.1502-15 and 1.1502-21(c)).

SECTION 3. DOMESTIC

CORPORATE TRANSACTIONS

.01 Purpose. The Treasury Department

and the IRS anticipate that the forthcoming proposed regulations will revise proposed §§ 1.56A-18 and 1.56A-19 con-

Bulletin No. 2025–43

sistent with the guidance provided in this

section 3 to allow a CAMT entity to determine (i) the amount of its AFSI resulting

from its ownership of stock of a domestic

corporation (as determined under proposed §1.56A-1(f)(1) and (2)) that is not

a member of the same tax consolidated

group as the CAMT entity, and (ii) the

AFSI and CAMT basis consequences of

certain transactions involving domestic

corporations. In response to commenters’

requests, the guidance set forth in this section 3 is intended to reduce compliance

burdens and costs associated with applying proposed §§ 1.56A-18 and 1.56A-19

by more closely following the rules that

apply for regular tax purposes and incorporating a more limited set of CAMT

inputs.

.02 Definitions. The following definitions apply solely for purposes of section

3 of this notice:

(1) Domestic covered asset transaction.

The term “domestic covered asset transaction” means a transaction (other than

a covered asset transaction, as defined in

proposed § 1.56A-4(b)(1)) in which one

or more assets are—

(a) Transferred by a domestic corporation in a transfer—

(i) To which § 311, 355 (in the case of

stock, or stock and securities, of a domestic corporation described in § 355(a)(1)

(A)), or 361 applies; or

(ii) That is part of a complete liquidation to which §§ 332 and 337 apply;

(b) Transferred to a domestic corporation in a transfer to which § 351 or 361

applies; or

(c) Stock or securities of a domestic

corporation that is a party to a reorganization described in § 368(a)(1), and that

stock or those securities are transferred in

a transfer to which § 354 or 356 applies.

(2) Section 336(e) transaction. The

term “§ 336(e) transaction” means a disposition, as defined in § 1.336-1(b)(5),

of stock of a domestic corporation with

respect to which the seller makes an election under § 336(e).

(3) Section 338 transaction. The term

“§ 338 transaction” means a purchase,

as defined in § 338(h)(3), of stock of

a domestic corporation with respect to

which—

(a) The purchaser makes an election

under § 338(g); or

535

(b) The purchaser and the seller make

an election under § 338(h)(10).

(4) Transfer. The term “transfer” (or

“transferred” or “transfers” or “transferring”), when used with respect to an asset,

means a sale, distribution, exchange, or

any other disposition of the asset. If the

asset is stock or securities of a corporation, the term “transfer” includes the issuance or redemption of that stock or securities by the corporation.

.03 Adjustments to AFSI.

(1) Adjustments with respect to stock of

a domestic corporation.

(a) In general. If a CAMT entity

directly owns stock of a domestic corporation that is not a member of a tax consolidated group of which the CAMT entity

is a member, the AFSI of the CAMT entity

with respect to its ownership of stock of

the domestic corporation is adjusted—

(i) To disregard any items of income,

expense, gain, and loss resulting from

ownership of stock of the domestic corporation, including any items that result

from acquiring or transferring the stock

(such as remeasurement gain or loss),

reflected in the CAMT entity’s FSI; and

(ii) To include any items of income,

deduction, gain, and loss for regular tax

purposes resulting from ownership of

stock of the domestic corporation, including any items that result from acquiring or

transferring the stock; however, for this

purpose, the amount of each such item

is computed by substituting the CAMT

entity’s CAMT basis in the stock of the

domestic corporation for the CAMT entity’s basis in that stock for regular tax purposes.

(b) Amount and character of distributions. The amount and character of any

distribution described in section 3.03(1)

(a) of this notice is determined using earnings and profits as determined for regular

tax purposes.

(2) Adjustments with respect to domestic covered asset transactions. If a CAMT

entity transfers an asset, other than stock

of a domestic corporation, in a domestic

covered asset transaction, the AFSI of the

CAMT entity is adjusted—

(a) To Disregard any items of income,

expense, gain, and loss with respect to the

transferred asset resulting from the domestic covered asset transaction reflected in

the CAMT entity’s FSI; and

October 20, 2025

(b) To Include any items of income,

deduction, gain, and loss for regular tax

purposes with respect to the transferred

asset resulting from the domestic covered asset transaction; however, for this

purpose, the amount of each such item is

computed by substituting the CAMT entity’s CAMT basis in the transferred asset

for the CAMT entity’s basis in the transferred asset for regular tax purposes.

(3) Adjustments with respect to

§ 336(e) transactions or § 338 transactions. If stock of a domestic corporation

is disposed of in a § 336(e) transaction or

acquired in a § 338 transaction, the AFSI

of the domestic corporation is adjusted to

include any net gain or loss that results for

regular tax purposes with respect to all

assets the domestic corporation is treated

as selling by reason of the transaction;

however, for this purpose, the amount

of gain or loss with respect to each asset

that the domestic corporation is deemed

to have sold by reason of the transaction

is computed by substituting the domestic

corporation’s CAMT basis in the asset for

the domestic corporation’s basis in the

asset for regular tax purposes.

.04 Determining CAMT basis in certain cases.

(1) Domestic covered asset transactions. This section 3.04(1) provides

interim guidance for determining the

transferee’s CAMT basis in an asset transferred in a domestic covered asset transaction (or the transferee’s CAMT basis in

an asset retained, in the case of stock of

a distributing corporation in certain distributions under § 355):

(a) If the asset is transferred in a transaction described in § 311, the transferee’s

CAMT basis in the asset is determined in

the manner described in § 301(d).

(b) If the asset is transferred in a transaction described in §§ 332 and 337, the

transferee’s CAMT basis in the asset is

determined in the manner described in

§ 334(b), substituting the transferor’s

CAMT basis in the asset for the transferor’s basis in the asset for regular tax purposes.

(c) If the asset is transferred in a transaction described in § 351 or 361, then—

(i) If the transferor is a CAMT entity,

the transferee’s CAMT basis in the asset

is determined in the manner described in

§ 362, substituting the transferor’s CAMT

October 20, 2025

basis in the asset for the transferor’s basis

in the asset for regular tax purposes,

and substituting the amount of income

included in the transferor’s AFSI for the

amount of gain recognized to the transferor for regular tax purposes; or

(ii) If the transferor is not a CAMT

entity, the transferee’s CAMT basis in the

asset is equal to the transferee’s basis in

the asset for regular tax purposes, including any basis increase under § 362 in the

amount of gain recognized to the transferor on the transfer.

(d) If the asset transferred is stock or

securities of a domestic corporation (that

is, a controlled corporation) described in

§ 355(a)(1)(A) and the asset is transferred

by a domestic transferor corporation (that

is, a distributing corporation) in a transaction to which § 355 applies, the transferee shareholder or security holder’s

CAMT basis in the stock or securities of

both the domestic distributing corporation and the domestic controlled corporation is determined by applying § 358,

substituting the transferee’s CAMT basis

in the stock or securities of the domestic distributing corporation for the transferee’s basis in the stock or securities of

the domestic distributing corporation for

regular tax purposes.

(e) If the asset transferred is exchanged

for stock or securities of a domestic corporation that is a party to a reorganization (as

defined in § 368(b)) or for stock or securities of a section 351 transferee (as defined

in proposed § 1.56A-18(b)(26)), the transferor’s CAMT basis in the assets received

is determined by applying § 358, substituting the transferor’s CAMT basis in the

assets transferred for the transferor’s basis

in those assets for regular tax purposes,

and substituting the amount of income or

loss included in the transferor’s AFSI for

the amount of gain or loss recognized to

the transferor for regular tax purposes.

(f) If a transferor in a domestic covered asset transaction described in section 3.04(1)(a) through (e) of this notice

did not determine the CAMT basis in

the assets transferred in that transaction

to a transferee CAMT entity, see section

3.04(4) of this notice for guidance for the

transferee CAMT entity to determine the

CAMT basis of those transferred assets.

(2) CAMT basis in assets deemed purchased in § 336(e) transactions and § 338

536

transactions. If stock of a domestic corporation is acquired in a § 336(e) transaction

or a § 338 transaction, immediately after

the transaction, the domestic corporation’s

CAMT basis in the assets it is deemed to

have purchased by reason of the transaction is equal to the domestic corporation’s

basis in those assets for regular tax purposes.

(3) Purchase accounting and push

down accounting. If a CAMT entity

acquires stock of a domestic corporation,

then any purchase accounting and push

down accounting adjustments, as applicable, with respect to the acquisition of the

stock of the domestic corporation are disregarded for purposes of determining—

(a) The CAMT basis in the domestic

corporation’s assets; and

(b) The CAMT entity’s AFSI.

