Bulletin No. 2022–30

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2022–30

July 25, 2022

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.

EMPLOYEE PLANS

Rev. Rul. 2022-13, page 99.

This revenue ruling addresses the application of section

432(b)(7) in the case of a merger of a multiemployer

defined benefit pension plan that receives special financial assistance (SFA) from the Pension Benefit Guaranty

Corporation into a multiemployer defined benefit pension plan that does not receive SFA.

ESTATE TAX

Rev. Proc. 2022-32, page 101.

This revenue procedure provides a simplified method

for certain estates to obtain an extension of time under

Finding Lists begin on page ii.

§ 301.9100-3 to file a return on or before the fifth anniversary of the decedent’s death to elect portability of

the deceased spousal unused exclusion (DSUE) amount

pursuant to § 2010(c)(5)(A). This revenue procedure

applies to estates that are not normally required to file

an estate tax return because the value of the gross

estate and adjusted taxable gifts is under the filing

threshold in § 6018(a).

INCOME TAX

REG 130675-17, page 104.

These proposed regulations define the term “foreign

currency contract” under section 1256(g)(2) to include

only foreign currency forward contracts.

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.

July 25, 2022 

Bulletin No. 2022–30

Part I

Applicability of section

432(b)(7) following

a merger involving a

multiemployer defined

benefit plan that has

received special financial

assistance

Rev. Rul. 2022-13

I. ISSUE

If a multiemployer defined benefit pension plan that has received special financial assistance (SFA) from the Pension

Benefit Guaranty Corporation (PBGC)

is merged into a multiemployer defined

benefit pension plan that has not received

SFA, and the plan that has not received

SFA is designated as the ongoing plan after

the merger, is the ongoing plan deemed to

be in critical status under section 432(b)

(7) of the Internal Revenue Code (Code)

solely as a result of the merger?

II. FACTS

Plan A, a multiemployer defined benefit pension plan with a calendar year plan

year, is an eligible multiemployer plan

under section 4262(b) of the Employee

Retirement Income Security Act of 1974,

Pub. L. 93-406 (88 Stat. 829 (1974)), as

amended (ERISA), and section 432(k)(3)

of the Code. Plan A applies to PBGC for

SFA and receives $50 million of SFA in

October 2022. On March 30, 2023, the

actuary for Plan A makes the annual certification required under section 432(b)

(3) of the Code and certifies that Plan A is

in critical status for the 2023 plan year in

accordance with section 432(b)(7).

Plan B, a multiemployer defined benefit pension plan that was in effect on July

16, 2006, has a calendar year plan year

and is not an eligible multiemployer plan

described in section 432(k)(3) that may

apply for SFA. After January 1, 2023,

the sponsors of Plan A and Plan B agree

to merge Plan A and Plan B, effective as

of January 1, 2024. Pursuant to the terms

of the merger agreement, Plan B will be

designated as the ongoing plan after the

merger and will obtain all the assets, and

assume all the liabilities, of Plan A. Effective as of the date of the merger, all assets

of the merged plan will be available to

pay all benefits and plan expenses of the

merged plan. In addition, with respect

to plan years beginning on or after the

merger, all plan-related documentation

and reports, including Form 5500, Annual

Return/Report of Employee Benefit Plan,

and attachments (Form 5500), will use the

name of Plan B and will be filed under the

Employer Identification Number (EIN)

and Plan Number of Plan B.

Plan A and Plan B request approval from

PBGC for the merger pursuant to 29 CFR

4262.16(f), and PBGC approves the merger.

Plan A and Plan B implement the merger as

of January 1, 2024, in accordance with the

merger agreement. Following the merger,

Plan B complies with the restrictions and

conditions that applied to Plan A before the

merger to the extent required under 29 CFR

4262.16(f)(3). Thus, for example, pursuant

to 29 CFR 4262.16(f)(3)(i), Plan B maintains a separate account for the SFA funds

received by Plan A (adjusted to reflect earnings on those funds and payments for benefits and plan-related expenses from that

separate account) in accordance with 29

CFR 4262.13(b) and invests the assets of

that separate account in permissible investments in accordance with 29 CFR 4262.14.

III. LAW AND ANALYSIS

Section 432 imposes certain requirements on multiemployer defined benefit

plans in effect on July 16, 2006. One of

those is the requirement under section

432(a)(2), which provides that the sponsor

of a plan in critical status within the meaning of section 432(b)(2) must adopt and

implement a rehabilitation plan that satisfies the requirements of section 432(e)(3).

In general, a multiemployer plan is in critical status for a plan year if, as determined

by the plan actuary, the plan is described

in section 432(b)(2)(A), (B), (C), or (D) as

of the beginning of the plan year.

Under section 432(b)(3), a multiemployer plan’s actuary must certify the

plan’s status under section 432 to the

Internal Revenue Service and to the plan

sponsor not later than the 90th day of each

plan year. The certification must state

whether or not the plan is in endangered

status for the plan year (or would be in

endangered status for that plan year but

for the application of section 432(b)(5));

whether or not the plan is or will be in critical status for the plan year or for any of

the succeeding 5 plan years; and whether

or not the plan is or will be in critical and

declining status (within the meaning of

section 432(b)(6)) for that plan year. For

a plan that is in a funding improvement

or rehabilitation period, the certification

must also state whether or not the plan is

making the scheduled progress in meeting

the requirements of its funding improvement or rehabilitation plan.

Section 432(b)(7), which was added

to the Code by section 9704(d)(2) of the

American Rescue Plan Act of 2021, Pub.

L. 117-2 (135 Stat. 4 (2021)), is one of

several provisions under which a multiemployer plan is treated as being in critical status for a plan year even if the plan

is not described in section 432(b)(2)(A),

(B), (C) or (D) of the Code.1 Specifically,

section 432(b)(7) provides that if an eligible multiemployer plan that receives

SFA under section 4262 of ERISA meets

the requirements of section 432(k)(2) of

the Code, then, notwithstanding the preceding paragraphs of section 432(b), the

plan is deemed to be in critical status for

plan years beginning with the plan year in

which the effective date of the SFA occurs

and ending with the last plan year ending

in 2051.2

1

Other provisions under which this occurs include section 432(b)(4) (which permits the sponsor of a multiemployer plan that is projected to enter critical status within 5 years to elect to be

treated as being in critical status effective for the current plan year) and section 432(e)(4)(B) (which provides that a plan in critical status remains in critical status until a plan year for which

the actuary certifies that the plan is not described in any of the subparagraphs of section 432(b)(2) and meets certain other indicia of financial health).

