Internal Revenue Bulletin 2024-28 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 2024–28
July 8, 2024
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
EXEMPT ORGANIZATIONS
Announcement 2024-28, page 39.
Revocation of IRC 501(c)(3) Organizations for failure to
meet the code section requirements. Contributions made to
the organizations by individual donors are no longer deduct-
ible under IRC 170(b)(1)(A).
EMPLOYEE PLANS
Notice 2024-55, page 31.
Notice 2024-55 provides guidance in the form of ques-
tions and answers with respect to sections 115 and 314
of Division T of the Consolidated Appropriations Act, 2023,
Pub. L. 117-328, 136 Stat. 4459 (2022), known as the
SECURE 2.0 Act of 2022 (SECURE 2.0 Act). Section 115
of the SECURE 2.0 Act adds section 72(t)(2)(I) to the Inter-
nal Revenue Code (Code), which permits a distribution from
an applicable eligible retirement plan to an individual for
purposes of meeting unforeseeable or immediate financial
needs relating to necessary personal or family emergency
expenses. Section 314 of the SECURE 2.0 Act adds sec-
tion 72(t)(2)(K) to the Code, which permits a distribution
from an applicable eligible retirement plan to a domestic
abuse victim if made during the 1-year period beginning
on the date on which the individual is a victim of domestic
abuse by a spouse or domestic partner. These two types of
distributions are includible in gross income but are not sub-
ject to the 10 percent additional tax under section 72(t)(1).
INCOME TAX
Notice 2024-54, page 24.
This notice announces that the Department of the Treasury
and the Internal Revenue Service intend to issue two sets
of proposed regulations that would provide special rules
for certain transactions under §§ 732, 734, 743, 755, and
1502 of the Internal Revenue Code. First, proposed regu-
lations under §§ 732, 734, 743, and 755 would provide
special rules for the cost recovery of positive basis adjust-
ments or the ability to take positive basis adjustments
into account in computing gain or loss on the disposition
of basis adjusted property following certain transactions.
Second, proposed regulations under § 1502 would provide
rules to clearly reflect the taxable income and tax liability
of a consolidated group whose members own interests in
a partnership.
REG-124593-23, page 40.
REG-124593-23 is a notice of proposed rulemaking (NPRM)
that identifies certain partnership transactions as “trans-
actions of interest,” a type of reportable transaction. The
transactions include either the distribution of partnership
property when the partnership has two or more related
partners, or the transfer of a partnership interest in a non-
recognition transaction when the transferor is related to the
transferee or the transferee is related to one or more of
the partners. The transactions of interest involve related
parties as defined under section 267(b) (without regard to
section 267(c)(3)) or section 707(b)(1), a transfer of a part-
nership interest or distribution of partnership property, and
a resulting aggregate increase to the basis of partnership
property or distributed property under sections 732(b) or
(d), 734(b), or 743(b) for the taxable year that exceeds
the gain recognized, if any on which tax is required to be
paid by any of the related partners by $5 million or more.
The basis increase allows related parties an opportunity
to decrease their taxable income through increased cost
recovery allowances or reduced taxable gain (or increased
taxable loss) on the disposition of the property in a transac-
tion in which gain or loss is recognized in whole or in part.
Rev. Rul. 2024-13, page 18.
Federal rates; adjusted federal rates; adjusted federal long-
term rate, and the long-term tax exempt rate. For purposes
of sections 382, 1274, 1288, 7872 and other sections of
the Code, tables set forth the rates for July 2024.
Finding Lists begin on page ii.

Rev. Rul. 2024-14, page 18.
This Revenue Ruling advises taxpayers of the Service’s
position challenging certain partnership related-party trans-
actions under the codified economic substance doctrine
in § 7701(o). Under the ruling, the Service applies the
economic substance doctrine in three situations involving
related parties where some or all of whom are partners
in a partnership, and the parties: (1) create basis dispari-
ties through various methods; (2) capitalize on these basis
disparities either by transferring a partnership interest in a
nonrecognition transaction or by making a current or liqui-
dating distribution of partnership property to a partner; and
(3) claim a basis adjustment under §§ 732(b), 734(b), or
743(b). The ruling holds that these transaction structures
lack economic substance under § 7701(o). In such cases,
the Service will disregard the basis adjustments.

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Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management 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 rul-
ings 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.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation 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
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
July 8, 2024 Bulletin No. 2024–28

Part I
Section 1274.—
Determination of Issue
Price in the Case of Certain
Debt Instruments Issued for
Property
(Also Sections 42, 280G, 382, 467, 468, 482, 483,
1288, 7520, 7872.)
Rev. Rul. 2024-13
This revenue ruling provides vari-
ous prescribed rates for federal income
tax purposes for July 2024 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month for
purposes of section 1274(d) of the Internal
Revenue Code. Table 2 contains the short-
term, mid-term, and long-term adjusted
applicable federal rates (adjusted AFR) for
the current month for purposes of section
1288(b). Table 3 sets forth the adjusted
federal long-term rate and the long-term
tax-exempt rate described in section
382(f). Table 4 contains the appropriate
percentages for determining the low-in-
come housing credit described in section
42(b)(1) for buildings placed in service
during the current month. However, under
section 42(b)(2), the applicable percent-
age for non-federally subsidized new
buildings placed in service after July 30,
2008, shall not be less than 9%. Table 5
contains the federal rate for determining
the present value of an annuity, an interest
for life or for a term of years, or a remain-
der or a reversionary interest for purposes
of section 7520. Finally, Table 6 contains
the blended annual rate for 2024 for pur-
poses of section 7872.
REV. RUL. 2024-13 TABLE 1
Applicable Federal Rates (AFR) for July 2024
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR5.06%5.00%4.97%4.95%
110% AFR5.58%5.50%5.46%5.44%
120% AFR6.09%6.00%5.96%5.93%
130% AFR6.61%6.50%6.45%6.41%
Mid-term
AFR4.49%4.44%4.42%4.40%
110% AFR4.94%4.88%4.85%4.83%
120% AFR5.40%5.33%5.29%5.27%
130% AFR5.85%5.77%5.73%5.70%
150% AFR6.77%6.66%6.61%6.57%
175% AFR7.92%7.77%7.70%7.65%
Long-term
AFR4.61%4.56%4.53%4.52%
110% AFR5.08%5.02%4.99%4.97%
120% AFR5.54%5.47%5.43%5.41%
130% AFR6.02%5.93%5.89%5.86%
REV. RUL. 2024-13 TABLE 2
Adjusted AFR for July 2024
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted AFR3.84%3.80%3.78%3.77%
Mid-term adjusted AFR3.40%3.37%3.36%3.35%
Long-term adjusted AFR3.49%3.46%3.45%3.44%
Bulletin No. 2024–28 15 July 8, 2024

REV. RUL. 2024-13 TABLE 3
Rates Under Section 382 for July 2024
Adjusted federal long-term rate for the current month3.49%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal
long-term rates for the current month and the prior two months.)
3.62%
REV. RUL. 2024-13 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for July 2024
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after
July 30, 2008, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit8.06%
Appropriate percentage for the 30% present value low-income housing credit 3.45%
REV. RUL. 2024-13 TABLE 5
Rate Under Section 7520 for July 2024
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,
or a remainder or reversionary interest
5.4%
REV. RUL. 2024-13 TABLE 6
Blended Annual Rate for 2024
Section 7872(e)(2) blended annual rate for 20245.03%

July 8, 2024 16 Bulletin No. 2024–28

Bulletin No. 2024–28 17 July 8, 2024
Section 42.—Low-Income
Housing Credit
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
July 2024. See Rev. Rul. 2024-13, page 15.
Section 280G.—Golden
Parachute Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
July 2024. See Rev. Rul. 2024-13, page 15.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and
Certain Built-In Losses
Following Ownership
Change
The adjusted applicable federal long-term rate
is set forth for the month of July 2024. See Rev.
Rul. 2024-13, page 15.
Section 467.—Certain
Payments for the Use of
Property or Services
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
July 2024. See Rev. Rul. 2024-13, page 15.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The applicable federal short-term rates are set
forth for the month of July 2024. See Rev. Rul.
2024-13, page 15.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
July 2024. See Rev. Rul. 2024-13, page 15.
Section 483.—Interest on
Certain Deferred Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
July 2024. See Rev. Rul. 2024-13, page 15.
Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month of
July 2024. See Rev. Rul. 2024-13, page 15.
Section 7520.—Valuation
Tables
The applicable federal mid-term rates are set
forth for the month of July 2024. See Rev. Rul.
2024-13, page 15.
Section 7872.—Treatment
of Loans With Below-
Market Interest Rates
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
July 2024. See Rev. Rul. 2024-13, page 15.

July 8, 2024 18 Bulletin No. 2024–28
Section 7701(o).—
Clarification of economic
substance doctrine
(Also §§ 732, 734, 743, 754, 755)
Rev. Rul. 2024-14
ISSUE
Does the economic substance doctrine
apply to disallow tax benefits associ-
ated with a series of transactions involv-
ing a related-party partnership, through
which the parties first generate a disparity
between inside basis and outside basis and
then trigger a basis adjustment to property
under § 732(b), § 734(b), or § 743(b),
1

which generates increased cost recovery
deductions with respect to the property
or reduced gain (or increased loss) upon a
sale of the property?
FACTS
C is a domestic corporation engaged
in operating a trade or business, includ-
ing through several subsidiary entities
commonly managed by C or in which C
directly or indirectly holds controlling
financial interests (C Subsidiaries) such
that C is related to each of the C Subsid-
iaries under § 267(b) or § 707(b)(1). The
C Subsidiaries include, among other enti-
ties, Sub 1, Sub 2, Sub 3, Partnership A,
Partnership B, Partnership C, and Partner-
ship D, each of which is indirectly owned
by C through one or more C Subsidiaries.
The C Subsidiaries own various deprecia-
ble or amortizable assets used in, and have
incurred various liabilities as part of, the
conduct of C’s trade or business. C issues
financial statements for its trade or busi-
ness that report these assets and liabilities
of the C Subsidiaries (C Financial State-
ments).
Situation 1. C indirectly owns more
than 50 percent of the stock of each of
Sub 1, Sub 2, and Sub 3, all domestic cor-
porations. Sub 1 and Sub 2 are the only
partners in Partnership A with each hold-
ing a 50 percent interest in the capital,
profits, and losses of Partnership A. Sub 1
and Sub 3 are the only partners in Part-
nership B with each holding a 50 percent
interest in the capital, profits, and losses of
Partnership B.
Prior to Date 1, Partnership A had
a valid election in place under § 754.
Also prior to Date 1, Sub 1’s share of
the adjusted tax basis of Partnership A’s
property (that is, Sub 1’s share of Partner-
ship A’s inside basis) was equal to $20x
and the adjusted tax basis of Sub 1’s inter-
est in Partnership A (that is, Sub 1’s out-
side basis) was $100x. This $80x dispar-
ity between Sub 1’s share of Partnership
A’s inside basis and Sub 1’s outside basis
in Partnership A prior to Date 1 resulted
from Sub 1 and Sub 2 making contribu-
tions to Partnership A, and Partnership A
making distributions to Sub 1 and Sub 2,
of property with specific Federal income
tax attributes, and the allocation of Fed-
eral income tax items in accordance with
§ 704(b) and (c). Such contributions, dis-
tributions, and allocations were under-
taken with a view to creating a disparity
between Sub 1’s share of Partnership A’s
inside basis and Sub 1’s outside basis in
Partnership A.
On Date 1, Sub 1 transfers its interest
in Partnership A to Partnership B in a con-
tribution that qualifies for nonrecognition
of gain or loss under § 721(a) (Sub 1 Con-
tribution). The stated business purpose
for the Sub 1 Contribution is to achieve
cost savings for C and the C Subsidiaries
by cleaning up intercompany accounts,
reducing administrative complexity, and
achieving other administrative efficien-
cies.
Immediately after the Sub 1 Contribu-
tion, Partnership B’s outside basis in its
interest in Partnership A is $100x under
§ 723 while its share of Partnership A’s
inside basis is $20x (without regard to
§ 743(b)). Under § 743(b), Partnership A
increases the adjusted basis of its property
by $80x (the excess of Partnership B’s
$100x outside basis over its $20x propor-
tionate share of inside basis) with respect
to Partnership B only.
2
Partnership A allo-
cates substantially all of this $80x basis
increase to its depreciable or amortizable
property (Basis-Adjusted Property) under
§ 755 and § 1.755-1(b)(5). The Sub 1
Contribution on Date 1 was undertaken
with a view to exploiting the disparity
between Sub 1’s share of Partnership A’s
inside basis and Sub 1’s outside basis in
Partnership A created before Date 1 and
increasing Partnership B’s share of Part-
nership A’s inside basis in the depreciable
or amortizable property.
The cost savings resulting from the
Sub 1 Contribution are insubstantial in
relation to the reduction in the aggregate
Federal income tax liability of the C Sub-
sidiaries resulting from the $80x increase
in Partnership A’s basis in the Basis-Ad-
justed Property, which results in Partner-
ship B being allocated increased amounts
of deductions for depreciation or amor-
tization or reduced amounts of gain (or
increased amounts of loss) upon the sale
of the Basis-Adjusted Property. C reports
the relatively small cost savings in the
C Financial Statements.
Situation 2. C indirectly owns more
than 50 percent of the stock of Sub 1 and
Sub 2, both domestic corporations. Sub 1
and Sub 2 are the only partners in Part-
nership C with each having a 50 percent
interest in the capital, profits, and losses
of Partnership C. Partnership C owns 100
percent of the stock of Sub 3, a domes-
tic corporation, a depreciable asset, and
$100x of money deposited in a bank
account.
Prior to Date 2, Partnership had a valid
election in place under § 754. Also prior
to Date 2, Partnership C held the Sub 3
stock with an adjusted basis of $90x and
fair market value of $100x and held the
depreciable asset with an adjusted basis of
$10x and fair market value of $100x. Also,
Sub 1’s outside basis in Partnership C was
$100x and Sub 2’s outside basis in Partner-
ship C was $10x as a result of Sub 1 and
Sub 2 making contributions to Partnership
C, and Partnership C making distributions
to Sub 1 and Sub 2, of property with spe-
cific Federal income tax attributes, and the
allocation of Federal income tax items in
1
Unless otherwise specified, all “Section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR part 1).
2
This section shows a mechanical application of the rules of subchapter K of chapter 1 of the Code (subchapter K). The tax effect will be disregarded if the economic substance doctrine
applies. Later sections of this revenue ruling address whether the economic substance doctrine applies.

Bulletin No. 2024–28 19 July 8, 2024
accordance with § 704(b) and (c). Such
contributions, distributions, and alloca-
tions were undertaken with a view to cre-
ating a disparity between Sub 2’s outside
basis and Partnership C’s inside basis in
the Sub 3 stock.
On Date 2, Partnership C distributes
all of the Sub 3 stock to Sub 2 other than
in liquidation of Sub 2’s interest in Part-
nership C (Sub 3 Stock Distribution).
The stated business purpose for the Sub 3
Stock Distribution is to achieve cost sav-
ings for C and the C Subsidiaries by clean-
ing up intercompany accounts, reducing
administrative complexity, and achieving
other administrative efficiencies.
Immediately after the Sub 3 Stock
Distribution, Sub 2’s adjusted basis in
the Sub 3 stock is $10x under § 732(a)
(2), the same as Sub 2’s outside basis in
Partnership C prior to the Sub 3 Stock
Distribution. In addition, the Sub 3 Stock
Distribution reduces Sub 2’s outside basis
in Partnership C from $10x to zero under
§ 733(2). Following the Sub 3 Stock Dis-
tribution, Partnership C increases the
inside basis of its assets by $80x under
§ 734(b)(1)(B). Under § 755 and § 1.755-
1(c)(2)(i), Partnership C increases the
adjusted basis of its remaining depreciable
asset from $10x to $90x.
3
The Sub 3 stock
Distribution on Date 2 was undertaken
with a view to exploiting the disparity
between Sub 2’s outside basis in Partner-
ship C and Partnership C’s inside basis in
the Sub 3 stock created before Date 2 and
transferring basis from nondepreciable
Sub 3 stock to Partnership C’s remaining
depreciable asset.
The cost savings resulting from the
Sub 3 Stock Distribution are insubstantial
in relation to the reduction in the aggre-
gate Federal income tax liability of the
C Subsidiaries resulting from the $80x
increase in Partnership C’s inside basis
in the remaining depreciable asset, which
results in Sub 1 and Sub 2 being allo-
cated increased amounts of deductions for
depreciation or reduced amounts of gain
(or increased amounts of loss) upon the
sale of Partnership C’s remaining depre-
ciable asset. C reports the relatively small
cost savings in the C Financial Statements.
Situation 3. C indirectly owns more
than 50 percent of the stock of Sub 1 and
Sub 2, both domestic corporations. Sub 1
and Sub 2 are the only partners in Part-
nership D with each having a 50 percent
interest in the capital, profits, and losses
of Partnership D.
Prior to Date 3, Partnership D owned
two assets: a depreciable asset with an
adjusted basis of $20x and a fair mar-
ket value of $100x and nondepreciable
land with an adjusted basis of $90x and
fair market value of $100x. Also prior
to Date 3, Sub 1’s outside basis in Part-
nership D was $100x, and Sub 2’s out-
side basis in Partnership D was $20x as
a result of Sub 1 and Sub 2 making con-
tributions to Partnership D, and Partner-
ship D making distributions to Sub 1 and
Sub 2, of property with specific Federal
income tax attributes, and the allocation
of Federal income tax items in accordance
with § 704(b) and (c). Such contributions,
distributions, and allocations were under-
taken with a view to creating a disparity
between Partnership D’s inside basis in
the depreciable asset and Sub 1’s outside
basis in Partnership D.
On Date 3, Partnership D liquidates by
distributing the depreciable asset to Sub
1 and the nondepreciable land to Sub 2
(Partnership D Liquidation). The stated
business purpose for the Partnership D
Liquidation is to achieve cost savings for
C and the C Subsidiaries by cleaning up
intercompany accounts, reducing admin-
istrative complexity, and achieving other
administrative efficiencies.
Immediately after the Partnership D
Liquidation, Sub 1’s adjusted basis in the
depreciable asset is $100x under § 732(b),
the same as Sub 1’s outside basis in Part-
nership D prior to the Partnership D Liq-
uidation, reflecting an increase of $80x
to the adjusted basis of the depreciable
asset in the hands of Sub 1. Also immedi-
ately after the Partnership D Liquidation,
Sub 2’s adjusted basis in the nondepre-
ciable land is $20x under § 732(b), the
same as Sub 2’s outside basis in Partner-
ship D prior to the Partnership D Liquida-
tion, reflecting a decrease of $70x to the
adjusted basis of the nondepreciable land
in the hands of Sub 2. The distribution of
the depreciable asset to Sub 1 as part of
the Partnership D Liquidation on Date 3
was undertaken with a view to exploit-
ing the disparity between Partnership D’s
inside basis in the depreciable asset and
Sub 1’s outside basis in Partnership D cre-
ated before Date 3 and transferring basis
from nondepreciable land distributed to
Sub 2 to the depreciable asset distributed
to Sub 1.
The cost savings resulting from the
Partnership D Liquidation are insub-
stantial in relation to the reduction in the
aggregate Federal income tax liability
of the C Subsidiaries resulting from the
$80x increase in Sub 1’s adjusted basis
in the depreciable asset, which results in
increased deductions for depreciation or
reduced amounts of gain (or increased
amounts of loss) upon the sale of the
depreciable asset for Sub 1. C reports
the relatively small cost savings in the
C Financial Statements.
L AW
Section 267(a) generally disallows
deductions in respect of any loss from the
sale or exchange of property, directly or
indirectly, between persons specified in
any of the paragraphs of § 267(b), other
than any loss of a distributing corporation
(or the distributee) in the case of a distri-
bution in complete liquidation. Section
267(b)(3) provides that two corporations
that are members of the same controlled
group (as defined in § 267(f)) have a rela-
tionship referred to in § 267(a). Section
267(f)(1) provides that a controlled group
has the meaning given by § 1563(a),
except that “more than 50 percent” is sub-
stituted for “at least 80 percent” each place
it appears in § 1563(a), and the determina-
tion is made without regard to § 1563(a)
(4) and (e)(3)(C). In addition, § 267(b)
(10) provides that a corporation and a part-
nership owned by the same persons have
a relationship referred to in § 267(a) if the
same persons own more than 50 percent of
both the value of the outstanding stock of
the corporation and the capital interest, or
the profits interest, in the partnership.
3
The distribution of Sub 3 stock (controlled corporation) to Sub 2 (corporate partner) meets the requirements of § 732(f) because Partnership C’s adjusted basis in the Sub 3 stock prior to
the Sub 3 Stock Distribution exceeds the adjusted basis of the stock in the hands of the corporate partner (Sub 2). Under § 732(f), the aggregate adjusted bases of Sub 3’s property must be
reduced by $80x, subject to the limitations in § 732(f)(3). Additionally, this revenue ruling does not address the application of § 751(b) to the facts of Situations 2 and 3.

July 8, 2024 20 Bulletin No. 2024–28
Section 707(b)(1)(A) disallows
any deduction for losses from sales or
exchanges of property (other than an
interest in the partnership) directly or indi-
rectly, between a partnership and a partner
owning, directly or indirectly, more than
50 percent of the capital interest, or the
profits interest, in such partnership. Sec-
tion 707(b)(1)(B) disallows any deduc-
tion for losses from sales or exchanges of
property (other than an interest in the part-
nership) directly or indirectly, between
two partnerships in which the same per-
sons own, directly or indirectly, more than
50 percent of the capital interests or profits
interests.
Section 721(a) provides that no gain
or loss is recognized to a partnership or
to any of its partners on the contribution
of property to the partnership in exchange
for an interest in the partnership. Section
723 provides that the basis of property
contributed to a partnership by a partner is
the adjusted basis of such property to the
contributing partner at the time of the con-
tribution increased by the amount of gain
(if any) recognized under § 721(b) to the
contributing partner at such time.
Section 731(b) provides that no gain
or loss is recognized to a partnership on
the distribution to a partner of property,
including money. Section 732(a)(1) gen-
erally provides that the basis of property
(other than money) distributed by a part-
nership to a partner other than in liquida-
tion of the partner’s interest is its adjusted
basis to the partnership immediately
before the distribution. However, § 732(a)
(2) limits the basis to the distributee part-
ner to the adjusted basis of that partner’s
interest in the partnership reduced by any
money distributed in the same transaction.
Section 732(b) provides that the basis of
property (other than money) distributed
by a partnership to a partner in liquida-
tion of the partner’s interest equals the
adjusted basis of the partner’s interest in
the partnership reduced by any money dis-
tributed in the same transaction. Section
732(c) provides rules for the allocation of
basis among properties received in a dis-
tribution to which § 732(a)(2) or § 732(b)
applies.
Section 733 provides that the adjusted
basis of a distributee partner’s interest in
a partnership following a non-liquidat-
ing distribution is reduced (but not below
zero) by (1) the amount of any money dis-
tributed to the partner, and (2) the adjusted
basis of distributed property (other than
money), as determined under § 732.
Section 734(a) provides that the basis
of partnership property is not adjusted as
the result of a distribution of property to
a partner unless an election provided in
§ 754 is in effect or there is a substantial
basis reduction (as defined in § 734(d))
with respect to such distribution. Section
734(b) provides that a partnership, with
respect to which an election provided in
§ 754 is in effect or with respect to which
there is a substantial basis reduction,
increases or decreases the adjusted basis of
partnership property to take into account
the gain or loss recognized by a distributee
partner under § 731(a) or changes in the
basis of distributed property under § 732.
Under § 734(b)(1)(B), in the case of dis-
tributed property to which § 732(a)(2)
applies, the amount of increase includes
the excess of the adjusted basis of the
distributed property immediately before
the distribution over the basis of the dis-
tributed property to the distributee. If
§ 734(b) is applicable, § 734(c) provides
that the allocation of basis among part-
nership properties is made in accordance
with the rules provided in § 755. Section
734(d) provides that there is a substantial
basis reduction with respect to a distribu-
tion if, had an election provided in § 754
been in effect, there would be a negative
net basis adjustment to partnership prop-
erty of more than $250,000.
Section 743(a) provides that the basis
of partnership property is not adjusted as
the result of a transfer of an interest in a
partnership by sale or exchange or on
the death of a partner unless an election
provided in § 754 is in effect or there is
a substantial built-in loss (as defined in
§ 743(d)) immediately after such transfer.
Section 743(b) provides that, in the case
of a transfer of an interest in a partnership
by sale or exchange or upon the death of
a partner, a partnership with respect to
which an election provided in § 754 is in
effect or a partnership that has a substan-
tial built-in loss immediately after such
transfer, increases the adjusted basis of the
partnership property by the excess of the
basis to the transferee partner of the trans-
feree partner’s interest in the partnership
over such partner’s proportionate share
of the adjusted basis of the partnership
property, or decreases the adjusted basis
of the partnership property by the excess
of the transferee partner’s proportionate
share of the adjusted basis of the partner-
ship property over the basis of such part-
ner’s interest in the partnership. Section
743(b) further provides that, under regu-
lations prescribed by the Secretary of the
Treasury or her delegate (Secretary), such
increase or decrease constitutes an adjust-
ment to the basis of partnership property
with respect to the transferee partner only.
If § 743(b) is applicable, § 743(c) provides
that the allocation of basis among partner-
ship properties is made in accordance with
the rules provided in § 755.
Section 754 provides, in part, that if a
partnership files an election, in accordance
with the regulations prescribed by the Sec-
retary, the basis of partnership property is
adjusted, in the case of a distribution of
property, in the manner provided in § 734,
and, in the case of a transfer of a part-
nership interest, in the manner provided
in § 743. A § 754 election applies with
respect to all distributions of property by
the partnership and to all transfers of inter-
ests in the partnership during the taxable
year with respect to which the election
was filed and all subsequent taxable years.
Section 755(a) provides that a basis
adjustment under § 734(b) or § 743(b)
is allocated among partnership proper-
ties in a manner that reduces the differ-
ence between the fair market values and
adjusted bases of those properties or in
any other manner permitted by the regu-
lations prescribed by the Secretary. Sec-
tion 755(b) provides that in applying the
allocation rules of § 755(a), increases or
decreases in the adjusted basis of partner-
ship property arising from a distribution
of, or a transfer of an interest attributable
to, capital assets and property described
in § 1231(b), or any other property of the
partnership, are allocated to partnership
property of like character. The allocation
of basis adjustments under §§ 743(b) and
734(b) among partnership property is pro-
vided in § 1.755-1(b) and (c), respectively.
Section 7701(o)(1) provides that, in
the case of any transaction to which the
economic substance doctrine is relevant,
the transaction is treated as having eco-
nomic substance only if (i) the transaction
changes in a meaningful way (apart from