(4) Determination of a transferee’s initial CAMT basis in certain circumstances.

(a) Overview. This section 3.04(4)

applies if a domestic CAMT entity acquires

assets in a domestic covered asset transaction from a transferor that does not determine the CAMT basis in those transferred

assets. If this section 3.04(4) applies, the

initial CAMT basis in those assets is the

transferee CAMT entity’s basis in those

assets for regular tax purposes.

(b) Timing of determination. A transferee CAMT entity determines the initial CAMT basis in assets acquired from

a transferor in a domestic covered asset

transaction to be the basis of those assets

(determined under section 3.04(4)(a) of

this notice) as of the end of the day on the

date of the domestic covered asset transaction.

(5) Coordination with proposed

§§ 1.56A-15 and 1.56A-16. Proposed

§1.56A-15(e) and 1.56A-16(e) (as applicable) are applied by taking into account

any adjustments made by a transferee

CAMT entity to the AFS basis of section

168 property or qualified wireless spectrum acquired in a domestic covered asset

transaction under this section 3.

SECTION 4. TROUBLED

COMPANIES

.01 Purpose. To provide additional

relief to troubled companies and increase

taxpayer certainty regarding the application of proposed § 1.56A-21, the Treasury

Bulletin No. 2025–43

Department and the IRS anticipate that

the forthcoming proposed regulations

will revise proposed § 1.56A-21 consistent with the interim guidance provided in

this section 4. Taken together, these revisions are intended: (i) to provide greater

clarity regarding the circumstances in

which regular tax rules, as opposed to

financial accounting standards, apply in

determining the CAMT consequences for

a troubled company; (ii) to further align

proposed § 1.56A-21 with the rules that

apply for regular tax purposes, including

the rules of §§ 108(e)(6) and (8); and (iii)

to specify the manner in which the attribute reduction rules apply with regard to

the basis of foreign corporation stock.

Additionally, the interim guidance contained in this section 4 clarifies (i) cases

in which financial accounting standards

or regular tax rules may be applied to

minimize the burden of CAMT on troubled companies, (ii) the attribute reduction rules in connection with discharges

of indebtedness, and (iii) the application

of the proposed rules to tax consolidated

groups.

.02 Definitions. For purposes of this

section 4:

(1) CAMT attribute. The term “CAMT

attribute” means—

(a) CAMT basis (excluding basis for

regular tax purposes (regular tax basis) in

stock in a foreign corporation);

(b) CAMT foreign tax credits;

(c) “CFC adjustment carryovers” (as

defined in proposed § 1.56A-6(b)(6)); and

(d) FSNOLs.

(2) Covered property. The term “covered property” means “section 168 property” (as defined in proposed § 1.56A-15(b)

(6)), “qualified wireless spectrum” (as

defined in proposed § 1.56A-16(b)(4)),

and “ANCSA property” (as defined in

proposed §1.56A-11(b)(2)).

(3) Discharge of indebtedness.

(a) In general. With respect to a CAMT

entity, the term “discharge of indebtedness” means any discharge of indebtedness (or any similar term) of the CAMT

entity reflected in its AFS.

(b) Adjustments to AFS basis. For purposes of this section 4.02(3), the term “discharge of indebtedness” includes reductions to the AFS basis of the indebtedness

(other than as a result of payment) during

the pendency of a title 11 case, regardless

Bulletin No. 2025–43

of whether a discharge of indebtedness is

granted by the court or pursuant to a plan

approved by the court.

(c) Nonrecourse indebtedness. With

respect to a CAMT entity, the term “discharge of indebtedness” does not include

the discharge of any indebtedness of the

CAMT entity that results from the satisfaction of nonrecourse debt of the CAMT

entity with property that secures that debt.

(d) Recourse indebtedness. With

respect to a CAMT entity, the term “discharge of indebtedness”—

(i) Includes the amount by which the

discharge of any recourse indebtedness of

the CAMT entity exceeds the aggregate

fair market value of the property used to

satisfy the indebtedness; and

(ii) Does not include the amount by

which the aggregate fair market value of

the property used to satisfy the indebtedness exceeds the aggregate CAMT basis

of that property.

(e) Federal financial assistance. The

term “Federal financial assistance” (FFA)

has the meaning provided in § 597(c) and

§ 1.597-1(b).

(f) Indebtedness. With respect to a

CAMT entity, the term “indebtedness”

means any indebtedness reflected on the

AFS of the CAMT entity—

(i) For which the CAMT entity is liable; or

(ii) Subject to which the CAMT entity

holds property (see § 108(d)(1)).

(g) Insolvent.

(i) In general. A CAMT entity is insolvent if and to the extent that the CAMT

entity is insolvent for regular tax purposes. See § 108(d)(3).

(ii) Timing of determination. With

respect to any discharge of indebtedness,

the insolvency of a CAMT entity is determined by taking into account the amount

of a CAMT entity’s assets and liabilities

for regular tax purposes immediately

before the discharge of indebtedness. See

§ 108(d)(3).

(iii) Member-by-member determination. In determining whether a CAMT

entity that is a member of a tax consolidated group is insolvent, the CAMT entity

is treated as a separate taxpayer from all

other members of its tax consolidated

group. For purposes of this section 4.02(3)

(g), a CAMT entity does not cease to be

a member of a tax consolidated group

537

unless the CAMT entity deconsolidates

for regular tax purposes.

(4) Title 11 case. The term “title 11

case” has the meaning given the term in

§ 108(d)(2), but without regard to whether

the discharge of indebtedness is granted

by, or is pursuant to a plan approved by,

the court. With respect to a CAMT entity

(including a CAMT entity that is a member of a tax consolidated group), a title 11

case would qualify the CAMT entity for

the exclusion in section 4.03(1) of this

notice only if the CAMT entity itself is

under the jurisdiction of the court as the

debtor in such case.

.03 Treatment of Discharge of indebtedness income.

(1) AFSI in title 11 cases. If a CAMT

entity that is under the jurisdiction of a

court in a title 11 case realizes any discharge of indebtedness income, then—

(a) For purposes of determining the

AFSI of the CAMT entity, the CAMT

entity disregards the total amount of

income that is reflected in the FSI of the

CAMT entity resulting solely from the

discharge of indebtedness of the CAMT

entity; and

(b) The CAMT entity applies the attribute reduction interim guidance described

in sections 4.03(4) and (5) of this notice to

the CAMT entity’s CAMT attributes.

(2) AFSI in cases of insolvency. If a

CAMT entity is insolvent and realizes any

discharge of indebtedness income, and

if section 4.03(1) of this notice does not

apply to the CAMT entity—

(a) For purposes of determining the

AFSI of the CAMT entity, the CAMT

entity disregards the income reflected

in the FSI of the CAMT entity resulting

solely from the discharge of indebtedness by an amount equal to the lesser of

the amount of the discharge of indebtedness and the amount by which the CAMT

entity is insolvent; and

(b) The CAMT entity applies the attribute reduction interim guidance described

in sections 4.03(4) and (5) of this notice to

the CAMT entity’s CAMT attributes.

(3) Disregarded entities.

(a) In general. For purposes of applying sections 4.03(1) and (2) of this notice

to discharge of indebtedness of a disregarded entity, the disregarded entity is not

considered to be the “taxpayer” as that

term is used in § 108. Instead, for purposes

October 20, 2025

of sections 4.03(1) and (2) of this notice,

the CAMT entity owner of the disregarded

entity is the “taxpayer.” See § 1.108-9.

(b) Title 11 cases. If indebtedness of a

disregarded entity is discharged in a title

11 case, section 4.03(1) of this notice

applies to that discharged indebtedness

only if the CAMT entity owner of the disregarded entity is under the jurisdiction of

the court in a title 11 case as the title 11

debtor.

(c) Insolvency. If indebtedness of a

disregarded entity is discharged, section

4.03(2) of this notice applies to that discharged indebtedness only to the extent

the CAMT entity owner of the disregarded

entity is insolvent.

(4) Attribute reduction.

(a) Overview. If income reflected in

the FSI of a CAMT entity is disregarded

for AFSI purposes under section 4.03(1)

(a) or 4.03(2)(a) of this notice (that is,

with regard to a discharge of indebtedness

during the pendency of a title 11 case or

when the CAMT entity is insolvent), the

CAMT entity reduces the CAMT attributes of the CAMT entity described in,

and in the manner required by, this section

4.03(4) and section 4.03(5) of this notice.

(b) Required attribute reduction

amount.

