Internal Revenue Bulletin 2010-41 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 201
0-41
October 12, 2010
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 2010–64, page 421.
Extension of replacement period for livestock sold
on account of drought.This notice explains the circum-
stances under which the 4–year replacement period under
section 1033(e)(2) of the Code is extended for livestock
sold on account of drought. This notice also contains a list
of the counties that experienced exceptional, extreme, or
severe drought during the preceding 12–month period ending
August 31, 2010. Taxpayers may use this list to determine if
an extension is available.
Notice 2010–65, page 424.
The notice announces that the Treasury Department and
the IRS intend to exercise regulatory authority under section
901(l)(3) of the Code not to apply the credit disallowance rules
of section 901(l) to foreign withholding taxes on (1) royalties
received in “ordinary course” back-to-back licenses of intel-
lectual property and articles embodying intellectual property
and (2) direct sales from the U.S. of copies of copyrighted
articles. The notice solicits comments on the exception as well
as on related issues under section 901(l). Notice 2005–90
supplemented.
Announcement 2010–75, page 428.
This document is part of a series of announcements relating to
the Service’s announcement that it was developing a schedule
requiring certain business taxpayers to report uncertain tax
positions on their tax returns. This announcement explains the
actions being taken by the IRS in response to the comments
received on the proposed schedule and instructions.
Announcement 2010–76, page 432.
This document announces that the Service is expanding its pol-
icy of restraint in connection with its decision to require certain
corporations to file Schedule UTP,Uncertain Tax Position State-
ment, and will forgo seeking particular documents that relate
to uncertain tax positions and the workpapers that document
the completion of Schedule UTP.
EMPLOYEE PLANS
Notice 2010–63, page 420.
This notice solicits comments on the requirements under sec-
tion 9815 of the Code (and 2716 of the Public Health Service
Act) that insured group health plans not discriminate in favor of
highly compensated individuals.
EXCISE TAX
Notice 2010–63, page 420.
This notice solicits comments on the requirements under sec-
tion 9815 of the Code (and 2716 of the Public Health Service
Act) that insured group health plans not discriminate in favor of
highly compensated individuals.
(Continued on the next page)
Announcements of Disbarments and Suspensions begin on page 433.
Finding Lists begin on page ii.

ADMINISTRATIVE
Rev. Proc. 2010–34, page 426.
Nonshareholder contribution to capital under section
118(a).This procedure provides a safe harbor under section
118(a) of the Code for the treatment of certain grants to
corporations from the Rural Utilities Service of the Depart-
ment of Agriculture under the Broadband Initiatives Program
and from the National Telecommunications and Information
Administration of the Department of Commerce under the
Broadband Technology Opportunities Program, as authorized
by the American Recovery and Reinvestment Act of 2009.
Announcement 2010–77, page 433.
This document contains a correction to Announcement
2010–59, which corrected Announcement 2010–47,
2010–30 I.R.B. 173, regarding “Deletions From Cumulative
List of Organizations Contributions to Which are Deductible
Under Section 170 of the Code”.
October 12, 20102010–41 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
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.
2010–41 I.R.B.October 12, 2010

October 12, 20102010–41 I.R.B.
Place missing child here.

Part III. Administrative, Procedural, and Miscellaneous
Request for Comments on
Requirements Prohibiting
Discrimination in Favor
of Highly Compensated
Individuals in Insured Group
Health Plans
Notice 2010–63
PURPOSE
This notice invites public comments
concerning the application of rules pro-
hibiting insured group health plans from
discriminating in favor of highly compen-
sated individuals. Representatives from
the United States Department of Labor
and from the United States Department
of Health and Human Services have re-
viewed this notice and have advised the
Department of the Treasury and the Inter-
nal Revenue Service that they agree with
it.
I. BACKGROUND
The Patient Protection and Afford-
able Care Act (the Affordable Care
Act), Pub. L. 111–148, was enacted
on March 23, 2010; the Health Care
and Education Reconciliation Act
(the Reconciliation Act), Pub.L.
111–152, was enacted on March 30,
2010. The Affordable Care Act and the
Reconciliation Act reorganize, amend,
and add to the provisions of part A
of title XXVII of the Public Health
Service Act (PHS Act) relating to group
health plans and health insurance issuers
in the group and individual markets.
The Affordable Care Act adds section
9815(a)(1) to the Internal Revenue Code
and section 715(a)(1) to the Employee
Retirement Income Security Act (ERISA)
to incorporate the provisions of part
A of title XXVII of the PHS Act into
theCodeandERISA,andmakethem
applicable to group health plans, and
health insurance issuers providing health
insurance coverage in connection with
group health plans.
Section 10101(d) of the Affordable
Care Act adds section 2716 to the PHS
Act. Section 2716 of the PHS Act pro-
vides that a group health plan (other than a
self-insured plan) must satisfy the require-
ments of section 105(h)(2) of the Code;
that rules similar to the rules of section
105 in paragraphs (h)(3) (nondiscrimi-
natory eligibility classification), (h)(4)
(nondiscriminatory benefits), and (h)(8)
(certain controlled groups) apply; and that
the term “highly compensated individ-
ual” has the meaning given by section
105(h)(5). These requirements for insured
group health plans are effective for plan
years beginning on or after September 23,
2010. New section 9815 of the Code in-
corporates by reference the requirements
of section 2716 of the PHS Act into chap-
ter 100 of the Code. Section 4980D of the
Code provides that group health plans that
fail to satisfy the requirements of chapter
100 are subject to an excise tax.
Section 105(h)(1) of the Code provides
that the exclusion in section 105(b), which
generally excludes from gross income
amounts paid through employer-spon-
sored health care coverage, does not apply
to amounts paid to a highly compensated
individual under a self-insured medical
reimbursement plan that does not satisfy
the requirements of section 105(h)(2) for
a plan year, to the extent the amounts
constitute an excess reimbursement of
the highly compensated individual. Sec-
tion 105(h)(2) provides that a self-insured
medical reimbursement plan satisfies the
requirements of that section only if (1)
the plan does not discriminate in favor of
highly compensated individuals as to eli-
gibility to participate and (2) the benefits
provided under the plan do not discrimi-
nate in favor of participants who are highly
compensated individuals. Treasury Regu-
lation §1.105–11 provides guidance on the
application of section 105(h).
II. APPLICATION OF THE
NONDISCRIMINATION RULES
IN CODE SECTION 105(h)(2) TO
INSURED GROUP HEALTH PLANS
PHS Act section 2716 incorporates the
substantive nondiscrimination require-
ments of Code section 105(h) (but not the
taxes on highly compensated individuals
in section 105(h)(1)) and applies them to
insured group health plans. An insured
group health plan failing to comply with
the nondiscrimination requirements of
Code section 105(h) is subject to the taxes,
remedies, and penalties that generally ap-
ply for a plan failing to comply with the
requirements of chapter 100 of the Code
(generally, an excise tax of $100 per day
per individual discriminated against for
each day the plan does not comply with
the requirement), part 7 of ERISA (a civil
action to enjoin a noncompliant act or
practice or for appropriate equitable re-
lief), or title XXVII of the PHS Act (civil
money penalties of $100 per day per indi-
vidual discriminated against for each day
the plan does not comply with the require-
ment). Thus, if a self-insured plan fails to
comply with Code section 105(h), highly
compensated individuals lose a tax ben-
efit; if an insured group health plan fails
to comply with Code section 105(h), the
plan is subject to a civil action to compel
it to provide nondiscriminatory benefits
and the plan or plan sponsor is subject to
an excise tax or civil money penalty of
$100 per day per individual discriminated
against.
For determining the application of
PHS Act section 2716 to grandfathered
health plans, see §54.9815–1251T,
29 CFR 2590.715–1251, and 45 CFR
147.140 (providing that the rules
prohibiting discrimination in favor of
highly compensated individuals by insured
group health plans do not apply to
grandfathered health plans). The rules
of section 105(h) of the Code continue
to apply to any self-insured medical
reimbursement plan regardless of whether
the plan is a grandfathered health plan.
III. REQUEST FOR COMMENTS
The final regulations under section
105(h) of the Code,
1
prohibiting discrim-
ination in favor of highly compensated
individuals under self-insured medical ex-
pense reimbursement plans, were issued
in 1981. The Treasury Department and
the IRS are considering issuing guidance
on the extension, through section 2716
of the PHSA and new section 9815 of
1
26 CFR 1.105–11.
2010–41 I.R.B.420October 12, 2010