Bulletin No. 2024–28 21 July 8, 2024
Federal income tax effects) the taxpayer’s
economic position, and (ii) the taxpayer has
a substantial purpose (apart from Federal
income tax effects) for entering into such
transaction. For this purpose, achieving a
financial accounting benefit is not taken
into account as a purpose for entering into
a transaction if the origin of such financial
accounting benefit is a reduction of Federal
income tax. Section 7701(o)(4).
Section 7701(o)(5)(A) provides that
the “economic substance doctrine” means
the common law doctrine under which tax
benefits under subtitle A of the Code with
respect to a transaction are not allowable
if the transaction does not have economic
substance or lacks a business purpose.
Section 7701(o)(5)(C) provides that
the determination of whether the eco-
nomic substance doctrine is relevant to a
transaction is made in the same manner as
if § 7701(o) had never been enacted.
Section 7701(o)(5)(D) provides that
the term “transaction” includes a series of
transactions.
Section 7701(o)(2)(A) provides that if
a taxpayer relies on profit potential to help
prove that a transaction has economic sub-
stance, profit potential will only be taken
into account if the present value of the
reasonably-expected pretax profit of that
transaction is substantial in relation to
the present value of the expected net tax
benefits of the transaction that would be
allowed if the Federal income tax effects
of the transaction were not disregarded.
Section 6662(b)(6) provides that a 20
percent penalty applies to an underpay-
ment attributable to a transaction lacking
economic substance under § 7701(o) or
failing to meet the requirements of any
similar rule of law. Under § 6662(i), the
penalty is increased to 40 percent on any
portion of an underpayment that is attrib-
utable to one or more nondisclosed non-
economic substance transactions. Under
§ 6664(c)(2), there is no reasonable cause
exception to the penalties described in
§ 6662(b)(6) or (i).
ANALYSIS
The basis adjustment rules under
§§ 732(b), 734(b), and 743(b) are intended
to reduce disparities between inside and
outside basis that would otherwise result
from a distribution of property or transfer
of a partnership interest. In each of Situ-
ations 1-3, however, the parties engaged
in a concerted effort to create disparities
between inside and outside basis through
various methods, such as the contribu-
tion or distribution of property with spe-
cific Federal income tax attributes or the
allocation of Federal income tax items in
accordance with § 704(b) and (c). They
then exploited the created disparities by
engaging in transfers resulting in basis
adjustments under the mechanical rules
of § 732(b), 734(b), or 743(b) to inappro-
priately reduce taxable income through
increased deductions or reduced gain (or
increased loss).
In Situation 1, the actions of the par-
ties creating a disparity between Sub 1’s
outside basis and share of Partnership A’s
inside basis, the transfer of Sub 1’s inter-
est in Partnership A to Partnership B in
the Sub 1 Contribution, and the resulting
positive basis adjustment to Partnership
B’s share of inside basis of Partnership A’s
property under § 743(b) were undertaken
with a view to increasing Partnership B’s
share of Partnership A’s inside basis in
depreciable or amortizable property by
$80x while avoiding recognition of gain
or loss under § 721(a) through a nonrec-
ognition transaction. Additionally, the
$80x basis increase was relatively large in
amount compared to the cost savings to C
and the C Subsidiaries.
In Situation 2, the actions of the par-
ties creating a disparity between Sub 2’s
outside basis and Partnership C’s inside
basis in the Sub 3 stock, the distribution
of Sub 3 stock (a high-inside basis asset)
to Sub 2 (a partner with a low outside
basis in its partnership interest) and the
resulting adjustment to the inside basis of
Partnership C’s remaining property were
undertaken with a view to transferring
$80x of basis from nondepreciable Sub 3
stock to Partnership C’s remaining depre-
ciable asset while avoiding recognition of
gain or loss under § 731 through a non-
recognition distribution. Additionally, the
$80x basis increase was relatively large in
amount compared to the cost savings.
In Situation 3, the actions of the par-
ties creating a disparity between Sub 1’s
outside basis and Partnership D’s adjusted
basis in the depreciable asset, the liq-
uidating distribution of the depreciable
asset (a low-inside basis asset) to Sub 1
(a partner with a high outside basis in its
partnership interest) in the Partnership D
Liquidation and the resulting adjustment
to the adjusted basis of the depreciable
asset to Sub 1 under § 732(b) were under-
taken with a view to transferring basis
from nondepreciable land distributed to
Sub 2 to the depreciable asset distributed
to Sub 1 while avoiding recognition of
gain or loss under § 731 through a non-
recognition distribution. Additionally, the
$80x basis increase was relatively large in
amount compared to the cost savings to C
and the C Subsidiaries.
Situations 1-3 all involve persons
related to each other under § 267(b) or
§ 707(b)(1). A transaction among related
parties to avoid Federal income tax by
generating inflated basis adjustments
falls outside the plain intent of §§ 732(b),
734(b), 743(b), and 754. While the differ-
ing economic interests of unrelated parties
generally make it less likely that unrelated
partners will engage in transactions such
as those in Situations 1-3, partnerships
composed of related partners have no such
disincentive.
4

Congress intended that the provisions
of subchapter K apply to transactions
between partnerships and their partners to
preserve parity between inside and outside
basis “so as to prevent any unintended tax
benefit or detriment to the partners.” H.R.
Rep. No. 1337, 83d Cong., 2d Sess. A225
(1954); S. Rep. No. 1622, 83d Cong., 2d
Sess. 384 (1954). Congress also expressed
its desire to prevent related parties from
exploiting the rules of subchapter K to
avoid tax “through the realization of fic-
titious losses or increasing the basis of
property for purposes of depreciation.”
H.R. Rep. No. 1337, at A226; S. Rep. No.
1622, at 386-87.
Congress did not intend that taxpay-
ers be able to avoid or indefinitely defer
taxation altogether by creating basis dis-
parities through contributions or distribu-
tions of property or through allocations
4
This revenue ruling does not address the application of § 7701(o) to transactions among unrelated partners. Depending on the specific facts, § 7701(o) may apply to transactions among
unrelated partners.

July 8, 2024 22 Bulletin No. 2024–28
of tax items by reason of a § 743(b) basis
adjustment after a nonrecognition trans-
action, such as the Sub 1 Contribution in
Situation 1; by reason of a § 734(b) basis
adjustment after distribution of property,
such as the Sub 3 Stock Distribution in
Situation 2; or by reason of a § 732(b)
basis adjustment after a liquidating distri-
bution of property, such as the Partnership
D Liquidation in Situation 3. The shared
economic interests of related parties make
them more likely than unrelated parties
to attempt to generate such tax benefits
in a manner not intended by Congress by
entering into transactions with no mean-
ingful economic change.
Unless a “meaning plainly appears”
that Congress intended a provision to
grant a tax benefit to transactions without
economic substance or business purpose,
such an intent “will not [be] attribute[d] to
Congress.” Knetsch v. United States, 364
U.S. 361, 367-69 (1960). The economic
substance doctrine is intended to apply
“despite literal compliance with the stat-
ute.” Coltec Indus., Inc. v. United States,
454 F.3d 1340, 1354 (Fed. Cir. 2006); see
Gregory v. Helvering, 293 U.S. 465, 470
(1935). The economic substance doctrine
was developed to address transactions
such as these, which follow the literal
words of the Code but lie outside of Con-
gress’s plain intent. Gregory, 293 U.S. at
469-70.
Each series of transactions described in
Situations 1-3 lacks economic substance.
In each of those situations, the economic
substance doctrine is applied to basis
adjustments generated by the following
series of connected transactions involv-
ing related parties, which may occur over
the course of several taxable years: (i) the
parties generate basis disparities through
various methods, such as contributions of
property with specific Federal income tax
attributes to the partnership, the allocation
of Federal income tax items in accordance
with § 704(b) and (c), or distributions
of property with specific attributes to
the partners, and (ii) either (1) a partner
transfers its partnership interest in a non-
recognition transaction while there exists
an inside/outside basis disparity, or (2)
the partnership distributes property with
specific Federal income tax attributes (for
example, high inside basis) to one or more
partners with specific Federal income tax
attributes (for example, low outside basis)
in a current or liquidating distribution. The
resulting basis adjustments, if allowed,
would permit the parties to shift basis in
a manner that enables the parties to claim
increased cost recovery deductions or
reduced gain (or increased loss) upon the
sale of the basis-adjusted property.
In applying the conjunctive test of
§ 7701(o)(1), each of two prongs must be
met for the transactions described in Sit-
uations 1-3 to have economic substance.
First, under § 7701(o)(1)(A), the trans-
action must change in a meaningful way
(apart from Federal income tax effects)
the taxpayer’s economic position. Second,
under § 7701(o)(1)(B), the taxpayer must
have had a substantial purpose (apart from
Federal income tax effects) for entering
into the transaction.
With respect to the first prong under
§ 7701(o)(1)(A), the transactions in Situ-
ations 1-3 have a negligible effect on C’s
economic position because the transac-
tions shift ownership of property among
commonly controlled entities without
“effect[ing] any real change in the ‘flow
of economic benefits,’ or provid[ing] any
real ‘opportunity to make a profit’ . . . .”
Coltec, 454 F.3d at 1360; see Reddam v.
Commissioner, 755 F.3d 1051, 1060-62
(9th Cir. 2014). The transactions fail to
“appreciably affect the [taxpayer’s] ben-
eficial interest except to reduce . . . tax”;
that is, the transactions do not apprecia-
bly affect C’s beneficial interests in the
C Subsidiaries or their assets, except to
reduce the aggregate Federal income tax
liability of the related persons involved.
Knetsch, 364 U.S. at 366 (quoting Gilbert
v. Commissioner, 248 F.2d 399, 411 (2d
Cir. 1957) (Learned Hand, J., dissenting))
(emphasis added). The only potential eco-
nomic gains are derived from purported
cost savings from cleaning up intercom-
pany accounts between the C Subsidiar-
ies, reducing administrative complexity,
and achieving administrative efficiencies.
However, any such cost savings do not
change C and the C Subsidiaries’ economic
position in a meaningful way because any
economic benefits attributable to pur-
ported cost savings (apart from the Fed-
eral income tax effects) are insubstantial
compared to the $80x in Federal income
tax benefits from the basis adjustments
attributable to these transactions. The
basis increases of $80x resulting from the
transactions in Situations 1-3 can be used
to reduce taxable income of the C Subsid-
iaries through depreciation, amortization,
or other deductions or reduce gain recog-
nized upon the sale of the property. The
transactions were “designed to generate”
basis increases, and those basis increases
“would always . . . have overshadowed”
the economic gain, including gain derived
from cost savings. Reddam, 755 F.3d at
1061-62. Even if there had been “some
prospect of profit” from transferring a
partnership interest or partnership prop-
erty among related parties, the calculable
Federal income tax benefits would have
“far exceeded any independent potential
for economic return.” Bank of New York
Mellon Corp. v. Commissioner, 801 F.3d
104, 117-18, 120 (2d Cir. 2015); Salem
Fin., Inc. v. United States, 786 F.3d 932,
949 (Fed. Cir. 2015) (citing Knetsch, 364
U.S. at 365-66). Thus, any change in eco-
nomic position (apart from the Federal
income tax effects) in the transactions
described in Situations 1-3 is not mean-
ingful within the meaning of § 7701(o)(1)
(A).
With respect to the second prong of the
conjunctive test under § 7701(o)(1)(B),
the transactions described in Situations
1-3 demonstrate a lack of any substantial
purpose (apart from Federal income tax
effects) to enter into these transactions.
The stated business purpose of achieving
cost savings from cleaning up intercom-
pany accounts between the C Subsidiar-
ies, reducing administrative complexity,
and achieving administrative efficiencies
may be a legitimate nontax economic pur-
pose. However, any such business purpose
is not substantial compared to the Federal
income tax purposes the transactions were
designed to carry out. See Reddam, 755
F.3d at 1061. Many of the facts in these
transactions demonstrating a lack of mean-
ingful change in economic position (apart
from Federal income tax effects) also
demonstrate a lack of substantial purpose
(apart from Federal income tax effects)
for these related parties to enter into these
transactions. Reasonable inferences into
a taxpayer’s purpose for entering a trans-
action can be drawn from the facts and
circumstances surrounding such transac-
tion, including results from a transaction
that the taxpayer could have reasonably

Bulletin No. 2024–28 23 July 8, 2024
anticipated as well as results from a trans-
action that were by design. The fact that
the cost savings were insubstantial com-
pared to relatively large basis increases of
$80x, that there was no appreciable effect
on the parties’ economic ownership of
the property allocated the basis increases,
and that the transactions were structured
to guarantee basis increases of $80x to
depreciable or amortizable property while
carrying a de minimis risk of economic
loss compared to the designed Federal
income tax benefit, Altria Grp., 658 F.3d
at 290-91, “indicate[] that the taxpayer’s
true motivation for the transaction is tax
avoidance.” See Bank of New York Mel-
lon Corp. v. United States, 140 T.C. 15, 38
(2013). Therefore, C lacked a substantial
purpose (apart from Federal income tax
effects) for causing its subsidiaries to enter
into the transactions described in Situa-
tions 1-3 within the meaning of § 7701(o)
(1)(B).
If a transaction or series of transactions
lacks economic substance, it may be dis-
regarded for Federal income tax purposes.
See Gregory, 293 U.S. 465; Coltec, 454
F.3d at 1352; ACM P’ship v. Commis-
sioner, 157 F.3d 231, 247-48 (3d Cir.
1998). While a transaction might meet the
literal requirements of the Code, courts
will not recognize a transaction that is not
within the intent of the Code. Gregory, 293
U.S. at 469-70. The series of transactions
described in Situations 1-3—related-party
contributions or distributions of property
or allocations of tax items and the subse-
quent transfer of a partnership interest or
distribution of property to generate a basis
adjustment to property that is eligible for
cost recovery (or is held for future sale)—
failed both prongs under § 7701(o)(1) and,
therefore, lack economic substance. As a
result, their Federal income tax effects
must be disregarded. The transactions did
not change in a meaningful way (apart
from Federal income tax effects) the eco-
nomic position of C or the C Subsidiaries
within the meaning of § 7701(o)(1)(A),
and C lacked a substantial business or
other purpose (apart from Federal income
tax effects) for causing the C Subsidiaries
to enter into these transactions within the
meaning of § 7701(o)(1)(B).
In addition, under § 6662(b)(6), the
transactions described in Situations 1-3
give rise to a 20 percent penalty applica-
ble to an underpayment attributable to a
transaction lacking economic substance
under § 7701(o). The penalty is increased
to 40 percent on any portion of the under-
payment attributable to one or more non-
disclosed noneconomic substance transac-
tions. See § 6662(i). Under § 6664(c)(2),
a reasonable cause exception to the penal-
ties described in § 6662(b)(6) and (i) may
not be asserted.
The series of transactions described
in Situations 1-3 may also be subject
to the partnership anti-abuse rule under
§ 1.701-2 or the § 704(c) anti-abuse rule
under § 1.704-3(a)(10). Other anti-abuse
doctrines including, but not limited to,
the substance-over-form doctrine and
step-transaction doctrine may apply,
depending on the facts and circumstances
of a specific transaction or series of trans-
actions.
HOLDING(S)
5
(1) The series of transactions in Situa-
tions 1-3 lack economic substance under
§ 7701(o). The transactions did not change
the economic position of C or the C Sub-
sidiaries in a meaningful way (aside from
the Federal income tax effects). Addi-
tionally, neither C nor the C Subsidiaries
had a substantial purpose for entering the
transactions (aside from Federal income
tax effects).
(2) In Situation 1, the basis adjustment
under § 743(b) is disregarded. As a result,
Partnership B is not entitled to an increase
of $80x in its share of the inside basis of
Partnership A’s assets, and Partnership B’s
share of the inside basis of Partnership A’s
assets remains $20x.
(3) In Situation 2, the basis adjustment
under § 734(b) is disregarded. As a result,
Partnership C is not entitled to an increase
of $80x to the inside basis of the remain-
ing depreciable asset, and the inside basis
of the depreciable asset remains $10x.
(4) In Situation 3, the basis adjustment
to Sub 1 under § 732(b) is disregarded. As
a result, Sub 1 is not entitled to an increase
of $80x to the adjusted basis of the depre-
ciable asset, and the adjusted basis of Sub
1’s depreciable asset remains $20x.
(5) C and/or the C Subsidiaries, as
applicable, are subject to the 20 percent
penalty under § 6662(b)(6) or the 40 per-
cent penalty under § 6662(i) for a nondis-
closed noneconomic substance transac-
tion, as applicable.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Anthony P. Sacco of the Office
of Associate Chief Counsel (Passthroughs
and Special Industries). For further infor-
mation regarding this revenue ruling, con-
tact Anthony P. Sacco at (202) 317-5805.
5
This revenue ruling makes no interpretations regarding which audit procedures (for example, the application of subchapter C of chapter 63 of the Code) might apply to effectuate the sub-
stantive interpretations of the Holdings section. Any such interpretations would require facts that are outside the scope of this revenue ruling.

July 8, 2024 24 Bulletin No. 2024–28
Part III
Forthcoming Guidance
Regarding Certain
Partnership Related-Party
Transactions
Notice 2024-54
SECTION 1. PURPOSE
.01 This notice announces that the
Department of the Treasury (Treasury
Department) and the Internal Revenue
Service (IRS) intend to publish two sets
of forthcoming proposed regulations that
would address certain basis-shifting trans-
actions involving partnerships and related
parties. These transactions, referred to as
“covered transactions” in this notice, (1)
involve partners in a partnership and their
related parties, (2) result in increases to the
basis of property under § 732, § 734(b),
or § 743(b) of the Internal Revenue Code
(Code),
1
and (3) generate increased cost
recovery allowances or reduced gain (or
increased loss) upon the sale or other dis-
position of the basis-adjusted property.
First, the Treasury Department and the
IRS intend to propose regulations under
§§ 732, 734(b), 743(b) and 755 (forth-
coming Proposed Related-Party Basis
Adjustment Regulations) that would (1)
provide the required method of recovering
adjustments to the bases of property held
by a partnership, property distributed by a
partnership, or both, arising from the cov-
ered transactions described in section 3 of
this notice, (2) provide rules governing the
determination of gain or loss on the dispo-
sition of such basis-adjusted property, and
(3) include similar transactions involving
tax-indifferent parties (for example, cer-
tain foreign persons, a tax-exempt organi-
zation, or a party with tax attributes that
make it tax-indifferent) rather than related
parties.
Second, the Treasury Department and
the IRS intend to propose regulations
under § 1502 (forthcoming Proposed Con-
solidated Return Regulations) to clearly
reflect the taxable income and tax liabil-
ity of a consolidated group (as defined
in § 1.1502-1(h)) whose members own
interests in a partnership. More specifi-
cally, the Treasury Department and the
IRS anticipate that the forthcoming Pro-
posed Consolidated Return Regulations
would provide for single-entity treatment
of members that are partners in a partner-
ship, so that covered transactions cannot
shift basis among group members and dis-
tort group income.

.02 Section 2 of this notice provides a
summary of relevant law. Section 3 of this
notice provides an overview of the need
for the forthcoming proposed regulations
2

and a description of the covered trans-
actions. Sections 4 and 5 of this notice
describe the forthcoming Proposed Relat-
ed-Party Basis Adjustment Regulations
and the forthcoming Proposed Consoli-
dated Return Regulations, respectively.
Section 6 of this notice describes the pro-
posed applicability dates of the forthcom-
ing proposed regulations. Section 7 of this
notice contains a request for comments.
SECTION 2. BACKGROUND
.01 Basis adjustments under subchap-
ter K
(1) In general. Under subchapter K of
chapter 1 of the Code (subchapter K), a
distribution by a partnership of the part-
nership’s property (partnership property)
or a transfer of an interest in a partner-
ship (partnership interest) may result in an
adjustment to the basis of the distributed
property, partnership property, or both.
A distribution of partnership property
may result in an adjustment to the basis
of the distributed property under § 732(a),
(b), or (d). In the case of a distribution
of partnership property to a partner by a
partnership with an election under § 754
(§ 754 election) in effect, or with respect
to which there is a substantial basis reduc-
tion as described in § 734(d), the distri-
bution may also result in an adjustment to
the basis of the partnership’s remaining
partnership property under § 734(b).
If a partnership interest is transferred
by sale or exchange or on the death of a
partner, and the partnership either has a
§ 754 election in effect or has a substan-
tial built-in loss with respect to the trans-
fer of the partnership interest as described
in § 743(d), the transfer may result in an
adjustment to the basis of partnership
property under § 743(b) with respect to
the transferee partner.
Section 754 provides that if a part-
nership makes an election in accordance
with regulations prescribed by the Secre-
tary of the Treasury or her delegate (Sec-
retary), the basis of partnership property
shall be adjusted, in the case of a distribu-
tion of property, in the manner provided
in § 734, and in the case of a transfer
of a partnership interest, in the manner
provided in § 743. Unless the election
is revoked in accordance with the regu-
lations under § 754, the § 754 election
applies with respect to all distributions
of property by the partnership and to all
transfers of interests in the partnership
during the taxable year with respect to
which the election was filed and all sub-
sequent taxable years.
(2) Basis adjustments under § 732.
Section 732 governs a distributee part-
ner’s basis in distributed property other
than money. In the case of a current dis-
tribution, and except as provided under
§ 732(a)(2), § 732(a)(1) provides that the
distributee partner’s basis in distributed
property (other than money) is equal to
the partnership’s adjusted basis in the dis-
tributed property immediately before the
distribution. Under § 732(a)(2), however,
a distributee partner’s basis in distributed
property is limited to the adjusted basis of
the distributee partner’s partnership inter-
est reduced by any money distributed to
such partner in the same transaction.
In the case of a liquidating distribution,
§ 732(b) provides that the distributee part-
ner’s basis in distributed property (other
than money) is equal to the adjusted basis
of the distributee partner’s partnership
interest reduced by any money distributed
to such partner in the same transaction.
1
Unless otherwise noted, all “section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR part 1).
2
References in this notice to the “forthcoming proposed regulations” are references to the forthcoming Proposed Related-Party Basis Adjustment Regulations and the forthcoming Proposed
Consolidated Return Regulations, collectively.