(i) In general. Subject to section

4.03(4)(b)(ii) of this notice, a CAMT

entity described in section 4.03(4)(a) of

this notice reduces its CAMT attributes

by an amount that equals (i) the amount

of discharge of indebtedness of the

CAMT entity excluded from AFSI under

section 4.03(1) or 4.03(2) of this notice,

minus (ii) the total amount by which

the CAMT entity reduces the regular

tax basis in any stock it holds in foreign

corporations under § 1017. For interim

guidance that provides the amount of

CAMT attributes that is reduced for

each dollar of discharge of indebtedness

excluded from AFSI, see section 4.03(5)

of this notice.

(ii) Maximum amount of attribute

reduction. The amount of CAMT attributes required to be reduced by a CAMT

entity under section 4.03(4)(b)(iii) of

this notice cannot exceed the aggregate

amount of the CAMT entity’s CAMT

attributes, determined as of the time of the

reduction under sections 4.03(4)(b)(iv)

and (v) of this notice.

October 20, 2025

(iii) Attribute reduction. A CAMT

entity described in section 4.03(4)(a) of

this notice reduces (but not below zero)

the following CAMT attributes of the

CAMT entity in the following order:

(A) CAMT basis of covered property,

but only if the regular tax basis of any covered property is reduced under § 1017, and

then only to the extent the CAMT basis of

the covered property exceeds the aggregate basis of the same property after the

regular tax basis is reduced under § 1017.

(B) FSNOLs.

(C) CFC adjustment carryovers.

(D) CAMT basis of real property used

in a trade or business or held for investment, other than real property described

in § 1221(a), that secured the discharged

indebtedness immediately before the discharge.

(E) CAMT basis of personal property used in a trade or business or held

for investment, other than inventory,

accounts receivable, and notes receivable,

that secured the discharged indebtedness

immediately before the discharge.

(F) CAMT foreign tax credits.

(G) Any remaining CAMT basis of

property used in a trade or business or

held for investment, other than stock

in a foreign corporation, and inventory,

accounts receivable, notes receivable, and

real property described in § 1221(a).

(H) CAMT basis of inventory, accounts

receivable, notes receivable, and real

property used in a trade or business and

described in § 1221(a).

(I) CAMT basis of property not used in

a trade or business or not held for investment.

(iv) Timing and allocation of reductions.

(A) Reductions generally made after

determination of CAMT liability for taxable year. The reductions described in

section 4.03(4)(b)(iii) of this notice are

made after the determination of the tentative minimum tax under § 55(b)(2)(A)

for the taxable year of the discharge of

indebtedness of the CAMT entity. For

taxable years beginning after December

31, 2019, and before January 1, 2023, the

reductions described in section 4.03(4)

(b)(iii) of this notice are made after the

determination of AFSI for the taxable

year of the discharge of indebtedness

of the CAMT entity. For any discharge

538

of indebtedness of a CAMT entity that

occurs in a taxable year beginning on or

before December 31, 2019, the reductions described in section 4.03(4)(b)(iii)

of this notice do not apply.

(B) CAMT basis of property. The

reductions of basis described in sections

4.03(4)(b)(iii)(A), (D), (E), (G), (H), and

(I) of this notice apply solely to property of the CAMT entity that the CAMT

entity holds on the first day of the taxable

year following the taxable year in which

the CAMT entity excludes discharge of

indebtedness income from its AFSI. For

additional interim guidance that addresses

domestic covered asset transactions, see

section 3 of this notice.

(C) Allocation of basis reductions.

Allocations of basis reductions to property described in section 4.03(4)(b)(iii)

(A), (D), (E), (G), (H), or (I) of this notice

are in proportion to the CAMT basis of all

property described in each such paragraph.

A CAMT entity that properly makes an

election under § 108(b)(5) for regular tax

purposes must apply the modifications of

§ 1.1017-1(c) to determine the allocation

of CAMT basis reductions to individual

items of property.

(v) Order of reductions.

(A) FSNOL carryovers. The reductions described in section 4.03(4)(b)(iii)

(B) or (C) of this notice, respectively, are

made first to any FSNOL or CFC adjustment carryover arising for the taxable

year of the discharge of indebtedness of

the CAMT entity, and then to the FSNOL

carryovers or CFC adjustment carryovers

to that taxable year, in the order of the

taxable years from which each FSNOL or

CFC adjustment carryover arose, beginning with the earliest such taxable year.

(B) CAMT foreign tax credits. The

reduction described in section 4.03(4)(b)

(iii)(F) of this notice is made in the order

in which the CAMT foreign tax credits

are taken into account for the taxable year

of the discharge of indebtedness of the

CAMT entity.

(5) Amount of attribute reduction.

(a) CAMT basis, FSNOLs, and CFC

adjustment carryovers. For each dollar of

AFSI that a CAMT entity excludes under

sections 4.03(1) and (2) of this notice, the

CAMT entity reduces, as appropriate—

(i) A dollar of CAMT basis;

(ii) A dollar of FSNOL; or

Bulletin No. 2025–43

(iii) A dollar of CFC adjustment carryover.

(b) CAMT basis reduction limitation.

Except as otherwise provided in section

4.03(5)(c) of this notice, the reduction in

CAMT basis may not exceed (i) the combined CAMT basis of property (including

the regular tax basis in stock of a foreign

corporation) and money immediately after

the discharge, over

(ii) The aggregate amount of liabilities

reflected on the AFS of the CAMT entity

immediately after the discharge of indebtedness of the CAMT entity.

(c) Election under § 108(b)(5). The

limitation in section 4.03(5)(b) of this

notice does not apply if the CAMT entity

has made an election under § 108(b)(5).

(d) CAMT foreign tax credits. For

each dollar of AFSI that a CAMT entity

excludes under this section 4.03, the

CAMT entity reduces each dollar of the

CAMT entity’s CAMT foreign tax credits

by an amount equal to—

(i) One dollar of the CAMT foreign tax

credit; multiplied by

(ii) The percentage specified in § 55(b)

(2)(A)(i).

(6) Exclusion from AFSI. For purposes

of determining the AFSI of a CAMT

entity, the CAMT entity disregards the

total amount of income reflected in its

FSI resulting solely from the discharge of

indebtedness of the CAMT entity to the

extent that payment of the liability would

have given rise to a direct reduction in

AFSI.

(7) Indebtedness contributed to capital.

For purposes of determining the AFSI of a

debtor CAMT entity from the discharge of

indebtedness, if the CAMT entity acquires

its indebtedness from a shareholder as a

contribution to capital that results in an

increase in the CAMT entity’s FSI, then—

(a) The CAMT entity is treated as

having satisfied the indebtedness with an

amount of money equal to the shareholder’s CAMT basis in the indebtedness;

(b) Any income from the transaction

included in FSI is disregarded in computing AFSI; and

(c) Any excess of the amount of the

indebtedness over the shareholder’s

CAMT basis increases the CAMT’s entity’s AFSI by the amount of that excess.

(8) Indebtedness satisfied by corporate

stock or partnership interest.

Bulletin No. 2025–43

(a) In general. For purposes of determining the AFSI of a debtor CAMT entity

from the discharge of indebtedness, this

section 4.03(8) applies if a debtor corporation transfers stock, or if a debtor partnership transfers a capital or profits interest in such partnership, to a creditor in

satisfaction of its recourse or nonrecourse

indebtedness.

(b) Application. If this section 4.03(8)

applies, then—

(i) The corporation or partnership is

treated as having satisfied the indebtedness with an amount of money equal to

the fair market value of the stock or partnership interest;

(ii) Any FSI from the transaction is disregarded in computing AFSI; and

(iii) Any excess of the amount of the

indebtedness over the fair market value of

the stock or partnership interest increases

the debtor CAMT’s entity’s AFSI by the

amount of that excess.

(c) Taking into account partnership’s

discharge of indebtedness. For rules

regarding how CAMT entity partners take

into account a partnership’s AFSI from

the discharge of indebtedness, see section

4.05 of this notice.

(9) Coordination with proposed

§§ 1.56A-15 and 1.56A-16. Proposed

§1.56A-15(e) and 1.56A-16(e) (as applicable) are applied by taking into account

any adjustments made by a CAMT entity

to the AFS basis of section 168 property

or qualified wireless spectrum under this

section 4.

(10) Examples. The following examples illustrate the application of the

interim guidance in this section 4.03. For

purposes of these examples, except as otherwise provided: each entity is a domestic

corporation that uses the calendar year as

its taxable year and is not a member of

a tax consolidated group; the exclusion

in section 4.03(6) of this notice does not

apply; and each entity does not own stock

in a foreign corporation.

