Internal Revenue Bulletin 2009-45 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 200
9-45
November 9, 2009
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
Notice 2009–85, page 598.
This notice provides guidance under section 877A of the Code,
which was enacted by section 301 of the Heroes Earnings As-
sistance and Relief Act of 2008 (the “Act”) and applies to individ-
uals who expatriate on or after June 17, 2008. Section 877A
generally provides that all property of a “covered expatriate” is
treated as sold on the day before the individual’s expatriation
date. Gain and loss from the deemed sale must be taken into
account at that time (subject to a $600,000 exclusion amount,
which will be indexed for inflation) unless the individual elects
to defer payment of the tax by providing security and waiving
treaty rights that would prevent assessment or collection of
the deferred tax. There are special rules for deferred compen-
sation items, specified tax deferred accounts, and interests in
nongrantor trusts.
Rev. Proc. 2009–50, page 617.
Cost-of-living adjustments for 2010.This procedure sets
forth the cost-of-living adjustments to certain items for 2010
due to inflation as required under various provisions of the Code
and Service guidance.
EXEMPT ORGANIZATIONS
Announcement 2009–76, page 627.
A list is provided of organizations now classified as private foun-
dations.
ESTATE TAX
Rev. Proc. 2009–50, page 617.
Cost-of-living adjustments for 2010.This procedure sets
forth the cost-of-living adjustments to certain items for 2010
due to inflation as required under various provisions of the Code
and Service guidance.
GIFT TAX
Rev. Proc. 2009–50, page 617.
Cost-of-living adjustments for 2010.This procedure sets
forth the cost-of-living adjustments to certain items for 2010
due to inflation as required under various provisions of the Code
and Service guidance.
EMPLOYMENT TAX
Rev. Proc. 2009–51, page 625.
This document sets forth the procedures for employers who
are eligible to file Form 944,Employer’sAnnualFederalTaxRe-
turn, to use to request to file Form 944 instead of Forms 941,
Employer’sQuarterlyFederalTaxReturn,fortaxyearsbegin-
ning on or after January 1, 2010. In addition, this document
sets forth the procedures for employers who previously were
notified to file Form 944 to use to request to file Forms 941
instead for tax years beginning on or after January 1, 2010.
(Continued on the next page)
Finding Lists begin on page ii.

EXCISE TAX
Rev. Proc. 2009–50, page 617.
Cost-of-living adjustments for 2010.This procedure sets
forth the cost-of-living adjustments to certain items for 2010
due to inflation as required under various provisions of the Code
and Service guidance.
ADMINISTRATIVE
Rev. Proc. 2009–50, page 617.
Cost-of-living adjustments for 2010.This procedure sets
forth the cost-of-living adjustments to certain items for 2010
due to inflation as required under various provisions of the Code
and Service guidance.
November 9, 20092009–45 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top quality service by helping them
understand an
d meet their tax responsibilities and by applying
the tax 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 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
published in the last Bulletin of each semiannual period.
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.
2009–45 I.R.B.November 9, 2009

November 9, 20092009–45 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 1.—Ta
xImposed
The Service pr
ovides inflation adjustments to the
tax rate table
s for individuals, trusts, and estates for
taxable years
beginning in 2010. In addition, the
amounts of cer
tain reductions allowed against the
unearned inc
ome of minor children in computing
the “kiddie t
ax” are adjusted. Also adjusted are the
amounts used
to determine whether a parent may
elect to repo
rt the “kiddie tax” on the parent’s return.
See Rev. Proc
. 2009-50, page 617.
Section 23.—Adoption
Expenses
The Service provides inflation adjustments to the
adoption credit allowed for the adoption of a child for
taxable years beginning in 2010. The Service also
provides inflation adjustments to the value used in
calculating the modified adjusted gross income lim-
itations used to determine the amount of adoption
credit that is allowed in taxable years beginning in
2010. See Rev. Proc. 2009-50, page 617.
Section 24.—Child Tax
Credit
The Service provides inflation adjustments for the
value used in determining the amount of the credit
that may be refundable for taxable years beginning in
2010. See Rev. Proc. 2009-50, page 617.
Section 25A.—Hope and
Lifetime Learning Credits
For taxable years beginning in 2010, the Ser-
vice provides inflation adjustments for the amount
of qualified tuition and related expenses that are
taken into account in determining the amount of the
Hope Scholarship Credit, and for the amount of a
taxpayer’s modified adjusted gross income that is
taken into account in determining the reduction in
the amount of the Hope Scholarship and Lifetime
Learning Credits otherwise available. See Rev. Proc.
2009-50, page 617.
Section 32.—Earned
Income
The Service provides inflation adjustments to the
limitations on the earned income credit for taxable
years beginning in 2010. See Rev. Proc. 2009-50,
page 617.
Section 42.—L
ow-Income
Housing Credi
t
The Service pr
ovides inflation adjustments to the
amounts used t
o calculate the State housing credit
ceiling used i
n determining the low-income housing
credit, and t
he per low-income unit qualified basis
amount, for c
alendar year 2010. See Rev. Proc.
2009-50, pag
e 617.
Section 59.—Other
Definitions and Special
Rules
The Service provides an inflation adjustment to the
exemption amount used in computing the alternative
minimum tax for a minor child subject to the “kiddie
tax” for taxable years beginning in 2010. See Rev.
Proc. 2009-50, page 617.
Section 62.—Adjusted
Gross Income Defined
The Service provides inflation adjustments to the
amounts an eligible employer may pay in calendar
year 2010 to certain welders and heavy equipment
mechanics for rig-related expenses that are deemed
substantiated under an accountable plan if paid in ac-
cordance with Rev. Proc. 2002–41, 2002–1 C.B.
1098. See Rev. Proc. 2009-50, page 617.
Section 63.—Taxable
Income Defined
The Service provides inflation adjustments to the
standard deduction amounts (including the limitation
in the case of certain dependents, and the additional
standard deduction for the aged or blind) for taxable
years beginning in 2010. See Rev. Proc. 2009-50,
page 617.
Section 132.—Certain
Fringe Benefits
The Service provides inflation adjustments to the
limitations on the exclusion of income for a qualified
transportation fringe benefit for taxable years begin-
ning in 2010. See Rev. Proc. 2009-50, page 617.
Section 135.—Income
from United States Savings
Bonds Used to Pay Higher
Education Tuition and Fees
The Service provides inflation adjustments to the
limitation on the exclusion of income from United
States savings bonds for taxpayers who pay qualified
higher educat
ion expenses for taxable years begin-
ning in 2010. S
ee Rev. Proc. 2009-50, page 617.
Section 137.—Adoption
Assistance Programs
The Service provides inflation adjustments to the
maximum amount that can be excluded from an em-
ployee’s gross income in connection with a qualified
adoption assistance programfor taxable years begin-
ning in 2010. The Service also provides inflation ad-
justments to the amount used to calculate the modi-
fied adjusted gross income limitations used to deter-
mine the amount that can be excluded from an em-
ployee’s gross income for taxable years beginning in
2010. See Rev. Proc. 2009-50, page 617.
Section 146.—Volume Cap
The Service provides inflation adjustments to the
amounts used to determine the State ceiling for the
volume cap of private activity bonds for calendar year
2010. See Rev. Proc. 2009-50, page 617.
Section 147.—Other
Requirements Applicable to
Certain Private Activity
Bonds
The Service provides an inflation adjustment
to the loan limit amount on agricultural bonds
for first-time farmers for calendar year 2010.
See Rev. Proc. 2009-50, page 617.
Section 148.—Arbitrage
26 CFR 1.148–5: Yield and valuation of investments.
The Service provides inflation adjustments for de-
termining in the calendar year 2010 whether a bro-
ker’s commission or similar fee with respect to the
acquisition of a guaranteed investment contract or in-
vestments purchased for a yield restricted defeasance
escrow is reasonable. The Service provides an infla-
tion adjustment to the computation credit determined
under section 1.148–3(d)(4) of the proposed Income
Tax Regulations for bond years ending in 2010. See
Rev. Proc. 2009-50, page 617.
Section 151.—Allowance
of Deductions for Personal
Exemptions
The Service provides inflation adjustments to the
personal exemption amount out for taxable years be-
ginning in 2010. See Rev. Proc. 2009-50, page 617.
2009–45 I.R.B.595November 9, 2009

Section 170.—Charitable,
etc., Contributions and Gifts
The Service provides inflation adjustments to the
“insubstantial benefit” guidelines for calendar year
2010. Under the guidelines, a charitable contribu-
tion is fully deductible even though the contributor re-
ceives “insubstantial benefits” from the charity. See
Rev. Proc. 2009-50, page 617.
Section 179.—Election
to Expense Certain
Depreciable Business
Assets
The Service provides inflation adjustments to the
aggregate cost of section 179 property that a taxpayer
may elect to treat as an expense for taxable years be-
ginning in 2010. See Rev. Proc. 2009-50, page 617.
Section 213.—Medical,
Dental, etc., Expenses
The Service provides inflation adjustments to the
limitation on the amount of eligible long-term care
premiums includible in the term “medical care” for
taxable years beginning in 2010. See Rev. Proc.
2009-50, page 617.
Section 220.—Archer MSAs
The Service provides inflation adjustments to the
amounts used to determine whether a health plan is
a “high deductible health plan” for purposes of de-
termining whether an individual is eligible for a de-
duction for cash paid to a medical savings account
for taxable years beginning in 2010. See Rev. Proc.
2009-50, page 617.
Section 221.—Interest on
Education Loans
The Service provides inflation adjustments to the
income limitations used to determine the allowable
deduction for interest on education loans for taxable
years beginning in 2010. See Rev. Proc. 2009-50,
page 617.
Section 512.—Unrelated
Business Taxable Income
The Service provides an inflat
ion adjustment to the
maximum amount of annual dues t
hat can be paid
to certain agricultural or hor
ticultural organizations
without any portion being trea
ted as unrelated trade
or business income by reason of
any benefits or priv-
ileges available to members fo
r taxable years begin-
ning in 2010. See Rev. Proc. 20
09-50, page 617.
Section 513.—Unrelated
Trade or Business
The Service provides an inflation adjustment to
the maximum cost of a “low cost article” for tax-
able years beginning in 2010. Funds raised through
a charity’s distribution of “low cost articles” will not
be treated as unrelated business income to the charity.
See Rev. Proc. 2009-50, page 617.
Section 877.—Expatriation
to Avoid Tax
The Service provides an inflation adjustment to
the amount used for calendar year 2010 to determine
whether an individual’s loss of United States citizen-
ship had the avoidance of United States tax as one of
its principal purposes. See Rev. Proc. 2009-50, page
617.
Section 877A.—Tax
Responsibilities of
Expatriation
The Service provides an inflation adjustment to the
amount that reduces the amount that would be in-
cludible in the gross income of a covered expatriate
for taxable years beginning in 2010. See Rev. Proc.
2009-50, page 617.
Section 911.—Citizens or
Residents of the United
States Living Abroad
The Service provides an inflation adjustment to
the amount of foreign earned income that may be ex-
cluded from gross income for taxable years beginning
in 2010. See Rev. Proc. 2009-50, page 617.
Section 2032A.—Valuation
of Certain Farm, etc.,
Real Property
The Service provides an inflation adjustment to the
maximum amount by which the value of certain farm
and other qualified real property included in a dece-
dent’s gross estate may be decreased for purposes of
valuing the estate of a decedent dying in calendar year
2010. See Rev. Proc. 2009-50, page 617.
Section 2503.—Taxable
Gifts
The Service provides an inflation adjustment to the
amount of gifts that may be made to a person in a
calendar year without including the amount in taxable
gifts for calendar year 2010. See Rev. Proc. 2009-50,
page 617.
Section 2523.—Gift to
Spouse
The Service provides an inflation adjustment to the
amount of gifts that may be made in a calendar year
to a spouse who is not a citizen of the United States
without including the amount in taxable gifts for cal-
endar year 2010. See Rev. Proc. 2009-50, page 617.
Section 4161.—Imposition
of Tax
The Service provides an inflation adjustment to the
amount of excise tax imposed for calendar year 2010
on the first sale by a manufacturer, producer, or im-
porter of any shaft of a type used in the manufacture
of certain arrows. See Rev. Proc. 2009-50, page 617.
Section 6033.—Returns by
Exempt Organizations
The Service provides an inflation adjustment
to the amount of dues certain exempt organiza-
tions with nondeductible lobbying expenditures
can charge and still be excepted from reporting
requirements for taxable years beginning in 2010.
See Rev. Proc. 2009-50, page 617.
Section 6039F.—Notice of
Large Gifts Received From
Foreign Persons
The Service provides an inflation adjustment to the
amount of gifts received, in a taxable year from for-
eign persons, that triggers areporting requirement for
a United States person for taxable years beginning in
2010. See Rev. Proc. 2009-50, page 617.
Section 6323.—Validity
and Priority Against
Certain Persons
The Service provides inflation adjustments for cal-
endar year 2010 to (1) the maximum amount of a ca-
sual sale of personal property below which a federal
tax lien will not be valid against a purchaser of the
property and (2) the maximum amount of a contract
for the repair or improvement of certain residential
property at or below which a federal tax lien will not
be valid against a mechanic’s lienor. See Rev. Proc.
2009-50, page 617.
Section 6334.—Property
Exempt From Levy
The Service provides inflation adjustments to the
value of certain property exempt from levy (fuel, pro-
visions, furniture, household personal effects, arms
for personal use, livestock, poultry, and books and
November 9, 20095962009–45 I.R.B.

tools of a trade, business, or profession) for calendar
year 2010. See Rev. Proc. 2009-50, page 617.
Section 6601.—Interest
on Underpayment,
Nonpayment or Extension
of Time for Payment, of Tax
The Service provides an inflation adjustment to
the amount used to determine the amount of interest
charged on a certain portion of the estate tax payable
in installments for the estate of a decedent dying in
calendar year 2010. See Rev. Proc. 2009-50, page
617.
Section 7430.—Awarding
of Costs and Certain Fees
The Service provides an inflation adjustment to the
hourly limit on attorney fees incurred in calendar year
2010 that may be awarded in a judgment or settlement
of an administrative or judicial proceeding concern-
ing the determination, collection, or refund of tax, in-
terest, or penalty. See Rev. Proc. 2009-50, page 617.
Section 7702B.—Treatment
of Qualified Long-Term
Care Insurance
The Service provides an inflation adjustment to
the stated dollar amount for calendar year 2010 of
theper diemlimitation regarding periodic payments
received under a qualified long-term care insur-
ance contract or periodicpayments received under
a life insurance contract that are treated as paid by
reason of the death of a chronically ill individual.
See Rev. Proc. 2009-50, page 617.
2009–45 I.R.B.597November 9, 2009

Part III. Administrative, Procedural, and Miscellaneous
Guidance for Expatriates
Under Section 877A
Notice 2009–85
PURPOSE
Section 301 of the Heroes Earnings As-
sistance and Relief Tax Act of 2008 (the
“Act”) added new sections 877A and 2801
to the Internal Revenue Code (“Code”),
amended sections 6039G and 7701(a),
made conforming amendments to sections
877(e) and 7701(b), and repealed section
7701(n) with respect to individuals who
on or after June 17, 2008, relinquish U.S.
citizenship or cease to be lawful perma-
nent residents of the United States. This
notice provides guidance for individuals
who are subject to section 877A. This
notice does not provide new guidance
regarding section 877, which continues
to apply to individuals who relinquished
U.S. citizenship or ceased to be lawful per-
manent residents prior to June 17, 2008.
Additionally, this notice does not address
new section 2801, which imposes transfer
tax on U.S. persons who receive gifts or
bequests on or after June 17, 2008, from
individuals who are subject to section
877A (but see section 9 of this notice).
SECTION 1. OVERVIEW
Section 877A(a) generally imposes a
mark-to-market regime on expatriates who
are covered by section 877A, providing
that all property of a covered expatriate is
treated as sold on the day before the expa-
triation date for its fair market value. Sec-
tion 877A further provides that any gain
arising from the deemed sale is taken into
account for the taxable year of the deemed
sale notwithstanding any other provisions
of the Code. Any loss from the deemed
sale is taken into account for the taxable
year of the deemed sale to the extent oth-
erwise provided in the Code, except that
the wash sale rules of section 1091 do
not apply. Under section 877A(a)(3), the
amount that would otherwise be includible
in gross income by reason of the deemed
sale rule is reduced (but not to below zero)
by $600,000, which amount is to be ad-
justed for inflation for calendar years af-
ter 2008 (the “exclusion amount”). For
calendar year 2009, the exclusion amount
as adjusted for inflation is $626,000. The
amount of any gain or loss subsequently
realized will be adjusted for gain and loss
taken into account under the mark-to-mar-
ket regime without regard to the amount
excluded. Pursuant to section 877A(b), a
taxpayer may elect to defer payment of tax
attributable to property deemed sold.
Section 877A(c) provides that the
mark-to-market regime does not apply to
deferred compensation items, specified
tax deferred accounts, and interests in
a nongrantor trust of which the covered
expatriate was a beneficiary on the day
before the expatriation date. If the cov-
ered expatriate is treated as the owner of
any portion of a trust under the grantor
trust rules (sections 671 through 679) on
the day before the expatriation date, the
assets held by that portion of the trust are
subject to the mark-to-market regime (but
see section 4 of this notice concerning
coordination with section 684).
Section 877A(d) provides alternative
tax regimes that apply to “eligible deferred
compensation items” and to other deferred
compensation items (“ineligible deferred
compensation items”). In the case of
“eligible deferred compensation items,”
section 877A(d)(1)(A) provides generally
that the payor must deduct and withhold
from any taxable payments to a covered
expatriate with respect to such items a tax
equal to 30 percent of the amount of those
taxable payments. In the case of “ineligi-
ble deferred compensation items,” section
877A(d)(2)(A) provides that a covered
expatriate generally is treated as having
received an amount equal to the present
value of the covered expatriate’s accrued
benefit on the day before the expatriation
date.
Section 877A(e)(1)(A) provides that if
a covered expatriate holds any interest in a
specified tax deferred account on the day
before the expatriation date, such covered
expatriate is treated as having received a
distribution of the covered expatriate’s en-
tire interest in such account on the day be-
fore the expatriation date.
Section 877A(f) provides that in the
case of any direct or indirect distribution
of property to a covered expatriate from a
nongrantor trust of which the covered ex-
patriate was a beneficiary on the day be-
fore the expatriation date, the trustee must
deduct and withhold from the distribution
an amount equal to 30 percent of the tax-
able portion of the distribution. If the fair
market value of the property distributed
exceeds its adjusted basis in the hands of
the trust, gain shall be recognized to the
trust as if the property had been sold by
the trust and the proceeds distributed to the
covered expatriate.
Section 877A(i) provides that the Sec-
retary shall prescribe such regulations
as may be necessary or appropriate to
carry out the purposes of section 877A.
The Treasury Department and the Internal
Revenue Service (IRS) expect to issue
regulations to incorporate the guidance set
forth in this notice. Until such regulations
are issued, taxpayers may rely on the guid-
ance set forth in this notice.
This notice has nine sections. Section
1 provides background regarding the gen-
eral application of section 877A. Section 2
provides rules for determining whether an
individual is subject to section 877A. Sec-
tion 3 explains the operation of the mark-
to-market regime. Section 4 addresses
the interaction of section 877A and cer-
tain other Code provisions, including sec-
tion 877. Section 5 explains the appli-
cation of section 877A to deferred com-
pensation items. Section 6 explains the
application of section 877A to specified
tax deferred accounts. Section 7 explains
the application of section 877A to inter-
ests in nongrantor trusts. Section 8 de-
scribes the filing and reporting require-
ments of expatriates who are covered by
section 877A and provides an overview of
changes to Form 8854 (Expatriation In-
formation Statement)aswellasanintro-
ductiontonewFormW–8CE(Notice of
Expatriation and Waiver of Treaty Bene-
fits). Section 9 states that future guidance
will address gifts and bequests subject to a
transfer tax under new section 2801.
SECTION 2. INDIVIDUALS
COVERED
A. Definitions
Expatriate. Section 877A(g)(2) pro-
vides that the term “expatriate” means
(1) any U.S. citizen who relinquishes his
November 9, 20095982009–45 I.R.B.