2

See also section 4262(m)(4) of ERISA (“An eligible multiemployer plan that receives special financial assistance shall be deemed to be in critical status within the meaning of section 305(b)

(2) [of ERISA] until the last plan year ending in 2051.”).

Bulletin No. 2022–30

99

July 25, 2022

Under section 432(e), if a plan is in

critical status, the sponsor is required to

adopt a rehabilitation plan. As described

in section 432(e)(3)(A)(i), the rehabilitation plan must be reasonably expected to

enable the plan to emerge from critical

status by the end of its 10-year rehabilitation period described in section 432(e)(4)

(unless, as described in section 432(e)(3)

(A)(ii), the plan sponsor determines that

the plan cannot reasonably be expected to

emerge from critical status by the end of

the rehabilitation period using all reasonable measures). Subject to certain exceptions, section 432(f) provides that a plan

in critical status may not be amended to

increase benefits and may not make lumpsum or similar payments. Pursuant to

section 4971(g)(1), the excise tax under

section 4971(a) would not apply to any

accumulated funding deficiency under a

plan in critical status, but the plan sponsor and contributing employers could be

subject to other excise taxes under section

4971(g)(2), (3) and (4).

The merger agreement between Plan A

and Plan B designates Plan B as the ongoing plan for the plan years beginning on or

July 25, 2022

after January 1, 2024 (the effective date of

the merger) and provides that Plan B will

obtain all of Plan A’s assets and assume

all of its liabilities. In accordance with the

designation of Plan B as the ongoing plan,

all plan-related documentation and reports

with respect to all plan years beginning on

or after January 1, 2024, including Form

5500, are in the name of Plan B and use

Plan B’s EIN and Plan Number.

Section 432(b)(7), which provides for

deemed critical status, applies only to an

eligible multiemployer plan described

in section 432(k)(3) that applies for and

receives SFA. Thus, if a multiemployer

plan that is eligible for and has received

SFA merges into a plan that did not

receive SFA, and, under the terms of the

merger, the plan that did not receive SFA

is designated as the ongoing plan, that

ongoing plan is not deemed to be in critical status under section 432(b)(7). Under

the facts of this revenue ruling, because

Plan B is not an eligible multiemployer

plan described in section 432(k)(3) that

may apply for and receive SFA under

section 4262 of ERISA, section 432(b)

(7) of the Code does not apply to Plan B.

100

Accordingly, Plan B is not deemed to be

in critical status pursuant to section 432(b)

(7) as a result of the merger with Plan A

for the plan years beginning on or after the

effective date of the merger.

IV. HOLDING

After a merger of a multiemployer

defined benefit pension plan that has

received SFA from PBGC with a second

multiemployer defined benefit pension

plan that has not received SFA, with the

second plan designated as the ongoing

plan after the merger, the ongoing plan is

not deemed to be in critical status under

section 432(b)(7) of the Code solely as a

result of the merger.

V. DRAFTING INFORMATION

The principal author of this revenue

ruling is Diane S. Bloom of the Office of

Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes). For further information,

please contact Ms. Bloom at (202) 3176700. This telephone call is not toll-free.

Bulletin No. 2022–30

Part III

26 CFR 601.201: Rulings and determination letters.

(Also Part I, Section 2010; 20.2010-2; 301.9100-3)

Rev. Proc. 2022-32

SECTION 1. PURPOSE

This revenue procedure supersedes

Rev. Proc. 2017-34, 2017-26 I.R.B. 1282,

and provides a simplified method for certain taxpayers to obtain an extension of

time under § 301.9100-3 of the Procedure

and Administration Regulations to make a

“portability” election under § 2010(c)(5)

(A) of the Internal Revenue Code (Code).

For purposes of the Federal estate and gift

taxes, a portability election allows a decedent’s unused exclusion amount (deceased

spousal unused exclusion amount, or

DSUE amount) to become available for

application to the surviving spouse’s subsequent transfers during life or at death.

The simplified method provided in this

revenue procedure is to be used in lieu

of the letter ruling process. No user fee is

required for submissions filed under this

revenue procedure.

SECTION 2. BACKGROUND

.01 Section 303(a) of the Tax Relief,

Unemployment Insurance Reauthorization, and Job Creation Act of 2010

(TRUIRJCA), Pub. L. No. 111-312,

124 Stat. 3296, 3302 (2010), amended

§ 2010(c) of the Code to allow the estate

of a decedent who is survived by a

spouse to make a portability election. For

purposes of the Federal estate and gift

taxes, a portability election allows the

surviving spouse to apply the decedent’s

DSUE amount to the surviving spouse’s

own transfers during life and at death.

The portability election applies to estates

of decedents dying after December 31,

2010, if such decedent is survived by a

spouse. The portability provisions under

§ 2010(c) of the Code were scheduled

to expire on January 1, 2013, pursuant

to §§ 101(a)(1) and 304 of TRUIRJCA.

However, § 101(a) of the American Taxpayer Relief Act of 2012, Pub. L. No.

112-240, 126 Stat. 2313 (2013), made

the ability to elect portability permanent.

Bulletin No. 2022–30

.02 Section 2010(c)(5)(A) provides

certain requirements that the estate of

a deceased spouse must satisfy to elect

portability, including that the estate must

elect portability of the DSUE amount on

an estate tax return that is filed within the

time prescribed by law (including extensions) for filing such return.

.03 For estates that are not required to

file an estate tax return under § 6018(a)

of the Code (as determined based on the

value of the gross estate and adjusted taxable gifts), § 20.2010-2(a)(1) of the Estate

Tax Regulations clarifies that the due date

of an estate tax return required to elect portability is nine months after the decedent’s

date of death or the last day of the period

covered by an extension (if an extension

of time for filing has been obtained). Section 20.2010-2(a)(1) further provides that

an extension of time under § 301.9100-3

to elect portability may be available to an

estate that is not required to file an estate

tax return under § 6018(a).

.04 On June 26, 2017, the Department

of the Treasury (Treasury Department)

and the Internal Revenue Service (IRS)

published Rev. Proc. 2017‑34, which

provides a method for obtaining an extension of time under § 301.9100-3 to make

a portability election under § 2010(c)

(5)(A) that is available to the estates

of decedents dying after December 31,

2010, if that estate was not required by

§ 6018(a) to file an estate tax return and

if such a decedent was survived by a

spouse. Under Rev. Proc. 2017-34, this

method is a simplified method that is to

be used in lieu of the letter ruling process

and is available for a period extending to

the second anniversary of the decedent’s

date of death.