(a) Example 1: Debt reduction during pendency

of title 11 case.

(i) Facts. During Year 1, X enters bankruptcy

in a title 11 case. At the time X enters bankruptcy,

X’s only debts are $100x of prepetition liabilities

subject to compromise, of which X expects $85x

to be allowed as a claim. On its AFS for Year 1, X

reduces its prepetition liabilities to $85x and reports

$15x of income ($100x - $85x) from the discharge

of indebtedness. In Year 2, the court approves the

discharge of $30x of X’s $100x of prepetition lia-

539

bilities, with the remaining $55x paid by transfers

to X’s creditors. On its AFS for Year 2, X reports

$30x of income ($85x - $55x) from the discharge

of indebtedness.

(ii) Analysis. X’s reduction of its $100x of liabilities to $85x on X’s Year 1 AFS produces a $15x

discharge of indebtedness within the meaning of that

term in section 4.02(3)(b) of this notice. Accordingly, this amount is eligible for the exclusion under

section 4.03(1)(a) of this notice for Year 1. The

court’s approval of the discharge of $30x of X’s

$100x prepetition liabilities in Year 2 also produces

a $30x discharge of indebtedness within the meaning of that term in section 4.02(3)(b) of this notice.

Accordingly, this amount is eligible for the exclusion

under section 4.03(1) of this notice for Year 2.

(b) Example 2: Disregarded entity in bankruptcy.

(i) Facts. Y, an LLC that is treated as a disregarded entity for Federal income tax purposes, is

wholly owned by X. In Year 1, Y enters bankruptcy

in a title 11 case. Y’s prepetition liabilities total

$125x, all of which are owed to unrelated third parties, and Y has $10x of cash as its only asset. Once

Y files for bankruptcy in Year 1, Y no longer reports

on the same AFS as X, but Y remains a disregarded

entity for Federal income tax purposes. During Year

1, the court discharges $40x of Y’s liabilities to third

parties, and Y reports $40x of income on its Year 1

AFS from the discharge of indebtedness. X, which is

not under the jurisdiction of the court as a debtor in

Year 1, enters bankruptcy in a title 11 case in Year 2.

(ii) Analysis. Because X (Y’s regarded owner) is

not under the jurisdiction of the court in a title 11

case as a debtor when Y’s debts are discharged in

Year 1, Y’s $40x of income from the discharge of

indebtedness for Year 1 is not eligible for the bankruptcy exclusion under section 4.03(1) of this notice.

See section 4.03(3)(b) of this notice.

(c) Example 3: Both Disregarded entity and its

regarded owner in bankruptcy.

(i) Facts. The facts are the same as in section

4.03(9)(b)(i) of this notice (Example 2), except

that, in Year 2, all of Y’s remaining $85x of liabilities ($125x - $40x) are discharged by the court in

exchange $10x of Y’s cash, resulting in $75x of discharge-of-indebtedness income reported on Y’s AFS.

(ii) Analysis. Because X (Y’s regarded owner) is

under the jurisdiction of the court in a title 11 case

when Y’s debts are discharged, the $75x of income

from the discharge of indebtedness on Y’s AFS is eligible for the exclusion under section 4.03(1) of this

notice. See section 4.03(3)(b) of this notice.

(d) Example 4: Insolvent disregarded entity.

(i) Facts. The facts are the same as in section

4.03(9)(b)(i) of this notice (Example 2), except that

Y enters bankruptcy in a title 11 case in Year 2 rather

than in Year 1. Immediately before the discharge of

Y’s indebtedness in Year 2, X is insolvent (within the

meaning of § 108(d)(3)) by $15x. At that time, Y has

$10x of assets; thus, Y would be insolvent (within

the meaning of § 108(d)(3)) by $115x if Y were a

regarded entity.

(ii) Analysis. Y may exclude $15x of its $40x

of discharge-of-indebtedness income under section

4.03(2) of this notice. See section 4.02(3)(h)(i) of

this notice. The remaining $25x of income from the

discharge of indebtedness is included in Y’s AFSI

even though Y would be insolvent within the mean-

October 20, 2025

ing of § 108(d)(3) by $125x if Y were a regarded

entity.

(e) Example 5: Attribute reduction.

(i) Facts. During its 2024 taxable year, X

emerges from bankruptcy in a title 11 case. As a

result of the bankruptcy reorganization, some of

X’s indebtedness is discharged. X has $850x of discharge of indebtedness income for regular tax purposes prior to the application of § 108(b). On X’s

AFS, X reports $1,000x of FSI from the discharge

of indebtedness. At the time of the discharge, X has

$300x of net operating losses (NOLs), $700x of

FSNOLs, and $800x of basis in its assets (including $600x of basis in covered property and $200x

of basis in inventory) both for regular tax purposes

and for CAMT purposes. X does not make an election under § 108(b)(5).

(ii) Application of § 108. For purposes of determining its income for regular tax purposes for the

2024 taxable year, X excludes $850x of income from

the discharge of indebtedness under § 108(a)(1)(A).

Under § 108(b), X reduces its NOLs by $300x and

the basis of its assets by $550x, of which $350x is

basis in covered property.

(iii) AFSI analysis. For purposes of determining

X’s AFSI for the 2024 taxable year, X disregards

any FSI that otherwise would result from the discharge of X’s indebtedness. See section 4.03(1)(a) of

this notice. X’s CAMT attributes are reduced by an

amount equal to the amount of the exclusion of FSI

from X’s AFSI (that is, $1,000x). See section 4.03(4)

(b)(i) of this notice. X first reduces its CAMT basis

of covered property to the extent its basis is reduced

under § 108(b) for regular tax purposes, or $350x.

See sections 4.03(4)(b)(iii)(A). X then reduces X’s

FSNOLs by $650x. See sections 4.03(4)(b)(iii)(B).

X does not further reduce its basis in covered property because X already has reduced $1,000x of attributes for the $1,000x of income from the discharge

of indebtedness it has excluded. See section 4.03(4)

(b)(ii) of this notice.

(f) Example 6: Excluded income from the discharge of indebtedness of insolvent taxpayer.

(i) Facts. The facts are the same as in section

4.03(9)(g)(i) of this notice (Example 6), except

that X does not emerge from bankruptcy in a title

11 case; instead, some of X’s indebtedness is discharged during the 2024 taxable year. Immediately

before the discharge, X is insolvent by $850x. X

has no other items of gain or loss during the 2024

taxable year.

(ii) Application of § 108. For purposes of determining its income for regular tax purposes for the

2024 taxable year, X excludes $850x of income from

the discharge of indebtedness under § 108(a)(1)(B).

Under § 108(b), X reduces its NOLs by $300x and

the basis of its assets by $550x, of which $350x is

basis in covered property.

(iii) AFSI analysis. For purposes of determining its AFSI for the 2024 taxable year, X disregards

$850x of its $1,000x of FSI from the discharge

of its indebtedness. See section 4.03(2)(a) of this

notice. X takes the remaining $150x of FSI from

the discharge of its indebtedness into account for

purposes of computing its AFSI. See id. X then uses

its FSNOL to reduce its AFSI by $120x (i.e., 80

percent of $150x). See § 56A(d). X’s CAMT attributes are reduced by an amount equal to the amount

October 20, 2025

of the exclusion of financial accounting gain from

X’s AFSI (that is, $850x). See sections 4.03(4)(b)

(i) of this notice. X first reduces its CAMT basis of

covered property to the extent its basis is reduced

under § 108(b) for regular tax purposes, or $350x.

See section 4.03(4)(b)(iii)(A) of this notice. X then

reduces its FSNOLs by $500x. See section 4.03(4)

(b)(iii)(B) of this notice.

.04 Fresh start accounting for emergence from bankruptcy.

(1) Scope. This section 4.04 provides

interim guidance for determining the

CAMT consequences to a CAMT entity

resulting from an emergence from bankruptcy of the CAMT entity.

(2) AFSI consequences resulting from

emergence from bankruptcy.

(a) In general. Solely with regard to the

emergence from bankruptcy of a CAMT

entity, the CAMT entity determines its

CAMT consequences resulting from that

emergence (and not from a discharge of

indebtedness or a domestic covered asset

transaction, as provided in sections 4.03

and 4.04(3)(a) of this notice, respectively)

by—

(i) Recomputing any resulting gain

or loss that is reflected in the FSI of the

CAMT entity using CAMT basis in its

assets instead of AFS basis; and

(ii) Determining the CAMT basis of

any assets (other than the regular tax basis

in the stock of a foreign corporation) of

the CAMT entity to be its AFS basis.