Bulletin No. 2024–28 25 July 8, 2024
In the case of a distribution of more
than one property from a partnership,
the basis of the distributed properties to
which § 732(a)(2) and (b) apply must be
allocated among the distributed properties
under the rules of § 732(c) and the regula-
tions thereunder.
(3) Basis adjustments under § 734.
In the case of a distribution of property
by a partnership with a § 754 election in
effect, and for which either the distrib-
utee partner recognizes gain or loss on
the distribution, or for which the basis
of the distributed property in the dis-
tributee partner’s hands, as determined
under § 732, differs from the partner-
ship’s adjusted basis in the distributed
property immediately before the distribu-
tion, § 734(b) requires the partnership to
increase or decrease (as applicable) the
basis of its remaining partnership prop-
erty. Also, in the case of a distribution
of property by a partnership that results
in a substantial basis reduction under
§ 734(d), the basis of remaining part-
nership property must be adjusted under
§ 734(b), even if the partnership does not
have a § 754 election in effect.
Section 734(b)(1) requires a partner-
ship to increase the basis of its remaining
property if a distribution of property by
the partnership results in the distributee
partner recognizing gain under § 731(a)
(1), or if property (other than money) to
which § 732(a)(2) or (b) applies is dis-
tributed to the distributee partner and the
property’s adjusted basis to the partner-
ship immediately before the distribution is
greater than the distributee partner’s basis
in the distributed property as determined
under § 732. Section 731(a)(1) requires a
distributee partner to recognize gain in a
current or liquidating distribution to the
extent that any money distributed to that
partner in the distribution exceeds the
adjusted basis of that partner’s partnership
interest immediately before the distri-
bution. The amount of the basis increase
to the partnership’s remaining property
under § 734(b)(1) following a distribu-
tion of partnership property to a partner
is equal to the amount of gain recognized
by the distributee partner in the distribu-
tion under § 731(a)(1) and the excess of
the partnership’s adjusted basis in the dis-
tributed property immediately before the
distribution over the distributee partner’s
basis in the distributed property as deter-
mined under § 732.
Section 734(b)(2) requires a partner-
ship to decrease the basis of its remaining
property if a distribution of property by
the partnership results in the distributee
partner recognizing loss under § 731(a)
(2), or if property (other than money) to
which § 732(b) applies is distributed to
the distributee partner in a distribution
and the property’s adjusted basis to the
partnership immediately before the distri-
bution is less than the distributee partner’s
basis in the distributed property as deter-
mined under § 732. Under § 731(a)(2), a
distributee partner may recognize a loss in
a liquidating distribution of that partner’s
interest in the partnership to the extent that
such partner received only money, unreal-
ized receivables described in § 751(c), or
inventory items described in § 751(d) in
the distribution. In such a case, the distrib-
utee partner is required to recognize a loss
to the extent that such partner’s adjusted
basis in the partnership interest exceeds
the sum of any money distributed to that
partner in the distribution and the basis to
the distributee partner (determined under
§ 732) of any unrealized receivables or
inventory received by that partner in the
distribution. The amount of the basis
decrease to the partnership’s remaining
property under § 734(b)(2) following a
distribution of partnership property to
a partner is equal to the amount of loss
recognized by the distributee partner in
the distribution under § 731(a)(2) and
the excess of the distributee partner’s
basis in the distributed property as deter-
mined under § 732 over the partnership’s
adjusted basis in the distributed property
immediately before the distribution.
A partnership without a § 754 election
in effect is subject to a mandatory basis
adjustment under § 734(b)(2) if there is
a substantial basis reduction with respect
to a distribution of partnership prop-
erty. Under § 734(d), a substantial basis
reduction with respect to a distribution of
partnership property occurs if the sum of
the amount of loss recognized to the dis-
tributee partner on the distribution, plus
any increase in basis in the distributed
property to the distributee partner under
§ 732(b), exceeds $250,000.
(4) Basis adjustments under § 743(b).
Generally, if a partnership interest is trans-
ferred in a sale or exchange or on the death
of a partner, the transferee partner’s basis
in the transferred partnership interest is
determined under § 742 and the basis of
partnership property is determined under
§ 743(a). Section 742 provides that the
transferee partner’s basis in a partnership
interest acquired other than by contribu-
tion is determined under part II of sub-
chapter O of chapter 1 of the Code, begin-
ning at § 1011 and following. Thus, for
example, a transferee partner’s basis in a
partnership interest acquired by purchase
generally is cost basis under § 1012.
Section 743(a) provides that, in the
case of a transfer of a partnership interest
by sale or exchange or on the death of a
partner, the basis of partnership property
is not adjusted unless either the partner-
ship has a § 754 election in effect or the
partnership has a substantial built-in loss
with respect to the transfer of the partner-
ship interest.
Under § 743(b), in the case of a trans-
fer of a partnership interest by sale or
exchange or on the death of a partner, a
partnership with a § 754 election in effect
or that has a substantial built-in loss with
respect to the transfer of the partnership
interest must increase or decrease (as
applicable) the adjusted basis of partner-
ship property with respect to the trans-
feree partner.
Section 743(b)(1) provides that the
adjusted basis of partnership property is
increased by the excess of the transferee
partner’s basis in the transferred partner-
ship interest over the transferee partner’s
proportionate share of the adjusted basis
of partnership property.
Section 743(b)(2) provides that the
adjusted basis of partnership property
is decreased by the excess of the trans-
feree partner’s proportionate share of the
adjusted basis of partnership property
over the transferee partner’s basis in the
transferred partnership interest.
A partnership without a § 754 election
is subject to a mandatory basis adjustment
under § 743(b) with respect to a transfer
of a partnership interest if the partnership
has a substantial built-in loss with respect
to the transfer of the partnership interest.
Under § 743(d)(1), a partnership has a
substantial built-in loss with respect to a
transfer of an interest in the partnership if
either the partnership’s adjusted basis in

July 8, 2024 26 Bulletin No. 2024–28
its property exceeds the fair market value
of such property by more than $250,000,
or the transferee partner would be allo-
cated a loss of more than $250,000 if the
partnership assets were sold for cash equal
to their fair market value immediately
after the transfer.
Under regulations prescribed by the
Secretary, a basis adjustment under
§ 743(b) is an adjustment to the basis of
partnership property with respect to the
transferee partner only. The transferee
partner’s proportionate share of the part-
nership’s adjusted basis in its property
generally is determined in accordance
with the transferee partner’s interest in
the partnership’s previously taxed capital
(including the transferee partner’s share of
partnership liabilities) under regulations
prescribed by the Secretary.
(5) Allocation of § 734(b) or § 743(b)
basis adjustments. Section 734(c) states
that a basis adjustment under § 734(b) is
allocated among partnership properties
under the rules of § 755. Section 743(c)
states that a basis adjustment under
§ 743(b) is allocated among partnership
properties under the rules of § 755.
Section 755(a) generally requires basis
adjustments under § 734(b) or § 743(b)
to be allocated in a manner that has the
effect of reducing the difference between
the fair market value and the adjusted
basis of partnership properties or in any
other manner permitted by regulations.
In addition, § 755(b) requires these basis
adjustments to be allocated to partnership
property of a like character or to subse-
quently acquired partnership property of
a like character if such property is not
available or has insufficient basis at the
time of the basis adjustment (because a
decrease in the adjusted basis of the prop-
erty would reduce the basis of such prop-
erty below zero). Section 755(c) provides
a special rule that prohibits allocating a
basis decrease under § 734(b) to the stock
of a corporation that is a partner of the
partnership (or that is related to a partner
of the partnership within the meaning of
§ 267(b) or § 707(b)(1)).
(6) Common terminology for bases
with respect to a partnership interest. A
partner’s adjusted basis in its partnership
interest commonly is referred to as the
partner’s “outside basis” in its partnership
interest. A partnership’s adjusted basis in
its property commonly is referred to as the
“inside basis” of the partnership’s prop-
erty. Each partner has a share of inside
basis. For ease of explanation, this termi-
nology is used in section 3 of this notice.
.02 Affiliated group of corporations
filing a consolidated return. Section 1501
grants an affiliated group of corporations
the privilege of making a consolidated
return, in lieu of separate returns, for Fed-
eral income tax purposes. Section 1502
authorizes the Secretary to prescribe con-
solidated return regulations for an affil-
iated group of corporations that join in
filing (or that are required to join in filing)
a consolidated return (that is, a consoli-
dated group as defined in § 1.1502-1(h))
to clearly reflect the Federal income tax
liability of the consolidated group and
to prevent avoidance of such tax liabil-
ity (§ 1502 regulations). For purposes of
carrying out those objectives, § 1502 also
permits the Secretary to prescribe rules
that may be different from the provisions
of chapter 1 of the Code that would apply
if the corporations composing the consol-
idated group filed separate returns. Terms
used in the § 1502 regulations generally
are defined in § 1.1502-1.
The § 1502 regulations provide rules
to clearly reflect the Federal income tax
liability of both the consolidated group
and each of its members. Therefore, these
regulations reflect a mix of single- and
separate-entity treatment. For exam-
ple, the intercompany-transaction rules
in § 1.1502-13(c) generally respect the
existence of intercompany transactions
between the separate members but recom-
pute and redetermine the members’ tax
items from the transaction to produce the
same effect on the group as if the trans-
acting members were divisions of a single
corporation.
.03 Basis-adjustment reporting for
consolidated groups
Form 1120, U.S. Corporation Income
Tax Return, includes a new question on
Schedule K, Question 31, applicable to
certain large, consolidated groups for any
taxable year ending on or after December
31, 2023. This question asks consolidated
groups with gross receipts or sales of $1
billion or more to report certain subchap-
ter K basis adjustments, as described in
the Instructions to the 2023 Form 1120
(released for public comment on Decem-
ber 20, 2023). The intent of this question
is for taxpayers to identify certain relat-
ed-party basis adjustment transactions
that were entered into by members of the
consolidated group in consolidated years
ending on or after December 31, 2023.
SECTION 3. COVERED
TRANSACTIONS
.01 Overview of the need for the forth-
coming proposed regulations.
The Treasury Department and the IRS
are aware of related persons using partner-
ships to engage in transactions that inap-
propriately exploit the basis-adjustment
provisions of subchapter K applicable to
distributions of partnership property or
transfers of partnership interests discussed
in section 2 of this notice. This awareness
results from the IRS’s review of various
partnership transactions involving related
parties in which basis adjustments were
created to artificially generate or regen-
erate Federal income tax benefits that
resulted in significant tax savings without
a corresponding economic outlay. These
transactions were carefully structured to
exploit the mechanical basis-adjustment
provisions of subchapter K to produce
significant tax benefits with little or no
economic impact on the related parties,
and in a manner that would not be a likely
arrangement between partners negotiating
at arm’s-length.
Generally, in a covered transaction,
partnership property is distributed to a
partner who is related to one or more other
partners, and that distribution results in a
person related to the distributee partner,
the distributee partner, or both, receiving
all or a share of a basis increase in the dis-
tributed property or remaining partnership
property under § 732 or § 734(b) (as appli-
cable); alternatively, a partnership interest
is transferred between related persons or
to a transferee partner who is related to
an existing partner in the partnership, and
that transfer results in an increase to the
inside basis in partnership property with
respect to the transferee partner under
§ 743(b).
The covered transactions generally are
structured so that, under the applicable
allocation rules (§§ 732(c), 734(c), 743(c),
and 755), the basis increase is allocated to
property that is eligible for cost recovery

Bulletin No. 2024–28 27 July 8, 2024
allowances (or eligible for a shorter cost
recovery period) or that the partnership
or the distributee partner disposes of in a
taxable sale or exchange. Accordingly, the
basis increase results in related partners
decreasing their overall taxable income
through additional or accelerated cost
recovery allowances or decreasing their
taxable gain or increasing their taxable
loss on the subsequent taxable disposi-
tion of the property subject to the basis
increase.
The related partners receive these tax
benefits directly in the case of a distribu-
tion of property in which the basis of the
distributed property is increased in the
distributee partner’s hands under § 732(b)
or § 732(d). They receive these bene-
fits indirectly in the case of a transfer of
a partnership interest in which the inside
basis of partnership property is increased
for the transferee partner under § 743(b)
or in the case of a distribution of property
that results in an increase to the com-
mon basis of partnership property under
§ 734(b). Whether the tax benefits are
received directly or indirectly, the result-
ing decrease in taxable income or gain
(or increase in taxable loss) benefits the
related-party group as a whole. Further,
because the partners are related, the distri-
butions or transfers may have little or no
effect on the overall economic ownership
of the property yet produce significant tax
benefits shared by the related partners.
A related partner’s partnership interest
must have certain characteristics to create
the opportunity for a covered transaction.
In general, these characteristics are (1) a
partner’s outside basis in its partnership
interest that is low compared to the part-
nership’s basis in property it distributes to
such partner, (2) a partner’s outside basis
in its partnership interest that is high com-
pared to such partner’s share of the part-
nership’s basis in the partnership prop-
erty (that is, the partner’s share of inside
basis), or (3) a partner’s outside basis in its
partnership interest that is high compared
to the partnership’s basis in property it
distributes to such partner in liquidation
of the partner’s interest. Partnerships with
related parties can create these character-
istics through orchestrated contributions
and distributions, as well as allocations
under § 704(b) and (c). In most commer-
cial transactions involving unrelated par-
ties, the opportunity for abuse is limited
because each party has separate, and often
competing, economic and tax interests,
and the parties transact at arm’s length.
In contrast, for related parties, basis can
be manipulated to provide a material net
tax benefit to the related parties. Such
basis shifting is contrary to congressional
intent in enacting subchapter K. Congress
intended that the provisions of subchapter
K apply to transactions between partner-
ships and their partners to preserve parity
between inside and outside basis “so as
to prevent any unintended tax benefit or
detriment to the partners.” H.R. Rep. No.
1337, 83d Cong., 2d Sess. A225 (1954);
S. Rep. No. 1622, 83d Cong., 2d Sess. 384
(1954). Congress also expressed its desire
to prevent related parties from exploit-
ing the rules of subchapter K to avoid
tax “through the realization of fictitious
losses or increasing the basis of property
for purposes of depreciation.” H.R. Rep.
No. 1337, at A226; S. Rep. No. 1622, at
386-87.
.02 Covered transactions under
§ 734(b).
In a covered transaction under
§ 734(b), a partnership with a § 754 elec-
tion in effect and two or more partners that
are related to each other makes a current
or liquidating distribution of property to
one or more of the related partners. Imme-
diately before the distribution, the partner-
ship’s basis in the distributed partnership
property exceeds the distributee partner’s
basis in its partnership interest (that is,
the partnership distributes property with
a relatively high inside basis to a distrib-
utee partner with a relatively low out-
side basis). Under § 732(a)(2) or (b), the
low-outside basis partner takes a basis in
the distributed property that is lower than
the inside basis of the property immedi-
ately before the distribution.
As a result of the basis decrease to the
distributed property in the hands of the
distributee partner under § 732(a)(2) or
(b), the partnership increases the basis of
its remaining properties under § 734(b)
by an amount equal to the excess of the
partnership’s basis in the distributed prop-
erty immediately before the distribution
over the basis of the distributed property
in the hands of the distributee partner
immediately after the distribution. Under
§§ 734(c) and 755, the partnership allo-
cates this basis increase among remaining
partnership properties.
.03 Covered transactions under
§ 743(b).
In a covered transaction under
§ 743(b), (1) a partner transfers an inter-
est in a partnership that has a § 754 elec-
tion in effect or a substantial built-in loss
immediately after such transfer (2) to a
related transferee or a transferee that is
related to one or more of the partners (3)
in a nonrecognition transaction within the
meaning of § 7701(a)(45) in which the
gain recognized, if any, and for which tax
imposed by subtitle A of the Code (subtitle
A) is required to be paid, is less than the
aggregate amount of the increase(s) in the
basis of partnership property with respect
to the transferee partner under §§ 743(b)
and 755.
In order for the transfer to give rise to a
basis adjustment under § 743(b), the trans-
feree partner must have an inside-outside
basis disparity with respect to its partner-
ship interest so that the transferee partner’s
outside basis does not equal the transferee
partner’s share of inside basis. Because a
§ 754 election is in effect for the taxable
year of the transfer or the partnership or a
substantial built-in loss immediately after
such transfer, a basis adjustment is made
under § 743(b) or (d) to partnership prop-
erty with respect to the transferee partner
to eliminate the inside-outside basis dis-
parity of the transferee partner. As a result
of the transfer, the partnership allocates
one or more basis increases to partnership
property with respect to the transferee
partner under §§ 743(c) and 755.
.04 Covered transactions under § 732.
In a covered transaction under § 732, a
partner (distributee partner) receives a liq-
uidating distribution of property resulting
in a basis increase in the distributed prop-
erty under § 732(b) and (c), and either—
(1) The partnership liquidates and dis-
tributes the partnership’s remaining part-
nership property to one or more parties
related to the distributee partner (related
distributee partner) resulting in a basis
adjustment that reduces the basis (basis
decrease) of such property to the related
distributee partners under § 732(b) and
(c), or
(2) The partnership continues, and a
related party to the distributee partner is
a continuing partner (related continuing

July 8, 2024 28 Bulletin No. 2024–28
partner) that has a share of the partner-
ship’s basis decrease under § 734(b) or (d)
resulting from the liquidating distribution
or would have had a share of the partner-
ship’s basis decrease under § 734(b) if the
partnership had a § 754 election in effect.
SECTION 4. FORTHCOMING
PROPOSED RELATED-
PARTY BASIS ADJUSTMENT
REGULATIONS
.01. In general. The forthcoming Pro-
posed Related-Party Basis Adjustment
Regulations would provide special rules
that would apply to the cost recovery of
basis adjustments arising from the covered
transactions described in section 3 of this
notice, as well as rules that would govern
whether and how a basis adjustment aris-
ing from a covered transaction would be
taken into account upon the disposition of
such basis-adjusted property. These pro-
posed regulations would be mechanical
rules applicable to all covered transactions
without regard to the taxpayer’s intent and
without regard to whether the transactions
could be abusive or lacking in economic
substance. Additionally, these proposed
regulations would apply only if, and to the
extent that, property has been allocated a
basis increase. If, and to the extent, prop-
erty has been allocated a basis decrease,
the proposed rules would not apply.
.02 Related persons; cost recovery. In
general, for purposes of the forthcoming
Proposed Related-Party Basis Adjustment
Regulations, partners and other persons
would be considered as related if they
have a relationship described in § 267(b)
(without regard to § 267(c)(3)) or § 707(b)
(1) immediately before or immediately
after a transaction. For purposes of the
forthcoming Proposed Related-Party
Basis Adjustment Regulations, the term
“cost recovery” means an allowance for
depreciation, amortization, or depletion
under subtitle A.
.03 Related-party basis adjustments;
cost recovery and disposition rules. Based
on the authority provided in §§ 482, 732,
734(b), 743(b), 755, and 7805, as well
as the provisions of the Code that oth-
erwise permit cost recovery allowances
with respect to basis increases under
subchapter K, the forthcoming Proposed
Related-Party Basis Adjustment Regula-
tions would provide that a basis increase
allocated to property retained or distrib-
uted by a partnership following a covered
transaction (related-party basis adjust-
ment, or RPBA) would be subject to spe-
cific rules providing the required method
of recovering the basis adjustment and the
treatment of the basis adjustment upon the
disposition of the property to which the
adjustment applies.
.04 Treatment of basis adjustments
resulting from covered transactions under
§ 734(b).
The forthcoming Proposed Relat-
ed-Party Basis Adjustment Regulations
would provide that an RPBA arising
from a covered transaction described
in section 3.02 of this notice (§ 734(b)
RPBA) would be recovered using the cost
recovery method and remaining recovery
period, if any, of the corresponding dis-
tributed property that gave rise to such
§ 734(b) RPBA. In addition, the part-
nership would not be eligible to take the
§ 734(b) RPBA into account upon the sale
or other disposition of partnership prop-
erty to which a § 734(b) RPBA applies,
subject to the rules described below. After
a qualifying disposition of a correspond-
ing distributed property, the basis adjust-
ment would cease to be a § 734(b) RPBA.
A qualifying disposition would mean a
disposition of a corresponding distrib-
uted property to an unrelated person in an
arm’s-length transaction in which taxable
gain or loss is fully recognized. Except as
otherwise provided, if a basis adjustment
ceases to be a § 734(b) RPBA, the remain-
ing basis attributable to the former RPBA
would be treated as giving rise to newly
placed in service property that is subject
to the cost recovery period and method
of the property to which it was allocated,
to the extent the property is eligible for
cost recovery allowances, and the basis
adjustment would be taken into account
in computing gain or loss upon the sale
or other disposition of the property. These
rules would not apply to the share of any
§ 734(b) basis adjustment of a partner that
is unrelated to the distributee partner. For
purposes of this rule, a partner’s share of
a basis adjustment under § 734(b) would
be determined under principles similar to
those in § 1.197-2(h)(12)(iv)(D).
If a partnership distributes to a partner
property with respect to which there is a
§ 734(b) RPBA in place, the partner would
take into account the § 734(b) RPBA in
determining the basis of the property
in the partner’s hands and the partner’s
outside basis in the partnership, and the
basis adjustment would remain a § 734(b)
RPBA until the basis adjustment ceases to
be a § 734(b) RPBA, as described above.
If a partnership disposes of property
to which a § 734(b) RPBA applies (other
than in a distribution to a partner) or a
partner disposes of property to which a
§ 734(b) RPBA applies, the amount of
the § 734(b) RPBA would be reallocated
to other property of the partnership or the
partner (under rules similar to the rules of
§ 1.755-1(c)) and would remain a § 734(b)
RPBA. If the partnership or partner cannot
reallocate a § 734(b) RPBA to any asset
under the preceding sentence because the
partnership or partner does not own prop-
erty of a like character, the reallocation
would be made when property of a like
character is subsequently acquired.
.05 Treatment of basis adjustments
resulting from covered transactions under
§ 743(b).
The forthcoming Proposed Relat-
ed-Party Basis Adjustment Regulations
would provide that an RPBA arising from
a covered transaction described in sec-
tion 3.03 of this notice (§ 743(b) RPBA)
would be ineligible for cost recovery until
the transferee partner becomes unrelated
to both the transferor partner and to all
existing partners as described below. In
addition, the transferee partner would
not be eligible to take the § 743(b) RPBA
into account upon the sale or other dis-
position of partnership property to which
a § 743(b) RPBA applies, subject to the
rules described below. If a transferee part-
ner that has a § 743(b) RPBA in place
ceases to be related to both the transferor
and all persons who were partners imme-
diately before or immediately after the
covered transaction, then the basis adjust-
ment would cease to be a § 743(b) RPBA.
Except as otherwise provided, if a basis
adjustment ceases to be a § 743(b) RPBA,
the basis attributable to the former RPBA
would be treated as giving rise to newly
placed in service property that is subject
to the cost recovery period and method of
the property to which it was allocated, to
the extent the property is eligible for cost
recovery allowances, and the basis adjust-

Bulletin No. 2024–28 29 July 8, 2024
ment would be taken into account in com-
puting gain or loss upon the sale or other
disposition of the property.
If a partnership distributes to a trans-
feree partner property with respect to
which there is a § 743(b) RPBA in place,
the transferee partner would take into
account the § 743(b) RPBA in determin-
ing the basis of the property in the part-
ner’s hands as well as in determining the
partner’s outside basis in the partnership,
and the basis adjustment would remain a
§ 743(b) RPBA until the basis adjustment
ceases to be a § 743(b) RPBA, as described
above. That is, the § 743(b) RPBA would
be taken into account for purposes of
applying § 732 but would remain ineli-
gible for cost recovery and would not be
used in computing gain or loss on the sale
or disposition of the distributed property
by the transferee partner.
If a partnership disposes of property to
which a § 743(b) RPBA applies (other than
in a distribution to the transferee partner)
or a transferee partner disposes of property
to which a § 743(b) RPBA applies, then
the amount of the § 743(b) RPBA would
be reallocated to other property (under
rules similar to the rules of § 1.755-1(c))
and would remain a § 743(b) RPBA. If the
partnership or transferee partner cannot
reallocate a § 743(b) RPBA to any asset
under the preceding sentence because the
partnership or transferee partner does not
own property of a like character, the real-
location would be made when property of
a like character is subsequently acquired.
If any gain is recognized in a covered
transaction described in section 3.03 of
this notice, and tax imposed by subtitle
A is required to be paid on such gain, the
portion of each basis increase attribut-
able to the gain would not be treated as a
§ 743(b) RPBA.
.06 Treatment of basis adjustments
resulting from covered transactions under
§ 732.
The forthcoming Proposed Relat-
ed-Party Basis Adjustment Regulations
would generally require that a basis
increase to distributed property under
§ 732(b) and (c) be treated as a § 732
RPBA to the extent such increase cor-
responds to a basis decrease of a related
partner (or the basis decrease a related
partner would have had if the partnership
had a § 754 election in effect). In the case
of a covered transaction described in sec-
tion 3.04(1) of this notice (complete liq-
uidation of the partnership), if a partner-
ship makes liquidating distributions to all
partners, a basis increase under § 732(b)
and (c) to property distributed to the dis-
tributee partner would be treated as one
or more § 732 RPBAs to the extent of a
basis decrease under § 732(b) and (c) to
property distributed to a related distribu-
tee partner. In the case of a covered trans-
action described in section 3.04(2) of this
notice (continuation of the partnership),
if a partnership makes a liquidating dis-
tribution to one partner and there is a
resulting basis decrease under § 734(b),
including a basis decrease that is sus-
pended under § 1.755-1(c)(4) (or there
would have been if the partnership had a
§ 754 election in effect), a basis increase
under § 732(b) and (c) to property dis-
tributed to the distributee partner would
be treated as one or more § 732 RPBAs
to the extent of a related continuing part-
ner’s share of a resulting basis decrease
under § 734(b) (or the basis decrease
under § 734(b) that would have resulted
if the partnership had a § 754 election in
effect).
The forthcoming Proposed Relat-
ed-Party Basis Adjustment Regulations
would require that a § 732 RPBA arising
from a covered transaction described in
section 3.04(1) of this notice resulting in a
basis increase under § 732(b) and (c) to the
property of the distributee partner would
be recovered using the cost recovery
method and remaining recovery period,
if any, of the corresponding property the
basis of which a related distributee partner
reduced. In addition, the distributee part-
ner would not be eligible to take the § 732
RPBA into account upon the sale or other
disposition of the property to which the
§ 732 RPBA applies, subject to the rules
described below. These rules would not
apply to any portion of the basis increase
that corresponds to a basis decrease to
property distributed to an unrelated part-
ner.
The forthcoming Proposed Relat-
ed-Party Basis Adjustment Regulations
would require that a § 732 RPBA arising
from a covered transaction described in
section 3.04(2) of this notice and result-
ing in a basis increase under § 732(b)
and (c) to the property of the distribu-
tee partner would be recovered using
the cost recovery method and remain-
ing recovery period, if any, of the cor-
responding property the basis of which
the partnership reduced under § 734(b),
or would have reduced under § 734(b) if
the partnership had a § 754 election in
effect. In addition, the distributee partner
would not be eligible to take the § 732
RPBA into account upon the sale or other
disposition of the property to which the
§ 732 RPBA applies, subject to the rules
described below. These rules would not
apply to any portion of the basis increase
that corresponds to the share of any basis
decrease under § 734(b) of a partner
unrelated to the distributee partner (or
the unrelated partner’s share of a basis
decrease under § 734(b) if the partner-
ship had a § 754 election in effect). For
purposes of this rule, a partner’s share of
a basis decrease under § 734(b) would be
determined under principles similar to
those in § 1.197-2(h)(12)(iv)(D).
For purposes of all covered transactions
described in section 3.04 of this notice, in
the case of multiple distributed properties,
the proposed regulations would treat each
distributed property as having a separate
§ 732 RPBA with respect to each basis
decrease to corresponding property. The
amount of a § 732 RPBA would be pro-
portional to the share of the basis decrease
to that § 732 RPBA’s corresponding prop-
erty out of the aggregate basis decrease to
all corresponding property. A § 732 RPBA
would be recovered using the cost recovery
method and remaining recovery period, if
any, of that § 732 RPBA’s correspond-
ing property. For purposes of this section
4.06, “corresponding property” would
mean, in the case of a covered transaction
described in section 3.04(1) of this notice,
property distributed to a related distribu-
tee partner and allocated a basis decrease
under § 732(b) and (c) and, in the case of
a covered transaction described in section
3.04(2) of this notice, property allocated a
basis decrease under § 734(b) of which a
related continuing partner has a share (or
would have a share if the partnership had
a § 754 election in effect). In addition, the
partner would not be eligible to take the
§ 732 RPBA into account upon the sale
or other disposition of property to which
a § 732 RPBA applies, subject to the rules
described below.

