# Bulletin No. 2020–52 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3Ae029944af9d81705 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text HIGHLIGHTS OF THIS ISSUE   Bulletin No. 2020–52 December 21, 2020 These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations. ADMINISTRATIVE REV. RUL. 2020-28, page 1669. Interest rates: underpayments and overpayments. The rates for interest determined under Section 6621 of the code for the calendar quarter beginning January 1, 2021, will be 3 percent for overpayments (2 percent in the case of a corporation), 3 percent for underpayments, and 5 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 0.5 percent. T.D. 9912, page 1688. These final regulations under sections 36B and 6011 of the Internal Revenue Code (Code) clarify that the reduction of the personal exemption deduction to zero for taxable years beginning after December 31, 2017, and before January 1, 2026, does not affect an individual taxpayer’s ability to claim the premium tax credit. These final regulations affect individuals who claim the premium tax credit. EXEMPT ORGANIZATIONS T.D. 9933, page 1692. Certain organizations that are generally exempt from federal income taxes are taxed on income from business activities that are not related to their exempt purpose. The calculation Finding Lists begin on page ii. of the tax on the unrelated business income depends upon whether the tax-exempt organization has more than one unrelated trade or business. The final regulations provide guidance on how these tax-exempt organizations determine if they have more than one unrelated trade or business, and, if so, how to calculate the amount of taxable income they have from the unrelated business activities. The final regulations also clarify that these regulations, as well as others on this topic, apply to individual retirement accounts. INCOME TAX T.D. 9934, page 1729. This document contains final regulations that coordinate the extraordinary disposition rules issued under Treasury regulation section 1.245A-5(c) and (d) and the disqualified basis rule issued under Treasury regulation section 1.951A-2(c)(5). This document also contains reporting rules under section 6038 to facilitate administration of these rules. T.D. 9935, page 1746. These final regulations amend the current like-kind exchange regulations to add a definition of real property to implement statutory changes limiting section 1031 treatment to like-kind exchanges of real property. The final regulations also provide a rule addressing a taxpayer’s receipt of personal property that is incidental to real property the taxpayer receives in an otherwise qualifying like-kind exchange of real property. The IRS Mission Provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all. Introduction The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. It is published weekly. It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application of the tax laws, including all rulings that supersede, revoke, modify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published. Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts stated in the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices, identifying details and information of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory requirements. Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same. The Bulletin is divided into four parts as follows: Part I.—1986 Code. This part includes rulings and decisions based on provisions of the Internal Revenue Code of 1986. Part II.—Treaties and Tax Legislation. This part is divided into two subparts as follows: Subpart A, Tax Conventions and Other Related Items, and Subpart B, Legislation and Related Committee Reports. Part III.—Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rulings. Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury’s Office of the Assistant Secretary (Enforcement). Part IV.—Items of General Interest. This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements. The last Bulletin for each month includes a cumulative index for the matters published during the preceding months. These monthly indexes are cumulated on a semiannual basis, and are published in the last Bulletin of each semiannual period. The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate. December 21, 2020  Bulletin No. 2020–52 Part I Section 6621.— Determination of Rate of Interest­ 26 CFR 301.6621-1: Interest rate. Rev. Rul. 2020-28 Section 6621 of the Internal Revenue Code establishes the interest rates on overpayments and underpayments of tax. Under section 6621(a)(1), the overpayment rate is the sum of the federal short-term rate plus 3 percentage points (2 percentage points in the case of a corporation), except the rate for the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the sum of the federal short-term rate plus 0.5 of a percentage point. Under section 6621(a)(2), the underpayment rate is the sum of the federal short-term rate plus 3 percentage points. Section 6621(c) provides that for purposes of interest payable under section 6601 on any large corporate underpayment, the underpayment rate under section 6621(a)(2) is determined by substituting “5 percentage points” for “3 percentage points.” See section 6621(c) and section 301.6621-3 of the Regulations on Procedure and Administration for the definition of a large corporate underpayment and for the rules for determining the applicable date. Section 6621(c) and section 301.6621-3 are generally effective for periods after December 31, 1990. Section 6621(b)(1) provides that the Secretary will determine the federal shortterm rate for the first month in each calendar quarter. Section 6621(b)(2)(A) provides that the federal short-term rate determined Bulletin No. 2020–52 under section 6621(b)(1) for any month applies during the first calendar quarter beginning after that month. Section 6621(b) (3) provides that the federal short-term rate for any month is the federal short-term rate determined during that month by the Secretary in accordance with section 1274(d), rounded to the nearest full percent (or, if a multiple of 1/2 of 1 percent, the rate is increased to the next highest full percent). Notice 88-59, 1988-1 C.B. 546, announced that in determining the quarterly interest rates to be used for overpayments and underpayments of tax under section 6621, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with section 6621 which, pursuant to section 6622, is subject to daily compounding. The federal short-term rate determined in accordance with section 1274(d) during October 2020 is the rate published in Revenue Ruling 2020-22, 2020-45 IRB 963, to take effect beginning November 1, 2020. The federal short-term rate, rounded to the nearest full percent, based on daily compounding determined during the month of October 2020 is 0 percent. Accordingly, an overpayment rate of 3 percent (2 percent in the case of a corporation) and an underpayment rate of 3 percent are established for the calendar quarter beginning January 1, 2021. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 for the calendar quarter beginning January 1, 2021 is 0.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning January 1, 2021, is 5 percent. These rates apply to amounts bearing interest during that calendar quarter. 1669 Sections 6654(a)(1) and 6655(a)(1) provide that the underpayment rate established under section 6621 applies in determining the addition to tax under sections 6654 and 6655 for failure to pay estimated tax for any taxable year. Thus, the 3 percent rate also applies to estimated tax underpayments for the first calendar quarter beginning January 1, 2021. Pursuant to section 6621(b)(2)(B), in determining the addition to tax under section 6654 for any taxable year for an individual, the federal short-term rate that applies during the third month following the taxable year also applies during the first 15 days of the fourth month following the taxable year. In addition, pursuant to section 6603(d) (4), the rate of interest on section 6603 deposits is 0 percent for the first calendar quarter in 2021. Interest factors for daily compound interest for annual rates of 0.5 percent are published in Appendix A of this Revenue Ruling. Interest factors for daily compound interest for annual rates of 2 percent, 3 percent and 5 percent are published in Tables 9, 11, and 15 of Rev. Proc. 9517, 1995-1 C.B. 563, 565, and 569. Annual interest rates to be compounded daily pursuant to section 6622 that apply for prior periods are set forth in the tables accompanying this revenue ruling. DRAFTING INFORMATION The principal author of this revenue ruling is Casey R. Conrad of the Office of the Associate Chief Counsel (Procedure and Administration). For further information regarding this revenue ruling, contact Mr. Conrad at (202) 317-6844 (not a tollfree number). December 21, 2020 APPENDIX A Days 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 Factor 0.000013699 0.000027397 0.000041096 0.000054796 0.000068495 0.000082195 0.000095894 0.000109594 0.000123294 0.000136995 0.000150695 0.000164396 0.000178097 0.000191798 0.000205499 0.000219201 0.000232902 0.000246604 0.000260306 0.000274008 0.000287711 0.000301413 0.000315116 0.000328819 0.000342522 0.000356225 0.000369929 0.000383633 0.000397336 0.000411041 0.000424745 0.000438449 0.000452154 0.000465859 0.000479564 0.000493269 0.000506974 0.000520680 0.000534386 0.000548092 0.000561798 December 21, 2020 365 Day Year 0.5% Compound Rate 184 Days Days Factor 63 0.000863380 64 0.000877091 65 0.000890801 66 0.000904512 67 0.000918223 68 0.000931934 69 0.000945646 70 0.000959357 71 0.000973069 72 0.000986781 73 0.001000493 74 0.001014206 75 0.001027918 76 0.001041631 77 0.001055344 78 0.001069057 79 0.001082770 80 0.001096484 81 0.001110197 82 0.001123911 83 0.001137625 84 0.001151339 85 0.001165054 86 0.001178768 87 0.001192483 88 0.001206198 89 0.001219913 90 0.001233629 91 0.001247344 92 0.001261060 93 0.001274776 94 0.001288492 95 0.001302208 96 0.001315925 97 0.001329641 98 0.001343358 99 0.001357075 100 0.001370792 101 0.001384510 102 0.001398227 103 0.001411945 1670 Days 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 Factor 0.001713784 0.001727506 0.001741228 0.001754951 0.001768673 0.001782396 0.001796119 0.001809843 0.001823566 0.001837290 0.001851013 0.001864737 0.001878462 0.001892186 0.001905910 0.001919635 0.001933360 0.001947085 0.001960811 0.001974536 0.001988262 0.002001988 0.002015714 0.002029440 0.002043166 0.002056893 0.002070620 0.002084347 0.002098074 0.002111801 0.002125529 0.002139257 0.002152985 0.002166713 0.002180441 0.002194169 0.002207898 0.002221627 0.002235356 0.002249085 0.002262815 Bulletin No. 2020–52 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 0.000575504 0.000589211 0.000602917 0.000616624 0.000630331 0.000644039 0.000657746 0.000671454 0.000685161 0.000698869 0.000712578 0.000726286 0.000739995 0.000753703 0.000767412 0.000781121 0.000794831 0.000808540 0.000822250 0.000835960 0.000849670 Bulletin No. 2020–52 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 0.001425663 0.001439381 0.001453100 0.001466818 0.001480537 0.001494256 0.001507975 0.001521694 0.001535414 0.001549133 0.001562853 0.001576573 0.001590293 0.001604014 0.001617734 0.001631455 0.001645176 0.001658897 0.001672619 0.001686340 0.001700062 1671 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 0.002276544 0.002290274 0.002304004 0.002317734 0.002331465 0.002345195 0.002358926 0.002372657 0.002386388 0.002400120 0.002413851 0.002427583 0.002441315 0.002455047 0.002468779 0.002482511 0.002496244 0.002509977 0.002523710 December 21, 2020 Days 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 Factor 0.000013661 0.000027323 0.000040984 0.000054646 0.000068308 0.000081970 0.000095632 0.000109295 0.000122958 0.000136620 0.000150283 0.000163947 0.000177610 0.000191274 0.000204938 0.000218602 0.000232266 0.000245930 0.000259595 0.000273260 0.000286924 0.000300590 0.000314255 0.000327920 0.000341586 0.000355252 0.000368918 0.000382584 0.000396251 0.000409917 0.000423584 0.000437251 0.000450918 0.000464586 0.000478253 0.000491921 0.000505589 0.000519257 0.000532925 0.000546594 0.000560262 0.000573931 December 21, 2020 366 Day Year 0.5% Compound Rate 184 Days Days Factor 63 0.000861020 64 0.000874693 65 0.000888366 66 0.000902040 67 0.000915713 68 0.000929387 69 0.000943061 70 0.000956735 71 0.000970409 72 0.000984084 73 0.000997758 74 0.001011433 75 0.001025108 76 0.001038783 77 0.001052459 78 0.001066134 79 0.001079810 80 0.001093486 81 0.001107162 82 0.001120839 83 0.001134515 84 0.001148192 85 0.001161869 86 0.001175546 87 0.001189223 88 0.001202900 89 0.001216578 90 0.001230256 91 0.001243934 92 0.001257612 93 0.001271291 94 0.001284969 95 0.001298648 96 0.001312327 97 0.001326006 98 0.001339685 99 0.001353365 100 0.001367044 101 0.001380724 102 0.001394404 103 0.001408085 104 0.001421765 1672 Days 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 Factor 0.001709097 0.001722782 0.001736467 0.001750152 0.001763837 0.001777522 0.001791208 0.001804893 0.001818579 0.001832265 0.001845951 0.001859638 0.001873324 0.001887011 0.001900698 0.001914385 0.001928073 0.001941760 0.001955448 0.001969136 0.001982824 0.001996512 0.002010201 0.002023889 0.002037578 0.002051267 0.002064957 0.002078646 0.002092336 0.002106025 0.002119715 0.002133405 0.002147096 0.002160786 0.002174477 0.002188168 0.002201859 0.002215550 0.002229242 0.002242933 0.002256625 0.002270317 Bulletin No. 2020–52 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 0.000587600 0.000601269 0.000614939 0.000628608 0.000642278 0.000655948 0.000669618 0.000683289 0.000696959 0.000710630 0.000724301 0.000737972 0.000751643 0.000765315 0.000778986 0.000792658 0.000806330 0.000820003 0.000833675 0.000847348 Bulletin No. 2020–52 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 0.001435446 0.001449127 0.001462808 0.001476489 0.001490170 0.001503852 0.001517533 0.001531215 0.001544897 0.001558580 0.001572262 0.001585945 0.001599628 0.001613311 0.001626994 0.001640678 0.001654361 0.001668045 0.001681729 0.001695413 1673 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 0.002284010 0.002297702 0.002311395 0.002325087 0.002338780 0.002352473 0.002366167 0.002379860 0.002393554 0.002407248 0.002420942 0.002434636 0.002448331 0.002462025 0.002475720 0.002489415 0.002503110 0.002516806 December 21, 2020 TABLE OF INTEREST RATES PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986 OVERPAYMENTS AND UNDERPAYMENTS PERIOD Before Jul. Feb. Feb. Feb. Feb. Jan. Jul. Jan. Jul. Jan. Jul. Jan. Jul. 