(b) Discharge of indebtedness. A

CAMT entity determines the CAMT consequences of any discharge of indebtedness of the CAMT entity resulting from

the CAMT entity’s emergence from bankruptcy in accordance with section 4.03 of

this notice.

(c) Domestic covered asset transactions. A CAMT entity determines the

CAMT consequences of any domestic

covered asset transaction in connection

with the CAMT entity’s emergence from

bankruptcy in accordance with section

4.04(3) of this notice.

(d) Covered asset transactions. A

CAMT entity determines the CAMT consequences of any covered asset transaction (as defined in proposed § 1.56A-4(b)

(1)) in connection with the CAMT entity’s

emergence from bankruptcy in accordance

with proposed § 1.56A-4.

(3) AFSI consequences of title 11 cases.

(a) Domestic covered asset transactions. If a CAMT entity disposes of assets

540

in a domestic covered asset transaction as

part of its title 11 case, the CAMT entity

determines the CAMT consequences of

the domestic covered asset transaction

with regard to the CAMT entity by applying section 3 of this notice.

(b) CAMT attribute adjustments. If

a CAMT entity is a target corporation

in a domestic covered asset transaction

described in section 3.02(1)(c) of this

notice, the CAMT entity is treated as

reducing all CAMT attributes required

by sections 4.03(4) and (5) of this notice

before the acquiror corporation would be

treated as receiving those CAMT attributes in the domestic covered asset transaction.

(4) Discharge of indebtedness. A

CAMT entity described in section 4.04(3)

of this notice determines the CAMT consequences of any discharge of indebtedness of the CAMT entity resulting from

the CAMT entity’s emergence from bankruptcy in accordance with section 4.03 of

this notice.

(5) Disregarded entities. For purposes

of applying this section 4.04 to a disregarded entity, the disregarded entity is

not considered to be the “taxpayer” as

that term is used in § 108. Instead, for

purposes of this section 4.04, the CAMT

entity owner of the disregarded entity is

the “taxpayer.” See section 4.03(3) of this

notice and § 1.108-9.

(6) Examples. The following examples

illustrate the application of the interim

guidance in this section 4.04.

(a) Example 1: Bankruptcy emergence in a

domestic covered asset transaction.

(i) Facts. X is a domestic corporation that uses

the calendar year as its taxable year and is not a

member of a tax consolidated group. During its

2024 taxable year, X emerges from bankruptcy in

a domestic covered asset transaction. In connection

with the transaction in which X emerges from bankruptcy, X reports $90x of gain on its AFS when it

increases the AFS basis of its assets from $40x to

their fair value of $130x at the time it emerges from

bankruptcy.

(ii) Analysis. For purposes of determining its

AFSI for the 2024 taxable year, X does not take into

account the $90x of FSI resulting from the increase

in the AFS basis of its assets. See section 3.03(2) of

this notice. X does not make any adjustments to the

CAMT basis of its assets resulting from X’s emergence from bankruptcy. Accordingly, X’s CAMT

basis in its assets remains at $40x. See section

3.04(1)(c)(i) of this notice.

(b) Example 2: Bankruptcy emergence in a transaction that is not a domestic covered asset transaction.

Bulletin No. 2025–43

(i) Facts. The facts are the same as in section

4.04(6)(a)(i) of this notice (Example 1), except that

X emerges from bankruptcy in a transaction that is

not a domestic covered asset transaction.

(ii) Analysis. X includes in its AFSI the $90x

of gain reported on its AFS when X emerged from

bankruptcy, and increases the AFS basis of its assets

from $40x to their fair value of $130x.

.05 Application to investments in partnerships.

(1) Scope. This section 4.05 provides

interim guidance for applying section 4

of this notice to a CAMT entity that is a

partner in a partnership if the partnership

recognizes discharge of indebtedness

income.

(2) Discharge of indebtedness income

of a partnership.

(a) Calculation of partnership’s AFSI.

Any discharge of indebtedness income

reflected in a partnership’s FSI is disregarded for purposes of determining the

partnership’s AFSI, and is instead taken

into account by the CAMT entities that

are partners in the partnership in accordance with sections 4.05(2)(b) and (c) of

this notice.

(b) Exclusion from AFSI and attribute

reduction at the partner level.

(i) In general. Subject to section

4.05(3) of this notice, the AFSI exclusions

provided in sections 4.03(1) and (2) of

this notice, and any resulting CAMT attribute reductions (as provided in sections

4.03(4) and (5) of this notice), are applied

at the partner level in the same manner as

the rules in § 108(a) and (b) are applied at

the partner level for regular tax purposes.

See § 108(d)(6) and § 1.108-9(b).

(ii) Covered property. For purposes of

applying the CAMT attribute reduction

interim guidance under sections 4.03(4)

and (5) of this notice at the partner level,

a CAMT entity partner treats its partnership investment as covered property to

the extent the basis of covered property

held by the partnership is reduced by

the partnership for regular tax purposes

under § 1.1017-1(g)(2). In addition, if a

CAMT entity partner treats its partnership investment as covered property under

the immediately preceding sentence, the

basis adjustment rules under § 1.10171(g)(2) with respect to covered property

held by the partnership apply for purposes

of determining the CAMT entity’s distributive share amount under proposed

§ 1.56A-5.

Bulletin No. 2025–43

(c) Discharge of indebtedness income

separately stated to partners. Discharge

of indebtedness income reflected in a

partnership’s FSI is separately stated to

the partners in accordance with their distributive share percentages for the taxable

year in which the income is reflected in

the partnership’s FSI. See also proposed

§ 1.56A-5(e)(4)(iii).

(3) Inclusion of partnership liabilities for purposes of determining insolvency. In applying section 4.05(2) of this

notice, a CAMT entity that is a partner

in a partnership includes its share of the

partnership’s liabilities under § 752 in

determining whether it is insolvent in the

same manner as its share of partnership

liabilities would be included for regular

tax purposes.

.06 Federal financial assistance.

(1) In general. AFSI does not include

any financial accounting gain attributable

to FFA any earlier than when the gain is

included in gross income for purposes of

§ 597 and the regulations under § 597.

(2) Example. The following example

illustrates the application of the interim

guidance in this section 4.06.

(i) Facts. X is an Institution, as defined in

§ 1.597-1(b), that uses the calendar year as its taxable year. On July 1, 2024, X acquires assets and

assumes liabilities of an unrelated Institution under

Agency Receivership, as defined in § 1.597-1(b), in

a Taxable Transfer, as defined in § 1.597-5(a)(1)(i)

(A), in exchange for an up-front payment from an

Agency, as defined in § 1.597-1(b). The contractual

terms of the acquisition by X involve a transfer of

assets to X that gives rise to $10,000x of FSI that is

attributable to FFA. Applicable financial accounting principles require X to include this $10,000x in

FSI in 2024. Pursuant to § 597 and the regulations

under § 597, the gain is not recognized for regular tax purposes in 2024. As a result of subsequent

events, X includes $2,000x of gain attributable to

that FFA in gross income for regular tax purposes

in 2025.

(ii) Analysis. Under section 4.06(1) of this

notice, X does not include the $10,000x of FSI in

AFSI in 2024. Under section 4.06(1) of this notice, X

includes FSI of $2,000x in AFSI in 2025.

.07 Cross-references. See section 3 of

this notice for interim guidance for determining the CAMT consequences resulting

from (i) the disposition of any property by

a CAMT entity during the pendency of a

title 11 case or while the CAMT entity is

insolvent, or (ii) acquisitive reorganizations and “section 355 transactions” (as

defined in proposed § 1.56A-18(b)(28)).

See section 5 of this notice for interim

541

guidance applicable to members of a tax

consolidated group.

SECTION 5. TAX CONSOLIDATED

GROUPS

.01 Purpose. The Treasury Department

and the IRS anticipate that the forthcoming proposed regulations will revise proposed § 1.1502-56A consistent with the

interim guidance provided in this section

5 to allow a consolidated group to determine its AFSI by more closely following

the consolidated return regulations, which

is intended to reduce compliance burdens

and costs associated with applying the

rules of proposed § 1.1502-56A.

.02 Definitions. The definitions provided in this section 5.02 and section 3.02

of this notice and in § 1.1502-1 apply for

purposes of this section 5.

(1) Tax consolidated group. The term

“tax consolidated group” has the meaning

given the term “consolidated group” in

§ 1.1502-1(h).

(2) Life-nonlife groups. For purposes

of the CAMT Proposed Regulations and

this notice, a group may apply the definition in section 5.02(1) of this notice

without regard to the five-taxable-year

limitation in § 1504(c)(2)(A) to determine

the CAMT entities that are members of

a tax consolidated group, provided that

the group makes that determination consistently for purposes of all provisions

in the CAMT Proposed Regulations and

this notice that apply to tax consolidated

groups.