.05 Since the publication of Rev.

Proc. 2017-34, the IRS has continued to issue numerous letter rulings

under § 301.9100-3 granting an extension of time to elect portability under

§ 2010(c)(5)(A) in situations in which

the decedent’s estate was not required by

§ 6018(a) to file an estate tax return and

the time for obtaining relief under the

simplified method had expired. The IRS

has observed that a significant percentage

of these ruling requests have been from

estates of decedents who died within five

101

years preceding the date of the request.

The number of these requests continues

to place a significant burden on the available resources of the IRS. The Treasury

Department and the IRS have determined

that the considerable number of ruling

requests for an extension of time to elect

portability received since the publication

of Rev. Proc. 2017-34 indicates a need for

continuing relief for the estates of decedents having no filing requirement under

§ 6018(a). Accordingly, this revenue procedure supersedes Rev. Proc. 2017-34 and

updates the procedures set forth therein

by extending the period within which

the estate of a decedent may make the

portability election under that simplified

method to on or before the fifth anniversary of the decedent’s date of death.

SECTION 3. SCOPE

.01 In General. The simplified method

of this revenue procedure is available to

the executor (either an appointed executor or, if none, a non-appointed executor,

as provided in § 20.2010-2(a)(6)) of the

estate of a decedent if:

(1) The decedent:

(a) was survived by a spouse;

(b) died after December 31, 2010; and

(c) was a citizen or resident of the

United States on the date of death.

(2) The executor is not required to file

an estate tax return under § 6018(a) as

determined based on the value of the gross

estate and adjusted taxable gifts and without regard to the need to file for portability

purposes;

(3) The executor did not file an estate

tax return within the time required by

§ 20.2010-2(a)(1) for filing an estate tax

return; and

(4) The executor satisfies all requirements of section 4.01 of this revenue

procedure.

.02 Executors that Timely Filed an

Estate Tax Return. The simplified method

of this revenue procedure is not available

to the estate of a decedent whose executor

filed an estate tax return within the time

prescribed by § 20.2010-2(a)(1). Such

an executor either will have elected portability of the DSUE amount by timely

filing that estate tax return or will have

July 25, 2022

affirmatively opted out of portability in

accordance with § 20.2010‑2(a)(3)(i).

.03 Estates with a § 6018 Filing

Requirement. As set forth in § 20.20102(a)(1), an extension of time to elect portability under § 301.9100-3, including

through the simplified method of this revenue procedure, is not available to an estate

that is required to file an estate tax return

under § 6018(a) (as determined based on

the value of the gross estate and adjusted

taxable gifts) because, in that case, the due

date of the election is prescribed by statute

and not by regulation.

.04 Failure to Qualify for Relief under

this Revenue Procedure. The executor of

an estate not within the scope described

in section 3.01 of this revenue procedure only because the executor does not

satisfy the requirements of section 4.01

of this revenue procedure may request

an extension of time to make the portability election under § 2010(c)(5)(A) by

requesting a letter ruling under the provisions of § 301.9100-3. The requirements

for requesting a letter ruling are described

in Rev. Proc. 2022-1 I.R.B. 1 (or any successor revenue procedure).

SECTION 4. RELIEF FOR CERTAIN

LATE PORTABILITY ELECTIONS

.01 Requirements for Relief. The

requirements for relief under this revenue

procedure are as follows:

(1) A person permitted to make the

election on behalf of the estate of a decedent--that is, an executor described in

§ 20.2010-2(a)(6)--must file a complete

and properly prepared Form 706, United

States Estate (and Generation-Skipping

Transfer) Tax Return, on or before the fifth

annual anniversary of the decedent’s date

of death. The Form 706 will be considered

complete and properly prepared if it is

prepared in accordance with § 20.20102(a)(7).

(2) The executor filing the Form 706

on behalf of the decedent’s estate must

state at the top of the Form 706 that the

return is “FILED PURSUANT TO REV.

PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).”

.02 Extent of Relief. Satisfaction of the

requirements for relief provided in section 4.01 of this revenue procedure, by an

executor for whom the relief is available

July 25, 2022

pursuant to section 3.01 of this revenue

procedure, is deemed to satisfy the requirements for relief under § 301.9100-3 and

upon that satisfaction, relief is granted

under the provisions of § 301.9100-3 to

extend the time to elect portability under

§ 2010(c)(5)(A). Accordingly, for purposes of electing portability, the Form

706 of that decedent’s estate will be considered to have been filed timely in accordance with § 20.2010-2(a)(1).

.03 Subsequent Determination that

Executor Is Required to File a Return

under § 6018(a). If, subsequent to the

grant of relief pursuant to this revenue

procedure, it is determined that, based on

the value of the gross estate and taking

into account any taxable gifts, the executor was required to file an estate tax return

under § 6018(a), the grant of an extension

as provided in section 4.02 of this revenue procedure is deemed null and void ab

initio.

SECTION 5. IMPACT OF RELIEF ON

SURVIVING SPOUSE

.01 Application of DSUE Amount. If

the decedent’s estate is granted relief

under this revenue procedure so that the

estate tax return is considered to have

been timely filed for purposes of electing portability, the DSUE amount of

that decedent is available to the decedent’s surviving spouse or the estate of

the surviving spouse for application to

the surviving spouse’s transfers made

on or after the decedent’s date of death

in accordance with the rules prescribed

under § 20.2010-3 of the Estate Tax Regulations and § 25.2505-2 of the Gift Tax

Regulations. However, if the increase in

the surviving spouse’s applicable exclusion amount attributable to the addition

of the decedent’s DSUE amount as of

the decedent’s date of death results in an

overpayment of gift or estate tax by the

surviving spouse or his or her estate, no

claim for credit or refund may be made if

the period of limitations under § 6511(a)

of the Code for filing a claim for credit

or refund of an overpayment of tax with

respect to such transfer has expired. That

is, an extension of time to elect portability granted under this revenue procedure

does not extend the period during which

the surviving spouse or the surviving

102

spouse’s estate may make a claim for

credit or refund under § 6511(a).

.02 Protective Claim for Credit or

Refund of Tax in Anticipation of Relief

under this Revenue Procedure. Because

a surviving spouse has no DSUE amount

from a deceased spouse to apply to

such surviving spouse’s transfers until

the portability election has been made

by the deceased spouse’s executor (see

§§ 20.2010-3(a)(2) and 25.2505-2(a)(2)),

a claim for credit or refund of tax filed

within the time prescribed in § 6511(a)

by the surviving spouse or the estate of

the surviving spouse in anticipation of

a Form 706 being filed to elect portability pursuant to this revenue procedure,

and otherwise meeting applicable legal

requirements, will be considered a protective claim for credit or refund of tax.