or her citizenship and (2) any long-term
resident of the United States who ceases
to be a lawful permanent resident of the
United States (within the meaning of sec-
tion 7701(b)(6), as amended). Pursuant to
section 877A(g)(5), a long-term resident
is an individual who is a lawful permanent
resident of the United States in at least
8 taxable years during the period of 15
taxable years ending with the taxable year
that includes the expatriation date.
Covered expatriate.Section
877A(g)(1)(A) defines the term “covered
expatriate” to mean an expatriate who:
(1) has an average annual net income
tax liability for the five preceding taxable
years ending before the expatriation date
that exceeds a specified amount that is ad-
justed for inflation ($145,000 in 2009) (the
“tax liability test”);
(2)hasanetworthof$2millionormore
as of the expatriation date (the “net worth
test”); or
(3) fails to certify, under penalties of
perjury, compliance with all U.S. Federal
tax obligations for the five taxable years
preceding the taxable year that includes
the expatriation date, including, but not
limited to, obligations to file income tax,
employment tax, gift tax, and information
returns, if applicable, and obligations to
pay all relevant tax liabilities, interest, and
penalties (the “certification test”). This
certification must be made on Form 8854
and must be filed by the due date of the
taxpayer’s Federal income tax return for
the taxable year that includes the day be-
fore the expatriation date. See section 8
of this notice for information concerning
Form 8854.
However, section 877A(g)(1)(B) pro-
vides that an expatriate will not be treated
as meeting the tax liability test or the net
worth test of section 877(a)(2)(A) or (B)
if—
(1) the expatriate became at birth a U.S.
citizen and a citizen of another country
and, as of the expatriation date, continues
to be a citizen of, and is taxed as a resident
of, such other country, and has been a U.S.
resident for not more than 10 taxable years
during the 15 taxable year period ending
with the taxable year during which the ex-
patriation date occurs; or
(2) the expatriate relinquishes U.S. cit-
izenship before the age of 18
1
/2and has
been a U.S. resident for not more than 10
taxable years before the date of relinquish-
ment.
The determination as to whether an in-
dividual is a covered expatriate is made as
of the expatriation date.
Expatriation date. Section 877A(g)(3)
defines the term “expatriation date” as the
date an individual relinquishes U.S. citi-
zenship or, in the case of a long-term resi-
dent of the United States, the date on which
the individual ceases to be a lawful perma-
nent resident of the United States within
the meaning of section 7701(b)(6).
Relinquishment of citizenship. Section
877A(g)(4) provides that a citizen will be
treated as relinquishing his or her U.S. cit-
izenship on the earliest of four possible
dates:
(1) the date the individual renounces
his or her U.S. nationality before a diplo-
matic or consular officer of the United
States pursuant to paragraph (5) of section
349(a) of the Immigration and National-
ity Act (8 U.S.C. 1481(a)(5)), provided
the renunciation is subsequently approved
by the issuance to the individual of a
certificate of loss of nationality by the
United States Department of State,
(2) the date the individual furnishes to
the United States Department of State a
signed statement of voluntary relinquish-
ment of U.S. nationality confirming the
performance of an act of expatriation spec-
ified in paragraph (1), (2), (3), or (4) of sec-
tion 349(a) of the Immigration and Nation-
ality Act (8 U.S.C. 1481(a)(1)-(4)), pro-
vided the voluntary relinquishment is sub-
sequently approved by the issuance to the
individual of a certificate of loss of nation-
ality by the United States Department of
State,
(3) the date the United States Depart-
ment of State issues to the individual a cer-
tificate of loss of nationality, or
(4) the date a court of the United States
cancels a naturalized citizen’s certificate of
naturalization.
Cessation of lawful permanent res-
idency.Under section 7701(b)(6), as
amended by the Act, a long-term resident
ceases to be a lawful permanent resident if
(A) the individual’s status of having been
lawfully accorded the privilege of residing
permanently in the United States as an im-
migrant in accordance with immigration
laws has been revoked or has been admin-
istratively or judicially determined to have
been abandoned, or if (B) the individual
(1) commences to be treated as a resident
of a foreign country under the provisions
of a tax treaty between the United States
and the foreign country, (2) does not waive
the benefits of the treaty applicable to
residents of the foreign country, and (3)
notifies the Secretary of such treatment on
Forms 8833 and 8854.
B. Tax Liability and Net Worth Tests
For guidance on determining whether
an individual is a covered expatriate by
reason of the tax liability test or the net
worth test, see Section III of Notice 97–19,
1997–1 C.B. 394.
SECTION 3. MARK-TO-MARKET
REGIME
A. Identification of a covered
expatriate’s property and
determination of fair market value
For purposes of the mark-to-market
regime, the covered expatriate is deemed
to have sold any interest in property that
he or she is considered to own under the
rules of this paragraph other than property
described in section 877A(c). For pur-
poses of computing the tax liability under
the mark-to-market regime, a covered ex-
patriate is considered to own any interest
in property that would be taxable as part
of his or her gross estate for Federal estate
tax purposes under Chapter 11 of Subtitle
B of the Code as if he or she had died on
the day before the expatriation date as a
citizen or resident of the United States.
Whether property would constitute part of
the gross estate will be determined with-
out regard to sections 2010 through 2016.
In addition, for this purpose, a covered
expatriate also is deemed to own his or her
beneficial interest(s) in each trust (or por-
tion of a trust), that would not constitute
part of his or her gross estate as described
in the preceding sentences. The covered
expatriate’s beneficial interest(s) in such
a trust shall be determined under the spe-
cial rules set forth in section III of Notice
97–19, 1997–1 C.B. 394.
In computing the tax liability under the
mark-to-market regime, a covered expa-
triate must use the fair market value of
each interest in property as of the day be-
fore the expatriation date in accordance
with the valuation principles applicable for
purposes of the Federal estate tax, except
2009–45 I.R.B.599November 9, 2009

as otherwise provided in this paragraph.
Specifically, fair market value will be de-
termined under section 2031 and the reg-
ulations thereunder, but without regard to
sections 2032 and 2032A, as if the cov-
ered expatriate had died as a citizen or resi-
dent of the United States on the day before
the expatriation date.For these purposes:
(a) the provisions of sections 2701 through
2704 will be applied as if the covered expa-
triate’s interests subject to those provisions
were being transferred to family members;
(b) the covered expatriate’s tax liability as
a result of section 877A, or otherwise, will
not be taken into account; and (c) sections
2055, 2056, 2056A, and 2057 will not be
taken into account. A covered expatriate
must determine the fair market value of his
or her beneficial interest in each trust, other
than a nongrantor trust subject to section
877A(f), to the extent the trust would not
constitute part of his or her gross estate, in
accordance with the Federal gift tax valua-
tion principles of section 2512 and the reg-
ulations thereunder without regard to any
prohibitions or restrictions on such inter-
est. An interest in a life insurance policy
will be valued in accordance with Treas.
Reg. § 25.2512–6 as if the covered expa-
triate had made a gift of the policy on the
day before the expatriation date.
B. Allocation of the exclusion amount
The exclusion amount, as described
in section 877A(a)(3), must be allocated
among all built-in gain property that is
subject to the mark-to-market regime and
is owned by the covered expatriate on the
day before the expatriation date, regardless
of whether the covered expatriate makes
an election to defer tax with respect to any
such property pursuant to section 877A(b).
Specifically, the exclusion amount must
first be allocated pro-rata to each item of
built-in gain property (“gain asset”) by
multiplying the exclusion amount by the
ratio of the built-in gain with respect to
each gain asset over the total built-in gain
of all gain assets. The exclusion amount
allocated to each gain asset may not ex-
ceed the amount of that asset’s built-in
gain. If the total section 877A(a) gain of
all the gain assets is less than the exclusion
amount, then the exclusion amount that
can be allocated to the gain assets will be
limited to the total section 877A(a) gain.
Each individual is eligible for only one
lifetime exclusion amount. Thus, if a cov-
ered expatriate becomes a U.S. citizen or
long-term resident, and then loses such cit-
izenship or ceases to be a lawful permanent
resident and thereby becomes a covered
expatriate subject again to section 877A,
the exclusion amount with respect to the
individual on a second expatriation is lim-
ited to the unused portion of his or her ex-
clusion amount remaining (if any) after the
first expatriation, asadjusted for inflation.
For example, if a covered expatriate used
one third of the exclusion amount for the
first expatriation, he or she will have two
thirds of the exclusion amount available,
as adjusted for inflation, in the event of a
second expatriation.
After allocating the appropriate amount
of the exclusion amount among the gain
assets, the covered expatriate must report
gains and losses on the appropriate Sched-
ules and Forms depending upon the char-
acter of each asset. Losses may be taken
into account only to the extent permitted
by the Code, except that the wash sale rules
of section 1091 do not apply. Thus, for ex-
ample, losses are subject to the limitations
of section 1211(b).
Example 1.A, a covered expatriate, relinquished
his citizenship on November 1, 2009. On October 31,
2009, A owned three assets. As of October 31, 2009,
Asset X had a fair market value of $2,000,000 and
an adjusted basis of $200,000, Asset Y had a fair
market value of $1,000,000 and an adjusted basis of
$800,000, and Asset Z had a fair market value of
$500,000 and an adjusted basis of $800,000. A must
allocate the exclusion amount to each gain asset as
follows:
Step 1. Determine the built-in gain or loss of each
asset by subtracting the asset’s adjusted basis from the
fair market value of the asset on October 31, 2009.
Adjusted
Basis
FMV
Built-in Gain/(Loss)
Asset X
$200,000$2,000,000$1,800,000
Asset Y
$800,000$1,000,000$200,000
Asset Z
$800,000$500,000($300,000)
Step 2. Determine the portion of the exclusion
amount allocable to each gain asset by multiplying
the exclusion amount ($626,000 for 2009) by the ra-
tio of the built-in gain on each gain asset over the to-
tal built-in gain on all gain assets subject to section
877A(a).
Asset X
$
1,800,000X$626,000= $563,400
$2,000,000
Asset Y
$
200,000X$626,000= $62,600
$2,000,000
Step 3. Determine the amount includible in gross
income with respect to each gain asset as a result of
section 877A(a) by subtracting the exclusion amount allocated to each asset from the amount of built-in
gain deemed realized with respect to that asset.
November 9, 20096002009–45 I.R.B.

Asset X:
$1,800,000
(
$563,400)
$1,236,600
Asset Y:
$200,000
(
$62,600)
$137,400
A must report the amount includible in gross in-
come as a result of the application of section 877A(a)
withrespecttoAssetsXandY(asdeterminedinStep
3), and A’s loss with respect to Asset Z on A’s Form
1040 (or other schedule, asprovided in Treas. Reg.
§ 1.6012–1(b)(2)(ii)(b)) for the portion of A’s tax-
able year that includes the day before the expatriation
date. This Form 1040 (or other schedule) should be
attached as a schedule to A’s Form 1040NR for the
remainder of that taxable year. Assuming that Assets
X and Y are business assets and that Asset Z is a cap-
ital asset, in the absence of other capital gains in the
year of expatriation, A’s use of the capital loss from
Asset Z would be limited by section 1211(b), as well
as other loss-limiting provisions in the Code. How-
ever, A’s use of the loss will not be limited by section
1091.
Example 2.The facts are the same as inExample
1, but assume that as of October 31, 2009, Asset X
had a fair market value of $2,000,000 and an adjusted
basis of $1,700,000. A must allocate the exclusion
amount to each gain asset as follows:
Step 1. Determine the built-in gain or loss of each
asset by subtracting the asset’s adjusted basis from the
fair market value of the asset on October 31, 2009.
Adjusted
Basis
FMV
Built-in Gain/(Loss)
Asset X
$1,700,000$2,000,000$300,000
Asset Y
$800,000$1,000,000$200,000
Asset Z
$800,000$500,000($300,000)
The total gain of all the gain assets for 877A(a)
purposes is $500,000. Becausethe total gain is less
than the exclusion amount ($626,000 for 2009), A can
only allocate $500,000 of the exclusion amount to the
gain assets.
Step 2. Determine the portion of the exclusion
amount allocable to each gain asset by multiplying
the allowable exclusion amount ($500,000) by the ra-
tio of the built-in gain on each gain asset over the to-
tal built-in gain on all gain assets subject to section
877A(a).
Asset X
$
300,000X$500,000= $300,000
$500,000
Asset Y
$
200,000X$500,000= $200,000
$500,000
Step 3. Determine the amount includible in gross
income with respect to each gain asset as a result of
section 877A(a) by subtracting the exclusion amount allocated to each asset from the amount of built-in
gain deemed realized with respect to that asset.
Asset X:
$300,000
(
$300,000)
$0
Asset Y:
$200,000
(
$200,000)
$0
Because all of the gain was excluded under
the exclusion amount, A does not recognize any
gain as a result of section 877A(a). A must re-
port the loss with respect to Asset Z on A’s Form
1040 (or other schedule, asprovided in Treas. Reg.
§ 1.6012–1(b)(2)(ii)(b)) for the portion of A’s taxable
year that includes the daybefore the expatriation
date. This Form 1040 (or other schedule) should be
attached as a schedule to A’s Form 1040NR for the
remainder of that taxable year. In the absence of
other gains for the portion of A’s taxable year that
includes the day before the expatriation date, A’s
use of the loss would be limited by the loss-limiting
provisions in the Code, including section 1211(b).
However, A’s use of the loss will not be limited by
section 1091.
C. Adjustment to basis of property
subject to the mark-to-market regime
Section 877A(a) requires proper adjust-
ments to be made in the amount of any
gain or loss subsequently realized with re-
spect to an asset for the amount of gain
or loss taken into account under section
877A(a)(2) with respect to that asset. In
making such adjustment, the basis of the
asset will be adjusted by the amount of
gain or loss taken into account under sec-
tion 877A(a)(2)(A) and (B), without re-
gard to the exclusion amount provided in
section 877A(a)(3).
Example 3.The facts are the same as inExam-
ple 1.Assume that Assets X and Z are United States
real property interests within the meaning of section
897(c) (“USRPIs”). On October 15, 2013, A, now a
resident of country B, sells Asset X for $3,000,000
and Asset Z for $700,000. A’s taxable gain is deter-
mined as follows:
Asset X: A’s basis of $200,000 in Asset X is ad-
justed by $1,800,000 (the amount of gain taken into
account under section 877A(a)(2) by reason of the
deemed sale under section 877A(a) without regard
to the amount excluded under section 877A(a)(3)),
resulting in a basis of $2,000,000. The $1,800,000
adjustment to basis is determined without regard to
the $563,400 exclusion amount allocated to asset
X. A recognizes $1,000,000 of gain ($3,000,000
amount realized - $2,000,000 basis) on this subse-
2009–45 I.R.B.601November 9, 2009

quent actual disposition of Asset X. Because A is
now a nonresident alien individual as defined under
section 7701(b), and because Asset X is a USRPI,
that gain is subject to section 897.
Asset Z: A’s basis of $800,000 in Asset Z is ad-
justed downward by $300,000 (the amount of loss
taken into account under section 877A(a)(2) by rea-
son of the deemed sale under section 877A(a)), result-
ing in a basis of $500,000. A recognizes $200,000 of
gain ($700,000 amount realized - $500,000 basis) on
this subsequent actual disposition. Because A is now
a nonresident alien individual as defined under sec-
tion 7701(b), and because Asset Z is a USRPI, that
gain is subject to section 897.
D. In-bound step-up in basis for
nonresident aliens becoming resident
aliens
Section 877A(h)(2) provides that,
solely for purposes of determining the tax
imposed by reason of section 877A(a),
property that was held by a nonresident
alien on the day that individual first be-
came a resident of the United States
(within the meaning of section 7701(b))
will be treated as having a basis on such
date of not less than the fair market value
of such property on such date. A covered
expatriate to whom this basis adjustment
rule applies may make an irrevocable elec-
tion, on a property-by-property basis, not
to have such rule apply. The election must
be made on Form 8854, which must be
filed with the covered expatriate’s Federal
income tax return for the taxable year that
includes the day before the expatriation
date. See section 8 of this notice for infor-
mation concerning Form 8854.
The IRS and Treasury Department in-
tend to exercise their regulatory authority
to exclude from this step-up-in-basis rule
United States real property interests within
the meaning of section 897(c) (“USRPIs”)
andpropertyusedorheldforuseincon-
nection with the conduct of a trade or busi-
ness within the United States. Thus, if on
the date the nonresident alien first became
a resident of the United States, the nonres-
ident alien held property that was a USRPI
orwaspropertyusedorheldforusein
connection with the conduct of a trade or
business within the United States, then the
basis of such property may not be stepped
up to fair market value under 877A(h)(2).
If, however, prior to becoming a resident
of the United States, the nonresident alien
was a resident of a country with which
the United States had an income tax treaty,
and the nonresident alien held property
used or held for use in connection with the
conduct of a U.S. trade or business that
was not carried on through a permanent
establishment in the United States under
theincometaxtreatyofsuchcountryand
the United States, then that property is
eligible for a step up in basis to fair market
value under 877A(h)(2).
Example 4. A first became a resident of the
United States when A became a lawful permanent
resident (green card holder) on April 1, 1995. On
April 1, 1995, A owned Asset S with a basis of
$400X and a fair market value of $700X and Asset
T with a basis of $500X and a fair market value
of $300X. Neither Asset S nor Asset T is a USRPI
or property used or held for use in connection with
the conduct of a trade or business within the United
States. On June 30, 2010, the fair market value of
Asset S is $1,300X and the fair market value of Asset
T is $800X. On July 1, 2010, A ceases to be a lawful
permanent resident and becomes a covered expatri-
ate within the meaning of section 877A(g)(1)(A). A
does not make the irrevocable election not to have
the rule of section 877A(h)(2) apply. Therefore,
Assets S and T will each be treated for purposes
of the mark-to-market regime as having a basis of
not less than the fair market value on April 1, 1995,
so that Assets S and T will be treated as having a
basis of $700X and $500X, respectively, on June
30, 2010, for purposes of determining the tax under
section 877A(a). A will be deemed to realize $600X
($1,300X -$700X) of gain with respect to Asset S
and $300X ($800X -$500X) of gain with respect to
Asset T, for a total of $900X.
Example 5. The facts are the same as inExam-
ple4.If A makes an irrevocable election on Form
8854 not to have the rule of section 877A(h)(2) ap-
ply with respect to Asset S because A does not want
to incur the expense of having an appraisal conducted
with respect to Asset S’s fair market value on April 1,
1995, A will be deemed to realize $900X ($1,300X -
$400X) of gain with respect to Asset S.
E. Deferral of payment of tax under the
mark-to-market regime
Deferral election.Section 877A(b)
provides that a covered expatriate may
make an irrevocable election (“deferral
election”) with respect to any property
deemed sold by reason of section 877A(a)
to defer the payment of the additional tax
attributable to any such property (“deferral
assets”). The deferral election is made on
an asset-by-asset basis. In order to make
the election with respect to any asset, the
covered expatriate must provide adequate
security (defined below) and must irre-
vocably waive any right under any U.S.
treaty that would preclude assessment or
collection of any tax imposed by reason
of section 877A. If the IRS subsequently
determines that the security provided for
the deferred tax no longer qualifies as ade-
quate security, the deferred tax and interest
will become due immediately, unless the
covered expatriate corrects such failure
within 30 days after the IRS mails noti-
fication of such failure to the last known
addresses of the covered expatriate and
the covered expatriate’s U.S. agent.
Subject to the preceding sentence, the
time for payment of the tax attributable to
a particular deferral asset under the mark-
to-market regime is extended until the ear-
lier of the due date (without extensions) of
the covered expatriate’s income tax return
for (a) the taxable year in which the asset is
disposed of by sale, non-recognition trans-
action, gift, or other means, or (b) the tax-
able year that includes the date of death of
the covered expatriate. However, a cov-
ered expatriate may pay any tax deferred
under section 877A(b), together with ac-
crued interest, at any time.
Interest accrual.Section 877A(b)(7)
provides that for purposes of section 6601,
the last date for the payment of tax will be
determined without regard to the deferral
election. Interest will be computed at the
underpayment rate established under sec-
tion 6621 from the due date of the return
(without extensions) for the taxable year
that includes the daybefore the expatria-
tion date and will compound daily under
section 6622 until the date the tax is paid.
Waiver of treaty benefits.Section
877A(b)(5) provides that a covered ex-
patriate may not make a deferral election
with respect to a particular asset unless the
covered expatriate makes an irrevocable
waiver of any right under any U.S. treaty
that would preclude the assessment or
collection of any tax imposed by reason
of section 877A. The covered expatriate
must make the waiver on Form 8854,
which must be filed with the covered ex-
patriate’s Federal income tax return for the
taxable year that includes the day before
the expatriation date. See section 8.C of
this notice. Additionally, acknowledg-
ment of such waiver must be noted in the
agreement to defer tax with respect to a
particular property(“tax deferral agree-
ment”) as described below.
Adequate security/Tax deferral agree-
ment.Section 877A(b)(4)(A) provides
that, in order to makea deferral election
with respect to any asset, the covered
expatriate must provide adequate secu-
rity with respect to such asset. Section
877A(b)(4)(B) defines the term “adequate
November 9, 20096022009–45 I.R.B.

