Internal Revenue Bulletin 2011-28 (PDF rendition): IRS Announcements

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Bulletin No. 201
1-28
July 11, 2011
HIGHLIGHTS
OF THIS ISSUE
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.
INCOME TAX
T.D. 9528, page 38.
Final regulations under section 41 of the Code implement
changes to the credit for increasing research activities made
by the Tax Relief and Health Care Act of 2006.
REG–137128–08, page 43.
Proposed regulations under section 6402 of the Code provide
guidance to taxpayers generally as to the proper place to file
a claim for credit or refund.
Announcement 2011–38, page 45.
This document provides notice of a public hearing on proposed
regulations (REG–118761–09, 2011–21 I.R.B. 803) providing
guidance concerning the time for taking into account deferred
losses on the sale or exchange of property between mem-
bers of a controlled group. A public hearing is scheduled for
August 3, 2011.
EXEMPT ORGANIZATIONS
Announcement 2011–39, page 46.
The IRS has revoked its determination that A Family Budget
Counseling, Inc., of Huntington City, NY; A Free Helpline,
Inc., of Aliso Viejo, CA; Assisting a Non-Profit Corporation
of Sacramento, CA; Building Affordable Communities and
Housing Foundation of Camden, NJ; Credit Counseling of
California of Roseville, MN; DebtScape, Inc., of Linthicum,
MD; Educational Assistance Foundation for Descendants of
Hungarian Immigrants in the Performing Arts, Inc., of Aven-
tura, FL; Eyes for the World Eunice K. Fiorito Foundation,
Ltd., of Washington, DC; Korean Senior Citizens Mutual Club
of Los Angeles, CA; Northeast Family Care Center of North
Canton, OH; Pulmonary Protection of Ohio of Canton, OH;
Pulmonary Protection of Ohio of Findlay, OH; T Town, Inc.,
of Corona, CA; and Wellspring Renewal Center of Philo, CA,
qualify as organizations described in sections 501(c)(3) and
170(c)(2) of the Code.
EMPLOYMENT TAX
REG–137128–08, page 43.
Proposed regulations under section 6402 of the Code provide
guidance to taxpayers generally as to the proper place to file
a claim for credit or refund.
ADMINISTRATIVE
REG–137128–08, page 43.
Proposed regulations under section 6402 of the Code provide
guidance to taxpayers generally as to the proper place to file
a claim for credit or refund.
Announcements of Disbarments and Suspensions begin on page 47.
Finding Lists begin on page ii.

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a’s taxpayers top-quality service by helping
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th 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 Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement 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.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al 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, Leg-
islation 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 Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d 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
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The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
July 11, 20112011–28 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 41.—C
redit for
Increasing Re
search
Activities
26 CFR 1.41–6: Aggregation of expenditures.
T.D. 9528
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Alternative Simplified Credit
Under Section 41(c)(5)
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations and removal
of temporary regulations.
SUMMARY: This document contains final
regulations relating to the election and cal-
culation of the alternative simplified credit
under section 41(c)(5) of the Internal Rev-
enue Code (Code). The final regulations
affect certain taxpayers claiming the credit
under section 41. These final regulations
implement changes to the credit for in-
creasing research activities under section
41 made by the Tax Relief and Health Care
Act of 2006.
DATES:Effective Date:These regulations
are effective on June 9, 2011.
Applicability Date:For dates of appli-
cability, see §§1.41–6(j)(3), 1.41–8(b)(5),
and 1.41–9(d).
FOR FURTHER INFORMATION
CONTACT: David Selig (202) 622–3040
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On Ju
ne 17, 2008, the Treasury De-
par
tment and the IRS published final
and
temporary regulations (T.D. 9401,
200
8–27 I.R.B. 1) in theFederal Regis-
ter
(73 FR 34185) relating to the election
and
calculation of the alternative simpli-
fie
d credit (ASC) under section 41(c)(5).
The ASC was add
ed by the Tax Relief
and Health Car
e Act of 2006 (Public Law
109–432, 120 S
tat. 2922, December 20,
2006). A noti
ce of proposed rulemaking
cross-refer
encing the temporary regula-
tions was als
o published in the same issue
of theFedera
lRegister(73 FR 34237).
Written and
electronic comments respond-
ing to these
regulations (collectively, the
2008 regula
tions) were received and a
public hear
ing was held on the 2008 reg-
ulations on
September 25, 2008. After
considera
tion of the comments received
and the sta
tements made at the public
hearing, t
he 2008 regulations are adopted
as revised
by this Treasury decision.
Summary of
Comments and
Explanat
ion of Changes
The 2008 r
egulations were issued pri-
marily to
provide guidance on the elec-
tion and c
alculation of the ASC. Section
1.41–9T(
b) of the 2008 regulations pro-
vide that
an election to make or revoke
the prov
isions of the ASC under section
41(c)(5
) must be made on a timely filed
(includ
ing extensions) original return for
the taxa
ble year and may not be made on
an amend
ed return. Before the issuance
of the 2
008 regulations, identical election
proced
ures existed for the alternative in-
cremen
tal research credit (AIRC) under
§1.41–
8. The 2008 regulations extended
these e
lection procedures to the ASC un-
der §1
.41–9T. The 2008 regulations also
provi
ded that extensions of time to make
or rev
oke the election for both the AIRC
and th
e ASC will not be granted under
§301.
9100–3. In the case of the AIRC, the
2008
regulations are of limited duration as
sect
ion 41(h)(2) provides that no election
unde
r section 41(c)(4) shall apply to tax-
able
years beginning after December 31,
2008
.
Comm
enters stated that these provi-
sion
s of the 2008 regulations are restrictive
and
asked that they be excluded from the
fin
al regulations.
The
Treasury Department and the IRS
bel
ieve that both tax administration and
fai
rness are best served by adopting the
sam
e election procedures for the ASC that
are
used for the AIRC under §1.41–8. A
taxpayer may m
ake or revoke an election
each taxable y
ear by obtaining the con-
sent of the Com
missioner. A taxpayer is
deemed to hav
e requested, and to have
been granted
, the consent of the Commis-
sioner to mak
e or revoke an election if the
taxpayer com
pletes the portion of Form
6765, “Cred
it for Increasing Research Ac-
tivities,”
(or successor form) relating to the
credit dete
rmined under section 41(a)(1),
the AIRC, or
the ASC, as appropriate, and
attaches th
e completed form to the tax-
payer’s ti
mely filed (including extensions)
original r
eturn for the year to which it ap-
plies. As i
s the case with a revocation of
an AIRC ele
ction under §1.41–8, an ASC
election
under section 41(c)(5) may not be
made or re
voked on an amended return.
Consiste
nt with this position, the final reg-
ulations
also provide that an extension of
time to ma
ke or revoke an election under
section
s 41(c)(4) and 41(c)(5) will not be
granted
under §301.9100–3.
One comm
enter suggested changing the
ASC shor
t taxable year rules in the 2008
regulat
ions to prorate short years by the
number o
f days in the year instead of the
number
of months in the year. The Trea-
sury De
partment and the IRS agree that
calcul
ating the ASC for short taxable years
on a dai
ly rather than a monthly basis pro-
vides a
more accurate calculation and re-
moves
uncertainty as to whether and how
to inc
lude a partial month in making the
month
ly calculation. Accordingly, the fi-
nal re
gulations generally require that short
taxab
le years be prorated by the number of
days
in the year instead of the number of
mont
hs in the year for taxable years ending
afte
r June 9, 2011. Recognizing that some
taxp
ayers may have already filed returns
usin
g a monthly calculation for a short tax-
able
year, the final regulations also provide
tha
t returns filed for taxable years ending
wit
hin a specified time period may, at the
tax
payer’s option, be amended to reflect
the
daily calculation.
Spe
cial Analyses
It ha
s been determined that this Trea-
sur
y decision is not a significant regula-
tor
y action as defined in Executive Order
128
66. Therefore, a regulatory assessment
2011–28 I.R.B.38July 11, 2011