.03 Examples.

(1) Example 1.

(a) Predeceasing Spouse (S1) dies on January 1,

2018, survived by Surviving Spouse (S2). The assets

includible in S1’s gross estate consist of cash on

deposit in bank accounts held jointly with S2 with

rights of survivorship in the amount of $4,500,000.

S1 made no taxable gifts during life. S1’s executor is not required to file an estate tax return under

§ 6018(a) and does not file such a return.

(b) S2 dies on January 29, 2021. S2’s taxable

estate is $17,000,000 and S2 made no taxable gifts

during life. S2’s executor files a Form 706 on behalf

of S2’s estate on October 29, 2021, claiming an

applicable exclusion amount of $11,700,000. S2’s

executor includes payment of the estate tax with the

Form 706.

(c) Pursuant to this revenue procedure, S1’s

executor files a complete and properly prepared

Form 706 on behalf of S1’s estate on December 1,

2022, reporting a DSUE amount of $11,180,000.

The executor includes at the top of the Form 706 the

statement required by section 4.01(2) of this revenue procedure. The filing of the return satisfies the

requirements for a grant of relief under this revenue

procedure and S1’s estate is deemed to have made a

valid portability election. The IRS accepts the return

of S1’s estate with no changes.

(d) To recover the estate tax paid, S2’s executor

must file a claim for credit or refund of tax by October 29, 2024 (the end of the period of limitations

prescribed in § 6511(a)), even though a Form 706

to elect portability was not filed on behalf of S1’s

estate at the time S2’s estate filed its Form 706. Such

a claim filed on Form 843, Claim for Refund and

Request for Abatement, in anticipation of the filing

of the Form 706 by S1’s executor will be considered

a protective claim for credit or refund of tax. Accordingly, as long as the Form 843 is filed on or before

October 29, 2024, the IRS can consider and process

that claim for credit or refund of tax once S1’s estate

is deemed to have made a valid portability election

and S2’s estate notifies the IRS that the claim for

credit or refund is ready for consideration.

Bulletin No. 2022–30

(2) Example 2.

(a) The facts relating to S1 and S1’s estate are

the same as in Example 1. S2 makes a gift to Child

of $13,000,000 on December 1, 2020. S2 has made

no prior taxable gifts. On April 15, 2021, S2’s executor files a Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, claiming an

applicable exclusion amount of $11,580,000. S2’s

executor tenders payment of the gift tax with the

Form 709.

(b) To recover the gift tax paid, S2’s executor

must file a claim for credit or refund of tax (protective or otherwise) within the time prescribed in

§ 6511(a) for filing a claim for credit or refund; in

this case, April 15, 2024.

(3) Example 3.

(a) The facts are the same as in Example 2 except

that S2’s Form 709 claims an applicable exclusion

amount of $22,760,000, including a DSUE amount

of $11,180,000 from S1’s estate. As a result, the

Form 709 reports no tax due and S2’s executor tenders no gift tax.

(b) Although the portability election, once made,

makes S1’s DSUE amount available to S2 retroactively to S1’s date of death, that DSUE amount is

not available until the election is made. Because

S2’s executor files the Form 709 before S1’s estate

makes the portability election, the claimed application of the DSUE amount will be denied and gift tax

on the transfer will be assessed. S2’s executor pays

the gift tax assessed. To recover that gift tax once

Bulletin No. 2022–30

the portability election has been made by S1’s estate,

S2’s executor must file a claim for credit or refund

of tax (protective or otherwise) within the time prescribed in § 6511(a) for filing a claim for credit or

refund.

SECTION 6. EFFECT ON OTHER

DOCUMENTS

Rev. Proc. 2017-34, 2017-26 I.R.B.

1282, is superseded. Rev. Proc. 2022-3,

2022-1 I.R.B. 144, is amplified.

SECTION 7. EFFECTIVE DATE

.01 In General. This revenue procedure

is effective July 8, 2022.

.02 Letter Rulings Will Not Be Issued.

On or before the fifth anniversary of a

decedent’s date of death, the exclusive

procedure for obtaining an extension of

time under § 301.9100-3 to make a portability election under § 2010(c)(5)(A) for

the estate of a decedent, if the decedent

and executor meet the requirements of

section 3.01(1) through (3) of this revenue

103

procedure, is the procedure described in

section 4.01 of this revenue procedure. If

an executor of such an estate has filed a

request for a letter ruling seeking an extension of time under § 301.9100-3 to make

a portability election under § 2010(c)(5)

(A) and that letter ruling is pending in

the National Office on July 8, 2022, the

Office of the Associate Chief Counsel

(Passthroughs & Special Industries) will

close its file on the ruling request and

refund the user fee, and the estate may

obtain the relief granted by this revenue

procedure only by complying with section

4.01 of this revenue procedure.

SECTION 8. DRAFTING

INFORMATION

The principal author of this revenue

procedure is Juli Ro Kim of the Office of

Associate Chief Counsel (Passthroughs

& Special Industries). For further information regarding this revenue procedure

contact Ms. Kim at (202) 317-6859 (not a

toll-free number).

July 25, 2022

Part IV

Notice of Proposed

Rulemaking

Definition of Foreign

Currency Contract Under

Section 1256

REG-130675-17

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains

proposed regulations that define the term

“foreign currency contract” under section

1256 of the Internal Revenue Code (the

“Code”) to include only foreign currency

forward contracts. The proposed regulations affect certain holders of foreign currency options.

DATES: Written or electronic comments

and requests for a public hearing must be

received by September 6, 2022.

ADDRESSES: Commenters are strongly

encouraged to submit public comments

electronically. Submit electronic submissions via the Federal eRulemaking

Portal at www.regulations.gov (indicate

IRS and REG-130675-17) by following the online instructions for submitting comments. Once submitted to the

Federal eRulemaking Portal, comments

cannot be edited or withdrawn. The IRS

expects to have limited personnel available to process public comments that are

submitted on paper through mail. Until

further notice, any comments submitted

on paper will be considered to the extent

practicable. The Department of the Treasury (“Treasury Department”) and the

IRS will publish for public availability

any comment submitted electronically,

and to the extent practicable on paper, to

its public docket.

Send paper submissions to: CC:PA:LPD:PR (REG-130675-17), room 5203,

Internal Revenue Service, PO Box 7604,

July 25, 2022

Ben Franklin Station, Washington, D.C.

20044.