the Code, of the requirements of section
105(h)(2) to insured group health plans.
The Department of the Treasury and the
IRS request comments on what additional
guidance relating to the application of
section 105(h) (2) would be helpful with
respect to insured group health plans.
Date: Comments must be submitted by
November 4, 2010.
Addresses: Comments, identified by “No-
tice 2010–63”, may be sent by one of the
following methods:
•Electronic: Sendtothefollowing
e-mail address:
Notice.Comments@irscounsel.treas.gov.
Include “Notice 2010–63” in the
subject line.
•Mail:CC:PA:LPD:PR (Notice
2010–63), Room 5205, Internal Rev-
enue Service, P.O. Box 7604, Ben
Franklin Station, Washington, DC
20044.
•Hand or courier delivery: Monday
through Friday between the hours of
8 a.m. and 4 p.m. to: CC:PA:LPD:PR
(Notice 2010–63), Courier’s Desk,
Internal Revenue Service, 1111
Constitution Avenue, NW, Washington
DC 20224.
All submissions will be open to pub-
lic inspection and copying in room 1621,
1111 Constitution Avenue, NW, Washing-
ton, DC from 9 a.m. to 4 p.m.
IV. DRAFTING INFORMATION
The principal author of this notice is
Karen Levin of the Office of Division
Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities). For
further information regarding this notice,
contact Ms. Levin at (202) 622–6080 (not
a toll-free call).
Extension of Replacement
Period for Livestock Sold
on Account of Drought in
Specified Counties
Notice 2010–64
SECTION 1. PURPOSE
This notice provides guidance regard-
ing an extension of the replacement pe-
riod under § 1033(e) of the Internal Rev-
enue Code for livestock sold on account of
drought in specified counties.
SECTION 2. BACKGROUND
.01Nonrecognition of Gain on Invol-
untary Conversion of Livestock. Section
1033(a) generally provides for nonrecog-
nition of gain when property is involuntar-
ily converted and replaced with property
that is similar or related in service or use.
Section 1033(e)(1) provides that a sale or
exchange of livestock(other than poultry)
held by a taxpayer for draft, breeding, or
dairy purposes in excess of the number
that would be sold following the taxpayer’s
usual business practices is treated as an
involuntary conversion if the livestock is
sold or exchanged solely on account of
drought, flood, or other weather-related
conditions.
.02Replacement Period. Section
1033(a)(2)(A) generally provides that gain
from an involuntary conversion is rec-
ognized only to the extent the amount
realized on the conversion exceeds the
cost of replacement property purchased
during the replacement period. If a sale
or exchange of livestock is treated as an
involuntary conversion under § 1033(e)(1)
and is solely on account of drought, flood,
or other weather-related conditions that re-
sult in the area being designated as eligible
for assistance by the federal government,
§ 1033(e)(2)(A) provides that the replace-
ment period ends four years after the close
of the first taxable year in which any part
of the gain from the conversion is realized.
Section 1033(e)(2)(B) provides that the
Secretary may extend this replacement pe-
riod on a regional basis for such additional
time as the Secretary determines appro-
priate if the weather-related conditions
that resulted in the area being designated
as eligible for assistance by the federal
government continue for more than three
years. Section 1033(e)(2) is effective for
any taxable year withrespect to which the
due date (without regard to extensions) for
a taxpayer’s return is after December 31,
2002.
SECTION 3. EXTENSION OF
REPLACEMENT PERIOD UNDER
§ 1033(e)(2)(B)
Notice 2006–82, 2006–2 C.B. 529, pro-
vides for extensions of the replacement pe-
riod under § 1033(e)(2)(B). If a sale or ex-
change of livestock is treated as an invol-
untary conversion on account of drought
and the taxpayer’s replacement period is
determined under § 1033(e)(2)(A), the re-
placement period will be extended under
§ 1033(e)(2)(B) and Notice 2006–82 until
the end of the taxpayer’s first taxable year
ending after the first drought-free year for
the applicable region. For this purpose, the
first drought-free year for the applicable
region is the first 12-month period that (1)
ends August 31; (2) ends in or after the last
year of the taxpayer’s 4-year replacement
period determined under § 1033(e)(2)(A);
and (3) does not include any weekly period
for which exceptional, extreme, or severe
drought is reported for any location in the
applicable region. The applicable region
is the county that experienced the drought
conditions on account of which the live-
stock was sold or exchanged and all coun-
ties that are contiguous to that county.
A taxpayer may determine whether
exceptional, extreme,or severe drought
isreportedforanylocationintheap-
plicable region by reference to U.S.
Drought Monitor maps that are pro-
duced on a weekly basis by the Na-
tional Drought Mitigation Center. U.S.
Drought Monitor maps are archived at
www.drought.unl.edu/dm/archive.html.
In addition, Notice 2006–82 provides
that the Internal Revenue Service will
publish in September of each year a list
of counties, districts, cities, or parishes
(hereinafter “counties”) for which excep-
tional, extreme, or severe drought was
reported during the preceding 12 months.
Taxpayers may use this list instead of
U.S. Drought Monitor maps to determine
whether exceptional, extreme, or severe
drought has been reported for any location
in the applicable region.
The Appendix to this notice contains
the list of counties for which exceptional,
October 12, 20104212010–41 I.R.B.

extreme, or severe drought was reported
during the 12-month period ending Au-
gust 31, 2010. Under Notice 2006–82,
the 12-month period ending on August 31,
2010, is not a drought-free year for an ap-
plicable region that includes any county on
this list. Accordingly, for a taxpayer who
qualified for a four-year replacement pe-
riod for livestock sold or exchanged on ac-
count of drought and whose replacement
period is scheduled to expire at the end of
2010 (or, in the case of a fiscal year tax-
payer, at the end of the taxable year that in-
cludes August 31, 2010), the replacement
period will be extended under § 1033(e)(2)
and Notice 2006–82 if the applicable re-
gion includes any county on this list. This
extension will continue until the end of the
taxpayer’s first taxable year ending after a
drought-free year for the applicable region.
SECTION 4. DRAFTING
INFORMATION
The principal author of this notice is
Sue-Jean Kim of the Office of Associate
Chief Counsel (Income Tax & Account-
ing). For further information regarding
this notice, contact Ms. Kim at (202)
622–4960 (not a toll-free call).
APPENDIX
Arizona
Counties of Apache, Cochise, Coconino, Gila, Graham, Greenlee, La Paz, Maricopa, Mohave, Navajo, Pima, Pinal, Santa
Cruz, Yavapai, Yuma.
Arkansas
Counties of Arkansas, Ashley, Chicot, Clay, Columbia, Desha, Drew, Greene, Lafayette, Ouachita, Phillips, Union.
California
Counties of Alameda, Amador, Butte, Calaveras, Colusa, ContraCosta, El Dorado, Fresno, Glenn, Humboldt, Imperial, Inyo,
Kern, Kings, Lake, Lassen, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Modoc, Monterey, Napa, Nevada,
Orange, Placer, Plumas, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Joaquin, San Luis Obispo, Santa
Barbara, Santa Clara, Shasta, Siskiyou, Solano, Sonoma, Stanislaus, Sutter, Tehama, Trinity, Tulare, Tuolumne, Ventura,
Yolo, Yuba.
Colorado
Counties of La Plata, Montezuma.
Delaware
County of Sussex.
Hawaii
Counties of Hawaii, Honolulu, Kalawao, Kauai, Maui.
Idaho
Counties of Bear Lake, Benewah, Bonner, Bonneville, Caribou, Clearwater, Fremont, Idaho,Kootenai, Latah, Madison,
Shoshone, Teton.
Kentucky
Counties of Carlisle, Fulton, Hickman.
Louisiana
Parishes of Avoyelles, Beauregard, Bienville, Bossier, Caddo, Caldwell, Catahoula, Claiborne, Concordia, De Soto, East Carroll,
Franklin, Grant, Jackson, La Salle, Lincoln, Madison, Morehouse, Natchitoches, Ouachita, Rapides, Red River, Richland,
Sabine, Tensas, Union, Vernon, Webster, West Carroll, Winn.
Maryland
Counties of Allegany, Anne Arundel, Calvert, Charles, Dorchester, Frederick, Garrett, Prince George’s, Saint Mary’s, Somerset,
Washington, Wicomico, Worcester.
Michigan
Counties of Alger, Baraga, Charlevoix, Chippewa, Delta, Dickinson, Gogebic, Houghton, Iron, Keweenaw, Luce, Mackinac,
Marquette, Menominee, Ontonagon, Schoolcraft.
Minnesota
Counties of Aitkin, Anoka, Beltrami, Cass, Chisago, Cook, Crow Wing, Dakota, Hennepin, Hubbard,Isanti, Itasca, Koochiching,
Lake, Pine, Ramsey, Saint Louis, Sherburne, Washington, Wright.
2010–41 I.R.B.422October 12, 2010

Mississippi
Counties of Bolivar, Coahoma, Humphreys,Issaquena, Leflore, Quitman, Sharkey, Sunflower, Tallahatchie, Tunica, Warren,
Washington, Yazoo.
Missouri
Counties of Butler, Carter, Dunklin, Mississippi, New Madrid, Pemiscot, Ripley, Stoddard, Wayne.
Montana
Counties of Big Horn, Carbon, Flathead, Gallatin, Glacier, Granite, Lake, Lincoln, Mineral, Missoula, Park, Pondera, Ravalli,
Sanders, Stillwater.
Nevada
Counties of Churchill, Clark, Esmeralda, Humboldt, Lincoln, Nye, Pershing, Washoe.
New Jersey
Counties of Atlantic, Burlington, Hunterdon, Mercer, Middlesex, Monmouth, Ocean, Somerset.
New Mexico
Counties of Hidalgo, McKinley, San Juan.
North Carolina
Counties of Franklin, Gates, Halifax, Hertford, Nash, Northampton, Union, Warren.
Oklahoma
Counties of Atoka, Bryan, Choctaw, Ellis, Harper, McCurtain, Pushmataha, Woods, Woodward.
Oregon
Counties of Harney, Jackson, Klamath, Lake.
Pennsylvania
Counties of Bedford, Bucks, Fayette, Franklin, Fulton, Somerset.
South Carolina
Counties of Chester, Chesterfield, Clarendon, Darlington, Dillon, Fairfield, Florence, Georgetown, Horry, Kershaw, Lancaster,
Lee, Marion, Marlboro, Sumter, Williamsburg.
Tennessee
Counties of Dyer, Lake, Obion.
Texas
Counties of Aransas, Atascosa, Austin, Bandera, Bastrop, Bee,Bell, Bexar, Blanco, Bosque, Brazoria, Brazos, Brooks, Brown,
Burleson, Burnet, Caldwell, Calhoun, Callahan, Cameron, Collin, Colorado, Comal, Comanche, Coryell, Dallas, Delta, Denton,
DeWitt, Dimmit, Duval, Edwards, Ellis, Erath, Falls, Fannin, Fayette, Fort Bend, Freestone, Frio,Galveston, Gillespie, Goliad,
Gonzales, Grayson, Grimes, Guadalupe, Hamilton, Harris, Harrison, Haskell, Hays, Hidalgo, Hill, Hood, Hopkins, Houston,
Hunt, Jackson, Jasper, Jim Hogg, Jim Wells, Johnson, Jones, Karnes, Kaufman, Kendall, Kenedy, Kerr, Kimble, Kinney, Kleberg,
Lamar, Lampasas, La Salle, Lavaca, Lee, Leon, Limestone, Live Oak, Llano, McLennan, McMullen, Madison, Marion,
Matagorda, Maverick, Medina, Milam, Mills, Montgomery, Nacogdoches, Newton, Nueces, Panola, Rains, Real, Refugio,
Robertson, Rockwall, Rusk, Sabine, San Augustine, San Patricio, San Saba, Shackelford, Shelby, Somervell, Starr, Stephens,
Throckmorton, Travis, Trinity, Uvalde, Val Verde, Van Zandt, Victoria, Walker, Waller, Washington, Webb, Wharton, Willacy,
Williamson, Wilson, Zapata, Zavala.
Utah
Counties of Kane, Rich, San Juan, Washington.
October 12, 20104232010–41 I.R.B.

