Rev. Proc. 2017-22

Rev. Proc. 2017-22

SECTION 1. PURPOSE

This revenue procedure clarifies that the safe harbor provided in Rev. Proc.

2010-46, 2010-49 I.R.B. 814, applies to any Transportation Investment Generating

Economic Recovery grants (TIGER Discretionary Grants) for capital investments in

surface transportation infrastructure made by the Department of Transportation (DOT)

pursuant to legislative authorizations of these grants made after the publication of Rev.

Proc. 2010-46.

SECTION 2. BACKGROUND

Section 118(a) of the Internal Revenue Code provides that in the case of a

corporation, gross income does not include a contribution to the capital of the taxpayer.

Section 1.118-1 of the Income Tax Regulations provides that § 118 applies to

contributions to capital made by a person other than a shareholder, for example,

contributions of property to a corporation by a governmental unit for the purpose of

enabling the corporation to expand its operating facilities.

Section 362(c)(2) requires a basis reduction in a corporation's property when the

corporation receives money from a nonshareholder as a contribution to its capital.

Rev. Proc. 2010-46, in part, provides a safe harbor under § 118(a) for certain

grant amounts received by corporate taxpayers engaged in a transportation trade or

business for capital investments in surface transportation infrastructure under (1) the

Supplemental Discretionary Grants for Capital Investments in Surface Transportation

Infrastructure (TIGER I Discretionary Grants) program as authorized by Title XII,

in part, provides a safe harbor under § 118(a) for certain

grant amounts received by corporate taxpayers engaged in a transportation trade or

business for capital investments in surface transportation infrastructure under (1) the

Supplemental Discretionary Grants for Capital Investments in Surface Transportation

Infrastructure (TIGER I Discretionary Grants) program as authorized by Title XII,

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Division A of ARRA; or (2) the National Infrastructure Investments (TIGER II

Discretionary Grants) program as authorized by the Transportation, Housing and Urban

Development, and Related Agencies Appropriations Act for 2010 (Title I, Division A of

the Consolidated Appropriations Act, 2010 (Pub. L. 111-117)).

In 2009, the Office of the Secretary of Transportation issued a Notice of Funding

Availability (NOFA), 74 FR 28755, that provides guidance on TIGER I Discretionary

Grants. The grants must be for capital investments in surface transportation

infrastructure. In 2010, the Office of the Secretary of Transportation issued a NOFA, 75

FR 30460, that provides guidance on TIGER II Discretionary Grants. The grants must

be for capital investments in surface transportation infrastructure. The 2010 NOFA

contemplates that some funds may be used to fund the planning, preparation, or design

of projects (TIGER II Planning Grants). DOT has issued additional NOFAs and Notices

of Funding Opportunity (NOFOs) as legislation enacted subsequent to the publication of

Rev. Proc. 2010-46 has provided further appropriations for TIGER Discretionary Grants

awarded by DOT.

SECTION 3. SCOPE

This revenue procedure clarifies that the safe harbor of Rev. Proc. 2010-46

applies to corporate taxpayers engaged in a transportation trade or business that

receive grant amounts for the costs of capital investments in surface transportation

infrastructure under any TIGER Discretionary Grants, including those authorized in each

year following those described in Rev. Proc. 2010-46 as well as any to be authorized in

the future

hat the safe harbor of Rev. Proc. 2010-46

applies to corporate taxpayers engaged in a transportation trade or business that

receive grant amounts for the costs of capital investments in surface transportation

infrastructure under any TIGER Discretionary Grants, including those authorized in each

year following those described in Rev. Proc. 2010-46 as well as any to be authorized in

the future. In no case will this revenue procedure apply to amounts received to pay the

subsidy and administrative costs of the Transportation Infrastructure Finance and

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Innovation Act of 1998 or to amounts received for any TIGER planning grants.

Further, this revenue procedure does not apply to noncorporate taxpayers.

SECTION 4. PROCEDURE

The Internal Revenue Service will not challenge a corporate taxpayer’s treatment

of grant amounts received by the corporation under any TIGER Discretionary Grants for

capital investments in surface transportation infrastructure as a nonshareholder

contribution to the capital of the corporation under § 118(a) if the corporation properly

reduces the basis of its property under § 362(c)(2) and the regulations thereunder. For

purposes of this revenue procedure, TIGER Discretionary Grants include those TIGER

Discretionary Grants authorized in each year following those described in Rev. Proc.

2010-46 as well as any to be authorized in the future.

SECTION 5. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2010-46, 2010-49 I.R.B. 814, is clarified.

SECTION 6. DRAFTING INFORMATION

The principal author of this revenue procedure is David McDonnell of the Office

of Associate Chief Counsel (Passthroughs & Special Industries). For further information

regarding this revenue procedure, contact Mr. McDonnell at (202) 317-4137 (not a toll

free call).