is not required. It also has been deter-
mined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to these regulations. It is
hereby certified that these regulations will
not have a significant economic impact on
a substantial number of small entities. Al-
though a substantial number of small en-
tities may make an election under these
regulations, any economic impact is min-
imal. This certification is based upon the
fact that the information required by these
regulations is already required to be main-
tained under the statute and current regu-
lations. These regulations add little or no
new burden to the existing requirements.
Additionally, an election under these regu-
lations generally will simplify the calcula-
tion of the credit and may result in a bene-
fit to the taxpayer. Accordingly, a regula-
tory flexibility analysis under the Regula-
tory Flexibility Act (5 U.S.C. chapter 6) is
not required. Pursuant to section 7805(f)
of the Code, these regulations have been
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administration
for comment on its impact on small busi-
ness.
Drafting Information
The principal author of these reg-
ulations is David Selig, Office of the
Associate Chief Counsel (Passthroughs
and Special Industries). However, other
personnel from the IRS and the Treasury
Department participated in their develop-
ment.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by removing §1.41–0T
to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.41–8 also issued under
26 U.S.C. 41(c)(4)(B).
Section 1.41–9 also issued under
26 U.S.C. 41(c)(5)(C). * * *
Par. 2. Section 1.41–0 is amended as
follows:
1. In §1.41–6, the entries for para-
graphs (j) and (j)(3) are revised.
2. In §1.41–8, the section title is re-
vised and entries for paragraphs (b)(4)(i)
and (b)(4)(ii) are added.
3. Adding entries for §1.41–9.
The revisions and additions read as fol-
lows:
§1.41–0 Table of contents.
*****
§1.41–6 Aggregation of expenditures.
*****
(j) Effective/applicability dates.
***
(3) Taxable years ending after June 9,
2011.
*****
§1.41–8 Alternative incremental credit
applicable for taxable years beginning on
or before December 31, 2008.
*****
(b) * * *
(4) * * *
(i) In general.
(ii) Designated member.
*****
§1.41–9 Alternative simplified credit.
(a) Determination of credit.
(b) Election.
(1) In general.
(2)Timeandmannerofelection.
(3) Revocation.
(4) Special rules for controlled groups.
(i) In general.
(ii) Designated member.
(c) Special rules.
(1) Qualified research expenditures
(QREs) required in all years.
(2) Section 41(c)(6) applicability.
(3) Short taxable years
(i) General rule.
(ii) Limited exception.
(4) Controlled groups.
(d) Effective/applicability dates.
§1.41–0T [Removed]
Par. 3. Section 1.41–0T is removed.
Par. 4. Section 1.41–6 is amended as
follows:
1. Paragraphs (b)(1), (c)(2), (e), (j)(3),
and paragraph heading (j) are revised.
2. Adding newExample 7to paragraph
(e).
The revisions and addition read as fol-
lows:
§1.41–6 Aggregation of expenditures.
*****
(b)Computation of the group
credit—(1)In general. All members of
a controlled group are treated as a sin-
gle taxpayer for purposes of computing
the research credit.The group credit is
computed by applying all of the section
41 computational rules on an aggregate
basis. All members of a controlled group
must use the same method of computation:
the method describedin section 41(a)(1),
the alternative incremental credit (AIRC)
methoddescribedinsection41(c)(4)
(available for years beginning on or before
December 31, 2008), or the alternative
simplified credit (ASC) method described
in section 41(c)(5), in computing the group
credit for a credit year.
*****
(c) * * *
(2)Stand-alone entity credit.The
termstand-alone entity creditmeans the
research credit (if any) that would be al-
lowable to a member of a controlled group
if the credit were computed as if section
41(f)(1) did not apply, except that the
member must apply the rules provided
in §1.41–6(d)(1) (relating to consolidated
groups) and §1.41–6(i) (relating to in-
tra-group transactions). Each member’s
stand-alone entity credit for any credit
year must be computed under whichever
available method (the method described in
section 41(a)(1), the method described in
section 41(c)(4), or the method described
in section 41(c)(5)) results in the greatest
stand-alone entity credit for that member,
without regard to the method used to com-
pute the group credit.
*****
(e)Examples. The following exam-
ples illustrate the provisions of this section.
Unless otherwise stated, no members of a
controlled group are members of a consoli-
dated group, no member of the group made
any basic research payments or paid or in-
curred any amounts to an energy research
consortium, and the group has not made
July 11, 2011392011–28 I.R.B.