Virginia
Cities of Charlottesville, Colonial Heights, Emporia, Franklin, Hopewell, Newport News, Petersburg, Poquoson, Richmond,
Suffolk, Williamsburg, Winchester. Counties of Accomack, Albemarle, Amelia, Brunswick, Buckingham, Caroline, Charles City,
Chesterfield, Clarke, Culpeper, Cumberland, Dinwiddie, Essex,Fauquier, Fluvanna, Frederick, Gloucester, Goochland, Greene,
Greensville, Hanover, Henrico, Isle of Wight, James City, King and Queen, King George, King William, Lancaster, Loudoun,
Louisa, Lunenburg, Madison, Mathews, Mecklenburg, Middlesex, New Kent, Northampton, Northumberland, Nottoway,
Orange, Page, Powhatan, Prince George, Rappahannock, Richmond, Rockingham, Shenandoah, Southampton, Spotsylvania,
Surry, Sussex, Warren, Westmoreland, York.
Washington
Counties of Chelan, Clallam, Douglas, Grant, GraysHarbor, Jefferson, Kittitas, Mason, Okanogan.
West Virginia
Counties of Berkeley, Grant, Hampshire, Hardy, Jefferson, Mineral, Morgan, Preston, Tucker.
Wisconsin
Counties of Ashland, Barron, Bayfield, Burnett, Chippewa, Clark, Door, Douglas, Dunn, Eau Claire, Florence, Forest, Iron,
Langlade, Lincoln, Marathon, Marinette, Menominee, Oconto, Oneida, Polk, Price, Rusk, Saint Croix, Sawyer, Shawano,
Taylor, Vilas, Washburn.
Wyoming
Counties of Big Horn, Fremont, Lincoln, Park, Sublette, Sweetwater, Teton.
Credit for Certain Foreign
Gross-Basis Withholding Taxes
Notice 2010–65
PURPOSE
On November 30, 2005, the Treasury
Department and the Internal Revenue Ser-
vice (IRS) issued Notice 2005–90, 2005–2
C.B. 1163. Notice 2005–90 sets forth an
exception to the application of section
901(l)(1)(B) of the Internal Revenue Code
with respect to certain back-to-back com-
puter program licensing arrangements.
This notice provides additional guidance
regarding the application of section 901(l)
to other back-to-back licensing arrange-
ments and certain arrangements for the
retail distribution of copyrighted articles.
BACKGROUND
Section 901(l) generally disallows a
credit for foreign gross-basis withholding
tax on any item of income (other than div-
idends) or gain with respect to property if
(a) the recipient of the item has not held
the property for more than 15 days (within
a 31-day testing period), exclusive of peri-
ods during which the recipient is protected
from risk of loss (section 901(l)(1)(A)),
or (b) the recipient is under an obligation
(whether pursuant to a short sale or oth-
erwise) to make related payments with
respect to positions in substantially similar
or related property (section 901(l)(1)(B)).
Section 901(l)(3) provides that the Secre-
tary may by regulation provide that section
901(l)(1) does not apply to property where
such application is not necessary to carry
out the purposes of section 901(l).
Notice 2005–90 states that the Trea-
sury Department and the IRS expect to is-
sue regulations setting forth an exception
to the application of section 901(l)(1)(B)
to foreign gross-basis withholding taxes
imposed on payments in a back-to-back
computer program licensing arrangement
in the ordinary course of the licensor’s
and licensee’s respective trades or busi-
nesses. Notice 2005–90 also requested
comments concerning any additional is-
sues that should be addressed by regu-
lations, including whether the exception
should apply to other circumstances and to
other types of property.
DISCUSSION
Following the issuance of Notice
2005–90, the Treasury Department and the
IRS received comments regarding busi-
ness arrangements involving the ordinary
course licensing and other transfers of
certain intellectual property with respect
to which the disallowance of a credit is
not necessary to carry out the purposes
of section 901(l). One such business
arrangement is generally similar to the
back-to-back licensing arrangements de-
scribed in Notice 2005–90, except that the
intellectual property involved is property
other than rights in, or copies of, computer
programs. Another ordinary course of
business arrangement identified by a com-
mentator involves the retail distribution of
certain copyrighted articles that does not
meet the holding period requirement in
section 901(l)(1)(A).
Consistent with Notice 2005–90 and
in response to comments received since
the issuance of that notice, the Treasury
DepartmentandtheIRSintendtoissue
regulations, pursuant to section 901(l)(3),
providing relief from the application of
section 901(l)(1)(A) or (B) in the circum-
stances described below. Specifically, the
regulations will provide that (1) section
901(l)(1)(B) will not apply to disallow a
credit for foreign gross-basis withhold-
ing taxes (which otherwise meet the legal
requirements to be treated as creditable
taxes) imposed on income or gain with
respect to back-to-back licensing arrange-
ments involving certain intellectual prop-
erty or copyrighted articles entered into
in the ordinary course of business; and
(2) section 901(l)(1)(A) will not apply
to disallow a credit for foreign gross-ba-
sis withholding taxes (which otherwise
meet the legal requirements to be treated
as creditable taxes) imposed on income
2010–41 I.R.B.424October 12, 2010

or gain with respect to retail distribution
arrangements for certain copyrighted arti-
cles entered into in the ordinary course of
business.
1. Relief from application of section
901(l)(1)(B) for certain back-to-back
licensing arrangements made in the
ordinary course of business
Under a typical business arrangement
involving back-to-back licensing, a do-
mestic corporation or a U.S. citizen or
resident alien individual (Master Licen-
sor) licenses (or otherwise transfers) rights
to certain intellectual property pursuant
to a master license agreement or similar
arrangement to either an affiliate (foreign
or domestic) or an unrelated domestic
corporation (or its controlled foreign cor-
poration) (Head Licensee) for the purpose
of development, production, exploitation,
distribution, or marketing of the intel-
lectual property. Head Licensee (or its
affiliates) is in the business of develop-
ing, producing, exploiting, distributing or
marketing intellectual property. As part
of the arrangement, Head Licensee subli-
censes rights to the intellectual property to
its affiliates or to unrelated corporations
(Sublicensees), as permitted under the
terms and conditions of the master license
agreement. Pursuant to the sublicense
agreements, Sublicensees make payments
to Head Licensee, which may be subject
to foreign gross-basis withholding tax.
There are a variety of business reasons
independent of U.S. tax considerations
for parties to structure a back-to-back
licensing arrangement with respect to in-
tellectual property. For example, Master
Licensor may contract with an unrelated
Head Licensee as part of a distribution
arrangement in which Licensee distributes
an article embodying Master Licensor’s
intellectual property through its affiliated
Sublicensees around the world. In such a
case, Master Licensor may be unwilling
for business or practical reasons to enter
into a contractual relationship with each
Sublicensee in each foreign jurisdiction
and may therefore require that its only
contractual relationshipbewithHeadLi-
censee. Alternatively, Master Licensor
may license the intellectual property to
an affiliated domestic or foreign Head
Licensee that distributes articles embody-
ing the intellectual property by means of
contractual relationships with unrelated
Sublicensees in foreign jurisdictions.
A back-to-back licensing arrangement
may be part of the manner by which an
unrelated Head Licensee conducts its busi-
ness. For example, where Head Licensee
has expertise in exploiting the intellectual
property, it may be ordinary and customary
for Head Licensee to acquire rights to the
intellectual property from Master Licen-
sor as part of a production or development
process before the article embodying the
intellectual property is distributed through
sublicensing arrangements with Head Li-
censee’s foreign or domestic affiliates.
a. Covered intellectual property and
copyrighted articles
Pursuant to the authority granted under
section 901(l)(3), the Treasury Depart-
ment and the IRS have determined that
the application of section 901(l)(1)(B)
to foreign gross-basis withholding taxes
imposed on payments in a back-to-back
licensing arrangement with respect to cov-
ered intellectual property or a covered
copyrighted article entered into in the or-
dinary course of business, as that term is
definedinsection1(b)ofthisnotice,is
not necessary to carry out the purposes of
section 901(l). For purposes of this notice,
“covered intellectual property” means
intellectual property rights in any film,
television program orrecording; literary,
musical or artistic composition; computer
program; right to publicity (e.g.,name
and likeness); or other similar property,
and a “covered copyrighted article” means
a copy of any film, television program
or recording; literary, musical or artistic
composition; computer program; or other
similar property.
b. Back-to-back licensing arrangement
For purposes of this notice, a “back-to-
back licensing arrangement with respect to
covered intellectual property or a covered
copyrighted article” is a transaction or se-
ries of transactions in which: (1) a domes-
tic corporation or individual who is a citi-
zen or resident of the United States owns a
right or rights in covered intellectual prop-
erty or a covered copyrighted article (mas-
ter licensor) and transfers a right or rights
in the covered intellectual property or the
covered copyrighted article to a domestic
corporation or a controlled foreign corpo-
rationwithinthemeaningofsection957
(head licensee) pursuant to an agreement
(a master license agreement or similar ar-
rangement) that is confined to the devel-
opment, production, exploitation, distribu-
tion, or marketing of the intellectual prop-
erty or the copyrightedarticle; (2) the head
licensee transfers a right or rights in the
covered intellectual property or the cov-
ered copyrighted article to one or more cor-
porations (sublicensees), as permitted by
the terms and conditions of the master li-
cense agreement, for the purpose of devel-
opment, production, exploitation, distribu-
tion or marketing of the intellectual prop-
erty or the copyrighted article or for the
sublicensee’s own use; and (3) the head li-
censee is a member of the worldwide affil-
iated group that includes either the master
licensor or the sublicensee. For purposes
of this notice, a worldwide affiliated group
is as defined in section 864(f)(1)(C), de-
termined without regard to the exception
in section 1504(a)(4) treating certain pre-
ferred stock as not stock.
The relief described in section 1 of this
notice applies without regard to the form
of the transaction or the treatment of the
transaction under foreign law, and includes
the transfer of rights in the intellectual
property or the copyrighted article through
a license, sale, lease or exchange for U.S.
tax purposes.
c. Ordinary course of business
For purposes of this notice, a back-to-
back licensing arrangement with respect
to covered intellectual property or a cov-
ered copyrighted article is in the “ordinary
course of business” if: (A) the arrange-
ment is consistent with the normal busi-
ness practices of the master licensor with
respect to licensing of intellectual prop-
erty or a copyrighted article of the type
that is the subject of the back-to-back li-
censing arrangement (as defined in sec-
tion 1(a) of this notice) independent of
U.S. federal tax considerations; (B) the
head licensee and each sublicensee (other
than a sublicensee that licenses the intel-
lectual property or copyrighted article ex-
clusively for its own use) are regularly en-
gaged in a trade or business, within the
meaning of § 1.367(a)–2T(b)(2), of devel-
oping, producing, exploiting, distributing
or marketing the intellectual property or
October 12, 20104252010–41 I.R.B.