security” as (1) a bond that is furnished
to, and accepted by, the Secretary, that
is conditioned on the payment of the tax
(and interest thereon), and that meets the
requirements of section 6325, or (2) an-
other form of security for such payment
(including letters of credit) that meets
such requirementsas the Secretary may
prescribe.
Each covered expatriate who makes a
deferral election must enter into a tax de-
ferral agreement with the IRS. Execution
of the agreement by the IRS will constitute
acceptance by the Secretary of the security
as adequate security. A template of a tax
deferral agreement is provided in Appen-
dix A of this notice. Any covered expatri-
ate who wishes to enter into a tax deferral
agreement under this notice must submit
to the following address a request to enter
into a tax deferral agreement (“deferral re-
quest”) by the due date of his or her return
for the taxable year that includes the day
before the expatriation date:
Internal Revenue Service
PO Box 331
Drop Point S607-F8854
Bensalem, PA 19020
The deferral request must include (1)
two signed copies of the template agree-
ment provided in Appendix A of this no-
tice, (2) a description of the asset(s) with
respect to which the covered expatriate is
electing to defer tax, (3) an attachment
showing the calculation of the tax attribut-
able to such asset(s) under the method set
forth below, (4) documentation of the pro-
posed security offered to secure the defer-
ral of tax, (5) a copy of an agreement with
a U.S. agent, as described below, and (6)
a copy of the covered expatriate’s return
for the taxable year that includes the day
before the expatriation date. Provided that
the security offered by the covered expatri-
ate is determined to be adequate to secure
the tax being deferred, the IRS will sign
the tax deferral agreement and provide one
copy to the covered expatriate.
Additionally, the covered expatriate
must attach a copy of the deferral request
to his or her return for the taxable year that
includes the day before the expatriation
date. The covered expatriate may file the
deferral request simultaneously with his
or her tax return.
The tax deferral agreement must be pe-
riodically renewed according to the terms
provided in the agreement. If the agree-
ment is not renewed within the time frame
specified in the agreement, the collateral
will be applied to the tax liability and in-
terest.
Appointment of U.S. agent.Inorderto
make a deferral election, a covered expa-
triate must appoint a U.S. person to act as
the covered expatriate’s limited agent for
purposes of accepting communication re-
lated to the tax deferral agreement from
the IRS on behalf of the covered expatri-
ate, the timely enforcement of the terms
of the tax deferral agreement between the
covered expatriate and the IRS, and apply-
ingsection7602andall related procedural
provisions of the Code with respect to a re-
quest by the IRS to examine records, for
the production of testimony, or for a sum-
mons by the IRS for such records or testi-
mony related to the enforcement of the tax
deferral agreement.
In order to authorize a U.S. person to act
as an agent, the covered expatriate and the
agent must enter into a binding agreement
that is substantially similar in form to the
agreement provided in Appendix B of this
notice. The agreement must be executed
by the covered expatriate and the agent and
must be submitted as part of the deferral
request. The authorization must remain in
effect for as long as the tax deferral agree-
ment remains in effect.
If the U.S. agent resigns, liquidates, or
terminates its responsibility as an agent of
the covered expatriate, the covered expa-
triate must, within 90 days, notify IRS-Ad-
visory (Telephone: 954–423–7344, Fax:
954–423–7809) in writing at the following
address:
Advisory
7850 SW 6th Court
Mail Stop 5780
Plantation, FL 33324–3202
This notification must contain the
name, address, and TIN of the new U.S.
agent (if any). If no new agent is ap-
pointed, then the tax deferral agreement
will be in default and the collateral will
be applied to the deferred tax and interest
attributable to all of the deferral assets.
Determination of tax attributable to
particular assets.Deferral of tax is made
on an asset-by-asset basis, and a cov-
ered expatriate who elects to defer the tax
attributable to one or more assets must
determine the amount of tax imposed by
reason of section 877A(a) attributable to
each asset deemed sold pursuant to section
877A(a). The tax imposed by reason of
section 877A(a) is the difference between
(a) the covered expatriate’s tax liability
for the portion of the taxable year that in-
cludes the day before the expatriation date
as reflected on a Form 1040 with respect to
that portion of the taxable year and that in-
cludes the net taxable gain resulting from
all deemed sales under section 877A(a)
and (b) the covered expatriate’s tax liabil-
ity for the portion of the taxable year that
includes the day before the expatriation
date as reflected on a Form 1040 with
respect to that portion of the taxable year
but that does not include the net taxable
gain resulting from all deemed sales under
section 877A(a).
The amount of tax imposed by reason
of section 877A(a) that is attributable to
each asset is determined by multiplying the
amount of tax imposed by reason of sec-
tion 877A(a) by the ratio of (a) the gain, if
any, includible in gross income under sec-
tion 877A(a) with respect to that particu-
lar asset to (b) the gain includible in gross
income by reason of section 877A(a) with
respect to all gain assets deemed sold pur-
suant to section 877A(a). The tax attrib-
utable to that particular asset, computed as
described in the preceding sentence, is the
amount of tax that that a covered expatriate
may elect to defer under section 877A(b)
with respect to that asset. The effect of
such election is to reduce the amount of tax
currently due and payable by the amount of
the tax attributable to the asset with respect
to which the election is made.
Example 6.The facts are the same asExample
1, except that A elects to defer the tax attributable to
Assets X and Y. Assume that A’s taxable income for
the portion of the taxable year that includes the day
before the expatriation date without regard to section
877A is $1,300,000, and that the tax liability on that
taxable income is $300,000. Also assume that A’s
taxable income for that same period, including the
$1,100,000 net gain resulting from all deemed sales
under section 877A(a) (and taking into account the
amount excluded pursuant to section 877A(a)(3)), is
$2,400,000, and that A’s total tax liability with respect
to that taxable income as reflected on a Form 1040 is
$500,000.
Step 1.Determine the amount of tax imposed by
reason of section 877A(a) by subtracting A’s tax lia-
bility for the portion of the taxable year that includes
the day before the expatriation date computed with-
out taking into account section 877A(a) ($300,000)
2009–45 I.R.B.603November 9, 2009

from A’s tax liability for that period including the tax-
able gain resulting from all deemed sales under sec-
tion 877A(a) ($500,000). The amount of tax that must
be allocated among the assets deemed sold pursuant
to section 877A(a) is $200,000.
Step 2.Determine the portion of tax attributable
to each asset deemed sold by multiplying the amount
of tax determined under Step 1 by the ratio of the
amount includible in gross income with respect to
each gain asset (as determined in Step 3 ofExample 1,
with the amount with respect to assets with a built-in
loss being zero) to the total amount includible in gross
income with respect to all gain assets.
Asset X
$
1,236,600X$200,000= $180,000
$1,374,000
Asset Y
$
137,400X$200,000= $20,000
$1,374,000
Asset Z
$
0X$200,000=$0
$1,374,000
For the portion of the taxable year that includes
the day before the expatriation date, A has a total tax
liability of $500,000, but, due to A’s deferral elections
with respect to Assets X and Y, A will report and pay
only $300,000 with A’s return for that portion of the
year. Of the $200,000 deferred tax, $180,000 is at-
tributable to Asset X and $20,000 is attributable to
Asset Y. If instead of electing to defer the tax attrib-
utable to Asset X and to Asset Y, A had elected to
defer only the tax attributable to Asset X ($180,000),
A would have been required to pay $320,000 of tax
with A’s return for that portion of the year (the total
tax otherwise due of $500,000 less the $180,000 of
tax attributable to Asset X which tax A has elected to
defer).
SECTION 4. COORDINATION WITH
CERTAIN CODE PROVISIONS
Termination of deferrals. Section
877A(h)(1)(A) provides that, notwith-
standing any other provision of the Code,
any time period for acquiring property that
would result in the reduction of gain rec-
ognized with respect to property disposed
of by a covered expatriate terminates on
the day before the expatriation date. This
rule applies to certain incomplete transac-
tions such as deferred like-kind exchanges
and involuntary conversions. In addi-
tion, section 877A(h)(1)(B) provides that,
notwithstanding any other provision of the
Code, any extension of time for payment
of tax ceases to apply on the day before the
expatriation date, and the unpaid portion
of such tax becomes due and payable at the
time and in the manner prescribed by the
Secretary. Accordingly, the tax shall be
due and payable on the earlier of the date
the tax would become due and payable
without regard to section 877A and the
due date of the covered expatriate’s return
for the taxable year that includes the day
before the expatriation date.
Section 367(a).Regulations under
section 367(a) regarding gain recognition
agreements (GRAs) provide that if an
individual U.S. transferor loses U.S. citi-
zenship or ceases to be a lawful permanent
resident of the United States, the individ-
ual shall be treated as disposing of all the
stock of the transferee foreign corporation
received in the initial transfer as of the day
before the loss of such status. This dis-
position shall constitute a triggering event
with respect to the GRA and require the
recognition of gain under the GRA (and
the payment of applicable interest with
respect to any additional tax due); this dis-
position shall not terminate or reduce the
amount of gain subject to the GRA. Gain
recognized under the GRA as a result of
this disposition, and any basis adjustments
resulting from such gain recognition, shall
be taken into account prior to any gain or
loss that is required to be taken into ac-
count under section 877A on the deemed
sale of the stock of the transferee foreign
corporation under section 877A(a).
Section 684. Section 877A(h)(3) pro-
vides that if the expatriation of any indi-
vidual would result in recognition of gain
under section 684, the provisions of sec-
tion 684 apply before the provisions of sec-
tion 877A. Section 684(a) and the regula-
tions thereunder generally require imme-
diate recognition of gain when a U.S. per-
son directly, indirectly, or constructively
transfers appreciated property to a foreign
trust of which the U.S. person is not treated
as the owner under the grantor trust rules
(sections 671 through 679). Section 672(f)
limits the circumstances in which a for-
eign person may be treated as the owner
of a trust under the grantor trust rules.
A covered expatriate’s expatriation may
cause a domestic trust of which the cov-
ered expatriate was treated as the owner
on the day before the expatriation date to
become a foreign trust under the rules of
section 7701(a)(31)(B) and § 301.7701–7.
If a covered expatriate’s expatriation also
causes the covered expatriate to cease to
be treated as the owner of the trust, appre-
ciated property held by the trust will gener-
ally be subject to the gain recognition rules
of section 684. Gain that is subject to tax
under the rules of section 684 will not also
be subject to tax under the mark-to-market
regime.
Section 897. If a covered expatriate
holds a USRPI on the day before the ex-
patriation date, the USRPI is generally
subject to tax under the mark-to-mar-
ket regime in the same manner as other
property of the covered expatriate. As
provided in section 3.C of this notice, the
covered expatriate’s basis in the USRPI
will be adjusted to reflect the gain or loss
taken into account under the mark-to-mar-
ket regime. Section 897 will not apply
to the gain or loss recognized as a result
of the mark-to-market regime, because
the covered expatriate will not be a non-
resident alien within the meaning section
7701(b) on the day before the expatriation
date. However, as illustrated in Example
3, above, section 897 will apply when the
covered expatriate subsequently disposes
of the USRPI.
Expatriations subject to section 877.
An individual whose expatriation date oc-
curred before June 17, 2008, continues to
be covered by the rules of sections 877 and
6039G as in effect on the individual’s ex-
patriation date. An individual whose ex-
patriation date occurred after June 3, 2004,
but before June 17, 2008, continues to be
subject to the provisions of section 7701(n)
(as in effect prior to June 17, 2008). In
such case, the 10-year period described in
section 877(a) commences on the date the
U.S. citizen or long-term resident complies
with the provision of section 7701(n) (as in
effect prior to June 17, 2008).
November 9, 20096042009–45 I.R.B.

Example 7.A, a U.S. citizen, relinquishes U.S.
citizenship on June 10, 2008, but does not file Form
8854 until December 12, 2009. A is subject to the
rules of section 877 and the reporting and notification
provisions of sections 6039G and 7701(n), as in effect
prior to June 17, 2008. The ten-year period described
in section 877(a) commences on December 12, 2009.
Example 8.A is a long-term resident who com-
mences to be treated as a resident of a foreign country
pursuant to an income tax treaty between the United
States and the foreign country. A qualifies under the
treaty to be treated as a resident of the foreign country
as of January 1, 2008. A is subject to the rules of sec-
tion 877 and the reporting and notification provisions
of sections 6039G and 7701(n), as in effect prior to
June 17, 2008.
SECTION 5. DEFERRED
COMPENSATION ITEMS
A. In general
Section 877A(c)(1) provides that the
tax under the mark-to-market regime pro-
vided in section 877A(a) does not apply
to any deferred compensation item, as
defined below. Instead, alternative tax
regimes apply to “eligible deferred com-
pensation items” and “ineligible deferred
compensation items.” In the case of an
“eligible deferred compensation item,”
section 877A(d)(1)(A) provides generally
that the payor must deduct and withhold a
tax equal to 30 percent of any taxable pay-
ment to a covered expatriate with respect
to such an item. In the case of “ineligi-
ble deferred compensation items,” section
877A(d)(2)(A) provides that a covered ex-
patriate generally is subject to taxation on
the ineligible deferred compensation item
as if received by the covered expatriate on
the day before the expatriation date.
Sections 5.B(2) and 5.B(3) of this no-
tice provide definitions for “eligible de-
ferred compensation items” and “ineligi-
ble deferred compensation items,” respec-
tively. Sections 5.C and 5.D of this notice
provide guidance on the taxation of “eligi-
ble deferred compensation items” and “in-
eligible deferred compensation items,” re-
spectively.
B. Definitions
The following definitions apply for pur-
poses of section 877A and this notice.
(1)Deferred compensation itemmeans:
a. Any interest in a plan or arrange-
ment described in section 219(g)(5), which
means:
i. a plan described in section 401(a)
that includes a trust exempt from tax under
section 501(a),
ii. an annuity plan described in section
403(a),
iii. a plan established for its employees
by the United States, by a State or polit-
ical subdivision thereof, or by an agency
or instrumentality of any of the foregoing,
but excluding an eligible deferred compen-
sation plan (within the meaning of section
457(b)),
iv. an annuity contract described in sec-
tion 403(b),
v. a simplified employee pension
(within the meaning of section 408(k)),
vi. a simplified retirement account
(within the meaning of section 408(p)), or
vii. a trust described in section
501(c)(18);
b. Any interest in aforeign pension
plan or similar retirement arrangement or
program;
c. Any item of deferred compensation,
as defined in section 5.B(4) of this notice;
or
d. Any property, or right to property,
that the individual is entitled to receive
in connection with the performance of
services to the extent not previously taken
into account under section 83 or in ac-
cordance with section 83. Until further
guidance is issued, a deferred compensa-
tion item described in this section 5.B(1)d
means property that has been transferred
(as defined in § 1.83–3(a)) to the covered
expatriate, or a right to property that the
covered expatriate, as of the expatriation
date, has a legally binding right to re-
ceive, in connection with the performance
of services (whether or not such prop-
erty or right to property is substantially
vested), but only to the extent the covered
expatriate has not taken such item into
account under, or in accordance with, sec-
tion 83. For this purpose, the following
generally constitute property or a right to
property: statutory and nonstatutory stock
options (see sections 421 through 424
and § 1.83–7); stock and other property;
stock-settled stock appreciation rights;
and stock-settled restricted stock units. A
covered expatriate will be considered to
have taken property or a right to prop-
erty into account under section 83 or in
accordance with section 83 to the extent
that: (A) on or before the expatriation
date, there has been a transfer of property
to or on behalf of the covered expatriate
in connection with the performance of
services with respect to such property or
right to property within the meaning of
section 83(a) and the regulations there-
under; (B) on or before the expatriation
date, either (i) such transferred property
has become substantially vested or (ii)
the covered expatriate has made a valid
election under section 83(b) with respect
to such transferred property; and (C) the
covered expatriate has filed a Federal in-
come tax return for the appropriate taxable
year or years accurately reporting the full
amount (if any) includible in such covered
expatriate’s income with respect to such
transferred property for such year or years
and has paid all taxes due with respect to
such return or returns, or, if such tax re-
turn is due after the expatriation date, the
income with respect to such transferred
property has been subject to appropriate
tax withholding.
(2)Eligible deferred compensation
itemmeans any deferred compensation
item with respect to which: (i) the payor is
either a U.S. person or a non-U.S. person
who elects to be treated as a U.S. per-
son for purposes of section 877A(d)(1)
and (ii) the covered expatriate notifies the
payor of his or her status as a covered
expatriate and irrevocably waives any
right to claim any withholding reduction
under any treaty with the United States.
See section 8 of this notice for the appli-
cable filing and reporting requirements.
Separate guidance will be issued under
section 877A(d)(3)(A) providing rules for
a non-U.S. person to elect to be treated
as a U.S. person for purposes of section
877A(d)(1).
(3)Ineligible deferred compensation
itemmeans any deferred compensation
item that is not an eligible deferred com-
pensation item. See section 8 of this notice
for the applicable filing and reporting re-
quirements.
(4)Item of deferred compensation
means any amount of compensation if, un-
der the terms of the plan, contract, or other
arrangement providing for such compen-
sation (compensation arrangement), the
covered expatriate has a legally binding
right as of the expatriation date to such
compensation, the compensation has not
been actually or constructively received
on or before the expatriation date, and
pursuant to the compensation arrange-
2009–45 I.R.B.605November 9, 2009

ment the compensation is payable to (or
on behalf of) the covered expatriate on or
after the expatriation date, but such term
does not include any deferred compen-
sation item that is described in section
5.B(1)a, 5.B(1)b, or 5.B(1)d of this no-
tice. An item of deferred compensation
generally includes an amount (other than
a deferred compensation item described
in sections 5.B(1)a, 5.B(1)b, or 5.B(1)d
of this notice), whether or not substan-
tially vested, that constitutes nonqualified
deferred compensation for purposes of
section 404(a)(5) (determined without re-
gard to § 1.404(b)–1T, Q&A 2), including
a cash-settled stockappreciation right, a
phantom stock arrangement, a cash-set-
tled restricted stock unit, an unfunded and
unsecured promise to pay money or other
compensation in the future (other than
such a promise to transfer property in the
future), and an interest in a trust described
in section 402(b)(1) or (4) (commonly
referred to as a secular trust).
(5)Propertyhas the meaning set out in
§ 1.83–3(e).
(6)Stock appreciation rightmeans a
right to compensation based on the appre-
ciation in value of a specified number of
shares of stock or other property during a
specified period (such as a period begin-
ning on the date of grant or some other
specified date and the date of exercise of
such right). A stock appreciation right is
a stock-settled stock appreciation right to
the extent that the compensation payable
under such right is in the form of a trans-
fer of shares of stock or other property or
a right to receive property in the future.
A stock appreciation right is a cash-settled
stock appreciation right to the extent that
it is not a stock-settled stock appreciation
right.
(7)Restricted stock unitmeans a right
to receive compensation in cash, shares of
stock, or other property, as defined in sec-
tion 5.B(5) of this notice, following the
satisfaction of a specified vesting condi-
tion. A restricted stock unit is a stock-set-
tled restricted stock unit to the extent that
the compensation payable under such re-
stricted stock unit is in the form of a trans-
fer following the satisfaction of such vest-
ing condition of shares of stock or other
property or a right to receive property in
the future. A restricted stock unit is a
cash-settled restricted stock unit to the ex-
tent that it is not a stock-settled restricted
stock unit.
(8)Substantially vestedhas the mean-
ing set out in § 1.83–3(b).
C. Taxation of eligible deferred
compensation items
If a deferred compensation item qual-
ifies as an eligible deferred compensation
item, the payor must deduct and withhold a
tax equal to 30 percent of any taxable pay-
ment to a covered expatriate with respect
to such an item. Section 877A(d)(1)(B)
provides that a taxable payment is any pay-
ment to the extent it would be includible in
gross income of the covered expatriate if
such person continued to be subject to tax
as a citizen or resident of the United States.
Because the covered expatriate must waive
his or her right to claim treaty benefits with
respect to an eligible deferred compensa-
tion item, the 30 percent withholding tax
cannot be reduced or eliminated by treaty.
See section 5.E of this notice for rules with
respect to an amount of deferred compen-
sation attributable to services performed
outside the United States while the covered
expatriate was not a citizen or resident of
the United States. See section 5.F of this
notice for information concerning the ap-
plication of the withholding rules.
D. Taxation of ineligible deferred
compensation items
With respect to any ineligible deferred
compensation item described in section
5.B(1)a, 5.B(1)b, and 5.B(1)c of this no-
tice, an amount equal to the present value
of the covered expatriate’s accrued ben-
efit is treated as having been received
by the covered expatriate on the day be-
fore the expatriation date as a distribution
under the plan and must be included on
the covered expatriate’s Form 1040 (or
other schedule, as provided in Treas. Reg.
§ 1.6012–1(b)(2)(ii)(b)) for the portion
of the taxable year that includes the day
before the expatriation date.
Within 60 days of the receipt of a prop-
erly completed Form W–8CE, the payor of
the ineligible deferred compensation item
must advise the covered expatriate of the
present value of the covered expatriate’s
accrued benefit in the deferred compensa-
tion item on the day before the expatriation
date. See section 8 of this notice for more
information concerning Form W–8CE.
In the case of a defined contribution
plan described in section 5.B(1)a, until fur-
ther guidance is issued, the present value
of the covered expatriate’s accrued bene-
fit is the account balance. In the case of
a defined benefit plan described in section
5.B(1)a, until further guidance is issued,
the present value of the covered expatri-
ate’s accrued benefit is determined using
the method set forth in section 4.02 of Rev.
Proc. 2004–37, 2004–1 C.B. 1099, deter-
mined as of the day before the expatriation
date. See section 5.E of this notice with re-
spect to an amount of deferred compensa-
tion attributable to services performed out-
side the United States while the covered
expatriate was not a citizen or resident of
the United States.
With respect to any ineligible deferred
compensation item not described in sec-
tion 5.B(1)a or 5.B(1)d of this notice, un-
til further guidance is issued, the present
value of the covered expatriate’s accrued
benefit is determined by applying princi-
ples in Prop. Treas. Reg. § 1.409A–4,
except as provided herein. Where such
proposed regulations provide for a deter-
mination to be made as of the end of the
taxable year, such determination shall be
made as of the day before the expatriation
date. For the purposes of this section 5.D,
the present value of the covered expatri-
ate’s accrued benefit is determined with-
out regard to any substantial risk of forfei-
ture. See section 5.E of this notice with re-
spect to an amount of deferred compensa-
tion attributable to services performed out-
side the United States while the covered
expatriate was not a citizen or resident of
the United States.
With respect to any ineligible deferred
compensation item described in section
5.B(1)d of this notice, the rights of the
covered expatriate to such item will be
treated as becoming transferable (within
the meaning of Treas. Reg. § 1.83–3(d))
and not subject to a substantial risk of for-
feiture (within the meaning of Treas. Reg.
§ 1.83–3(c)) on the day before the expatri-
ation date. Thus, for example, in the case
of property transferred to or on behalf of
the covered expatriate in connection with
the performance of services that has not
become substantially vested as of the ex-
patriation date, such asrestricted stock, to
the extent that the covered expatriate has
not previously taken into account under
section 83 or in accordance with section
November 9, 20096062009–45 I.R.B.