an AIRC election (except as provided in
Example 6) or an ASC election (except as
provided inExample 7).
*****
Example 7.Group alternative simplified credit.
The following example illustrates a group computa-
tion in a year for which the ASC method under section
41(c)(5) is in effect. No members of the controlled
group are members of a consolidated group and no
member of the group made any basic research pay-
ments or paid or incurred any amounts to an energy
research consortium.
(i)Facts. Q, R, and S, all of which are calendar-
year taxpayers, are members of a controlled group.
The research credit under section 41(a)(1) is not al-
lowable to the group for the 2011 taxable year (the
credit year) because the group’s aggregate QREs for
the credit year are less than the group’s base amount.
The group does not use the AIRC method of section
41(c)(4) because it is unavailable for taxable years be-
ginning after December 31, 2008. The group credit
is computed using the ASC rules of section 41(c)(5).
Assume that each member of the group had QREs in
each of the three years preceding the credit year. For
purposes of computing the group credit for the credit
year, Q, R, and S had the following:
Q
R
SGroup Aggregate
Credit Year QREs
$0x$20x$30x$50x
Average QREs for 3 Years Preceding the Credit Year
$10x$20x$10x$40x
(ii)Computation of the group credit. The research
creditallowabletothegroupiscomputedasifQ,R,
and S are one taxpayer. The group credit is equal to 14
percent of so much of the QREs for the credit year as
exceeds 50 percent of the average QREs for the three
taxable years preceding the credit year. The group
credit is 0.14 x ($50x - (0.5 x $40x)), which equals
$4.2x.
(iii)Allocation of the group credit. Under para-
graph (c)(2) of this section, the stand-alone entity
credit for each member of the group must be com-
puted using the method that results in the greatest
stand-alone entity credit for that member. The stand-
alone entity credit for Q is zero under the regular or
ASC methods. Assume that the stand-alone entity
credit for each of R ($1.4x)and S ($3.5x) is greatest
using the ASC method. Therefore, the stand-alone
entity credits for each of R and S must be computed
using the ASC method. The sum of the stand-alone
entity credits of the members of the group is $4.9x.
Because the group credit of $4.2x is less than the sum
of the stand-alone entity credits of all the members of
the group ($4.9x), the group credit is allocated among
the members of the group based on the ratio that each
member’s stand-alone entity credit bears to the sum
of the stand-alone entity credits of all the members of
the group. The $4.2x group credit is allocated as fol-
lows:
Q
R
STotal
Stand-Alone Entity Credit
$0x$1.4x$3.5x$4.9x
Allocation Ratio (Stand-Alone Entity
Credit/Sum of Stand-Alone Entity Credits)
0/4.91.4/4.9
3.5/4.9
Multiplied by: Group Credit
$4.2x$4.2x$4.2x
Equals: Credit Allocated to Member
$0x$1.2x$3x$4.2x
*****
(j)Effective/applicability dates.***
*****
(3)Taxable years ending after June 9,
2011. Paragraphs (b)(1), (c)(2), and (e) of
this section are applicable for taxable years
ending after June 9, 2011. For taxable
years ending on or before June 9, 2011,
see §§1.41–6T and 1.41–6 as contained in
26 CFR part 1, revised April 1, 2011.
§1.41–6T [Removed]
Par. 5. Section 1.41–6T is removed.
Par. 6. In §1.41–8, the section heading
and paragraphs (b)(2), (b)(3), (b)(4)(ii),
and (b)(5) are revised to read as follows:
§1.41–8 Alternative incremental credit
applicable for taxable years beginning on
or before December 31, 2008.
*****
(b) * * *
(2)Time and manner of election.An
election under section 41(c)(4) is made
by completing the portion of Form 6765,
“Credit for Increasing Research Activi-
ties,”(orsuccessorform)relatingtothe
election of the AIRC, and attaching the
completed form to the taxpayer’s timely
filed (including extensions) original return
for the taxable year to which the election
applies. An election under section 41(c)(4)
may not be made on an amended return.
An extension of time to make an election
under section 41(c)(4) will not be granted
under §301.9100–3 of this chapter.
(3)Revocation. An election under this
section may not be revoked except with
the consent of the Commissioner. A tax-
payer is deemed to have requested, and
to have been granted, the consent of the
Commissioner to revoke an election un-
der section 41(c)(4) if the taxpayer com-
pletes the portion of Form 6765, “Credit
For Increasing Research Activities,” (or
successor form) relating to the amount de-
termined under section 41(a)(1) (the reg-
ular credit) or the alternative simplified
credit (ASC) and attaches the completed
form to the taxpayer’s timely filed (includ-
ing extensions) original return for the year
to which the revocation applies. An elec-
tion under section 41(c)(4) may not be re-
voked on an amended return. An exten-
sion of time to revoke an election under
section 41(c)(4) will not be granted under
§301.9100–3 of this chapter.
(4) * * *
(ii)Designated member. For purposes
of this paragraph (b)(4), for any credit
year, the termdesignated membermeans
that member of the group that is allocated
the greatest amount of the group credit
under §1.41–6(c) based on the amount of
credit reported on the taxpayer’s timely
filed (including extensions) original Fed-
eral income tax return (even if that member
subsequently is determined not to be the
designated member). If the members of
a group compute the group credit using
different methods (the method described
in section 41(a)(1), the AIRC method of
section 41(c)(4) (available for years be-
ginning on or before December 31, 2008),
or the ASC method of section 41(c)(5))
and at least two members of the group
2011–28 I.R.B.40July 11, 2011

qualify as the designated member, then
the termdesignated membermeans that
member that computes the group credit
using the method that yields the greatest
groupcredit. Forexample,A,B,C,and
D are members of a controlled group but
are not members of a consolidated group.
For the 2008 taxable year (the credit year),
the group credit using the method de-
scribed in section 41(a)(1) is $10x. Under
this method, A would be allocated $5x
of the group credit, which would be the
largest share of the group credit under this
method. For the credit year, the group
credit using the AIRC method is $15x.
Under the AIRC method, B would be
allocated $5x of the group credit, which
is the largest share of the group credit
computed using the AIRC method. For
the credit year, the group credit using the
ASC method is $10x. Under the ASC
method, C would be allocated $5x of the
group credit, which is the largest share
of the group credit computed using the
ASC method. Because the group credit
is greatest using the AIRC method and B
is allocated the greatest amount of credit
under that method, B is the designated
member. Therefore, if B makes a section
41(c)(4) election on its original timely
filed return for the credit year, that election
is binding on all members of the group for
the credit year.
(5)Effective/applicability dates.This
section is applicable for taxable years
ending after June 9, 2011. For taxable
years ending on or before June 9, 2011,
see §§1.41–8 and 1.41–8T, as contained in
26 CFR part 1, revised April 1, 2011.
§1.41–8T [Removed]
Par. 7. Section 1.41–8T is removed.
Par. 8. Section 1.41–9 is added to read
as follows:
§1.41–9 Alternative simplified credit.
(a)Determination of credit. At the elec-
tion of the taxpayer, the credit determined
under section 41(a)(1) equals the amount
determined under section 41(c)(5).
(b)Election—(1)In general.Atax-
payer may elect to apply the provisions of
the alternative simplified credit (ASC) in
section 41(c)(5) for any taxable year of the
taxpayer ending after December 31, 2006.
If a taxpayer makes an election under sec-
tion 41(c)(5), the election applies to the
taxable year for which made and all subse-
quent taxable years unless revoked in the
manner prescribed in paragraph (b)(3) of
this section.
(2)Time and manner of election.An
election under section 41(c)(5) is made
by completing the portion of Form 6765,
“Credit for Increasing Research Activi-
ties,”(orsuccessorform)relatingtothe
election of the ASC, and attaching the
completed form to the taxpayer’s timely
filed (including extensions) original return
for the taxable year to which the election
applies. An election under section 41(c)(5)
may not be made on an amended return.
An extension of time to make an election
under section 41(c)(5) will not be granted
under §301.9100–3 of this chapter.
(3)Revocation. An election under this
section may not be revoked except with
the consent of the Commissioner. A tax-
payer is deemed to have requested, and
to have been granted, the consent of the
Commissioner to revoke an election under
section 41(c)(5) if the taxpayer completes
the portion of Form 6765 (or successor
form) relating to the credit determined un-
der section 41(a)(1) (the regular credit) or
the alternative incremental credit (AIRC)
and attaches the completed form to the tax-
payer’s timely filed (including extensions)
original return for the year to which the re-
vocation applies. An election under sec-
tion 41(c)(5) may not be revoked on an
amended return. An extension of time to
revoke an election under section 41(c)(5)
will not be granted under §301.9100–3 of
this chapter.
(4)Special rules for controlled
groups—(i)In general. In the case of
a controlled group of corporations, all
the members of which are not included
on a single consolidated return, an elec-
tion (or revocation) must be made by the
designated member by satisfying the re-
quirements of paragraphs (b)(2) or (b)(3)
of this section (whichever applies), and
such election (or revocation) by the des-
ignated member shall be binding on all
the members of the group for the credit
year to which the election (or revocation)
relates. If the designated member fails
to timely make (or revoke) an election,
each member of the group must compute
the group credit using the method used to
compute the group credit for the immedi-
ately preceding credit year.
(ii)Designated member. For purposes
of this paragraph (b)(4), for any credit year,
the termdesignated membermeans that
member of the group that is allocated the
greatest amount of the group credit un-
der §1.41–6(c) based on the amount of
credit reported on the taxpayer’s timely
filed (including extensions) original Fed-
eral income tax return (even if that mem-
ber subsequently is determined not to be
the designated member). If the members
of a group compute the group credit using
different methods (the method described
in section 41(a)(1), the AIRC method of
section 41(c)(4), or the ASC method of
section 41(c)(5)) and at least two mem-
bers of the group qualify as the designated
member, then the termdesignated mem-
bermeans that member that computes the
group credit using the method that yields
the greatest group credit. For example, A,
B, C, and D are members of a controlled
group but are not members of a consol-
idated group. For the 2011 taxable year
(the credit year), the group credit using
the method described in section 41(a)(1) is
$10x. Under this method, A would be allo-
cated $5x of the group credit, which would
be the largest share of the group credit
under this method. For the credit year,
the group credit using the ASC method is
$15x. Under the ASC method, C would
be allocated $5x of the group credit, which
is the largest share of the group credit
computed using the ASC method. Be-
cause the group credit is greatest using the
ASC method and C is allocated the great-
est amount of credit under that method, C
is the designated member. Therefore, if
C makes a section 41(c)(5) election on its
timely filed (including extensions) original
return for the credit year, that election is
binding on all members of the group for
the credit year.
(c)Special rules—(1)Qualified re-
search expenses (QREs) required in all
years. Unless a taxpayer has QREs in
each of the three taxable years preceding
the taxable year for which the credit is
being determined, the credit equals that
percentage of the QREs for the taxable
year provided by section 41(c)(5)(B)(ii).
(2)Section 41(c)(6) applicability.
QREs for the three taxable years preced-
ing the credit year must be determined on
a basis consistent with the definition of
QREs for the credit year, without regard to
the law in effect for thethree taxable years
July 11, 2011412011–28 I.R.B.