the copyrighted article that is the subject
of the back-to-back licensing arrangement;
and (C) for each payment made by a sub-
licensee under the sublicense agreement
with respect to which foreign gross-ba-
sis withholding tax is imposed, the sub-
licensee uses the right to the intellectual
property or the copyrighted article that is
the subject of the sublicense agreement
in a trade or business within the meaning
of § 1.367(a)–2T(b)(2). For purposes of
clause (B), the head licensee or the sub-
licensee shall be considered to be regu-
larly engaged in the business of develop-
ing, producing, exploiting, distributing or
marketing the intellectual property or the
copyrighted article that is the subject of the
back-to-back licensing arrangement if any
member of its worldwide affiliated group
is so engaged with respect to that specific
intangible.
2. Relief from application of section
901(l)(1)(A) for certain retail distribution
arrangements made in the ordinary course
of business
Under a typical business arrangement
involving retail distribution of certain
copyrighted articles, a domestic corpora-
tion owns a copyright which is used to pro-
duce copyrighted articles. In the ordinary
course of its trade or business, the corpora-
tion, which may or may not hold the copy-
righted articles for the minimum holding
period described in section 901(l)(1)(A),
transfers such copyrighted articles directly
or indirectly through U.S. affiliates to re-
tail customers in foreign jurisdictions. The
transactions with retail customers would
generally be treated as sales in determining
whether for U.S. tax purposes the income
is from sources within the United States.
See,e.g., § 1.861–18. Retail customers
in foreign jurisdictions make payments to
the domestic corporation or its U.S. affil-
iate that, nevertheless, may be subject to
foreign gross-basis withholding taxes.
a. Covered copyrighted articles
Pursuant to the authority granted under
section 901(l)(3), the Treasury Department
and the IRS have determined that the ap-
plication of section 901(l)(1)(A) to foreign
gross-basis withholding taxes imposed on
payments in a retail distribution arrange-
ment for covered copyrighted articles (as
thattermisdefinedinsection1(a)ofthis
notice) entered into in the ordinary course
of business (as that term is defined in sec-
tion 2(c) of this notice) is not necessary to
carry out the purposes of section 901(l).
b. Retail distribution arrangement
For purposes of this notice, a “re-
tail distribution arrangement for covered
copyrighted articles” is a transaction in
which: (1) a domestic corporation owns a
copyright which is used to produce a cov-
ered copyrighted article; (2) the domestic
corporation transfers directly or indirectly
through one or more U.S. affiliates the
covered copyrighted article to foreign re-
tail customers; and (3) such arrangement
is in the ordinary course of business of the
domestic corporation and, if appropriate,
its U.S. affiliate(s). For purposes of this
notice, a U.S. affiliate is any member of
the domestic corporation’s affiliated group
as defined in section 1504(a).
c. Ordinary course of business
For purposes of this notice, a retail dis-
tribution arrangement for covered copy-
righted articles is in the “ordinary course of
business” if: (A) the arrangement is con-
sistent with the normal business practices
of the domestic corporation with respect
to sales of copyrighted articles of the type
that is the subject of the retail distribution
arrangement (as defined in section 2(a) of
this notice) independent of U.S. federal tax
considerations; and (B) the domestic cor-
poration, or the U.S. affiliate in the case
of a domestic corporation that transfers
the covered copyrighted articles indirectly
through such affiliate, is regularly engaged
in a trade or business, within the meaning
of § 1.367(a)–2T(b)(2), of selling the cov-
ered copyrighted articles that are the sub-
ject of the retail distribution arrangement.
EFFECT ON OTHER DOCUMENTS
This notice supplements but does not
modify or affect the application of the ex-
ception described in Notice 2005–90.
EFFECTIVE DATE
The regulations described in this no-
tice will apply to amounts that are paid or
accrued after September 23, 2010. Until
regulations incorporating the guidance set
forth in this notice are issued, taxpayers
may rely on the guidance contained in this
notice.
REQUEST FOR COMMENTS AND
CONTACT INFORMATION
The Treasury Department and the IRS
request comments concerning the excep-
tions to section 901(l)(1) described in
this notice, the scope of the active dealer
exception in section 901(l)(2) to persons
for whom intangible property or copy-
righted articles are described in section
1221(a)(1), as well as the exception de-
scribed in Notice 2005–90 and other issues
with respect to which the Treasury Depart-
ment and the IRS requested comments in
Notice 2005–90. Written comments may
be submitted to the Office of Associate
Chief Counsel (International), Attention:
Suzanne Walsh, Internal Revenue Service,
1111 Constitution Avenue, NW, Washing-
ton, DC 20224. Alternatively, taxpayers
may submit comments electronically to
Notice.comments@irscounsel.treas.gov.
Comments will be available for public
inspection and copying. For further
information regarding this notice,
contact Ms. Walsh of the Office of
Associate Chief Counsel (International) at
(202)–622–3850 (not a toll-free call).
26 CFR 601.105: Examination of returns and claims
for refund, credit, or abatement; determination of
correct tax liability.
(AlsoPartI,§§118,362.)
Rev. Proc. 2010–34
SECTION 1. PURPOSE
This revenue procedure provides a safe
harbor under section 118(a) of the Inter-
nal Revenue Code for the treatment of cer-
tain grants to corporations from the Rural
Utilities Service (RUS) of the Department
of Agriculture under the Broadband Initia-
tives Program (BIP) and from the National
Telecommunications and Information Ad-
ministration (NTIA) of the Department of
Commerce under the Broadband Technol-
ogy Opportunities Program (BTOP) as au-
thorized by the American Recovery and
Reinvestment Act of 2009 (ARRA).
2010–41 I.R.B.426October 12, 2010

SECTION 2. BACKGROUND
Section 118(a) of the Code provides
that in the case of a corporation, gross in-
come does not include a contribution to the
capital of the taxpayer.
Section 1.118–1 of the Income Tax
Regulations provides that section 118 ap-
plies to contributions to capital made by a
person other than a shareholder, for exam-
ple, property contributed to a corporation
by a governmental unit for the purpose
of enabling the corporation to expand its
operating facilities.
Section 362(c)(2) of the Code requires a
basis reduction in a corporation’s property
when the corporation receives money from
a nonshareholder as a contribution to its
capital.
ARRA appropriated money for the
expansion of broadband capabilities in
the United States. Title I, Division A of
ARRA appropriated $2.5 billion to RUS
for BIP. Title II, Division A of ARRA ap-
propriated $4.7 billion to NTIA for BTOP.
BIP provides grants for six purposes:
(1) Last Mile Remote Projects (LMRP);
(2) Last Mile Projects (LMP); (3) Mid-
dle Mile Projects (MMP); (4) Satellite
Projects (SP); (5) Technical Assistance
(TA); and (6) Rural Library Broadband
(RLB). BTOP provides grants for four
purposes: (1) Broadband Infrastructure
(BI); (2) Comprehensive Community In-
frastructure (CCI); (3) Public Computer
Centers (PCC); and (4) Sustainable Broad-
band Adoption (SBA). See Notices of
Funds Availability, 74 FR 33104 (BIP and
BTOP), 75 FR 3792 (BTOP), and 75 FR
3820 (BIP).
SECTION 3. SCOPE
This revenue procedure generally ap-
plies to corporate taxpayers that receive
a grant from RUS under BIP for LMRP,
LMP, MMP, or RLB or from NTIA under
BTOPforBIorCCI.
This revenue procedure does not ap-
ply to the portion of any grant paid to re-
imburse pre-application expenses. This
revenue procedure also does not apply to
grants from RUS under BIP for SP or TA.
In addition, this revenue procedure does
not apply to: (1) noncorporate taxpay-
ers; (2) loans from RUS under BIP; (3)
grants from NTIA under BTOP for PCC or
SBA; or (4) the National Broadband Plan
or the Universal Service Fund of the Fed-
eral Communications Commission.
SECTION 4. PROCEDURE
The Internal Revenue Service will not
challenge a corporation’s treatment of a
grant to the corporation from RUS under
BIP for LMRP, LMP, MMP, or RLB or
from NTIA under BTOP for BI or CCI
within the scope of section 3 of this rev-
enue procedure as a nonshareholder con-
tribution to the capital of the corporation
under section 118(a) of the Code if the cor-
poration properly reduces the basis of its
property under section 362(c)(2) and the
regulations thereunder.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective
September 23, 2010.
SECTION 6. DRAFTING
INFORMATION
The principal author of this rev-
enue procedure is David McDonnell of
the Office of Associate Chief Counsel
(Passthroughs & Special Industries). For
further information regarding this revenue
procedure, contact Mr. McDonnell at
(202) 622–3040 (not a toll-free call).
October 12, 20104272010–41 I.R.B.