July 8, 2024 30 Bulletin No. 2024–28
For purposes of all covered transac-
tions described in section 3.04 of this
notice, upon a qualifying disposition
of a corresponding property, any § 732
RPBA to which that property corre-
sponds would cease to be a § 732 RPBA.
If a basis adjustment ceases to be a § 732
RPBA, the remaining basis attributable
to the former RPBA would be treated
as giving rise to newly placed in ser-
vice property that is subject to the cost
recovery period and method of the dis-
tributed property, to the extent the prop-
erty is eligible for cost recovery allow-
ances, and the basis adjustment would
be taken into account in computing gain
or loss upon the sale or other disposition
of the property. A qualifying disposition
would mean a disposition of property to
an unrelated person in a fully taxable,
arm’s-length transaction.
.07 Special rules and tax-indiffer-
ent parties. Special rules in the forth-
coming Proposed Related-Party Basis
Adjustment Regulations would apply to
covered transactions that involve other
related subchapter K provisions, such as
§ 732(d) and (f), and additional steps, as
well as to tiered-partnership structures.
The forthcoming Proposed Related-Party
Basis Adjustment Regulations would
also treat as a covered transaction cer-
tain partnership arrangements involving
taxable and tax-indifferent parties that
would otherwise be a covered transaction
if the relatedness requirement of section
3.02, 3.03, or 3.04 of this notice were
satisfied. For example, if a partnership,
in which no partners are related, makes
a distribution to an organization exempt
from tax imposed by subtitle A by rea-
son of § 501(a) of property that results in
a basis increase to remaining partnership
property under § 734(b)(1), this transac-
tion would be treated as a covered trans-
action described in section 3.02 of this
notice. For purposes of the forthcoming
Proposed Related-Party Basis Adjustment
Regulations, a tax-indifferent party would
be defined as a person that is either not
liable for Federal income tax because of
its tax-exempt or, in certain cases, foreign
status or, also in certain cases, to which
gain from the transaction would not result
in Federal income tax liability for the per-
son’s taxable year within which such gain
is recognized.
SECTION 5. FORTHCOMING
PROPOSED CONSOLIDATED
RETURN REGULATIONS
.01 In general. As a result of the inter-
play between the § 1502 regulations and
the rules of subchapter K, a consolidated
group’s income from investments in part-
nerships often is not clearly reflected in
the group’s consolidated taxable income
(as determined under § 1.1502-11 and
other applicable § 1502 regulations) and
consolidated tax liability (as determined
under § 1.1502-2 and other applicable
§ 1502 regulations). In particular, anom-
alous results arise in certain situations in
which the group’s ownership interest in a
partnership is split among members of the
group, or in which a partnership interest is
transferred from one member to another.
The Treasury Department and the IRS
are concerned that some consolidated
groups have attempted to alter consol-
idated taxable income or consolidated
tax liability through basis adjustments to
the property of partnerships owned by a
group’s members simply by: (i) trans-
ferring partnership interests from one
member to another; or (ii) separating the
group’s ownership interest in a partner-
ship between different members and caus-
ing the partnership to distribute property
to one or more of the member partners.
Such an alteration of consolidated taxable
income or consolidated tax liability does
not clearly reflect the income of the group,
which files a single tax return for each tax-
able year and generally reports its income
and tax liability as if it were a single cor-
poration. See §§ 1501 and 1502.
To prevent distortion of a consolidated
group’s income from investments in part-
nerships, the forthcoming Proposed Con-
solidated Return Regulations would apply
a single-entity approach with respect to
interests in a partnership held by members
of a consolidated group. It is intended that
the forthcoming Proposed Consolidated
Return Regulations would prevent direct
or indirect basis shifts among the members
of the group resulting from the covered
transactions described in section 3 of this
notice. This approach would avoid many of
the anomalous results that arise from split
ownership of partnership interests among
members of the group or from intercom-
pany transfers of partnership interests.
SECTION 6. PROPOSED
APPLICABILITY DATES
.01 The Treasury Department and the
IRS intend to propose that the Treasury
decision that adopts the Proposed Relat-
ed-Party Basis Adjustment Regulations
described in section 4 of this notice as
final regulations would apply to taxable
years ending on or after June 17, 2024.
That is, once finalized, the regulations
would govern the availability and amount
of cost recovery deductions and gain or
loss calculations for taxable years ending
on or after June 17, 2024 even if the rele-
vant covered transaction was completed in
a prior taxable year.
.02 The applicability date for the Trea-
sury decision that adopts the forthcoming
Proposed Consolidated Return Regula-
tions described in section 5 of this notice
will not relate to the issuance of this notice
but will be proposed in the notice of pro-
posed rulemaking containing the forth-
coming Proposed Consolidated Return
Regulations.
SECTION 7. REQUEST FOR
COMMENTS AND SUBMISSION
INFORMATION
.01 Request for comments. The Trea-
sury Department and the IRS request
comments on the approaches to address-
ing distortions of income from partnership
related-party basis shifting transactions
described in sections 4 and 5 of this notice.
.02 Procedures for submitting com-
ments.
(1) Deadline. Written comments should
be submitted by July 17, 2024. However,
consideration will be given to any written
comments submitted after July 17, 2024,
if such consideration will not delay the
issuance of the proposed regulations.
(2) Form and manner. The subject line
for the comments should include a refer-
ence to Notice 2024-54. All commenters
are strongly encouraged to submit com-
ments electronically. However, comments
may be submitted in one of two ways:
(a) Electronically via the Federal
eRulemaking Portal at https://www.reg-
ulations.gov (type IRS-2024-0027 in the
search field on the regulations.gov home-
page to find this notice and submit com-
ments); or

Bulletin No. 2024–28 31 July 8, 2024
(b) By mail to: Internal Revenue Ser-
vice, CC:PA:01:PR (Notice 2024-54),
Room 5203, P.O. Box 7604, Ben Franklin
Station, Washington, D.C., 20044.
(3) Publication of comments. The Trea-
sury Department and the IRS will publish
for public availability any comment sub-
mitted electronically and on paper to its
public docket on https://www.regulations.
gov.
SECTION 8. DRAFTING
INFORMATION
The principal authors of this notice
are Kevin I. Babitz and Anthony P. Sacco
of the Office of Associate Chief Counsel
(Passthroughs and Special Industries). For
further information regarding this notice,
contact Elizabeth V. Zanet at (202) 317-
6007 or Anthony P. Sacco at (202) 317-
5805. Regarding the forthcoming Pro-
posed Consolidated Return Regulations,
contact Jeremy Aron-Dine at (202) 317-
6847.
Certain Exceptions to
the 10 Percent Additional
Tax Under Code
Section 72(t)
Notice 2024-55
I. PURPOSE
This notice provides guidance on the
application of the exceptions to the 10 per-
cent additional tax under section 72(t)(1)
of the Internal Revenue Code (Code) for
emergency personal expense distributions
and domestic abuse victim distributions.
The Department of the Treasury (Treasury
Department) and the Internal Revenue
Service (IRS) anticipate issuing regula-
tions under section 72(t) of the Code, and
section IV of this notice solicits public
comments with respect to all aspects of
section 72(t).
II. BACKGROUND
Section 72(t)(1) of the Code generally
provides for a 10 percent additional tax
on a distribution from a qualified retire-
ment plan, as defined in section 4974(c),
unless the distribution qualifies for one
of the exceptions listed in section 72(t)
(2). The 10 percent additional tax applies
only to the portion of the distribution that
is includible in gross income. For pur-
poses of section 72(t), the term “qualified
retirement plan,” as defined in section
4974(c), means a plan described in section
401(a) that includes a trust exempt from
tax under section 501(a), an annuity plan
described in section 403(a), an annuity
contract described in section 403(b), an
individual retirement account described in
section 408(a), or an individual retirement
annuity described in section 408(b).
1
Section 72(t)(2) provides several
exceptions to the 10 percent additional tax
imposed by section 72(t)(1), including, for
example, exceptions for distributions:
• made on or after the date on which the
employee
2
attains age 59 ½;
• made to a beneficiary (or to the estate
of the employee) on or after the death
of the employee;
• attributable to the employee being dis-
abled within the meaning of section
72(m)(7);
• that are part of a series of substantially
equal periodic payments (not less fre-
quently than annually) made for the life
(or life expectancy) of the employee or
the joint lives (or joint life expectan-
cies) of the employee and the employ-
ee’s designated beneficiary; and
• made, if the distributions are not made
from an IRA, to an employee after sep-
aration from service after attainment of
age 55.
On December 29, 2022, Division T
of the Consolidated Appropriations Act,
2023, Public Law 117-328, 136 Stat. 4459
(2022), known as the SECURE 2.0 Act
of 2022 (SECURE 2.0 Act), was enacted.
Sections 115 and 314 of the SECURE 2.0
Act amended section 72(t) of the Code to
add exceptions to the 10 percent additional
tax, and this notice provides guidance on
those sections.
III. PROVISIONS OF THE SECURE
2.0 ACT
A. SECTION 115 OF THE SECURE
2.0 ACT -- EMERGENCY
PERSONAL EXPENSE
DISTRIBUTIONS
Section 115 of the SECURE 2.0 Act
amended section 72(t)(2) of the Code by
adding section 72(t)(2)(I), which provides
a new exception to the 10 percent addi-
tional tax for a distribution from an appli-
cable eligible retirement plan to an indi-
vidual for emergency personal expenses.
An emergency personal expense distribu-
tion is includible in gross income but is
not subject to the 10 percent additional tax
under section 72(t)(1).
Section 72(t)(2)(I)(iv) provides that
the term “emergency personal expense
distribution” means any distribution
made from an applicable eligible retire-
ment plan to an individual for purposes
of meeting unforeseeable or immediate
financial needs relating to necessary per-
sonal or family emergency expenses. Sec-
tion 72(t)(2)(I)(iv) also provides that the
term “applicable eligible retirement plan”
has the same meaning as in section 72(t)
(2)(H)(vi)(I), where the term is defined as
an eligible retirement plan described in
section 402(c)(8)(B) other than a defined
benefit plan.
Emergency personal expense distri-
butions are subject to three limitations.
First, section 72(t)(2)(I)(ii) provides that
not more than one distribution per calen-
dar year is permitted to be treated as an
emergency personal expense distribution
by any individual. Second, section 72(t)
(2)(I)(iii) permits an individual to treat
a distribution as an emergency personal
expense distribution in any calendar
year in an amount up to a maximum of
$1,000.
3
Third, section 72(t)(2)(I)(vii)
provides rules that limit taking subse-
quent emergency personal expense dis-
tributions.
1
For purposes of this notice, the term “IRA” includes an individual retirement account described in section 408(a) and an individual retirement annuity described in section 408(b).
2
The term “employee” includes any participant in an employee retirement plan, and in the case of an IRA, the individual for whose benefit the IRA was established. See generally section
72(t)(5).
3
This $1,000 amount is not indexed for inflation.

July 8, 2024 32 Bulletin No. 2024–28
Section 72(t)(2)(I)(iv) provides that
an administrator of an applicable eligible
retirement plan may rely on an employee’s
written certification that the employee sat-
isfies the conditions for an emergency per-
sonal expense distribution. The Secretary
may provide by regulations for exceptions
to the rule regarding a plan administrator’s
reliance on an employee’s certification,
and for procedures for addressing cases of
employee misrepresentation.
Section 72(t)(2)(I)(v) provides that if
a distribution from an applicable eligible
retirement plan to an individual would
be an emergency personal expense dis-
tribution (without regard to the limita-
tions in section 72(t)(2)(I)(ii) and (iii)), a
plan will not be treated as failing to meet
any requirement under the Code merely
because the plan treats the distribution
as an emergency personal expense dis-
tribution, unless the aggregate amount
of the distributions from all plans main-
tained by the employer (and any member
of any controlled group
4
that includes the
employer) to that individual exceeds the
limitations described in section 72(t)(2)(I)
(ii) and (iii).
Section 72(t)(2)(I)(vi) provides that the
rules relating to repayment of emergency
personal expense distributions should fol-
low the rules for repayment of qualified
birth or adoption distributions in section
72(t)(2)(H)(v). Therefore, an individual
generally may, at any time during the
3-year period beginning on the day after
the date on which the distribution was
received, repay an emergency personal
expense distribution (not to exceed the
aggregate amount of the emergency per-
sonal expense distribution) to an applica-
ble eligible retirement plan in which the
individual is a beneficiary and to which a
rollover can be made.
Section 72(t)(2)(I)(viii) provides that
the special rules in section 72(t)(2)(H)(vi)
(II) and (IV) (for qualified birth or adoption
distributions) also apply for emergency
personal expense distributions. Thus, an
emergency personal expense distribution
is not treated as an eligible rollover dis-
tribution for purposes of the direct roll-
over rules under section 401(a)(31), the
notice requirement under section 402(f),
or the mandatory withholding rules under
section 3405. In addition, emergency per-
sonal expense distributions are treated as
meeting the distribution requirements of
sections 401(k)(2)(B)(i), 403(b)(7)(A)(i),
403(b)(11), and 457(d)(1)(A).
The amendment made to section 72(t)
(2) by section 115 of the SECURE 2.0 Act
applies to emergency personal expense
distributions made after December 31,
2023.
Questions and Answers Relating to
Individuals Receiving Emergency
Personal Expense Distributions
Q. A-1: What is an emergency personal
expense distribution?
A. A-1: An emergency personal
expense distribution is a distribution
made from an applicable eligible retire-
ment plan to an individual for purposes
of meeting unforeseeable or immediate
financial needs relating to necessary per-
sonal or family emergency expenses. An
emergency personal expense distribution
is includible in gross income, but it is not
subject to the 10 percent additional tax
under section 72(t)(1).
Q. A-2: How does an individual deter-
mine whether an expense is an unforesee-
able or immediate financial need relating
to necessary personal or family emer-
gency expenses?
A. A-2: Whether an individual has an
unforeseeable or immediate financial need
relating to necessary personal or family
emergency expenses is determined by
the relevant facts and circumstances for
each individual. Factors to be considered
include, but are not limited to, whether
the individual (or a family member of the
individual) has expenses relating to --
(a) medical care (including the cost
of medicine or treatment that would be
deductible under section 213(d), deter-
mined without regard to the limitations in
section 213(a)),
(b) accident or loss of property due to
casualty,
(c) imminent foreclosure or eviction
from a primary residence,
(d) the need to pay for burial or funeral
expenses,
(e) auto repairs, or
(f) any other necessary emergency per-
sonal expenses.
For purposes of determining whether
an individual has an unforeseeable or
immediate financial need, the adminis-
trator may rely on an employee’s written
certification that the employee is eligible
for an emergency personal expense distri-
bution. See Q&A A-9 of this notice.
Q. A-3: Which types of plans are eli-
gible to permit an emergency personal
expense distribution?
A. A-3: An emergency personal
expense distribution may be made from
an applicable eligible retirement plan,
which means an eligible retirement plan
described in section 402(c)(8)(B) other
than a defined benefit plan. Therefore,
generally, a section 401(a) qualified
defined contribution plan (such as a sec-
tion 401(k) plan), a section 403(a) annuity
plan, a section 403(b) annuity contract, a
governmental section 457(b) plan, or an
IRA is eligible to permit an emergency
personal expense distribution.
Q. A-4: How frequently can an individ-
ual treat a distribution from an applicable
eligible retirement plan as an emergency
personal expense distribution?
A. A-4: An individual is permitted to
treat only one distribution per calendar
year as an emergency personal expense
distribution.
Q. A-5: Is there a dollar limitation on
the amount that an individual may treat as
an emergency personal expense distribu-
tion under section 72(t)(2)(I)(iii)?
A. A-5: The amount that may be treated
as an emergency personal expense distri-
bution by an individual in any calendar
year shall not exceed the lesser of $1,000
or an amount equal to the excess of --
(a) the individual’s total nonforfeitable
accrued benefit under the plan (in the case
of an IRA, the individual’s total interest
in the IRA), determined as of the date of
each such distribution, over
(b) $1,000.
For example, Plan C is a section 401(k)
plan that permits emergency personal
expense distributions, and Employee A is
a participant in Plan C. On July 1, 2025,
Employee A has a vested account balance
4
Section 72(t)(2)(I)(v) applies the controlled group definition in section 72(t)(2)(H)(iv)(II), which defines “controlled group” as any group treated as a single employer under section 414(b),
(c), (m), or (o).

Bulletin No. 2024–28 33 July 8, 2024
of $1,500 in Plan C. On July 1, 2025,
Employee A requests an emergency per-
sonal expense distribution of $500 from
Plan C. Employee A has not previously
received an emergency personal expense
distribution. The excess of Employee
A’s nonforfeitable interest in Plan C
over $1,000 is $1,500 - $1,000, or $500.
Employee A is permitted to treat $500 from
Plan C as an emergency personal expense
distribution (the lesser of $1,000 or the
amount equal to $1,500 - $1,000 ($500)).
Q. A-6: Once an individual treats a
distribution as an emergency personal
expense distribution, how soon can that
individual take a subsequent emergency
personal expense distribution?
A. A-6: Notwithstanding the limitation
in Q&A A-4 of this notice, if an individual
treats a distribution as an emergency per-
sonal expense distribution in any calendar
year with respect to an applicable eligible
retirement plan, no amount of any sub-
sequent distribution can be treated as an
emergency personal expense distribution
during the immediately following 3 calen-
dar years with respect to that plan unless --
(a) the previous emergency personal
expense distribution is fully repaid to the
plan, or
(b) the aggregate of the individual’s
elective deferrals and employee contribu-
tions to the plan (in the case of an IRA, the
total amounts that the individual contrib-
uted to the IRA) after the previous emer-
gency personal expense distribution is at
least equal to the amount of the previous
emergency personal expense distribution
that has not been repaid.
For example, consider the same facts
as Q&A A-5 of this notice (Employee A
requests from Plan C an emergency per-
sonal expense distribution of $500 on July
1, 2025). Employee A does not repay the
emergency personal expense distribution
but continues to make elective deferrals
to Plan C. On August 1, 2027, Employee
A has an account balance in the amount
of $5,000. With respect to the $5,000
account balance, Employee A contributed
$3,500 in elective deferrals since the July
1, 2025, distribution. On August 1, 2027,
Employee A requests an emergency per-
sonal expense distribution (which meets
the requirements of Q&A A-1 of this
notice) of $1,000 from Plan C. This distri-
bution meets the limitation requirements
in Q&A A-4 (annual limitation), Q&A
A-5 (dollar limitation), and Q&A A-6
(limitation on subsequent distributions) of
this notice.
Q. A-7: May an individual repay an
emergency personal expense distribution
to an applicable eligible retirement plan?
A. A-7: An individual may, at any time
during the 3-year period beginning on the
day after the date on which the distribu-
tion was received, repay any portion of an
emergency personal expense distribution
(up to the entire amount of the emergency
personal expense distribution) to an appli-
cable eligible retirement plan in which the
individual is a beneficiary and to which a
rollover can be made under section 402(c),
403(a)(4), 403(b)(8), 408(d)(3), or 457(e)
(16), as applicable.
Questions and Answers Relating to
Applicable Eligible Retirement Plans
Permitting Emergency Personal
Expense Distributions.
Q. A-8: Is an applicable eligible retire-
ment plan required to permit emergency
personal expense distributions under sec-
tion 72(t)(2)(I)?
A. A-8: It is optional for an appli-
cable eligible retirement plan to permit
emergency personal expense distribu-
tions pursuant to section 72(t)(2)(I). Plan
amendments adopted to permit emer-
gency personal expense distributions are
discretionary amendments for purposes
of the plan amendment rules discussed in
Section II.J. of Notice 2024-02, 2024-02
IRB 316. For information relating to the
deadline for adopting plan amendments,
see the plan amendment rules discussed in
Section II.J. of Notice 2024-02.
If an applicable eligible retirement
plan does not permit emergency personal
expense distributions, the individual is
permitted to treat an otherwise permissi-
ble distribution
5
as an emergency personal
expense distribution. See Q&A A-15 of
this notice.
Q. A-9: May an administrator rely on
a written certification from an employee
that the employee is eligible for an emer-
gency personal expense distribution?
A. A-9: In determining whether an
employee is eligible for an emergency
personal expense distribution, an adminis-
trator of an applicable eligible retirement
plan is permitted to rely on an employee’s
written certification that the employee
is eligible for an emergency personal
expense distribution.
6
For this purpose,
an administrator is a plan administrator
as defined in section 414(g), or an IRA
trustee, custodian, or issuer.
Q. A-10: Do emergency personal
expense distributions from an applicable
eligible retirement plan meet the distribu-
tion restriction requirements in sections
401(k)(2)(B)(i), 403(b)(7)(A)(i), 403(b)
(11), and 457(d)(1)(A)?
A. A-10: Emergency personal expense
distributions are treated as meeting the
distribution restrictions for qualified
cash or deferred arrangements under sec-
tion 401(k)(2)(B)(i), custodial accounts
under section 403(b)(7)(A)(i), annuity
contracts under section 403(b)(11), and
governmental deferred compensation
plans under section 457(d)(1)(A). Thus,
for example, an employer may expand the
distribution options under its plan to allow
an amount attributable to elective, quali-
fied nonelective, qualified matching, or
safe harbor contributions under a section
401(k) plan to be distributed as an emer-
gency personal expense distribution.
Q. A-11: Is an emergency personal
expense distribution treated by an applica-
ble eligible retirement plan as an eligible
rollover distribution for purposes of the
direct rollover rules, section 402(f) notice
requirements, and the mandatory with-
holding rules?
A. A-11: An emergency personal
expense distribution is not treated as an
eligible rollover distribution for purposes
5
For purposes of this notice, a “permissible distribution” means a distribution that meets the distribution restriction requirements in sections 401(k)(2)(B)(i), 403(b)(7)(A)(i), 403(b)(11),
and 457(d)(1)(A) and is permissible under the plan. Thus, for example, a participant in a plan that does not permit emergency personal expense distributions may meet the requirements for
a hardship distribution if the plan permits hardship distributions. In addition, a participant who terminated service with an employer with an accrued benefit under a section 401(k) plan that
does not permit emergency personal expense distributions may meet the distribution restrictions for severance from employment.
6
The written certification may be provided using the electronic delivery rules in §1.401(a)-21(d).