A public hearing will be scheduled if

requested in writing by any person that

timely submits written comments. If a

public hearing is scheduled, notice of the

date, time, and place for the public hearing will be published in the Federal Register. For those requesting to speak during

the hearing, send an outline of topic submissions electronically via the Federal

eRulemaking Portal at www.regulations.

gov (indicate IRS and REG-130675-17).

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, D.

Peter Merkel or Karen Walny at (202)

317-6938; concerning submissions of

comments or requests for a public hearing,

Regina L. Johnson at (202) 317-5177 (not

toll-free numbers) or by sending an email

to publichearings@irs.gov.

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed regulations that would provide that the term

foreign currency contract as defined in section 1256(g)(2) of the Code applies only

to a foreign currency forward contract.

I. Statutory Development of Section 1256

A. Section 1256 Generally

Section 1256(a)(1) provides that each

section 1256 contract held by a taxpayer

at the close of the taxable year is treated

as sold for its fair market value on the last

business day of that taxable year (and any

gain or loss is taken into account for the

taxable year). Section 1256(a)(2) provides

that proper adjustment must be made

in the amount of any gain or loss subsequently realized to take into account the

gain or loss previously recognized under

section 1256(a)(1). Generally, section

1256(a)(3) provides that any gain or loss

on a section 1256 contract is treated as 60

percent long-term capital gain or loss and

40 percent short-term capital gain or loss

(“60/40 treatment”).

104

Section 1256(b)(1) defines a section

1256 contract as any regulated futures

contract, any foreign currency contract,

any nonequity option, any dealer equity

option, and any dealer securities futures

contract. Section 1256(b)(2) excludes the

following contracts from the definition of

a section 1256 contract: (1) any securities

futures contract or option on such a contract unless it is a dealer securities futures

contract, or (2) any interest rate swap,

currency swap, basis swap, interest rate

cap, interest rate floor, commodity swap,

equity swap, equity index swap, credit

default swap, or similar agreement.

Section 1256(g)(2)(A) defines the term

foreign currency contract as a contract

that (1) requires delivery of, or the settlement of which depends on the value of,

a foreign currency which is a currency in

which positions are also traded through

regulated futures contracts, (2) is traded

in the interbank market, and (3) is entered

into at arm’s length at a price determined

by reference to the price in the interbank

market. Section 1256(g)(2)(B) grants the

Secretary authority to prescribe regulations as may be necessary or appropriate

to carry out the purposes of the foreign

currency contract definition, including the

authority to exclude any contract or type

of contract from that definition if it would

be inconsistent with those purposes.

Section 1256(g)(3) defines the term

nonequity option as any listed option (generally, an option traded on or subject to

the rules of a qualified board or exchange)

that is not an equity option.

Section 1256(f)(2) provides that 60/40

treatment does not apply to gain or loss

that otherwise would be ordinary. Section 988(a)(1) provides that if a futures

contract, forward contract, option, or similar financial instrument is a section 988

transaction, the gains and losses from the

transaction are treated as ordinary, absent

an election for certain transactions. However, regulated futures contracts and nonequity options that are marked-to-market

under section 1256 are not section 988

transactions unless a taxpayer makes an

election to treat the contract as a section

988 transaction. See section 988(c)(1)(D)

(i) and (ii).

Bulletin No. 2022–30

B. Scope of Section 1256 When Enacted

in 1981

When it was enacted in 1981, section

1256 applied only to regulated futures

contracts, including regulated futures

contracts involving foreign currency.

See Economic Recovery Tax Act of

1981 (“ERTA”), Public Law 97-34 (95

Stat. 172, section 503(a) (1981)). One of

the hallmarks of regulated futures contracts is the daily cash settlement, markto-market system employed by U.S.

futures exchanges to determine margin

requirements. In contrast to U.S. futures

exchanges, the interbank market and other

over-the-counter (“OTC”) markets did not

employ a daily cash settlement, mark-tomarket system for margin requirements.

C. Technical Corrections Act of 1982

As originally enacted, section 1256

applied to regulated futures contracts

requiring the delivery of foreign currency, but not to similar foreign currency

forward contracts that were traded in the

OTC market rather than on an exchange.

In 1983, Congress extended the application of the statute to foreign currency contracts traded in the interbank market and

provided a definition in section 1256(g)(1)

for the term foreign currency contract. See

Technical Corrections Act of 1982, Public

Law 97-448, section 105(c)(5)(B) and (C)

(96 Stat. 2365 (1983)). In adding section

1256(g)(1), Congress specified that the

term foreign currency contract included

only a contract that requires delivery of

the foreign currency.

The legislative history explains that

this expansion was grounded in the economic comparability of trading foreign

currency through forward contracts in the

interbank market to trading foreign currency through regulated futures contracts

and the interchangeability of the two types

of contracts by traders. H.R. Rep. No.

97-794, at 23 (1982). In addition, the pricing of these foreign currency forward contracts was readily available because they

trade through the larger, liquid interbank

market. Id. Nothing in the statute or legislative history indicates Congress intended

to include option contracts, which are

not generally economically comparable

Bulletin No. 2022–30

to regulated futures contracts. Moreover,

while the definition of foreign currency

contract enacted in 1983 required the

delivery of foreign currency, option contracts will not always result in settlement

(either by physical delivery or delivery of

the cash equivalent value).

D. Deficit Reduction Act of 1984

In 1984, Congress further expanded the

types of contracts to which section 1256

applied to include nonequity options and

dealer equity options. See Deficit Reduction Act of 1984, Public Law 98-369 at

section 102(a)(3) (98 Stat. 494 (1984)). It

also amended the definition of a foreign

currency contract to allow for cash settlement. Id. The Deficit Reduction Act of

1984 also added section 1256(g)(2)(B),

which provides the Treasury Department

with authority to issue regulations that are

necessary or appropriate to carry out the

purposes of the foreign currency contract

definition. Id.

Before this 1984 amendment, the term

foreign currency contract applied only to

contracts that required the physical delivery of the foreign currency. However,

the futures contract and forward contract

market had developed in a manner that no

longer required physical delivery. Instead,

contracts permitted the parties to settle

contracts for their cash equivalent value.

The definition of regulated futures contract was amended in 1983 to remove the

requirement of delivery of personal property. See H.R. Conf. Rep. 97-986, at 26-27

(1982). The amendment to the definition

of foreign currency contract in 1984 was

intended similarly to treat the delivery

requirement as met where the contract

provides for a settlement determined by

reference to the value of foreign currency.