Part IV. Items o
fGeneralInterest
Reporting of Uncertain Tax
Positions
Announcement 2010–75
In a series of announcements the Inter-
nal Revenue Service announced that it was
developing a schedule requiring certain
business taxpayers to report uncertain tax
positions on their tax returns and requested
comments both on the proposal and on
a draft schedule and instructions. An-
nouncement 2010–9, 2010–7 I.R.B. 408;
Announcement 2010–17, 2010–13 I.R.B.
515; Announcement 2010–30, 2010–19
I.R.B. 668. The Service also stated in An-
nouncement 2010–9 that it would issue a
Notice of Proposed Rulemaking (NPRM)
to provide that corporations would be
required to file a schedule disclosing un-
certain tax positions. The NPRM was
published on September 9, 2010, and sets
out a proposed rule explicitly authoriz-
ing the Service to require the filing of
Schedule UTP. Requirement of a State-
ment Disclosing Uncertain Tax Positions,
75 Fed. Reg. 54802 (proposed Sept. 9,
2010). The Service expects a final rule
will be promulgated by the end of the year.
The Service received a large number of
comments on the overall proposal, includ-
ing whether and how the Service should
implement the requirement to file a sched-
ule reporting uncertain tax positions, as
well as the draft schedule and instructions
released for comment on April 19, 2010.
Many of the comments expressed concerns
regarding how the Service would use the
reported information, the interaction of the
new reporting requirement with the exist-
ing policy of restraint, the additional bur-
den the reporting requirement would place
on affected corporations, and the impact
the reporting requirement would have on
the relationship between the corporation
and the Service or the corporation and its
advisors or independent auditors. Some
commentators questioned the Service’s au-
thority to require reporting of uncertain tax
positions with the corporation’s tax return.
All of these comments have been care-
fully considered in developing the final
schedule and instructions, which require
certain corporations with audited financial
statements to file Schedule UTP,Uncer-
tain Tax Position Statement,beginning
with the 2010 tax year. A final schedule
and instructions are being released con-
temporaneously withthis announcement.
In addition, a Directive regarding imple-
mentation of Schedule UTP and related
matters, and a separate announcement re-
garding modifications that will be made
to the existing Policy of Restraint in con-
junction with implementation of Schedule
UTP, are being released contemporane-
ously with this announcement.
Overview of major changes to the draft
schedule and instructions
The fi
nal schedule and instructions
make a
number of significant changes to
the Ap
ril draft in order to address burden
and o
ther concerns expressed by commen-
tato
rs. Some of the major changes include:
•a five-year phase-in of the reporting
requirement based on a corporation’s
asset size;
•no reporting of a maximum tax adjust-
ment;
•no reporting of the rationale and nature
of uncertainty in the concise descrip-
tion of the position; and
•no reporting of administrative practice
tax positions.
Fiv
e-year phase-in period
In Announcement 2010–9, the Service
proposed that the reporting requirement
apply to business taxpayers with total as-
sets of at least $10 million. The Service
requested comments on whether transition
rules should be used or criteria modified
to either include or exclude certain busi-
ness taxpayers, and the type of uncertain
tax positions that should be reported by
pass-through entities and tax-exempt enti-
ties.
In Announcement 2010–30, the Service
announced that the types of corporations
required to file the schedule initially would
be limited to corporations that issue au-
dited financial statements (or that have tax
positions for which a related party records
a reserve in an audited financial statement)
and file Form 1120, U.S. Corporation
Income Tax Return;Form 1120-F,U.S.
Income Tax Return of a Foreign Corpo-
ration;Form 1120-L,U.S. Life Insurance
Company Income Tax Return;orForm
1120-PC,U.S. Property and Casualty In-
surance Company Income Tax Return.
A number of commentators recom-
mended that the Service either increase
the $10 million total asset threshold per-
manently or during a transition period
to allow many organizations additional
time to implement the reporting require-
ment. Some commentators recommended
that taxpayers in the Compliance Assur-
ance Program (CAP) and taxpayers under
continuous audit (CIC taxpayers) be ex-
cluded from the reporting requirement.
Although a few comments recommended
that the reporting requirement also apply
to pass-through entities and tax-exempt
entities, many suggested that the reporting
requirements should be delayed or elimi-
nated for these entities.
The final schedule and instructions gen-
erally retain the previously announced fil-
ing requirements regarding types of cor-
porations required to complete the sched-
ule for 2010 tax years. Accordingly, pub-
lic or privately held corporations that issue
or are included in audited financial state-
ments and that file a Form 1120, Form
1120-F, Form 1120-L, or Form 1120-PC
must report their uncertain tax positions on
Schedule UTP if they satisfy the total as-
set threshold. In response to comments,
however, the Service has implemented a
five-year phase-in of the Schedule UTP for
corporations with total assets under $100
million. Corporations that have total as-
sets equal to or exceeding $100 million
must file Schedule UTP starting with 2010
tax years. The total asset threshold will
be reduced to $50 million starting with
2012 tax years and to $10 million start-
ing with 2014 tax years. The Service will
consider whether to extend all or a portion
of Schedule UTP reporting to other tax-
payers for 2011 or later tax years, such as
pass-through entities and tax-exempt enti-
ties.
The final instructions do not exclude
CAP or CIC taxpayers from the reporting
requirement. With respect to CAP, the Ser-
vice will address Schedule UTP compli-
ance in upcoming CAP permanence guid-
ance that is expected to be released shortly.
2010–41 I.R.B.428October 12, 2010

No reporting of maximum tax adjustment
The draft schedule and instructions pro-
posed that the corporation report a maxi-
mum tax adjustment for each tax position
listed on the schedule, other than trans-
fer pricing and other valuation positions.
The maximum tax adjustment was defined
in the draft instructions as the maximum
United States federal income tax liability
for the tax position if the position were
not sustained upon examination by the Ser-
vice. The draft instructions also provided
the corporation a choice of ranking transfer
pricing and other valuation positions based
on the federal income tax reserve or an es-
timate of the adjustment to federal income
tax that would result if the position were
not sustained.
Many of the comments recommended
eliminating entirely or modifying the pro-
posed requirement to report the maximum
tax adjustment for each tax position. Many
comments expressed concern that this
amount would be unduly burdensome to
compute, would provide the Service with
misleading information about the riski-
ness of the position and its magnitude,
and would not be a meaningful basis upon
which to determine the issues or returns
to examine. Some commentators recom-
mended that no information be provided
on the schedule regarding the materiality
of the tax position. Some commentators
expressed a preference for a measure that
relied on information already available to
the corporation to minimize the burden
associated with completing the schedule.
Many commentators suggested various al-
ternative measures of magnitude including
the following:
•ranges or baskets based on the maxi-
mum tax adjustment, a reasonable esti-
mate of the federal income tax benefit,
or the reserve for the tax positions;
•ranges or baskets based on a per-
centage of gross income, revenue,
expenses, or reserves;
•ranking of all issues as proposed in the
draft instructions for transfer pricing
and other valuation issues;
•ranking of all issues based on magni-
tude, such as reserves for uncertain tax
positions;
•disclosure of only those tax positions
for which the tax reserve exceeds a per-
centage of the tabular roll-forward in
the annual financial statement footnote
disclosures;
1
•disclosure of the maximum tax adjust-
ment only if it exceeds $500,000; and
•disclosure of the aggregate reserve for
uncertain tax positions.
After considering the comments and the
suggested alternatives, the Service has re-
moved the proposed requirement to report
the maximum tax adjustment. Instead, the
final schedule and instructions require a
corporation to rank all of the reported tax
positions (including transfer pricing and
other valuation positions) based on the
United States federal income tax reserve
(including interest and penalties) recorded
for the position taken in the return, and
to designate those tax positions for which
the reserve exceeds 10 percent of the ag-
gregate amount of the reserves for all of
the tax positions reported on the schedule.
This ranking method is expected to allow
the Service to more accurately evaluate
the materiality of the issues reported on
the schedule and to impose less burden
on corporations than would have been
the case under the maximum tax adjust-
ment proposal. This method relies on the
reserve computations that corporations
perform for audited financial statement
purposes, but does not require disclosure
of the actual amounts of the tax reserves.
In addition, commentators noted the
difficulty of computing the maximum tax
adjustment for tax positions for which
no reserve was created based on an ex-
pectation to litigate the position. The
instructions address this concern by pro-
viding that no size needs to be determined
with respect to these tax positions and that
these positions can be assigned any rank
by the corporation.
Removal of requirement to include
rationale and nature of uncertainty in
concise description of the position
A number of commentators expressed
concern about the requirement that the
rationale for an uncertain tax position, as
well the nature of the uncertainty, be dis-
closed as part of the concise description.
Commentators stated that these disclo-
sures are not required by FIN 48 and
asserted that they conflict with both the
Service’s policy of restraint and the Ser-
vice’s stated objective not to require that
taxpayers disclose their assessment of the
strength or weakness of their positions.
Other commentators pointed out that the
examples in the draft instructions did not
provide this information. As an alterna-
tive, several commentators suggested that
the requirements for a concise description
be similar to the information required to
be disclosed in conjunction with the filing
of a Form 8275,Disclosure Statement.
In response to these comments, the pro-
posed requirement to include the rationale
and nature of the uncertainty in the con-
cise description has been eliminated. The
instructions now require a concise descrip-
tion of the tax position, including a de-
scription of the relevant facts affecting the
tax treatment of the position and informa-
tion that reasonably can be expected to ap-
prise the Service of the identity of the tax
position and the nature of the issue. This
is based upon and consistent with the in-
formationrequiredtobereportedonForm
8275. In addition, the final instructions ex-
pressly state that a corporation is not re-
quired to include an assessment of the haz-
ards of a tax position or an analysis of the
support for or against the tax position.
No reporting of administrative practice
tax positions
The proposal required that a corpora-
tion report on Schedule UTP tax positions
for which no reserve was recorded because
the corporation determined it was the Ser-
vice’s administrative practice not to raise
the issue during an examination. Many
commentators recommended elimination
of this requirement because it would be un-
duly burdensome for corporations to iden-
tify, describe, and quantify these positions,
and would provide the Service very little
useful information.
After reviewing the comments, the Ser-
vice determined that the concerns about
the administrability of this requirement
outweighed the value of the information
that may be included. Therefore, the
Service has eliminated the proposed re-
quirement to report tax positions for which
1
Public companies are required to disclose a tabular reconciliation of unrecognized tax benefits at the beginningandendofthereportingperiodintheir annual financial statements. FASB
ASC Topic 740–10 Income Taxes. Income Taxes, Accounting Standards Codification Subtopic 740–10–5015A (Fin. Accounting Standards Bd. 2010).
October 12, 20104292010–41 I.R.B.