July 8, 2024 34 Bulletin No. 2024–28
of the direct rollover rules under section
401(a)(31), the notice requirement under
section 402(f), and the mandatory with-
holding rules under section 3405. Thus, the
plan is not required to offer an individual
a direct rollover with respect to an emer-
gency personal expense distribution. In
addition, the administrator is not required
to provide a section 402(f) notice. Finally,
the administrator or payor of the emer-
gency personal expense distribution is not
required to withhold an amount equal to 20
percent of the distribution, as generally is
required in section 3405(c)(1). However,
an emergency personal expense distribu-
tion is subject to the withholding require-
ments of section 3405(b) and § 35.3405-1T
of the withholding tax regulations.
Q. A-12: If an applicable eligible retire-
ment plan permits emergency personal
expense distributions, is the plan required
to accept a repayment of that distribution
to the plan?
A. A-12: An applicable eligible retire-
ment plan must accept the repayment of
an emergency personal expense distribu-
tion from an individual if the following
apply:
(a) the plan permits emergency per-
sonal expense distributions;
(b) the individual received an emer-
gency personal expense distribution from
that plan; and
(c) the individual is eligible to make
a rollover contribution to that plan at the
time the individual wishes to repay the
emergency personal expense distribution
to the plan.
Q. A-13: Is a repayment of an emer-
gency personal expense distribution from
an applicable eligible retirement plan
other than an IRA treated as the direct
transfer of an eligible rollover distribution
as defined in section 402(c)(4)?
A. A-13: In the case of a repayment of
an emergency personal expense distribu-
tion from an applicable eligible retirement
plan other than an IRA, an individual is
treated as having received the distribu-
tion as an eligible rollover distribution
(as defined in section 402(c)(4)) and as
having transferred the amount to an appli-
cable eligible retirement plan in a direct
trustee-to-trustee transfer within 60 days
of the distribution.
Q. A-14: Is a repayment of an emer-
gency personal expense distribution from
an IRA treated as the direct transfer of a
distribution described in section 408(d)
(3)?
A. A-14: In the case of a repayment of
an emergency personal expense distribu-
tion from an IRA, an individual is treated
as having received the distribution as a
distribution described in section 408(d)(3)
and as having transferred the amount to
an applicable eligible retirement plan in a
direct trustee-to-trustee transfer within 60
days of the distribution.
Q. A-15: If an applicable eligible
retirement plan does not permit emer-
gency personal expense distributions, may
an individual treat an otherwise permissi-
ble distribution as an emergency personal
expense distribution?
A. A-15: If an applicable eligible
retirement plan does not permit emer-
gency personal expense distributions
and an individual receives an otherwise
permissible distribution that meets the
requirements of an emergency personal
expense distribution (as defined in Q&A
A-1 of this notice), the individual may
treat the distribution on the individual’s
federal income tax return as an emergency
personal expense distribution to the extent
the distribution meets the various limita-
tions on an emergency personal expense
distribution (see Q&As A-4 through A-6
of this notice). As part of the individual’s
tax return, the individual will claim on
Form 5329, Additional Taxes on Qualified
Plans (Including IRAs) and Other Tax-Fa-
vored Accounts, that the distribution is an
emergency personal expense distribution,
in accordance with the form’s instruc-
tions. The distribution, while includible
in gross income, is not subject to the 10
percent additional tax under section 72(t)
(1) pursuant to section 72(t)(2)(I). If the
individual decides to repay the amount to
an eligible retirement plan, the individual
may, at any time during the 3-year period
beginning on the day after the date on
which the distribution was received, repay
the amount to an IRA.
B. SECTION 314 OF THE SECURE
2.0 ACT -- DOMESTIC ABUSE
VICTIM DISTRIBUTIONS
Section 314 of the SECURE 2.0 Act
amended section 72(t)(2) by adding sec-
tion 72(t)(2)(K), which provides a new
exception to the 10 percent additional tax
for an eligible distribution to a domestic
abuse victim (domestic abuse victim dis-
tribution). A domestic abuse victim distri-
bution is includible in gross income but is
not subject to the 10 percent additional tax
under section 72(t)(1). A “domestic abuse
victim distribution” is defined in section
72(t)(2)(K)(iii)(I) as any distribution from
an applicable eligible retirement plan to a
domestic abuse victim if made during the
1-year period beginning on any date on
which the individual is a victim of domes-
tic abuse by a spouse or domestic partner.
The term “domestic abuse” is defined in
section 72(t)(2)(K)(iii)(II) as physical,
psychological, sexual, emotional, or eco-
nomic abuse, including efforts to control,
isolate, humiliate, or intimidate the vic-
tim, or to undermine the victim’s ability to
reason independently, including by means
of abuse of the victim’s child or another
family member living in the household.
Section 72(t)(2)(K)(ii) permits an indi-
vidual to receive a distribution from an
applicable eligible retirement plan of up
to $10,000 (indexed for inflation) without
application of the 10 percent additional tax
if the distribution meets the requirements
to be a domestic abuse victim distribution.
An “applicable eligible retirement plan”
is defined in section 72(t)(2)(K)(vi)(I) as
an eligible retirement plan (as defined in
section 402(c)(8)(B)) other than a defined
benefit plan or a plan to which sections
401(a)(11) and 417 apply.
Section 72(t)(2)(K)(iv) provides that if
a distribution from an applicable eligible
retirement plan to a domestic abuse victim
would be a domestic abuse victim distri-
bution (without regard to the limitation
in section 72(t)(2)(K)(ii)), a plan will not
be treated as failing to meet any require-
ment under the Code merely because the
plan treats the distribution as a domes-
tic abuse victim distribution, unless the
aggregate amount of the distributions
from all plans maintained by the employer
(and any member of any controlled group
that includes the employer) to the domes-
tic abuse victim exceeds the limitation
described in section 72(t)(2)(K)(ii).
Section 72(t)(2)(K)(v) provides that
the rules relating to repayment of domes-
tic abuse victim distributions should fol-
low the rules in section 72(t)(2)(H)(v)
(the rules for repayment of qualified birth

Bulletin No. 2024–28 35 July 8, 2024
or adoption distributions). Therefore,
an individual generally may, at any time
during the 3-year period beginning on the
day after the date on which the distribu-
tion was received, repay a domestic abuse
victim distribution (not to exceed the
aggregate amount of the domestic abuse
victim distribution) to an applicable eligi-
ble retirement plan in which the individ-
ual is a beneficiary and to which a rollover
can be made.
Section 72(t)(2)(K)(vi)(II) provides
that a domestic abuse victim distribution
is not treated as an eligible rollover distri-
bution for purposes of the direct rollover
rules under section 401(a)(31), the notice
requirement under section 402(f), or the
mandatory withholding rules under sec-
tion 3405.
Section 72(t)(2)(K)(vi)(III) provides
that any distribution that the employee or
participant certifies as a domestic abuse
victim distribution shall be treated as
meeting the distribution requirements of
sections 401(k)(2)(B)(i), 403(b)(7)(A)(i),
403(b)(11), and 457(d)(1)(A).
The amendment made to section 72(t)
(2) by section 314 of the SECURE 2.0 Act
applies to domestic abuse victim distribu-
tions made after December 31, 2023.
Questions and Answers Relating to
Individuals Receiving Domestic Abuse
Victim Distributions
Q. B-1: What is a domestic abuse vic-
tim distribution?
A. B-1: A domestic abuse victim dis-
tribution is a distribution from an appli-
cable eligible retirement plan to a domes-
tic abuse victim made during the 1-year
period beginning on any date on which the
individual is a victim of domestic abuse
by a spouse or domestic partner. A domes-
tic abuse victim distribution is includible
in gross income but is not subject to the 10
percent additional tax under section 72(t)
(1).
Q. B-2: How is domestic abuse defined
for the purposes of a domestic abuse vic-
tim distribution?
A. B-2: The term “domestic abuse”
means physical, psychological, sexual,
emotional, or economic abuse, including
efforts to control, isolate, humiliate, or
intimidate the victim, or to undermine the
victim’s ability to reason independently,
including by means of abuse of the vic-
tim’s child or another family member liv-
ing in the household.
Q. B-3: Which types of plans are eli-
gible to permit a domestic abuse victim
distribution?
A. B-3: A domestic abuse victim dis-
tribution may be made from an applicable
eligible retirement plan, which is defined
in section 72(t)(2)(K)(vi)(I) as an eligi-
ble retirement plan described in section
402(c)(8)(B), other than a defined benefit
plan or a plan to which the spousal con-
sent requirements of sections 401(a)(11)
and 417 apply. In general, the spousal
consent requirements of sections 401(a)
(11) and 417 apply to certain qualified
retirement plans, including defined bene-
fit plans, money purchase pension plans,
and defined contribution plans that (1) do
not provide 100 percent death benefits for
surviving spouses, (2) provide benefits in
the form of a life annuity, or (3) are direct
or indirect transferees of a defined bene-
fit or money purchase pension plan. See
section 401(a)(11)(B) and § 1.401(a)–20,
Q&A–3.
Q. B-4: Is there a dollar limitation on
the amount that an individual may treat as
a domestic abuse victim distribution under
section 72(t)(2)(K)?
A. B-4: The aggregate amount that an
individual may treat as a domestic abuse
victim distribution cannot exceed the
lesser of --
(a) $10,000 (indexed for inflation), or
(b) 50 percent of the present value of
the nonforfeitable accrued benefit (vested
accrued benefit) of the employee under
the plan.
For example, Plan E is a section
403(b) plan that permits domestic abuse
victim distributions, and Taxpayer D is
a participant in Plan E. On August 15,
2024, Taxpayer D is eligible to receive a
domestic abuse victim distribution from
Plan E because Taxpayer D was a vic-
tim of domestic abuse on January 15,
2024. August 15, 2024, is less than one
year after the January 15, 2024, inci-
dent. On August 15, 2024, Taxpayer D
has a $15,000 vested account balance in
Plan E ($7,500 is 50 percent of Taxpayer
D’s vested account balance). Taxpayer D
requests a $7,500 domestic abuse victim
distribution from Plan E. Taxpayer D is
permitted to take a domestic abuse victim
distribution of $7,500 from Plan E (the
lesser of $7,500 (50 percent of Taxpayer
D’s vested account balance) and $10,000).
Q. B-5: How are the cost-of-living
adjustments made to the dollar limit for
domestic abuse victim distributions?
A. B-5: For taxable years beginning in
a calendar year after 2024, the $10,000
amount will be increased annually by an
amount equal to –
(a) The $10,000 dollar limitation, mul-
tiplied by
(b) The cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year
begins, determined by substituting calen-
dar year 2023, for calendar year 2016 in
section 1(f)(3)(A)(ii).
If any amount after adjustment under
section 72(t)(2)(K)(vii) is not a multiple
of $100, the amount will be rounded to
the nearest multiple of $100. The adjusted
amounts will be provided in future guid-
ance issued in the Internal Revenue Bul-
letin.
Q. B-6: May an individual repay a
domestic abuse victim distribution to an
applicable eligible retirement plan?
A. B-6: An individual may, at any time
during the 3-year period beginning on the
day after the date on which the distribu-
tion was received, repay any portion of a
domestic abuse victim distribution (up to
the entire amount of the domestic abuse
victim distribution) to an applicable eligi-
ble retirement plan in which the individ-
ual is a beneficiary and to which a rollover
can be made under section 402(c), 403(a)
(4), 403(b)(8), 408(d)(3), or 457(e)(16), as
applicable.
Questions and Answers Relating to
Applicable Eligible Retirement Plans
Permitting Domestic Abuse Victim
Distributions
Q. B-7: Is an applicable eligible retire-
ment plan required to permit domestic
abuse victim distributions under sec-
tion 72(t)(2)(K)?
A. B-7: It is optional for an applicable
eligible retirement plan to permit domes-
tic abuse victim distributions pursuant to
section 72(t)(2)(K). Plan amendments
adopted to permit domestic abuse victim
distributions are discretionary amend-
ments for purposes of the plan amendment

July 8, 2024 36 Bulletin No. 2024–28
rules discussed in Section II.J. of Notice
2024-02. For information relating to the
deadline for adopting plan amendments,
see Section II.J of Notice 2024-02.
If an applicable eligible retirement plan
does not permit domestic abuse victim
distributions, the individual is permitted
to treat an otherwise permissible distribu-
tion as a domestic abuse victim distribu-
tion. See Q&A B-14 of this notice.
Q. B-8: Do domestic abuse victim
distributions from an applicable eligi-
ble retirement plan meet the distribution
restriction requirements in sections 401(k)
(2)(B)(i), 403(b)(7)(A)(i), 403(b)(11), and
457(d)(1)(A)?
A. B-8: If the employee or participant
certifies that the employee or participant is
eligible to receive a domestic abuse victim
distribution, then the distribution is treated
as meeting the distribution restrictions for
qualified cash or deferred arrangements
under section 401(k)(2)(B)(i), custodial
accounts under section 403(b)(7)(A)(i),
annuity contracts under section 403(b)(11),
and governmental deferred compensation
plans under section 457(d)(1)(A). Thus,
for example, an employer may expand the
distribution options under its plan to allow
an amount attributable to elective, qualified
nonelective, qualified matching, or safe
harbor contributions under a section 401(k)
plan to be distributed as a domestic abuse
victim distribution.
Q. B-9: What are the certification
requirements for a domestic abuse victim
distribution?
A. B-9: Pursuant to section 72(t)(2)(K)
(vi)(III), any distribution that an employee
or participant certifies as a domestic abuse
victim distribution will be treated as meet-
ing the distribution restriction requirements
under the Code for the applicable eligible
retirement plan. To meet the certification
requirements of section 72(t)(2)(K)(vi)
(III), the employee or participant could
check the box on the distribution request
form to certify that (1) the employee or
participant is eligible for a domestic abuse
victim distribution and (2) the distribution
is made during the 1-year period begin-
ning on any date on which the individual
is a victim of domestic abuse. The certifi-
cation must be provided in writing and the
employee or participant may use the elec-
tronic delivery rules in §1.401(a)-21(d) to
provide the certification.
Q. B-10: Is a domestic abuse victim
distribution treated by an applicable eligi-
ble retirement plan as an eligible rollover
distribution for purposes of the direct roll-
over rules, section 402(f) notice require-
ments, and the mandatory withholding
rules?
A. B-10: A domestic abuse victim
distribution is not treated as an eligible
rollover distribution for purposes of the
direct rollover rules under section 401(a)
(31), the notice requirement under section
402(f), and the mandatory withholding
rules under section 3405. Thus, the plan
is not required to offer an individual a
direct rollover with respect to a domes-
tic abuse victim distribution. In addition,
the administrator is not required to pro-
vide a section 402(f) notice. Finally, the
administrator or payor of the domestic
abuse victim distribution is not required
to withhold an amount equal to 20 percent
of the distribution, as generally is required
in section 3405(c)(1). However, a domes-
tic abuse victim distribution is subject
to the withholding requirements of sec-
tion 3405(b) and § 35.3405-1T.
Q. B-11: If an applicable eligible retire-
ment plan permits domestic abuse victim
distributions, is the plan required to accept
a repayment of that distribution to the
plan?
A. B-11: An applicable eligible retire-
ment plan must accept the repayment of
a domestic abuse victim distribution from
an individual if the following apply:
(a) the plan permits domestic abuse
victim distributions;
(b) the individual received a domestic
abuse victim distribution from that plan;
and
(c) the individual is eligible to make
a rollover contribution to that plan at the
time the individual wishes to repay the
domestic abuse victim distribution to the
plan.
Q. B-12: Is a repayment of a domestic
abuse victim distribution from an appli-
cable eligible retirement plan other than
an IRA treated as the direct transfer of an
eligible rollover distribution as defined in
section 402(c)(4)?
A. B-12: In the case of a repayment
of a domestic abuse victim distribution
from an applicable eligible retirement
plan other than an IRA, an individual is
treated as having received the distribu-
tion as an eligible rollover distribution
(as defined in section 402(c)(4)) and as
having transferred the amount to an appli-
cable eligible retirement plan in a direct
trustee-to-trustee transfer within 60 days
of the distribution.
Q. B-13: Is a repayment of a domes-
tic abuse victim distribution from an IRA
treated as the direct transfer of a distribu-
tion described in section 408(d)(3)?
A. B-13: In the case of a repayment of
a domestic abuse victim distribution from
an IRA, an individual is treated as having
received the distribution as a distribution
described in section 408(d)(3) and as hav-
ing transferred the amount to an appli-
cable eligible retirement plan in a direct
trustee-to-trustee transfer within 60 days
of the distribution.
Q. B-14: If an applicable eligible retire-
ment plan does not permit domestic abuse
victim distributions, may an individual
treat an otherwise permissible distribution
as a domestic abuse victim distribution?
A. B-14: If an applicable eligible
retirement plan does not permit domestic
abuse victim distributions and an indi-
vidual receives an otherwise permissible
distribution that meets the requirements
of a domestic abuse victim distribution
(as defined in Q&A B-1 of this notice),
the individual may treat the distribution
as a domestic abuse victim distribution
on the individual’s federal income tax
return to the extent the distribution meets
the limitation on a domestic abuse victim
distribution (see Q&A B-4 of this notice).
As part of the individual’s tax return, the
individual will claim on Form 5329 that
the distribution is a domestic abuse victim
distribution, in accordance with the form’s
instructions. The distribution, while inclu-
dible in gross income, is not subject to the
10 percent additional tax under section
72(t)(1) pursuant to section 72(t)(2)(K). If
the individual decides to repay the amount
to an eligible retirement plan, the indi-
vidual may, at any time during the 3-year
period beginning on the day after the date
on which the distribution was received,
repay the amount to an IRA.
IV. REQUEST FOR COMMENTS
The Treasury Department and the IRS
invite comments on all matters discussed
in this notice. In particular, the Treasury

Bulletin No. 2024–28 37 July 8, 2024
Department and the IRS invite comments
on whether the Secretary should adopt
regulations providing exceptions to the
rule that a plan administrator may rely
on an employee’s certification relating
to emergency personal expense distribu-
tions and procedures to address cases of
employee misrepresentation.
In addition, as mentioned in the Pur-
pose section of this notice, the Treasury
Department and the IRS anticipate issu-
ing regulations under section 72(t) and
invite general comments on section 72(t).
In particular, because the anticipated pro-
posed regulations would address repay-
ments of certain distributions under
section 72(t)(2) (for example, qualified
birth or adoption distributions under
section 72(t)(2)(H), emergency personal
expense distributions under section 72(t)
(2)(I), domestic abuse victim distribu-
tions under section 72(t)(2)(K), and ter-
minal illness distributions under section
72(t)(2)(L)), the Treasury Department
and the IRS request comments relating
to repayments. For example, comments
are requested on the implementation
of the requirement that any repayment
made within the 3-year period beginning
on the day after the date the distribution
was received will be treated as a direct
trustee-to-trustee transfer within 60 days
of the distribution. Comments are also
requested on procedures for determining
whether a repayment meets the appli-
cable requirements under section 72(t)
(2), particularly whether it would be
helpful if the anticipated proposed reg-
ulations would permit an administrator
to rely on an individual’s certification
that any requested repayment meets the
requirements under section 72(t)(2), is
made within the applicable 3-year time
period,
7
and does not exceed the amount
of the distribution with respect to which
a repayment is being made.
Comments should be submitted in
writing on or before October 7, 2024,
and should include a reference to Notice
2024-55. Comments may be submitted
electronically via the Federal eRulemak-
ing Portal at www.regulations.gov (type
“IRS Notice 2024-55” in the search field
on the Regulations.gov home page to find
this notice and submit comments). Alter-
natively, comments may be submitted by
mail to: Internal Revenue Service, Attn:
CC:PA:LPD:PR (Notice 2024-55), Room
5203, P.O. Box 7604, Ben Franklin Sta-
tion, Washington, D.C. 20044.
The Treasury Department and the IRS
will publish for public availability any
comment submitted electronically or on
paper to its public docket.
V. PAPERWORK REDUCTION ACT
The collection of information con-
tained in this notice has been submitted to
the Office of Management and Budget in
accordance with the Paperwork Reduction
Act (PRA) (44 U.S.C. 3507) under con-
trol number 1545-2317. An agency may
not conduct or sponsor, and a person is
not required to respond to, a collection
of information unless the collection of
information displays a valid OMB con-
trol number. The information collec-
tion requirements in section III.A and
B will be submitted to OMB for review
and approval in accordance with 5 CFR
1320.10.
Pursuant to section 72(t)(2)(I)(iv),
Q&A A-9 of this notice provides that, in
determining whether an employee is eli-
gible for an emergency personal expense
distribution, an administrator of an appli-
cable eligible retirement plan is permitted
to rely on an employee’s written certifi-
cation that the employee is eligible for an
emergency personal expense distribution.
Q&A B-9 of this notice provides that,
to meet the certification requirements of
section 72(t)(2)(K)(vi)(III), an individ-
ual could check the box on the distribu-
tion request form to certify that (1) the
employee or participant is eligible for a
domestic abuse victim distribution and (2)
the distribution is made during the 1-year
period beginning on any date on which the
individual is a victim of domestic abuse.
The certification must be provided in
writing and the employee or participant
may use the electronic delivery rules in
§1.401(a)-21(d) to provide the certifica-
tion.
According to the Bureau of Labor and
Statistics, determined as of March 2023,
approximately 45 percent of civilian
workers in the United States participated
in defined contribution plans. The popu-
lation of civilian workers represented by
the March 2023 National Compensation
Survey (NCS) was 145,300,100. Using
45 percent of the population reported
in the NCS survey, approximately
65,385,045 civilian workers participated
in defined contribution plans in March
2023.
Sections 115 and 314 of the SECURE
2.0 Act became effective January 1, 2024.
The IRS does not have all the data neces-
sary for determining paperwork for certi-
fications of emergency personal expense
and domestic victim abuse distributions.
At this point, the IRS does not know
how many applicable eligible retirement
plans will offer these distributions or how
many employees will request these dis-
tributions from applicable eligible retire-
ment plans. Therefore, the paperwork
burden is based on an estimated range
of the number of employees who would
apply for either an emergency personal
expense distribution or a domestic abuse
victim distribution from an applicable
eligible retirement plan that permits such
distributions.
The collection of information is
required to obtain a benefit. For Q&A
A-9 of this notice, the likely respondent is
an individual who is requesting an emer-
gency personal expense distribution from
an applicable eligible retirement plan, as
described in section 72(t)(2)(I)(iv), and
self-certifying that the individual is eli-
gible for an emergency personal expense
distribution.
Estimated total annual reporting bur-
den: 3,750 to 7,500 hours.
Estimated average annual burden per
respondent: 3 minutes.
Estimated number of respondents:
75,000 to 150,000 respondents.
Estimated frequency of responses: 1
per distribution request.
For Q&A B-9 of this notice, the likely
respondent is an individual who is request-
ing a domestic abuse victim distribution
7
But see section 311(b)(2) of the SECURE 2.0 Act for a special temporary rule on the effective date of the 3-year rule for repayments relating to qualified birth or adoption distributions made
on or before the date of enactment of the SECURE 2.0 Act.

July 8, 2024 38 Bulletin No. 2024–28
from an applicable eligible retirement
plan, as defined in section 72(t)(2)(K)(vi)
(I), and self-certifying that the individual
is eligible for a domestic abuse victim dis-
tribution and that the distribution is made
during the 1-year period beginning on any
date on which the individual is a victim of
domestic abuse.
Estimated total annual reporting bur-
den: 3,750 to 7,500 hours.
Estimated average annual burden per
respondent: 3 minutes.
Estimated number of respondents:
75,000 to 150,000 respondents.
Estimated frequency of responses: 1
per distribution request.
Books or records relating to a col-
lection of information must be retained
as long as their contents may become
material in the administration of any
internal revenue law. Generally, tax
returns and tax return information
are confidential, as required by sec-
tion 6103 of the Code.
VI. DRAFTING INFORMATION
The principal authors of this notice are
Naomi Lehr, Vernon Carter, and Pamela
R. Kinard of the Office of Associate Chief
Counsel (Employee Benefits, Exempt
Organizations, and Employment Taxes).
For further information regarding this
notice, please contact Mr. Vernon Carter at
(202) 317-6799, Ms. Naomi Lehr at (202)
317-4102, or Ms. Pamela Kinard at (202)
317-6000 (not toll-free numbers).