Specifically, the House Report explained

the reason for the 1984 amendment as

follows:

PRESENT LAW

 he Technical Corrections Act of 1982

T

provided that certain foreign currency

contracts entered into after May 11,

1982 (or earlier, if certain elections

were made) will be treated as regulated futures contracts and therefore be

105

taxed on the marked-to-market system

with a maximum tax rate of 32 percent.

In order for a contract to qualify as a

foreign currency contract, the contract

must require delivery of a foreign currency which is a currency in which

positions are also traded through regulated futures contracts.

EXPLANATION OF PROVISION

 ecause certain contracts may call for

B

a cash settlement by reference to the

value of the foreign currency rather

than actual delivery of the currency,

the bill provides that the delivery of

a foreign currency requirement is met

where the contract provides for a settlement determined by reference to the

value of the foreign currency.

H.R. Rep. 98-432 Part 2, at 1646 (1984).

At the same time, Congress addressed

foreign currency options by adding nonequity options to the list of section 1256

contracts, as described above. Consequently, listed foreign currency options

became subject to section 1256 by explicit

Congressional action. While the legislative history expressly stated that Congress amended the definition of a foreign

currency contract to include cash-settled

foreign currency forward contracts, the

legislative history does not indicate that

Congress intended also to expand the

scope of section 1256 to include OTC

foreign currency options regardless of

whether they may be cash-settled.

E. Technical and Miscellaneous Revenue

Act of 1988

The legislative history with respect to

a 1988 amendment to section 988 also

indicates that Congress understood that

a foreign currency contract, as defined

by section 1256(g)(2), does not include a

foreign currency option. Section 988 generally applies to forward contracts, futures

contracts, options, and similar financial

instruments if the amount that a taxpayer

is entitled to receive or is required to pay

is denominated in terms of a nonfunctional currency or determined by reference to the value of one or more nonfunctional currencies. See section 988(c)(1)

July 25, 2022

(A) and (B)(iii); see also section 988(c)

(1)(D) (providing an exception to section 988(c)(1)(B)(iii) for certain regulated

futures contracts and nonequity options).

In 1988, Congress amended section 988

to add section 988(c)(1)(E). Technical and

Miscellaneous Revenue Act of 1988, Public Law 100-647, at section 6130(b) (102

Stat. 3342 (1988)). Section 988(c)(1)(E)

provides that any instrument described in

section 988(c)(1)(B)(iii) (that is, any forward contract, futures contract, option, or

similar financial instrument) is not a section 988 transaction if it is held by certain

partnerships (each, a “qualified fund”) and

would be marked to market under section

1256. Section 988(c)(1)(E)(iv)(I) further

provides that any bank forward contract,

any foreign currency futures contract

traded on a foreign exchange, or any similar instrument to the extent provided in

regulations that is not otherwise a section

1256 contract is treated as a section 1256

contract for purposes of section 1256

when held by a qualified fund.

The legislative history indicates that

Congress believed that the term foreign

currency contract generally meant bank

forward contracts on foreign currency, and

that OTC foreign currency options were

not already section 1256 contracts. See

H.R. Conf. Rep. No. 100-1104 (Vol. 2),

at 189, reprinted in 1988-3 C.B. 473, 679

(“[T]he [conference] agreement expands

the definition of section 1256 contracts

to generally include … bank forwards:

that is, foreign currency contracts (as that

term is defined in section 1256(g)(2) of

the Code), and [certain other contracts]

…. [T]he [conference] agreement provides the Treasury with regulatory authority to treat other similar instruments (for

example, options) held by qualified funds

as section 1256 contracts.”) (emphasis

added).

II. Listed Transactions Using Offsetting

Foreign Currency Options

Taxpayers entered into tax avoidance

transactions that relied upon treating

OTC foreign currency options, in a currency in which regulated futures were

traded, as section 1256(g)(2) foreign currency contracts. On December 22, 2003,

the IRS published Notice 2003-81, 200351 I.R.B. 1223, which identified a tax

July 25, 2022

avoidance transaction involving offsetting foreign currency options. This transaction is often referred to as a “major-minor” transaction because it involved the

taxpayer purchasing call and put options

in a “major” foreign currency (one in

which regulated futures contracts traded)

and writing call and put options in a

“minor” currency (one in which regulated

futures contracts were not traded). The

purchased and written foreign currency

options were in two different currencies

that historically had a high positive correlation, such that the taxpayer could

be reasonably certain to have offsetting

gains and losses in the options. The taxpayer treated its major currency options

as foreign currency contracts under section 1256(g)(2) and treated its options

on the minor currency as not subject to

section 1256. When there was unrecognized gain and loss on the options, the

taxpayer assigned the purchased major

currency option with a loss to a charity,

and the charity assumed the offsetting

written minor currency option from the

taxpayer (the taxpayer, however, retained

the premium received on the written

option). The taxpayer treated the assignment of the major currency option as a

mark-to-market recognition event under

section 1256(c), claiming a loss upon

the assignment. However, the taxpayer

did not report the recognition of gain

on the offsetting minor currency option

assumed by the charity because the

option was a non-section 1256 contract

and the taxpayer treated the assumption

as a non-recognition event. The “Facts”

section of Notice 2003-81 stated, without

legal analysis, that the purchased major

currency options were foreign currency

contracts within the meaning of section 1256(g)(2)(A) because the major

currency was traded through regulated

futures contracts. Notice 2003-81 identified this transaction as a listed transaction

and indicated that the taxpayer would be

required under the Code to account for

the gain attributable to the premium originally received by the taxpayer for writing the minor currency option.

On August 27, 2007, the IRS published

Notice 2007-71 (2007-35 I.R.B. 472),

which modified and supplemented Notice

2003-81. Notice 2007-71 explained that

“foreign currency options, whether or

106

not the underlying currency is one in

which positions are traded through regulated futures contracts, are [not] foreign currency contracts as defined in §

1256(g)(2).” Notice 2007-71 explained

that the “Facts” section of Notice 200381 included “an erroneous conclusion of

law.” Notice 2007-71 corrected this error

in the “Facts” section of Notice 2003-81,

stating that the pertinent sentence should

have read as follows: “‘The taxpayer takes

the position that the purchased options are

‘foreign currency contracts’ within the

meaning of §1256(g)(2)(A) of the Internal

Revenue Code and §1256 contracts within

the meaning of §1256(b).’”

III. Judicial Interpretations of Section

1256(g)(2)

The IRS challenged taxpayers’ characterization of the major-minor transactions

in several cases before the United States

Tax Court (“Tax Court”). In a series of

rulings on motions for partial summary

judgment, the Tax Court held that foreign currency options were not “foreign

currency contracts” under section 1256.

