Internal Revenue Bulletin 2017-38 (PDF rendition): IRS Announcements

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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.
EXEMPT ORGANIZATIONS
Announcement 2017–12, page 238.
Revocation of IRC 501(c)(3) Organizations for failure to meet
the code section requirements. Contributions made to the
organizations by individual donors are no longer deductible
under IRC 170(b)(1)(A).
EMPLOYEE PLANS
Notice 2017– 45, page 232.
The notice extends temporary relief under Notice 2014 –5
from section 401(a)(4) nondiscrimination testing for closed
defined benefit plans through plan years beginning before
2019, and provides that taxpayers may continue to rely on the
proposed regulations for the same period.
ADMINISTRATIVE
Notice 2017– 47, page 232.
Notice 2017– 47 provides penalty relief to partnerships and
REMICs that filed certain untimely returns or untimely requests
for extension of time to file those returns for the first taxable
year that began after December 31, 2015, by the fifteenth day
of the fourth month following the close of that taxable year.
INCOME TAX
Notice 2017– 47, page 232.
Notice 2017– 47 provides penalty relief to partnerships and
REMICs that filed certain untimely returns or untimely requests
for extension of time to file those returns for the first taxable
year that began after December 31, 2015, by the fifteenth day
of the fourth month following the close of that taxable year.
Rev. Proc. 2017– 47, page 233.
Safe Harbor for Inadvertent Normalization Violations. This rev-
enue procedure provides a safe harbor concerning inadvertent
or unintentional uses of a practice or procedure that is incon-
sistent with §§ 50(d)(2) and 168(i)(9) of the Internal Revenue
Code of 1986, as amended, which require the use of the
Normalization Rules. If the safe harbor provided in this revenue
procedure applies, the Internal Revenue Service will not assert
that a taxpayer’s inadvertent or unintentional use of a practice
or procedure that is inconsistent with §§ 50(d)(2) and 168(i)(9)
constitutes a violation of the Normalization Rules. This revenue
procedure does not limit or change the process by which a
taxpayer may request a letter ruling or a referral for a technical
advice memorandum that the taxpayer’s proposed practice or
procedure is consistent or inconsistent with the Normalization
Rules.
Finding Lists begin on page ii.
Bulletin No. 2017–38
September 18, 2017

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force 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 Conven-
tions, 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 other-
wise indicated. Procedures relating solely to matters of internal
management are not published; however, statements of inter-
nal 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, identify-
ing 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, Legisla-
tion 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 Sec-
retary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment 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.
September 18, 2017Bulletin No. 2017–38

Part III. Administrative, Procedural, and Miscellaneous
Notice 2017– 45
Extension of Temporary
Nondiscrimination Relief for
Closed Defined Benefit Plans
through 2018
I. PURPOSE
This notice extends the temporary non-
discrimination relief for closed defined
benefit plans that is provided in Notice
2014–5, 2014–2 I.R.B. 276, by making
that relief available for plan years begin-
ning before 2019 if the conditions of No-
tice 2014–5 are satisfied.
II. BACKGROUND
Notice 2014–5 provides temporary
nondiscrimination relief for certain
“closed” defined benefit pension plans
(i.e., defined benefit plans that provide
ongoing accruals but that have been
amended to limit those accruals to some
or all of the employees who participated
in the plan on a specified date). Specif-
ically, for plan years beginning before
2016, Section III.B of Notice 2014–5
permits a DB/DC plan that includes a
closed defined benefit plan (that was
closed before December 13, 2013) and
that satisfies certain conditions set forth
in the notice to demonstrate satisfaction
of the nondiscrimination in amount re-
quirement of § 1.401(a)(4)–1(b)(2) on
the basis of equivalent benefits even if
the DB/DC plan does not meet any
of the existing eligibility conditions for
testing on that basis under § 1.401(a)
(4)–9(b)(2)(v).
Notice 2015–28, 2015–14 I.R.B. 848,
and Notice 2016–57, 2016–40 I.R.B.
432,extend the temporary nondiscrimi-
nation relief provided in Notice 2014–5
by applying that relief to plan years
beginning before 2018 if the conditions
of Notice 2014–5 aresatisfied. Notice
2015–28 further provides that, during the
period for which the extension applies, the
remaining provisions of the nondiscrimina-
tion regulations under § 401(a)(4) continue
to apply.
Proposed regulations relating to non-
discrimination requirements for closed
plans were published in the Federal Reg-
ister on January 29, 2016 (81 FR 4976).
The proposed regulations set forth relief
for closed plans under §§ 1.401(a)(4)–4,
1.401(a)(4)–8, and 1.401(a)(4)–9 (subject
to satisfaction of certain conditions set
forth in the regulations), and contain other
proposed nondiscrimination rules. The
regulations are proposed to apply gener-
ally to plan years beginning on or after the
date of publication of the final regulations.