Bulletin No. 2024–28 39 July 8, 2024
Part IV
Deletions From Cumulative
List of Organizations,
Contributions to Which are
Deductible Under Section
170 of the Code
Announcement 2024-28
Table of Contents
The Internal Revenue Service has
revoked its determination that the organi-
zations listed below qualify as organiza-
tions described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the IRS will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the IRS is not pre-
cluded from disallowing a deduction for
any contributions made after an organiza-
tion ceases to qualify under section 170(c)
(2) if the organization has not timely filed
a suit for declaratory judgment under sec-
tion 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declar-
atory judgment has been timely filed,
contributions from individuals and orga-
nizations described in section 170(c)(2)
that are otherwise allowable will continue
to be deductible. Protection under section
7428(c) would begin on July 08, 2024, and
would end on the date the court first deter-
mines the organization is not described in
section 170(c)(2) as more particularly set
for in section 7428(c)(1). For individual
contributors, the maximum deduction pro-
tected is $1,000, with a husband and wife
treated as one contributor. This benefit is
not extended to any individual, in whole
or in part, for the acts or omissions of the
organization that were the basis for revo-
cation.
Name Of Organization
Effective Date of
Revocation
Location
Mary Duque Juniors of Children’s Hospital Los Angeles 3/1/2020Los Angeles, CA
Leadville-Lake County Chamber of Commerce Foundation1/1/2020Leadville, Co

July 8, 2024 40 Bulletin No. 2024–28
Notice of Proposed
Rulemaking
Certain Partnership
Related-Party Basis
Adjustment Transactions as
REG-124593-23
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
and public hearing.
SUMMARY: This document contains
proposed regulations that would identify
certain partnership related-party basis
adjustment transactions and substantially
similar transactions as transactions of
interest, a type of reportable transaction.
Material advisors and certain participants
in these transactions would be required to
file disclosures with the IRS and would be
subject to penalties for failure to disclose.
The proposed regulations would affect
participants in these transactions as well
as material advisors. This document also
provides a notice of a public hearing on
the proposed regulations.
DATES: Comments due: Written or elec-
tronic comments must be received by
August 19, 2024.
Public hearing: A public hearing on this
proposed regulation has been scheduled
for Tuesday, September 17, 2024, at 10
a.m. ET. Requests to speak and outlines of
topics to be discussed at the public hear-
ing must be received by August 19, 2024.
If no outlines are received by August 19,
2024, the public hearing will be cancelled.
Requests to attend the public hearing must
be received by 5 p.m. ET on September
13, 2024. The public hearing will be made
accessible to people with disabilities.
Requests for special assistance during the
public hearing must be received by 5 p.m.
ET on September 12, 2024.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically via the Federal eRulemak-
ing Portal at https://www.regulations.
gov (indicate IRS and REG-124593-23)
by following the online instructions for
submitting comments. Requests for a
public hearing must be submitted as pre-
scribed in the “Comments and Requests
for a Public Hearing” section. Once
submitted to the Federal eRulemaking
Portal, comments cannot be edited or
withdrawn. The Department of the Trea-
sury (Treasury Department) and the IRS
will publish for public availability any
comments submitted to the IRS’s pub-
lic docket. Send paper submissions to:
CC:PA:01:PR (REG-124593-23), room
5203, Internal Revenue Service, P.O.
Box 7604, Ben Franklin Station, Wash-
ington, DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Elizabeth Zanet of the Office
of Associate Chief Counsel (Passthroughs
and Special Industries), (202) 317-6007;
concerning the submission of comments
or the hearing, Vivian Hayes at (202) 317-
6901 (not toll-free numbers) or by email at
publichearings@irs.gov (preferred).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed addi-
tions to the Income Tax Regulations (26
CFR part 1) under section 6011 of the
Internal Revenue Code (Code). The pro-
posed additions would add §1.6011-18 to
identify certain partnership related-party
basis adjustment transactions as transac-
tions of interest for purposes of section
6011 (proposed regulations).
I. Disclosure of Reportable Transactions
by Participants and Penalties for Failure
to Disclose
Section 6011(a) generally provides
that, if required by regulations prescribed
by the Secretary of the Treasury or her
delegate (Secretary), any person made
liable for any tax imposed by the Code,
or with respect to the collection thereof,
must make a return or statement according
to the forms and regulations prescribed by
the Secretary. Every person required to
make a return or statement must include
therein the information required by such
forms or regulations.
Section 1.6011-4(a) provides that
every taxpayer that has participated in a
reportable transaction within the mean-
ing of §1.6011-4(b) and who is required
to file a tax return must file a disclosure
statement within the time prescribed in
§1.6011-4(e).
Reportable transactions are identified
in §1.6011-4 and include listed transac-
tions, confidential transactions, transac-
tions with contractual protection, loss
transactions, and transactions of interest.
See §1.6011-4(b)(2) through (6). Section
1.6011-4(b)(6) defines a “transaction of
interest” as a transaction that is the same
as or substantially similar to one of the
types of transactions that the IRS has iden-
tified by notice, regulation, or other form
of published guidance as a transaction of
interest.
Section 1.6011-4(c)(4) provides that a
transaction is “substantially similar” if it
is expected to obtain the same or similar
types of tax consequences and is either
factually similar or based on the same or
similar tax strategy. Receipt of an opin-
ion regarding the tax consequences of the
transaction is not relevant to the determi-
nation of whether the transaction is the
same as or substantially similar to another
transaction. Further, the term substantially
similar must be broadly construed in favor
of disclosure. For example, a transaction
may be substantially similar to a transac-
tion of interest even though it may involve
different entities or use different Code pro-
visions.
Section 1.6011-4(c)(3)(i)(E) provides
that a taxpayer has participated in a trans-
action of interest if the taxpayer is one of
the types or classes of persons identified
as participants in the transaction in the
published guidance describing the trans-
action of interest.
Section 1.6011-4(d) and (e) provide
that the disclosure statement, Form 8886,
Reportable Transaction Disclosure State-
ment (or successor form), must be attached
to the taxpayer’s tax return for each tax-
able year in which a taxpayer participates
in a reportable transaction. A copy of
the disclosure statement must be sent to
the IRS’s Office of Tax Shelter Analysis
(OTSA) at the same time that any disclo-
sure statement is first filed by the taxpayer

Bulletin No. 2024–28 41 July 8, 2024
pertaining to a particular reportable trans-
action.
Section 1.6011-4(e)(2)(i) provides
that if a transaction becomes a transac-
tion of interest after the filing of a tax-
payer’s tax return (including an amended
return) reflecting the taxpayer’s partici-
pation in the transaction of interest and
before the end of the period of limita-
tions for assessment for any taxable year
in which the taxpayer participated in the
transaction of interest, then a disclo-
sure statement must be filed with OTSA
within 90 calendar days after the date on
which the transaction becomes a transac-
tion of interest. This requirement extends
to an amended return and exists regard-
less of whether the taxpayer participated
in the transaction in the year the trans-
action became a transaction of interest.
The Commissioner of Internal Revenue
(Commissioner) may also determine the
time for disclosure of transactions of
interest in the published guidance identi-
fying the transaction.
Participants required to disclose these
transactions under §1.6011-4 who fail to
do so are subject to penalties under sec-
tion 6707A of the Code. Section 6707A(b)
provides that the amount of the penalty is
75 percent of the decrease in tax shown
on the return as a result of the reportable
transaction (or which would have resulted
from such transaction if such transaction
were respected for Federal tax purposes),
subject to minimum and maximum pen-
alty amounts. The minimum penalty
amount is $5,000 in the case of a natural
person and $10,000 in any other case. For
a transaction of interest, the maximum
penalty amount is $10,000 in the case of
a natural person and $50,000 in any other
case.
Additional penalties may also apply.
In general, section 6662A of the Code
imposes a 20 percent accuracy-related
penalty on any understatement (as defined
in section 6662A(b)(1)) attributable to
an adequately disclosed reportable trans-
action. If the taxpayer had a requirement
to disclose participation in the reportable
transaction but did not adequately disclose
the transaction in accordance with the reg-
ulations under section 6011, the taxpayer
is subject to an increased penalty rate
equal to 30 percent of the understatement.
See section 6662A(c). Section 6662A(b)
(2) provides that section 6662A applies to
any item which is attributable to any listed
transaction and any reportable transaction
(other than a listed transaction) if a sig-
nificant purpose of such transaction is the
avoidance or evasion of Federal income
tax.
II. Disclosure of Reportable Transactions
by Material Advisors and Penalties for
Failure to Disclose
Section 6111(a) provides that each
material advisor with respect to any
reportable transaction must make a return
setting forth: (1) information identifying
and describing the transaction, (2) infor-
mation describing any potential tax ben-
efits expected to result from the transac-
tion, and (3) such other information as the
Secretary may prescribe. Such return must
be filed not later than the date specified by
the Secretary.
Section 301.6111-3(a) of the Procedure
and Administration Regulations (26 CFR
part 301) provides that each material advi-
sor with respect to any reportable transac-
tion, as defined in §1.6011-4(b), must file
a return as described in §301.6111-3(d) by
the date described in §301.6111-3(e).
Section 301.6111-3(b)(1) provides that
a person is a material advisor with respect
to a transaction if the person provides any
material aid, assistance, or advice with
respect to organizing, managing, promot-
ing, selling, implementing, insuring, or
carrying out any reportable transaction,
and directly or indirectly derives gross
income in excess of the threshold amount
as defined in §301.6111-3(b)(3) for the
material aid, assistance, or advice. Under
§301.6111-3(b)(2)(i) and (ii), a person
provides material aid, assistance, or advice
if the person provides a tax statement,
which is any statement (including another
person’s statement), oral or written, that
relates to a tax aspect of a transaction that
causes the transaction to be a reportable
transaction as defined in §1.6011-4(b)(2)
through (7).
Material advisors must disclose trans-
actions on Form 8918, Material Advisor
Disclosure Statement (or successor form),
as provided in §301.6111-3(d) and (e).
Section 301.6111-3(e) provides that the
material advisor’s disclosure statement for
a reportable transaction must be filed with
the OTSA by the last day of the month
that follows the end of the calendar quar-
ter in which the advisor becomes a mate-
rial advisor with respect to a reportable
transaction or in which the circumstances
necessitating an amended disclosure
statement occur. A person may become a
material advisor with respect to a trans-
action that is later identified as a trans-
action of interest. See §301.6111-3(b)(4).
The disclosure statement must be sent to
the OTSA at the address provided in the
instructions for Form 8918 (or successor
form).
Section 301.6111-3(d)(2) provides that
the IRS will issue to a material advisor a
reportable transaction number with respect
to the disclosed reportable transaction.
Receipt of a reportable transaction num-
ber does not indicate that the disclosure
statement is complete, nor does it indicate
that the transaction has been reviewed,
examined, or approved by the IRS. Mate-
rial advisors must provide the reportable
transaction number to all taxpayers for
whom the material advisor acts as a mate-
rial advisor as defined in §301.6111-3(b).
The reportable transaction number must
be provided at the time the transaction is
entered into, or if the transaction is entered
into prior to the material advisor receiving
the reportable transaction number, within
60 calendar days from the date the report-
able transaction number is mailed to the
material advisor.
Section 6707(a) of the Code provides
that a material advisor who fails to file a
timely disclosure, or files an incomplete
or false disclosure statement, is subject
to a penalty. Pursuant to section 6707(b)
(1), the penalty for reportable transactions
other than listed transactions, including
transactions of interest, is $50,000.
Additionally, section 6112(a) of the
Code provides that each material advisor
with respect to any reportable transaction,
whether or not required to file a return
under section 6111 with respect to such
transaction, must maintain a list (1) iden-
tifying each person with respect to whom
such advisor acted as a material advisor
with respect to such transaction and (2)
containing such other information as the
Secretary may by regulations require.
Material advisors must furnish such lists
to the IRS in accordance with §301.6112-
1(e).

July 8, 2024 42 Bulletin No. 2024–28
A material advisor may be subject to
a penalty under section 6708 of the Code
for failing to maintain a list under section
6112(a) and failing to make the list avail-
able upon written request to the Secretary
in accordance with section 6112(b) within
20 business days after the date of request.
Section 6708(a) provides that the penalty
is $10,000 per day for each day of the fail-
ure after the 20th day. However, no pen-
alty will be imposed with respect to the
failure on any day if such failure is due to
reasonable cause.
III. Basis Adjustments under
Subchapter K
A. In general
Under subchapter K of chapter 1 of the
Code (subchapter K), a distribution by a
partnership of the partnership’s property
(partnership property) or a transfer of an
interest in a partnership (partnership inter-
est) may result in an adjustment to the
basis of the distributed property, partner-
ship property, or both.
A distribution of partnership property
may result in an adjustment to the basis
of the distributed property under section
732(a), (b), or (d) of the Code. In the case
of a distribution of partnership property to
a partner by a partnership with an election
under section 754 of the Code (section
754 election) in effect, or with respect to
which there is a substantial basis reduc-
tion as described in section 734(d) of the
Code, the distribution may also result in
an adjustment to the basis of the partner-
ship’s remaining property (remaining part-
nership property) under section 734(b).
If a partnership interest is transferred
by sale or exchange or on the death of a
partner, and the partnership either has
a section 754 election in effect or has a
substantial built-in loss with respect to
the transfer of the partnership interest as
described in section 743(d) of the Code,
the transfer may result in an adjustment
to the basis of partnership property under
section 743(b) with respect to the trans-
feree partner.
Section 754 provides that if a partner-
ship makes an election in accordance with
regulations prescribed by the Secretary,
the basis of partnership property shall be
adjusted, in the case of a distribution of
property, in the manner provided by sec-
tion 734, and in the case of a transfer of
a partnership interest, in the manner pro-
vided in section 743. Unless the election
is revoked in accordance with the regula-
tions under section 754, the section 754
election applies with respect to all distri-
butions of property by the partnership and
to all transfers of interests in the partner-
ship during the taxable year with respect
to which the election was filed and all sub-
sequent taxable years.
B. Basis adjustments under section 732
Section 732 governs a distributee part-
ner’s basis in distributed property other
than money. In the case of a current dis-
tribution, and except as provided under
section 732(a)(2), section 732(a)(1) pro-
vides that the distributee partner’s basis
in distributed property (other than money)
is equal to the partnership’s adjusted basis
in the distributed property immediately
before the distribution. Under section
732(a)(2), however, a distributee partner’s
basis in distributed property is limited to
the adjusted basis of the distributee part-
ner’s partnership interest reduced by any
money distributed to such partner in the
same transaction.
In the case of a liquidating distribution,
section 732(b) provides that the distribu-
tee partner’s basis in distributed property
(other than money) is equal to the adjusted
basis of the distributee partner’s partner-
ship interest reduced by any money dis-
tributed to such partner in the same trans-
action.
In the case of a distribution of more
than one property from a partnership, the
basis of the distributed properties to which
section 732(a)(2) and (b) apply must be
allocated among the distributed properties
under the rules of section 732(c) and the
regulations thereunder.
C. Basis adjustments under section 734
In the case of a distribution of prop-
erty by a partnership with a section 754
election in effect, and for which either the
distributee partner recognizes gain or loss
on the distribution, or for which the basis
of the distributed property in the distribu-
tee partner’s hands, as determined under
section 732, differs from the partnership’s
adjusted basis in the distributed property
immediately before the distribution, sec-
tion 734(b) requires the partnership to
increase or decrease (as applicable) the
basis of its remaining partnership prop-
erty. Also, in the case of a distribution of
property by a partnership that results in
a substantial basis reduction under sec-
tion 734(d), the basis of remaining part-
nership property must be adjusted under
section 734(b), even if the partnership
does not have a section 754 election in
effect.
Section 734(b)(1) requires a partner-
ship to increase the basis of its remaining
partnership property if a distribution of
partnership property by the partnership
results in the distributee partner recog-
nizing gain under section 731(a)(1) of the
Code, or if property (other than money)
to which section 732(a)(2) or (b) applies
is distributed to the distributee partner
and the property’s adjusted basis to the
partnership immediately before the dis-
tribution is greater than the distributee
partner’s basis in the distributed property
as determined under section 732. Section
731(a)(1) requires a distributee partner to
recognize gain in a current or liquidating
distribution to the extent that any money
distributed to that partner in the distri-
bution exceeds the adjusted basis of that
partner’s partnership interest immediately
before the distribution. The amount of the
basis increase to the partnership’s remain-
ing property under section 734(b)(1) fol-
lowing a distribution of partnership prop-
erty to a partner is equal to the amount of
gain recognized by the distributee partner
in the distribution under section 731(a)
(1) and the excess of the partnership’s
adjusted basis in the distributed property
immediately before the distribution over
the distributee partner’s basis in the dis-
tributed property as determined under sec-
tion 732.
Section 734(b)(2) requires a partner-
ship to decrease the basis of its remaining
property if a distribution of property by the
partnership results in the distributee part-
ner recognizing loss under section 731(a)
(2), or if property (other than money) is
distributed to the distributee partner in
a distribution to which section 732(b)
applies and the property’s adjusted basis
to the partnership immediately before the
distribution is less than the distributee

Bulletin No. 2024–28 43 July 8, 2024
partner’s basis in the distributed property
as determined under section 732. Under
section 731(a)(2), a distributee partner
may recognize a loss in a liquidating
distribution of that partner’s interest in
the partnership to the extent that such
partner received only money, unrealized
receivables described in section 751(c),
or inventory items described in section
751(d) of the Code in the distribution.
In such a case, the distributee partner is
required to recognize a loss to the extent
that such partner’s adjusted basis in the
partnership interest exceeds the sum of
any money distributed to that partner in
the distribution and the basis to the dis-
tributee partner (determined under sec-
tion 732) of any unrealized receivables
or inventory received by that partner in
the distribution. The amount of the basis
decrease to the partnership’s remaining
property under section 734(b)(2) follow-
ing a distribution of partnership property
to a partner is equal to the amount of loss
recognized by the distributee partner in
the distribution under section 731(a)(2)
and the excess of the distributee partner’s
basis in the distributed property as deter-
mined under section 732 over the part-
nership’s adjusted basis in the distributed
property immediately before the distribu-
tion.
A partnership without a section 754
election in effect is subject to a mandatory
basis adjustment under section 734(b)(2)
if there is a substantial basis reduction
with respect to a distribution of partner-
ship property. Under section 734(d), a
substantial basis reduction with respect
to a distribution of partnership property
occurs if the sum of the amount of loss
recognized to the distributee partner on
the distribution, plus any increase in basis
in the distributed property to the distribu-
tee partner under section 732(b), exceeds
$250,000.
D. Basis adjustments under
section 743(b)
Generally, if a partnership interest is
transferred in a sale or exchange or on
the death of a partner, the transferee
partner’s basis in the transferred partner-
ship interest is determined under section
742 of the Code and the basis of part-
nership property is determined under
section 743(a). Section 742 provides
that the transferee partner’s basis in a
partnership interest acquired other than
by contribution is determined under part
II of subchapter O of chapter 1 of the
Code, beginning at section 1011 of the
Code and following. Thus, for example,
a transferee partner’s basis in a partner-
ship interest acquired by purchase gen-
erally is cost basis under section 1012 of
the Code. Section 743(a) provides that,
in the case of a transfer of a partner-
ship interest by sale or exchange or on
the death of a partner, the basis of part-
nership property is not adjusted unless
either the partnership has a section 754
election in effect or the partnership has
a substantial built-in loss with respect to
the transfer of the partnership interest.
Under section 743(b), in the case of a
transfer of a partnership interest by sale
or exchange or on the death of a partner,
a partnership with a section 754 election
in effect or that has a substantial built-in
loss with respect to the transfer of the part-
nership interest must increase or decrease
(as applicable) the adjusted basis of part-
nership property with respect to the trans-
feree partner.
Section 743(b)(1) provides that the
adjusted basis of partnership property is
increased by the excess of the transferee
partner’s basis in the transferred partner-
ship interest over the transferee partner’s
proportionate share of the adjusted basis
of partnership property.
Section 743(b)(2) provides that the
adjusted basis of partnership property
is decreased by the excess of the trans-
feree partner’s proportionate share of the
adjusted basis of partnership property
over the transferee partner’s basis in the
transferred partnership interest.
A partnership without a section 754
election is subject to a mandatory basis
adjustment under section 743(b) with
respect to a transfer of a partnership inter-
est if the partnership has a substantial
built-in loss with respect to the transfer
of the partnership interest. Under sec-
tion 743(d)(1), a partnership has a sub-
stantial built-in loss with respect to a
transfer of an interest in the partnership if
either the partnership’s adjusted basis in
its property exceeds the fair market value
of such property by more than $250,000,
or the transferee partner would be allo-
cated a loss of more than $250,000 if the
partnership assets were sold for cash equal
to their fair market value immediately
after the transfer.
Under regulations prescribed by the
Secretary, a basis adjustment under sec-
tion 743(b) is an adjustment to the basis
of partnership property with respect to
the transferee partner only. The transferee
partner’s proportionate share of the part-
nership’s adjusted basis in its property
generally is determined in accordance
with the transferee partner’s interest in
the partnership’s previously taxed capital
(including the transferee partner’s share of
partnership liabilities) under regulations
prescribed by the Secretary.
In the case of a transferee partner who
acquired all or part of its partnership inter-
est by a transfer to which no section 754
election was in effect, and to whom a dis-
tribution of property (other than money)
is made with respect to the transferred
interest within two years, section 732(d)
and the regulations thereunder allow the
partner to make an election to treat as the
adjusted basis of the distributed property
the adjusted basis such property would
have if the adjustment under section
743(b) were in effect with respect to the
partnership property.
Under §1.732-1(d)(4), the special
basis adjustment under section 732(d)
is required to apply to a distribution of
property to a partner who acquired all or
part of its interest by a transfer from a
partnership without a section 754 elec-
tion in effect for the taxable year of such
transfer, whether or not the distribution is
made within two years of such transfer,
if at the time the partnership interest was
transferred, (i) the fair market value of all
partnership property (other than money)
exceeded 110 percent of its adjusted
basis to the partnership, (ii) an alloca-
tion of basis under section 732(c) upon
a liquidation of the transferee partner’s
interest in the partnership immediately
after the transfer of such interest would
have resulted in a shift of basis from
property not subject to an allowance for
depreciation, depletion, or amortization
to property subject to such an allowance,
and (iii) a basis adjustment under section
743(b) would change the basis to the
transferee partner of the property actually
distributed.

July 8, 2024 44 Bulletin No. 2024–28
E. Allocation of basis adjustments under
sections 734 and 743
Section 734(c) states that a basis
adjustment under section 734(b) is allo-
cated among partnership properties under
the rules of section 755 of the Code. Sec-
tion 743(c) states that a basis adjustment
under section 743(b) is allocated among
partnership properties under the rules of
section 755.
Section 755(a) generally requires basis
adjustments under section 734(b) or sec-
tion 743(b) to be allocated in a manner
that has the effect of reducing the differ-
ence between the fair market value and the
adjusted basis of partnership properties or
in any other manner permitted by regula-
tions. In addition, section 755(b) requires
these basis adjustments to be allocated to
partnership property of a like character
or to subsequently acquired partnership
property of a like character if such prop-
erty is not available or has insufficient
basis at the time of the basis adjustment
(because a decrease in the adjusted basis
of the property would reduce the basis of
such property below zero). Section 755(c)
provides a special rule that prohibits
allocating a basis decrease under section
734(b) to the stock of a corporation that
is a partner of the partnership (or to any
related partner in the partnership within
the meaning of section 267(b) of the Code
or section 707(b)(1) of the Code).
F. Common terminology for bases with
respect to a partnership interest
A partner’s adjusted basis in its part-
nership interest commonly is referred to
as the partner’s “outside basis” in its part-
nership interest. A partnership’s adjusted
basis in its property commonly is referred
to as the “inside basis” of the partner-
ship’s property. Each partner has a share
of inside basis. For ease of explanation,
this terminology is used in part IV of this
Background section.
IV. Partnership Related-Party Basis
Adjustment Transactions
A. Overview
The Treasury Department and the IRS
are aware of related persons using partner-
ships to engage in transactions that inap-
propriately exploit the basis adjustment
provisions of subchapter K applicable to
distributions of partnership property or
transfers of partnership interests discussed
in part III of this Background section. This
awareness results from the IRS’s review
of various partnership transactions involv-
ing related parties in which basis adjust-
ments were created to artificially generate
or regenerate Federal income tax benefits
that resulted in significant tax savings
without a corresponding economic out-
lay. These transactions were carefully
structured to exploit the mechanical basis
adjustment provisions of subchapter K to
produce significant tax benefits with lit-
tle or no economic impact on the related
parties, and in a manner that would not
be a likely arrangement between partners
negotiating at arm’s-length.
Four variations of the transactions
are referred to in this preamble as “Part-
nership Related-Party Basis Adjustment
Transactions.” The manner in which the
transactions exploit the basis adjustment
provisions of sections 732(b) and (d),
734(b), and 743(b), and the potential for
tax abuse presented by the transactions are
described in this part IV and part VI of this
Background section.
Generally, in a Partnership Relat-
ed-Party Basis Adjustment Transaction,
partnership property is distributed to a
partner who is related to one or more other
partners, and that distribution results in a
person related to the distributee partner,
the distributee partner, or both, receiving
all or a share of a basis increase in the dis-
tributed property or remaining partnership
property under section 732 or 734(b) (as
applicable); alternatively, a partnership
interest is transferred between related
persons or to a transferee partner who is
related to an existing partner in the part-
nership, and that transfer results in an
increase to the inside basis in partnership
property with respect to the transferee
partner under section 743(b).
Partnership Related-Party Basis
Adjustment Transactions generally are
structured so that, under the applicable
allocation rules (sections 732(c), 734(c),
743(c), and 755), the basis increase is
allocated to property that is eligible for
cost recovery allowances (or eligible for
a shorter cost recovery period) or that
the partnership or the distributee partner
disposes of in a taxable sale or exchange.
Accordingly, the basis increase results
in related partners decreasing their over-
all taxable income through additional or
accelerated cost recovery allowances or
decreasing their taxable gain or increasing
their taxable loss on the subsequent tax-
able disposition of the property subject to
the basis increase.
The related partners receive these tax
benefits directly in the case of a distribu-
tion of property in which the basis of the
distributed property is increased in the
distributee partner’s hands under section
732(b) or (d). They receive these benefits
indirectly in the case of a transfer of a
partnership interest in which the inside
basis of partnership property is increased
for the transferee partner under section
743(b) or in the case of a distribution of
property that results in an increase to the
common basis of partnership property
under section 734(b). Whether the tax
benefits are received directly or indi-
rectly, the resulting decrease in taxable
income or gain (or increase in taxable
loss) benefits the related-party group as
a whole. Further, because the partners
are related, the distributions or transfers
may have little or no effect on the overall
economic ownership of the property yet
produce significant tax benefits shared by
the related partners.
A related partner’s partnership inter-
est must have certain characteristics to
create the opportunity for a Partnership
Related-Party Basis Adjustment Trans-
action. In general, these characteristics
are (1) a partner’s outside basis in its
partnership interest that is low com-
pared to the partnership’s basis in prop-
erty it distributes to such partner, (2) a
partner’s outside basis in its partnership
interest that is high compared to such
partner’s share of the partnership’s basis
in the partnership property (that is, the
partner’s share of inside basis), or (3) a
partner’s outside basis in its partnership
interest that is high compared to the part-
nership’s basis in property it distributes
to such partner in liquidation of the part-
ner’s interest. Partnerships with related
parties can create these characteristics
through orchestrated contributions and
distributions, as well as allocations
under section 704(b) and (c). In most