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, Jul. 1975–Jan. 1976–Jan. 1978–Jan. 1980–Jan. 1982–Dec. 1983–Jun. 1983–Dec. 1984–Jun. 1984–Dec. 1985–Jun. 1985–Dec. 1986–Jun. 1986–Dec. RATE 1, 31, 31, 31, 31, 31, 30, 31, 30, 31, 30, 31, 30, 31, 1975 1976 1978 1980 1982 1982 1983 1983 1984 1984 1985 1985 1986 1986 6% 9% 7% 6% 12% 20% 16% 11% 11% 11% 13% 11% 10% 9% Table Table Table Table Table Table Table Table Table Table Table Table Table Table In 1995-1 C.B. DAILY RATE TABLE 2, pg. 4, pg. 3, pg. 2, pg. 5, pg. 6, pg. 37, pg. 27, pg. 75, pg. 75, pg. 31, pg. 27, pg. 25, pg. 23, pg. 557 559 558 557 560 560 591 581 629 629 585 581 579 577 TABLE OF INTEREST RATES FROM JAN. 1, 1987 - Dec. 31, 1998 Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1987–Mar. 1987–Jun. 1987–Sep. 1987–Dec. 1988–Mar. 1988–Jun. 1988–Sep. 1988–Dec. 1989–Mar. 1989–Jun. 1989–Sep. 1989–Dec. 1990–Mar. 1990–Jun. 1990–Sep. 1990–Dec. 1991–Mar. 1991–Jun. December 21, 2020 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 1987 1987 1987 1987 1988 1988 1988 1988 1989 1989 1989 1989 1990 1990 1990 1990 1991 1991 RATE 8% 8% 8% 9% 10% 9% 9% 10% 10% 11% 11% 10% 10% 10% 10% 10% 10% 9% 1674 OVERPAYMENTS 1995-1 C.B. TABLE PG 21 575 21 575 21 575 23 577 73 627 71 625 71 625 73 627 25 579 27 581 27 581 25 579 25 579 25 579 25 579 25 579 25 579 23 577 UNDERPAYMENTS 1995-1 C.B. RATE RATE TABLE PG 9% 23 577 9% 23 577 9% 23 577 10% 25 579 11% 75 629 10% 73 627 10% 73 627 11% 75 629 11% 27 581 12% 29 583 12% 29 583 11% 27 581 11% 27 581 11% 27 581 11% 27 581 11% 27 581 11% 27 581 10% 25 579 Bulletin No. 2020–52 Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1991–Sep. 1991–Dec. 1992–Mar. 1992–Jun. 1992–Sep. 1992–Dec. 1993–Mar. 1993–Jun. 1993–Sep. 1993–Dec. 1994–Mar. 1994–Jun. 1994–Sep. 1994–Dec. 1995–Mar. 1995–Jun. 1995–Sep. 1995–Dec. 1996–Mar. 1996–Jun. 1996–Sep. 1996–Dec. 1997–Mar. 1997–Jun. 1997–Sep. 1997–Dec. 1998–Mar. 1998–Jun. 1998–Sep. 1998–Dec. Bulletin No. 2020–52 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 1991 1991 1992 1992 1992 1992 1993 1993 1993 1993 1994 1994 1994 1994 1995 1995 1995 1995 1996 1996 1996 1996 1997 1997 1997 1997 1998 1998 1998 1998 9% 9% 8% 7% 7% 6% 6% 6% 6% 6% 6% 6% 7% 8% 8% 9% 8% 8% 8% 7% 8% 8% 8% 8% 8% 8% 8% 7% 7% 7% 1675 23 23 69 67 67 65 17 17 17 17 17 17 19 21 21 23 21 21 69 67 69 69 21 21 21 21 21 19 19 19 577 577 623 621 621 619 571 571 571 571 571 571 573 575 575 577 575 575 623 621 623 623 575 575 575 575 575 573 573 573 10% 10% 9% 8% 8% 7% 7% 7% 7% 7% 7% 7% 8% 9% 9% 10% 9% 9% 9% 8% 9% 9% 9% 9% 9% 9% 9% 8% 8% 8% 25 25 71 69 69 67 19 19 19 19 19 19 21 23 23 25 23 23 71 69 71 71 23 23 23 23 23 21 21 21 579 579 625 623 623 621 573 573 573 573 573 573 575 577 577 579 577 577 625 623 625 625 577 577 577 577 577 575 575 575 December 21, 2020 TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS 1995-1 C.B. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, December 21, 2020 1999–Mar. 1999–Jun. 1999–Sep. 1999–Dec. 2000–Mar. 2000–Jun. 2000–Sep. 2000–Dec. 2001–Mar. 2001–Jun. 2001–Sep. 2001–Dec. 2002–Mar. 2002–Jun. 2002–Sep. 2002–Dec. 2003–Mar. 2003–Jun. 2003–Sep. 2003–Dec. 2004–Mar. 2004–Jun. 2004–Sep. 2004–Dec. 2005–Mar. 2005–Jun. 2005–Sep. 2005–Dec. 2006–Mar. 2006–Jun. 2006–Sep. 2006–Dec. 2007–Mar. 2007–Jun. 2007–Sep. 2007–Dec. 2008–Mar. 2008–Jun. 2008–Sep. 2008–Dec. 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 1999 1999 1999 1999 2000 2000 2000 2000 2001 2001 2001 2001 2002 2002 2002 2002 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 1676 RATE 7% 8% 8% 8% 8% 9% 9% 9% 9% 8% 7% 7% 6% 6% 6% 6% 5% 5% 5% 4% 4% 5% 4% 5% 5% 6% 6% 7% 7% 7% 8% 8% 8% 8% 8% 8% 7% 6% 5% 6% TABLE 19 21 21 21 69 71 71 71 23 21 19 19 17 17 17 17 15 15 15 13 61 63 61 63 15 17 17 19 19 19 21 21 21 21 21 21 67 65 63 65 PAGE 573 575 575 575 623 625 625 625 577 575 573 573 571 571 571 571 569 569 569 567 615 617 615 617 569 571 571 573 573 573 575 575 575 575 575 575 621 619 617 619 Bulletin No. 2020–52 Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1. 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, Bulletin No. 2020–52 2009–Mar. 2009–Jun. 2009–Sep. 2009–Dec. 2010–Mar. 2010–Jun. 2010–Sep. 2010–Dec. 2011–Mar. 2011–Jun. 2011–Sep. 2011–Dec. 2012–Mar. 2012–Jun. 2012–Sep. 2012–Dec. 2013–Mar. 2013–Jun. 2013–Sep. 2013–Dec. 2014–Mar. 2014–Jun. 2014–Sep. 2014–Dec. 2015–Mar. 2015–Jun. 2015–Sep. 2015–Dec. 2016–Mar. 2016–Jun. 2016–Sep. 2016–Dec. 2017–Mar. 2017–Jun. 2017–Sep. 2017–Dec. 2018–Mar. 2018–Jun. 2018–Sep. 2018–Dec. 2019–Mar. 2019–Jun. 2019–Sep. 2019–Dec. 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 1677 5% 4% 4% 4% 4% 4% 4% 4% 3% 4% 4% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 4% 4% 4% 4% 4% 4% 4% 4% 5% 5% 5% 6% 6% 5% 5% 15 13 13 13 13 13 13 13 11 13 13 11 59 59 59 59 11 11 11 11 11 11 11 11 11 11 11 11 59 61 61 61 13 13 13 13 13 15 15 15 17 17 15 15 569 567 567 567 567 567 567 567 565 567 567 565 613 613 613 613 565 565 565 565 565 565 565 565 565 565 565 565 613 615 615 615 567 567 567 567 567 569 569 569 571 571 569 569 December 21, 2020 Jan. Apr. Jul. Oct. Jan. 1, 1, 1, 1, 1, December 21, 2020 2020–Mar. 2020–Jun. 2020–Sep. 2020–Dec. 2021–Mar. 31, 30, 30, 31, 31, 2020 2020 2020 2020 2021 1678 5% 5% 3% 3% 3% 63 63 59 59 11 617 617 613 613 565 Bulletin No. 2020–52 TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT CORPORATE OVERPAYMENTS AND UNDERPAYMENTS Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1999–Mar. 1999–Jun. 1999–Sep. 1999–Dec. 2000–Mar. 2000–Jun. 2000–Sep. 2000–Dec. 2001–Mar. 2001–Jun. 2001–Sep. 2001–Dec. 2002–Mar. 2002–Jun. 2002–Sep. 2002–Dec. 2003–Mar. 2003–Jun. 2003–Sep. 2003–Dec. 2004–Mar. 2004–Jun. 2004–Sep. 2004–Dec. 2005–Mar. 2005–Jun. 2005–Sep. 2005–Dec. 2006–Mar. 2006–Jun. 2006–Sep. 2006–Dec. 2007–Mar. 2007–Jun. 2007–Sep. 2007–Dec. 2008–Mar. 2008–Jun. 2008–Sep. 2008–Dec. Bulletin No. 2020–52 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 1999 1999 1999 1999 2000 2000 2000 2000 2001 2001 2001 2001 2002 2002 2002 2002 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 OVERPAYMENTS 1995-1 C.B. RATE TABLE PG 6% 17 571 7% 19 573 7% 19 573 7% 19 573 7% 67 621 8% 69 623 8% 69 623 8% 69 623 8% 21 575 7% 19 573 6% 17 571 6% 17 571 5% 15 569 5% 15 569 5% 15 569 5% 15 569 4% 13 567 4% 13 567 4% 13 567 3% 11 565 3% 59 613 4% 61 615 3% 59 613 4% 61 615 4% 13 567 5% 15 569 5% 15 569 6% 17 571 6% 17 571 6% 17 571 7% 19 573 7% 19 573 7% 19 573 7% 19 573 7% 19 573 7% 19 573 6% 65 619 5% 63 617 4% 61 615 5% 63 617 1679 UNDERPAYMENTS 1995-1 C.B. RATE TABLE PG 7% 19 573 8% 21 575 8% 21 575 8% 21 575 8% 69 623 9% 71 625 9% 71 625 9% 71 625 9% 23 577 8% 21 575 7% 19 573 7% 19 573 6% 17 571 6% 17 571 6% 17 571 6% 17 571 5% 15 569 5% 15 569 5% 15 569 4% 13 567 4% 61 615 5% 63 617 4% 61 615 5% 63 617 5% 15 569 6% 17 571 6% 17 571 7% 19 573 7% 19 573 7% 19 573 8% 21 575 8% 21 575 8% 21 575 8% 21 575 8% 21 575 8% 21 575 7% 67 621 6% 65 619 5% 63 617 6% 65 619 December 21, 2020 Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1,z 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2009–Mar. 2009–Jun. 2009–Sep. 2009–Dec. 2010–Mar. 2010–Jun. 2010–Sep. 2010–Dec. 2011–Mar. 2011–Jun. 2011–Sep. 2011–Dec. 2012–Mar. 2012–Jun. 2012–Sep. 2012–Dec. 2013–Mar. 2013–Jun. 2013–Sep. 2013–Dec. 2014–Mar. 2014–Jun. 2014–Sep. 2014–Dec. 2015–Mar. 2015–Jun. 2015–Sep. 2015–Dec. 2016–Mar. 2016–Jun. 2016–Sep. 2016–Dec. 2017–Mar. 2017–Jun. 2017–Sep. 2017–Dec. 2018–Mar. 2018–Jun. 2018–Sep. 2018–Dec. 2019–Mar. 2019–Jun. 2019–Sep. 2019–Dec. 2020–Mar. December 21, 2020 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31,, 31, 30, 30, 31, 31, 30, 30, 31, 31, 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 4% 3% 3% 3% 3% 3% 3% 3% 2% 3% 3% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 3% 3% 3% 3% 3% 3% 3% 3% 4% 4% 4% 5% 5% 4% 4% 4% 1680 13 11 11 11 11 11 11 11 9 11 11 9 57 57 57 57 9 9 9 9 9 9 9 9 9 9 9 9 57 59 59 59 11 11 11 11 11 13 13 13 15 15 13 13 61 567 565 565 565 565 565 565 565 563 565 565 563 611 611 611 611 563 563 563 563 563 563 563 563 563 563 563 563 611 613 613 613 565 565 565 565 565 567 567 567 569 569 567 567 615 5% 4% 4% 4% 4% 4% 4% 4% 3% 4% 4% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 4% 4% 4% 4% 4% 4% 4% 4% 5% 5% 5% 6% 6% 5% 5% 5% 15 13 13 13 13 13 13 13 11 13 13 11 59 59 59 59 11 11 11 11 11 11 11 11 11 11 11 11 59 61 61 61 13 13 13 13 13 15 15 15 17 17 15 15 63 569 567 567 567 567 567 567 567 565 567 567 565 613 613 613 613 565 565 565 565 565 565 565 565 565 565 565 565 613 615 615 615 567 567 567 567 567 569 569 569 571 571 569 569 617 Bulletin No. 2020–52 Apr. Jul. Oct. Jan. 1, 1, 1, 1, 2020–Jun. 2020–Sep. 2020–Dec. 2021–Mar. Bulletin No. 2020–52 30, 30, 31, 31, 2020 2020 2020 2021 4% 2% 2% 2% 1681 61 57 57 9 615 611 611 563 5% 3% 3% 3% 63 59 59 11 617 613 613 565 December 21, 2020 TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS FROM JANUARY 1, 1991 - PRESENT Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, December 21, 2020 1991–Mar. 1991–Jun. 1991–Sep. 1991–Dec. 1992–Mar. 1992–Jun. 1992–Sep. 1992–Dec. 1993–Mar. 1993–Jun. 1993–Sep. 1993–Dec. 1994–Mar. 1994–Jun. 1994–Sep. 1994–Dec. 1995–Mar. 1995–Jun. 1995–Sep. 1995–Dec. 1996–Mar. 1996–Jun. 1996–Sep. 1996–Dec. 1997–Mar. 1997–Jun. 1997–Sep. 1997–Dec. 1998–Mar. 1998–Jun. 1998–Sep. 1998–Dec. 1999–Mar. 1999–Jun. 1999–Sep. 1999–Dec. 2000–Mar. 2000–Jun. 2000–Sep. 2000–Dec. 2001–Mar. 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 1991 1991 1991 1991 1992 1992 1992 1992 1993 1993 1993 1993 1994 1994 1994 1994 1995 1995 1995 1995 1996 1996 1996 1996 1997 1997 1997 1997 1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000 2001 1682 RATE 13% 12% 12% 12% 11% 10% 10% 9% 9% 9% 9% 9% 9% 9% 10% 11% 11% 12% 11% 11% 11% 10% 11% 11% 11% 11% 11% 11% 11% 10% 10% 10% 9% 10% 10% 10% 10% 11% 11% 11% 11% 1995-1 C.B. TABLE 31 29 29 29 75 73 73 71 23 23 23 23 23 23 25 27 27 29 27 27 75 73 75 75 27 27 27 27 27 25 25 25 23 25 25 25 73 75 75 75 27 PG 585 583 583 583 629 627 627 625 577 577 577 577 577 577 579 581 581 583 581 581 629 627 629 629 581 581 581 581 581 579 579 579 577 579 579 579 627 629 629 629 581 Bulletin No. 2020–52 Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, Bulletin No. 2020–52 2001–Jun. 2001–Sep. 2001–Dec. 2002–Mar. 2002–Jun. 2002–Sep. 2002–Dec. 2003–Mar. 2003–Jun. 2003–Sep. 2003–Dec. 2004–Mar. 2004–Jun. 2004–Sep. 2004–Dec. 2005–Mar. 2005–Jun. 2005–Sep. 2005–Dec. 2006–Mar. 2006–Jun. 2006–Sep. 2006–Dec. 2007–Mar. 2007–Jun. 2007–Sep. 2007–Dec. 2008–Mar. 2008–Jun. 2008–Sep. 2008–Dec. 2009–Mar. 2009–Jun. 2009–Sep. 2009–Dec. 2010–Mar. 2010–Jun. 2010–Sep. 2010–Dec. 2011–Mar. 2011–Jun. 2011–Sep. 2011–Dec. 2012–Mar. 2012–Jun. 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 2001 2001 2001 2002 2002 2002 2002 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 1683 10% 9% 9% 8% 8% 8% 8% 7% 7% 7% 6% 6% 7% 6% 7% 7% 8% 8% 9% 9% 9% 10% 10% 10% 10% 10% 10% 9% 8% 7% 8% 7% 6% 6% 6% 6% 6% 6% 6% 5% 6% 6% 5% 5% 5% 25 23 23 21 21 21 21 19 19 19 17 65 67 65 67 19 21 21 23 23 23 25 25 25 25 25 25 71 69 67 69 19 17 17 17 17 17 17 17 15 17 17 15 63 63 579 577 577 575 575 575 575 573 573 573 571 619 621 619 621 573 575 575 577 577 577 579 579 579 579 579 579 625 623 621 623 573 571 571 571 571 571 571 571 569 571 571 569 617 617 December 21, 2020 Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, December 21, 2020 2012–Sep. 2012–Dec. 2013–Mar. 2013–Jun. 2013–Sep. 2013–Dec. 2014–Mar. 2014–Jun. 2014–Sep. 2014–Dec. 2015–Mar. 2015–Jun. 2015–Sep. 2015–Dec. 2016–Mar. 2016–Jun. 2016–Sep. 2016–Dec. 2017–Mar. 2017–Jun. 2017–Sep. 2017–Dec. 2018–Mar. 2018–Jun. 2018–Sep. 2018–Dec. 2019–Mar. 2019–Jun. 2019–Sep. 2019–Dec. 2020–Mar. 2020–Jun. 2020–Sep. 2020–Dec. 2021–Mar. 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30, 31, 31, 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 1684 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 6% 6% 6% 6% 6% 6% 6% 6% 7% 7% 7% 8% 8% 7% 7% 7% 7% 5% 5% 5% 63 63 15 15 15 15 15 15 15 15 15 15 15 15 63 65 65 65 17 17 17 17 17 19 19 19 21 21 19 19 67 67 63 63 15 617 617 569 569 569 569 569 569 569 569 569 569 569 569 617 619 619 619 571 571 571 571 571 573 573 573 575 575 573 573 621 621 617 617 569 Bulletin No. 2020–52 TABLE OF INTEREST RATES FOR CORPORATE OVERPAYMENTS EXCEEDING $10,000 FROM JANUARY 1, 1995 – PRESENT 1995-1 C.B. RATE TABLE PG Jan. 1, 1995–Mar. 31, 1995 6.5% 18 572 Apr. 1, 1995–Jun. 30, 1995 7.5% 20 574 Jul. 1, 1995–Sep. 30, 1995 6.5% 18 572 Oct. 1, 1995–Dec. 31, 1995 6.5% 18 572 Jan. 1, 1996–Mar. 31, 1996 6.5% 66 620 Apr. 1, 1996–Jun. 30, 1996 5.5% 64 618 Jul. 1, 1996–Sep. 30, 1996 6.5% 66 620 Oct. 1, 1996–Dec. 31, 1996 6.5% 66 620 Jan. 1, 1997–Mar. 31, 1997 6.5% 18 572 Apr. 1, 1997–Jun. 30, 1997 6.5% 18 572 Jul. 1, 1997–Sep. 30, 1997 6.5% 18 572 Oct. 1, 1997–Dec. 31, 1997 6.5% 18 572 Jan. 1, 1998–Mar. 31, 1998 6.5% 18 572 Apr. 1, 1998–Jun. 30, 1998 5.5% 16 570 Jul. 1. 