preceding the credit year. This consistency
requirement applies even if the period
for filing a claim for credit or refund has
expired for any of the three taxable years
preceding the credit year.
(3)Short taxable years—(i)General
rule. If one or more of the three taxable
years preceding the credit year is a short
taxable year, then the QREs for such year
are deemed to be equal to the QREs ac-
tually paid or incurred in that year mul-
tipliedby365anddividedbythenum-
ber of days in that year. If a credit year
is a short taxable year, then the average
QREs for the three taxable years preceding
the credit year are modified by multiplying
that amount by the number of days in the
short taxable year and dividing the result
by 365.
(ii)Limited exception.Returns
filed for taxable years ending af-
ter December 31, 2006, and before
June 9, 2011, and for which the period
of limitations has not expired, may be
amended to apply the daily calculation
for short taxable years provided in
paragraph(3)(i)ofthissectioninlieuof
the monthly calculation for short taxable
years provided in §1.41–9T(c)(4).
(4)Controlled groups. For purposes of
computing the group credit under §1.41–6,
a controlled group must apply the rules of
this paragraph (c) on an aggregate basis.
For example, if the controlled group has
QREs in each of the three taxable years
preceding the taxable year for which the
credit is being determined, the controlled
group applies the credit computation pro-
vided by section 41(c)(5)(A) rather than
section 41(c)(5)(B)(ii).
(d)Effective/applicability dates.This
section is applicable for taxable years end-
ing after June 9, 2011. For taxable years
ending on or before June 9, 2011, see
§1.41–9T as contained in 26 CFR part 1,
revised April 1, 2011.
§1.41–9T [Removed]
Par. 9. Section 1.41–9T is removed.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved June 2, 2011.
Emily McMahon,
Acting Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on June 9, 2011,
8:45 a.m., and published in the issue of the Federal Register
for June 10, 2011, 76 F.R. 33994)
2011–28 I.R.B.42July 11, 2011

Part IV. Items o
fGeneralInterest
Notice of Proposed
Rulemaking
Claims for Credit or Refund
REG–137128–08
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking.
SUMMARY: This document contains pro-
posed regulations for filing a claim for
credit or refund. The regulations provide
guidance to taxpayers generally as to the
proper place to file a claim for credit or
refund. The regulations are updated to re-
flect changes made by the enactment of the
Tax Reform Act of 1976, the Internal Rev-
enue Service Restructuring and Reform
Act of 1998, and the Community Renewal
Tax Relief Act of 2000. The regulations
further are updated to reflect that the IRS
may prescribe additional claim forms.
DATES: Written or electronic comments
and requests for a public hearing must be
received by September 8, 2011.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–137128–08), room
5205, Internal Revenue Service, P.O.
Box 7604, Ben Franklin Station, Wash-
ington, DC 20044. Submissions may
be hand-delivered between the hours of
8 a.m. and 4 p.m. to CC:PA:LPD:PR
(REG–137128–08), Courier’s Desk, In-
ternal Revenue Service, 1111 Constitution
Avenue, N.W., Washington, DC, or sent
electronically via the Federal eRulemak-
ing Portal atwww.regulations.gov(IRS
REG–137128–08).
FOR FURTHER INFORMATION
CONTACT: Concerning submission
of comments or request for a hearing,
Richard.A.Hurst@irscounsel.treas.gov,
(202) 622–7180 (not a toll-free num-
ber); concerning the proposed regulations,
Micah A. Levy, (202) 622–3630 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed
amendments to 26 CFR part 301 under
section 6402 of the Internal Revenue Code
(Code). Section 6402 of the Code au-
thorizes the Secretary to make credits or
refunds. Section 6511 provides the lim-
itations period within which a taxpayer
must file a claim for credit or refund and
restricts the ability of the Secretary to is-
sue a credit or refund unless the claim is
filed by the taxpayer within that period.
Section 7422 prohibits the maintenance
of a suit for refund until a claim has been
duly filed with the Secretary. Currently,
§301.6402–2(a)(2) provides generally that
a claim for credit or refund needs to be
filed with the service center serving the
internal revenue district in which the tax
was paid. The proposed regulations clarify
that, unless otherwisedirected, the proper
place to file a claim for credit or refund is
with the service center at which the tax-
payer currently would be required to file
a tax return for the type of tax to which
the claim relates, irrespective of where the
tax was paid or was required to have been
paid.
This document also removes outdated
portions of §§301.6402–2 and 301.6402–3
and revises the reference in §301.6402–4
to the Joint Committee on Taxation thresh-
old referral amount under section 6405.
Explanation of Provisions
I.The Proper Place to File a Claim for
Credit or Refund
If a taxpayer is required to file a claim
for credit or refund on a particular form,
then the claim must be filed in a manner
consistent with that form and the related
instructions. For example, to correct an
amount reported on a Form 1040, “U.S.
Individual Income Tax Return,” Treasury
regulation §301.6402–3(a)(2) requires
that the taxpayer file the claim on a Form
1040X, “Amended U.S. Individual Income
Tax Return.” Accordingly, a claim for
refund of an overpayment of individual
income taxes would need to be filed on a
Form 1040X at the location specified in
the instructions provided for the form. If
filing instructions are not otherwise pro-
vided, a claim for credit or refund must be
filed with the service center at which the
taxpayer would be required to file a current
tax return for the type of tax to which the
claim relates. Section 301.6402–2(a)(2)
is revised to clarify that claims should
not be filed at a different location based
upon where the tax either was paid or was
required to have been paid. Nor would it
be relevant if the tax was properly paid at
a different location in a prior year because
the taxpayer had a change in residence.
II.The Proper Form for Filing a Claim for
Credit or Refund
The IRS has prescribed various forms
that must be used to file a claim for credit
or refund for a particular tax. For example,
as explained in this preamble, an indi-
vidual taxpayer must use a Form 1040X
to file a claim for refund of income tax.
The proposed regulations would revise
§301.6402–2(c) to provide that taxpayers
must use the form prescribed for filing a
particular claim for credit or refund. When
there is no alternative form prescribed, a
claim for credit or refund is to be filed on a
Form 843, “Claim for Refund and Request
for Abatement.”
III.Claims for Employment Taxes
On July 1, 2008, final regulations
(T.D. 9405, 2008–32 I.R.B. 293) relating
to employment tax adjustments and
employment tax refund claims were
published in theFederal Register
(73 FR 37371). Those final regulations
modify the process for making claims for
refund of overpayments of employment
taxes under section 6402. To file a
claim to correct errors discovered on or
after January 1, 2009, an employer now
uses the form that corresponds to the
return being corrected. The new forms
correspond with Form 941, “Employer’s
QUARTERLY Federal Tax Return”; Form
943, “Employer’s Annual Federal Tax
Return for Agricultural Employees”; Form
944, “Employer’s ANNUAL Federal Tax
Return”; Form 945, “Annual Return of
Withheld Federal Income Tax”; and Form
CT–1, “Employer’s Annual Railroad
Retirement Tax Return.” For example,
July 11, 2011432011–28 I.R.B.