The proposed regulations provide that tax-
payers are permitted to apply certain pro-
visions of the proposed regulations (in-
cluding all of the provisions that apply
specifically to closed plans) for certain
plan years beginning before the proposed
applicability date.
Many comments have been submitted
on the proposed regulations, including
oral comments at a public hearing held on
May 19, 2016. The Internal Revenue Ser-
vice (IRS) and the Treasury Department
expect that the final regulations will in-
clude a number of significant changes in
response to those comments. However, it
is anticipated that the final regulations will
not be published in time for plan spon-
sors to make plan design decisions
based on the final regulations before ex-
piration of the relief provided under No-
tice 2014–5 (as last extended by Notice
2016–57). Accordingly, the IRS and the
Treasury Department have determined
that it is appropriate to extend the relief
provided under Notice 2014–5 for an
additional year.
III. EXTENSION OF RELIEF FOR
CLOSED PLANS
The temporary nondiscrimination re-
lief for closed plans that is provided in
Notice 2014–5 is hereby extended to plan
years beginning before 2019 if the condi-
tions of Notice 2014–5 are satisfied. This
extension is provided in anticipation of
the issuance of final amendments to the
§ 401(a)(4) regulations. In addition, it is
intended that the final regulations will
provide that the reliance granted in the
preamble to the proposed regulations may
be applied for plan years beginning before
2019.
IV. EFFECT ON OTHER
DOCUMENTS
Notice 2014–5, Notice 2015–28, and
Notice 2016–57 are modified.
DRAFTING INFORMATION
The principal author of this notice is
Diane S. Bloom of the Office of the As-
sociate Chief Counsel (Tax Exempt and
Government Entities). However, other
personnel from the IRS participated in
development of this guidance. For further
information regarding this notice, please
contact Ms. Bloom or Linda Marshall at
(202) 317-6700 (not a toll-free number).
Relief for Partnerships and
REMICs Filing Returns or
Extension Requests by the
Due Date in Effect Before
the Enactment of the
Surface Transportation Act
Notice 2017– 47
PURPOSE
This notice provides penalty relief to
partnerships and real estate mortgage invest-
ment conduits (REMICs) that filed certain
untimely returns or untimely requests for
extension of time to file those returns for the
first taxable year that began after December
31, 2015, by the fifteenth day of the fourth
month following the close of that taxable
year.
BACKGROUND
Section 2006 of the Surface Transpor-
tation and Veterans Health Care Choice
Improvement Act of 2015 (the Surface
Transportation Act), Public Law 114–41,
129 Stat. 443 (2015),amended section
6072 of the Internal Revenue Code (the
Code) and changed the date by which a
partnership must file its annual return. The
due date for filing the annual return of a
partnership changed from the fifteenth day
of the fourth month following the close of
the taxable year (April 15 for calendar-year
taxpayers) to the fifteenth day of the third
month following the close of the taxable
September 18, 2017Bulletin No. 2017–38
232

year (March 15 for calendar-year taxpay-
ers). The new due date applies to the returns
of partnerships for taxable years beginning
after December 31, 2015.
Partnerships filing Form 1065, “U.S.
Return of Partnership Income,” and Form
1065–B, “U.S. Return of Income for
Electing Large Partnerships,” are affected
by the Surface Transportation Act amend-
ment. These partnerships may also file
Form 8804, “Annual Return for Partner-
ship Withholding Tax (Section 1446),”
and Form 8805, “Foreign Partner’s Infor-
mation Statement of Section 1446 With-
holding Tax,” which are generally due to
the IRS on the same date as the partner-
ship’s Form 1065 or Form 1065–B. Filers
of Form 1065 must furnish their partners
with Schedules K-1, “Partner’s Share of
Income, Deductions, Credits, etc.,” by the
due date of the Form 1065, and filers of
Form 1065–B must furnish their partners
with Schedules K-1 by the first March 15
following the close of the partnership’s
taxable year. Filers of Form 8804 that are
required to file Forms 8805 must also fur-
nish their partners with their respective
copies of Forms 8805 by the due date of
the Form 8804. Some partnerships must
also file additional returns, such as Form
5471, “Information Return of U.S. Per-
sons With Respect to Certain Foreign
Corporations,” by the due date of the
Form 1065 or Form 1065–B.
Partnerships can obtain a six-month
extension of time to file Form 1065,
1065–B, or 8804 by filing Form 7004,
“Application for Automatic Extension of
Time to File Certain Business Income
Tax, Information, and Other Returns,” by
the statutory due date of those returns.