no reserve was created due to a widely-un-
derstood administrative practice, but will
continue to explore ways to assess the im-
pact of these tax positions on overall tax
compliance.
Consistency between Schedule UTP
reporting and financial statement reserve
decisions
Some commentators opposed the pro-
posal because of their understanding that
it required a corporation to report tax posi-
tions for which no reserve was recorded in
the corporation’s financial statements (in-
cluding expectation-to-litigate positions)
either because the position was highly
certain or was immaterial in the context
of the audited financial statements. Other
commentators recommended that the in-
structions clearly state that highly certain
and immaterial tax positions not be re-
quired to be reported on the schedule.
The final instructions address these
comments by clarifying that the schedule
seeks the reporting of tax positions consis-
tent with the reserve decisions made by the
corporation for audited financial statement
purposes. The instructions clarify that
corporations are not required to report tax
positions that are either immaterial under
applicable financial accounting standards
or are sufficiently certain so that no re-
serve is required under those standards.
A tax position that a corporation would
litigate, if challenged, but that is clear and
unambiguous or is immaterial is therefore
notrequiredtobereportedonSchedule
UTP. The instructions require reporting of
tax positions taken in a return for which
reserves were createdunder applicable fi-
nancial accounting standards or for which
no reserve was created because of an ex-
pectation to litigate.
A number of commentators requested
that the instructions regarding unit of ac-
count be clarified to more closely align the
term with its meaning in FIN 48. The final
instructions add an example to emphasize
that the definition of unit account should
be applied consistently with the guidance
in FIN 48. Some commentators stated that
the draft instructions provided inadequate
guidance regarding the treatment of a unit
of account for reporting tax positions by
corporations using IFRS. The final instruc-
tions continue to provide that a corporation
that uses its entire tax year as a unit of ac-
count under IFRS or another method of ac-
counting may not do so for Schedule UTP
reporting, but must identify a unit of ac-
count based on FIN 48 principles or by us-
ing any other level of detail that is consis-
tently applied if that identification is rea-
sonably expected to apprise the Service of
the identity and nature of the issue under-
lying a tax position taken in the tax return.
Additional areas of clarification
Many of the commentators provided
specific comments on the language in the
draft instructions, either asking for clar-
ification of the language or suggesting
changes to the language. In response, the
following changes were made to the in-
structions:
•The instructions clarify that Schedule
UTP requires the reporting of U.S.
federal income tax positions but not
foreign or state tax positions. Un-
der the general reporting instructions,
however, a corporation is required to
report a United States federal income
tax position taken in a return that arises
out of uncertainty with regard to a
foreign tax position (e.g., foreign tax
credits) if a reserve for United States
federal income tax was recorded to
reflect that uncertainty.
•The instructions clarify that a tax po-
sition is reported on Schedule UTP
once (1) a reserve for a tax position is
recorded and (2) a tax position is taken
on a return regardless of the order in
which those two events occur.
•The instructions clarify that corpora-
tions report their own tax positions on
Schedule UTP and do not report the tax
positions of a related party.
•The instructions clarify that tax posi-
tions taken in years before 2010 need
not be reported in 2010 or a later year
even if a reserve is recorded in audited
financial statements issued in 2010 or
later.
•The instructions clarify the reporting
of recurring tax positions taken in mul-
tiple years.
•The instructions were revised to reflect
the fact that Schedule UTP need not be
filed for short tax years ending in 2010.
•The instructions clarify that worldwide
assets are used to determine whether
a corporation that files a Form 1120-F
(including a protective return) must
file Schedule UTP.
•The definition of audited financial
statement was revised to clarify that
an audited financial statement is one
on which an independent auditor ex-
presses an opinion and that compiled
or reviewed financial statements are
excluded from the definition of audited
financial statement.
•The definition of record a reserve was
revised to clarify that it includes the
recording of a reserve for United States
federal income tax, interest, or penal-
ties and to reinforcethat temporary dif-
ferences must be reported on Schedule
UTP.
•The instructions clarify for corpora-
tions included in multiple audited fi-
nancial statements that the recording of
a reserve in any audited financial state-
ment in which the corporation is in-
cluded triggers reporting of the tax po-
sition if the tax position is taken on a
return filed by the reporting corpora-
tion.
Privilege, work product doctrine, subject
matter waiver, and policy of restraint
comments
A number of commentators asked that
the proposal be withdrawn on the basis
that the requirement to identify tax posi-
tions along with the taxpayer’s views and
assessments of those positions is inconsis-
tent with the attorney-client privilege, the
work product doctrine, and the tax prac-
titioner privilege, because it may require
disclosure of information that is based
upon the advice of counsel and tax return
preparers and may require the sharing of
the mental impressions of these advisers.
Many of these commentators were also
concerned that disclosure of tax positions
on Schedule UTP could enable adversaries
to raise questions about subject-matter
waiver with respect to confidential com-
munications related to the disclosed tax
positions. Other commentators asked that
the Service confirm that claims of priv-
ilege may continue to be asserted to the
same extent permitted under current law.
As set out above, the instructions no
longer require the rationale and nature of
the uncertainty to be included in the sched-
ule’s concise description and further ex-
plain that the concise description should
2010–41 I.R.B.430October 12, 2010

not include information related to the cor-
poration’s assessment of the hazards of a
tax position or an analysis of the support
for or against the tax position.
Many commentators raised issues about
the effect of Schedule UTP’s reporting re-
quirements on the Service’s policy of re-
straint. Some saw Schedule UTP as incon-
sistent with the policy of restraint, while
others asked that the policy of restraint
be expanded to cover documents used to
prepare Schedule UTP. The Service is re-
leasing, contemporaneously with the re-
lease of this announcement, Announce-
ment 2010–76, which modifies the policy
of restraint in response to these concerns.
Other comments — exclude certain tax
positions and expectation to litigate
Various commentators suggested ex-
cluding certain types of tax positions from
Schedule UTP reporting, including:
•all transfer pricing positions;
•temporary differences;
•correlative effects of foreign tax posi-
tions (e.g., effect of foreign tax posi-
tions on U.S. earnings and profits or
foreign tax credits); and
•specified transactions or issues, such
as permanent establishment, debt-eq-
uity, tax-free combinations, or issues
the Service has conceded in an audit
of the reporting corporation during the
prior five years, which should be in-
cluded in an “angel list.”
The final schedule and instructions do
not incorporate any of the recommended
exclusions. The Service believes that ex-
cluding these types of tax positions from
Schedule UTP reporting would be incon-
sistent with the purpose and objectives
underlying the new reporting requirement
and that it is important to obtain reporting
of all types of uncertain tax positions.
The proposal required a corporation to
report a tax position taken in a return for
which no reserve was recorded based on
the corporation’s expectation to litigate
the position. A number of commentators
suggested eliminating this requirement,
either because it would be unduly burden-
some to identify, describe, and quantify
these positions, or because requiring re-
porting of these positions on Schedule
UTP departs from the Service’s stated
objective of consistency with financial
accounting standards. Many commenta-
tors recommended clarifying the scope
of tax positions required to be reported
as expectation-to-litigate positions. Some
commentators expressed concern that this
requirement would require corporations to
reassess at the time of preparing Sched-
ule UTP all tax positions taken in the
current-year return for which no reserve
was previously recorded and report on the
schedule each tax position the corporation
might litigate if it had to do so in order
to sustain the issue. A few commentators
requested guidance on how the corpora-
tion documents an expectation-to-litigate
position.
The final schedule and instructions re-
tain the requirement to report tax positions
taken in a return for which no reserve was
recorded because of an expectation to lit-
igate the position and incorporate revised
instructions to clarify the meaning of ex-
pectation to litigate. The final instruc-
tions clarify that a corporation may rely on
the reserve decisions it made for financial
statement purposes to complete Schedule
UTP and thus is not expected to reassess
at the time the schedule is completed those
reserve decisions previously made for fi-
nancial statement purposes. The final in-
structions do not provide guidance on how
a corporation documents an expectation to
litigate position. The Service expects that
a corporation would continue to document
its decision in the same way as it substan-
tiates any decision not to record a reserve
in its financial statements.
Internal Directive and related changes
The Service is issuing contemporane-
ously with this Announcement a Directive
concerning the use of Schedule UTP by the
Service and its examination and research
personnel. The Directive outlines the var-
ious uses for the information reported on
the schedule and indicates that initial pro-
cessing of Schedule UTP information will
be centralized to ensureappropriate review
to identify trends and areas requiring fur-
ther guidance to address uncertainty in the
law.
In addition, the Service will create a
working group to study and revise the
Schedule M–3,Net Income (Loss) Rec-
onciliation for Corporations with Total
Assets of $10 Million or More,toreduce
duplicate reporting.The Service believes
that the implementation of Schedule UTP
is likely to reduce the need for some of
the information currently reported on the
Schedule M–3. The working group will
beginitsworkin2011andwillworkwith
external stakeholders to develop appropri-
ate revisions to the Schedule M–3.
The Service also will be expanding the
Compliance Assurance Program (CAP)
and making it permanent. The Service
intends that the permanent CAP will con-
sist of three phases: pre-CAP, which will
allow a taxpayer to become current on
the audit cycle while demonstrating the
requisite transparency needed to be eligi-
ble for CAP; CAP, which will resemble
the existing CAP pilot program; and CAP
maintenance, which will call for the re-
duction of resourcesand taxpayer contact
for those taxpayers in this phase as ap-
propriate. Details will be contained in the
upcoming CAP permanence guidance that
is expected to be released shortly.
Exchange of information with foreign
governments
Concerns have been raised that the Ser-
vice will automatically disclose informa-
tion reported on the Schedule UTP to for-
eign governments. The Service intends to
generally refrain from providing Schedule
UTP information to other governments ex-
cept in those circumstances in which there
is a reciprocal arrangement with the for-
eign government regarding uncertain-tax-
position information, such as where the
foreign government collects similar infor-
mation for its own tax administration pur-
poses and agrees to make this informa-
tion available to the Service in a similar
manner. In addition, even if reciprocity
did exist, the Service would consider other
factors in determining whether to disclose
the information, including the relevance of
the information to the foreign government,
which in many cases would not be present.
Future guidance and changes
While the instructions provide initial
guidance concerning filing of Schedule
UTP, the Service recognizes that they do
not address every issue raised by com-
mentators. For example, the instructions
do not address issues related to the report-
ing of tax positions in the year in which
October 12, 20104312010–41 I.R.B.