.03 Determination of AFSI of tax consolidated groups.

(1) In general. Except as provided in

sections 5.03(3) and (4) of this notice,

the consolidated return regulations apply

to the determination of the AFSI of a tax

consolidated group, with the modifications provided in section 5.03(2) of this

notice.

(2) Modifications to consolidated

return regulations. When applying the

consolidated return regulations to the

determination of AFSI, the following substitutions apply:

(a) AFSI in place of taxable income.

(b) CAMT basis in place of adjusted

basis.

(c) FSNOLs in place of NOLs.

October 20, 2025

(3) Exceptions. The following provisions of the consolidated return regulations do not apply to the determination of

the AFSI of a tax consolidated group:

(a) The separate return limitation year

(SRLY) rules in §§ 1.1502-15 and 1.150221(c).

(b) The § 382 rules in §§ 1.1502-90

through 1.1502-99.

(c) Any rule that is inapplicable under

§ 56A (for example, the rules for capital

gain and loss in § 1.1502-22).

(4) Certain rules regarding foreign

attributes. The rules in proposed § 1.150256A(h) (concerning consolidated CFC

adjustment carryovers) and proposed

§ 1.1502-56A(i) (concerning consolidated

unused CFC taxes)) are incorporated into

the interim guidance provided in this section 5.

able years beginning before the date on

which forthcoming proposed regulations

are published in the Federal Register, or

other guidance modifying this section 7

is published in the Internal Revenue Bulletin, taxpayers may rely on the guidance

provided in sections 3 through 6 of this

notice, including for purposes of filing

amended returns. A taxpayer’s reliance on

any of the guidance provided in sections 3

through 6 of this notice for a taxable year

will not cause the corporation to become

subject to, or to violate, the reliance rules,

including the consistency requirements,

provided in the preamble of the CAMT

Proposed Regulations for such taxable

year.

SECTION 6. LIMITATIONS ON

ACQUIRED FSNOLS AND CERTAIN

BUILT-IN ITEMS

The principal authors of this notice

are William W. Burhop, Alana V. Dagher,

and John B. Lovelace, each of the Office

of the Associate Chief Counsel (Corporate). Other personnel from the Treasury

Department and the IRS participated in

its development. For further information

regarding this notice, please contact William W. Burhop at (202) 317-5363, Alana

V. Dagher at (202) 317-5024, or John B.

Lovelace at (202) 317-5363 (not toll-free

numbers).

.01 Purpose. The Treasury Department

and the IRS anticipate that the forthcoming proposed regulations will revise proposed § 1.56A-23 consistent with the

interim guidance provided in section 6.02

of this notice for determining the amount

of FSNOLs that are available to reduce

AFSI, which is intended to reduce compliance burdens and costs associated with

applying proposed § 1.56A-23 in response

to comments.

.02 Adjustments to AFSI. In computing the amount of FSNOLs that are

available to reduce AFSI, a CAMT entity

need not apply the limitations in proposed

§ 1.56A-23(e) and (f).

SECTION 7. APPLICABILITY

DATES

It is anticipated that the forthcoming proposed regulations will provide

that rules consistent with the guidance

provided in sections 3 through 6 of this

notice will apply for taxable years beginning on or after the date final regulations

addressing §§ 56A(c)(2)(B), 56A(c)(2)

(C), 56A(c)(15)(B), and 56A(e) are published in the Federal Register. For tax-

1

SECTION 8. DRAFTING AND

CONTACT INFORMATION

Substantial Improvement of

Property in Rural Areas

Notice 2025-50

SECTION 1. PURPOSE

This notice provides guidance to taxpayers applying the substantial improvement provision of § 1400Z-2(d)(2)(D)(ii)

of the Internal Revenue Code (Code),1 as

amended by § 70421(c)(4)(C) of Public

Law 119-21, 139 Stat. 72, 227 (July 4,

2025), commonly known as the One, Big,

Beautiful Bill Act (OBBBA), for certain

improvements to property located in a

qualified opportunity zone (QOZ) listed

in Notice 2018-48, 2018-28 I.R.B. 9, or

Notice 2019-42, 2019-29 I.R.B. 352, that

is comprised entirely of a “rural area.”

This notice does not provide any guidance regarding the forthcoming round

of opportunity zone nominations, certifications, and designations authorized by

the OBBBA, which the Department of

the Treasury (Treasury Department) and

the Internal Revenue Service (IRS) will

address in the future.

SECTION 2. BACKGROUND

.01 Qualified Opportunity Zones under

the TCJA

Section 13823 of Public Law 11597, 131 Stat. 2054, 2183 (December 22,

2017), commonly known as the Tax Cuts

and Jobs Act (TCJA), amended the Code

by adding §§ 1400Z-1 and 1400Z-2.

Section 1400Z-1 outlines the process by

which a population census tract located in

the 50 States, the District of Columbia, or

the U.S. territories that is a low-income

community is nominated to be a QOZ by

the chief executive officer of a State, the

District of Columbia, or a territory, and

then certified and designated as a QOZ

by the Secretary of the Treasury or the

Secretary’s delegate (Secretary). Revenue

Procedure 2018-16, 2018-9 I.R.B. 383,

provided guidance on the nomination process.

Notice 2018-48 and Notice 2019-42

list census tracts that were nominated in

2018, which the Secretary certified and

designated as QOZs (2018 QOZs). The

2018 QOZs were based on census tracts

and boundaries based on the 2010 Decennial Census. No census tract has been designated as a QOZ since the designations of

the 2018 QOZs.

Under § 1400Z-2(d)(1), the term

“qualified opportunity fund” (QOF)

means any investment vehicle organized as a corporation or a partnership

for the purpose of investing in “qualified opportunity zone property” (QOZP)

that holds at least 90 percent of its assets

in QOZP. Pursuant to § 1400Z-2(d)(2)

(A)(iii), QOZP includes, among other

things, “qualified opportunity zone business property” (QOZBP).

Unless otherwise specified, all “section” or “§” references are to sections of the Code.

October 20, 2025

542

Bulletin No. 2025–43

.02 Substantial Improvement of Property Generally

Under § 1400Z-2(d)(2)(A) and (D)

(i)-(ii), if leased or owned tangible property is used in the trade or business of an

eligible entity (that is, a QOF or a qualified opportunity zone business as defined

in § 1400Z-2(d)(3)), then the property

may qualify as QOZBP only if, among

other requirements, the original use of the

tangible property in the 2018 QOZ began

with that eligible entity or that eligible

entity substantially improves the property. Such tangible property is treated as

substantially improved only if, during any

30-month period following the acquisition

of the property (30-month period), additions to the basis of the tangible property

in the hands of the eligible entity exceed

an amount equal to 100 percent of the eligible entity’s adjusted basis in the tangible

property at the beginning of the 30-month

period. See section 2.03 of this notice

regarding the substantial improvement

of property in a 2018 QOZ comprised

entirely of a rural area.

.03 Substantial Improvement of Property in QOZ Comprised Entirely of a

Rural Area

Section 70421(c)(4)(C) of the OBBBA

amended § 1400Z-2(d)(2)(D)(ii) to modify the general substantial improvement

threshold for improvements to property

located in a QOZ that is comprised entirely

of a rural area. The OBBBA amendment

reduced the substantial improvement

threshold for required additions to the

basis for such property from 100 percent

to 50 percent. This OBBBA amendment

took effect on July 4, 2025.

.04 Definition of Rural Area

Section 70421(c)(2) of the OBBBA

codifies a definition of “rural area” in

§ 1400Z-2(b)(2)(C)(ii) applicable to

amounts invested in QOFs after December 31, 2026. Under such definition, a

“rural area” is defined as “any area other

than—(I) a city or town that has a population of greater than 50,000 inhabitants,

and (II) any urbanized area contiguous

and adjacent to a city or town described

in subclause (I).” This definition is the

same as the one provided by § 343(a)

(13)(A) of the Consolidated Farm and

Rural Development Act of 1961 (Con

Act), Public Law 87-128, 75 Stat. 294,

as subsequently amended, codified at 7

U.S.C. 1991(a)(13)(A), and used by the

United States Department of Agriculture

(USDA) in its application of programs

across the Rural Development Mission Area, including the Rural Business

Cooperative Service.