Partnerships that receive an extension of
time to file Form 1065 receive a concur-
rent extension of time to furnish their
partners with Schedules K-1. Also, part-
nerships that receive an extension of
time to file Form 8804 receive concur-
rent extensions of time to file Forms
8805 and to furnish respective copies of
the Forms 8805 to their partners. The
six-month extension may apply to addi-
tional returns that partnerships may be
required to file by the due date of their
Forms 1065 or 1065–B, but it does not
affect the due date for partnerships filing
Form 1065–B to furnish their partners
with Schedules K-1.
Partnerships that fail to timely meet
their obligations to file and furnish returns
are subject to penalties. Partnerships that
fail to file Form 1065, 1065–B, or 8804 by
the due date (with regard to extensions)
are subject to penalty under section 6698
or 6651 of the Code. Partnerships that fail
to file Forms 8805 by the due date (with
regard to extensions) are subject to pen-
alty under 6721 of the Code. Partner-
ships that fail to furnish Schedules K-1
or the partner copies of Forms 8805 by
the due date are subject to penalty under
section 6722 of the Code. Partnerships
that fail to file Form 5471 by the due
date are subject to penalty under section
6038 or 6679 of the Code.Partnerships
that fail to file additional returns that they
are required to file by the due date of their
Forms 1065 or 1065–B may also be subject
to other penalties.
Many partnerships filed the returns dis-
cussed above or Form 7004 for the first
taxable year beginning after December 31,
2015, by the date previously required by
section 6072. If not for the Surface Trans-
portation Act, these returns and requests
for extension of time to file would have
been timely.
DISCUSSION
The IRS will grant relief from the pen-
alties described above for any return de-
scribed above for the first taxable year of
any partnership that began after December
31, 2015, if the following conditions are
satisfied:
(1) the partnership filed the Form 1065,
1065–B, 8804, 8805, 5471, or other return
required to be filed with the IRS and fur-
nishedcopies (or Schedules K-1) to the
partners (as appropriate) by the date that
would have been timely under section
6072 before amendment by the Surface
Transportation Act (April 18, 2017 for
calendar-year taxpayers, because April
15 was a Saturday and April 17 was a
legal holiday in the District of Colum-
bia), or
(2) the partnership filed Form 7004 to
request an extension of time to file by the
date that would have been timely under
section 6072 before amendment by the
Surface Transportation Act and files the
return with the IRS and furnishes copies
(or Schedules K-1) to the partners (as ap-
propriate) by the fifteenth day of the ninth
month after the close of the partnership’s
taxable year (September 15, 2017, for
calendar-year taxpayers). If the partner-
ship files Form 1065–B and was required
to furnish Schedules K-1 to the partners
by March 15, 2017, it must have done so
to qualify for relief.
This relief will be granted automati-
cally for penalties for failure to timely
file Forms 1065, 1065–B, 8804, 8805,
and any other returns, such as Form
5471, for which the due date is tied to
the due date of Form 1065 or Form
1065–B. Relief will also be granted to
REMICs, which file Form 1066, “U.S.
Real Estate Mortgage InvestmentConduit
(REMIC) Income Tax Return.” Partner-
ships and REMICs that qualify for relief
and have already been assessed penalties
can expect to receive a letter within the
next several months notifying them that
the penalties have been abated. For recon-
sideration of a penalty covered by this
notice that has not been abated by Febru-
ary 28, 2018, contact the number listed in
the letter that notified you of the penalty
or call (800) 829-0115 and state that you
are entitled to relief under Notice 2017–
47. Taxpayers who qualify for relief under
this notice will not be treated as having
received a first-time abatement under
the IRS’s administrative penalty waiver
program.
DRAFTING INFORMATION
The principal author of this notice is Jon-
athan R. Black of the Office of the Associate
Chief Counsel (Procedure and Administra-
tion). For further information regarding this
notice contact Jonathan R. Black at (202)
317-6845 (not a toll-free number).
Safe Harbor for Inadvertent
Normalization Violations
Rev. Proc. 2017– 47
SECTION 1. PURPOSE
This revenue procedure provides a safe
harbor concerning inadvertent or uninten-
tional uses of a practice or procedure that
is inconsistent with §§ 50(d)(2) and
168(i)(9) of the Internal Revenue Code of
1986, as amended (Code), which require
the use of the Normalization Rules (as
Bulletin No. 2017–38September 18, 2017
233

defined in section 4.04 of this revenue
procedure). If the safe harbor under sec-
tion 5 of this revenue procedure applies,
the Internal Revenue Service (Service)
will not assert that a taxpayer’s inadver-
tent or unintentional use of a practice
or procedure that is inconsistent with
§§ 50(d)(2) and 168(i)(9) of the Code
constitutes a violation of the Normaliza-
tion Rules. This revenue procedure does
not limit or change the process by which a
taxpayer may request a letter ruling or a
referral for a technical advice memoran-
dum that the taxpayer’s proposed practice
or procedure is consistent or inconsistent
with the Normalization Rules.