1998–Sep. 30, 1998 5.5% 16 570 Oct. 1, 1998–Dec. 31, 1998 5.5% 16 570 Jan. 1, 1999–Mar. 31, 1999 4.5% 14 568 Apr. 1, 1999–Jun. 30, 1999 5.5% 16 570 Jul. 1, 1999–Sep. 30, 1999 5.5% 16 570 Oct. 1, 1999–Dec. 31, 1999 5.5% 16 570 Jan. 1, 2000–Mar. 31, 2000 5.5% 64 618 Apr. 1, 2000–Jun. 30, 2000 6.5% 66 620 Jul. 1, 2000–Sep. 30, 2000 6.5% 66 620 Oct. 1, 2000–Dec. 31, 2000 6.5% 66 620 Jan. 1, 2001–Mar. 31, 2001 6.5% 18 572 Apr. 1, 2001–Jun. 30, 2001 5.5% 16 570 Jul. 1, 2001–Sep. 30, 2001 4.5% 14 568 Oct. 1, 2001–Dec. 31, 2001 4.5% 14 568 Jan. 1, 2002–Mar. 31, 2002 3.5% 12 566 Apr. 1, 2002–Jun. 30, 2002 3.5% 12 566 Jul. 1, 2002–Sep. 30, 2002 3.5% 12 566 Oct. 1, 2002–Dec. 31, 2002 3.5% 12 566 Jan. 1, 2003–Mar. 31, 2003 2.5% 10 564 Apr. 1, 2003–Jun. 30, 2003 2.5% 10 564 Jul. 1, 2003–Sep. 30, 2003 2.5% 10 564 Oct. 1, 2003–Dec. 31, 2003 1.5% 8 562 Jan. 1, 2004–Mar. 31, 2004 1.5% 56 610 Apr. 1, 2004–Jun. 30, 2004 2.5% 58 612 Bulletin No. 2020–52 1685 December 21, 2020 Jul. 1, 2004–Sep. 30, 2004 1.5% 56 610 Oct. 1, 2004–Dec. 31, 2004 2.5% 58 612 Jan. 1, 2005–Mar. 31, 2005 2.5% 10 564 Apr. 1, 2005–Jun. 30, 2005 3.5% 12 566 Jul. 1, 2005–Sep. 30, 2005 3.5% 12 566 Oct. 1, 2005–Dec. 31, 2005 4.5% 14 568 Jan. 1, 2006–Mar. 31, 2006 4.5% 14 568 Apr. 1, 2006–Jun. 30, 2006 4.5% 14 568 Jul. 1, 2006–Sep. 30, 2006 5.5% 16 570 Oct. 1, 2006–Dec. 31, 2006 5.5% 16 570 Jan. 1, 2007–Mar. 31, 2007 5.5% 16 570 Apr. 1, 2007–Jun. 30, 2007 5.5% 16 570 Jul. 1, 2007–Sep. 30, 2007 5.5% 16 570 Oct. 1, 2007–Dec. 31, 2007 5.5% 16 570 Jan. 1, 2008–Mar. 31, 2008 4.5% 62 616 Apr. 1, 2008–Jun. 30, 2008 3.5% 60 614 Jul. 1, 2008–Sep. 30, 2008 2.5% 58 612 Oct. 1, 2008–Dec. 31, 2008 3.5% 60 614 Jan. 1, 2009–Mar. 31, 2009 2.5% 10 564 Apr. 1, 2009–Jun. 30, 2009 1.5% 8 562 Jul. 1, 2009–Sep. 30, 2009 1.5% 8 562 Oct. 1, 2009–Dec. 31, 2009 1.5% 8 562 Jan. 1, 2010–Mar. 31, 2010 1.5% 8 562 Apr. 1, 2010–Jun. 30, 2010 1.5% 8 562 Jul. 1, 2010–Sep. 30, 2010 1.5% 8 562 Oct. 1, 2010–Dec. 31, 2010 1.5% 8 562 Jan. 1, 2011–Mar. 31, 2011 0.5%* Apr. 1, 2011–Jun. 30, 2011 1.5% 8 562 Jul. 1, 2011–Sep. 30, 2011 1.5% 8 562 Oct. 1, 2011–Dec. 31, 2011 0.5%* Jan. 1, 2012–Mar. 31, 2012 0.5%* Apr. 1, 2012–Jun. 30, 2012 0.5%* Jul. 1, 2012–Sep. 30, 2012 0.5%* Oct. 1, 2012–Dec. 31, 2012 0.5%* Jan. 1, 2013–Mar. 31, 2013 0.5%* Apr. 1, 2013–Jun. 30, 2013 0.5%* Jul. 1, 2013–Sep. 30, 2013 0.5%* Oct. 1, 2013–Dec. 31, 2013 0.5%* Jan. 1, 2014–Mar. 31, 2014 0.5%* Apr. 1, 2014–Jun. 30, 2014 0.5%* Jul. 1, 2014–Sep. 30, 2014 0.5%* Oct. 1, 2014–Dec. 31, 2014 0.5%* December 21, 2020 1686 Bulletin No. 2020–52 Jan. 1, 2015–Mar. 31, 2015 0.5%* Apr. 1, 2015–Jun. 30, 2015 0.5%* Jul. 1, 2015–Sep. 30, 2015 0.5%* Oct. 1, 2015–Dec. 31, 2015 0.5%* Jan. 1, 2016–Mar. 31, 2016 0.5%* Apr. 1, 2016–Jun. 30, 2016 1.5% 56 610 Jul. 1, 2016–Sep. 30, 2016 1.5% 56 610 Oct. 1, 2016–Dec. 31, 2016 1.5% 56 610 Jan. 1, 2017–Mar. 31, 2017 1.5% 8 562 Apr. 1, 2017–Jun. 30, 2017 1.5% 8 562 Jul. 1, 2017–Sep. 30, 2017 1.5% 8 562 Oct. 1, 2017–Dec. 31, 2017 1.5% 8 562 Jan. 1, 2018–Mar. 31, 2018 1.5% 8 562 Apr. 1, 2018–Jun. 30, 2018 2.5% 10 564 Jul. 1, 2018–Sep. 30, 2018 2.5% 10 564 Oct. 1, 2018–Dec. 31, 2018 2.5% 10 564 Jan. 1, 2019–Mar. 31, 2019 3.5% 12 566 Apr. 1, 2019–Jun. 30, 2019 3.5% 12 566 Jul. 1, 2019–Sep. 30, 2019 2.5% 10 564 Oct. 1, 2019–Dec. 31, 2019 2.5% 10 564 Jan. 1, 2020–Mar. 31, 2020 2.5% 58 612 Apr. 1, 2020–Jun. 30, 2020 2.5% 58 612 Jul. 1, 2020–Sep. 30, 2020 0.5%* Oct. 1, 2020–Dec. 31, 2020 0.5%* Jan. 1, 2021–Mar. 31, 2021 0.5%* * The asterisk reflects the interest factors for daily compound interest for annual rates of 0.5 percent published in Appendix A of this Revenue Ruling. Bulletin No. 2020–52 1687 December 21, 2020 26 CFR 1.36B T.D. 9912 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 Guidance Clarifying Premium Tax Credit Unaffected by Suspension of Personal Exemption Deduction AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final regulations. SUMMARY: This document includes final regulations under sections 36B and 6011 of the Internal Revenue Code (Code) that clarify that the reduction of the personal exemption deduction to zero for taxable years beginning after December 31, 2017, and before January 1, 2026, does not affect an individual taxpayer’s ability to claim the premium tax credit. These final regulations affect individuals who claim the premium tax credit. DATES: Effective date: These final regulations are effective on December 1, 2020. Applicability date: These final regulations apply to taxable years ending on or after December 31, 2020. FOR FURTHER INFORMATION CONTACT: Suzanne R. Sinno at (202) 317-4718 or Lisa Mojiri-Azad at (202) 317-4649 (not toll-free numbers). SUPPLEMENTARY INFORMATION: Background and Explanation of Provisions I. Overview This document contains final amendments to the Income Tax Regulations (26 December 21, 2020 CFR part 1) under sections 36B and 6011 of the Code. Section 151 of the Code generally allows a taxpayer to claim a personal exemption deduction, based on the exemption amount defined in section 151(d), for the taxpayer, the taxpayer’s spouse, and any dependents, as defined in section 152 of the Code. On December 22, 2017, section 151(d)(5) was added to the Code by section 11041 of Public Law 115-97, 131 Stat. 2054, 2082, commonly referred to as the Tax Cuts and Jobs Act (TCJA). Section 151(d)(5)(A) provides that, for taxable years beginning after December 31, 2017, and before January 1, 2026, “[t]he term ‘exemption amount’ means zero.” However, section 151(d) (5)(B) provides that the reduction of the exemption amount to zero is not taken into account in determining whether a deduction under section 151 is allowed or allowable to a taxpayer, or whether a taxpayer is entitled to a deduction under section 151, for purposes of any other provision of the Code. The conference report to the TCJA states that this provision clarifies that the reduction of the personal exemption to zero “should not alter the operation of those provisions of the Code which refer to a taxpayer allowed a deduction . . . under section 151.” See H.R. Rep. No. 115-466 at 203 n.16 (Conf. Rep.) (2017). Beginning in 2014, under the Patient Protection and Affordable Care Act, Public Law 111-148 (124 Stat. 119 (2010)), and the Health Care and Education Reconciliation Act of 2010, Public Law 111152 (124 Stat. 1029 (2010)) (collectively, PPACA), eligible individuals who purchase coverage under a qualified health plan through a Health Insurance Exchange (Exchange) established under section 1311 of the PPACA may claim a premium tax credit under section 36B of the Code. Several rules relating to the premium tax credit apply based on whether a taxpayer properly claims or claimed a personal exemption deduction under section 151 for the taxpayer, the taxpayer’s spouse, and any dependents. These rules affect eligibility for the premium tax credit, computation of the premium tax credit, reconciliation of advance credit payments with the premium tax credit a taxpayer is allowed for the taxable year, and income tax return 1688 filing requirements related to the premium tax credit. II. Eligibility for, and Computation of, the Premium Tax Credit To be eligible for the premium tax credit, an individual must be an applicable taxpayer. Under section 36B(c)(1), an applicable taxpayer generally is a taxpayer whose household income for the taxable year is at least 100 percent but not more than 400 percent of the Federal poverty line for the taxpayer’s family size for the taxable year. A taxpayer’s family size is equal to the number of individuals in the taxpayer’s family. Section 1.36B-1(d) of the Income Tax Regulations provides the rules for determining the individuals in a taxpayer’s family. Section 1.36B-1(d), as currently in effect, provides that a taxpayer’s family means the individuals for whom a taxpayer properly claims a deduction for a personal exemption under section 151 for the taxable year, and further provides that family size means the number of individuals in the family. Additionally, §1.36B-2(b)(3) provides that an individual is not an applicable taxpayer if another taxpayer may claim a deduction under section 151 for the individual for a taxable year beginning in the calendar year in which the individual’s taxable year begins. Section 36B(c)(2) provides that the premium tax credit generally is not allowed for a month with respect to an individual if for that month the individual is eligible for minimum essential coverage other than coverage in the individual market. However, under a special eligibility rule in §1.36B-2(c)(4)(i), an individual who may enroll in minimum essential coverage because of a relationship to another person eligible for the coverage but for whom the other eligible person does not claim a personal exemption deduction under section 151 is treated as eligible for minimum essential coverage under such coverage only for months that the related individual is enrolled in the coverage. Under section 36B(a), a taxpayer’s premium tax credit is equal to the premium assistance credit amount for the taxable year. Section 36B(b)(1) and §1.36B-3(d) generally provide that the premium assistance credit amount is the sum of the pre- Bulletin No. 2020–52 mium assistance amounts for all coverage months in the taxable year for individuals in the taxpayer’s family, as defined in §1.36B-1(d). III. Reconciliation of Advance Credit Payments with the Premium Tax Credit Under section 1412 of the PPACA, advance payments of the premium tax credit (advance credit payments) may be paid directly to issuers of qualified health plans on behalf of eligible individuals. The amount of advance credit payments made on behalf of a taxpayer in a taxable year is determined by a number of factors, including projections of the taxpayer’s household income and family size for the taxable year. Under §1.36B-4, a taxpayer generally must reconcile all advance credit payments for coverage of any member of the taxpayer’s family with the amount of the premium tax credit allowed under section 36B. Section 1.36B-4(a)(1)(ii) provides allocation rules to reconcile advance credit payments when a taxpayer’s family members are enrolled with one or more individuals who are not members of the taxpayer’s family. If a taxpayer enrolls an individual and another taxpayer claims a personal exemption deduction for the individual, the allocation rules in §1.36B(a) (1)(ii)(B) apply for purposes of computing each taxpayer’s premium tax credit and reconciling any advance credit payments. If advance credit payments are made for coverage of an individual for whom no taxpayer claims a personal exemption deduction, §1.36B-4(a)(1)(ii)(C) provides that the taxpayer who attested to the Exchange to the intention to claim a personal exemption deduction for the individual as part of the advance credit payment eligibility determination for coverage of the individual must reconcile the advance credit payments. IV. Income Tax Return Filing Requirements Related to the Premium Tax Credit Section 6011 provides the general rules for filing a return. Section 1.60118 requires a taxpayer who receives the benefit of advance credit payments in a taxable year to file an income tax return Bulletin No. 2020–52 for that taxable year to reconcile advance credit payments with the taxpayer’s premium tax credit. The regulation further provides that if advance credit payments are made for coverage of an individual for whom no taxpayer claims a personal exemption deduction, the taxpayer who attested to the Exchange to the intention to claim a personal exemption deduction for the individual as part of the advance credit payment eligibility determination for coverage of the individual must file a tax return and reconcile the advance credit payments. Taxpayers who are required to reconcile advance credit payments or who claim the premium tax credit must complete Form 8962, Premium Tax Credit (PTC), and file it with their income tax return. V. Notice 2018-84 On November 5, 2018, the Department of the Treasury (Treasury Department) and the IRS issued Notice 201884, 2018-45 I.R.B. 768, which provided interim guidance clarifying that the reduction of the personal exemption deduction to zero under section 151(d)(5) does not affect the ability of individual taxpayers to claim the premium tax credit. Specifically, the notice provides that (1) a taxpayer is considered to have claimed a personal exemption deduction for himself or herself for a taxable year if the taxpayer files an income tax return for the year and does not qualify as a dependent of another taxpayer under section 152 for the year; and (2) a taxpayer is considered to have claimed a personal exemption deduction for an individual other than the taxpayer if the taxpayer is allowed a personal exemption deduction for the individual, taking into account section 151(d)(5)(B), and lists the individual’s name and taxpayer identification number (TIN) on the Form 1040, U.S. Individual Income Tax Return, or Form 1040NR, U.S. Nonresident Alien Income Tax Return, the taxpayer files for the year. The notice states that until further guidance is issued, the interim guidance described in the notice applies. The notice also states that the Treasury Department and the IRS intend to amend the regulations under sections 36B and 6011 to clarify the application of section 151(d)(5). 