For the 2010 Decennial Census, the

Bureau of the Census (Census Bureau)

classified “urban areas” as either “urban

clusters” or “urbanized areas.” Urban

clusters were urban areas with at least

2,500 people but fewer than 50,000 people, and urbanized areas were urban areas

with 50,000 or more people.2 For the 2020

Decennial Census, the Census Bureau

changed its classification criteria of urban

areas. As part of this change, urban areas

are now based on a minimum threshold

of 2,000 housing units or 5,000 people.

Moreover, the Census Bureau stopped

distinguishing urban areas between those

that are “urban clusters” and those that

are “urbanized areas.” Instead, the 2020

Decennial Census designates only “urban

areas.”3

Prior to the Census Bureau’s 2020

change in methodology, the USDA relied

on 2010 Decennial Census data and definitions to identify urbanized areas for

programs that referenced urbanized areas.

Following the 2020 Decennial Census and

the change in the definition of rural and

urban, Census Bureau data, as previously

described, no longer provides whether a

specific area is an “urbanized area.”4 In

2023, the USDA determined that because

it is obligated by statute to use the most

recent Decennial Census data for certain

programs, and the Census Bureau no

longer identifies urbanized areas, the use

of 2010 Decennial Census data by the

USDA would be contrary to congressional instruction to use the most recent data

contained in statutes administered by the

USDA that incorporate population-based

definitions of “rural.” Accordingly, the

USDA has adopted the methodology of

the 2020 Decennial Census for its rural

development programs.

While the definition of rural area in

§ 1400Z-2(b)(2)(C)(ii), as enacted by the

OBBBA, is the same as that of the Con

Act and 7 U.S.C. 1991(a)(13)(A), the

OBBBA definition does not include the

additional statutory provisions for defining a rural area that are found in 7 U.S.C.

1991(a)(13)(D) through (I). Hence, the

methodology this notice applies for

determining a rural area for purposes of

§ 1400Z-2(b)(2)(C)(ii) is broadly similar

to the methodology used by the USDA

for its rural development programs, but

does not correspond in all respects to the

additional details provided in 7 U.S.C.

1991(a)(13).

SECTION 3. SCOPE

This notice applies to all tangible property located in a 2018 QOZ that is comprised entirely of a rural area (as defined

in section 4 of this notice) that has been,

or is in the process of being, substantially

improved (as described in section 5 of this

notice). The Treasury Department and the

IRS have determined that there are 3,309

2018 QOZs that are comprised entirely

of a rural area based on 2020 Decennial

Census data. See the Appendix for a list of

these 2018 QOZs.

SECTION 4. MEANING OF “RURAL

AREA” FOR 2018 QOZS

For purposes of applying the substantial improvement test of § 1400Z-2(d)(2)

(D)(ii) with respect to 2018 QOZs:

.01 A “rural area” is any area other

than—

(1) A city or town that has a population of greater than 50,000 inhabitants (as

defined in section 4.02 of this notice), and

(2) Any urbanized area (as defined in

section 4.03 of this notice) contiguous and

adjacent (as defined in section 4.04 of this

notice) to a city or town described in section 4.01(1) of this notice.

.02 A “city or town that has population

greater than 50,000 inhabitants” is determined, other than for the State of Hawaii

and Commonwealth of Puerto Rico, as an

incorporated city and town with a resident

See “Urban Area Criteria for the 2010 Census,” 76 FR 53030 (August 24, 2011).

See “Urban Area Criteria for the 2020 Census-Final Criteria,” 87 FR 16706 (March 24, 2022).

4

Id. at 16715.

2

3

Bulletin No. 2025–43

543

October 20, 2025

population greater than 50,000 in the 2020

Decennial Census. For the State of Hawaii

and Commonwealth of Puerto Rico, a

“city or town that has a population greater

than 50,000 inhabitants” is determined as

a Census Designated Place with a resident

population greater than 50,000 in the 2020

Decennial Census.

.03 An “urbanized area” means any

Census-Bureau-designated urban area.

.04 “Contiguous” and “adjacent” are

geographic terms referring to two or more

areas that share either a common boundary or at least one common point.5

5

SECTION 5. APPLICATION

For any determination made on or

after July 4, 2025, as to whether any

tangible property located in a 2018

QOZ comprised entirely of a rural area

meets the substantial improvement

test described in § 1400Z-2(d)(2)(D)

(ii), the substantial improvement test is

satisfied if the additions to basis with

respect to such property in the hands

of the QOF or a qualified opportunity

zone business exceed an amount equal

to 50 percent of the adjusted basis of

such property at the beginning of the

30-month period described in § 1400Z2(d)(2)(D)(ii).

SECTION 6. DRAFTING

INFORMATION

The principal author of this notice

is Maria Castillo Valle of the Office of

Associate Chief Counsel (Income Tax

& Accounting). For further information

regarding this notice contact Ms. Castillo

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

call).

See Urban Area Criteria for the 2010 Census, 76 FR 53030 (August 24, 2011).