SECTION 2. BACKGROUND
In general, normalization is a system of
accounting used by regulated public util-
ities to reconcile the tax treatment of the
Investment Tax Credit (ITC) or acceler-
ated depreciation of public utility assets
with their regulatory treatment. Under
normalization, a utility receives the tax
benefit of the ITC oraccelerated deprecia-
tion in the early years of an asset’s regula-
tory useful life and passes that benefit on to
ratepayers ratably over the regulatory useful
life in the form of reduced rates. The re-
mainder of this section 2 describes the intent
of Congress in adopting the Normalization
Rules and their operation under the Code
and Income Tax Regulations.
.01Congressional Intent. Congress
had two principal objectives in adopting
the Normalization Rules. The first objec-
tive was to preserve the utility’s incentive
to invest. Congress enacted the ITC and
accelerated depreciation to stimulate in-
vestment. These incentives were not in-
tended to subsidize the consumption of
any products or services, including utility
products or services. Recognizing that
public utility rates are set based on the
utility’s costs incurred to provide the util-
ity service, including federal income tax
expense, Congress enacted a set of rules to
assure that some or all of the value of the
incentives it provided for utility capital
investment would not be diverted from
investment by utilities to lower prices for
consumption by customers of utilities.
The second objective was to protect the
government’s tax revenue. Congress rea-
soned that when a utility elected acceler-
ated depreciation and its regulator low-
ered rates to reflect the resulting tax
benefit, the federal government would ex-
perience a reduction in tax revenue twice:
once from the added accelerated depreci-
ation deductions taken by the utility, and
again from the decline in the revenue re-
ceived by the utility as a result of its lower
rates. See S. Rep. No. 91–552, at 17
(1969). The same impact results if a utility
is permitted to flow through the benefit of
its ITC to customers.
.02Depreciation. Section 168 of the
Code provides taxpayers generally with
the benefits of the accelerated cost recov-
ery system in the computation of their
depreciation deduction for federal income
tax purposes. Section 168(f) provides the
description of certain property for which
the benefits of § 168 do not apply. Section
168(f)(2) provides that § 168 does not
apply to any public utility property, as
defined in § 168(i)(10), if the taxpayer
does not use a normalization method of
accounting. In general, § 168(i)(10) de-
fines “public utility property” as property
used predominantly in the trade or busi-
ness of furnishing or selling (A) electrical
energy, water, or sewage disposal ser-
vices, (B) gas or steam through a local
distribution system, (C) certain communi-
cations services, or (D) the transportation
of gas or steam by pipeline, ifrates for
such furnishing or sale are established
or approved by a State (including the
District of Columbia) or political subdi-
vision thereof, any agency or instrumen-
tality of the United States, or a public
service or public utility commission or
other body of any State or political sub-
division thereof.
Section 168(i)(9) describes what
constitutes a “normalization method of
accounting.” The rules provided in
§ 168(i)(9) recognize that the rates a
regulated public utility is permitted to
charge its customers are established or
approved by regulators based on the
utility’s cost of service taking into ac-
count the depreciation of assets and fed-
eral income tax expense. The Normal-
ization Rules under § 168(i)(9)(A)(i)
require the taxpayer to compute the fed-
eral income tax expense taken into ac-
count in setting its rates using a depre-
ciation method that is the same as, and a
depreciation period that is no shorter
than, the method and period used to
compute the depreciation expense for
purposes of computing rates. Under
§ 168(i)(9)(A)(ii), a taxpayer must ac-
count for any difference between its fed-
eral income tax expense taken into ac-
count in computing its rates and the
actual federal income tax it pays as a
reserve for deferred taxes. If the tax-
payer uses estimates or projections in
determining for rate-making purposes
its tax expense, depreciation expense, or
reserve for deferred taxes, the Normal-
ization Rules under § 168(i)(9)(B) re-
quire the use of consistent estimates or
projections with respect to the other two
items and rate base.
Section 1.167(l)–1(a)(1) of the Income
Tax Regulations provides that the normal-
ization requirements for public utility
property pertain only to the deferral of
federal income tax liability resulting from
the use of an accelerated method of de-
preciation for computing the allowance
for depreciation under § 167 of the Code
and the use of straight-line depreciation
for computing tax expense and deprecia-
tion expense for purposes of establishing
cost of services and for reflecting operat-
ing results in regulated books of account.
.03Investment Tax Credit. Section 46
of the Code sets forth certain investment
credits against income tax. Section 50(d)
provides special rules for certain taxpay-
ers to qualify for those credits, including
§ 50(d)(2), which provides that rules sim-
ilar to the limitations provided under for-
mer § 46(f) applicable to public utility
property prior to the enactment of the
Revenue Reconciliation Act of 1990, Pub.