In one case, however, the Sixth Circuit

disagreed and held that a foreign currency option could be a foreign currency

contract.

A. Summitt v. Commissioner

The IRS successfully challenged the

listed transactions described in Notice

2003-81 in Summitt v. Commissioner, 134

T.C. 248 (2010). The Tax Court held that

a foreign currency option is not a foreign

currency contract as defined by section

1256(g)(2).

Explaining that the plain meaning of

the statutory language controls the decision, the Tax Court held that the term foreign currency contract does not include an

option contract and that the major currency

option was not subject to the mark-to-market rules of section 1256. Id. at 264, 266.

The court noted that forwards and options

confer different rights and obligations to

the parties to these contracts. Id. at 264.

The court found that it was clear that the

words “or the settlement of which depends

on the value of” in section 1256(g)(2)(A)

(i) meant that a foreign currency contract

must require settlement at expiration and

Bulletin No. 2022–30

that the reference in the statute to settlements was included to permit a foreign

currency contract to be physically settled

or cash-settled. Id. at 265. In contrast, an

option may expire without any settlement

occurring. The court further observed that

“[t]here is no evidence in the legislative

history that a literal reading of the statute

will defeat Congress’ purpose in enacting

it.” Id.

Subsequently, the Tax Court followed

its decision in Summitt in two other

cases. See Garcia v. Commissioner, T.C.

Memo. 2011-85; Wright v. Commissioner,

T.C. Memo. 2011-292. In both cases, the

Tax Court noted that the taxpayers did

not show a material factual difference

between their cases and the earlier Tax

Court opinion on the same issue. Garcia,

T.C. Memo. 2011-85; Wright, T.C. Memo.

2011-292.

B. Wright v. Commissioner

The taxpayer appealed the Tax Court’s

decision in Wright. The Sixth Circuit

reversed the Tax Court, holding that a

foreign currency option could be a foreign currency contract based on the plain

meaning of section 1256(g)(2). Wright v.

Commissioner, 809 F.3d 877, 885 (6th

Cir. 2016). Specifically, the Sixth Circuit

found that the plain language of section

1256(g)(2)(A)(i) (“which requires delivery of, or the settlement of which depends

on the value of, a foreign currency which

is a currency in which positions are also

traded through regulated futures contracts”) does not require settlement. Id.

at 883. The court reasoned that the plain

meaning of section 1256(g)(2)(A)(i) provides that a “foreign currency contract” is

“(1) ‘a contract ... which requires delivery of ... a foreign currency’ or (2) ‘a contract ... the settlement of which depends

on the value of ... a foreign currency.’”

Id. Therefore, it found that a contract is

a “foreign currency contract” if the settlement of the contract depends on the

value of a foreign currency, even if the

contract does not mandate settlement. Id.

In concluding that the statutory language

in section 1256(g)(2)(A) was unambiguous, the Sixth Circuit noted that the Treasury Department and the IRS had express

authority to change this result for future

taxpayers. Id. at 885.

Bulletin No. 2022–30

Explanation of Provisions

Under the authority of section 1256(g)

(2)(B), and to carry out the purposes of

section 1256(g)(2)(A), these proposed

regulations provide that only a forward

contract on foreign currency is a “foreign

currency contract” as defined in section

1256(g)(2). The legislative history to section 1256, as discussed in part I of this

preamble, indicates that Congress’s purpose in amending the definition of foreign

currency contract in 1984 was merely to

include cash-settled foreign currency forward contracts within the definition of foreign currency contract. It would be inconsistent with this purpose to construe the

term foreign currency contract as including options or other derivatives.

These proposed regulations do not

change the status of foreign currency

options that otherwise qualify as section

1256 contracts. Specifically, nonequity

options are separately listed as section

1256 contracts in section 1256(b)(1)(C).

Section 1256(g)(3) provides that a nonequity option is any listed option which

is not an equity option. Section 1256(g)

(5) defines a listed option as “any option

. . . which is traded on (or subject to the

rules of) a qualified board or exchange.”

Therefore, a foreign currency option that

is listed on a qualified board or exchange

is a “nonequity option” and remains subject to section 1256.

These proposed regulations do not

define the term forward contract. For

purposes of these proposed regulations,

whether a derivative contract is properly

characterized as a forward contract for

U.S. federal income tax purposes is determined under current law. In addition, the

IRS may consider applying existing antiabuse rules and judicial doctrines to a contract and any related transactions in order

to evaluate whether a transaction is properly characterized as a forward contract

or whether a transaction characterized

as some other type of derivative contract

should be treated as a forward contract.

Proposed Applicability Date

These proposed rules are proposed to

apply to contracts entered into on or after

the date that is 30 days after the date of

publication of the Treasury decision

107

adopting these proposed rules as final regulations in the Federal Register (the “proposed applicability date”). This proposed

applicability date is intended to provide

taxpayers in the Sixth Circuit with time

to transition from the holding in Wright

v. Commissioner to the rule described in

these proposed regulations. However, for

contracts entered into before the proposed

applicability date by taxpayers in other

circuits, the IRS intends to continue to

adhere to its prior published position that

foreign currency options are not foreign

currency contracts under section 1256(g)

(2). See Notice 2007-71, 2007-35 I.R.B.

472. A taxpayer may rely on these proposed regulations for taxable years ending on or after July 6, 2022, provided the

taxpayer and its related parties, within the

meaning of sections 267(b) (determined

without regard to section 267(c)(3)) and

707(b)(1), consistently follow the proposed regulations for all contracts entered

into during the taxable year ending on or

after July 6, 2022 through the proposed

applicability date of the final regulations.

Special Analyses

I. Regulatory Planning and Review –

Economic Analysis

This regulation is not subject to review

under section 6(b) of Executive Order

12866 pursuant to the Memorandum of

Agreement (April 11, 2018) between the

Department of the Treasury and the Office

of Management and Budget regarding

review of tax regulations.

II. Regulatory Flexibility Act

The proposed rule affects any taxpayer

that enters into a foreign currency option

contract in the interbank market and that

would otherwise treat the option as a “foreign currency contract” within the meaning of section 1256(g), contrary to the

position set forth by the IRS in Notice

2007-71. No data is available about the

number of small entities that are taking

such a position. However, the Secretary

has determined that the economic impact

on any small entities affected by the proposed rule would not be significant.