October 20, 2025

544

Bulletin No. 2025–43

APPENDIX

State

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Bulletin No. 2025–43

County

Autauga

Baldwin

Baldwin

Baldwin

Baldwin

Baldwin

Baldwin

Barbour

Bibb

Blount

Bullock

Butler

Calhoun

Calhoun

Calhoun

Chambers

Cherokee

Chilton

Choctaw

Clarke

Clay

Cleburne

Coffee

Colbert

Conecuh

Coosa

Covington

Covington

Crenshaw

Cullman

Cullman

Dale

Dallas

DeKalb

Elmore

Elmore

Escambia

Etowah

Fayette

Franklin

Geneva

Census Tract Number

01001020700

01003011501

01003011502

01003010200

01003010400

01003010600

01003010500

01005950100

01007010002

01009050500

01011952200

01013952800

01015002101

01015000700

01015000800

01017954300

01019955900

01021060102

01023956800

01025957902

01027959000

01029959600

01031010900

01033020200

01035960400

01037961000

01039962700

01039962000

01041963700

01043965000

01043964800

01045020700

01047956500

01049960900

01051031000

01051031300

01053970400

01055001200

01057020300

01059973700

01061050300

545

Tract Type

Low-Income Community

Non-LIC Contiguous

Low-Income Community

Low-Income Community

Non-LIC Contiguous

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

October 20, 2025

State

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alabama

Alaska

Alaska

Alaska

Alaska

Alaska

Alaska

Alaska

Alaska

Alaska

October 20, 2025

County

Greene

Hale

Henry

Jackson

Lamar

Lauderdale

Lauderdale

Lawrence

Limestone

Limestone

Limestone

Lowndes

Macon

Macon

Macon

Marengo

Marion

Marion

Marshall

Monroe

Perry

Pickens

Pike

Randolph

Shelby

St. Clair

Sumter

Talladega

Tallapoosa

Walker

Washington

Wilcox

Winston

Aleutians East

Aleutians West

Bethel

Fairbanks North Star

Fairbanks North Star

Fairbanks North Star

Haines

Hoonah-Angoon

Kenai Peninsula

Census Tract Number

01063060200

01065040400

01067030200

01071950600

01075030100

01077010900

01077010100

01079979100

01083020201

01083020700

01083020600

01085780800

01087231603

01087232200

01087231500

01091972900

01093964400

01093964500

01095030100

01099076000

01105687000

01107050100

01109189100

01111000500

01117030703

01115040203

01119011300

01121010900

01123962300

01127020400

01129044200

01131035100

01133965700

02013000100

02016000100

02050000300

02090000200

02090001100

02090000100

02100000100

02105000300

02122000100

546

Tract Type

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Non-LIC Contiguous

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Bulletin No. 2025–43

State

Alaska

Alaska

Alaska

Alaska

Alaska

Alaska

Alaska

Alaska

Alaska

American Samoa

American Samoa

American Samoa

American Samoa

American Samoa

American Samoa

American Samoa

American Samoa

American Samoa

American Samoa

American Samoa

American Samoa

American Samoa

American Samoa

American Samoa

American Samoa

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Bulletin No. 2025–43

County

Matanuska-Susitna

Matanuska-Susitna

Nome

North Slope

Northwest Arctic

Prince of Wales-Hyder

Prince of Wales-Hyder

Wrangell

Yukon-Koyukuk

Eastern

Eastern

Eastern

Eastern

Eastern

Eastern

Eastern

Manu’a

Western

Western

Western

Western

Western

Western

Western

Western

Apache

Apache

Apache

Cochise

Cochise

Cochise

Cochise

Coconino

Coconino

Coconino

Coconino

Coconino

Gila

Gila

Gila

Graham

Greenlee

Census Tract Number

02170000701

02170000401

02180000100

02185000200

02188000100

02198940100

02198000100

02275000300

02290000200

60010950500

60010950600

60010950900

60010950700

60010950200

60010950100

60010950300

60020951800

60050951100

60050951201

60050951203

60050951202

60050951000

60050951500

60050951300

60050951600

04001970502

04001970200

04001945100

04003001702

04003001100

04003000600

04003000301

04005942202

04005945000

04005945100

04005002300

04005945200

04007940400

04007001100

04007000900

04009961201

04011960300

547

Tract Type

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Non-LIC Contiguous

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

October 20, 2025

State

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arizona

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

October 20, 2025

County

Greenlee

La Paz

La Paz

Maricopa

Maricopa

Mohave

Mohave

Mohave

Mohave

Mohave

Mohave

Navajo

Navajo

Navajo

Pinal

Pinal

Pinal

Pinal

Pinal

Pinal

Santa Cruz

Santa Cruz

Yavapai

Yavapai

Yavapai

Yavapai

Yuma

Yuma

Yuma

Yuma

Yuma

Arkansas

Ashley

Benton

Boone

Bradley

Carroll

Chicot

Clark

Cleburne

Columbia

Conway

Census Tract Number

04011960100

04012940300

04012020100

04013723305

04013040502

04015955000

04015951900

04015951602

04015953900

04015954800

04015940400

04017965300

04017963300

04017960500

04021002103

04021002300

04021001000

04021000700

04021000901

04021000400

04023966402

04023966302

04025002100

04025001601

04025000900

04025000606

04027011501

04027012100

04027011600

04027011403

04027011202

05001480400

05003960600

05007021101

05009790501

05011950300

05015950300

05017080300

05019953900

05023480300

05027950200

05029950300

548

Tract Type

Non-LIC Contiguous

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Non-LIC Contiguous

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Non-LIC Contiguous

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Bulletin No. 2025–43

State

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Bulletin No. 2025–43

County

Crittenden

Dallas

Desha

Desha

Drew

Drew

Franklin

Garland

Garland

Garland

Grant

Greene

Greene

Hempstead

Hot Spring

Howard

Independence

Independence

Jackson

Jefferson

Jefferson

Jefferson

Jefferson

Johnson

Lafayette

Lawrence

Little River

Logan

Marion

Miller

Mississippi

Mississippi

Mississippi

Nevada

Ouachita

Ouachita

Phillips

Phillips

Polk

Pope

Pope

Sevier

Census Tract Number

05035030703

05039970300

05041950200

05041950100

05043490300

05043490400

05047950200

05051011500

05051010800

05051010700

05053470300

05055480700

05055480500

05057480300

05059020200

05061950300

05063490200

05063490600

05067480400

05069000502

05069001000

05069002400

05069002500

05071952000

05073470100

05075470100

05081030102

05083950500

05089960202

05091020500

05093010700

05093010800

05093011100

05099090200

05103950600

05103950200

05107480600

05107480400

05113950400

05115951600

05115951300

05133080300

549

Tract Type

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Non-LIC Contiguous

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Non-LIC Contiguous

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

October 20, 2025

State

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

Arkansas

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

October 20, 2025

County

St. Francis

St. Francis

Union

Union

Van Buren

White

Alpine

Amador

Butte

Butte

Butte

Calaveras

Colusa

Colusa

Del Norte

Del Norte

El Dorado

El Dorado

El Dorado

Fresno

Fresno

Fresno

Fresno

Fresno

Fresno

Fresno

Fresno

Glenn

Glenn

Humboldt

Humboldt

Humboldt

Humboldt

Humboldt

Humboldt

Humboldt

Imperial

Imperial

Imperial

Imperial

Imperial

Imperial

Census Tract Number

05123960400

05123960600

05139950900

05139951000

05141460200

05145070800

06003010000

06005000102

06007003002

06007003001

06007002800

06009000400

06011000300

06011000500

06015000102

06015000101

06017031600

06017031900

06017030302

06019006501

06019006602

06019006202

06019006201

06019008501

06019008200

06019008302

06019007802

06021010100

06021010200

06023000300

06023000500

06023010501

06023010102

06023001300

06023940000

06023000100

06025012100

06025011900

06025012200

06025011400

06025011300

06025010900

550

Tract Type

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Non-LIC Contiguous

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Bulletin No. 2025–43

State

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

Bulletin No. 2025–43

County

Imperial

Inyo

Inyo

Kern

Kern

Kern

Kern

Kern

Kern

Kern

Kern

Kern

Kern

Kern

Kern

Kern

Kern

Kern

Kings

Kings

Kings

Kings

Lake

Lake

Lake

Lassen

Lassen

Madera

Madera

Mariposa

Mariposa

Mendocino

Mendocino

Mendocino

Merced

Merced

Merced

Merced

Modoc

Modoc

Monterey

Monterey

Census Tract Number

06025010400

06027000400

06027000800

06029003303

06029006303

06029005300

06029006401

06029006304

06029004701

06029003500

06029004402

06029004401

06029004101

06029005900

06029006100

06029005600

06029005802

06029005507

06031001601

06031001701

06031001300

06031001402

06033000801

06033000802

06033000702

06035040303

06035040304

06039000202

06039000103

06043000102

06043000101

06045010100

06045011300

06045011500

06047002201

06047000602

06047000603

06047000503

06049000100

06049000300

06053011302

06053014102

551

Tract Type

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Non-LIC Contiguous

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

October 20, 2025

State

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

California

October 20, 2025

County

Monterey

Monterey

Nevada

Nevada

Placer

Placer

Plumas

Plumas

Riverside

Riverside

Riverside

Riverside

Riverside

Riverside

Sacramento

San Benito

San Benito

San Bernardino

San Bernardino

San Bernardino

San Bernardino

San Luis Obispo

San Luis Obispo

San Luis Obispo

Santa Barbara

Santa Barbara

Santa Barbara

Shasta

Siskiyou

Siskiyou

Siskiyou

Sonoma

Stanislaus

Stanislaus

Tehama

Trinity

Trinity

Tulare

Tulare

Tulare

Tulare

Tulare

Census Tract Number

06053013700

06053013500

06057000900

06057000600

06061021603

06061020401

06063000202

06063000400

06065044507

06065044509

06065044510

06065045604

06065046102

06065046200

06067009800

06069000701

06069000200

06071010700

06071010423

06071009500

06071009400

06079012200

06079010102

06079010902

06083002705

06083002706

06083002702

06089012500

06093000702

06093000703

06093000500

06097150305

06099003400

06099003201

06103001100

06105000300

06105000101

06107003200

06107002800

06107004200

06107004300

06107001400

552

Tract Type

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Bulletin No. 2025–43

State

California

California

California

California

California

California

California

California

California

California

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Bulletin No. 2025–43

County

Tulare

Tulare

Tulare

Tuolumne

Tuolumne

Ventura

Ventura

Yuba

Yuba

Yuba

Adams

Alamosa

Alamosa

Alamosa

Archuleta

Baca

Bent

Chaffee

Chaffee

Cheyenne

Clear Creek

Costilla

Crowley

Delta

Delta

Delta

Dolores

Eagle

Fremont

Fremont

Fremont

Garfield

Garfield

Garfield

Gunnison

Huerfano

Kit Carson

La Plata

La Plata

Lake

Larimer

Las Animas

Census Tract Number

06107000502

06107000201

06107000302

06109004200

06109001200

06111000304

06111000600

06115040400

06115040301

06115040302

08001008606

08003960200

08003960300

08003960000

08007974400

08009964700

08011966700

08015000401

08015000402

08017960600

08019014800

08023972600

08025969600

08029964600

08029964800

08029965100

08033000100

08037000503

08043978800

08043978300

08043978200

08045951702

08045951600

08045951901

08051963700

08055960600

08063962100

08067940400

08067971100

08065961900

08069002802

08071000200

553

Tract Type

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Non-LIC Contiguous

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Low-Income Community

Non-LIC Contiguous

Low-Income Community

Non-LIC Contiguous

Low-Income Community

Non-LIC Contiguous

October 20, 2025

State

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Colorado

Connecticut

Connecticut

Connecticut

Connecticut

Connecticut

Connecticut

Connecticut

Connecticut

Connecticut

Connecticut

Connecticut

Delaware

October 20, 2025

County

Las Animas

Las Animas

Lincoln

Logan

Logan

Logan

Mesa

Moffat

Montezuma

Montrose

Montrose

Montrose

Montrose

Morgan

Morgan

Otero

Otero

Phillips

Prowers

Prowers

Prowers

Rio Blanco

Rio Grande

Saguache

San Juan

San Miguel

Washington

Weld

Weld

Yuma

Litchfield

New London

New London

New London

New London

New London

New London

New London

Tolland

This text is long and has been trimmed here. Open the source document for the complete record.