L. No. 101–508, Title XI, 104 Stat. 1388,
shall apply to certain regulated compa-
nies. The Tax Reform Act of 1986, Pub.
L. No. 99–514, 100 Stat. 2085, repealed
the ITC generally with respect to public
utility property placed in service after
1985; however, due to the long useful life
of much public utility property, these pro-
visions retain their vitality.
Under the general rule of former
§ 46(f), those regulated companies are not
entitled to the ITC if either the taxpayer’s
cost of service or rate base for ratemaking
purposes is reduced by any portion of the
credit. However, the statute provides im-
portant exceptions. Former § 46(f)(1) pro-
vides that the ITC may not be used to
reduce the taxpayer’s cost of service, but
September 18, 2017Bulletin No. 2017–38
234

may be used to reduce rate base, if such
reduction is restored not less rapidly than
ratably. Former § 46(f)(2) provides an
election under which a taxpayer is permit-
ted to take into account a ratable portion
of the ITC for purposes of determining
cost of service, but is not permitted to
reduce the base to which the taxpayer’s
rate of return for ratemaking purposes is
applied by any portion of the credit. A
utility taxpayer elects either former
§ 46(f)(1) or former § 46(f)(2) and that
choice applies to all public utility property
of the taxpayer. A taxpayer that does not
specifically elect former § 46(f)(2) is
subject to the general rule of former
§ 46(f)(1).
Former § 46(f)(6) provides that for
purposes of determining ratable portions,
the period of time used in computing de-
preciation expense for purposes of reflect-
ing operating results in the taxpayer’s
regulated books of account is to be used.
Under § 1.46–6(g)(2) of the Income
Tax Regulations, “ratable” is deter-
mined by considering the period of time
actually used in computing the taxpay-
er’s regulated depreciation expense for
the property forwhich a credit is allowed.
“Regulated depreciation expense” is the de-
preciation expense for the property used by
a regulatory body for purposes of establish-
ing the taxpayer’s cost of service for rate-
making purposes.
.04Application of Sanctions for Fail-
ure to Use a Normalization Method of
Accounting. Former § 46(f)(4)(A) pro-
vides that there is no disallowance of a
credit before the first final inconsistent
determination is put into effect for the
taxpayer’s former § 46(f) property. Sec-
tion 1.46–6(f)(4) provides that the ITC is
disallowed for any former § 46(f) property
placed in service by a taxpayer (a) before
the date a final inconsistent determination
by a regulatory body is put into effect, and
(b) on or after such date and before the
date a subsequent consistent determina-
tion is put into effect.
Section 1.46–6(f)(7) provides that the
term “determination” refers to a determi-
nation made with respect to former § 46(f)
property (other than property to which an
election under former § 46(f)(3) applies)
by a regulatory body described in former
§ 46(c)(3)(B)that determines the effect of
the credit (a) for purposes of former
§ 46(f)(1), on the taxpayer’s cost of service
or rate base for ratemaking purposes, or (b)
for a taxpayer that made an election under
former § 46(f)(2), on the taxpayer’s cost of
service, for ratemaking purposes or in its
regulated books of account, or on the tax-
payer’s rate base for ratemaking purposes.
Section 1.46–6(f)(8)(i) provides that
“inconsistent” refers to a determination
that is inconsistent with former § 46(f)(1)
or former § 46(f)(2). For example, a de-
termination to reduce the taxpayer’s cost
of service by more than a ratable portion
of the ITC would be a determination that
is inconsistent with former § 46(f)(2).
Section 1.46–6(f)(8)(ii) provides that the
term “consistent” refers to a determination
that is consistent with former § 46(f)(1)
or former § 46(f)(2). Section 1.46–
6(f)(8)(iii) provides that the term “final
determination” means a determination by
a regulatory body with respect to which
all rights of appeal or to request a review,
a rehearing, or a redetermination have
been exhausted or have lapsed.
The Senate Finance Committee Report
to the Tax Reduction Act of 1975 ad-
dressed the importance of the final deter-
mination by stating that “if a regulatory
agency requires the flowing through of a
company’s additional investment credit at
a rate faster than permitted, or insists upon
a greater rate base adjustment than is per-
mitted, the additional investment credit is
to be disallowed, but only after a final
determination...isputinto effect.” S.
Rep. No. 94–36, at 44–45 (1975).
Unlike most tax provisions the sanc-
tions imposed under the Normalization
Rules were not intended to directly in-
crease or decrease federal tax revenues.
They were intended to discourage the flow
through of tax benefits to customers in order
to allow utilities to benefit from the under-
lying depreciation and ITC provisions and
prevent the loss of revenue the federal gov-
ernment would suffer if the benefits were
flowed through to customers.