1689 VI. Proposed Regulations On May 27, 2020, the Treasury Department and the IRS published a notice of proposed rulemaking (REG-12481019) in the Federal Register (85 FR 31710) under section 36B. The notice of proposed rulemaking announced that the regulations currently in effect would be amended to reflect the guidance in Notice 2018-84. Specifically, §1.36B-1(d), as proposed, would define the term family to mean the taxpayer, including both spouses in the case of a joint return, except for individuals who qualify as a dependent of another taxpayer under section 152, and any other individual for whom the taxpayer is allowed a personal exemption deduction and whom the taxpayer properly reports on the taxpayer’s income tax return for the taxable year. Consistent with Notice 2018-84, the proposed regulations would provide that an individual is reported on the taxpayer’s income tax return if the individual’s name and taxpayer identification number (TIN) are listed on the taxpayer’s Form 1040 series return. To conform to §1.36-1(d) as proposed, §§1.36B-2, 1.36B-4, and 1.6011-8 would be amended. These amendments as proposed would apply for taxable years ending after the date of publication of the final regulations in the Federal Register. VII. Final Regulations No comments responsive to the subject of the notice of proposed rulemaking were received. There were no requests for a public hearing on the proposed regulations, so no public hearing was held. Accordingly, the Treasury Department and the IRS are finalizing the proposed regulations with no changes. The final regulations are applicable for taxable years ending on or after December 31, 2020. However, taxpayers may apply the final regulations for taxable years to which section 151(d)(5) applies ending before December 31, 2020. See section 7805(b)(7). Special Analyses These final regulations are not subject to review under section 6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement (April 11, 2018) be- December 21, 2020 tween the Treasury Department and the Office of Management and Budget regarding review of tax regulations. Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that this final rule will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that the final regulations affect individual taxpayers, not entities. Accordingly, the Secretary certifies that the rule will not have a significant economic impact on a substantial number of small entities. Pursuant to section 7805(f), these final regulations have been submitted to the Chief Counsel for the Office of Advocacy of the Small Business Administration for comment on their impact on small business (85 FR 31710). No comments on the notice were received from the Chief Counsel for the Office of Advocacy of the Small Business Administration. 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). This rule does not include any Federal mandate that may result in expenditures by state, local, or tribal governments, or by the private sector in excess of that threshold. 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. This final rule does not have federalism implications and does not impose substantial direct compliance costs on state and local governments or December 21, 2020 preempt state law within the meaning of the Executive Order. Statement of Availability of IRS Documents The regulations, notices and other guidance cited in this preamble are generally published in the Internal Revenue Bulletin and are available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by visiting the IRS website at www.irs.gov. Drafting Information The principal author of these final regulations is Suzanne R. Sinno of the Office of Associate Chief Counsel (Income Tax and Accounting). Other personnel from the Treasury Department and the IRS participated in the development of the regulations. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. 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 adding entries in numerical order to read in part as follows: Authority: 26 U.S.C. 7805* * * Par. 2. Section 1.36B-0 is amended by: 1. Revising the entries for §1.36B-1(d) and (o). 2. Revising the entries for §1.36B-2(c) (4)(i) and (e). 3. Revising the entries for §1.36B-4(a) (1)(ii)(B) and (C). 4. Revising the entry for §1.36B-4(c). The revisions read as follows: §1.36B-1 Premium tax credit definitions. ***** (d) Family and family size. (1) In general. (2) Special rule for tax years to which section 151(d)(5) applies. ***** 1690 (o) Applicability dates. §1.36B-2 Eligibility for premium tax credit. ***** (c) * * * (4) * * * (i) Related individual. ***** (e) Applicability dates. §1.36B-4 Reconciling the premium tax credit with advance credit payments. ***** (a) * * * (1) * * * (ii) * * * (B) Individuals enrolled by a taxpayer and claimed by another taxpayer. (C) Responsibility for advance credit payments for an individual not reported on any taxpayer’s return. ***** (c) Applicability dates. ***** Par. 3. Section 1.36B-1 is amended by 1. Redesignating paragraph (d) as paragraph (d)(1). 2. Adding new paragraph (d) and new heading. 3. Revising the paragraph heading to newly designated paragraph (d)(1). 4. Adding paragraph (d)(2). 5. Revising paragraph (o). The additions and revisions read as follows: §1.36B-1 Premium tax credit definitions. ***** (d) Family and family size—(1) In general.* * * (2) Special rule for tax years to which section 151(d)(5) applies. For taxable years to which section 151(d)(5) applies, a taxpayer’s family means the taxpayer, including both spouses in the case of a joint return, except for individuals who qualify as a dependent of another taxpayer under section 152, and any other individual for whom the taxpayer is allowed a personal exemption deduction and whom the taxpayer properly reports on the taxpayer’s income tax return for the taxable year. For purposes of this paragraph (d) Bulletin No. 2020–52 (2), an individual is reported on the taxpayer’s income tax return if the individual’s name and taxpayer identification number (TIN) are listed on the taxpayer’s Form 1040 series return. See §601.602 of this chapter. ***** (o) Applicability dates. (1) Except for paragraphs (d)(2), (l), and (m) of this section, this section applies to taxable years ending after December 31, 2013. (2) Paragraph (d)(2) of this section applies to taxable years ending on or after December 31, 2020. (3) Paragraphs (l) and (m) of this section apply to taxable years beginning after December 31, 2018. Paragraphs (l) and (m) of §1.36B-1 as contained in 26 CFR part 1 edition revised as of April 1, 2016, apply to taxable years ending after December 31, 2013, and beginning before January 1, 2019. Par. 4. Section 1.36B-2 is amended by: 1. Revising paragraph (c)(4)(i). 2. Revising the heading for paragraph (e). 3. Adding paragraph (e)(4). The revisions and addition read as follows: §1.36B-2 Eligibility for premium tax credit. ***** (c) * * * (4) Special eligibility rules—(i) Related individual. An individual who may enroll in minimum essential coverage because of a relationship to another person eligible for the coverage, but is not included in the family, as defined in §1.36B-1(d), of the other eligible person, is treated as eligible for such minimum essential coverage only for months that the related individual is enrolled in the coverage. ***** (e) Applicability dates. * * * (4) Paragraph (c)(4)(i) of this section applies to taxable years ending on or after December 31, 2020. Par. 5. Section 1.36B-4 is amended by: 1. The heading of paragraph (a)(1)(ii) (B) is revised. 2. Adding a sentence to the end of paragraph (a)(1)(ii)(B)(1). Bulletin No. 2020–52 3. Revising paragraphs (a)(1)(ii)(B)(2) and (a)(1)(ii)(C). 4. Revising the paragraph heading to paragraph (c) and adding a sentence at the end. The additions and revisions read as follows: §1.36B-4 Reconciling the premium tax credit with advance credit payments. (a) * * * (1) * * * (ii) * * * (B) Individuals enrolled by a taxpayer and claimed by another taxpayer—(1) In general. * * * For taxable years to which section 151(d)(5) applies, the claiming taxpayer is the taxpayer who properly includes the shifting enrollee in his or her family for the taxable year. (2) Allocation percentage. The enrolling taxpayer and claiming taxpayer may agree on any allocation percentage between zero and one hundred percent. If the enrolling taxpayer and claiming taxpayer do not agree on an allocation percentage, the percentage is equal to the number of shifting enrollees properly included in the enrolling taxpayer’s family divided by the number of individuals enrolled by the enrolling taxpayer in the same qualified health plan as the shifting enrollee. ***** (C) Responsibility for advance credit payments for an individual not reported on any taxpayer’s return. If advance credit payments are made for coverage of an individual who is not included in any taxpayer’s family, as defined in §1.36B-1(d), the taxpayer who attested to the Exchange to the intention to include such individual in the taxpayer’s family as part of the advance credit payment eligibility determination for coverage of the individual must reconcile the advance credit payments. ***** (c) Applicability dates.* * * The last sentence of paragraph (a)(1)(ii)(B)(1), paragraph (a)(1)(ii)(B)(2), and paragraph (a)(1)(ii)(C) of this section apply to taxable years ending on or after December 31, 2020. Par. 6. Section 1.6011-8 is amended by revising paragraphs (a) and (b) as follows: 1691 §1.6011-8 Requirement of income tax return for taxpayers who claim the premium tax credit under section 36B. (a) Requirement of return. Except as otherwise provided in this paragraph (a), a taxpayer who receives the benefit of advance payments of the premium tax credit (advance credit payments) under section 36B must file an income tax return for that taxable year on or before the due date for the return (including extensions of time for filing) and reconcile the advance credit payments. However, if advance credit payments are made for coverage of an individual who is not included in any taxpayer’s family, as defined in §1.36B-1(d), the taxpayer who attested to the Exchange to the intention to include such individual in the taxpayer’s family as part of the advance credit payment eligibility determination for coverage of the individual must file a tax return and reconcile the advance credit payments. (b) Applicability dates—(1) In general. Except as provided in paragraph (b)(2) of this section, paragraph (a) of this section applies for taxable years ending on or after December 31, 2020. (2) Prior periods. Paragraph (a) of this section as contained in 26 CFR part 1 edition revised as of April 1, 2016, applies to taxable years ending after December 31, 2013, and beginning before January 1, 2017. Paragraph (a) of this section as contained in 26 CFR part 1 edition revised as of April 1, 2020, applies to taxable years beginning after December 31, 2016, and ending before December 31, 2020. Sunita Lough, Deputy Commissioner for Services and Enforcement. Approved: September 4, 2020. David J. Kautter, Assistant Secretary of the Treasury (Tax Policy). (Filed by the Office of the Federal Register on November 27, 2020, 11:15 a.m., and published in the issue of the Federal Register for December 01, 2020, 85 F.R. 76976) December 21, 2020 26 CFR 1.512(a)-6: Special rule for organizations with more than one unrelated trade or business T.D. 9933 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1 and 602 Unrelated Business Taxable Income Separately Computed for Each Trade or Business AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final rule. SUMMARY: This document contains final regulations that provide guidance on how an exempt organization subject to the unrelated business income tax determines if it has more than one unrelated trade or business, and, if so, how the exempt organization calculates unrelated business taxable income. The final regulations also clarify that the definition of “unrelated trade or business” applies to individual retirement accounts. Additionally, the final regulations provide that inclusions of “subpart F income” and “global intangible low-taxed income” are treated in the same manner as dividends for purposes of determining unrelated business taxable income. The final regulations affect exempt organizations that are subject to the unrelated business income tax. DATES: Effective date: The final regulations are effective on December 2, 2020. Applicability date: For dates of applicability, see §§1.170A-9(k)(3), 1.509(a)3(o), 1.512(a)-1(h), 1.512(a)-6(i), 1.512(b)-1(a)(3), 1.512(b)-1(g)(5), and 1.513-1(h). FOR FURTHER INFORMATION CONTACT: Jonathan A. Carter at (202) 3175800 or Stephanie N. Robbins at (202) 317-4086 (not toll-free numbers). December 21, 2020 SUPPLEMENTARY INFORMATION: Background This document amends the Income Tax Regulations (26 CFR Part 1) by adding final regulations under section 512(a) (6) of the Internal Revenue Code (Code). Section 512(a)(6) was added to the Code by section 13702 of Public Law 115-97, 131 Stat. 2054 (2017), commonly referred to as the Tax Cuts and Jobs Act (TCJA). Section 512(a)(6) requires an exempt organization subject to the unrelated business income tax under section 511 (UBIT) that has more than one unrelated trade or business, to calculate unrelated business taxable income (UBTI), separately with respect to each such trade or business including for purposes of determining any net operating loss (NOL) deduction. In August 2018, the Department of the Treasury (Treasury Department) and the IRS released Notice 2018-67 (2018-36 IRB 409 (Sept. 4, 2018)), which discussed and solicited comments regarding various issues arising under section 512(a)(6) and set forth interim guidance and transition rules relating to that section. The Treasury Department and the IRS received 24 comments in response to Notice 2018-67. On April 24, 2020, the Treasury Department and the IRS published a notice of proposed rulemaking (REG-10686418) in the Federal Register (85 FR 23172) that proposed regulations to provide guidance regarding how an exempt organization subject to UBIT (hereinafter referred to as an exempt organization) determines if it has more than one unrelated trade or business, and, if so, how the exempt organization calculates UBTI under section 512(a)(6) (proposed regulations). No public hearing was requested or held. The Treasury Department and the IRS received 17 comments in response to the proposed regulations. The proposed regulations reserved two issues for additional consideration. The first issue relates to the allocation of expenses, depreciation, and similar items shared between an exempt activity and an unrelated trade or business or between more than one unrelated trade or business. The second issue relates to changes made to the section 172 NOL deduction by the Coronavirus Aid, Relief, and Economic 1692 Security Act, Public Law 116-136, 134 Stat. 281 (2020) (CARES Act). The Treasury Department and the IRS anticipate publishing a separate notice of proposed rulemaking that will address these issues. After consideration of the comments received, the proposed regulations are adopted as modified by this Treasury Decision. The major areas of comment and the revisions to the proposed regulations are discussed in the following Summary of Comments and Explanation of Revisions. The comments are available for public inspection at www.regulations.gov or on request. Other minor, non-substantive modifications made to the proposed regulations and adopted in these final regulations are not discussed in the Summary of Comments and Explanation of Revisions. Summary of Comments and Explanation of Revisions These final regulations provide guidance on how an exempt organization determines if it has more than one unrelated trade or business, and, if so, how the exempt organization calculates UBTI under section 512(a)(6). The final regulations also clarify that the definition of “unrelated trade or business” in section 513(b) applies to individual retirement accounts and that inclusions of subpart F income and global intangible low-taxed income are treated in the same manner as dividends for purposes of section 512. 