83 with respect to such transfer, generally
such property will be treated as having
become substantially vested for purposes
ofsection83onthedaybeforetheex-
patriation date. Consequently, the fair
market value of such property (determined
without regard to any lapse restriction as
defined in Treas. Reg. § 1.83–3(i)), re-
duced by the amount (if any) the covered
expatriate paid for the property, generally
will be includible in the covered expa-
triate’s income for Federal income tax
purposes as of such date.
With respect to a right to a trans-
fer of property in the future (such as a
stock-settled stock appreciation right or a
stock-settled restricted stock unit), such
right will be treated assubstantially vested
as of the day before the expatriation date
and, under the cash-equivalency doctrine
(seeCowden v. Commissioner,289F.2d
20 (5
th
Cir. 1961)), the value of such
right generally will be includible in the
income of the covered expatriate as of
such date. Until further guidance is issued,
the value of such right is determined by
applying principles similar to Prop. Treas.
Reg. § 1.409A–4, except that where
such proposed regulations provide for a
determination to be made as of the end
of the taxable year, such determination
shall be made as of the day before the
expatriation date.
Under section 877A(d)(2)(B), no early
distribution tax will be imposed by rea-
son of the treatment resulting from sec-
tion 877A(d)(2)(A). For purposes of this
notice, an early distribution tax is any
additional tax that would be imposed un-
der sections 72(t), 220(e)(4), 223(f)(4),
409A(a)(1)(B), 529(c)(6), or 530(d)(4) if
the amounts required to be included in the
income of the covered expatriate under
section 877A(d)(2) had actually been paid
or transferred to the covered expatriate on
the day before the expatriation date.
Section 877A(d)(2)(C) provides that
appropriate adjustments shall be made
to subsequent distributions from the plan
to reflect the tax imposed by section
877A(d)(2). Thus, when the covered ex-
patriate receives distributions, the amount
that was includible in his or her gross
income under section 877A(d)(2) will be
treated as investment in the contract for
purposes of section 72 in cases where such
section would apply to such amounts.
In other cases, the covered expatriate
may make an appropriate adjustment to the
amount that would otherwise be includible
in the covered expatriate’s income to pre-
vent amounts previously taxed under sec-
tion 877A(d)(2) from being includible in
income and subject to Federal income tax
a second time. With respect to ineligi-
ble deferred compensation items to which
Prop. Treas. Reg. § 1.409A–4 would ap-
ply, such adjustment will be made pursuant
to principles similar to Prop. Treas. Reg.
§ 1.409A–4. With respect to any ineligi-
ble deferred compensation items to which
section 72 does not apply and Prop. Treas.
Reg. § 1.409A–4 would not apply, until
further guidance is issued, taxpayers may
use any reasonable method to determine
the amount of such adjustment, so long
as such method: is consistently applied to
all such ineligible deferred compensation
items with respect to the covered expatri-
ate; does not reduce the amount includible
in the covered expatriate’s income with re-
spect to any ineligible deferred compensa-
tion item below zero; and does not result in
an aggregate amount of such adjustments
that, when combined with amounts treated
as investment in the contract for purposes
of section 72 and pursuant to principles
similar to Prop. Treas. Reg. § 1.409A–4,
exceeds the amount included in the cov-
ered expatriate’s income pursuant to sec-
tion 877A(d)(2)(A).
E. Services performed outside the
United States
Section 877A(d)(5) provides that the
rules of sections 877A(d)(1) and (2) shall
not apply to any deferred compensation
item to the extent attributable to services
performed outside the United States while
the covered expatriate was not a citizen or
resident of the United States. Thus, in the
case of an eligible deferred compensation
item, the amount of a taxable payment un-
der section 877A(d)(1)(A) with respect to
such item will not include the portion of
such item that is attributable to services
performed outside the United States before
or after the expatriation date while the cov-
ered expatriate was not a citizen or resident
of the United States.
To the extent that a portion of an in-
eligible deferred compensation item is at-
tributable to services performed outside
the United States before or after the expa-
triation date while the covered expatriate
was not a citizen or resident of the United
States, the amount includible in income
under section 877A(d)(2)(A) with respect
to such item will not include such portion.
Until further guidance is issued, taxpay-
ers may use any reasonable method that is
consistent with existing guidance (includ-
ing Treas. Reg. § 1.861–4(b)(2), Rev-
enue Ruling 79–388, and Revenue Proce-
dure 2004–37) and is based upon a reason-
able, good faith interpretation of section
877A(d)(5) to determine the portion of a
deferred compensation item that is attrib-
utable to services performed outside the
United States while the covered expatriate
was not a citizen or resident of the United
States.
F. Application of withholding rules
Section 877A(d)(6) provides that the
tax that is imposed on taxable payments
from eligible deferred compensation items
by section 877A(d)(1) is imposed under
section 871, but that the payment is subject
to withholding under section 877A(d)(1)
and not under section 1441 or Chapter 24.
Any amount due under section 871 that is
not paid by means of withholding must be
reported on the income tax return filed by
the covered expatriate for the relevant tax-
able year. Section 877A(d)(6)(A) provides
that rules similar to the rules of sections
1461 through 1464 apply for purposes of
section 877A(d). Thus, a payor is liable for
the tax as stated under section 1461. The
covered expatriate must notify the payor of
his or her covered expatriate status by sub-
mitting Form W–8CE to the trustee on the
earlier of (1) the day prior to the first distri-
bution on or after the expatriation date or
(2) 30 days after the expatriation date.
Section 877A(g)(1)(C) provides that in
the case of any covered expatriate who is
subject to tax as a citizen or resident of the
United States for any period beginning af-
ter the expatriation date, such individual
will not be treated as a covered expatriate
during such period for purposes of the 30
percent withholding tax on a taxable pay-
ment from an eligible deferred compen-
sation item. Thus, the taxable payment
would not be subject to tax under section
871, but would be subject to the tax im-
posed on payments to a citizen or resident
of the United States.
2009–45 I.R.B.607November 9, 2009

This notice does not address certain
withholding issues with respect to deferred
compensation items. Pending further
guidance, employers and plans need not
withhold income taxes with respect to
amounts deemed received under section
877A(d)(2)(A). Instead, the covered ex-
patriate should report ineligible deferred
compensation items on his or her Form
1040 (or other schedule, as provided in
Treas. Reg. § 1.6012–1(b)(2)(ii)(b)) for
the portion of the taxable year that includes
the day before the expatriation date. Also
pending further guidance, the FICA and
FUTA taxation of deferred compensation
items should be determined without regard
to section 877A. The IRS and Treasury
Department invite public comments on
these issues and expect to provide future
guidance on such withholding require-
ments.
G. Examples
Example 9. On January 3, 2006, Corporation
Y, a U.S. corporation, granted B, an employee of
Corporation Y, 10 stock-settled stock appreciation
rights and 10 cash-settled stock appreciation rights
in connection with B’s performance of services. B
can exercise the stock appreciation rights at any
time from January 3, 2006, through January 2,
2016. Each stock-settled stock appreciation right
entitles B to receive upon exercise a number of
shares of the common stock of Corporation Y equal
to the difference between the value of a share of
Corporation Y common stock on the date B exercises
the right over the value of a share of such stock
on the date of grant, divided by the value of a
share of such stock on the date of exercise. Each
cash-settled stock appreciation right entitles B to a
cash payment upon exercise equal to the excess of
the value of a share of Corporation Y stock on the
date of exercise over the value of a share of such
stock on the date of grant. The stock appreciation
rights do not provide for a deferral of compensation
under section 409A, in accordance with Treas. Reg.
§ 1.409A–1(b)(5). On January 3, 2006, the per share
price of the Corporation Y stock was $10. As of
November 18, 2009, B had not exercised any of the
stock appreciation rights and the value of a share of
the Corporation Y stock was $20. On November 19,
2009, B ceases to be a lawful permanent resident of
the United States and becomes a covered expatriate.
During B’s employment with Corporation Y, B
performed all services for Corporation Y in the
United States.
The stock-settled stock appreciation rights are
deferred compensation items within the mean-
ing of section 877A(d)(4)(D). Pursuant to section
877A(d)(2)(A)(ii), the stock-settled stock appreci-
ation rights are treated as substantially vested on
November 18, 2009, and their value is includible in
B’s income on that date. Pursuant to Prop. Treas.
Reg. § 1.409A–4(b)(6), B is required to include $100
in income on that date with respect to such rights.
The cash-settled stock appreciation rights are de-
ferred compensation items within the meaning of sec-
tion 877A(d)(4)(C). Under section 877A(d)(2)(A)(i),
B is treated as having received on November 18,
2009, an amount equal to the present value of the
cash-settled stock appreciation rights. Pursuant to
Prop. Treas. Reg. § 1.409A–4(b)(6), B is required to
include $100 in income with respect to such rights.
Example 10.Assume the same facts as in Ex-
ample 9, except that, with respect to all of B’s stock
appreciation rights, B timely notifies Corporation
Y of her status as a covered expatriate and irrevo-
cably waives any right to claim any withholding
reductionunderanytreatywiththeUnitedStates.
On January 15, 2010, when the value of a share of
Corporation Y stock is $25, B exercises all of her
stock appreciation rights.
The stock appreciation rights are eligible deferred
compensation items within the meaning of section
877A(d)(3). B has no income inclusion on Novem-
ber 18, 2009, with respect to the stock appreciation
rights.
With respect to the stock-settled stock apprecia-
tion rights, on January 15, 2010, B is required to in-
clude $150 in income. Corporation Y is required to
deduct and withhold a tax equal to $45 from the $150
of income recognized by B on January 15, 2010 (30%
of the amount included in B’s gross income). With
respect to the cash-settled stock appreciation rights,
Corporation Y is required to deduct and withhold a
tax equal to $45 from the $150 that is includible in
B’s income on January 15, 2010.
Example 11.C relinquishes his citizenship on De-
cember 17, 2009 and becomes a covered expatriate.
On December 16, 2009, C was an employee of Corpo-
ration Z, a U.S. corporation. During C’s employment
with Corporation Z, C performed all services for Cor-
poration Z in the United States.
On December 16, 2009, C had stock-settled re-
stricted stock units that entitle C to 100 shares of
Corporation Z’s common stock if C continues to pro-
vide substantial services to Corporation Z until De-
cember 16, 2013. Corporation Z granted C the re-
stricted stock units on December 16, 2008, in connec-
tion with C’s performance ofservices. Under Treas.
Reg. § 1.409A–1(b)(4), the restricted stock units do
not provide for a deferral of compensation for pur-
poses of section 409A. On December 16, 2009, the
fair market value of a share of Corporation Z stock
was $30.
The stock-settled restricted stock units are
deferred compensation items within the mean-
ingofsection877A(d)(4)(D).Pursuanttosec-
tion 877A(d)(2)(A)(ii), the stock-settled restricted
stock units are treated as substantially vested on
December 16, 2009, and the value of such units is
includible in C’s income on December 16, 2009.
Pursuant to Prop. Treas. Reg. § 1.409A–4(b)(6),
C is required to include $3,000 in income on
December 16, 2009, the amount of the fair market
value of Corporation Z’s stock on that date multiplied
by the number of shares covered by the restricted
stock units ($30 x 100).
Example 12. Assume the same facts as in Exam-
ple 11, except that, on December 16, 2009, with re-
spect to the restricted stock units, C timely notifies
Corporation Z of his status as a covered expatriate
and irrevocably waives any right to claim any with-
holding reduction under any treaty with the United
States. C continues to perform services for Corpo-
ration Z outside the United States and, on December
16, 2013, C fulfills the requirements of the vesting
schedule and receives 100 shares of Corporation Z’s
common stock when the share price of Corporation Z
stock is $50.
The restricted stock units are eligible deferred
compensation items within the meaning of sec-
tion 877A(d)(3). C has no income inclusion on
December 16, 2009, with respect to the restricted
stock units.
Pursuant to section 5.E of this notice, C reason-
ably determines that 80% of the value of the stock
transferred to C on December 16, 2013 pursuant to the
restricted stock units is attributable to services per-
formed outside the United States while C was not a
citizen or resident of the United States. Therefore,
$1,000 (20% of $5,000) will be includible in C’s gross
income and Corporation Z is required to deduct and
withhold a tax equal to $300.
Example 13. D has been a U.S. citizen since birth.
D relinquishes her citizenship on November 19, 2009
and becomes a covered expatriate. On November 18,
2009, the day before D’s relinquishment of citizen-
ship, D was an employee of Corporation W, a U.S.
corporation. After November 18, 2009, D performs
services for Corporation W outside the United States.
On November 18, 2009, D had 1,000 shares of re-
stricted common stock of Corporation W that Corpo-
ration W granted to D on November 18, 2008, in con-
nection with D’s performance of services. Under the
terms of the award, D will forfeit all of the restricted
shares if D ceases to be employed by Corporation D
before November 18, 2013. D’s shares of restricted
stock become substantially vested on November 17,
2013. D did not make an election pursuant to section
83(b) with respect to the shares of restricted stock and
paid nothing for them. On November 18, 2009, the
fair market value of Corporation W’s stock was $100
per share.
The shares of restricted stock are deferred
compensation items within the meaning of
section 877A(d)(4)(D).Pursuanttosection
877A(d)(2)(A)(ii), D’s rights to the shares of re-
stricted stock are treated as substantially vested on
November 18, 2009. Accordingly, D is required to
include in income $100,000 ($100 x 1,000) on that
date.
Example 14. Assume the same facts as in Exam-
ple 13, except that, with respect to the restricted stock,
D timely notifies Corporation W of her status as a
covered expatriate and irrevocably waives any right
to claim any withholding reduction under any treaty
with the United States. On November 18, 2013, D’s
shares of restricted stock become substantially vested
and the fair market value of Corporation W’s stock is
$200.
Corporation W is required to deduct and with-
hold a tax equal to 30% from any income that would
be includible in D’s gross income as a result of D
being treated as a citizen or resident of the United
States. Pursuant to section 5.E of this notice, D rea-
sonably determines that 80% of the value of the re-
stricted stock on November 18, 2013, is attributable
to services performed outside the United States while
D was not a citizen or resident of the United States.
Therefore, on November 18, 2013, $40,000 (20% of
$200,000) is includible in D’s gross income, and Cor-
November 9, 20096082009–45 I.R.B.

poration W is required to deduct and withhold a tax
equal to $12,000.
Example 15.E, a covered expatriate, relin-
quishes his citizenship on November 19, 2009, and
becomes a resident of Country N. Country N does
not have a tax treaty with the United States. Until
November 19, 2009, while a citizen of the United
States, E performed services as an employee for
Corporation V, a U.S. corporation, in and outside the
United States. After November 18, 2009, E performs
services for Corporation V solely outside the United
States.
On November 18, 2009, E participates in an
account balance nonqualified deferred compensation
plan. E’s account balance under the plan is deemed
to be invested in a specified predetermined actual
investment. The value of the deemed investment
under E’s account balance plan is $1,000,000 on that
date. Under the plan, Corporation V is required to
pay E an amount equal to E’s account balance under
the plan on November 30, 2012. E’s account balance
plan complies with the requirements of section 409A
at all relevant times and no amounts are set aside in a
trust or otherwise to pay amounts due under the plan.
The account balance plan is an item of de-
ferred compensation within the meaning of section
877A(d)(4)(C). Pursuant to section 877A(d)(2)(A)(i)
and Prop. Treas. Reg. § 1.409A–4(b)(3), E is
treated as having received $1,000,000 on November
18, 2009. If, on November 30, 2012, the value of
the deemed investment in the account balance plan
is $1,500,000 and that amount is includible in E’s
gross income on that date, then, pursuant to section
877A(d)(2)(C) and Prop. Treas. Reg. § 1.409A–4,
an appropriate adjustment is made as a result of
E’s treatment as having received $1,000,000 on
November 18, 2009. Accordingly, only $500,000
is includible in E’s gross income on November 30,
2012.
Example 16.Assume the same facts as in Exam-
ple 15, except that, with respect to the account bal-
ance plan, E timely notifies Corporation V of his sta-
tus as a covered expatriate and irrevocably waives
any right to claim any withholding reduction under
any treaty with the United States.
The account balance plan is an eligible de-
ferred compensation item within the meaning of
section 877A(d)(3). E has no income inclusion on
November 18, 2009, with respect to the account
balance plan. On November 30, 2012, $1,500,000 is
includible in E’s gross income as a result of E being
treated as a citizen or resident of the United States,
and Corporation V is required to deduct and withhold
a tax equal to $450,000 from the amount it pays to E
pursuant to the account balance plan.
Example 17.F relinquishes his citizenship on
November 11, 2009, and becomes a covered expatri-
ate. On November 10, 2009, the day before F’s relin-
quishment of citizenship, F was a participant in a plan
described in section 401(a) that includes a trust ex-
empt from tax under section 501(a). F complies with
the procedures prescribed in section 8 of this notice
for notifying the payor of his status as a covered expa-
triate and making an irrevocable waiver of any right
to claim treaty benefits with respect to withholding on
the payment. Therefore, F’s interest in the plan is an
eligible deferred compensation item and tax will not
be due under section 877A until F receives taxable
payments from the plan. When F receives taxable
payments from the plan, the payor will be required
to withhold 30 percent of the gross amount of each
taxable payment pursuant to section 877A(d)(1).
Example 18.G relinquishes her citizenship on
November 12, 2009, and becomes a covered expa-
triate. On November 11, 2009, the day before G’s
relinquishment of citizenship, G was a participant
in a plan described in section 401(a) that includes a
trust exempt from tax under section 501(a). G does
not comply with the prescribed procedures for noti-
fying the payor of her status as a covered expatri-
ate and making an irrevocable waiver of any right to
claim treaty benefits with respect to withholding on
the payment. Therefore, G’s interest in the plan is
an ineligible deferred compensation item. Under sec-
tion 877A(d)(2), G is treated as having received on
November 11, 2009, an amount equal to the present
value of her accrued benefit in the plan determined
in accordance with section 5.D of this notice and is
required to report this amount on her federal income
tax return for the taxable year that includes Novem-
ber 11, 2009. G will not be subject to any tax on early
distributions that might otherwise be payable.
When G receives distributions from the plan, the
amount that G includes in her gross income for her
taxable period ending on November 12, 2009, will be
treated as investment in the contract for purposes of
section 72. Thus, a portion of each distribution will
constitute investment in the contract and will not be
taxed again.
Example 19.H relinquishes his citizenship on
November 13, 2009, and becomes a covered expatri-
ate. On November 12, 2009, the day before H’s relin-
quishment of citizenship, H is a participant in a for-
eign pension plan that provides benefits pursuant to a
trust described in section 402(b)(4) and that does not
provide for a deferral of compensation under Treas.
Reg. § 1.409A–1(b)(6). The trustee of the trust un-
der the foreign pension plan does not comply with
the procedures for electing to be treated as a U.S.
person for purposes of section 877A(d)(1). There-
fore, H’s interest in the plan is an ineligible deferred
compensation item even if H complies with the pre-
scribed procedures for notifying the payor of his sta-
tus as a covered expatriate and makes an irrevocable
waiver of any right to claim treaty benefits with re-
spect to withholding on the payment. Under section
877A(d)(2), on November 12, 2009, H is treated as
having received an amount equal to the present value
of his accrued benefit in the plan determined in accor-
dance with section 5.D of this notice and is required
to report such amount (other than his investment in
the contract) on his federal income tax return for the
taxable year that includes November 12, 2009.
SECTION 6. SPECIFIED TAX
DEFERRED ACCOUNTS
The mark-to-market regime does not
apply to specified tax deferred accounts.
Instead, section 877A(e)(1)(A) provides
that if a covered expatriate holds any in-
terest in a specified tax deferred account
(defined below) on the day before the ex-
patriation date, such covered expatriate is
treated as having received a distribution of
his or her entire interest in such account
on the day before the expatriation date.
Within 60 days of receipt of a properly
completed Form W–8CE, the custodian of
a specified tax deferred account must ad-
vise the covered expatriate of the amount
of the covered expatriate’s entire interest
in his or her account on the day before his
or her expatriation date. See section 8 of
this notice for more information concern-
ing Form W–8CE.
Section 877A(e)(1)(B) provides that
no early distribution tax will apply by
reason of the tax imposed by section
877A(e)(1)(A). Section 877A(g)(6) pro-
vides that the term “early distribution tax”
means any increase in tax imposed un-
der sections 72(t), 220(e)(4), 223(f)(4),
409A(a)(1)(B), 529(c)(6), or 530(d)(4).
Section 877A(e)(1)(C) provides that
appropriate adjustments must be made to
subsequent distributions to take into ac-
count the previously taxed amount under
section 877A. Thus, in the case of distri-
butions that are taxable under the rules of
section 72, the amount that the covered
expatriate includes in gross income pur-
suant to section 877A(e)(1) will be treated
as investment in the contract for purposes
of section 72.
Section 877A(e)(2) provides that the
term “specified tax deferred account”
means an individual retirement plan (as
defined in section 7701(a)(37)), a qual-
ified tuition plan (as defined in section
529), a Coverdell education savings ac-
count (as defined in section 530), a health
savings account (as defined in section
223), and an Archer MSA (as defined in
section 220). However, simplified em-
ployee pensions (within the meaning of
section 408(k)) and simplified retirement
accounts (within the meaning of section
408(p)) of a covered expatriate are treated
as deferred compensation items and not
as specified tax deferred accounts. See
section 5 of this notice for rules pertaining
to deferred compensation items.
SECTION 7. INTERESTS IN
NONGRANTOR TRUSTS
A. In general
The mark-to-market regime does not
apply to any interest in a nongrantor trust.
For this purpose, section 877A(f)(3) pro-
vides that the term “nongrantor trust”
means the portion of any trust, whether
2009–45 I.R.B.609November 9, 2009