In addition, in discussing the limita-
tions on the ratemaking treatment of the
ITC under § 46(e)(1) and (e)(2), the Sen-
ate Finance Committee Report concerning
the Revenue Act of 1971, P.L. 92–178, 85
Stat. 497, indicates that the Committee
hoped that the sanctions of disallowance
of the ITC would not have to be imposed.
S. Rep. No. 92–437, at 41 (1971).
SECTION 3. SCOPE
.01 This revenue procedure applies to a
taxpayer that:
(1) owns Public Utility Property (as
defined in section 4.03 of this revenue
procedure);
(2) has inadvertently or unintention-
ally failed to follow a practice or proce-
dure that is consistent with the Normal-
ization Rules (as defined in section 4.04 of
this revenue procedure) in one or more
years;
(3) upon recognizing its failure to
comply with the Normalization Rules, the
taxpayer changes its Inconsistent Practice
or Procedure (as defined in section 4.06 of
this revenue procedure) to a Consistent
Practice or Procedure (as defined in sec-
tion 4.05 of this revenue procedure) at the
NextAvailable Opportunity (as defined in
section 4.07 of this revenue procedure) in a
manner that totally reverses the effect of the
Inconsistent Practice or Procedure, provided
the Taxpayer’s Regulator (as defined in sec-
tion 4.01 of this revenue procedure) adopts
or approves the change; and
(4) retains contemporaneous docu-
mentation that clearly demonstrates the
effects of the Inconsistent Practice or Pro-
cedure and the change to a Consistent
Practice or Procedure adopted or ap-
proved by the Taxpayer’s Regulator.
.02 For purposes of section 3.01(2) of
this revenue procedure, a taxpayer’s In-
consistent Practice or Procedure is neither
inadvertent nor unintentional if the Tax-
payer’s Regulator specifically considered
and specially addressed the application of
the Normalization Rules to the Inconsis-
tent Practice or Procedure in establishing
or approving the taxpayer’s rates even if
at the time of such consideration the Tax-
payer’s Regulator did not believe the
practice or procedure was inconsistent
with the Normalization Rules.
SECTION 4. DEFINITIONS
.01 Taxpayer’s Regulator
Taxpayer’s Regulator means a State
(including the District of Columbia) or
political subdivision thereof, any agency
or instrumentality of the United States,
or a public service or public utility com-
mission or other body of any State or
political subdivision thereof that estab-
Bulletin No. 2017–38September 18, 2017
235

lishes or approves the rates of the tax-
payer.
.02 Rate Proceeding
Rate Proceeding means a proceeding in
which the Taxpayer’s Regulator estab-
lishes or approves the taxpayer’s rates.
.03 Public Utility Property
Public Utility Property has the mean-
ing provided in former § 46(f)(5) or in
§ 168(i)(l0), and the applicable Income
Tax Regulations.
.04 Normalization Rules
The Normalization Rules mean, in the
case of the ITC, the rules provided by
former § 46(f), as ineffect on the day
before the date of enactment of the Rev-
enue Reconciliation Act of 1990, and
the Income Tax Regulations thereunder,
and, in the case of the accelerated cost
recovery system for depreciation, the
rules provided by § 168(i)(9), as in ef-
fect on the day before the date of enact-
ment of the Revenue Reconciliation Act
of 1990, and the Income Tax Regula-
tions thereunder.
.05 Consistent Practice or Procedure
A Consistent Practice or Procedure
means a practice or procedure followed by
the taxpayer and the Taxpayer’s Regulator
that is consistent with the Normalization
Rules.
.06 Inconsistent Practice or Procedure
An Inconsistent Practice or Procedure
means a practice or procedure followed by
the taxpayer and the Taxpayer’s Regulator
that is inconsistent with the Normalization
Rules.
.07 Next Available Opportunity
(1) In the case of a taxpayer without a
Rate Proceeding pending before the Tax-
payer’s Regulator, the Next Available Op-
portunity means the next Rate Proceeding.
(2) In the case of a taxpayer with a
Rate Proceeding currently pending before
the Taxpayer’s Regulator, the Next Avail-
able Opportunity means the currently
pending proceeding, unless the rules of
the Taxpayer’s Regulator or applicable
state or federal law (at the time the Incon-
sistent Practice or Procedure is identified)
preclude the taxpayer from initiating a
change from an Inconsistent Practice or
Procedure to a Consistent Practice or Pro-
cedure in thecurrently pending proceeding,
in which case the currently pending pro-
ceeding shall not be the Next Available Op-
portunity, and the Next Available Opportu-
nity means the next Rate Proceeding.