1. Separate Unrelated Trade or Business Consistent with section 512(a)(6) and the proposed regulations, the final regulations provide that an exempt organization with more than one unrelated trade or business must compute UBTI separately with respect to each unrelated trade or business, without regard to the specific deduction in section 512(b)(12), including for purposes of determining any NOL deduction. a. NAICS 2-Digit Codes Retained The proposed regulations generally provided that an exempt organization must identify each of its separate unrelated trades or businesses using the first two digits of the North American Industry Bulletin No. 2020–52 Classification System code (NAICS 2-digit code) that most accurately describes the unrelated trade or business. Most commenters agreed with the proposed regulations’ adoption of NAICS 2-digit codes over NAICS 6-digit codes, which Notice 2018-67, for purposes of interim guidance, provided was a reasonable way to identify separate trades or businesses. One commenter discussed how the use of NAICS 2-digit codes balances the legislative intent of not allowing the losses from one unrelated trade or business to offset the income from another unrelated trade or business with the need for an administrable and efficient method of identifying separate unrelated trades or businesses. Other commenters agreed that NAICS 2-digit codes offer the most administrable and least burdensome method of identifying separate unrelated trades or businesses for both exempt organizations and the IRS. One commenter disagreed with the use of NAICS 2-digit codes to identify separate unrelated trades or businesses. This commenter noted that, in passing the TCJA, Congress intended to limit exempt organizations’ use of tax benefits that are unrelated to their tax-exempt purpose or purposes, and the commenter asserted that the proposed regulations reversed this congressional intent by identifying separate unrelated trades or businesses using the twenty broad categories provided by NAICS 2-digit codes. This commenter recommended instead that the rules relating to the qualified business deduction under section 199A for identifying a separate trade or business should be used for purposes of section 512(a)(6). The regulations under section 199A provide that the term “trade or business” has the same meaning as in section 162. The commenter contended that enough case law exists with respect to section 162 to define “trade or business” and that the section 199A regulations have provided practitioners with enough experience to identify a trade or business using this definition. The final regulations do not adopt the approach taken by the section 199A regulations as a method of identifying separate unrelated trades or businesses for purposes of section 512(a)(6) because, although sections 199A and 512(a)(6) were both enacted as part of the TCJA, they serve different purposes. Section Bulletin No. 2020–52 199A, in part, provides individuals, estates, and certain trusts a deduction of up to 20 percent of business income from certain domestic trades or businesses. Such taxpayers might be engaged in one or more trades or businesses for which they may be entitled to the section 199A deduction. For purposes of computing the section 199A deduction, taxpayers are required to determine the specific lines between trades or business to ensure that only qualified items of income and expense traced to each qualified trade or business are used to compute the deduction and that the W-2 wage and unadjusted basis immediately after acquisition (UBIA) limitations are properly applied. Therefore, the section 199A regulations look to section 162 to determine how these lines should be drawn. By contrast, section 512 looks to section 162 to determine whether a trade or business exists but employs a simplified regime to identify separate unrelated trades or businesses under section 512(a) (6) for exempt organizations because they are not primarily engaged in section 162 for-profit trades or businesses. The regime also applies for a more limited purpose, that is preventing exempt organizations from using losses of one unrelated trade or business to offset the gains of any other unrelated trade or business, and uniformly to all of an exempt organization’s separate unrelated trades or businesses. The Treasury Department and IRS believe that using NAICS 2-digit codes in this context provides an objective means to identify separate trades or businesses consistent with Congress’s intent without imposing an undue burden on exempt organizations. Accordingly, the final regulations under section 512(a) (6) do not adopt this comment. b. No Additional Methods of Identifying Separate Unrelated Trades or Businesses One commenter recommended that NAICS 2-digit codes be used as a safe-harbor and that a facts and circumstances test be applied as the primary method of identifying separate unrelated trades or businesses. This commenter asserted that a facts and circumstances test would be more consistent with other parts of the Code (including the regulations under 1693 section 199A) and would provide a more flexible framework for variations in activities across exempt organizations. This commenter proposed considering multiple factors for identifying separate trades or businesses that would include the interdependence of the activities, the geographic location of the activities, and the relationship the exempt organization has with the operation of the activity. The commenter opined that a facts and circumstances test would help alleviate any inequity caused by section 512(a)(6). As explained both in Notice 2018-67 and the preamble to the proposed regulations, Congress did not provide any explicit criteria for determining whether an exempt organization has “more than one unrelated trade or business” or for identifying “separate” unrelated trades or businesses for purposes of calculating UBTI in accordance with section 512(a)(6). The Joint Committee on Taxation (JCT) noted that “it is intended that the Secretary issue guidance concerning when an activity will be treated as a separate unrelated trade or business for purposes of [section 512(a)(6)].” Staff of the Joint Committee on Taxation, General Explanation of Pub. L. 115-97 (December 2018), at 293 (General Explanation). Notice 2018-67 stated that the Treasury Department and the IRS would like to set forth a more administrable method than a facts and circumstances test for identifying separate unrelated trades or businesses. Nonetheless, the Treasury Department and the IRS considered a facts and circumstances test as a method of identifying separate unrelated trades or businesses in response to comments received following the enactment of section 512(a)(6) and again in response to Notice 2018-67. The factors suggested by commenters, and previously considered, generally were derived from other Code provisions, such as sections 132, 162, 183, 414, and 469. However, these Code provisions primarily consider whether an activity is a trade or business and not whether one trade or business is “separate” from another. Accordingly, the Treasury Department and the IRS continue to consider these Code provisions, alone or in conjunction with each other, as unhelpful models for identifying separate trades or businesses for purposes of section 512(a)(6). December 21, 2020 It continues to be the case that adoption of a facts and circumstances test, as the only identification method or in addition to a safe harbor using NAICS 2-digit codes, would increase the administrative burden on exempt organizations in complying with section 512(a)(6) because a fact-intensive analysis would be required with respect to each unrelated trade or business. Additionally, adoption of a facts and circumstances test would offer exempt organizations less certainty and likely result in inconsistency among exempt organizations conducting more than one unrelated trade or business because of differing approaches exempt organizations would take in applying such a test. Also, a facts and circumstances test would increase the administrative burden on the IRS, which, upon examination, must perform the same fact-intensive analysis with respect to each of the unrelated trades or businesses identified by the exempt organization for purposes of calculating UBTI. Accordingly, the final regulations do not adopt a facts and circumstances test in addition to or in place of NAICS 2-digit codes as a method of identifying separate unrelated trades or businesses for purposes of section 512(a)(6). c. Identifying the Appropriate NAICS 2-Digit Code The proposed regulations provided that an exempt organization’s separate unrelated trades or businesses are determined based on the applicable NAICS 2-digit code. Before an exempt organization can identify its “separate” unrelated trades or businesses, it must first determine whether it regularly carries on unrelated trades or businesses within the meaning of sections 511 through 514. Section 1.513-1(a) clarifies that, unless one of the specific exceptions of section 512 or 513 applies, gross income of an exempt organization is includible in the computation of UBTI if: (1) it is income from a trade or business; (2) such trade or business is regularly carried on by the organization; and (3) the conduct of such trade or business is not substantially related (other than through the production of funds) to the organization’s performance of its exempt functions. Accordingly, the final regulations provide that an exempt organization determines whether it carries on unrelated trades or businesses by applying sections 511 through 514. Under the final regulations, the exempt organization then identifies its separate unrelated trades or businesses for purposes of section 512(a)(6) using the methods described in the final regulations. With respect to most unrelated trade or business activities, an exempt organization determines whether those activities are separate unrelated trades or businesses for purposes of section 512(a) (6) based on the most accurate NAICS 2-digit codes describing the activities. Several commenters requested additional guidance regarding how to choose the “most accurate” NAICS 2-digit code. These commenters suggested that strict adherence to NAICS 2-digit codes can result in unrelated trade or business activities that the exempt organization considers to be one unrelated trade or business being separated into two or more unrelated trades or businesses. Other commenters requested that aggregation of NAICS 2-digit codes be allowed in certain circumstances. The commenters provided examples of unrelated trade or business activities that they considered to be one unrelated trade or business but that may be identified as more than one unrelated trade or business when using NAICS 2-digit codes. For example, one commenter stated that an organization operating a gift shop that sells clothing, electronics, and books in a bricks-and-mortar store and online would report those activities under two different NAICS 2-digit codes – one for the sale of clothing and electronics (44) and one for books and online sales (45). Another example provided by a commenter is a museum that provides catering services, valet parking, and personal property rentals as part of a package for special events, such as weddings, held on its premises. The commenter noted that the museum may be required to identify these activities using three different NAICS 2-digit codes – one for catering (72), one for parking (81), and one for rentals (53). The commenter posit- ed that the museum should be able to treat this activity as one trade or business based on a reasonable and common sense understanding of the service provided (hosting an event), rather than the various components of the provided services. The Treasury Department and the IRS note that NAICS 2-digit codes aggregate trade or business activities into only 20 separate trades or businesses, compared to the more than 1,000 trades or businesses identified at the NAICS 6-digit code level. Like the proposed regulations, the final regulations provide that a separate unrelated trade or business is identified by the NAICS 2-digit code that most accurately describes the exempt organization’s trade or business activity. In addition, the final regulations add that this determination is based on the more specific NAICS code, such as at the 6-digit level, that describes the activity that it conducts. The final regulations also state that the descriptions in the current NAICS manual (available at www.census.gov) of trades or businesses using more than two digits of the NAICS codes are relevant in this determination. In response to commenter examples, the final regulations incorporate a rule used in NAICS for identifying certain industries1 and provide that, in the case of the sale of goods, both online and in stores, the separate unrelated trade or business is identified by the goods sold in stores if the same goods generally are sold both online and in stores. With respect to the museum example, the Treasury Department and the IRS note that income from activities that is appropriately characterized as income from rentals is generally exempt from UBTI under section 512(b)(3). The analysis of whether an activity produces rental income depends, in part, on whether other services are provided by the exempt organization in connection with the possible rental activity (such as providing space for a wedding). To the extent other services are provided, income from the use of space may cease to be rent from real property and instead take on the character of the services provided. See §1.512(b)1(c)(5). Exempt organizations already need to do this analysis of the facts and The NAICS code for “Electronic Shopping and Mail-Order Houses” provides that “Store retailing or a combination of store retailing and nonstore retailing in the same establishment—are classified in Sector 44-45, Retail Trade, based on the classification of the store portion of the activity.” 