Form 941–X, “Adjusted Employer’s
QUARTERLY Federal Tax Return or
Claim for Refund,” is used by employers
instead of Form 843, “Claim for Refund
and Request for Abatement.” The new
“X” forms are used to claim refunds,
make adjustments, and request abatements
of employment taxes. In addition,
§301.6402–2(d) is revised to provide
that when filing a claim for employment
taxes, a separate claim must be made
for each taxable period. For example,
if an employer overpaid social security
taxes on Forms 941 filed for the third and
fourth quarters in 2009, then the employer
must file a separate Form 941–X for each
quarter.
IV.Internal Revenue Districts
The proposed regulations make tech-
nical revisions that remove the refer-
ence to “internal revenue districts” in
§301.6402–2(a)(2), because such ref-
erence has been made obsolete by the
enactment of the Internal Revenue Service
Restructuring and Reform Act of 1998,
Public Law 105–206, 112 Stat. 685. The
technical revisions also remove the refer-
ences to a district director or director of the
regional service center in §§301.6402–3
and 301.6402–4, as those positions no
longer exist within the IRS.
V.Outdated Provisions
Treasury Decision 6950, 1968–1 C.B.
528 (33 FR 5354) (Aug. 4, 1968), revised
paragraph (a)(2) of §301.6402–2 to dis-
tinguish between claims filed before and
claims filed on or after April 15, 1968.
Those revisions provided that claims filed
before April 15, 1968 must be filed in the
office of the internal revenue officer to
whom the tax was paid. For claims filed
on or after April 15, 1968, claims were
directed to be filed with the service cen-
ter serving the internal revenue district in
which the tax was paid.
Treasury Decision 7410, 1976–1 C.B.
384 (41 FR 11019) (Mar. 16, 1976), re-
vised paragraph (c) of §301.6402–2 to dis-
tinguish between claims filed before and
claims filed on or after July 1, 1976. Those
revisions provided that, except for claims
for the refund of overpayments of income
taxes filed on or after July 1, 1976, all
refund claims for taxes, interest, penal-
ties, and additions to tax needed to be
filed on Form 843, “Claim for Refund and
Request for Abatement.” Treasury Deci-
sion 7410 also revised paragraphs (a) and
(b) of §301.6402–3 to prescribe different
form requirements for claims for the re-
fund of overpayments of income taxes de-
pending on whether the claim was filed be-
fore July 1, 1976, or would be filed on or
after July 1, 1976.
The regulations are revised to remove
the outdated guidance regarding the vary-
ing requirements based on these dates.
VI.Section 6405
Section 6405 requires the advance re-
ferral of a report to the Joint Committee
on Taxation regarding specified types of
refunds or credits in excess of a threshold
amount (currently $2,000,000). Section
1907(a)(1) of the Tax Reform Act of 1976,
Public Law 94–455, 90 Stat. 1520, 1835,
amended section 6405 to reference the
“Joint Committee on Taxation,” instead
of the “Joint Committee on Internal Rev-
enue Taxation.” The proposed regulations
would update the reference to the “Joint
Committee on Internal Revenue Taxa-
tion” in §301.6402–4 with a reference
to the “Joint Committee on Taxation.”
Section 305(a) of the Community Re-
newal Tax Relief Act of 2000, Public Law
106–554, 114 Stat. 2763, 2763A–634,
section 11834(a) of the Omnibus Budget
Reconciliation Act of 1990, Public Law
101–508, 104 Stat. 1388, 1388–560, and
section 1210(a) of the Tax Reform Act of
1976, 90 Stat. 1520, 1522, revised the
threshold referral amount in section 6405
by replacing $100,000 with $2,000,000.
To avoid the need to revise this regula-
tion again to reflect any future change in
the threshold amount, the parenthetical
reference to the specific amount required
for the section 6405 threshold referral is
removed.
Proposed Effective Date
These rules, when they are promulgated
as final regulations, will apply to claims for
credit or refund filed on or after the date
that the final regulations are published in
theFederal Register. The rules in these
proposed regulations may be relied upon
by taxpayers making claims for credit or
refund before publication of the Treasury
decision.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a sig-
nificant regulatoryaction as defined in
Executive Order 12866.Therefore, a reg-
ulatory assessment is not required. It has
also been determinedthat section 553(b)
of the Administrative Procedure Act
(5 U.S.C. chapter 5) and the Regulatory
Flexibility Act (5 U.S.C. chapter 6) do not
apply to the regulations, and, therefore,
a regulatory flexibility analysis is not
required. Pursuant to section 7805(f) of
the Internal Revenue Code, this regulation
has been submitted to the Chief Counsel
for Advocacy of the Small Business
Administration for comments on its impact
on small businesses.
Comments and Requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written (a signed orig-
inal and 8 copies) or electronic comments
that are submitted timely to the IRS. The
IRS and the Treasury Department request
comments on the clarity of the proposed
rules and how they can be made easier to
understand. All comments will be avail-
able for public inspection and copying.
A public hearing will be scheduled if
requested in writing by any person that
timely submits written comments. If a
public hearing is scheduled, notice of the
date, time, and place for the public hearing
will be published in theFederal Register.
Drafting Information
The principal author of the proposed
regulations is Micah A. Levy, Office of
the Associate Chief Counsel (Procedure &
Administration).
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 301 is pro-
posed to be amended as follows:
PART 301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 continues to read as follows:
2011–28 I.R.B.44July 11, 2011