domestic or foreign, of which the covered
expatriate is not considered the owner
under subpart E of Part I of subchapter J,
determined as of the day before the ex-
patriation date. Section 877A(f) provides
that in the case of any direct or indirect
distribution of property (including money)
to a covered expatriate from a nongrantor
trust of which the covered expatriate was
a beneficiary on the day before the expa-
triation date, the trustee must deduct and
withhold from the distribution an amount
equal to 30 percent of the taxable portion
of the distribution. Section 877A(f)(2)
provides that the term “taxable portion”
means, with respect to any distribution, the
portion of the distribution that would have
been includible in the covered expatriate’s
gross income if the covered expatriate had
continued to be subject to tax as a citizen
or resident of the United States.
For purposes of determining whether
a covered expatriate is a beneficiary of a
nongrantor trust on the day before the ex-
patriation date, a beneficiary is a person
(a) who is entitled or permitted, under the
terms of the trust instrument or applica-
ble local law, to receive a direct or indi-
rect distribution of trust income or corpus
(including, for example, a distribution in
discharge of an obligation of that person),
(b) with the power to apply trust income or
corpus for his or her own benefit, or (c) to
whom the trust income or corpus could be
paid if the trust or the current interests in
the trust were then terminated.
If a trust that is a nongrantor trust im-
mediately before the expatriation date
subsequently becomes a grantor trust of
which the covered expatriate is treated
as the owner, directly or indirectly, then
the conversion is deemed to be a taxable
distribution under section 877A(f)(1) to
the covered expatriate to the extent of the
portion of the trust of which the covered
expatriate is then treated as the owner.
Section 877A(f) does not apply to any
distribution from a trust forming part of a
plan an interest in which is treated as a de-
ferred compensation item to which section
5 of this notice applies or part of a speci-
fied tax deferred account to which section
6 of this notice applies.
B. Recognition of gain by trust
Section 877A(f)(1)(B) provides that
if the fair market value of property dis-
tributed from a trust described in section
7.A of this notice exceeds its adjusted ba-
sis in the hands of the trust, gain must be
recognized to the trust as if such property
had been sold to the covered expatriate at
its fair market value.
Example 20. On Date 1, Trustee of a complex,
nongrantor trust, distributes a painting to A, a cov-
ered expatriate who was a beneficiary of the trust
on the day before A’s expatriation date. The paint-
ing is a capital asset and has a basis of $100,000
and a fair market value of $400,000. The trust is a
domestic trust that excludes gains from the sale or
exchange of capital assets from its distributable net
income (DNI) under section 643(a)(3). On Date 1,
the trust is deemed to haverecognized capital gain
of $300,000 under section 877A(f)(1)(B). The trust
must include the $300,000 of capital gain in its gross
income and may not deduct that amount under section
661 in computing its taxable income under section
641. The trust is taxable on the $300,000 capital gain
(reduced by the applicable exemption amount under
section 642(b) and any applicable deductions) and is
not required to deduct and withhold any amount pur-
suant to section 877A(f)(1)(A). A is not taxable on
the $300,000 capital gain.
Example 21. The facts are the same as inExample
20except that the trust is a foreign trust that includes
capital gain in DNI pursuant to section 643(a)(6)(C).
Although the trust must include the $300,000 of capi-
tal gain in its gross income, it may deduct that amount
under section 661 in computing its taxable income
under section 641. If A, now a nonresident alien,
had continued to be subject to tax as a citizen or resi-
dent of the United States, the capital gain of $300,000
would have been includible in A’s gross income pur-
suant to section 662. Accordingly, the trust is re-
quired to deduct and withhold $90,000 (30 percent
of $300,000) pursuant to section 877A(f)(1)(A).
C. Withholding
Section 877A(f)(4)(A) provides that
rules similar to the rules of section
877A(d)(6) shall apply. Thus, the tax
that is imposed by section 877A(f) is im-
posed under section 871, but the payment
is subject to withholding under section
877A(f)(1)(A) and not under section 1441.
Any amount due under section 871 that is
not paid by means of withholding must be
reportedontheincometaxreturnfiledby
the covered expatriate for the relevant tax-
able year. In addition, rules similar to the
rules of section 1461 through 1464 apply.
Thus, the trustee, as the person required to
deduct and withhold the tax, is liable for
such tax as stated under section 1461. The
covered expatriate must notify the trustee
of his or her covered expatriate status by
submitting Form W–8CE to the trustee on
the earlier of (1) the day prior to the first
distribution on or after the expatriation
date or (2) 30 days after the expatriation
date. For more information about Form
W–8CE, see section 8 of this notice.
Section 877A(g)(1)(C) provides, in
part, that in the case of any covered expa-
triate who is subject to tax as a citizen or
resident of the United States for any period
beginning after the expatriation date, such
individual will not be treated as a covered
expatriate during such period for purposes
of the 30 percent withholding tax on the
taxable portion of a distribution from a
nongrantor trust. Thus, the taxable portion
of the distribution would not be subject to
tax under section 871, but would be sub-
ject to the tax imposed on distributions to
a citizen or resident of the United States.
D. Interaction with treaties
Section 877A(f)(4)(B) provides that
a covered expatriate shall be treated as
having waived any right to claim any re-
duction under any treaty with the United
States in withholding on any distribution
to which section 877A(f)(1)(A) applies
unless the covered expatriate agrees to
such other treatment asthe Secretary deter-
mines appropriate. Until further guidance
is issued, a covered expatriate may pre-
serve his or her right to claim a treaty
benefit with respect to a distribution to
which section 877A(f)(1)(A) applies by
electing on Form 8854 to be treated as
having received the value of his or her
interest in the trust as determined for pur-
poses of section 877A, on the day before
the expatriation date.
In order to make the election described
in the previous paragraph, the covered ex-
patriate must obtain a letter ruling from
the IRS as to the value, if ascertainable,
of his or her interest in the trust as of the
day before the expatriation date by fol-
lowing the procedures set out in Revenue
Procedure 2009–4, 2009–1 I.R.B. 118 (or
any subsequent publication that replaces
Revenue Procedure 2009–4). Until the
trustee receives a copy of the letter rul-
ing from the covered expatriate and a cer-
tification signed underpenalties of perjury
that the tax due on the value of the interest
in the trust has been paid to the IRS, the
trustee must withhold as provided in sec-
tion 877A(f)(1). The amount of tax due on
the value of the interest in the nongrantor
trust as of the day before the expatriation
date will be adjusted by the amount of any
tax withheld on or after the expatriation
November 9, 20096102009–45 I.R.B.

date and prior to receipt of the letter rul-
ing. The covered expatriate may not make
the election if the IRS determines that his
or her interest in the trust does not have an
ascertainable value as of the day before the
expatriation date.
If the covered expatriate provides the
trustee with a copy of the letter ruling and a
certification written under penalties of per-
jury that the tax due on the value of the
interest in the trust has been paid to the
IRS, then the tax imposed under section
877A(f) with respect to the trust will be
deemed to have been fully satisfied. Ac-
cordingly, no subsequent distribution from
the trust to the covered expatriate will be
subject to 30 percent withholding under
section 877A(f)(1)(A), and the covered ex-
patriate will not be precluded by section
877A(f)(4)(B) from claiming treaty bene-
fits with respect to any distribution from
the trust under the appropriate article of an
applicable treaty.
SECTION 8. FILING AND
REPORTING REQUIREMENTS
A. In general
Background. Section 301(e) of the
Act amended section 6039G to impose a
requirement on any individual to whom
section 877A applies for any taxable year,
to provide a statement that includes certain
informationasprovidedinsection6039G,
including details ofthe individual’s in-
come, assets, and liabilities. The Treasury
Department and the IRS intend to issue
regulations under section 877A that will
require covered expatriates who are liable
for tax under section 877A to report cer-
taininformationinconnectionwiththeir
expatriation. Until the issuance of such
regulations, covered expatriates must re-
port information in compliance with the
rules set forth in this notice and any other
information that the IRS may require.
B. Income tax returns
Initial filing obligations for the year of
expatriation.A covered expatriate must
file a dual-status return if he or she was
a U.S. citizen or long-term resident for
only part of the taxable year that includes
the day before the expatriation date. A
dual-status return requires the covered ex-
patriate to file a Form 1040NR with a Form
1040 attached as a schedule. See Treas.
Reg. § 1.6012–1(b)(2)(ii)(b), Treas. Reg.
§ 1.871–13, and chapter 6 of IRS Publica-
tion 519 for the requirements for filing a
dual-status return. If the covered expatri-
ate’s expatriation date is January 1, then he
or she will not be required to file a dual-sta-
tus return.
Filing obligations for subsequent years.
A covered expatriate must file Form
1040NR in accordance with Treas. Reg.
§1.6012–1(b). If the covered expatriate is
fully withheld upon at source for a par-
ticular taxable year and has no income
effectively connected with the conduct of
a trade or business in the United States
for that year, then he or she will not be
required to file a Form 1040NR for that
year. See Treas. Reg. §1.6012–1(b)(2).
C. Form 8854
Certification of compliance with tax
obligations for preceding five years.All
U.S. citizens who relinquish their U.S. cit-
izenship and all long-term residents who
cease to be lawful permanent residents
of the United States (within the mean-
ing of section 7701(b)(6)) must file Form
8854 in order to certify, under penalties
of perjury, that they have been in compli-
ance with all federal tax laws during the
five years preceding the year of expatri-
ation. Individuals who fail to make such
certification will be treated as covered
expatriates within the meaning of section
877A(g) whether or not they also meet the
tax liability test or the net worth test. For
more information about the tax liability
test, the net worth test, and the certifica-
tion test, see section 2 of this notice.
Initial waiver of treaty benefits for el-
igible deferred compensation items and
annual reporting requirements. A covered
expatriate who wishes to treat a deferred
compensation item as an eligible deferred
compensation item must make an irrev-
ocable election on Form 8854 for the
taxable year that includes the day before
the expatriation date to waive any right to
claim any withholding reduction under any
treaty with the United States with respect
to the eligible deferred compensation item.
See section 5.B(2) of this notice. The
covered expatriate must make a separate
election for each deferred compensation
item that he or she wishes to treat as an
eligible deferred compensation item. The
covered expatriate must also annually file
Form 8854 to certify that no distributions
have been received from his or her eligible
deferred compensation item(s) or to report
the distributions received.
Interest in a nongrantor trust.A cov-
ered expatriate with any interest in a
nongrantor trust on the day before his or
her expatriation date must file Form 8854
annually to certify that no distributions
have been received or to report the distri-
butions received. However, if a covered
expatriate makes an election on Form 8854
to be treated as having received the value
of his or her entire interest in the trust as
determined for purposes of section 877A
(thereby preserving his or her right to
claim a treaty benefit with respect to a dis-
tribution to which section 877A(f)(1)(A)
applies), follows the procedure set forth
in section 7.D of this notice for obtaining
a letter ruling from the IRS, and pays the
tax due, the covered expatriate will not be
required to report subsequent distributions
with respect to his or her interest in the
trust on Form 8854. The election, once
made, cannot be revoked except with the
consent of the Commissioner.
Election not to apply in-bound step-up
in basis rule.A covered expatriate who
wishes to make an election described in
section 3.D of this notice, with respect
to assets that the covered expatriate held
when he or she first became a resident of
the United States, must make the election
on Form 8854 for the taxable year that in-
cludes the day before the expatriation date.
Time and manner of filing initial Form
8854.A covered expatriate must file Form
8854 with the covered expatriate’s Form
1040NR or Form 1040, whichever is appli-
cable, for the covered expatriate’s taxable
year that includes the day before the ex-
patriation date. A covered expatriate who
is required to file Form 8854 for such tax-
able year will be considered to have timely
filed Form 8854 if it is filed by the due
date of the original Form 1040NR or Form
1040 (including extensions) for such tax-
able year. Covered expatriates who are
U.S. citizens or long-term residents for
only part of the taxable year that includes
the day before the expatriation date must
file a dual-status return. See section 8.B of
this notice.
Example 22.A relinquishes his citizenship on
December 1, 2009. Under section 877A(a)(1), A is
deemed to have sold all of A’s property on Novem-
ber 30, 2009, the day before the expatriation date. A
2009–45 I.R.B.611November 9, 2009

must certify on a Form 8854 filed with Form 1040NR
for the 2009 taxable year that A has complied with all
of A’s federal tax obligations for 2004 through 2008.
For the portion of the taxable year that includes the
day before the expatriation date, A must attach a Form
1040 (or other schedule, asprovided in Treas. Reg.
§ 1.6012–1(b)(2)(ii)(b)) to his Form 1040NR. If A
does not file Form 8854, A will be treated as a cov-
ered expatriate even if A does not meet the tax liabil-
ity test or the net worth test.
Individuals electing to defer the tax im-
posedbysection877A.A covered expa-
triate who makes a deferral election under
section 877A(b) and section 3.E of this no-
tice must list all deferral assets on Form
8854 for the taxable year that includes the
day before the expatriation date, as well as
the amount of deferred tax attributable to
each deferral asset, and make an irrevoca-
bleelectiononsuchForm8854towaive
any right under any treaty of the United
States that would preclude assessment or
collection of any tax imposed by reason of
section 877A. The covered expatriate also
must file Form 8854 annually for taxable
years up to and including the taxable year
in which the full amount of deferred tax
and interest is paid. These annual filings
will permit the IRS to monitor compliance
with the terms of the covered expatriate’s
tax deferral agreement. See section 3.E
of this notice for guidance on the types of
events that will trigger the payment of the
deferred tax. The Form 8854 must be at-
tached to a timely filed Form 1040NR (or,
if applicable, Form 1040). If the covered
expatriate is not otherwise required to file
Form 1040NR (or Form 1040), Form 8854
must be submitted to the address provided
in the instructions to the form by the due
date (had the covered expatriate otherwise
been required to file) of Form 1040NR
plus extensions, and must contain such in-
formation as required by the instructions to
Form 8854.
2008 tax year.For purposes of com-
plying with section 877A for the 2008 tax
year, Form 8854 and the request for the de-
ferral of tax will be timely filed if these
documents are filed by the due date of the
return plus extensions (or 30 days after
publication of this notice, if later). How-
ever, interest will be imposed on tax that is
paid after the due date of the return (with-
out regard to extensions granted).
D. Form W–8CE
A covered expatriate who has a de-
ferred compensation item, a specified tax
deferred account, or an interest in a non-
grantor trust must file Form W–8CE with
the relevant payor on the earlier of (1) the
day prior to the first distribution on or after
the expatriation date or (2) 30 days after
the covered expatriate’s expatriation date
as defined in section 877A(g)(3)). How-
ever, if the expatriation date was prior to
the publication date of Form W–8CE, the
covered expatriate must file Form W–8CE
with the relevant payor on the earlier of
(1) the date prior to the first distribution
on or after the expatriation date or (2) 30
days after the date of publication of this
notice.
Eligible deferred compensation item.
In the case of an eligible deferred compen-
sation item described in section 5.B(2) of
this notice, Form W–8CE provides notice
to the payor that the individual is a covered
expatriate who has waived treaty benefits
with respect to the eligible deferred com-
pensation item, with the result that taxable
payments will be subject to 30 percent
withholding under section 877A(d)(1).
See section 5.C of this notice.
Ineligible deferred compensation item.
In the case of an ineligible deferred com-
pensation item described in section 5.B(3)
of this notice, Form W–8CE provides no-
tice to the payor that the individual is a
covered expatriate who is treated as re-
ceiving an amount equal to the present
value of his or her accrued benefit on the
day before the expatriation date and with
respect to which appropriate adjustments
must be made to subsequent distributions
to reflect the tax imposed by reason of such
treatment. See section 5.D of this notice.
Within 60 days of receipt of Form W–8CE,
the payor must provide a written statement
to the covered expatriate setting forth the
present value of the covered expatriate’s
accrued benefit on the day before the ex-
patriation date.
Specified tax deferred account.Inthe
case of a specified tax deferred account,
Form W–8CE provides notice to the payor
that the individual is a covered expatriate
who is treated as receiving a distribution
of his or her entire interest in the account
on the day before his or her expatriation
date and with respect to which appropriate
adjustments must be made to subsequent
distributions to reflect the tax imposed by
reason of such treatment. See section 6 of
this notice. Within 60 days of receipt of
Form W–8CE, the payor must provide a
written statement to the covered expatriate
setting forth the amount of the covered ex-
patriate’s account balance on the day be-
fore the expatriation date.
Interest in nongrantor trust. In the case
of an interest in a nongrantor trust of which
the covered expatriate was a beneficiary on
the day before the expatriation date, Form
W–8CE provides notice to the trustee that
the individual is a covered expatriate. The
covered expatriate will be deemed to have
waived treaty benefits with respect to fu-
ture distributions from the trust unless the
covered expatriate checks a box on Form
W–8CE certifying that he or she will elect
on Form 8854 to pay tax currently on the
value of his or her interest in the trust as
determined for purposes of section 877A
and will request a letter ruling from the
IRS as to the value of his or her interest
in such trust, as provided in section 7.D
of this notice. If the box is checked, the
trustee must, within 60 days of receipt of
Form W–8CE, provide the covered expa-
triate with the information needed to cal-
culate the value of his or her interest in the
trust as of the day before the expatriation
date. The covered expatriate will be sub-
ject to 30 percent withholding under sec-
tion 877A(f)(1)(A) on the taxable portion
of each distribution from the trust on or af-
ter the expatriation date until such time as
the trustee receives a copy of the letter rul-
ing and the covered expatriate’s certifica-
tion in writing under penalties of perjury
that the tax owed on the value of the inter-
est in the trust has been paid to the IRS. See
section 7.D of this notice.
SECTION 9. GIFTS OR BEQUESTS
Giftsorbequestsfromacoveredexpa-
triate on or after June 17, 2008, are subject
to a transfer tax under new section 2801.
Separate guidance will be issued for U.S.
persons who receive gifts or bequests on or
after June 17, 2008, from expatriates who
are subject to the rules of this notice. Satis-
faction of the reporting and tax obligations
for covered gifts or bequests received will
be deferred, pending the issuance of guid-
ance. That guidance will provide a reason-
able period of time between the issuance of
that guidance and the date prescribed for
such reporting and tax payments.
November 9, 20096122009–45 I.R.B.