1 December 21, 2020 1694 Bulletin No. 2020–52 circumstances to determine their UBTI. Similarly, whether services provided in connection with hosting an event should be aggregated or not depends on the facts and circumstances, including the language of the contract or contracts, the services provided, who is providing the services, etc. It is possible that the activities could be separate trades or businesses based on the fragmentation rule contained in section 513(c) and §1.513-1(b) (“[a]ctivities of producing or distributing goods or performing services from which a particular amount of gross income is derived do not lose identity as trade or business merely because they are carried on within a larger aggregate of similar activities or within a larger complex of other endeavors which may, or may not, be related to the exempt purposes of the organization”). Because NAICS at the 2-digit code level aggregates all trade or business activities into only 20 separate trades or businesses, many trade or business activities that could be considered separate trades or businesses, such as the provision of food or lodging, are already aggregated into broad categories (NAICS code 72 includes both lodging and food services) and therefore treated as one trade or business under the final regulations. Accordingly, if an exempt organization determines that, based on the facts and circumstances, its trade or business activities must be separated into two or more unrelated trades or businesses under NAICS 2-digit codes, the Treasury Department and the IRS view that result as appropriate to achieve the balance of tax administrability and carrying out the purposes of section 512(a)(6). Thus, under the final regulations, if trade or business activities would be best described by different NAICS 2-digit codes, those activities should be identified using different NAICS 2-digit codes and treated as separate unrelated trades or businesses. In addition, consistent with the proposed regulations, the final regulations continue to provide that the NAICS 2-digit code must identify the separate unrelated trade or business in which the exempt organization engages (directly or indirectly). The NAICS 2-digit code cannot describe activities the conduct of which are substantially related to the exercise or performance by such organization of its charitable, educational, or other Bulletin No. 2020–52 purpose or function constituting the basis for its exemption under section 501 (or, in the case of an organization described in section 511(a)(2)(B), to the exercise or performance of any purpose or function described in section 501(c)(3)). For example, a college or university described in section 501(c)(3) or 511(a)(2)(B) cannot use the NAICS 2-digit code for educational services to identify all of its separate unrelated trades or businesses, and a qualified retirement plan described in section 401(a) cannot use the NAICS 2-digit code for finance and insurance to identify all of its unrelated trades or businesses. Also consistent with the proposed regulations, the final regulations continue to provide that an organization will report each NAICS 2-digit code only once. The Treasury Department and the IRS note that this rule permits exempt organizations to aggregate trade or business activities that may occur in different geographic locations. The final regulations include the same example as provided by the proposed regulations — the pharmacies operated in different geographic locations that are one unrelated trade or business for purposes of section 512(a)(6) because the pharmacy trade or business is identified using one NAICS 2-digit code. d. Changing NAICS 2-Digit Codes The proposed regulations generally provided that, once an organization has identified a separate unrelated trade or business using a particular NAICS 2-digit code, the organization cannot change the NAICS 2-digit code describing that separate unrelated trade or business unless two requirements are met. First, the exempt organization must show that the NAICS 2-digit code chosen was due to an unintentional error. Second, the exempt organization must show that another NAICS 2-digit code more accurately describes the unrelated trade or business. The preamble to the proposed regulations stated that the instructions to the Form 990-T, “Exempt Organization Business Income Tax Return,” would be updated to describe how an exempt organization notifies the IRS of a change in a NAICS 2-digit code due to an unintentional error. At least one commenter requested clarification regarding what is meant by 1695 “unintentional error.” Commenters also suggested that the final regulations should include additional circumstances in which exempt organizations can change the NAICS 2-digit code describing a separate unrelated trade or business. Several commenters explained that the nature of a separate unrelated trade or business may change or evolve to the extent that the unrelated trade or business would be more accurately reported under a different NAICS 2-digit code. One commenter likened this shift in trade or business activities to the commencement of a new unrelated trade or business. Accordingly, these commenters recommended that an exempt organization be permitted to change the NAICS 2-digit code identifying a separate unrelated trade or business if a change in the unrelated business activity results in it being better described by a different NAICS 2-digit code. Finally, one commenter requested that a code change be permitted if the exempt organization’s tax preparer reasonably believes that an unrelated trade or business activity is more accurately described by a different NAICS 2-digit code. Several commenters also requested clarification of the process for reporting an erroneous code. One commenter recommended that the instructions to the Form 990-T clarify that an exempt organization should provide such notification to the IRS on the Form 990-T — including an explanation of the change and any necessary supporting information — and that such change would be effective on the first day of the taxable year beginning after the taxable year for which the Form 990-T providing such notification is filed. This commenter also questioned whether reconciliation was required for the prior taxable year or years in which the erroneous code was used and, if so, how an adjustment resulting from such reconciliation would be applied. In response to these comments, the final regulations remove the restriction on changing NAICS 2-digit codes. Instead, the final regulations require an exempt organization that changes the identification of a separate unrelated trade or business to report the change in the taxable year of the change in accordance with forms and instructions. See section 6012(a)(2) and §1.6012-2(e). The final regulations clarify that a change in identification of a sepa- December 21, 2020 rate unrelated trade or business includes the changed identification of the separate unrelated trade or business with respect to a partnership interest that was incorrectly designated as a qualifying partnership interest (discussed in part 2.b of this Summary of Comments and Explanation of Revisions). To report the change in identification, the final regulations require an organization to provide certain information with respect to each separate unrelated trade or business the identification of which changes: the identification of the separate unrelated trade or business in the previous taxable year, the identification of the separate unrelated trade or business in the current taxable year, and the reason for the change. The Treasury Department and the IRS anticipate that the instructions to the Form 990-T will be revised for taxable years for which the final regulations are effective to provide instructions regarding where and how changes in identification are reported. The effect on NOLs caused by changes of the identification of separate unrelated trades or businesses are discussed in part 6.d of this Summary of Comments and Explanation of Revisions. e. Transition from NAICS 6-Digit Codes to NAICS 2-Digit Codes The preamble to the proposed regulations provided that, for taxable years beginning before the date the proposed regulations are published in the Federal Register as final regulations, an exempt organization may rely on a reasonable, good-faith interpretation of sections 511 through 514, considering all the facts and circumstances, when identifying separate unrelated trades or businesses for purposes of section 512(a)(6). The preamble to the proposed regulations provided that an exempt organization could rely on the proposed regulations in their entirety or, alternatively, the methods of aggregating or identifying separate trades or businesses provided in Notice 2018-67, which provided that a reasonable, good-faith interpretation included using NAICS 6-digit codes. One commenter recommended that the final regulations confirm that an exempt organization that reported separate unrelated trades or businesses using NAICS 6-digit codes in taxable years beginning December 21, 2020 prior to the exempt organization’s first taxable year for which the final regulations are effective can reclassify their activities using NAICS 2-digit codes without having to report an unintentional error. As discussed in the Applicability Dates section of this preamble, these final regulations are applicable to taxable years beginning on or after December 2, 2020. Although an exempt organization may have used NAICS 6-digit codes to identify its separate unrelated trades or businesses in taxable years beginning before this date, the transition from NAICS 6-digit codes to NAICS 2-digit codes does not require the reporting of a code change because the exempt organization will be using the same NAICS code to identify its separate unrelated trades or businesses – just with fewer digits. The move from NAICS 6-digit codes to NAICS 2-digit codes may result in the combination of NOLs if an exempt organization has trade or business activities that would be separate unrelated trades or businesses if identified using NAICS 6-digit codes but would be one unrelated trade or business if identified using NAICS 2-digit codes. An exempt organization may choose, but is not required, to amend Forms 990-T filed prior to December 2, 2020 to report separate unrelated trades or businesses using NAICS 2-digit codes. f. No De Minimis Exception Provided The preamble to the proposed regulations discussed one comment with respect to Notice 2018-67 that suggested the Treasury Department and the IRS adopt a de minimis exception for exempt organizations reporting less than $100,000 of gross UBTI. The preamble to the proposed regulations explained that the Treasury Department and the IRS declined to adopt the comment because section 512(a)(6) does not provide discretionary authority for the Treasury Department and the IRS to establish a de minimis exception. Further, the preamble to the proposed regulations explained that, even at a lower threshold, a de minimis test would be contrary to the stated congressional intent of not permitting exempt organizations to use losses from one unrelated trade or business to offset the gains from another unrelated trade or business. 