Authority: 26 U.S.C. 7805 ***
Par. 2. Section 301.6402–2 is amended
by revising paragraphs (a)(2), (b)(2), (c),
and (d) and adding paragraph (g) to read
as follows:
§301.6402–2. Claims for credit or refund.
(a) * * *
(2) Except as provided in paragraph (b)
of §301.6091–1 (relating to hand-carried
documents), the claim, together with ap-
propriate supporting evidence, generally
must be filed with the service center at
which the taxpayer currently would be re-
quired to file a tax return for the type of tax
to which the claim relates. Notwithstand-
ing the preceding sentence, if a taxpayer
is required to file a claim for credit or re-
fund on a particular form, then the claim
mustbefiledinamannerconsistentwith
such form and form instructions. If a tax-
payer is filing a claim in response to an IRS
notice or correspondence, then the claim
must be filed in accordance with the spe-
cific instructions contained in the notice or
correspondence regarding the proper ad-
dress for filing. As to interest in the case
of credits or refunds, see section 6611. See
section 7502 for provisions treating timely
mailing as timely filing, and section 7503
for the time for filing a claim when the last
day falls on Saturday, Sunday, or a legal
holiday.
(b) * * *
(2) The IRS does not have the authority
to refund on equitable grounds penalties or
other amounts legally collected.
(c)Form for filing claim. Unless the
IRS otherwise has prescribed a particular
form on which the claim must be filed,
in which case the claim shall be made on
such other form, all claims by taxpayers
for the refunding of taxes, interest, penal-
ties, and additions to tax shall be made on
Form 843, “Claim for Refund and Request
for Abatement.” For special rules applica-
ble to income taxes, see §301.6402–3. For
provisions relating to credits and refunds
of taxes other than income tax, see the reg-
ulations relating to the particular tax.
(d)Separate claims for separate tax-
able periods. In the case of income and gift
taxes, income tax withheld, taxes under
the Federal Insurance Contributions Act,
taxes under the Railroad Retirement Tax
Act, and taxes under the Federal Unem-
ployment Tax Act, a separate claim shall
be made for each return for each taxable
period.
*****
(g)Effective/Applicability date.This
section is applicable on the date that the
final regulations are published in theFed-
eral Register.
Par. 3. Section 301.6402–3 is amended
by revising paragraph (a), introductory
text, removing paragraph (b), redesignat-
ing paragraphs (c), (d), (e) and (f), as (b),
(c), (d) and (e), respectively, and revising
paragraphs (b) and (e) to read as follows:
§301.6402–3. Special rules applicable to
income tax.
(a) In the case of a claim for credit or
refund of income tax—
*****
(b) The filing of a properly executed
income tax return shall, in any case in
which the taxpayer is not required to show
the tax on the form (see section 6014 and
the regulations), betreated as a claim for
refund and such return shall constitute a
claim for refund within the meaning of sec-
tion 6402 and section 6511 for the amount
of the overpayment shown by the com-
putation of the tax made by the Secre-
tary on the basis of the return. Whether
such claim is timely filed within the lim-
itations period prescribed by section 6511
will be governed by the date on which the
return is considered filed, except that if
the requirements of §301.7502–1 (relating
to timely mailing treated as timely filing)
are met, the claim shall be considered to
have been filed on the date of the postmark
stamped on the cover in which the return
was mailed.
*****
(e)Effective/Applicability date.This
section is applicable on the date that the
final regulations are published in theFed-
eral Register, except that references in
paragraph (d) of this section to Form
8805 or other statements required under
§1.1446–3(d)(2) shall apply to partnership
taxable years beginning after April 29,
2008.
Par. 4. Section 301.6402–4 is revised
to read as follows:
§301.6402–4. Payments in excess of
amounts shown on return.
In certain cases, a taxpayer’s payments
in respect of a tax liability, made before
the filing of the return, may exceed the
amount of tax shown on the return. For
example, such payments may arise in the
case of income tax if the estimated tax
payments or the credit for income tax
withheld at the source on wages exceeds
the amount of tax shown on the return,
or if the installment payments based on a
corporation’s estimate of its tax liability
on an application for an extension of time
to file its return exceeds the tax liability
shown on the return subsequently filed.
In any case in which the Secretary deter-
mines that the payments by the taxpayer
(made within the period prescribed for
payment and before the filing of the re-
turn) are in excess of the amount of tax
shown on the return, the Secretary may
make credit or refund of such overpayment
without awaiting examination of the com-
pleted return and without awaiting filing
of a claim for refund. The provisions of
§§301.6402–2 and 301.6402–3 are appli-
cable to such overpayment, and taxpayers
should submit claims for refund (if the
income tax return is not itself a claim for
refund, as provided in §301.6402–3) to
protect themselves in the event the Secre-
tary fails to make such determination and
credit or refund. The provisions of section
6405 (relating to reports of refunds in ex-
cess of the statutorily prescribed threshold
referral amount to the Joint Committee on
Taxation) are not applicable to the over-
payments described in this section caused
by timely payments of tax which exceed
the amount of tax shown on a timely filed
return.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on June 9, 2011,
8:45 p.m., and published in the issue of the Federal Register
for June 10, 2011, 76 F.R. 34017)
Controlled Groups; Deferral of
Losses; Hearings
Announcement 2011–38
AGENCY: Internal Revenue Service
(IRS), Treasury.
July 11, 2011452011–28 I.R.B.

ACTION: Notice of public hearing on pro-
posed rulemaking.
SUMMARY: This document provides
notice of public hearing on a notice of
proposed rulemaking (REG–118761–09,
2011–21 I.R.B. 803) providing guidance
concerning the time for taking into account
deferred losses on the sale or exchange of
property between members of a controlled
group.
DATES: The public hearing is being held
on Wednesday, August 3, 2011, at 10 a.m.
The IRS must receive outlines of the topics
to be discussed at the hearing by Thursday,
July 21, 2011.
ADDRESSES: The public hearing is being
held in the auditorium, Internal Revenue
Building, 1111 Constitution Avenue, NW,
Washington, DC. Send submissions to:
CC:PA:LPD:PR (REG–118761–09), room
5203, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washing-
ton, DC 20044. Submissions may be
hand-delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (REG–118761–09),
Courier’s Desk, Internal Revenue Service,
1111 Constitution Avenue, NW, Wash-
ington, DC. Alternatively, taxpayers may
submit electronic outlines of oral com-
ments via the Federal eRulemaking Portal
athttp://www.regulations.gov.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Bruce A. Decker at (202)
622–7790; concerning submissions of
comments, the hearing, and/or to be
placed on the building access list to at-
tend the hearing, Richard A. Hurst at
Richard.A.Hurst@irscounsel.treas.govor
(202) 622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
The subject of the public hearing is
the notice of proposed rulemaking
(REG–118761–09) that was published
in theFederal Registeron Thursday,
April 21, 2011 (76 FR 22336).
Persons,whowishtopresentoralcom-
ments at the hearing that submitted writ-
ten comments, must submit an outline of
thetopicstobediscussedandtheamount
of time to be devoted to each topic (signed
original and eight (8) copies) by Thursday,
July 21, 2011.
A period of 10 minutes is allotted to
each person for presenting oral comments.
After the deadline for receiving out-
lines has passed, the IRS will prepare an
agenda containing the schedule of speak-
ers. Copies of the agenda will be made
available, free of charge, at the hearing or
in the Freedom of Information Reading
Room (FOIA RR) (Room 1621) which
is located at the 11
th
and Pennsylvania
Avenue NW entrance, 1111 Constitution
Avenue, NW, Washington, DC.
Because of access restrictions, the IRS
will not admit visitors beyond the imme-
diate entrance area more than 30 minutes
before the hearing starts. For informa-
tion about having your name placed on the
building access list to attend the hearing,
see the FOR FURTHER INFORMATION
CONTACT section of this document.
LaNita Van Dyke,
Chief, Publications and
Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on May 31, 2010,
8:45 p.m., and published in the issue of the Federal Register
for June 1, 2011, 76 F.R. 31543)
Deletions From Cumulative
List of Organizations
Contributions to Which
are Deductible Under Section
170 of the Code
Announcement 2011–39
The Internal Revenue Service has re-
voked its determination that the organi-
zations listed below qualify as organiza-
tions described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the Service will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the Service is not
precluded from disallowing a deduction
for any contributions made after an or-
ganization ceases to qualify under section
170(c)(2) if the organization has not timely
filed a suit for declaratory judgment under
section 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declara-
tory judgment has been timely filed, con-
tributions from individuals and organiza-
tions described in section 170(c)(2) that
are otherwise allowable will continue to
be deductible. Protection under section
7428(c) would begin July 11, 2011, and
would end on the date the court first deter-
mines that the organization is not described
in section 170(c)(2) as more particularly
set forth in section 7428(c)(1). For indi-
vidual contributors, the maximum deduc-
tion protected is $1,000, with a husband
and wife treated as one contributor. This
benefit is not extended to any individual, in
wholeorinpart,fortheactsoromissions
of the organization that were the basis for
revocation.
A Family Budget Counseling, Inc.
Huntington City, NY
A Free Helpline, Inc.
Aliso Viejo, CA
Assisting a Non-Profit Corporation
Sacramento, CA
Building Affordable Communities and
Housing Foundation
Camden, NJ
Credit Counseling of California
Roseville, MN
DebtScape, Inc.
Linthicum, MD
Educational Assistance Foundation for
Descendants of Hungarian Immigrants
in the Performing Arts, Inc.
Aventura, Fl
EyesfortheWorldEuniceK.Fiorito
Foundation, Ltd.
Washington, DC
Korean Senior Citizens Mutual Club
Los Angeles, CA
Northeast Family Care Center
North Canton, OH
Pulmonary Protection of Ohio
Canton, OH
Pulmonary Protection of Ohio
Findlay, OH
T Town, Inc.
Corona, CA
Wellspring Renewal Center
Philo, CA
2011–28 I.R.B.46July 11, 2011