(3) If, at the conclusion of a Rate
Proceeding, the taxpayer has a private
letter ruling request pending before the
Service to address whether or not a prac-
tice or procedure addressed in the Rate
Proceeding is a Consistent Practice or
Procedure, and the Taxpayer’s Regula-
tor later establishes or approves rates
subject to adjustment from the effective
date of the unadjusted rates in order to
conform to the Service’s ruling, the tax-
payer shall have corrected its Inconsis-
tent Practice or Procedure at the Next
Available Opportunity.
SECTION 5. APPLICATION
.01 For any taxpayer described in sec-
tion 3 of this revenue procedure, the Ser-
vice will not assert that the Inconsistent
Practice or Procedure constitutes a viola-
tion of the Normalization Rules and will
not deny that taxpayer the benefits of the
ITC and/or accelerated depreciation. In
any tax year ending after the taxpayer has
identified an Inconsistent Practice or Pro-
cedure, but in which the taxpayer has not
changed to a Consistent Practice or Pro-
cedure because the taxpayer has not
reached the year that presents the taxpayer
with its Next Available Opportunity, the
taxpayer must include in its return a state-
ment described in section 5.02 of this
revenue procedure. If the taxpayer makes
the representation described in section
5.02(3) of this revenue procedure, the Ser-
vice will not assert that the Inconsistent
Practice or Procedure is a violation of the
Normalization Rules and will not chal-
lenge the taxpayer’s use of the identified
Inconsistent Practice or Procedure unless
the taxpayer does not change to a Consis-
tent Practice or Procedure at the Next
Available Opportunity.
.02 A statement is described in this
section 5.02 if:
(1) The top of the statement is
marked “FILED PURSUANT TO REV.
PROC. 2017–47”;
(2) The statement identifies the tax-
payer’s Inconsistent Practice or Proce-
dure; and
(3) The statement includes a repre-
sentation by the taxpayer of its intention
to change to a Consistent Practice or Pro-
cedure at the Next Available Opportunity.
SECTION 6. EFFECTIVE DATE
This revenue procedure is effective for
taxable years ending on or after December
31, 2016. However, the Service will not
challenge any Inconsistent Practice or
Procedure in any earlier taxable year pro-
vided that the requirements of sections 3
and 5 of this revenue procedure are satis-
fied by the taxpayer with respect to the
Inconsistent Practice or Procedure in such
taxable year.
SECTION 7. PAPERWORK
REDUCTION ACT
The collections of information con-
tained in this revenue procedure have
been reviewed and approved by the Office
of Management and Budget in accordance
with the Paperwork Reduction Act (44
U.S.C. 3507) under control number 1545-
2276.
An agency may not conduct or spon-
sor, and a person is not required to re-
spond to, a collection of information un-
less the collection of information displays
a valid OMB control number.
The collections of information are in
sections 3 and 5 of this revenue proce-
dure and are required for a taxpayer to
apply the safe harbor provided by this
revenue procedure. This information is
required to be collected and retained to
clearly demonstrate the effects of a tax-
payer’s Inconsistent Practice or Proce-
dure and the taxpayer’s change to a
Consistent Practice or Procedure ad-
opted or approved by the Taxpayer’s
Regulator. The taxpayer must also in-
clude a statement in its federal income
tax return identifying the Inconsistent
Practice or Procedure and representing
its intention to change to a Consistent
Practice or Procedure at the Next Avail-
able Opportunity. The likely respon-
dents are corporations or partnerships
that are regulated public utilities.
The estimated total annual reporting
burden is 1,800 hours.
The estimated annual burden per re-
spondent varies from 10 hours to 14
hours, depending on individual circum-
stances, with an estimated average bur-
den of 12 hours to collect and retain
contemporaneous documentation and to
complete the statement required under
September 18, 2017Bulletin No. 2017–38
236

this revenue procedure. The estimated
number of respondents is 150.
The estimated annual frequency of re-
sponses is on occasion.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by § 6103.
SECTION 8. DRAFTING INFORMATION
The principal author of this revenue
procedure is Jennifer C. Bernardini of
the Office of Associate Chief Counsel
(Passthroughs & Special Industries). For
further information regarding this reve-
nue procedure contact Ms. Bernardini
on (202) 317-6853 (not a toll free
number).
Bulletin No. 2017–38September 18, 2017
237

Part IV. Items of General Interest
Deletions From Cumulative
List of Organizations,
Contributions to Which are
Deductible Under Section
170 of the Code
Announcement 2017–12
Table of Contents
The Internal Revenue Service has re-
voked its determination that the organiza-
tions listed below qualify as organizations
described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the IRS 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 IRS is not pre-
cluded from disallowing a deduction for
any contributions made after an organiza-
tion ceases to qualify under section
170(c)(2) if the organization has not
timely filed a suit for declaratory judg-
ment under section 7428 and if the con-
tributor (1) had knowledge of the revoca-
tion 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 omis-
sions 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 on September 18,
2017 and would end on the date the court
first determines the organization is not
described in section 170(c)(2) as more
particularly set for in section 7428(c)(1).