Bulletin No. 2024–28 45 July 8, 2024
commercial transactions involving unre-
lated parties, the opportunity for abuse
is limited because each party has sepa-
rate, and often competing, economic and
tax interests and the parties transact at
arm’s length. In contrast, for related par-
ties, basis can be manipulated to provide
a material net tax benefit to the related
parties, as illustrated in part IV.B, C, D
and E of this Background section.
B. Partnership Related-Party Basis
Adjustment Transactions under section
734(b)
In a Partnership Related-Party Basis
Adjustment Transaction under sec-
tion 734(b), a partnership with a section
754 election in effect and two or more
direct or indirect partners that are related
to each other makes a current or liquidat-
ing distribution of partnership property
to one or more of the related partners.
Immediately before the distribution, the
partnership’s basis in the distributed part-
nership property exceeds the distributee
partner’s basis in its partnership interest
(that is, the partnership distributes prop-
erty with a relatively high inside basis
to a distributee partner with a relatively
low outside basis). Under section 732(a)
(2) or (b), the low-outside basis partner
takes a basis in the distributed property
that is lower than the inside basis of the
property immediately before the distri-
bution.
As a result of the basis decrease to the
distributed property in the hands of the
distributee partner under section 732(a)(2)
or (b), the partnership increases the basis
of its remaining partnership properties
under section 734(b) by an amount equal
to the excess of the partnership’s basis
in the distributed property immediately
before the distribution over the basis of
the distributed property in the hands of the
distributee partner immediately after the
distribution.
As a result of the distribution, under
sections 734(c) and 755, the partnership
allocates the basis increase to its remain-
ing partnership properties; these remain-
ing partnership properties are eligible for
cost recovery allowances or are disposed
of by the partnership in a taxable sale or
exchange. The partnership then claims
increased cost recovery allowances or
decreased taxable gain (or increased
taxable loss) on the disposition of the
partnership property with the increased
basis.
Because the transaction occurs among
related persons, any economic conse-
quences inherent in distributing partner-
ship property to a partner that will have
to reduce the basis of the distributed
property under section 732(a)(2) or (b)
can be minimized. For example, the dis-
tributed property might be property that
the distributee partner intends to hold
indefinitely and that is not eligible for cost
recovery allowances. Further, because the
transaction occurs among related persons,
the overall economic ownership of the
property remains substantially the same as
before the transaction.
Related parties may choose to structure
a distribution of partnership property to a
related partner so that gain is recognized,
for example, by distributing cash or mar-
ketable securities. If the recognized gain is
insignificant compared with the increase
in basis obtained under section 734(b) or
is offset because of a tax attribute of the
distributee partner (such as net operating
losses), then the transfer may be consid-
ered a Partnership Related-Party Basis
Adjustment Transaction under section
734(b).
C. Partnership Related-Party Basis
Adjustment Transactions under section
743(b)
In a Partnership Related-Party Basis
Adjustment Transaction under sec-
tion 743(b), a partner transfers an interest
in a partnership with a section 754 election
in effect to a related transferee or a trans-
feree that is related to one or more of the
partners in a nonrecognition transaction
within the meaning of section 7701(a)(45)
of the Code, such as a transfer under sec-
tion 351(a) or 721(a) of the Code. Because
the transfer is accomplished through a
nonrecognition transaction, the transfer-
ee’s basis in the transferred partnership
interest generally will be equal to the
transferor partner’s basis in the transferred
partnership interest (that is, the transferred
partnership interest will be substituted
basis property within the meaning of sec-
tion 7701(a)(42) of the Code, such as that
provided under section 362(a) of the Code
in the case of a transfer of property to a
corporation in exchange for stock under
section 351(a), or under section 722 of the
Code in the case of a transfer of property
to a partnership in exchange for a partner-
ship interest under section 721(a)).
In order for the transfer to give rise to a
basis increase under section 743(b)(1), the
transferor partner must have an inside-out-
side basis disparity with respect to its
partnership interest so that the transferor
partner’s basis in the partnership interest
(that is, the transferor partner’s outside
basis that carries over to the transferee
partner) is greater than the transferor part-
ner’s share of the partnership’s basis in its
properties (that is, the transferor partner’s
share of inside basis immediately prior to
the transfer). Because a section 754 elec-
tion is in effect for the taxable year of the
transfer, section 743(b) requires a basis
increase to eliminate the inside-outside
basis disparity of the transferee partner.
The basis increase under section 743(b)
(1) is equal to the excess of the transferee
partner’s outside basis over its proportion-
ate share of the inside basis.
As a result of the transfer, under sec-
tions 743(c) and 755, the partnership
allocates the basis increase with respect
to the transferee partner to its partnership
properties; these properties are eligible
for cost recovery allowances or are dis-
posed of by the partnership in a taxable
sale or exchange. The transferee partner
then receives increased allocations of cost
recovery allowances or lower allocations
of taxable gain (or higher allocations of
taxable loss) on the sale or exchange of
the property by the partnership. Further,
because the transaction occurs among
related persons, the overall economic
ownership of the partnership among
the related partners remains the same as
before the transaction.
Related parties may choose to structure
a transfer of a partnership interest between
a related transferor partner and related
transferee so that gain is recognized. If the
recognized gain is insignificant compared
with the increase in basis obtained under
section 743(b)(1) or is offset because of a
tax attribute of the transferor (such as net
operating losses), then the transfer may
be considered a Partnership Related-Party
Basis Adjustment Transaction under sec-
tion 743(b).

July 8, 2024 46 Bulletin No. 2024–28
D. Partnership Related-Party Basis
Adjustment Transactions under section
732(b)
In a Partnership Related-Party Basis
Adjustment Transaction under section
732(b), a partnership with two or more
direct or indirect partners that are related
makes a liquidating distribution of prop-
erty to a related partner. Immediately
before the distribution, the partnership’s
basis in the distributed property was rela-
tively low and the distributee partner had
a relatively high outside basis. Under sec-
tion 732(b), the distributee partner’s basis
in the distributed property is equal to the
partner’s outside basis. As a result, the
distributed property’s basis is increased
by an amount equal to the excess of the
distributee partner’s outside basis over the
partnership’s basis in the distributed prop-
erty. As part of the transaction, under sec-
tion 732(b) and (c), the distributee partner
allocates the basis increase to its distrib-
uted property; this property is eligible for
cost recovery allowances or is property
that the distributee partner disposes of in
a taxable sale or exchange. Accordingly,
the distributee partner receives increased
cost recovery allowances or decreases its
taxable gain (or increases taxable loss) on
the disposition of the distributed property.
Because the transaction occurs among
related parties, any economic conse-
quences inherent in distributing partner-
ship property that may result in tax ben-
efits to the distributee, potentially at the
expense of the remaining partners, is min-
imized. Further, because the transaction
occurs among related persons, the over-
all economic ownership of the property
among the related partners remains the
same as before the transaction.
As a result of the basis increase to the
distributed property, the partnership may
be required to decrease the basis of one
or more of its remaining properties under
the elective or mandatory basis adjust-
ment provisions of section 734(b)(2) or
(d). The parties may plan the transaction
so that this reduction in basis will not
have an adverse tax effect on the related
parties because the partnership can allo-
cate the basis reduction to property the
partnership intends to hold indefinitely
and that is not eligible for cost recovery
allowances.
The related parties may achieve simi-
lar results through a transaction in which
the partnership is liquidated. In a Part-
nership Related-Party Basis Adjustment
Transaction in which a partnership makes
liquidating distributions to all partners, a
partner with a high outside basis (distrib-
utee partner) receives a liquidating distri-
bution of low-inside basis property that is
eligible for cost recovery allowances or
that the distributee partner disposes of in a
taxable sale or exchange. The partnership
also distributes property to one or more
parties related to the distributee partner
(related distributee partner(s)), and such
distribution may require a reduction to
the basis of property under section 732(b)
because the related distributee partner’s
basis in the partnership interest at the time
of liquidation may be low compared to the
partnership’s basis in the distributed prop-
erty. Similar to the version of the transac-
tion in which only the distributee partner’s
partnership interest is liquidated, the prop-
erty that is subject to reduction in basis as
a result of the liquidation may be prop-
erty that the related distributee partner(s)
intend to hold indefinitely and that is not
eligible for cost recovery allowances.
E. Partnership Related-Party Basis
Adjustment Transactions under section
732(d)
In a Partnership Related-Party Basis
Adjustment Transaction under section
732(d), a partnership with two or more
direct or indirect partners that are related
makes a current or liquidating distribution
of property to a related partner. Prior to the
distribution, the related partner acquired
all or part of its partnership interest in a
transaction that would have been a Part-
nership Related Party Basis Adjustment
Transaction under section 743(b) if the
partnership had a section 754 election in
effect.
The subsequent property distribu-
tion to the related transferee partner is
made within two years of the transfer (in
the case of an elective basis adjustment
under section 732(d)) or at any time after
the transfer if at the time of the transfer
the fair market value of the partnership’s
property (other than money) exceeded 110
percent of the property’s adjusted basis to
the partnership (in the case of a mandatory
basis under section 732(d)). In either case,
under section 732(d), for purposes of sec-
tion 732(a), (b), and (c), the adjusted part-
nership basis of the distributed property
is treated as equal to the adjusted basis
the property would have had if the basis
adjustment under section 743(b) were in
effect at the time of the transfer.
As part of the transaction, the related
distributee partner receives property with
a higher basis than the property had before
the transaction and either the property is
eligible for cost recovery allowances or
the distributee partner recovers the prop-
erty’s basis by disposing of it in a taxable
sale or exchange.
Similar to a Partnership Related-Party
Basis Adjustment Transaction under sec-
tion 732(b), because the transaction occurs
among related parties, any economic con-
sequences inherent in distributing part-
nership property to a partner that, as a
result of the distribution, will receive tax
benefits is lessened or eliminated. Further,
because the transaction occurs among
related persons, the economic ownership
of the property remains essentially the
same as before the transaction.
V. Tax-Indifferent Parties involved
in Partnership Basis Adjustment
Transactions
The Treasury Department and the IRS
are aware that persons using partnerships
that include tax-indifferent parties as
partners may undertake transactions that
accomplish the same results as the Part-
nership Related-Party Basis Adjustment
Transactions. These transactions may take
the form of any of the variations of the
transactions described in part IV of this
Background section and produce the same
tax benefits for the taxable partners, except
that the partners may not be related and
negative tax consequences resulting from
the transactions are borne by the tax-in-
different party. For example, a partner-
ship with a section 754 election in effect
and unrelated partners, one of which is a
tax-indifferent party with a low outside
basis, may distribute high-basis nondepre-
ciable property to the tax-indifferent party.
Under section 732(a)(2) or (b), the distri-
bution results in the tax-indifferent party
taking a basis in the distributed property
that is lower than the partnership’s basis in

Bulletin No. 2024–28 47 July 8, 2024
the property immediately before the distri-
bution. Under section 734(b), the partner-
ship must adjust the basis of its remaining
property and, as part of the transaction
under sections 734(c) and 755, it increases
the basis of depreciable property. Since
the distributee partner is a tax-indifferent
party, it does not experience any negative
tax consequences from receiving property
subject to a basis decrease as a result of the
distribution. At the same time, the partners
that are not tax-indifferent receive the tax
benefit of increased cost recovery allow-
ances through the partnership.
VI. Potential Tax Avoidance Using
Partnership Related-Party Basis
Adjustment Transactions
In Partnership Related-Party Basis
Adjustment Transactions, related persons
use partnerships to engage in transac-
tions that inappropriately apply the basis
adjustments under section 732, 734(b), or
743(b). These provisions can be exploited
to create inappropriate basis increases to
the partnership’s properties, including any
distributed property, but without mean-
ingful change in the economic ownership
of the properties or partnership interests
because the parties involved in the trans-
actions are related. The basis increases
may be used to increase cost recovery
allowances or decrease taxable gain or
increase taxable loss on the subsequent
taxable disposition of the property by the
partnership or distributee partner.
The Treasury Department and the IRS
propose to identify the Partnership Relat-
ed-Party Basis Adjustment Transactions
and substantially similar transactions as
transactions of interest under proposed
regulations described in the Explanation of
Provisions section of this preamble. Iden-
tifying the transactions as transactions of
interest would substantially improve the
IRS’s ability to detect abusive transactions
and gather information about their preva-
lence and the contexts in which they arise.
Explanation of Provisions
I. Partnership Related-Party Basis
Adjustment Transactions of Interest
Proposed §1.6011-18(a) would identify
transactions that are the same as or sub-
stantially similar (within the meaning of
§1.6011-4(c)(4)) to transactions described
in proposed §1.6011-18(c) as transactions
of interest for the purposes of §1.6011-4(b)
(6). Proposed §1.6011-18(c) would include
a relatedness requirement and a $5 million
minimum threshold requirement. Further,
proposed §1.6011-18(a) would identify
transactions that are substantially similar
(within the meaning of §1.6011-4(c)(4))
to the transactions described in proposed
§1.6011-18(c) as including the transactions
described in proposed §1.6011-18(d).
The relatedness requirement would be set
forth in proposed §1.6011-18(b)(8) and (9).
Proposed §1.6011-18(b)(8) would define
“related” as having a relationship described
in section 267(b) (without regard to section
267(c)(3)) or 707(b)(1). Proposed §1.6011-
18(b)(9) would define “related partners” as
partners of a partnership that are related in
the following manner—(i) in a transaction
described in proposed §1.6011-18(c)(1), the
partnership has two or more direct or indirect
partners that are related to each other within
the meaning of proposed §1.6011-18(b)(8),
or (ii) in a transaction described in proposed
§1.6011-18(c)(2), the transferor of a part-
nership interest is related to the transferee,
or the transferee is related to one or more
of the partners in the partnership, within the
meaning of proposed §1.6011-18(b)(8). The
relatedness requirement may be met either
immediately before or immediately after a
basis adjustment transaction described in
proposed §1.6011-18(c)(1) or (2).
Proposed §1.6011-18(c) would pro-
vide that a transaction of interest is a
transaction the factual elements of which
are described in proposed §1.6011-18(c)
(1)(i) through (iii) or (c)(2). A basis
adjustment transaction under proposed
§1.6011-18(c)(1)(i) would occur when a
partnership makes a current or liquidat-
ing distribution of property to a partner
who is related to one or more partners,
the partnership increases the basis of one
or more of its remaining properties under
section 734(b) and (c), and the $5 million
threshold under proposed §1.6011-18(c)
(3) is met.
A basis adjustment transaction under
proposed §1.6011-18(c)(1)(ii) would
occur when a partnership distributes prop-
erty to a partner who is related to one or
more partners in liquidation of a partner-
ship interest (or in complete liquidation of
the partnership), the basis of one or more
distributed properties is increased under
section 732(b) and (c), and the $5 million
threshold under proposed §1.6011-18(c)
(3) is met.
A basis adjustment transaction under
proposed §1.6011-18(c)(1)(iii) would
occur when a partnership distributes
property to a partner who is related to
one or more partners, the basis of one or
more distributed properties is increased
under section 732(d), the related partner
acquired all or a part of its interest in the
partnership in a transaction that would
have been a transaction described in pro-
posed §1.6011-18(c)(2) if the partnership
had a section 754 election in effect for the
year of transfer, and the $5 million thresh-
old under proposed §1.6011-18(c)(3) is
met.
A basis adjustment transaction under
proposed §1.6011-18(c)(2) would occur
when a partner transfers an interest in the
partnership to a related transferee or to
a person who is related to one or more
existing partners in a nonrecognition
transaction, the basis of one or more part-
nership properties is increased under sec-
tion 743(b)(1) and (c), and the $5 million
threshold under proposed §1.6011-18(c)
(3) is met. Proposed §1.6011-18(b)(2)
would define nonrecognition transaction
as defined in section 7701(a)(45) (other
than a transfer on the death of a partner).
Proposed §1.6011-18(c)(3) would pro-
vide rules for determining the $5 million
threshold. Under proposed §1.6011-18(c)
(3), a basis adjustment would include
basis increases from multiple transactions
described in proposed §1.6011-18(c)(1)
or (2) by the same partner or partnership
during the taxable year that in the aggre-
gate (without netting for any basis adjust-
ments in the same transaction or another
transaction that reduces basis) and after
reducing the resulting aggregate amount
by the gain recognized, if any, on which
tax imposed under subtitle A of the Code
(subtitle A) is required to be paid by any
of the related parties to the transaction
equal or exceed $5 million. Accordingly,
a transaction of a partner or partnership
described in proposed §1.6011-18(c)(1)
or (2) that results in a basis increase of
less than $5 million during the taxable
year would be a transaction of interest
under proposed §1.6011-18(a) if, in the

July 8, 2024 48 Bulletin No. 2024–28
same taxable year, the partner or partner-
ship participated in another transaction
or transactions described in proposed
§1.6011-18(c)(1) or (2), and in the aggre-
gate, the transactions resulted in a basis
increase that equals or exceeds $5 mil-
lion, without regard to any basis decrease
resulting from the transactions and after
reducing the resulting aggregate amount
by the gain recognized, if any, on which
tax imposed under subtitle A is required to
be paid by any of the related parties to the
transactions. A threshold of $5 million of
basis increases in a taxable year to which
no corresponding tax is paid should be
sufficiently large to capture situations that
use the provisions of subchapter K to pro-
duce significant tax benefits with little or
no economic impact.
If a basis adjustment transaction is
described in proposed §1.6011-18(c)(1)
(i) through (iii) or (c)(2), any basis adjust-
ments to recoverable property must be
reported in the taxable year of the basis
adjustment transaction, in each taxable
year there is a cost recovery allowance,
and in the taxable year the recoverable
property is disposed of in a transaction in
which gain or loss is recognized in whole
or in part. Any basis adjustments to other
property must be reported in the taxable
year of the basis adjustment transaction
and the taxable year in which the other
property is disposed of in a transaction in
which gain or loss is recognized in whole
or in part. See proposed §1.6011-18(e) and
(f).
Proposed §1.6011-18(b)(7) would
define recoverable property as property
of a character subject to an allowance for
depreciation, amortization, or depletion
under subtitle A of the Code.
II. Examples of Partnership Related-
Party Basis Adjustment Transactions of
Interest
The following examples illustrate the
transactions of interest described in pro-
posed §1.6011-18(c).
A. Example 1. A Partnership Related-
Party Basis Adjustment Transaction
under proposed §1.6011-18(c)(1)(i).
XY Partnership is owned by partners
X and Y. The partners are related to each
other within the meaning of proposed
§1.6011-18(b)(8) and (b)(9)(i). Each part-
ner directly owns 50 percent of the capi-
tal and profits interests in XY Partnership
and shares losses equally. X has an outside
basis of $10 million, and Y has an outside
basis of $1 million. XY Partnership owns
property it uses in its trade or business,
including Property 1 and Property 2. For
Federal income tax purposes, Property 1
is depreciable property and Property 2 is
nondepreciable property. XY Partnership
has an adjusted basis in Property 1 of zero,
and an adjusted basis in Property 2 of $10
million.
XY Partnership has a section 754
election in effect for the taxable year and
makes a current distribution of Property
2 to Y. Under section 732(a)(2), Y’s basis
in distributed Property 2 is limited to Y’s
adjusted basis in its partnership interest of
$1 million. As a result of the distribution to
Y, Property 2’s adjusted basis is decreased
from $10 million immediately before the
distribution to $1 million in Y’s hands.
Under section 734(b), XY Partnership
must increase the basis of its remaining
property. The amount of the basis increase
is equal to the excess of XY Partnership’s
basis in Property 2 immediately before
the distribution of $10 million over Y’s
adjusted basis in Property 2 after the dis-
tribution of $1 million, which results in an
increase to the basis of XY Partnership’s
remaining property of $9 million.
Under sections 734(c) and 755 and the
regulations thereunder, XY Partnership
allocates the basis increase of $9 million
to Property 1. As a result, XY Partnership
claims depreciation deductions based on
an increased basis in Property 1.
B. Example 2. A Partnership Related-
Party Basis Adjustment Transaction
under proposed §1.6011-18(c)(1)(ii).
DEF Partnership is owned by part-
ners D, E and F. The partners are related
to each other within the meaning of pro-
posed §1.6011-18(b)(8) and (b)(9)(i).
D’s outside basis is $7 million. E and F
each have an outside basis of $1 million.
DEF Partnership owns only two proper-
ties, Property 1 and Property 2, both of
which it uses in its trade or business. For
Federal income tax purposes, Property 1
is depreciable property and Property 2 is
nondepreciable property. DEF Partnership
has an adjusted basis in Property 1 of zero,
and an adjusted basis in Property 2 is $9
million.
DEF Partnership distributes Property
1 to D in liquidation of D’s partnership
interest. Under section 732(b), D’s basis
in distributed Property 1 is equal to $7
million. As a result, D claims depreciation
deductions based on a $7 million basis in
Property 1.
C. Example 3. A Partnership Related-
Party Basis Adjustment Transaction
under proposed §1.6011-18(c)(1)(iii).
XYZ Partnership is owned by partners
X, Y and Z. The partners are related to
each other within the meaning of proposed
§1.6011-18(b)(8) and (b)(9)(i). Each part-
ner directly owns one-third of the capital
and profits interests in XYZ Partnership
and shares losses equally.
XYZ Partnership owns Property 1,
Property 2, and Property 3. Property 1 is
depreciable property, and XYZ Partner-
ship’s adjusted basis in Property 1 is zero.
Property 2 and Property 3 are nondepre-
ciable property.
X acquired its interest in XYZ Partner-
ship in a nonrecognition transaction from
a person related to X within the mean-
ing of proposed §1.6011-18(b)(8). At the
time of the transfer, XYZ Partnership did
not have a section 754 election in effect.
Immediately after the transfer, X’s outside
basis was $12 million and share of inside
basis was $2 million. If XYZ Partner-
ship had a section 754 election in effect
at the time of the transfer, XYZ Partner-
ship would have adjusted X’s share of
inside basis under section 743(b). Assume
that the adjustment under section 743(b)
would have resulted in a basis increase to
Property 1 of $10 million.
In a taxable year that is within two
years of the transfer of the partnership
interest to X, XYZ Partnership makes a
current distribution of Property 1 to X.
Under section 732(a)(1), X’s adjusted
basis in Property 1 is zero. However, X
makes an election under section 732(d)
to adjust the basis of Property 1 to the
adjusted basis it would have if the adjust-
ment under section 743(b) were in effect
with respect to the partnership property at
the time X acquired its interest. As a result