REQUEST FOR COMMENTS
The Treasury Department and the IRS
invite public comments on the guidance
provided in this notice. All materials sub-
mitted will be available for public inspec-
tion and copying.
Comments may be submitted to Internal
Revenue Service, CC:PA:LPD:PR (Notice
2009–85), Room 5203, PO Box 7604, Ben
Franklin Station, Washington, DC 20044.
Submissions may also be hand-delivered
Monday through Friday between the hours
of 8 a.m. and 4 p.m. to the Couriers Desk
at 1111 Constitution Avenue, NW, Wash-
ington, DC 20224, Attn: CC:PA:LPD:PR
(Notice 2009–85), Room 5203. Submis-
sions may also be sent electronically via
the internet to the following email address:
Notice.comments@irscounsel.treas.gov.
Include the notice number (Notice
2009–85) in the subject line.
EFFECTIVE DATE
Regulations to be issued incorporating
the guidance set forth in this notice will ap-
ply to individuals whose expatriation date
is on or after October 15, 2009. Until
such regulations are issued, such individu-
als may apply the rules described in the no-
tice in their entirety. Individuals whose ex-
patriation date is on or after June 17, 2008,
and before October 15, 2009, may apply
the rules described in this notice in their
entirety.
DRAFTING INFORMATION
The principal drafters of this notice are
Willard W. Yates and Lara A. Banjanin
of the Office of Associate Chief Counsel
(International). For further information
regarding this notice generally, contact
Willard W. Yates or Lara A. Banjanin at
(202) 622–3880 (not a toll-free number).
For further information regarding
deferred compensation items, contact
Ilya E. Enkishev at (202) 622–6030 (not a
toll-free number).
PAPERWORK REDUCTION ACT
The collections of information con-
tained in this notice have been reviewed
and approved by the Office of Manage-
ment and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C.
3507) under control number 1545–2123.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
control number.
The first collection of information
requirement in this notice is in section
8 of the notice, as required by section
877A(a)(1). The collection of information
relates to the requirement that the covered
expatriate obtain the fair market value
appraisal of his or her property and report
such value to the IRS. This collection of
information is necessary for the proper
performance of the function of the IRS in
the collection of the mark-to-market tax
imposed by section 877A(a)(1).
The statement must be attached to the
final Form 1040 filed by the covered ex-
patriate setting forth the fair market value
of all assets the covered expatriate owns
along with the basis of such assets. We
estimate that annually approximately 100
taxpayers will expatriate who will be sub-
ject to 877A, and that it will take approx-
imately 4 hours to prepare the documen-
tation. The total reporting burden is esti-
mated to be 400 hours.
The second collection requirement in
the notice is also in section 8 of the notice,
as required by section 877A(b)(4)(B). This
collection of information is necessary for
the proper performance of the function of
the IRS because it notifies the IRS that the
covered expatriate is electing to defer a tax
that is owed and allows for insuring that
the tax owed is eventually paid.
A bond, letter of credit, or adequate se-
curity statement must be furnished to the
appropriate SBSE Advisory Office by the
covered expatriate for each item the cov-
ered expatriate wishes to defer the tax. We
estimate that annually approximately 10
taxpayers will elect to defer the payment
oftax,andthatitwilltakeapproximately
2 hours to prepare the documentation. The
total reporting burden is estimated to be 20
hours.
Books or records relating to collections
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by section 6103.
2009–45 I.R.B.613November 9, 2009

APPENDIX A
DEPARTMENT OF THE TREASURY — INTERNAL REVENUE SERVICE
AGREEMENT ON DEFERRAL OF TAX
IMPOSED UNDER I.R.C. § 877A
Under § 877A of the Internal Revenue Code of 1986, as amended (“I.R.C.”), the Taxpayer (asidentified on the signature
page of this agreement by Taxpayer’s name and address) (herein referred to as “Taxpayer”) and the Commissioner of Internal
Revenue (the “Commissioner”) enter into the following agreement to defer tax with respect to the property(ies) identified
below (this “Agreement”):
WHEREAS, I.R.C. § 877A(a) imposes tax on covered expatriates, as defined in I.R.C. § 877A(g), by deeming such individuals
to have sold all of their property for its fair market value on theday before their expatriation date (“mark-to-market tax”), as
provided in Notice 2009–85, I.R.B. 2009–45, and any subsequent guidance, and
WHEREAS, I.R.C. § 877A(b) provides that a covered expatriate may make an election to defer payment of the mark-to-market
tax imposed on the deemed sale of property, on a property-by-property basis, if adequate security is provided with respect to such
property, as provided in Notice 2009–85, I.R.B. 2009–45, and any subsequent guidance,
IT IS HEREBY DETERMINED AND AGREED THAT:
(1) Taxpayer is a covered expatriate, as defined in I.R.C. § 877A(g), who renounced (his/her) (U.S. citizenship/ceased to be a
lawful permanent resident of the United States) on [date].
(2) Taxpayer is liable for the tax imposed by I.R.C. § 877A(a) by reason of his/her covered expatriate status.
(3) By signing this Agreement, Taxpayer consents to the assessmentand collection of the liabilitiesfor tax, interest, additions to
tax, and penalties determined by or resulting from the determinations of this agreement, waiving all defenses against and
restrictions on the assessment and collection of those liabilities including any defense based on the expiration of the period of
limitations on assessment or collection.
(4) Pursuant to I.R.C. § 877A(b), Taxpayer is making an irrevocable election to defer payment of the mark-to-market tax imposed
with respect to the property(ies) identified in an attachment tothis Agreement and in an amount reflected on such attachment in
accordance with the instructions in section 3.E of Notice 2009–85, I.R.B. 2009–45.
THEREFORE, based on the above information and material submitted by the Taxpayer it is determined that:
(1) Taxpayer has furnished a bond or othersecurity (“collateral”) that is acceptable to the Commissioner, conditioned upon
payment of the amount of tax due.
(2) Interest on the amount of the deferred tax will be charged for the period that payment of the tax is deferred (in other words,
from the due date for the payment of the tax, determined without regard to the election, to the date on which payment of such
tax is received) at the rate established under I.R.C. § 6621 thatis applicable to individual underpayments as computed under
I.R.C. § 6622.
(3) The Commissioner may accept collateral other than a letter of credit or bond in his sole discretion. If the collateral is
not a letter of credit or bond, Taxpayer is required to verify to the satisfaction of the Commissioner the existence, location,
and value of the collateral.
(4) If Taxpayer elects to defer the tax and supplies security that the Commissioner determines is not adequate and Taxpayer fails to
correct such failure within 30 days of written notice, the tax owed will not be deemed to have been deferred and penalties will be
imposed under I.R.C. § 6651(a)(2) for failure to pay the tax owed.
(5) By signing this agreement, Taxpayer hereby certifies that he/she hasirrevocably waived, on Form 8854 (Expatriation
Information Statement), any right under any treaty of the United States that would preclude assessment or collection of any tax
imposed by reason of I.R.C. § 877A.
(6) Subject to the provisions of paragraphs 8 through 11 of this Agreement, the time for payment of the additional tax attributable
to the property that is the subject of this Agreement shall be extended until the due date of the return for the taxable year in
which each such property is disposed of either by sale, gift, disposal in a transaction in which gain is not recognized in whole
or in part, or by Taxpayer’s death.
(7) If any of the tax that is the subject of this Agreement remains unpaid at the time of Taxpayer’s death, such tax is due and
payable by Taxpayer’s estate no later than the due date of the return for the year of Taxpayer’s death. If such payment is not
received by such due date, the collateral willbe applied to the tax liability and interest.
November 9, 20096142009–45 I.R.B.

(8) If, in his sole discretion, the Commissioner determines that the collateral provided with respect to any property that is the
subject of this Agreement no longer provides adequate security, and Taxpayer fails to correct such failure within 30 days after the
IRS mails notification of such failure to the last known addresses of the covered expatriate and the covered expatriate’s agent, the
deferred tax and the interest with respect to such property will be immediately due, and this Agreement will be defaulted and
the collateral will be applied to the tax liability and interest.
(9) This Agreement shall be effective for [# of years] years from the date it is executed by Taxpayer and the Commissioner. At the
expiration of [# of years] years, this Agreement will be terminated and the deferred tax and interest will be immediately due, unless
Taxpayer renews this Agreement by providing any amended or replacement collateral that may be required under paragraph 10 of
this Agreement and certifying in writing that none of the property that is the subject of this Agreement has been disposed of by
sale, gift, disposal in a transaction in which gain is not recognizedin whole or in part, or by Taxpayer’s death. If this Agreement is
renewed, it will remain in effect for another [# of years] years.Taxpayer may continue to renew this Agreement every [# of years].
(10) Ninety days prior to the termination date of this Agreement, the Commissioner will notify Taxpayer that amended or
replacement collateral is required to reflect the tax and projected interest in order to renew this Agreement. If amended or
replacement collateral is not received by the Commissioner 30 daysbefore the termination date of this Agreement, the collateral
will be applied to the tax liability and interest.
(11) In order to renew this Agreement, Taxpayer must ensure suchrenewal is effected 30 days prior to the stated termination date
of this Agreement by complying with the requirements prescribed in paragraphs 9 and 10 of this Agreement. If such a renewal is
not received in writing by the Commissioner 30 days prior to the stated termination date of this Agreement, Taxpayer will not be
eligible to renew this Agreement and the collateral will be applied to the tax liability and interest.
(12) If Taxpayer does not notify the Commissioner in writing of any change of address within 30 days of such change, this
Agreement will be terminated and the collateral will be applied to the tax liability and interest.
(13) As a condition for enteringinto this Agreement, all returns due from Taxpayer for the five taxable years preceding the
taxable year that includes the expatriation date must be timely filed and must betrue, accurate, and complete; otherwise this
agreement will be null and void.
(14) For all matters pertaining to this Agreement, Taxpayer should contact the following office:
Advisory
7850 SW 6th Court
Mail Stop 5780
Plantation, Florida, 33324–3202
Telephone: 954–423–7344
Fax: 954–423–7809
(15) All notices, instructions, and other communications (“Notices”) required or permitted to be given, forwarded, or transmitted
hereunder shall be in writing and shall be deemed to have been duly given if: (a) within the continental United States, delivered
personally or mailed by first class mail (postage prepaid, by registered or certified mail, return receipt requested); (b) outside
of the continental United States, sent by a private delivery service designated in Notice 2004–83, 2004–2 C.B. 1030 (or any
subsequent publication that replaces Notice2004–83); or (c) regardless ofplace of origination, sent by cable, telex, telegram or
facsimile transmission (e.g.,telecopier) subsequently confirmed by letter.
(16) If the Commissioner determines that any material fact represented by Taxpayer is erroneous or inaccurate, the restrictions and
obligations imposed on the Commissioner by this Agreement shall be null and void.
(17) This Agreement and all of its terms and conditions shall inure to the benefit of, and be binding upon all parties to the
Agreement and their respective successors and assigns.
(18) This Agreement may not be amended, modified, superseded or canceled, and none of the terms hereof may be waived, except
by a written instrument executed by the Commissioner, and the other party or parties hereto sought to be charged thereby.
(19) This Agreement shall be governed, construed, and enforced in accordance with the laws of the United States of America.
(20) This Agreement shall not be binding upon any signatoryhereto until it has been signed by the Commissioner, and the
Commissioner has received counterparts thereof duly executed by each of the signatories whose names appear at the foot
of this Agreement.
2009–45 I.R.B.615November 9, 2009

(21) As a condition for entering into this Agreement, and prior to its execution, Taxpayer mustappoint a U.S. person to act as
Taxpayer’s limited agent for purposes ofaccepting communication related to this Agreement from the Commissioner on behalf
of Taxpayer. This includes, but is not limited to, acting as Taxpayer’s limited agent for the timely enforcement of the terms of
this Agreement, for applying I.R.C. § 7602 and all related procedural provisions of the I.R.C. with respect to a request by the
Commissioner to examine records, for the production of testimony, or for a summons by the Commissioner for such records
or testimony, and for the acceptance of service of process for anenforced collection suit, if necessary. Taxpayer must enter
into a binding agreement with the agent,and the authorization under such agreement must remain in effect for as long as this
Agreement remains in effect. If the agent resigns, liquidates or terminates its responsibility as Taxpayer’s agent, Taxpayer must,
within 90 days, notify Advisory at the following address:
Advisory
7850 SW 6th Court
Mail Stop 5780
Plantation FL 33324–3202
Telephone: 954–423–7344
Fax: 954–423–7809
This notification must contain the name, address, and TIN of the new U.S. agent (if any). If no new agent is appointed, then this
Agreement is in default and the collateral willbe applied to the deferred tax and interest attributable to all of the deferral assets.
WHEREAS, the determinations set forth above are hereby mutually agreed to by Taxpayer and the Commissioner.
IN WITNESS WHEREOF, the above parties have subscribed their names to these presents, in triplicate.
(Name of Taxpayer)Date
Taxpayer Identification Number:
Address in country of residence:
Commissioner of the Internal Revenue Service
By
(Title)Date
November 9, 20096162009–45 I.R.B.

APPENDIX B
AUTHORIZATION OF AGENT
[Name of covered expatriate] hereby expressly authorizes [name of U.S. agent] toact as his or her agent solely for purposes
of accepting communication related to the Tax Deferral Agreement from the Internal Revenue Service on behalf of [covered
expatriate], the timely enforcement of the terms of the Tax Deferral Agreement between [covered expatriate] and the IRS,
and applying section 7602 and all relatedprocedural provisions of the Internal Revenue Code with respect to any request to
examine records or produce testimony or with respect to a summonsfor such records or testimony related to the enforcement of
the Tax Deferral Agreement.
Signature of [covered expatriate] (date)
Type or print your name below
TIN
Address
[Name of agent] accepts this appointment to act as agent for [covered expatriate] for the abovepurpose. I certify that I have
the authority to execute this authorization of agent to act on behalf of [covered expatriate] and agree to accept communications
and service of process on behalf of [covered expatriate] for the above purposes.
Signature of agent(date)
Type or print your name below
TIN
Address
26 CFR 601.602: Tax forms and instructions.
(Also Part I, §§ 1, 23, 24, 25A, 32, 42, 59, 62, 63, 132, 135, 137, 146, 147, 148, 151, 170, 179, 213, 220, 221, 512, 513, 877, 877A, 911, 2032A, 2503, 2523, 4161,
6033, 6039F, 6323, 6334, 6601, 7430, 7702B; 1.148–3, 1.148–5.)
Rev. Proc. 2009–50
TABLE OF CONTENTS
Table of Contents
SECTION 1. PURPOSE
SECTION 2. CHANGES
SECTION 3. 2010 ADJUSTED ITEMS
2009–45 I.R.B.617November 9, 2009

Code Section
.01 Tax Rate Tables1(a)–(e)
.02 Unearned Income of Minor Children Taxedas if Parent’s Income (“Kiddie Tax”)1(g)
.03 Adoption Credit23
.04 Child Tax Credit24
.05 Hope Scholarship, American Opportunity, and Lifetime Learning Credits25A
.06EarnedIncomeCredit32
.07 Rehabilitation Expenditures Treated as Separate New Building42(e)
.08 Low-Income Housing Credit42(h)
.09 Alternative Minimum Tax Exemption for a Child Subject to the “Kiddie Tax”
59(j)
.10 Transportation Mainline Pipeline ConstructionIndustry Optional Expense Substantiation Rules for
Payments to Employees under Accountable Plans
62(c)
.11 Standard Deduction63
.12 Qualified Transportation Fringe132(f)
.13 Income from United States Savings Bonds for Taxpayers Who Pay Qualified Higher Education Expenses
135
.14 Adoption Assistance Programs137
.15 Private Activity Bonds Volume Cap
146(d)
.16 Loan Limits on Agricultural Bonds147(c)(2)
.17 General Arbitrage Rebate Rules148(f)
.18 Safe Harbor Rules for Broker Commissions on Guaranteed Investment Contracts or Investments
Purchased for a Yield Restricted Defeasance Escrow
148
.19 Personal Exemption
151
.20 Election to Expense Certain Depreciable Assets179
.21 Eligible Long-Term Care Premiums213(d)(10)
.22 Medical Savings Accounts220
.23 Interest on Education Loans221
.24 Treatment of Dues Paid to Agricultural or Horticultural Organizations
512(d)
.25 Insubstantial Benefit Limitations for Contributions Associated with Charitable Fund-Raising Campaigns 513(h)
.26ExpatriationtoAvoidTax877
.27 Tax Responsibilities of Expatriation877A
.28 Foreign Earned Income Exclusion911
.29 Valuation of Qualified Real Property in Decedent’s Gross Estate2032A
.30 Annual Exclusion for Gifts
2503 & 2523
.31 Tax on Arrow Shafts4161
.32 Reporting Exception for Certain Exempt Organizations with Nondeductible Lobbying Expenditures6033(e)(3)
.33 Notice of Large Gifts Received from Foreign Persons6039F
.34 Persons Against Whom a Federal Tax Lien Is Not Valid6323
.35 Property Exempt from Levy
6334
.36 Interest on a Certain Portion of the Estate Tax Payable in Installments6601(j)
.37 Attorney Fee Awards7430
.38 Periodic Payments Received under Qualified Long-Term Care Insurance Contracts or under Certain
Life Insurance Contracts
7702B(d)
November 9, 20096182009–45 I.R.B.

SECTION 4. EFFECTIVE DATE
SECTION 5. DRAFTING INFORMATION
SECTION 1. PURPOSE
This revenue procedure sets forth infla-
tion adjusted items for 2010.
SECTION 2. CHANGES
.01 Section 1003 of the American Re-
covery and Reinvestment Tax Act of 2009,
Tit. I of Div. B of Pub. L. No. 111–5, 123
Stat. 155 (ARRTA), amended § 24(d)(4)
of the Internal Revenue Code to provide
a temporary increase in the refundable
portion of the child tax credit. Under
§ 24(d)(1)(B)(i), a taxpayer is allowed
a refundable credit equal to 15 percent
of earned income in excess of $10,000,
adjusted annually forinflation. Section
24(d)(4) provides that, for taxable years
beginning in 2009 or 2010, the dollar
amount in effect under § 24(d)(1)(B)(i) is
$3,000. (See section 3.04 of this revenue
procedure.)
.02 Section 1004 of ARRTA added to
the Code new § 25A(i) (the American Op-
portunity Tax Credit) to provide temporary
increases in the amount of the Hope Schol-
arship Credit and the threshold phaseout
amounts for the credit. Section 25A(i)(1)
provides that, for taxable years beginning
in 2009 or 2010, the American Opportu-
nity Tax Credit is equal to 100 percent of
the amount of qualified tuition and related
expenses not in excess of $2,000, plus
25 percent of those expenses that exceed
$2,000 but do not exceed $4,000. Section
25A(i)(4) provides that, for taxable years
beginning in 2009 or 2010, the amount
of the American Opportunity Tax Credit
begins to phase out for taxpayers whose
modified adjusted gross income exceeds
$80,000 ($160,000 for married taxpayers
filing a joint return). The credit is com-
pletely phased out at $90,000 ($180,000
for married taxpayers filing a joint return).
(See section 3.05 of this revenue proce-
dure.)
.03 Section 1002 of ARRTA added
§ 32(b)(3) to the Code to provide a
temporary increase in the earned in-
come credit for certain taxpayers. Under
§ 32(b)(3)(A), for taxable years beginning
in 2009 or 2010, the maximum amount
of the earned income credit for taxpayers
with three or more qualifying children is
45 percent of the earned income amount
for the taxable year. For taxable years
beginning in 2009, under § 32(b)(3)(B)(i)
the amount added to the threshold phase-
out amounts and the completed phaseout
amounts for married taxpayers filing joint
returns is $5,000. For taxable years be-
ginning in 2010, the $5,000 amount under
§ 32(b)(3)(B)(i) is adjusted for inflation.
(See section 3.06 of this revenue proce-
dure.)
.04 Section 3003 of the Housing and
Economic Recovery Act of 2008, Pub. L.
No. 110–289, 122 Stat. 2654 (HERA),
amended § 42(e)(3) of the Code to in-
crease the per low-income unit qualified
basis amount under § 42(e)(3)(A)(ii)(II)
to $6,000 for rehabilitation expenditures
to qualify for treatment as a separate
new building for the low-income hous-
ing credit. For calendar years begin-
ning in 2010, the $6,000 amount un-
der § 42(e)(3)(A)(ii)(II) is, pursuant to
§ 42(e)(3)(D), adjusted for inflation. (See
section 3.07 of this revenue procedure.)
.05 Section 3001 of HERA added
§ 42(h)(3)(I) to the Code to provide for
temporary increases in certain amounts
used to calculate the State housing credit
ceiling under § 42(h)(3)(C)(ii)(I) and (II),
after any adjustments for inflation to those
amounts under § 42(h)(3)(H). The tempo-
rary increases apply only to calendar years
2008 and 2009. Accordingly, for calendar
years after 2009, the inflation adjusted
amounts under § 42(h)(3)(C)(ii)(I) and (II)
are determined without the temporary in-
creases. (See section 3.08 of this revenue
procedure.)
.06 The overall limitation on itemized
deductions under § 68 does not apply to
any taxable year beginning after December
31, 2009, and before January 1, 2011. Ac-
cordingly, the overall limitation on item-
ized deductions is not included in this rev-
enue procedure.
.07 Section 1151 of ARRTA amended
§ 132(f)(2) of the Code to provide a
temporary increase in the amount exclud-
able from gross income for certain em-
ployer-provided transportation fringe ben-
efits. For months beginning after February
17, 2009, and before January 1, 2011, the
monthly limitation under § 132(f)(2)(A)
for transportation in a commuter highway
vehicle and any transit pass is the same as
the amount in effect under § 132(f)(2)(B)
for qualified parking. (See section 3.12 of
this revenue procedure.)
.08 The phaseout of the personal ex-
emption amount under § 151(d)(3) does
not apply to any taxable year beginning af-
ter December 31, 2009, and before Jan-
uary 1, 2011. Accordingly, the exemp-
tion amount for taxpayers with adjusted
gross income in excess of the maximum
phaseout amount and the maximum ad-
justed gross income phaseout amounts are
not included in this revenue procedure.
.09 Section 1202 of ARRTA amended
§ 179(b)(7) of the Code to extend to
taxable years beginning in 2009 the tem-
porary increases to the dollar limitations
under § 179(b)(1) and (2) that applied to
taxable years beginning in 2008. Because
the temporary increases do not apply to
taxable years beginning after December
31, 2009, the dollar limitations under
§ 179(b)(1) and (2) provided in this rev-
enue procedure are determined without
regard to § 179(b)(7). (See section 3.20 of
this revenue procedure.)
.10 The passenger air transportation ex-
cise taxes imposed under § 4261(b) and
(c), as extended by § 2(b)(1) of the Fiscal
Year 2010 Federal Aviation Administra-
tion Extension Act , Pub. L. No. 111–69,
123 Stat. 2054 (2009), apply to transporta-
tion taken through December 31, 2009,
and to amounts paid on or before Decem-
ber 31, 2009, for transportation beginning
after that date. Accordingly, the amounts
in § 4261(b) and (c) are not included in this
revenue procedure.
SECTION3.2010ADJUSTEDITEMS
.01Tax Rate Tables. For taxable years
beginning in 2010, the tax rate tables under
§1areasfollows:
2009–45 I.R.B.619November 9, 2009

TABLE 1 — Section 1(a) — Married Individuals Filing Joint Returns and Surviving Spouses
If Taxable Income Is:The Tax Is:
Not over $16,750
10% of the taxable income
Over $16,750 but
not over $68,000
$1,675 plus 15% of
the excess over $16,750
Over $68,000 but
not over $137,300
$9,362.50 plus 25% of
the excess over $68,000
Over $137,300 but
not over $209,250
$26,687.50 plus 28% of
the excess over $137,300
Over $209,250 but
not over $373,650
$46,833.50 plus 33% of
the excess over $209,250
Over $373,650$101,085.50 plus 35% of
the excess over $373,650
TABLE 2 — Section 1(b) — Heads of Households
If Taxable Income Is:The Tax Is:
Not over $11,950
10% of the taxable income
Over $11,950 but
not over $45,550
$1,195 plus 15% of
the excess over $11,950
Over $45,550 but
not over $117,650
$6,235 plus 25% of
the excess over $45,550
Over $117,650 but
not over $190,550
$24,260 plus 28% of
the excess over $117,650
Over $190,550 but
not over $373,650
$44,672 plus 33% of
the excess over $190,550
Over $373,650$105,095 plus 35% of
the excess over $373,650
TABLE 3 — Section 1(c) — Unmarried Individuals (other than Surviving Spouses and Heads of Households)
If Taxable Income Is:The Tax Is:
Not over $8,375
10% of the taxable income
Over $8,375 but
not over $34,000
$837.50 plus 15% of
the excess over $8,375
Over $34,000 but
not over $82,400
$4,681.25 plus 25% of
the excess over $34,000
Over $82,400 but
not over $171,850
$16,781.25 plus 28% of
the excess over $82,400
Over $171,850 but
not over $373,650
$41,827.25 plus 33% of
the excess over $171,850
Over $373,650$108,421.25 plus 35% of
the excess over $373,650
November 9, 20096202009–45 I.R.B.