Announcement of Disciplinary Sanctions From the Office
of Professional Responsibility
Announcement 2011-41
TheOfficeofProfessionalResponsi-
bility (OPR) announcesrecent disciplinary
sanctions involving attorneys, certified
public accountants, enrolled agents, en-
rolled actuaries, enrolled retirement plan
agents, and appraisers. These individuals
are subject to the regulations governing
practice before the Internal Revenue Ser-
vice (IRS), which are set out in Title 31,
Code of Federal Regulations, Part 10, and
which are published in pamphlet form as
Treasury Department Circular No. 230.
The regulations prescribe the duties and
restrictions relating to such practice and
prescribe the disciplinary sanctions for
violating the regulations.
The disciplinary sanctions to be im-
posed for violation of the regulations are:
Disbarred from practice before the
IRS—An individual who is disbarred is
not eligible to represent taxpayers before
the IRS.
Suspended from practice before the
IRS—An individual who is suspended is
not eligible to represent taxpayers before
the IRS during the term of the suspension.
Censured in practice before the
IRS—Censure is a public reprimand. Un-
like disbarment or suspension, censure
does not affect an individual’s eligibility
to represent taxpayers before the IRS, but
OPR may subject the individual’s future
representations to conditions designed to
promote high standards of conduct.
Monetary penalty—A monetary
penalty may be imposed on an individual
who engages in conduct subject to sanc-
tion or on an employer, firm, or entity
if the individual was acting on its behalf
and if it knew, or reasonably should have
known, of the individual’s conduct.
Disqualification of appraiser—An
appraiser who is disqualified is barred
from presenting evidence or testimony in
any administrative proceeding before the
Department of the Treasury or the IRS.
Under the regulations, attorneys, cer-
tified public accountants, enrolled agents,
enrolled actuaries, and enrolled retirement
plan agents may not assist, or accept assis-
tance from, individuals who are suspended
or disbarred with respect to matters consti-
tuting practice (i.e., representation) before
the IRS, and they may not aid or abet sus-
pended or disbarred individuals to practice
before the IRS.
Disciplinary sanctions are described in
these terms:
Disbarred by decision after hearing,
Suspended by decision after hearing,
Censured by decision after hearing,
Monetary penalty imposed after hear-
ing, and Disqualified after hearing—An
administrative law judge (ALJ) conducted
an evidentiary hearing upon OPR’s com-
plaint alleging violation of the regulations
and issued a decision imposing one of
these sanctions. After 30 days from the
issuance of the decision, in the absence of
an appeal, the ALJ’s decision became the
final agency decision.
Disbarred by default decision, Sus-
pended by default decision, Censured by
default decision, Monetary penalty im-
posed by default decision, and Disqual-
ified by default decision—An ALJ, after
findingthatnoanswertoOPR’scomplaint
had been filed, granted OPR’s motion for a
default judgment and issued a decision im-
posing one of these sanctions.
Disbarment by decision on appeal,
Suspended by decision on appeal, Cen-
sured by decision on appeal, Monetary
penalty imposed by decision on ap-
peal, and Disqualified by decision on
appeal—The decision of the ALJ was
appealed to the agency appeal authority,
acting as the delegate of the Secretary
of the Treasury, and the appeal authority
issued a decision imposing one of these
sanctions.
Disbarred by consent, Suspended by
consent, Censured by consent, Mone-
tary penalty imposed by consent, and
Disqualified by consent—In lieu of a
disciplinary proceeding being instituted
or continued, an individual offered a con-
sent to one of these sanctions and OPR
accepted the offer. Typically, an offer
of consent will provide for: suspension
for an indefinite term; conditions that the
individual must observe during the sus-
pension; and the individual’s opportunity,
after a stated number of months, to file
with OPR a petition for reinstatement af-
firming compliance with the terms of the
consent and affirming current eligibility
to practice (i.e., an active professional
license or active enrollment status). An
enrolled agent or an enrolled retirement
plan agent may also offer to resign in order
to avoid a disciplinary proceeding.
Suspended by decision in expedited
proceeding, Suspended by default de-
cision in expedited proceeding, Sus-
pended by consent in expedited pro-
ceeding—OPR instituted an expedited
proceeding for suspension (based on cer-
tain limited grounds, including loss of a
professional license and criminal convic-
tions).
OPR has authority to disclose the
grounds for disciplinary sanctions in these
situations: (1) an ALJ or the Secretary’s
delegate on appeal has issued a decision
on or after September 26, 2007, which was
theeffectivedateofamendmentstothe
regulations that permit making such deci-
sions publicly available; (2) the individual
has settled a disciplinary case by signing
OPR’s “consent to sanction” form, which
requires consenting individuals to admit to
one or more violations of the regulations
and to consent to the disclosure of the in-
dividual’s own return information related
to the admitted violations (for example,
failure to file Federal income tax returns);
or (3) OPR has issued a decision in an
expedited proceeding for suspension.
Announcements of disciplinary sanc-
tions appear in the Internal Revenue Bul-
letin at the earliest practicable date. The
sanctions announced below are alphabet-
ized first by the names of states and sec-
ond by the last names of individuals. Un-
less otherwise indicated, section numbers
(e.g. §10.51) refer to the regulations.
July 11, 2011472011–28 I.R.B.