a corporation is acquired or disposed of.
As another example, a number of com-
mentators recommended the instructions
address the level or type of due diligence
required to obtain reserve information
from a related party or information from
a pass-through entity relating to a corpo-
ration’s uncertain tax position involving
the pass-through entity. Other issues will
arise as the Service and corporations gain
experience with the schedule. The Service
will continue to consider these issues and
how best to provide further guidance.
In addition, the Service will review the
completeness and utility of Schedule UTPs
filed by corporations, beginning with 2010
tax years, and modify the schedule and in-
structions as appropriate. For example, the
Service will review the reporting of trans-
fer pricing positions on Schedule UTP and
consider whether additional information,
such as the specific country, character of
income, or other facts are necessary to pro-
vide sufficient information regarding the
identity and nature of those tax positions.
Penalties
A number of commentators recom-
mended that the Service expressly state
that penalties will not be imposed, either
permanently or during a transition period,
for reporting failures regarding Schedule
UTP. The final instructions do not provide
specific instructions regarding penalties.
The Service intends to review compliance
regarding how the schedule is completed
by corporations and to take appropriate en-
forcement action, including the possibility
of opening an examination or making an-
other type of taxpayer contact, in those
instances in which there appears to be a
failure to complete the schedule or a fail-
ure to report whether the corporation is
required to complete the schedule.
Coordination with Forms 8275 and 8886
Some commentators suggested the
Service provide that in certain circum-
stances a corporation need not file Form
8886,Reportable Transaction Disclosure
Statement, if a reportable transaction is
disclosed on Schedule UTP. A number
of commentators recommended that the
Service expressly provide that disclosure
of a tax position on Schedule UTP con-
stitutes disclosure of the position to avoid
penalties under sections 6662(b)(6) and
6662(i) involving an underpayment due to
a claimed tax benefit because of a transac-
tion lacking economic substance.
The final Schedule UTP instructions
state that a complete and accurate disclo-
sure of a tax position on the appropriate
year’s Schedule UTP will be treated as if
the corporation filed a Form 8275 or Form
8275-R regarding the tax position and that
a separate Form 8275 or 8275-R need not
be filed to avoid certain accuracy-related
penalties with respect to that tax posi-
tion. Consistent with Notice 2010–62,
issued September 13, 2010, in the case of
a transaction that is not a reportable trans-
action, the Service will treat a complete
and accurate disclosure of a tax position
on Schedule UTP as satisfying the disclo-
sure requirements of section 6662(i). The
Service is studying other ways to reduce
duplicate reporting and is considering
whether complete and accurate disclosure
on Schedule UTP would also, in appropri-
ate circumstances, provide the information
necessary to satisfy the reportable transac-
tion disclosure requirements.
The principal author of this announce-
ment is Kathryn Zuba of the Office of
the Associate Chief Counsel (Procedure
and Administration). For further infor-
mation regarding this announcement, con-
tact Kathryn Zuba at (202) 622–3400 (not
a toll-free call). Forquestions relating
to Schedule UTP and instructions, contact
Deborah Palacheck at (202) 283–8710 (not
a toll-free call).
Requests for Documents
Provided to Independent
Auditors, Policy of Restraint
and Uncertain Tax Positions
Announcement 2010–76
The Internal Revenue Service is ex-
panding its policy of restraint in connec-
tion with its decision to require certain
corporations to file Schedule UTP,Uncer-
tain Tax Position Statement, and will forgo
seeking particular documents that relate to
uncertain tax positions and the workpapers
that document the completion of Schedule
UTP.
BACKGROUND
Schedule UTP requires a specified class
of corporations to provide a concise de-
scription of each uncertain tax position
for which the corporation or a related en-
tity has recorded a reserve in its finan-
cial statements, or for which no reserve
has been recorded because of an expecta-
tion of litigation. These uncertain tax po-
sitions are identifiedby corporations dur-
ing the process of preparing financial state-
ments under applicable accounting stan-
dards, such as FASB Interpretation No.
48,Accounting for Uncertainty in Income
Taxes, an Interpretation of FASB Statement
No. 109(FIN 48).
1
In reviewing and ver-
ifying financial statements for compliance
with FIN 48, independent auditors may ask
for copies of legal opinions and other doc-
uments in order to understand transactions,
to understand the legal bases for the treat-
ment of transactions, and to determine the
adequacy of reserves for contingent tax li-
abilities.
POLICY OF RESTRAINT
(1) If a document is otherwise privi-
leged under the attorney-client privilege,
the tax advice privilege in section 7525 of
the Code, or the work product doctrine and
the document was provided to an indepen-
dent auditor as part of an audit of the tax-
payer’s financial statements, the Service
will not assert during an examination that
privilege has been waived by such disclo-
sure.
(2) Paragraph (1) does not apply if
(a) the taxpayer has engaged in any
activity or taken any action, other than
those described in that paragraph, that
would waive the attorney-client privilege,
the tax advice privilege in section 7525 of
the Code, or the work product doctrine; or
(b) a request for tax accrual work-
papers is made under IRM 4.10.20.3 be-
cause unusual circumstances exist or the
taxpayer has claimed the benefits of one or
more listed transactions.
(3) Under current procedures, examin-
ers request tax reconciliation workpapers
as a matter of course. IRM 4.10.20.3. The
taxpayer may redact the following infor-
mation from any copies of tax reconcilia-
tion workpapers relating to the preparation
1
Under the codification of accounting standards, the relevant portions of FIN 48 are now contained in Accounting Standards Codification subtopic 740–10,Income Taxes. FASB ASC 740–10.
2010–41 I.R.B.432October 12, 2010

of Schedule UTP it is asked to produce dur-
ing an examination:
(a) working drafts, revisions, or
comments concerning the concise descrip-
tion of tax positions reported on Schedule
UTP;
(b) the amount of any reserve re-
lated to a tax position reported on Schedule
UTP; and
(c) computations determining the
ranking of tax positions to be reported on
Schedule UTP or the designation of a tax
position as a Major Tax Position.
(4) Other than requiring the disclosure
of the information on the schedule, the re-
quirement to file Schedule UTP does not
affect the policy of restraint.
(5) This announcement describes the
policy of the Service for seeking the docu-
ments described in paragraph 1 and 3 from
taxpayers and third parties during an ex-
amination. It does not create or imply the
application of the attorney-client privilege,
the tax advice privilege under section 7525
of the Code, or the work product doctrine
to any document of any taxpayer or third
party.
(6) These modifications to the policy
of restraint will be incorporated into IRM
4.10.20.
DRAFTING INFORMATION
The principal author of this announce-
ment is Kathryn Zuba of the office of
Associate Chief Counsel (Procedure and
Administration). For further informa-
tion regarding this announcement, contact
Kathryn Zuba at (202) 622–3400 (not a
toll-free call).
Deletions From Cumulative
List of Organizations
Contributions to Which
are Deductible Under Section
170 of the Code; Correction
Announcement 2010–77
This document contains a corrected
Announcement 2010–59. Announcement
2010–59 should have read:
This document contains a correction
to Announcement 2010–47, 2010–30
I.R.B. 173, which contained an incorrect
taxpayer name. The taxpayer name incor-
rectly read: “Thorek Hospital & Medical
Center of Chicago, IL”.
The taxpayer name should have read:
“Thorek Hospital & Medical Center Self
Insurance Trust Fund of Chicago, IL”.
FOR FURTHER INFORMATION
CONTACT:
Flora McClain
1100 Commerce Street
MS 4920DAL
Dallas, TX 75242
214–413–5462
Announcement of Disciplinary Sanctions From the Office
of Professional Responsibility
Announcement 2010-78
TheOfficeofProfessionalResponsi-
bility (OPR) announcesrecent disciplinary
sanctions involving attorneys, certified
public accountants, enrolled agents, en-
rolled actuaries, enrolled retirement plan
agents, and appraisers. These individuals
are subject to the regulations governing
practice before the Internal Revenue Ser-
vice (IRS), which are set out in Title 31,
Code of Federal Regulations, Part 10, and
which are published in pamphlet form as
Treasury Department Circular No. 230.
The regulations prescribe the duties and
restrictions relating to such practice and
prescribe the disciplinary sanctions for
violating the regulations.
The disciplinary sanctions to be im-
posed for violation of the regulations are:
Disbarred from practice before the
IRS—An individual who is disbarred is
not eligible to represent taxpayers before
the IRS.
Suspended from practice before the
IRS—An individual who is suspended is
not eligible to represent taxpayers before
the IRS during the term of the suspension.
Censured in practice before the
IRS—Censure is a public reprimand. Un-
like disbarment or suspension, censure
does not affect an individual’s eligibility
to represent taxpayers before the IRS, but
OPR may subject the individual’s future
representations to conditions designed to
promote high standards of conduct.
Monetary penalty—A monetary
penalty may be imposed on an individual
who engages in conduct subject to sanc-
tion or on an employer, firm, or entity
if the individual was acting on its behalf
and if it knew, or reasonably should have
known, of the individual’s conduct.
Disqualification of appraiser—An
appraiser who is disqualified is barred
from presenting evidence or testimony in
any administrative proceeding before the
Department of the Treasury or the IRS.
Under the regulations, attorneys, cer-
tified public accountants, enrolled agents,
enrolled actuaries, and enrolled retirement
plan agents may not assist, or accept assis-
tance from, individuals who are suspended
or disbarred with respect to matters consti-
tuting practice (i.e., representation) before
theIRS,andtheymaynotaidorabetsus-
pended or disbarred individuals to practice
before the IRS.
Disciplinary sanctions are described in
these terms:
Disbarred by decision after hearing,
Suspended by decision after hearing,
Censured by decision after hearing,
Monetary penalty imposed after hear-
ing, and Disqualified after hearing—An
administrative law judge (ALJ) conducted
an evidentiary hearing upon OPR’s com-
plaint alleging violation of the regulations
and issued a decision imposing one of
October 12, 20104332010–41 I.R.B.