TABLE 4 — Section 1(d) — Married Individuals Filing Separate Returns
If Taxable Income Is:The Tax Is:
Not over $8,375
10% of the taxable income
Over $8,375 but
not over $34,000
$837.50 plus 15% of
the excess over $8,375
Over $34,000 but
not over $68,650
$4,681.25 plus 25% of
the excess over $34,000
Over $68,650 but
not over $104,625
$13,343.75 plus 28% of
the excess over $68,650
Over $104,625 but
not over $186,825
$23,416.75 plus 33% of
the excess over $104,625
Over $186,825$50,542.75 plus 35% of
the excess over $186,825
TABLE 5 — Section 1(e) — Estates and Trusts
If Taxable Income Is:The Tax Is:
Not over $2,300
15% of the taxable income
Over $2,300 but
not over $5,350
$345 plus 25% of
the excess over $2,300
Over $5,350 but
not over $8,200
$1,107.50 plus 28% of
the excess over $5,350
Over $8,200 but
not over $11,200
$1,905.50 plus 33% of
the excess over $8,200
Over $11,200$2,895.50 plus 35% of
the excess over $11,200
.02Unearned Income of Minor
Children Taxed as if Parent’s Income
(the “Kiddie Tax”). For taxable years
beginning in 2010, the amount in
§ 1(g)(4)(A)(ii)(I), which is used to reduce
the net unearned income reported on the
child’s return that is subject to the “kiddie
tax,” is $950. This amount is the same
as the $950 standard deduction amount
provided in section 3.11(2) of this rev-
enue procedure. The same $950 amount
is used for purposes of § 1(g)(7) (that is,
to determine whether a parent may elect
to include a child’s gross income in the
parent’s gross income and to calculate the
“kiddie tax”). For example, one of the re-
quirements for the parental election is that
a child’s gross income is more than the
amount referenced in § 1(g)(4)(A)(ii)(I)
but less than 10 times that amount; thus,
a child’s gross income for 2010 must be
more than $950 but less than $9,500.
.03Adoption Credit. For taxable years
beginning in 2010, under § 23(a)(3) the
credit allowed for an adoption of a child
with special needs is $12,170. For taxable
years beginning in 2010, under § 23(b)(1)
the maximum credit allowed for other
adoptions is the amount of qualified adop-
tion expenses up to $12,170. The available
adoption credit begins to phase out under
§ 23(b)(2)(A) for taxpayers with modi-
fied adjusted gross income in excess of
$182,520 and is completely phased out for
taxpayers with modified adjusted gross
income of $222,520 or more. (See section
3.14 of this revenue procedure for the ad-
justed items relating to adoption assistance
programs.)
.04Child Tax Credit. For taxable
years beginning in 2010, the value used in
§ 24(d)(1)(B)(i) to determine the amount
of credit under § 24 that may be refundable
is $3,000.
.05Hope Scholarship, American Op-
portunity, and Lifetime Learning Credits.
(1) For taxable years beginning in
2010, the Hope Scholarship Credit under
§ 25A(b)(1), as increased under § 25A(i)
(the American Opportunity Tax Credit), is
an amount equal to 100 percent of qual-
ified tuition and related expenses not in
excess of $2,000, plus 25 percent of those
expenses that exceed $2,000 but do not ex-
ceed $4,000. Accordingly, the maximum
Hope Scholarship Credit allowable under
§ 25A(b)(1) for taxable years beginning in
2010 is $2,500.
(2) For taxable years beginning in 2010,
a taxpayer’s modified adjusted gross in-
come in excess of $80,000 ($160,000 for a
joint return) is used to determine the reduc-
tion under § 25A(d)(2) in the amount of the
Hope Scholarship Credit otherwise allow-
able under § 25A(a)(1). For taxable years
beginning in 2010, a taxpayer’s modified
adjusted gross income in excess of $50,000
($100,000 for a joint return) is used to de-
termine the reduction under § 25A(d)(2) in
the amount of the Lifetime Learning Credit
otherwise allowable under § 25A(a)(2).
.06Earned Income Credit.
2009–45 I.R.B.621November 9, 2009

(1)In general. For taxable years be-
ginning in 2010, the following amounts
are used to determine the earned income
credit under § 32(b). The “earned in-
come amount” is the amount of earned
income at or above which the maximum
amount of the earned income credit is al-
lowed. The “threshold phaseout amount”
is the amount of adjusted gross income
(or, if greater, earned income) above which
the maximum amount of the credit begins
to phase out. The “completed phaseout
amount” is the amount of adjusted gross
income (or, if greater, earned income) at
or above which no credit is allowed. The
threshold phaseout amounts and the com-
pleted phaseout amounts shown in the ta-
ble below for married taxpayers filing a
joint return include the increase provided
in § 32(b)(3)(B)(i), asadjusted for infla-
tion for taxable years beginning in 2010.
Number of Qualifying Children
ItemOneTwoThree or MoreNone
Earned Income Amount
$ 8,970$12,590$12,590$ 5,980
Maximum Amount of Credit
$ 3,050$ 5,036$ 5,666$ 457
Threshold Phaseout Amount
(Single, Surviving Spouse, or Head of
Household)
$16,450$16,450$16,450$ 7,480
Completed Phaseout Amount
(Single, Surviving Spouse, or Head of
Household)
$35,535$40,363$43,352$13,460
Threshold Phaseout Amount
(Married Filing Jointly)
$21,460$21,460$21,460$12,490
Completed Phaseout Amount
(Married Filing Jointly)
$40,545$45,373$48,362$18,470
The instructions for the Form 1040 se-
ries provide tables showing the amount of
the earned income credit for each type of
taxpayer.
(2)Excessive investment income.For
taxable years beginning in 2010, the
earned income tax credit is not allowed
under § 32(i) if the aggregate amount
of certain investment income exceeds
$3,100.
.07Rehabilitation Expenditures
Treated as Separate New Property.For
calendar year 2010, the per low-in-
come unit qualified basis amount under
§ 42(e)(3)(A)(ii)(II) is $6,000.
.08Low-Income Housing Credit.For
calendar year 2010, the amount used un-
der § 42(h)(3)(C)(ii) to calculate the State
housing credit ceiling for the low-income
housing credit is the greater of (1) $2.10
multiplied by the State population, or (2)
$2,430,000.
.09Alternative Minimum Tax Exemp-
tion for a Child Subject to the “Kiddie
Tax.” For taxable years beginning in 2010,
for a child to whom the § 1(g) “kiddie tax”
applies, the exemption amount under §§ 55
and 59(j) for purposes of the alternative
minimum tax under § 55 may not exceed
the sum of (1) the child’s earned income
for the taxable year, plus (2) $6,700.
.10Transportation Mainline Pipeline
Construction Industry Optional Expense
Substantiation Rules for Payments to Em-
ployees under Accountable Plans.For
calendar year 2010, an eligible employer
may pay certain welders and heavy equip-
mentmechanicsanamountofupto$16
per hour for rig-related expenses that is
deemed substantiated under an account-
able plan if paid in accordance with Rev.
Proc. 2002–41, 2002–1 C.B. 1098. If the
employer provides fuel or otherwise reim-
burses fuel expenses, up to $10 per hour
is deemed substantiated if paid under Rev.
Proc. 2002–41.
.11Standard Deduction.
(1)In general. For taxable years be-
ginning in 2010, the standard deduction
amounts under § 63(c)(2) are as follows:
Filing StatusStandard Deduction
Married Individuals Filing Joint Returns and Surviving Spouses (§ 1(a))
$11,400
Heads of Households (§ 1(b))
$8,400
Unmarried Individuals (other than Surviving Spouses and Heads of Households) (§ 1(c))
$5,700
Married Individuals Filing Separate Returns (§ 1(d))
$5,700
(2)Dependent. For taxable years be-
ginning in 2010, the standard deduction
amount under § 63(c)(5) for an individual
who may be claimed as a dependent by an-
other taxpayer cannot exceed the greater of
(1) $950, or (2) the sum of $300 and the in-
dividual’s earned income.
(3)Aged or blind. For taxable years
beginning in 2010, the additional standard
deduction amount under § 63(f) for the
aged or the blind is $1,100. These amounts
November 9, 20096222009–45 I.R.B.

are increased to $1,400 if the individual is
also unmarried and not a surviving spouse.
.12Qualified Transportation Fringe.
For taxable years beginning in 2010, the
monthly limitation under § 132(f)(2)(A),
regarding the aggregate fringe benefit
exclusion amount for transportation in a
commuter highway vehicle and any transit
pass, and under § 132(f)(2)(B), regarding
the fringe benefit exclusion amount for
qualified parking, is $230.
.13Income from United States Savings
Bonds for Taxpayers Who Pay Qualified
Higher Education Expenses. For taxable
years beginning in 2010, the exclusion un-
der § 135, regarding income from United
States savings bonds for taxpayers who
pay qualified higher education expenses,
begins to phase out for modified adjusted
gross income above $105,100 for joint
returns and $70,100 for other returns.
The exclusion is completely phased out
for modified adjusted gross income of
$135,100 or more for joint returns and
$85,100 or more for other returns.
.14Adoption Assistance Programs.For
taxable years beginning in 2010, under
§ 137(a)(2) the amount that can be ex-
cluded from an employee’s gross income
for the adoption of a child with special
needs is $12,170. For taxable years be-
ginning in 2010, under § 137(b)(1) the
maximum amount that can be excluded
from an employee’s gross income for the
amounts paid or expenses incurred by an
employer for qualified adoption expenses
furnished pursuant to an adoption assis-
tance program for other adoptions by the
employee is $12,170. The amount exclud-
able from an employee’s gross income be-
gins to phase out under § 137(b)(2)(A) for
taxpayers with modified adjusted gross in-
come in excess of $182,520 and is com-
pletely phased out for taxpayers with mod-
ified adjusted gross income of $222,520 or
more. (See section 3.03 of this revenue
procedure for the adjusted items relating to
the adoption credit.)
.15Private Activity Bonds Volume Cap.
For calendar year 2010, the amounts used
under § 146(d)(1) to calculate the State
ceiling for the volume cap for private
activity bonds is the greater of (1) $90
multiplied by the State population, or (2)
$273,775,000.
.16Loan Limits for Agricultural Bonds.
For calendar year 2010, the loan limit
amount on agricultural bonds under
§ 147(c)(2)(A) for first-time farmers is
$470,100.
.17General Arbitrage Rebate Rules.
For bond years ending in 2010, the amount
of the computation credit determined
under § 1.148–3(d)(4) of the proposed
Income Tax Regulations is $1,500.
.18Safe Harbor Rules for Broker
Commissions on Guaranteed Invest-
ment Contracts or Investments Purchased
for a Yield Restricted Defeasance Es-
crow. For calendar year 2010, under
§ 1.148–5(e)(2)(iii)(B)(1), a broker’s com-
mission or similar fee for the acquisition
of a guaranteed investment contract or in-
vestments purchased for a yield restricted
defeasance escrow is reasonable if (1) the
amount of the fee that the issuer treats as
a qualified administrative cost does not
exceed the lesser of (A) $35,000, and (B)
0.2 percent of the computational base (as
defined in § 1.148–5(e)(2)(iii)(B)(2)) or,
if more, $4,000; and (2) the issuer does
not treat more than $100,000 in brokers’
commissions or similar fees as qualified
administrative costs for all guaranteed
investment contracts and investments for
yield restricted defeasance escrows pur-
chased with gross proceeds of the issue.
.19Personal Exemption. For taxable
years beginning in 2010, the personal ex-
emption amount under § 151(d) is $3,650.
.20Election to Expense Certain Depre-
ciable Assets. For taxable years begin-
ning in 2010, under § 179(b)(1) the aggre-
gate cost of any § 179 property a taxpayer
may elect to treat as an expense cannot
exceed $134,000. Under § 179(b)(2), the
$134,000 limitation is reduced (but not be-
low zero) by the amount by which the cost
of § 179 property placed in service during
the 2010 taxable year exceeds $530,000.
.21Eligible Long-Term Care Premi-
ums. For taxable years beginning in 2010,
the limitations under § 213(d)(10), re-
garding eligible long-term care premiums
includible in the term “medical care,” are
as follows:
Attained Age Before the Close of the Taxable YearLimitation on Premiums
40 or less
$330
More than 40 but not more than 50
$620
More than 50 but not more than 60
$1,230
More than 60 but not more than 70
$3,290
More than 70
$4,110
.22Medical Savings Accounts.
(1)Self-only coverage. For taxable
years beginning in 2010, the term “high
deductible health plan” as defined in
§ 220(c)(2)(A) means,for self-only cov-
erage, a health plan that has an annual
deductible that is not less than $2,000 and
not more than $3,000, and under which the
annual out-of-pocket expenses required
to be paid (other than for premiums) for
covered benefits do not exceed $4,050.
(2)Family coverage. For taxable years
beginning in 2010, the term “high de-
ductible health plan” means, for family
coverage, a health plan that has an annual
deductible that is not less than $4,050 and
not more than $6,050, and under which the
annual out-of-pocket expenses required
to be paid (other than for premiums) for
covered benefits do not exceed $7,400.
.23Interest on Education Loans.For
taxable years beginning in 2010, the
$2,500 maximum deduction for inter-
estpaidonqualifiededucationloans
under § 221 begins to phase out under
§ 221(b)(2)(B) for taxpayers with mod-
ified adjusted gross income in excess of
$60,000 ($120,000 for joint returns), and
is completely phased out for taxpayers
with modified adjusted gross income of
$75,000 or more ($150,000 or more for
joint returns).
2009–45 I.R.B.623November 9, 2009

.24Treatment of Dues Paid to Agricul-
tural or Horticultural Organizations.For
taxable years beginning in 2010, the limi-
tation under § 512(d)(1), regarding the ex-
emption of annual dues required to be paid
by a member to an agricultural or horticul-
tural organization, is $146.
.25Insubstantial Benefit Limitations
for Contributions Associated with Chari-
table Fund-Raising Campaigns.
(1)Low cost article. For taxable years
beginning in 2010, the unrelated business
income of certain exempt organizations
under § 513(h)(2) does not include a “low
cost article” of $9.60 or less.
(2)Other insubstantial benefits.For
taxable years beginning in 2010, the $5,
$25, and $50 guidelines in section 3 of
Rev. Proc. 90–12, 1990–1 C.B. 471 (as
amplified by Rev. Proc. 92–49, 1992–1
C.B. 987, and modified by Rev. Proc.
92–102, 1992–2 C.B. 579), for disregard-
ing the value of insubstantial benefits
received by a donor in return for a fully
deductible charitable contribution under
§ 170, are $9.60, $48, and $96, respec-
tively.
.26Expatriation to Avoid Tax.For
calendar year 2010, an individual with
“average annual netincome tax” of more
than $145,000 for the five taxable years
ending before the date of the loss of United
States citizenship under § 877(a)(2)(A)
is a covered expatriate for purposes of
§ 877A(g)(1).
.27Tax Responsibilities of Expatria-
tion. For taxable years beginning in 2010,
the amount that would be includible in the
gross income of a covered expatriate by
reason of § 877A(a)(1) is reduced (but not
below zero) by $627,000.
.28Foreign Earned Income Exclusion.
For taxable years beginning in 2010, the
foreign earned income exclusion amount
under § 911(b)(2)(D)(i) is $91,500.
.29Valuation of Qualified Real Prop-
erty in Decedent’s Gross Estate.Foran
estate of a decedent dying in calendar year
2010, if the executor elects to use the spe-
cial use valuation method under § 2032A
for qualified real property, the aggregate
decrease in the value of qualified real prop-
erty resulting from electing to use § 2032A
for purposes of the estate tax cannot ex-
ceed $1,000,000.
.30Annual Exclusion for Gifts.
(1) For calendar year 2010, the first
$13,000 of gifts to any person (other than
gifts of future interests in property) are
not included in the total amount of taxable
gifts under § 2503 made during that year.
(2) For calendar year 2010, the first
$134,000 of gifts to a spouse who is not
a citizen of the United States (other than
gifts of future interests in property) are
not included in the total amount of taxable
gifts under §§ 2503 and 2523(i)(2) made
during that year.
.31Tax on Arrow Shafts. For calen-
dar year 2010, the tax imposed under
§ 4161(b)(2)(A) on the first sale by the
manufacturer, producer, or importer of any
shaft of a type used in the manufacture of
certain arrows is $0.45 per shaft.
.32Reporting Exception for Certain
Exempt Organizations with Nondeductible
Lobbying Expenditures. For taxable years
beginning in 2010, the annual per per-
son, family, or entity dues limitation to
qualify for the reporting exception under
§ 6033(e)(3) (and section 5.05 of Rev.
Proc. 98–19, 1998–1 C.B. 547), regarding
certain exempt organizations with nonde-
ductible lobbying expenditures, is $101 or
less.
.33Notice of Large Gifts Received from
Foreign Persons. For taxable years begin-
ning in 2010, recipients of gifts from cer-
tainforeignpersonsmayberequiredtore-
port these gifts under § 6039F if the ag-
gregate value of gifts received in a taxable
year exceeds $14,165.
.34Persons Against Whom a Federal
Tax Lien Is Not Valid. For calendar year
2010, a federal tax lien is not valid against
(1) certain purchasers under § 6323(b)(4)
who purchased personal property in a
casual sale for less than $1,380, or (2)
a mechanic’s lienor under § 6323(b)(7)
that repaired or improved certain residen-
tial property if the contract price with the
owner is not more than $6,890.
.35Property Exempt from Levy.For
calendar year 2010, the value of property
exempt from levy under § 6334(a)(2) (fuel,
provisions, furniture, and other household
personal effects, as well as arms for per-
sonal use, livestock, and poultry) cannot
exceed $8,250. The value of property ex-
empt from levy under § 6334(a)(3) (books
and tools necessary for the trade, business,
or profession of the taxpayer) cannot ex-
ceed $4,120.
.36Interest on a Certain Portion of the
Estate Tax Payable in Installments.Foran
estate of a decedent dying in calendar year
2010, the dollar amount used to determine
the “2-percent portion” (for purposes of
calculating interest under § 6601(j)) of the
estate tax extended as provided in § 6166
is $1,340,000.
.37Attorney Fee Awards. For fees
incurred in calendar year 2010, the
attorney fee award limitation under
§ 7430(c)(1)(B)(iii) is $180 per hour.
.38Periodic Payments Received un-
der Qualified Long-Term Care Insurance
Contracts or under Certain Life Insur-
ance Contracts. For calendar year 2010,
the stated dollar amount of theper diem
limitation under § 7702B(d)(4), regarding
periodic payments received under a qual-
ified long-term care insurance contract or
periodic payments received under a life
insurance contract that are treated as paid
by reason of the death of a chronically ill
individual, is $290.
SECTION 4. EFFECTIVE DATE
.01General Rule. Except as provided
in section 4.02, this revenue procedure ap-
plies to taxable years beginning in 2010.
.02Calendar Year Rule.Thisrev-
enue procedure applies to transactions or
events occurring in calendar year 2010
for purposes of sections 3.07 (rehabil-
itation expenditures treated as separate
new property), 3.08 (low-income hous-
ing credit), 3.10 (transportation mainline
pipeline construction industry optional
expense substantiation rules for payments
to employees under accountable plans),
3.15 (private activity bonds volume cap),
3.16 (loan limits on agricultural bonds),
3.17 (general arbitrage rebate rules), 3.18
(safe harbor rules for broker commissions
on guaranteed investment contracts or in-
vestments purchased for a yield restricted
defeasance escrow), 3.26 (expatriation to
avoid tax), 3.29 (valuation of qualified
real property in decedent’s gross estate),
3.30 (annual exclusion for gifts), 3.31 (tax
on arrow shafts), 3.34 (persons against
whom a federal tax lien is not valid), 3.35
(property exempt from levy), 3.36 (inter-
est on a certain portion of the estate tax
payable in installments), 3.37 (attorney
fee awards), and 3.38 (periodic payments
received under qualified long-term care
insurance contracts or under certain life
insurance contracts).
November 9, 20096242009–45 I.R.B.