The proposed rule clarifies that a

“foreign currency contract” as defined in

July 25, 2022

section 1256(g)(2) means only a foreign

currency forward contract (and not a foreign currency option contract). The proposed rule does not require taxpayers to

collect additional information to determine whether section 1256 applies to

the taxpayer’s option contracts. Taxpayers that would have otherwise reported

these over-the-counter foreign currency

options on IRS Form 6781 (Gains and

Losses from Section 1256 Contracts

and Straddles) as section 1256 contracts

may collect less information under the

proposed rule since the options will not

be treated as section 1256 contracts.

In addition, the proposed rule does not

impose any new costs on taxpayers

since it reaffirms the IRS’s published

position that over-the-counter foreign

currency options are not “foreign currency contracts” within the meaning of

section 1256(g). Similarly, the proposed

rule does not affect a taxpayer’s reporting obligation with respect to over-thecounter foreign currency options since

the same amount of information is

required to be reported.

In accordance with the Regulatory

Flexibility Act (5 U.S.C. 601 et seq.) the

Secretary hereby certifies that this proposed rule, if adopted, will not have a significant economic impact on a substantial

number of small entities. The Treasury

Department and the IRS invite comment

from members of the public about potential impacts on small entities.

III. Section 7805(f)

Pursuant to section 7805(f), this notice

of proposed rulemaking has been submitted to the Chief Counsel for Advocacy

of the Small Business Administration for

comment on its impact on small business.

IV. 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

July 25, 2022

million in 1995 dollars, updated annually

for inflation. This proposed 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.

V. Executive Order 13132: Federalism

Executive Order 13132 (entitled

“Federalism”) prohibits an agency from

publishing any rule that has federalism

implications if the rule either imposes

substantial, direct compliance costs on

state and local governments, and is not

required by statute, or preempts state

law, unless the agency meets the consultation and funding requirements of

section 6 of the Executive order. These

proposed 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.

comments. Requests for a public hearing

are also encouraged to be made electronically by sending an email to publichearings@irs.gov. If a public hearing is scheduled, notice of the date and time for the

public hearing will be published in the

Federal Register.

Announcement 2020-4, 2020-17

I.R.B. 667 (April 20, 2020), provides

that until further notice, public hearings conducted by the IRS will be held

telephonically. Any telephonic hearing

will be made accessible to people with

disabilities.

Drafting Information

The principal authors of these regulations are D. Peter Merkel and Karen

Walny of the Office of Chief Counsel

(International). However, other personnel from the Treasury Department and the

IRS participated in their development.

List of Subjects in 26 CFR Part 1

Statement of Availability of IRS

Documents

Income taxes, Reporting and recordkeeping requirements.

IRS notices and other guidance cited in

this preamble are published in the Internal

Revenue Bulletin (or Cumulative Bulletin)

and are available from the Superintendent

of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by

visiting the IRS website at http://www.irs.

gov.

Proposed Amendments to the

Regulations

Comments and Request for Public

Hearing

Paragraph 1. The authority citation for

part 1 is amended by adding an entry in

numerical order to read in part as follows:

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

*****

Section 1.1256(g)-2 also issued under

26 U.S.C. 1256(g)(2)(B).

*****

Par. 2. Section 1.1256(g)-2 is added to

read as follows:

Before these proposed regulations are

adopted as final regulations, consideration

will be given to any comments that are

submitted timely to the IRS as prescribed

in this preamble under the ADDRESSES

heading. The Treasury Department and

the IRS request comments on all aspects

of the proposed rules. Any electronic comments submitted, and to the extent practicable any paper comments submitted, will

be made available at www.regulations.gov

or upon request.

A public hearing will be scheduled

if requested in writing by any person

that timely submits electronic or written

108

Accordingly, the Treasury Department

and the IRS propose to amend 26 CFR

part 1 as follows:

PART 1–INCOME TAXES

§1.1256(g)-2 Foreign currency contract

defined.

(a) Foreign currency contract. For purposes of section 1256, the term foreign

currency contract means a forward contract that—

Bulletin No. 2022–30

(1) Requires delivery of, or the settlement of which depends on the value of,

a foreign currency that is a currency in

which positions are also traded through

regulated futures contracts;

(2) Is traded in the interbank market;

and

Bulletin No. 2022–30

(3) Is entered into at arm’s length at a

price determined by reference to the price

in the interbank market.

(b) Applicability date. This section

applies to contracts entered into on or after

[date 30 days after date of publication of

the final rule in the Federal Register].

109

Paul J. Mamo,

Acting Deputy Commissioner for Services and Enforcement.

(Filed by the Office of the Federal Register on July

05, 2022, 8:45 a.m., and published in the issue of

the Federal Register for July 06, 2022, 87 F.R.

40168)

July 25, 2022

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

­effect:

Amplified describes a situation where

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

being extended to apply to a variation of

the fact situation set forth therein. Thus,

if an earlier ruling held that a principle

applied to A, and the new ruling holds that

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

where the language in a prior ruling is

being made clear because the language

has caused, or may cause, some confusion. It is not used where a position in a

prior ruling is being changed.

Distinguished describes a situation

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

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

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

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

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

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

restate the valid portion of the previously

published ruling in a new ruling that is

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

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

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

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

Suspended is used in rare situations

to show that the previous published rulings will not be applied pending some

future action such as the issuance of new

or amended regulations, the outcome of

cases in litigation, or the outcome of a

Service study.

Abbreviations

The following abbreviations in current

use and formerly used will appear in

material published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2022–30

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

i

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

July 25, 2022

Numerical Finding List1

Bulletin 2022–30

Notices:

2022-29, 2022-28 I.R.B. 66

2022-30, 2022-28 I.R.B. 70

2022-31, 2022-29 I.R.B. 85

Proposed Regulations:

REG-130975-08, 2022-28 I.R.B. 71

REG 130675-17, 2022-30 I.R.B. 104

Revenue Procedures:

2022-25, 2022-27 I.R.B. 3

2022-28, 2022-27 I.R.B. 65

2022-26, 2022-29 I.R.B. 90

2022-32, 2022-30 I.R.B. 101

Revenue Rulings:

2022-12, 2022-27 I.R.B. 1

2022-13, 2022-30 I.R.B. 99

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin

2021–52, dated December 27, 2021.

1

July 25, 2022

ii

Bulletin No. 2022–30

Finding List of Current Actions on

Previously Published Items1

Bulletin 2022–30

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin

2021–52, dated December 27, 2021.

1

Bulletin No. 2022–30

iii

July 25, 2022

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

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

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

We Welcome Comments About the Internal Revenue Bulletin

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

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

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

NW, IR-6230 Washington, DC 20224.