1696 One commenter on the proposed regulations nonetheless recommended the adoption of a de minimis exception. This commenter proposed that an exempt organization with less than $10,000 of total gross revenues from all unrelated trade or business activities be permitted to treat all its unrelated trades or businesses as one trade or business for purposes of section 512(a)(6). For exempt organizations with more than $10,000 of total gross revenues from all unrelated trade or business activities, the commenter suggested aggregation of all separate unrelated trades or businesses with less than $1,000 of total gross revenues. The commenter reasoned that exempt organizations with less than $10,000 of total gross revenues from unrelated trade or business activities likely lack the resources necessary to comply with section 512(a)(6). The commenter attempted to refute the argument that the Treasury Department and the IRS lack the authority to promulgate a de minimis exception by noting that the Treasury Department and the IRS already exercised discretion by permitting exempt organizations to treat their activities in the nature of investments as a separate unrelated trade or business for purposes of section 512(a)(6). The commenter cites the JCT General Explanation as confirmation that the Treasury Department and the IRS are authorized to permit the aggregation of separate unrelated trades or businesses. Permitting the aggregation of certain investment activities is an administrative rule premised on the difficulty an exempt organization partner may experience in certain situations in obtaining the information needed to determine whether the trades or businesses conducted by the partnership are separate unrelated trades or businesses with respect to the exempt organization partner (see part 2 of this Summary of Comments and Explanation of Revisions for a more in depth discussion). By contrast, permitting the aggregation of “de minimis” separate unrelated trades or businesses is contrary to the congressional intent of not permitting exempt organizations to offset the losses from one unrelated trade or business with the gains from another, without regard to the amount of the gross receipts in either trade or business. Finally, the concept of a Bulletin No. 2020–52 de minimis amount of UBTI is incompatible with the fragmentation rule in section 513(c); §1.513-1(b). That is, the fragmentation rule requires the identification of unrelated trade or business activities no matter the size. To the extent that smaller exempt organizations may have difficulty complying with section 512(a)(6), the Treasury Department and the IRS expect that adoption of NAICS 2-digit codes, as opposed to NAICS 6-digit codes, may relieve much of this burden because smaller exempt organizations are unlikely to have numerous unrelated trades or businesses under these final regulations. Furthermore, under §1.6012-2(e), an exempt organization is required to file Form 990-T only “if it has gross income, included in computing [UBTI] for such taxable year, of $1,000 or more.” This filing threshold, which applies regardless of the number of separate unrelated trades or businesses conducted by the exempt organization, serves as a de minimis rule for small exempt organizations. Accordingly, the Treasury Department and the IRS do not adopt this comment in the final regulations for these reasons as well as the reasons cited in the preamble to the proposed regulations. For example, if facilities are used both to carry on exempt activities and to conduct unrelated trade or business activities, then expenses, depreciation, and similar items attributable to such facilities must be allocated between the two uses on a reasonable basis (reasonable basis standard). The preamble to the proposed regulations noted that an exempt organization with more than one unrelated trade or business must not only allocate shared expenses among exempt and taxable activities as described in §1.512(a)-1(c) but also among separate unrelated trades or businesses. Accordingly, the proposed regulations incorporated the existing allocation standard in §1.512(a)-1(c) for purposes of section 512(a)(6). No comments were received regarding this approach. Accordingly, the final regulations continue to provide that an exempt organization with more than one unrelated trade or business must allocate deductions between separate unrelated trades or businesses using the reasonable basis standard described in §1.512(a)-1(c). g. Allocation of Directly Connected Deductions The preamble to the proposed regulations did, however, describe the concerns of the Treasury Department and the IRS regarding the administrability of the reasonable basis standard. The preamble to the proposed regulations announced that the Treasury Department and the IRS would continue to consider whether the reasonable basis standard should be retained and announced the intention to publish a separate notice of proposed rulemaking. As an initial matter, however, the proposed regulations stated that allocation of expenses, depreciation, and similar items using an unadjusted gross-to-gross method is not reasonable. In general, a gross-to-gross method of allocation uses a ratio of gross income from an unrelated trade or business activity over the total gross income from both unrelated and related activities generating the same indirect expenditures. The percentage resulting from this ratio is used to determine the percentage of the shared costs attributable to the unrelated trade or business activity (or activities). If a price difference exists between the i. In General Section 512(a)(1) permits an exempt organization with an unrelated trade or business to take the deductions allowed under chapter 1 of the Code (chapter 1) that are directly connected with the carrying on of such unrelated trade or business. Section 512(a)(3) similarly permits a social club described in section 501(c)(7), a voluntary employees’ beneficiary association (VEBA) described in section 501(c) (9), or a supplemental unemployment benefits trust (SUB) described in section 501(c)(17) to take the deductions allowed under chapter 1 that are directly connected with the production of gross income (excluding exempt function income). To the extent that an exempt organization may have items of deduction that are shared between an exempt activity and an unrelated trade or business, §1.512(a)-1(c) provides special rules for allocating such expenses. Bulletin No. 2020–52 ii. The Unadjusted Gross-to-Gross Method Unreasonable in Certain Circumstances 1697 provision of a good or service to different populations and no adjustment is made, the gross-to-gross ratio may be described as “unadjusted.” Several commenters asserted that the unadjusted gross-to-gross method should not be considered unreasonable. Of these commenters, two stated that the gross-togross method can be reasonable if there is no price difference for goods or services provided in related and unrelated activities or if adjustments are made for any price differences. One commenter further argued that no allocation method should be per se unreasonable because what is unreasonable with respect to one set of facts and circumstances may be reasonable with respect to another. In response to these commenters’ recommendations, the final regulations clarify that allocation of expenses, depreciation, and similar items is not reasonable if the cost of providing a good or service in a related and an unrelated activity is substantially the same, but the price charged for that good or service in the unrelated activity is greater than the price charged in the related activity and no adjustment is made to equalize the price difference for purposes of allocating expenses, depreciation, and similar items based on revenue between related and unrelated activities. For example, if a social club described in section 501(c)(7) charges nonmembers a higher price than it charges members for the same good or service, but does not adjust the price of the good or service provided to members for purposes of allocating expenses, depreciation, and similar items attributable to the provision of that good or service, the allocation method is not reasonable. The Action on Decision (AOD) relating to Rensselaer Polytechnic Institute v. Commissioner stated that the IRS would not litigate the reasonableness of an allocation method “until the allocation rules of [§1.512(a)-1(c)] are amended.” 732 F.2d 1058 (2d Cir. 1984), aff’g 79 T.C. 967 (1982); AOD 1987-014 (Jun. 18, 1987). The final regulations amend the rules of §1.512(a)-1(c) and, as discussed in the Applicability Dates section of this preamble, are effective for taxable years beginning on or after December 2, 2020. Accordingly, the IRS rescinds the AOD to the limited extent of any allocation meth- December 21, 2020 od that fails to equalize price differences between related activities and unrelated trade or business activities for such taxable years. The IRS will continue to refrain from litigating the reasonableness of other allocation methods pending the publication of further guidance, which the Treasury Department and the IRS continue to consider and expect to publish in a separate notice of proposed rulemaking. 2. Activities in the Nature of Investments The proposed regulations treat an exempt organization’s activities in the nature of an investment (investment activities) as a separate trade or business for purposes of section 512(a)(6). Several commenters repeated the suggestion previously made in response to Notice 2018-67 that the Treasury Department and the IRS should not treat an exempt organization’s investment activities as an unrelated trade or business, and therefore the income and losses from these activities should not be considered for purposes of applying section 512(a)(6). The preamble to the proposed regulations explained that the Treasury Department and the IRS concluded that the structure and purposes of sections 511 through 514 indicate that an exempt organization’s investment activities are an unrelated trade or business for purposes of section 512(a) (6), although certain income from such investment activities (investment income) is excluded from the calculation of UBTI under modifications in section 512(b). The Treasury Department and the IRS also noted that the language of section 512(a) (6)(B) states an organization’s total UBTI is the sum of the UBTI computed for each separate unrelated trade or business under section 512(a)(6)(A). To conclude that investment income is not included in the separately computed UBTI under section 512(a)(6)(A) would be to remove such income entirely from UBTI under section 512(a)(6)(B), even when no modification in section 512(b) applies to the income. Nothing in the legislative history or the statute suggests that Congress intended to amend the items of income that are taxable under section 511. Accordingly, the final regulations continue to treat an ex- 2 empt organization’s investment activities that are subject to UBIT as a separate unrelated trade or business for purposes of section 512(a)(6). a. Exclusive List of Investment Activities The proposed regulations provided an exclusive list of an exempt organization’s investment activities that may be treated as a separate unrelated trade or business for purposes of section 512(a)(6). Under the proposed regulations, for most exempt organizations, such investment activities are limited to: (i) qualifying partnership interests (see part 2.b of this Summary of Comments and Explanation of Revisions); (ii) qualifying S corporation interests (see part 3.a of this Summary of Comments and Explanation of Revisions); and (iii) debt-financed properties (see part 2.d of this Summary of Comments and Explanation of Revisions).2 Although commenters recommended modifications to the rules regarding the individual items included in this list, no commenters objected to the treatment of these items as investment activities. Accordingly, the final regulations adopt the list of investment activities provided in the proposed regulations without change. Nonetheless, some commenters recommended that this exclusive list be expanded to include specified payments from controlled entities that are included in UBTI under section 512(b)(13) (discussed in part 2.a.i of this Summary of Comments and Explanation of Revisions) and certain amounts from controlled foreign corporations that are included in UBTI under section 512(b)(17) (discussed in part 2.a.ii of this Summary of Comments and Explanation of Revisions). i. Specified Payments from Controlled Entities Section 512(b)(13)(A) requires an exempt organization, referred to as a “controlling organization,” that receives or accrues (directly or indirectly) a specified payment from another entity which it controls, referred to as a “controlled entity,” to include such payment as an item of gross income derived from an unrelated trade or business to the extent such payment reduces the net unrelated income of the controlled entity (or increases any net unrelated loss of the controlled entity). See also §1.512(b)-1(l)(1). Section 512(b) (13)(C) defines the term “specified payment” as any interest, annuity, royalty, or rent. Accordingly, section 512(b)(13) treats certain amounts that would ordinarily be excluded from the calculation of UBTI under section 512(b)(1), (2), and (3) as income derived from an unrelated trade or business. The proposed regulations provided that, if an exempt organization controls another entity (within the meaning of section 512(b)(13)(D)), the specified payments from that controlled entity will be treated as gross income from a separate unrelated trade or business for purposes of section 512(a)(6). If a controlling organization receives specified payments from two different controlled entities, the proposed regulations treated the payments from each controlled entity as separate unrelated trades or businesses. Two commenters recommended that income included in UBTI under section 512(b)(13) should be part of the investment activities trade or business under section 512(a)(6). These commenters noted that different fact patterns can produce different tax results because of the interaction between section 512(b)(13) and the debt-financed property rules of section 514. For example, one commenter provided a series of examples in which a wholly owned taxable subsidiary rented space from its exempt organization parent in a debt-financed property owned by the parent. Section 1.514(b)-1(b)(2)(ii) of the current regulations states that section 514 does not apply to amounts specifically taxable under other provisions of the Code, such as rents and interest from controlled organizations includible pursuant to section 512(b)(13). Thus, if a controlling organization leases debt-financed property to a controlled organization, the amount of rents includible in the controlling