SECTION 5. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Christina M. Glendening of
the Office of Associate Chief Counsel
(Income Tax & Accounting). For further
information regarding this revenue pro-
cedure, contact Ms. Glendening at (202)
622–4920 (not a toll-free call).
26 CFR 31.6011(a)–1: Returns under Federal In-
surance Contributions Act; 26 CFR 31.6011(a)–4:
Returns of income tax withheld.
(Also: Part 1, § 6011; 26 CFR 31.6071(a)–1,
31.6091–1, and 31.6302–1.)
Rev. Proc. 2009–51
SECTION 1. PURPOSE
This revenue procedure sets forth the
procedures for employers to follow to re-
quest to file Form 944,Employer’s AN-
NUAL Federal Tax Return(i.e., to opt in).
In addition, this revenue procedure sets
forth the procedures for employers who
previously were notified to file Form 944
to follow to request to file Forms 941,Em-
ployer’s QUARTERLY Federal Tax Return,
instead (i.e.,tooptout).
SECTION 2. BACKGROUND
.01 Form 944 was designed to reduce
burden on small employers by permitting
those employers to file one employment
tax return to report their social security,
Medicare, and withheld federal income
taxes (referred to herein as their “employ-
ment tax liability”) for an entire taxable
year instead of four employment tax re-
turns (one for each quarter).
.02 The Treasury Department and
the Internal Revenue Service (IRS) pub-
lished temporary regulations (T.D. 9239,
2006–1 C.B. 401) related to Form 944
in the Federal Register (71 FR 11) on
January 3, 2006. A notice of proposed
rulemaking (REG–148568–04, 2006–1
C.B. 417) cross-referencing the temporary
regulations was published in the Federal
Register on the same day (71 FR 11). A
correction to the temporary regulations
was published in the Federal Register
on March 17, 2006 (71 FR 13766). Re-
vised temporary regulations (T.D. 9440,
2009–5 I.R.B. 409) and proposed regu-
lations (REG–147440–08, 2009–9 I.R.B.
641) relating to Form 944 were published
in the Federal Register (73 FR 79354 and
73 FR 79423) on December 29, 2008.
A correction to the revised temporary
regulations was published in the Federal
Register on January 1, 2009 (74 FR 3421).
.03 Sections 31.6011(a)–1T(a)(5)(ii)
and 31.6011(a)–4T(a)(4)(ii) of the revised
temporary regulations provide that the
IRS may establish procedures in published
guidance for employers to follow to re-
quest to file Form 944 or to request to file
Forms 941 (after receiving notification of
their qualification to file Form 944).
.04 For tax year 2009, the IRS
issued the procedures for employ-
ers to follow for purposes of Treas.
Reg. §§ 31.6011(a)–1T(a)(5)(ii) and
31.6011(a)–4T(a)(4)(ii) on December 29,
2008, in Revenue Procedure 2009–13
(2009–3 IRB 323).
.05 A new revenue procedure for tax
years beginning on or after January 1,
2010, is necessary to allow employers to
opt out of filing Form 944 for any rea-
son. Under the prior rules for tax years
2006, 2007, 2008, and 2009, employers
who were qualified to file Form 944 could
only opt out (i.e., request to file Forms
941 instead) if they estimated that their
employment tax liability would exceed
the $1,000 threshold or if they wanted to
e-file Forms 941 quarterly instead. Be-
ginning in tax year 2010, employers will
be able to opt out of filing Form 944
for any reason if they follow the proce-
dures set forth in this revenue procedure.
This revenue procedure constitutes pub-
lished guidance for purposes of Treas.
Reg. §§ 31.6011(a)–1T(a)(5)(ii) and
31.6011(a)–4T(a)(4)(ii).
.06 Employers who file Forms 941 and
944 must deposit their employment tax lia-
bility in accordance with the rules in Treas.
Reg. §§ 31.6302–1 and 31.6302–1T or,
absent reasonable cause, the employers
may be subject to the penalty for failure
to deposit under section 6656. Generally,
the same deposit rules apply to employers
regardless of which form they file to report
their employment tax liability; however,
thede minimisdeposit amount may be
different. For more information on the de-
posit rules, see Publication 15,(Circular
E), Employer’s Tax Guide, the Instructions
for Form 941, the Instructions for Form
944, and the instructions for the related
Spanish-language returns or returns for
U.S. possessions.
.07 For provisions relating to the time
and place for filing returns, see Treas. Reg.
§§ 31.6071(a)–1 and 31.6091–1, respec-
tively.
SECTION 3. SCOPE
This revenue procedure applies to qual-
ified employers, as defined in section 4.01.
SECTION 4. PROCEDURES
.01Qualified employers. Qualified em-
ployers are those with an estimated annual
employment tax liability (that is, social se-
curity, Medicare, and withheld Federal in-
come taxes) of $1,000 or less for the entire
calendar year, except employers required
to make a return on Form 943,Employer’s
Annual Federal Tax Return For Agricul-
tural Employees, or on Schedule H (Form
1040),Household Employment Taxes.The
IRS may increase the amount of the es-
timated annual employment tax liability
that qualifies employers to file Form 944
through a revenue procedure, notice, or
other IRS guidance published in the Inter-
nal Revenue Bulletin.
.02Requests to File Form 944 (i.e., opt
in to filing Form 944). Upon request by
qualified employers, the IRS will notify
employers in writing of their qualification
to file Form 944. Employers may request
tofileForm944bycontactingtheIRSat
the appropriate telephone number or mail-
ing address identified in subsections .05
and .06 below, respectively, by the appli-
cable due date identified in subsection .04
below. Employers must not file Form 944
unless they receive notification that they
are eligible to do so. Employers who pre-
viously received notification of their qual-
ification to file Form 944 must continue
to file Form 944 unless the IRS notifies
the employer that the employer no longer
qualifies to file Form 944 or the employer
opts out consistent with the procedures de-
scribed below.
.03Requests to File Forms 941 (i.e., opt
out of filing Form 944). Employers who
previously were notified to file Form 944
but want to file Forms 941 instead must
call or write the IRS stating that they want
to opt out of filing Form 944 before the
applicable due date, as indicated in sub-
section .04 below.Employers can find
2009–45 I.R.B.625November 9, 2009

the appropriate IRS telephone number and
mailing address in subsections .05 and .06
below, respectively. The IRS will send
written notification to employers that their
filing requirement was changed to Forms
941. Employers who were notified of their
qualification to file Form 944 but do not re-
ceive notification that their filing require-
ment was changed to Forms 941 must file
Form 944 rather than Forms 941.
.04Due dates.
(1)Employers who have previously
filed Form 941 or Form 944 or the related
Spanish-language returns or returns for
U.S. possessions.Employerswhowant
to call to request to opt in or out of filing
Form 944 for the current tax year must
call the IRS on or before April 1
st
of the
current tax year (e.g., April 1, 2010 for
returns for tax year 2010). Employers who
want to write to request to opt in or out of
filing Form 944 for the current tax year
must have their written correspondence
postmarked on or before March 15
th
of the
current tax year (e.g., March 15, 2010 for
returns for tax year 2010).
(2)New employers. Businesses that re-
cently received an employer identification
number or had an employer identification
number but were not previously required
to file Forms 941 or Form 944 or the re-
lated Spanish-language returns or returns
for U.S. possessions who want to call to
request to opt in or out of filing Form 944
for the current tax year must call the IRS
on or before the first day of the month that
the first required Form 941 for the current
tax year is due (e.g., for returns for tax year
2010, call on or before April 1, 2010, July
1, 2010, October 1, 2010, or January 1,
2011). Employers who want to write to re-
quest to opt in or out of filing Form 944 for
the current tax year must have their written
correspondence postmarked on or before
the 15
th
day of the month before their first
required Form 941 for the current tax year
is due (e.g., for returns for tax year 2010,
correspondence postmarked on or before
March 15, 2010, June 15, 2010, Septem-
ber 15, 2010, or December 15, 2010).
(3)Saturday, Sunday, or legal holiday.
For any due date that falls on a Saturday,
Sunday, or legal holiday, the last day em-
ployers may call the IRS or have their writ-
ten correspondence postmarked is the next
business day following that Saturday, Sun-
day, or legal holiday.
.05Phone numbers. Employers can call
the IRS to opt in or out of filing Form
944 by using the phone numbers specified
in the Instructions for Form 944, Instruc-
tions for Form 944–SS, Instructions for
Form 944(SP), or the Instructions for Form
944–PR, as applicable. At publication, the
following phone numbers have been iden-
tified for this purpose:
(a) Employers in the United
States, including Puerto Rico and
the U.S. Virgin Islands, can call
1–800–829–4933. TTY/TDD users can
call 1–800–829–4059.
(b) Employers in Guam, American
Samoa, the Commonwealth of the North-
ern Mariana Islands, and international
callers can call 215–516–2000.
.06Mailing Addresses. Employers can
write the IRS to opt in or out of filing Form
944 by using one of the mailing addresses
specified in the Instructions for Form 944,
Instructions for Form 944–SS, Instructions
for Form 944(SP), or the Instructions for
Form 944–PR, as applicable. At publica-
tion, the following mailing addresses have
been identified for this purpose:
Department of Treasury, Internal Rev-
enue Service Ogden, Utah 84201–0038 or
Department of Treasury, Internal Revenue
Service Cincinnati, Ohio 45999–0038.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective on
January 1, 2010.
SECTION 6. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Audra M. Dineen of the
Office of Associate Chief Counsel (Pro-
cedure & Administration). For further
information regarding this revenue proce-
dure, contact Audra M. Dineen at (202)
622–4910 (not a toll-free call).
November 9, 20096262009–45 I.R.B.

Part IV. Items o
fGeneralInterest
Foundations S
tatus of Certain
Organization
s
Announcement 2009–76
The following organizations have failed
to establish or have been unable to main-
tain their status as public charities or as op-
erating foundations. Accordingly, grantors
and contributors may not, after this date,
rely on previous rulings or designations
in the Cumulative List of Organizations
(Publication 78), or on the presumption
arising from the filing of notices under sec-
tion 508(b) of the Code. This listing does
notindicate that the organizations have lost
their status as organizations described in
section 501(c)(3), eligible to receive de-
ductible contributions.
Former Public Charities. The follow-
ing organizations (which have been treated
as organizations thatare not private foun-
dations described in section 509(a) of the
Code) are now classified as private foun-
dations:
Angelic Creat
ions, Inc., Semmes, AL
Apex Care and L
earning Center, Inc.,
Tylertown, MS
Blaine Commun
ity Outreach,
Sunflower, MS
Breaking Chai
ns, Inc., Philadelphia, PA
CARE, Dallas,
TX
Carolina Cent
er for Non Profit Resources,
Lexington, SC
Chattanooga I
nner City Outreach, Inc.,
Chattanooga,
TN
Childrens Vil
lage & Pre-School,
Tampa, FL
Community Hea
ling and Restoration
Ministries, I
nc., Raleigh, NC
Cooperative C
ommunity Services,
Wichita, KS
Commonwealth
Child Development
Institute, Cl
ifton, VA
Covenant Life
Foundation Community
Development C
orporation,
New York, NY
Crowned Visio
n, Inc., Conyers, GA
DanceWithMeP
rogram, Oak Park, MI
Delaware Brea
kthrough Programs, Inc.,
Middletown, D
E
Divine Destin
y, Garyville, LA
Education for
a Better World, Peoria, AZ
Genesis Area D
evelopment,
Brownwood, TX
Helping Other
s Prepare for Excellence,
Riverside, CA
Imani Mission
s, Inc., Edgewood, MD
Interstate Ri
ver Consortium,
Springdale, O
H
James Legg Sch
olarship Fund,
Levittown, NY
Lighthouse Ha
ven, Inc., Stockton, CA
Manageable Li
festyle Center, Inc.,
Terrell, TX
Mid-West IMPA
CT Org., Chicago, IL
National Endo
wment to End the Digital
Divide Founda
tion, Azle, TX
Prosperity Pl
ace, Inc., Charlotte, NC
Samata Sarana
USA, Inc.,
New Rochelle,
NY
Social Progre
ss, Inc., Richmond, CA
Sons of Salvage
Corp., Carol Stream, IL
Success Readin
g Program, Bronx, NY
Sundance Commu
nity Resource Center,
Inc., Corinth,
NY
Therapeia Mini
stries, Killeen, TX
Triple R. Partn
erships, Bellflower, CA
Tzedaka Fund, N
ew York, NY
Unity One Corpo
ration, Long Beach, CA
Womens Cancer C
enter Foundation,
Las Vegas, NV
Women of Power O
utreach Ministry, Inc.,
Landrum, SC
Worldone, Ltd.
, Northampton, MA
Youth Communit
y Cartoon Network, Inc.,
Los Angeles, CA
If an organizat
ion listed above submits
information th
at warrants the renewal of
its classifica
tion as a public charity or as
a private oper
ating foundation, the Inter-
nal Revenue Se
rvicewillissuearulingor
determinatio
nletterwiththerevisedclas-
sification as
to foundation status. Grantors
and contribu
tors may thereafter rely upon
such ruling o
r determination letter as pro-
vided in sect
ion 1.509(a)–7 of the Income
Tax Regulati
ons. It is not the practice of
the Service t
o announce such revised clas-
sification
of foundation status in the Inter-
nal Revenue
Bulletin.
2009–45 I.R.B.627November 9, 2009

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.
November 9, 2009i2009–45 I.R.B.

Numerical Finding List
1
Bulletins 2009–27 through 2009–45
Announcements:
2009-56, 2009-28 I.R.B.145
2009-57, 2009-29 I.R.B.158
2009-58, 2009-29 I.R.B.158
2009-59, 2009-29 I.R.B.158
2009-60, 2009-30 I.R.B.166
2009-61, 2009-33 I.R.B.246
2009-62, 2009-33 I.R.B.247
2009-63, 2009-33 I.R.B.248
2009-64, 2009-36 I.R.B.319
2009-65, 2009-36 I.R.B.319
2009-66, 2009-37 I.R.B.364
2009-67, 2009-38 I.R.B.388
2009-68, 2009-38 I.R.B.388
2009-69, 2009-40 I.R.B.475
2009-70, 2009-41 I.R.B.499
2009-71, 2009-40 I.R.B.475
2009-72, 2009-41 I.R.B.500
2009-73, 2009-41 I.R.B.500
2009-74, 2009-42 I.R.B.537
2009-75, 2009-42 I.R.B.537
2009-76, 2009-45 I.R.B.627
2009-77, 2009-43 I.R.B.567
2009-78, 2009-44 I.R.B.594
Notices:
2009-51, 2009-28 I.R.B.128
2009-55, 2009-31 I.R.B.170
2009-57, 2009-29 I.R.B.147
2009-58, 2009-30 I.R.B.163
2009-59, 2009-31 I.R.B.170
2009-60, 2009-32 I.R.B.181
2009-61, 2009-32 I.R.B.181
2009-62, 2009-35 I.R.B.260
2009-63, 2009-34 I.R.B.252
2009-64, 2009-36 I.R.B.307
2009-65, 2009-39 I.R.B.413
2009-66, 2009-39 I.R.B.418
2009-67, 2009-39 I.R.B.420
2009-68, 2009-39 I.R.B.423
2009-69, 2009-35 I.R.B.261
2009-70, 2009-34 I.R.B.255
2009-71, 2009-35 I.R.B.262
2009-72, 2009-37 I.R.B.325
2009-73, 2009-38 I.R.B.369
2009-74, 2009-38 I.R.B.370
2009-75, 2009-39 I.R.B.436
2009-76, 2009-43 I.R.B.554
2009-77, 2009-40 I.R.B.449
2009-78, 2009-40 I.R.B.452
2009-79, 2009-40 I.R.B.454
2009-81, 2009-40 I.R.B.455
Notices— Continued:
2009-82, 2009-41 I.R.B.491
2009-83, 2009-44 I.R.B.588
2009-84, 2009-44 I.R.B.592
2009-85, 2009-45 I.R.B.598
Proposed Regulations:
REG-140492-02, 2009-43 I.R.B.559
REG-152166-05, 2009-32 I.R.B.183
REG-112994-06, 2009-28 I.R.B.144
REG-127270-06, 2009-42 I.R.B.534
REG-136563-07, 2009-41 I.R.B.497
REG-108045-08, 2009-43 I.R.B.557
REG-113289-08, 2009-33 I.R.B.244
REG-116614-08, 2009-42 I.R.B.536
REG-130200-08, 2009-31 I.R.B.174
REG-139068-08, 2009-43 I.R.B.558
Revenue Procedures:
2009-30, 2009-27 I.R.B.27
2009-31, 2009-27 I.R.B.107
2009-32, 2009-28 I.R.B.142
2009-33, 2009-29 I.R.B.150
2009-34, 2009-34 I.R.B.258
2009-35, 2009-35 I.R.B.265
2009-36, 2009-35 I.R.B.304
2009-37, 2009-36 I.R.B.309
2009-38, 2009-37 I.R.B.362
2009-39, 2009-38 I.R.B.371
2009-40, 2009-39 I.R.B.438
2009-41, 2009-39 I.R.B.439
2009-42, 2009-40 I.R.B.459
2009-43, 2009-40 I.R.B.460
2009-44, 2009-40 I.R.B.462
2009-45, 2009-40 I.R.B.471
2009-46, 2009-42 I.R.B.507
2009-47, 2009-42 I.R.B.524
2009-50, 2009-45 I.R.B.617
2009-51, 2009-45 I.R.B.625
Revenue Rulings:
2009-18, 2009-27 I.R.B.1
2009-19, 2009-28 I.R.B.111
2009-20, 2009-28 I.R.B.112
2009-21, 2009-30 I.R.B.162
2009-22, 2009-31 I.R.B.167
2009-23, 2009-32 I.R.B.177
2009-24, 2009-36 I.R.B.306
2009-25, 2009-38 I.R.B.365
2009-26, 2009-38 I.R.B.366
2009-27, 2009-39 I.R.B.404
2009-28, 2009-39 I.R.B.391
2009-29, 2009-37 I.R.B.322
2009-30, 2009-39 I.R.B.391
2009-31, 2009-39 I.R.B.395
2009-32, 2009-39 I.R.B.399
Revenue Rulings— Continued:
2009-33, 2009-40 I.R.B.447
2009-34, 2009-42 I.R.B.502
2009-35, 2009-44 I.R.B.568
Treasury Decisions:
9452, 2009-27 I.R.B.1
9453, 2009-28 I.R.B.114
9454, 2009-32 I.R.B.178
9455, 2009-33 I.R.B.239
9456, 2009-33 I.R.B.188
9457, 2009-41 I.R.B.482
9458, 2009-43 I.R.B.547
9459, 2009-41 I.R.B.480
9460, 2009-44 I.R.B.584
9461, 2009-41 I.R.B.488
9462, 2009-42 I.R.B.504
9463, 2009-40 I.R.B.442
9465, 2009-43 I.R.B.542
9466, 2009-43 I.R.B.551
9468, 2009-44 I.R.B.570
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2009–1 through 2009–26 is in Internal Revenue Bulletin
2009–26, dated June 29, 2009.
2009–45 I.R.B.iiNovember 9, 2009

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2009–27 through 2009–45
Announcements:
2006-93
Superseded by
Ann. 2009-62, 2009-33 I.R.B.247
Notices:
2002-3
Modified and superseded by
Notice 2009-68, 2009-39 I.R.B.423
2004-67
Supplemented and superseded by
Notice 2009-59, 2009-31 I.R.B.170
2006-70
Obsoleted by
T.D. 9453, 2009-28 I.R.B.114
2006-109
Superseded in part by
Rev. Proc. 2009-32, 2009-28 I.R.B.142
2007-7
Modified by
Notice 2009-82, 2009-41 I.R.B.491
2008-30
Amplified and clarified by
Notice 2009-75, 2009-39 I.R.B.436
2008-43
Obsoleted by
REG-113289-08, 2009-33 I.R.B.244
2009-28
Clarified by
Notice 2009-69, 2009-35 I.R.B.261
2009-31
Amplified by
Rev. Proc. 2009-43, 2009-40 I.R.B.460
2009-42
Amplified by
Rev. Proc. 2009-43, 2009-40 I.R.B.460
Revenue Procedures:
97-27
Clarified and modified by
Rev. Proc. 2009-39, 2009-38 I.R.B.371
97-49
Modified and superseded by
Rev. Proc. 2009-31, 2009-27 I.R.B.107
2002-44
Superseded by
Rev. Proc. 2009-44, 2009-40 I.R.B.462
Revenue Procedures— Continued:
2002-59
Superseded by
Rev. Proc. 2009-41, 2009-39 I.R.B.439
2005-63
Modified by
Rev. Proc. 2009-39, 2009-38 I.R.B.371
2007-44
Modified by
Rev. Proc. 2009-36, 2009-35 I.R.B.304
2007-65
Modified by
Ann. 2009-69, 2009-40 I.R.B.475
2008-34
Superseded by
Rev. Proc. 2009-46, 2009-42 I.R.B.507
2008-38
Superseded by
Rev. Proc. 2009-30, 2009-27 I.R.B.27
2008-44
Superseded by
Rev. Proc. 2009-35, 2009-35 I.R.B.265
2008-52
Amplified, clarified, and modified by
Rev. Proc. 2009-39, 2009-38 I.R.B.371
2008-59
Superseded by
Rev. Proc. 2009-47, 2009-42 I.R.B.524
2008-65
Modified by
Rev. Proc. 2009-33, 2009-29 I.R.B.150
2009-16
Modified by
Rev. Proc. 2009-33, 2009-29 I.R.B.150
2009-39
Modified by
Ann. 2009-67, 2009-38 I.R.B.388
Revenue Rulings:
74-346
Superseded by
Rev. Rul. 2009-34, 2009-42 I.R.B.502
75-190
Superseded by
Rev. Rul. 2009-34, 2009-42 I.R.B.502
75-398
Superseded by
Rev. Rul. 2009-34, 2009-42 I.R.B.502
75-526
Superseded by
Rev. Rul. 2009-34, 2009-42 I.R.B.502
Revenue Rulings— Continued:
2009-22
Corrected by
Ann. 2009-74, 2009-42 I.R.B.537
2009-29
Corrected by
Ann. 2009-74, 2009-42 I.R.B.537
Treasury Decisions:
9456
Corrected by
Ann. 2009-73, 2009-41 I.R.B.500
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2009–1 through 2009–26 is in Internal Revenue Bulletin 2009–26, dated June 29, 2009.
November 9, 2009iii2009–45 I.R.B.

2009–45 I.R.B.November 9, 2009

November 9, 20092009–45 I.R.B.

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