For individual contributors, the maximum
deduction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any indi-
vidual, in whole or in part, for the acts or
omissions of the organization that were
the basis for revocation.
NAME OF ORGANIZATIONEffective Date of RevocationLOCATION
Beaver County Farmers’ Markets, Inc.1/1/2015Enon Valley, PA
Milford Valley Memorial Hospital1/1/2013Milford Valley, UT
Hosanna Foundation, Inc.1/1/2014Miramar, FL
Alternative Christian Experience, Inc.1/1/2014Tampa, FL
Nevada Sports Academy Stars, Inc.1/1/2014Henderson, NV
Play to Succeed1/1/2013Longview, WA
2010 ArtBlok1/1/2015Minneapolis, MN
Society for International Help, Inc.1/1/2008Long Island City, NY
Knowledge Speaks, Inc.6/1/2011Jacksonville, FL
Abraham Project1/1/2014Philadelphia, PA
Project OneEight, Inc.1/1/2014Spartanburg, SC
Kissy’s Kidz, Inc.1/1/2014Bowie, MD
Inter-religious Foundation For Community
Organization, Inc.
1/1/2009New York, NY
Faith’s Hope Foundation7/1/2010Fullerton, CA
September 18, 2017Bulletin No. 2017–38
238

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarifiedis used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. 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
being stated in a new ruling.
Supersededdescribes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the new
ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example,modifiedand
supersededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
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
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings 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 following abbreviations in current
use and formerly used will appear in ma-
terial published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE
—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Bulletin No. 2017–38September 18, 2017
i

Numerical Finding List
1
Bulletin 2017–27 through 2017–38
Action on Decision:
2017-5, 2017-27 I.R.B.1
2017-6, 2017-33 I.R.B.194
Announcements:
2017-05, 2017-27 I.R.B.5
2017-08, 2017-28 I.R.B.9
2017-09, 2017-35 I.R.B.219
2017-10, 2017-33 I.R.B.210
2017-12, 2017-38 I.R.B.238
Notices:
2017-36, 2017-33 I.R.B.208
2017-37, 2017-29 I.R.B.89
2017-38, 2017-30 I.R.B.147
2017-39, 2017-31 I.R.B.150
2017-40, 2017-32 I.R.B.190
2017-41, 2017-34 I.R.B.211
2017-42, 2017-34 I.R.B.212
2017-43, 2017-36 I.R.B.224
2017-44, 2017-36 I.R.B.226
2017-45, 2017-38 I.R.B.232
2017-47, 2017-38 I.R.B.232
Proposed Regulations:
REG-139633-08, 2017-31 I.R.B.175
REG-128483-15, 2017-32 I.R.B.191
REG-136118-15, 2017-28 I.R.B.9
Revenue Procedures:
2017-41, 2017-29 I.R.B.92
2017-42, 2017-29 I.R.B.124
2017-43, 2017-31 I.R.B.153
2017-44, 2017-35 I.R.B.216
2017-45, 2017-35 I.R.B.216
2017-47, 2017-38 I.R.B.233
2017-48, 2017-36 I.R.B.229
2017-50, 2017-37 I.R.B.230
Revenue Rulings:
2017-14, 2017-27 I.R.B.2
2017-15, 2017-32 I.R.B.176
2017-16, 2017-35 I.R.B.215
2017-17, 2017-36 I.R.B.222
Treasury Decisions:
9819, 2017-29 I.R.B.85
9820, 2017-32 I.R.B.178
9821, 2017-32 I.R.B.181
9822, 2017-33 I.R.B.195
9823, 2017-33 I.R.B.206
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2017–01 through 2017–26 is in Internal Revenue Bulletin
2017–26, dated June 27, 2017.
September 18, 2017Bulletin No. 2017–38
ii

Finding List of Current Actions on
Previously Published Items
1
Bulletin 2017–27 through 2017–38
Notices:
2015-77
Amplified by
Notice 2017-40, 2017-32 I.R.B.190
Revenue Procedures:
2016-27
Modified by
Rev. Proc. 2017-43, 2017-31 I.R.B.153
2016-27
Superseded by
Rev. Proc. 2017-43, 2017-31 I.R.B.153
2016-48
Superseded by
Rev. Proc. 2017-48, 2017-36 I.R.B.229
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2017–01 through 2017–26 is in Internal Revenue Bulletin
2017–26, dated June 27, 2017.
Bulletin No. 2017–38September 18, 2017
iii

INTERNAL REVENUE BULLETIN
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