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Alabama
PelhamPoff Jr., Richard G.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
March 22, 2011
Arizona
MesaAllen, Steven W.AttorneySuspended by default
decision in expedited
proceeding under
§10.82 (conviction
under 18 U.S.C. §371,
conspiracy to defraud the
United States)
Indefinite from
February 7, 2011
California
Newport BeachAgajanian, Roger J.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment)
Indefinite from
March 8, 2011
Los AngelesBurkenroad, DavidAttorneySuspended by decision
in expedited proceeding
under §10.82 (suspension
of attorney license)
Indefinite from
February 17, 2011
CalabasasGeyer, Mark M.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment)
Indefinite from
March 22, 2011
San FranciscoMartin, Craig K.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment)
Indefinite from
March 4, 2011
Colorado
Riebesell, Harold F.,
See Nevada
Florida
Ft. LauderdaleLegel, LawrenceCPASuspended by decision on
appeal for violations of
§10.51 (conviction under
26 U.S.C. §7203, aiding
andabettinginthefailure
to pay income tax)
January 13, 2009
—
January 13, 2012
Boca RatonRizzo, Vincent D.Enrolled AgentReinstated
to practice
before the IRS,
March 7, 2011
2011–28 I.R.B.48July 11, 2011

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Idaho
PocatelloAdamson, Dannis M.AttorneySuspended by default
decision in expedited
proceeding under
§10.82 (conviction under
26 U.S.C. §7202, willful
failure to pay over taxes)
Indefinite from
January 11, 2011
Illinois
LansingClausing, Robert J.Enrolled AgentReinstated
to practice
before the IRS,
March 9, 2011
Iowa
Iowa CityFields, JeffreyAttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
March 22, 2011
Kentucky
HarrodsburgPope, Lisa A.Enrolled AgentSuspended by consent
for admitted violation
of §10.51 (failure to file
or timely file Federal
individual income tax
returns for tax years
2006-2008, and failure
to timely file and pay
taxes due on employer’s
quarterly Federal tax
returns for 11 quarters
2005-2007)
Indefinite from
March 25, 2011,
butatleast18
months
Maryland
BaltimoreHunt, Mark E.AttorneySuspended by decision
in expedited proceeding
under §10.82 (conviction
under 26 U.S.C. §7213,
unauthorized disclosure
of returns and return
information)
Indefinite from
April 11, 2011
Massachusetts
TauntonMartin, Craig J.AttorneySuspended by decision
in expedited proceeding
under §10.82 (attorney
disbarment)
Indefinite from
March 4, 2011
July 11, 2011492011–28 I.R.B.

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
TewksburyPaczkowski,
Raymond J.
AttorneySuspended by decision
in expedited proceeding
under §10.82 (attorney
disbarment)
Indefinite from
March 4, 2011
Michigan
Traverse CityTuttle, WallaceH.AttorneyDisbarred by ALJ on
summary judgment
motion for violation of
§10.51 (willful failure to
file Federal individual
income tax returns for
2007 and 2008)
At least 5 years
from April 9, 2011
Minnesota
MinneapolisBiber, Aaron F.AttorneySuspended by decision
in expedited proceeding
under §10.82 (attorney
disbarment)
Indefinite from
March 4, 2011
Nevada
RenoRiebesell, Harold F.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license in Colorado)
Indefinite from
March 4, 2011
New Jersey
South OrangeHersh, Bruce D.AttorneySuspended by decision
in expedited proceeding
under §10.82 (attorney
disbarment)
Indefinite from
March 4, 2011
New York
BronxDaniel, CleavanEnrolled AgentCensured by consent
for admitted violation
of §10.22(a) (failure to
exercise due diligence in
the preparation of client
taxreturnsfiledwiththe
Internal Revenue Service)
July 2, 2009
WilliamsvilleRickard II, Michael W. AttorneySuspended by decision
in expedited proceeding
under §10.82 (attorney
disbarment)
Indefinite from
March 4, 2011
2011–28 I.R.B.50July 11, 2011

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Ohio
Lewis CenterSalisbury, Kirk G.CPADisbarred by decision
on appeal in proceeding
under §10.60 for violation
of §10.51 (failure to
file Federal individual
income tax returns for tax
years 2004-2007, failure
to timely file Federal
individual income tax
returns for tax years 2002
and 2003, and failure
to timely pay Federal
individual income tax
return liabilities for tax
years 2002 and 2003)
At least 5
years from
February 2, 2010
Oregon
BeavertonBurroughs, Gary S.CPASuspended by consent
for admitted violation
of §10.22 (failure to
exercise due diligence in
the determination of the
validity of credits and
deductions under §44
of the Internal Revenue
Code)
Indefinite from
December 31, 2010
Pennsylvania
RoyersfordKozelsky, Joseph G.CPADisbarred by decision on
appeal for violations of
§10.51 (failure to timely
file Federal individual
income tax returns for tax
years 2001-2007)
At least 5 years
from
December 17, 2010
Tennessee
KnoxvilleLockett, William S.AttorneySuspended by default
decision in expedited
proceeding under
§10.82 (conviction under
26 U.S.C. §7203, willful
failure to file a Federal
income tax return)
Indefinite from
January 11, 2011
Texas
HoustonAneji, Patrick E.CPAReinstated
to practice
before the IRS,
February 17, 2011
July 11, 2011512011–28 I.R.B.

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
DallasLarue, Lauren C.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment)
Indefinite from
January 11, 2011
The WoodlandsPetrillo, Donald J.AttorneyDisbarred by decision on
appeal for violations of
§10.51 (willful failure to
file, or timely file, Federal
individual tax returns for
2004-2007)
At least 5
years from
April 22, 2011
2011–28 I.R.B.52July 11, 2011

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
July 11, 2011i2011–28 I.R.B.

Numerical Finding List
1
Bulletins 2011–27 through 2011–28
Announcements:
2011-37, 2011-27 I.R.B.37
2011-38, 2011-28 I.R.B.45
2011-39, 2011-28 I.R.B.46
2011-41, 2011-28 I.R.B.47
Notices:
2011-47, 2011-27 I.R.B.34
2011-50, 2011-27 I.R.B.35
2011-51, 2011-27 I.R.B.36
Proposed Regulations:
REG-137128-08, 2011-28 I.R.B.43
Revenue Rulings:
2011-14, 2011-27 I.R.B.31
Treasury Decisions:
9527, 2011-27 I.R.B.1
9528, 2011-28 I.R.B.38
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2011–1 through 2011–26 is in Internal Revenue Bulletin
2011–26, dated June 27, 2011.
2011–28 I.R.B.iiJuly 11, 2011

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2011–27 through 2011–28
Proposed Regulations:
REG-118761-09
Hearing scheduled by
Ann. 2011-38, 2011-28 I.R.B.45
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2011–1 through 2011–26 is in Internal Revenue Bulletin 2011–26, dated June 27, 2011.
July 11, 2011iii2011–28 I.R.B.

2011–28 I.R.B.July 11, 2011

July 11, 20112011–28 I.R.B.

INTERNAL REVENUE BULLETIN
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