these sanctions. After 30 days from the
issuance of the decision, in the absence of
an appeal, the ALJ’s decision became the
final agency decision.
Disbarred by default decision, Sus-
pended by default decision, Censured by
default decision, Monetary penalty im-
posed by default decision, and Disqual-
ified by default decision—An ALJ, after
findingthatnoanswertoOPR’scomplaint
had been filed, granted OPR’s motion for a
default judgment and issued a decision im-
posing one of these sanctions.
Disbarment by decision on appeal,
Suspended by decision on appeal, Cen-
sured by decision on appeal, Monetary
penalty imposed by decision on ap-
peal, and Disqualified by decision on
appeal—The decision of the ALJ was
appealed to the agency appeal authority,
acting as the delegate of the Secretary
of the Treasury, and the appeal authority
issued a decision imposing one of these
sanctions.
Disbarred by consent, Suspended by
consent, Censured by consent, Mone-
tary penalty imposed by consent, and
Disqualified by consent—In lieu of a
disciplinary proceeding being instituted
or continued, an individual offered a con-
sent to one of these sanctions and OPR
accepted the offer. Typically, an offer
of consent will provide for: suspension
for an indefinite term; conditions that the
individual must observe during the sus-
pension; and the individual’s opportunity,
after a stated number of months, to file
with OPR a petition for reinstatement af-
firming compliance with the terms of the
consent and affirming current eligibility
to practice (i.e., an active professional
license or active enrollment status). An
enrolled agent or an enrolled retirement
plan agent may also offer to resign in order
to avoid a disciplinary proceeding.
Suspended by decision in expedited
proceeding, Suspended by default de-
cision in expedited proceeding, Sus-
pended by consent in expedited pro-
ceeding—OPR instituted an expedited
proceeding for suspension (based on cer-
tain limited grounds, including loss of a
professional licenseand criminal convic-
tions).
OPR has authority to disclose the
grounds for disciplinary sanctions in these
situations: (1) an ALJ or the Secretary’s
delegate on appeal has issued a decision
on or after September 26, 2007, which was
theeffectivedateofamendmentstothe
regulations that permit making such deci-
sions publicly available; (2) the individual
has settled a disciplinary case by signing
OPR’s “consent to sanction” form, which
requires consenting individuals to admit to
one or more violations of the regulations
and to consent to the disclosure of the in-
dividual’s own return information related
to the admitted violations (for example,
failure to file Federal income tax returns);
or (3) OPR has issued a decision in an
expedited proceeding for suspension.
Announcements of disciplinary sanc-
tions appear in the Internal Revenue Bul-
letin at the earliest practicable date. The
sanctions announced below are alphabet-
ized first by the names of states and sec-
ond by the last names of individuals. Un-
less otherwise indicated, section numbers
(e.g., § 10.51) refer to the regulations.
City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
California
West HollywoodKrane, Matthew G.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(suspension of attorney
license)
Indefinite from
August 10, 2010
SacramentoMurray, William R.CPASuspended by default
decision in expedited
proceeding under § 10.82
(suspension of CPA
license)
Indefinite from
August 10, 2010
CerritosTiongson, Anthony A. CPASuspended by decision
in expedited proceeding
under § 10.82 (conviction
under 26 U.S.C. § 7207,
filing false tax return)
Indefinite from
August 9, 2010
Florida
Fort LauderdaleShepherd, Robert L.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment in
New York)
Indefinite from
August 10, 2010
2010–41 I.R.B.434October 12, 2010

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Kentucky
LouisvilleAtherton, Bruce D.AttorneySuspended by decision
in expedited proceeding
under § 10.82 (attorney
disbarment)
Indefinite from
September 7, 2010
Nebraska
KearneyHager, Janelle M.CPASuspended by default
decision in expedited
proceeding under § 10.82
(revocation of CPA
license)
Indefinite from
August 10, 2010
New York
GarrisonAzznara, Nat J.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment)
Indefinite from
August 10, 2010
Shepherd, Robert L.,
See Florida
WaccabucSimels, Robert M.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(conviction under 18
U.S.C. § 1512, conspiracy
to obstruct justice, and
attempt to obstruct
justice; 18 U.S.C. § 201,
bribery; and 18 U.S.C.
§ 2512, importation
of eavesdropping
equipment)
Indefinite from
August 10, 2010
North Carolina
CharlotteRoss, Walter H.CPASuspended by decision
in expedited proceeding
under § 10.82 (suspension
of CPA license)
Indefinite from
August 16, 2010
October 12, 20104352010–41 I.R.B.

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.
2010–41 I.R.B.iOctober 12, 2010

Numerical Finding List
1
Bulletins 2010–27 through 2010–41
Announcements:
2010-43, 2010-27 I.R.B.42
2010-44, 2010-28 I.R.B.54
2010-45, 2010-29 I.R.B.87
2010-46, 2010-29 I.R.B.87
2010-47, 2010-30 I.R.B.173
2010-48, 2010-32 I.R.B.234
2010-49, 2010-34 I.R.B.272
2010-50, 2010-33 I.R.B.260
2010-51, 2010-33 I.R.B.261
2010-52, 2010-36 I.R.B.315
2010-53, 2010-36 I.R.B.323
2010-54, 2010-38 I.R.B.386
2010-55, 2010-37 I.R.B.346
2010-56, 2010-39 I.R.B.398
2010-57, 2010-38 I.R.B.386
2010-58, 2010-38 I.R.B.387
2010-59, 2010-39 I.R.B.399
2010-60, 2010-40 I.R.B.417
2010-61, 2010-40 I.R.B.417
2010-62, 2010-40 I.R.B.417
2010-63, 2010-40 I.R.B.417
2010-64, 2010-40 I.R.B.418
2010-65, 2010-40 I.R.B.418
2010-66, 2010-40 I.R.B.418
2010-67, 2010-40 I.R.B.418
2010-68, 2010-40 I.R.B.418
2010-69, 2010-40 I.R.B.418
2010-70, 2010-40 I.R.B.418
2010-71, 2010-40 I.R.B.418
2010-72, 2010-40 I.R.B.419
2010-73, 2010-40 I.R.B.419
2010-74, 2010-40 I.R.B.419
2010-75, 2010-41 I.R.B.428
2010-76, 2010-41 I.R.B.432
2010-77, 2010-41 I.R.B.433
2010-78, 2010-41 I.R.B.433
Notices:
2010-48, 2010-27 I.R.B.9
2010-49, 2010-27 I.R.B.10
2010-50, 2010-27 I.R.B.12
2010-51, 2010-29 I.R.B.83
2010-52, 2010-30 I.R.B.88
2010-53, 2010-31 I.R.B.182
2010-54, 2010-40 I.R.B.403
2010-55, 2010-33 I.R.B.253
2010-56, 2010-33 I.R.B.254
2010-57, 2010-34 I.R.B.267
2010-58, 2010-37 I.R.B.326
2010-59, 2010-39 I.R.B.396
2010-60, 2010-37 I.R.B.329
Notices— Continued:
2010-61, 2010-40 I.R.B.408
2010-62, 2010-40 I.R.B.411
2010-63, 2010-41 I.R.B.420
2010-64, 2010-41 I.R.B.421
2010-65, 2010-41 I.R.B.424
Proposed Regulations:
REG-139343-08, 2010-33 I.R.B.256
REG-151605-09, 2010-31 I.R.B.184
REG-112841-10, 2010-27 I.R.B.41
REG-118412-10, 2010-29 I.R.B.85
REG-119046-10, 2010-40 I.R.B.415
REG-120391-10, 2010-35 I.R.B.310
REG-120399-10, 2010-32 I.R.B.239
Revenue Procedures:
2010-25, 2010-27 I.R.B.16
2010-26, 2010-30 I.R.B.91
2010-27, 2010-31 I.R.B.183
2010-28, 2010-34 I.R.B.270
2010-29, 2010-35 I.R.B.309
2010-30, 2010-36 I.R.B.316
2010-31, 2010-40 I.R.B.413
2010-32, 2010-36 I.R.B.320
2010-33, 2010-38 I.R.B.347
2010-34, 2010-41 I.R.B.426
Revenue Rulings:
2010-18, 2010-27 I.R.B.1
2010-19, 2010-31 I.R.B.174
2010-20, 2010-36 I.R.B.312
2010-21, 2010-39 I.R.B.388
2010-22, 2010-39 I.R.B.388
2010-23, 2010-39 I.R.B.388
2010-24, 2010-40 I.R.B.400
Tax Conventions:
2010-48, 2010-32 I.R.B.234
2010-52, 2010-36 I.R.B.315
Treasury Decisions:
9486, 2010-27 I.R.B.3
9487, 2010-28 I.R.B.48
9488, 2010-28 I.R.B.51
9489, 2010-29 I.R.B.55
9490, 2010-31 I.R.B.176
9491, 2010-32 I.R.B.186
9492, 2010-33 I.R.B.242
9493, 2010-35 I.R.B.273
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2010–1 through 2010–26 is in Internal Revenue Bulletin
2010–26, dated June 28, 2010.
October 12, 2010ii2010–41 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2010–27 through 2010–41
Notices:
96-53
Modified by
Notice 2010-59, 2010-39 I.R.B.396
2003-19
Revoked by
Notice 2010-53, 2010-31 I.R.B.182
2004-2
Modified by
Notice 2010-59, 2010-39 I.R.B.396
2004-50
Modified by
Notice 2010-59, 2010-39 I.R.B.396
2005-90
Supplemented by
Notice 2010-65, 2010-41 I.R.B.424
2006-69
Amplified by
Notice 2010-59, 2010-39 I.R.B.396
2008-51
Modified by
Notice 2010-59, 2010-39 I.R.B.396
2008-52
Modified by
Notice 2010-59, 2010-39 I.R.B.396
2009-47
Obsoleted by
Rev. Proc. 2010-28, 2010-34 I.R.B.270
2009-80
Corrected by
Ann. 2010-59, 2010-39 I.R.B.399
2009-90
Superseded by
Notice 2010-54, 2010-40 I.R.B.403
Proposed Regulations:
REG-115037-00
Withdrawn by
Ann. 2010-60, 2010-40 I.R.B.417
REG-146893-02
Withdrawn by
Ann. 2010-60, 2010-40 I.R.B.417
Revenue Procedures:
81-18
Obsoleted by
Rev. Proc. 2010-27, 2010-31 I.R.B.183
Revenue Procedures— Continued:
2007-44
Modified by
Notice 2010-48, 2010-27 I.R.B.9
2009-18
Obsoleted in part by
Rev. Proc. 2010-25, 2010-27 I.R.B.16
2009-30
Superseded by
Rev. Proc. 2010-26, 2010-30 I.R.B.91
2009-35
Superseded by
Rev. Proc. 2010-33, 2010-38 I.R.B.347
2010-3
Modified by
Notice 2010-62, 2010-40 I.R.B.411
Revenue Rulings:
2003-102
Obsoleted by
Rev. Rul. 2010-23, 2010-39 I.R.B.388
Treasury Decisions:
9487
Corrected by
Ann. 2010-50, 2010-33 I.R.B.260
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2010–1 through 2010–26 is in Internal Revenue Bulletin 2010–26, dated June 28, 2010.
2010–41 I.R.B.iiiOctober 12, 2010

October 12, 20102010–41 I.R.B.

2010–41 I.R.B.October 12, 2010

October 12, 20102010–41 I.R.B.

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