organization’s UBTI shall first be determined under section 512(b)(13), Special rules discussed in part 4 of this Summary of Comments and Explanation of Revisions apply to social clubs described in section 501(c)(7). December 21, 2020 1698 Bulletin No. 2020–52 and only the portion of such rents not taken into account by operation of section 512(b)(13) are taken into account by operation of section 514. See §1.512(b)-1(l) (5)(ii). Because the regulations provide a clear ordering rule that sets section 512(b) (13) income apart from the rules of section 514, section 512(b)(13) taxable income can never be debt-financed investment income. The Treasury Department and the IRS considered in the preamble to the proposed regulations whether specified payments should be included with an exempt organization’s investment activities and concluded that this treatment would be inconsistent with the purpose of section 512(b) (13)(A), which is to prevent a controlled entity from gaining a competitive advantage (in contravention of the purposes of section 512) through making deductible payments to a controlling organization that is exempt from tax. See S. Rep. No. 91552, at 73 (1969) (explaining that certain “rental” arrangements between exempt organizations and taxable subsidiaries “[enable] the taxable [subsidiary] to escape nearly all of its income taxes”). Consistent with this purpose, section 512(b)(13)(A) treats specified payments as income from an unrelated trade or business only “to the extent such payment reduces the net unrelated income of the controlled entity (or increases any net unrelated loss of the controlled entity).” Additionally, the required degree of control of the controlling organization over the controlled entity indicates that the controlled entities are not a part of the controlling organization’s otherwise appropriately characterized investment activities. Alternatively, if specified payments are not included with an exempt organization’s investment activities, these commenters requested that specified payments from any source be treated as one unrelated trade or business for purposes of section 512(a)(6). The commenters asserted that the aggregation of specified payments would reduce the incentive to restructure financial transactions to obtain more favorable tax results. One commenter set out an example in which the UBTI from the separate unrelated trades or businesses for specified payments received from two controlled entities of an exempt organization differed under section 512(b)(13) Bulletin No. 2020–52 depending on whether the exempt organization owned both subsidiaries directly or one subsidiary directly and the other subsidiary indirectly through the first subsidiary. The commenter asserted that aggregating the UBTI from all the controlled entities would create the same tax result for all exempt organizations with these facts regardless of the structure of the subsidiaries and the rental payments. The Treasury Department and the IRS continue to view specified payments as not appropriately characterized as part of an exempt organization’s investment activities. Furthermore, because section 512(b)(13) views specified payments as stemming from the trade or business activity of the controlled entity rather than from its investment activities, the Treasury Department and the IRS decline to adopt the suggestion that all specified payments be treated as one unrelated trade or business for purposes of section 512(a)(6). Rather, because section 512(b) (13)(A) provides that specified payments from a controlled entity are income derived from an unrelated trade or business, the final regulations adopt the proposed regulations regarding specified payments without modification. ii. Certain Amounts from Controlled Foreign Corporations Section 512(b)(17) requires any amount included in gross income under section 951(a)(1)(A) to be included as an item of gross income derived from an unrelated trade or business to the extent the amount so included is attributable to insurance income (as defined in section 953) which, if derived directly by the exempt organization, would be treated as gross income from an unrelated trade or business. Section 953(a)(1) defines “insurance income” as any income that (A) is attributable to the issuing (or reinsuring) of an insurance or annuity contract, and (B) would (subject to certain modifications not relevant here) be taxed under subchapter L of chapter 1 if such income were the income of a domestic insurance company. Thus, section 512(b)(17) “applies a look-through rule in characterizing certain subpart F insurance income for unrelated business income tax purposes.” H. R. Rep. No. 104-586 (1996), at 137. 1699 The proposed regulations treated the provision of insurance by all controlled foreign corporations (CFCs) as one trade or business, regardless of whether such insurance income is received from more than one CFC, which is consistent with how NAICS would categorize the provision of insurance (52 – Finance and Insurance). However, the proposed regulations did not permit the aggregation of an exempt organization’s insurance income included in UBTI under section 512(b)(17) with any insubstantial commercial-type insurance activities conducted directly by the exempt organization because the CFC, not the exempt organization, is engaged in the activity giving rise to the insurance income included in UBTI under section 512(b)(17). The insurance activity described in section 512(b)(17) is not attributed to the exempt organization and thus is distinguishable from any commercial-type insurance activity engaged in directly by the exempt organization. One commenter recommended that amounts included in income under section 512(b)(17) should be part of an exempt organization’s investment activities. This commenter questioned the statement in the preamble to the proposed regulation that “the required degree of control of the exempt organization over the controlled foreign corporation indicates that the exempt organization’s interest in a controlled foreign corporation is probably not part of the exempt organization’s otherwise appropriately characterized investment activities.” The commenter explained that, with respect to insurance income specifically, the required ownership by United States shareholders for CFC status is reduced to 25 percent from the usual 50 percent. The commenter asserted that an exempt organization shareholder therefore could hold less than a 10 percent interest in a CFC that as a whole is owned by United States shareholders. The commenter stated that the low percentage of ownership necessary to have such amounts included in UBTI should warrant inclusion with an exempt organization’s investment activities, based on the similarity to the ownership percentages for qualifying partnership interest status discussed in part 2.b of this Summary of Comments and Explanation of Revisions. However, another commenter recom- December 21, 2020 mended retention of the rules in the proposed regulations for amounts included in income under section 512(b)(17). As explained in the preamble to the proposed regulations, the reasons for not treating amounts included in income under section 512(b)(17) as an exempt organization’s investment activities extend beyond the amount of control the exempt organization may have over the CFC. In particular, that preamble explained that insurance income included in UBTI under section 512(b)(17) should not be treated as gross income from an exempt organization’s investment activities because the provision of insurance generally is an unrelated trade or business. See section 501(m) (providing that, in the case of an exempt organization described in section 501(c)(3) or (4) that does not provide commercial-type insurance as a substantial part of its activities, the activity of providing commercial-type insurance is treated as an unrelated trade or business (as defined in section 513)). Further, the percentage interest prongs of the qualifying partnership interest rules, discussed in parts 2.b.iii and 2.b.iv.A of this Summary of Comments and Explanation of Revisions, serve as a proxy for an exempt organization’s ability to obtain the information necessary to identify the underlying trade or business of the partnership. For amounts included in income under section 512(b)(17), the underlying trade or business is known because the only amounts included are from the insurance activity of the CFC. Thus, the same treatment of income under section 512(b)(17) is not needed for administrative convenience. Accordingly, the final regulations adopt without change the proposed regulations regarding the treatment of amounts included in UBTI under section 512(b) (17) for purposes of section 512(a)(6). b. Qualifying Partnership Interests In general, for exempt organizations, the activities of a partnership are considered the activities of the exempt organization partners.3 Specifically, section 512(c) states that if a trade or business regularly carried on by a partnership of which an exempt organization is a member is an unrelated trade or business with respect to such organization, such organization shall include its share of the gross income of the partnership in UBTI. However, commenters on both Notice 2018-67 and the proposed regulations explained the difficulty of obtaining information regarding the trade or business activities of lower-tier partnerships. Therefore, as a matter of administrative convenience for both the exempt organization and the IRS, the proposed regulations permitted, but did not require, an exempt organization to aggregate its UBTI from an interest in a partnership with more than one unrelated trade or business (including unrelated trades or businesses conducted by lower-tier partnerships) if it met certain requirements (qualifying partnership interest, or QPI). Additionally, the proposed regulations permitted the aggregation of any QPI with all other QPIs, resulting in the treatment of the aggregate group of QPIs (along with associated debt-financed income under section 514 and qualifying S corporation interests, both discussed in parts 2.d and 3.a, respectively, of this Summary of Comments and Explanation of Revisions) as a single “investment activities” trade or business for purposes of section 512(a)(6) (A). The proposed regulations identified a partnership interest as a QPI if it met the requirements of either the de minimis test (discussed in part 2.b.iii of this Summary of Comments and Explanation of Revisions) or the control test (discussed in part 2.b.iv of this Summary of Comments and Explanation of Revisions). A few commenters recommended alternative or additional tests to identify a QPI. Three commenters suggested that the generally accepted accounting principles (GAAP) codified by the Financial Accounting Standards Board (FASB) should replace the de minimis and the control tests to identify partnership interests as QPIs. These commenters recommended that any interest that is reported as “fair value” under these standards should be considered a QPI and included as part of the exempt organization’s investment activities. Two other commenters recommended that a partnership that uses an investment manager should be a QPI. For this purpose, one of these commenters recommended defining an investment manager as someone who is either (i) included in a listing of investment managers with the Securities and Exchange Commission (SEC), (ii) in the business of providing investment advice for compensation and manages at least $150 million in client assets, or (iii) has filed a Form D notice with the SEC with respect to the partnership at issue indicating that interests in such partnership are offered under an exemption from SEC registration requirements. Finally, one commenter provided a general list of facts and circumstances that should be considered when determining whether a partnership interest is a QPI, such as whether the exempt organization is a limited partner, whether the exempt organization has the right to be involved in the day-to-day management or operations of the partnership, and whether the exempt organization formed the partnership. As noted in Notice 2018-67, the purpose of permitting the aggregation of QPIs is to reduce the administrative burden of obtaining information from the partnership regarding the trade or business activities of the partnership in which the exempt organization holds a modest interest, and particularly of lower-tier partnerships under such partnership. As stated in the preamble to the proposed regulations, the percentage interest level for QPIs was intended as a proxy to identify partnership interests in which the exempt organization does not significantly participate. 85 FR at 23180. Taking into account the comments received, the Treasury Department and the IRS have determined that, for purposes of section 512(a)(6), if the percentage interest level indicates that an exempt organization does not significantly participate in a partnership, the exempt organization is not likely to be able to easily obtain the information required to identify the trades or businesses conducted, directly or indirectly, by the partnership that are unrelated trades or businesses with respect to the exempt organization partner. The recommendations of the commenters regarding alternate or additional meth- See sections 512(c), 513(a); §1.513-1(d)(1) and (2); Plumstead Theatre Society, Inc. v. Commissioner, 74 T.C. 1324 (1980); 675 F.2d 244 (9th Cir. 1995); Service Bolt & Nut Co. Profit Sharing Trust v. Commissioner, 724 F.2d 519 (6th Cir.1983), affg, 78 T.C. 812 (1982); Rev. Rul. 98-15, 1998-1 C.B. 718. 3 December 21, 2020 1700 Bulletin No. 2020–52 ods to determine whether a partnership interest is a QPI do not pro [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Ae029944af9d81705. Public record. Not legal advice.