Bulletin No. 2024–28 49 July 8, 2024
of the election under 732(d), because the
adjusted basis of Property 1 under section
743(b) with respect to X would have been
increased by $10 million, X takes a basis
in Property 1 equal to $10 million and
claims depreciation deductions based on a
$10 million basis in Property 1.
D. Example 4. A Partnership Related-
Party Basis Adjustment Transaction
under proposed §1.6011-18(c)(2).
AB Partnership is owned by partners
A and B. A owns 95 percent of the capi-
tal and profits interests in AB Partnership
and is allocated 95 percent of all losses. B
owns 5 percent of the capital and profits
interests in AB Partnership and is allo-
cated 5 percent of all losses. A’s outside
basis is $6 million and share of inside
basis is $1 million. AB Partnership owns
depreciable property it uses in a trade or
business.
In a taxable year in which AB Partner-
ship has a section 754 election in effect,
A transfers its entire partnership interest
to C, a person related to A within the
meaning of proposed §1.6011-18(b)(8)
and (b)(9)(ii), in a nonrecognition trans-
action in which no gain was recognized.
Because AB Partnership has a section
754 election in effect for the taxable year
of the transfer, under section 743(b)(1),
AB Partnership increases the basis of the
partnership property with respect to C by
$5 million.
Assume that under sections 743(c) and
755 and the regulations thereunder, the
basis increase with respect to C of $5 mil-
lion is allocated to partnership property
that is depreciable. As a result, C may be
allocated depreciation deductions over the
recovery periods of the partnership prop-
erties equal to the amount of the basis
increase under section 743(b)(1).
III. Substantially Similar Transactions
Proposed §1.6011-18(a) would pro-
vide that substantially similar transactions
include, but are not limited to, the trans-
actions described in proposed §1.6011-
18(d). For purposes of proposed §1.6011-
18, transactions would be “substantially
similar” transactions if the transactions
are substantially similar within the mean-
ing of §1.6011-4(c)(4).
Under proposed §1.6011-18(d)(1), a
transaction would be substantially simi-
lar to a transaction described in proposed
§1.6011-18(c) if the transaction is a basis
adjustment transaction described in pro-
posed §1.6011-18(c)(1) or (2), except
that it does not involve related partners
and one or more partners of the partner-
ship is a tax-indifferent party. Under pro-
posed §1.6011-18(b)(11), a tax-indifferent
party would mean a person that is either
not liable for Federal income tax because
of its tax-exempt or, in certain cases, for-
eign status or to which gain from a trans-
action described in proposed §1.6011-
18(c) would not result in Federal income
tax liability for the person’s taxable year
within which such gain is recognized (for
example, because the taxpayer has a net
operating loss carryforward or capital loss
carryforward).
Under proposed §1.6011-18(d)(2), a
transaction would be substantially simi-
lar to a transaction described in proposed
§1.6011-18(c) in situations in which a
partner transfers its partnership interest
in a recognition transaction to a related
transferee or to a person related to one or
more existing partners, and the $5 million
threshold under proposed §1.6011-18(c)
(3) is met. Proposed §1.6011-18(b)(6)
would define a recognition transaction
as a transaction other than a nonrecog-
nition transaction as defined in proposed
§1.6011-18(b)(2).
IV. Persons Treated as Participants
Whether a taxpayer has participated in
a transaction of interest described in pro-
posed §1.6011-18(c) during a taxable year
is determined under proposed §1.6011-
18(e). Participants would include a par-
ticipating partner within the meaning of
proposed §1.6011-18(b)(3), a participat-
ing partnership within the meaning of pro-
posed §1.6011-18(b)(4), and a related sub-
sequent transferee within the meaning of
proposed §1.6011-18(b)(10). A participant
would also include a tax-indifferent party
within the meaning of proposed §1.6011-
18(b)(11).
Proposed §1.6011-18(b)(3) would
define “participating partner” as any part-
ner that directly receives a distribution of
property or an interest in a participating
partnership, or directly transfers an interest
in a participating partnership, in a transac-
tion described in proposed §1.6011-18(c),
including a person that becomes or ceases
to be a partner as a result of such trans-
action. Accordingly, except for in the case
of a related subsequent transferee, the
proposed regulations would impose the
disclosure requirement only on the direct
distributee, transferor, or transferee in the
transaction of interest identified under
proposed §1.6011-18(a). The person iden-
tified as the participating partner must be
the owner for Federal income tax purposes
of the partnership interest. As a result, in
the case of a partnership interest held by a
disregarded entity, the participating part-
ner would be the owner of the disregarded
entity for Federal income tax purposes.
In the case of a partnership interest held
by a grantor trust, the participating part-
ner would be the grantor or owner of the
grantor trust. Similar principles would be
applied in determining the participating
partner in circumstances similar to the
disregarded entity or grantor trust situa-
tions. Under proposed §1.6011-18(e)(2),
a participating partner would participate
in a transaction of interest in any taxable
year in which the partner directly receives
a distribution of property or an interest
in a participating partnership, or directly
transfers an interest in a participating part-
nership, in a transaction described in pro-
posed §1.6011-18(c).
Proposed §1.6011-18(b)(4) would
define “participating partnership” as
any partnership that makes a distribu-
tion of property to a participating partner
in a transaction described in proposed
§1.6011-18(c)(1), or a partnership interest
of which was transferred in a transaction
described in proposed §1.6011-18(c)(2).
Under proposed §1.6011-18(e)(3), a par-
ticipating partnership would participate
in a transaction of interest in any taxable
year in which (i) the partnership makes a
distribution of property to a participating
partner in a transaction described pro-
posed §1.6011-18(c)(1) or (ii) a partici-
pating partnership interest is transferred in
a transaction described proposed §1.6011-
18(c)(2).
Proposed §1.6011-18(b)(10) would
define “related subsequent transferee” as
any person related within the meaning of
proposed §1.6011-18(b)(8) to a participat-
ing partner that directly received in a non-

July 8, 2024 50 Bulletin No. 2024–28
recognition transaction a transfer (includ-
ing a distribution) of property that was
subject to an increase in basis as a result of a
transaction described in proposed §1.6011-
18(c). Under proposed §1.6011-18(e)(4),
any direct transfer, in a nonrecognition
transaction, to a related person of property
subject to a basis increase resulting from a
transaction described in proposed §1.6011-
18(c) would result in the related subsequent
transferee becoming a participant in the
transaction of interest identified under pro-
posed §1.6011-18(a). However, any sub-
sequent transfer (including a distribution)
by the related subsequent transferee to a
transferee would not cause that transferee
to become a participant.
Proposed §1.6011-18(e)(5) would pro-
vide that a participating partnership, par-
ticipating partner, or related subsequent
transferee also participates in a transac-
tion described in proposed §1.6011-18(c)
in any taxable year in which its tax return
reflects the Federal income tax conse-
quences of the basis increase from such
transaction.
V. Information Disclosure Requirements
Proposed §1.6011-18(f) would require
participants to provide the information
required under §1.6011-4(d) and the
Instructions to Form 8886 (or succes-
sor form). For all participants, describ-
ing the transaction in sufficient detail
would include (but would not be limited
to) describing on Form 8886 (or succes-
sor form) an increase in basis resulting
from a transaction described in proposed
§1.6011-18(c) by providing the informa-
tion required in proposed §1.6011-18(f)
(1)(i), through (iii).
Proposed §1.6011-18(f)(1)(i) would
require reporting of the names and iden-
tifying numbers (for example, social secu-
rity number, employer identification num-
ber) of all participants.
Proposed §1.6011-18(f)(1)(ii) would
require participants to provide all basis
adjustments resulting from a transaction
described in §1.6011-18(c), and basis
information, including the participating
partnership’s adjusted basis in the distrib-
uted property immediately before the dis-
tribution, any adjustments to basis under
sections 732(a)(2), (b), (d) or 734(b), any
adjustments to basis under section 743(b)
with respect to a participating partner that
is transferred an interest in a participating
partnership, and with respect to a partici-
pating partner that transfers an interest in
a participating partnership, that participat-
ing partner’s adjusted basis in the partic-
ipating partnership interest and share of
the participating partnership’s adjusted
basis in its property immediately before
the transfer.
Proposed §1.6011-18(f)(1)(iii) would
require participants to provide informa-
tion on Form 8886 (or successor form)
of any Federal income tax consequences
realized during the taxable year as a result
of a transaction described in proposed
§1.6011-18(c), including cost recovery
allowances attributable to an increase in
basis described in proposed §1.6011-18(c)
or taxable gain or loss attributable to the
disposition of property that was subject to
an increase in basis described in proposed
§1.6011-18(c). In the case of Federal
income tax consequences realized after
the taxable year of a transaction described
in proposed §1.6011-18(c), such as cost
recovery allowances or taxable gain
or loss on a disposition, a participant
must provide information on the Federal
income tax consequences on Form 8886
(or successor form) for the taxable year of
realization.
Under proposed §1.6011-18(f)(2),
if the property subject to an increase in
basis as a result of a transaction described
in proposed §1.6011-18(c) is disposed of
in a subsequent taxable year in a transac-
tion in which gain or loss is recognized in
whole or in part, a participant must send a
copy of Form 8886 to OTSA, for the tax-
able year of the disposition, in addition
to sending a copy to OTSA in the taxable
year of the basis adjustment transaction.
Proposed §1.6011-18(g) would provide
examples of the participants’ disclosure
requirements for the taxable year in which
the transaction of interest occurred and the
subsequent taxable years in which a par-
ticipant continued to realize the Federal
income tax consequences of the transac-
tion of interest.
VI. Effect of Transaction Becoming a
Transaction of Interest
Participants required to disclose these
transactions under §1.6011-4 who fail to
do so would be subject to penalties under
section 6707A. Material advisors required
to disclose these transactions under sec-
tion 6111 who fail to do so would be sub-
ject to penalties under section 6707. Mate-
rial advisors required to maintain lists of
investors under section 6112 who fail to
do so (or who fail to provide such lists
when requested by the IRS) would be sub-
ject to penalties under section 6708(a). In
addition, the IRS may impose other pen-
alties on persons involved in these trans-
actions or substantially similar transac-
tions, including accuracy-related penalties
under section 6662 or section 6662A, the
penalty under section 6700 of the Code for
promoting abusive tax shelters, and the
penalty under section 6701 of the Code
for aiding and abetting understatement of
a tax liability.
In addition, material advisors have
disclosure requirements with regard to
transactions occurring in prior years.
However, notwithstanding §301.6111-
3(b)(4)(i) and (iii), material advisors
would be required to disclose only if they
have made a tax statement on or after
six years before the date of the Treasury
decision adopting these regulations as
final regulations is published in the Fed-
eral Register.
Proposed Applicability Date
Proposed §1.6011-18(a) would apply
to identify certain partnership relat-
ed-party basis adjustment transactions
described in proposed §1.6011-18(c) and
substantially similar transactions as trans-
actions of interest effective as of the date
of publication in the Federal Register of
a Treasury decision adopting these regula-
tions as final regulations.
Special Analyses
I. Regulatory Planning and Review –
Economic Analysis
Pursuant to the Memorandum of
Agreement, Review of Treasury Regula-
tions under Executive Order 12866 (June
9, 2023), tax regulatory actions issued by
the IRS are not subject to the requirements
of section 6 of Executive Order 12866, as
amended. Therefore, a regulatory impact
assessment is not required.

Bulletin No. 2024–28 51 July 8, 2024
II. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520) generally requires
that a federal agency obtain the approval
of the Office of Management and Bud-
get (OMB) before collecting information
from the public regardless of whether such
collection of information is mandatory,
voluntary, or required to obtain or retain
a benefit. An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information dis-
plays a valid control number assigned by
OMB.
The proposed regulations would
contain reporting and recordkeeping
requirements that are required to iden-
tify increases to the basis of partnership
property in certain transactions involving
adjustments to the basis of partnership
property. These collections of information
would generally be used by the IRS for tax
compliance purposes and by taxpayers to
facilitate proper reporting and recordkeep-
ing.
The proposed regulations would iden-
tify certain transactions as reportable
transactions and require partners and
partnerships that participate in the trans-
actions, and material advisors that pro-
vide advice on the transactions, to meet
the reporting requirements under Sections
6011 and 6111, and material advisors to
meet the list maintenance requirements
of Section 6112. The reporting require-
ments contained in the proposed regula-
tions would be met by completing Forms
8886 and 8918. These forms have been
approved by OMB under control numbers
1545-1800 and 1545-0865, respectively.
Accordingly, the proposed regulations
would not be creating new collection of
information requirements or changing the
collection of information requirements
already contained in the burden associated
with the control numbers for Forms 8886
and 8918.
III. Regulatory Flexibility Act
When an agency issues a proposed
rulemaking, the Regulatory Flexibility Act
(5 U.S.C. chapter 6) (RFA) requires the
agency to prepare and make available for
public comment an initial regulatory flex-
ibility analysis that describes the impact
of the proposed rule on “small entities.”
5 U.S.C. 603(a). The term “small entities”
is defined in 5 U.S.C. 601 to mean “small
business,” “small organization,” and
“small governmental jurisdiction,” which
are also defined in 5 U.S.C. 601. Small
business size standards define whether a
business is “small” and have been estab-
lished for types of economic activities,
or industry, generally under the North
American Industry Classification System
(NAICS). See 13 CFR part 121 (Small
Business Size Regulations). The size
standards look at various factors, includ-
ing annual receipts, number of employ-
ees, and amount of assets, to determine
whether the business is small. See 13 CFR
part 121.201 for the Small Business Size
Standards by NAICS Industry.
Section 605 of the RFA provides an
exception to the requirement to prepare
an initial regulatory flexibility analysis
if the agency certifies that the proposed
rulemaking will not have a significant
economic impact on a substantial number
of small entities. The Treasury Depart-
ment and the IRS hereby certify that these
proposed regulations will not have a sig-
nificant economic impact on a substantial
number of small entities under the RFA.
The IRS’s Research, Applied Analyt-
ics, and Statistics division (RAAS) esti-
mates that, in the case of a Partnership
Related-Party Basis Adjustment Transac-
tion identified as a transaction of interest
involving a basis adjustment under section
743(b), partnerships with gross receipts or
sales of $25 million or less might comprise
two-thirds and partnerships with gross
receipts or sales of over $25 million might
comprise one-third of all partnerships
engaging in the transaction. This data pro-
vides an estimate that cannot yet be tested
or confirmed without actual reporting of
these transactions. Further, although the
estimate suggests that the majority (two-
thirds) of partnerships subject to reporting
might be partnerships with gross receipts
or sales of $25 million or less, the estimate
does not indicate that the majority of part-
nerships subject to reporting will be small
entities. The “$25 million or less” param-
eter is used as a reference point that does
not necessarily correlate with the meaning
of small entities under the Small Business
Size Regulations. Thus, some or many of
the partnerships in the category having
gross receipts or sales of $25 million or
less might be too large to meet the size
standards for small businesses under the
Small Business Size Regulations. In addi-
tion, the data does not indicate whether the
partnerships with gross receipts or sales of
$25 million or less are part of larger enter-
prises.
The proposed regulations will not have
a significant economic impact on small
entities because the proposed regulations
would implement sections 6111 and 6112
and § 1.6011-4 by specifying the manner
in which and the time at which a Part-
nership Related-Party Basis Adjustment
Transaction identified as a transaction of
interest must be reported. Accordingly,
because the proposed regulations would
be limited in scope to time and manner
of information reporting, their economic
impact is expected to be minimal.
The Treasury Department and the IRS
expect that the reporting burden is low
because the information sought is neces-
sary for regular annual return preparation
and ordinary recordkeeping. The esti-
mated burden for any taxpayer required to
file Form 8886 is approximately 10 hours,
16 minutes for recordkeeping, 4 hours, 50
minutes for learning about the law or the
form, and 6 hours, 25 minutes for prepar-
ing, copying, assembling, and sending the
form to the IRS. RAAS estimates that the
appropriate wage rate for complying with
the proposed regulations is $102.00 (2022
dollars) per hour. Thus, it is estimated that
persons required to comply with the pro-
posed regulations would incur costs total-
ing approximately $2,194.70 per filing.
This amount is small in comparison to the
$5 million or more of basis increase in a
Partnership Related-Party Basis Adjust-
ment Transaction identified as a transac-
tion of interest. As a result, the relatively
small cost to comply with the proposed
regulations will not pose any significant
economic impact to any small entities that
would be subject to the proposed regula-
tions.
For the reasons stated, a regulatory
flexibility analysis under the RFA is not
required. The Treasury Department and
the IRS invite comments on the impact of
the proposed regulations on small entities.
Pursuant to section 7805(f) of the
Code, this notice of proposed rulemaking

July 8, 2024 52 Bulletin No. 2024–28
has been submitted to the Chief Counsel
for the Office of Advocacy of the Small
Business Administration for comment on
its impact on small business.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires
that agencies assess anticipated costs and
benefits and take certain other actions
before issuing a final rule that includes
any Federal mandate that may result in
expenditures in any one year by a State,
local, or Tribal government, in the aggre-
gate, or by the private sector, of $100
million (updated annually for inflation).
This proposed rule does not include any
Federal mandate that may result in expen-
ditures by State, local, or Tribal govern-
ments or by the private sector in excess of
that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on State and local gov-
ernments, and is not required by statute,
or preempts State law, unless the agency
meets the consultation and funding
requirements of section 6 of the Execu-
tive order. This proposed rule does not
have federalism implications and does
not impose substantial direct compliance
costs on State and local governments or
preempt State law within the meaning of
the Executive order.
Comments and Public Hearing
Before these proposed amendments to
the regulations are adopted as final regula-
tions, consideration will be given to com-
ments regarding the notice of proposed
rulemaking that are submitted timely to
the IRS as prescribed in the preamble
under the ADDRESSES section. The
Treasury Department and the IRS request
comments on all aspects of the proposed
regulations. All comments will be made
available at https://www.regulations.gov.
Once submitted to the Federal eRulemak-
ing Portal, comments cannot be edited or
withdrawn.
A public hearing has been scheduled
for September 17, 2024 beginning at 10
a.m. ET, in the Auditorium at the Inter-
nal Revenue Building, 1111 Constitution
Avenue, NW., Washington, DC. 20224.
Due to building security procedures, vis-
itors must enter at the Constitution Ave-
nue entrance. In addition, all visitors must
present photo identification to enter the
building. Because of access restrictions,
visitors will not be admitted beyond the
immediate entrance area more than 30
minutes before the hearing starts. Partic-
ipants may alternatively attend the public
hearing by telephone.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing. Persons who wish
to present oral comments at the hearing
must submit an outline of the topics to be
discussed and the time to be devoted to
each topic by August 19, 2024. A period
of 10 minutes will be allotted to each
person for making comments. An agenda
showing the scheduling of the speakers
will be prepared after the deadline for
receiving outlines has passed. Copies of
the agenda will be available free of charge
at the hearing. If no outline of the topics
to be discussed at the hearing is received
by August 19, 2024, the public hearing
will be cancelled. If the public hearing is
cancelled, a notice of cancellation of the
public hearing will be published in the
Federal Register.
Individuals who want to testify in
person at the public hearing must send
an email to publichearings@irs.gov to
have your name added to the building
access list. The subject line of the email
must contain the regulation number REG-
124593-23 and the language TESTIFY In
Person. For example, the subject line may
say: Request to TESTIFY In Person at
Hearing for REG-124593-23.
Individuals who want to testify by
telephone at the public hearing must send
an email to publichearings@irs.gov to
receive the telephone number and access
code for the hearing. The subject line
of the email must contain the regulation
number REG-125593-23 and the language
TESTIFY Telephonically. For example,
the subject line may say: Request to TES-
TIFY Telephonically at Hearing for REG-
124593-23.
Individuals who want to attend the
public hearing in person without testify-
ing must also send an email to publichear-
ings@irs.gov to have your name added to
the building access list. The subject line
of the email must contain the regulation
number REG-124593-23 and the language
ATTEND In Person. For example, the
subject line may say: Request to ATTEND
Hearing In Person for REG-124593-23.
Requests to attend the public hearing must
be received by 5 p.m. ET on September
13, 2024.
Individuals who want to attend the pub-
lic hearing by telephone without testifying
must also send an email to publichear-
ings@irs.gov to receive the telephone
number and access code for the hearing.
The subject line of the email must con-
tain the regulation number REG-124593-
23 and the language ATTEND Hearing
Telephonically. For example, the subject
line may say: Request to ATTEND Hear-
ing Telephonically for REG-124593-23.
Requests to attend the public hearing must
be received by 5 p.m. ET on September
13, 2024.
Hearings will be made accessible to
people with disabilities. To request special
assistance during a hearing please contact
the Publications and Regulations Section
of the Office of Associate Chief Counsel
(Procedure and Administration) by send-
ing an email to publichearings@irs.gov
(preferred) or by telephone at (202) 317-
6901 (not a toll-free number) at least Sep-
tember 12, 2024.
Drafting Information
The principal author of these proposed
regulations is Elizabeth Zanet, Office of
Associate Chief Counsel (Passthroughs
and Special Industries). However, other
personnel from the Treasury Department
and the IRS participated in the develop-
ment of these regulations.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
part 1 as follows:

Bulletin No. 2024–28 53 July 8, 2024
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by adding an entry
for §1.6011-18 in numerical order to read
in part as follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
Section 1.6011-18 also issued under 26
U.S.C. 6001 and 26 U.S.C. 6011.
* * * * *
Par. 2. Section 1.6011-18 is added to
read as follows:
§1.6011-18 Certain partnership
related-party basis adjustment
transactions as transactions of interest.
(a) Identification as transaction of
interest. Transactions that are the same as
or substantially similar (within the mean-
ing of §1.6011-4(c)(4)) to the transactions
described in paragraph (c) of this section
are identified as transactions of interest
for purposes of §1.6011-4(b)(6). Transac-
tions that are substantially similar (within
the meaning of §1.6011-4(c)(4)) to the
transactions described in paragraph (c) of
this section include, but are not limited to,
transactions described in paragraph (d) of
this section.
(b) Definitions. The following defini-
tions apply for purposes of this section:
(1) Code means the Internal Revenue
Code.
(2) Nonrecognition transaction means
a nonrecognition transaction within the
meaning of section 7701(a)(45) of the
Code (other than a transfer on the death
of a partner).
(3) Participating partner means any
partner that directly receives a distribution
of property or an interest in a participating
partnership, or directly transfers an interest
in a participating partnership, in a trans-
action described in paragraph (c) of this
section, including a person that becomes
or ceases to be a partner as a result of such
transaction. In the case of a participating
partnership interest held by an entity that
is disregarded as separate from its owner
within the meaning of §301.7701-2(c)(2)
(i) of this chapter, participating partner
means the owner of the disregarded entity
for Federal income tax purposes. In the
case of a participating partnership interest
held by a grantor trust within the meaning
of section 671 of the Code, participating
partner means the grantor or other person
designated under sections 671 through
679 of the Code as the owner of that por-
tion of the trust that holds the participating
partnership interest.
(4) Participating partnership means
any partnership—
(i) That makes a distribution of prop-
erty to a participating partner in a transac-
tion described in paragraph (c)(1) of this
section, or
(ii) A partnership interest which is
transferred in a transaction described in
paragraph (c)(2) of this section.
(5) Participating partnership interest
means any partnership interest in a partic-
ipating partnership.
(6) Recognition transaction means a
transaction other than a nonrecognition
transaction within the meaning of para-
graph (b)(2) of this section.
(7) Recoverable property means prop-
erty of a character subject to an allowance
for depreciation, amortization, or deple-
tion under subtitle A of the Code (subtitle
A).
(8) Related means having a relation-
ship described in section 267(b) of the
Code (without regard to section 267(c)(3))
or section 707(b)(1) of the Code.
(9) Related partners mean partners of a
partnership that are related in the follow-
ing manner:
(i) In the case of a transaction described
in paragraph (c)(1) of this section, the
partnership has two or more direct or indi-
rect partners that are related immediately
before or immediately after a transaction
described in paragraph (c)(1) of this sec-
tion.
(ii) In the case of a transaction described
in paragraph (c)(2) of this section, the
transferor of a partnership interest is
related to the transferee, or the transferee
is related to one or more of the partners
in the partnership, immediately before or
immediately after a transaction described
in paragraph (c)(2) of this section.
(10) Related subsequent transferee
means any person who is related to a par-
ticipating partner and directly received in
a nonrecognition transaction, a transfer
(including a distribution) of property that
was subject to an increase in basis as a
result of a transaction described in para-
graph (c) of this section.
(11) Tax-indifferent party means a per-
son that is either not liable for Federal
income tax because of its tax-exempt or,
in certain cases, foreign status or to which
gain from a transaction described in para-
graph (c) of this section would not result
in Federal income tax liability for the per-
son’s taxable year within which such gain
is recognized.
(c) Transaction description. A trans-
action is described in this paragraph (c)
if the factual elements of the transaction
described in paragraph (c)(1)(i) through
(iii) or (c)(2) of this section are met.
(1) Distributions by partnership. A
partnership engages in any of the trans-
actions described in paragraphs (c)(1)(i)
through (iii) of this section with one or
more of the related partners:
(i) The partnership distributes prop-
erty to a person who is a related partner
in a current or liquidating distribution, the
partnership increases the basis of one or
more of its remaining properties under
section 734(b) and (c) of the Code, and
the $5 million threshold described in para-
graph (c)(3) of this section is met.
(ii) The partnership distributes prop-
erty to a person who is a related partner
in liquidation of the person’s partnership
interest (or in complete liquidation of the
partnership), the basis of one or more dis-
tributed properties is increased under sec-
tion 732(b) and (c) of the Code, and the $5
million threshold described in paragraph
(c)(3) of this section is met.
(iii) The partnership distributes prop-
erty to a person who is a related partner,
the basis of one or more distributed prop-
erties is increased under section 732(d) of
the Code, the related partner acquired all
or a part of its interest in the partnership
in a transaction that would have been a
transaction described in paragraph (c)
(2) of this section if the partnership had a
section 754 election in effect for the year
of transfer, and the $5 million threshold
described in paragraph (c)(3) of this sec-
tion is met.
(2) Transfer of partnership interest. A
partner transfers an interest in a partner-
ship to a related partner in a nonrecogni-
tion transaction, the basis of one or more
partnership properties is increased under
section 743(b)(1) and (c) of the Code, and
the $5 million threshold described in para-
graph (c)(3) of this section is met.

July 8, 2024 54 Bulletin No. 2024–28
(3) $5 million threshold. For the pur-
pose of determining whether a transaction
is described in paragraph (c)(1), (c)(2), (d)
(1), or (d)(2) of this section, the $5 million
threshold is met for a taxable year if the
sum of all basis increases resulting from
all such transactions of a partnership or
partner during the taxable year (without
netting for any basis adjustment in the
same transaction or another transaction
that reduces basis) exceeds by at least $5
million the gain recognized from such
transactions, if any, on which tax imposed
under subtitle A is required to be paid by
any of the related partners (or tax-indif-
ferent party, in the case of a transaction
described in paragraphs (d)(1) and (2) of
this section) to such transactions.
(d) Substantially similar transaction.
A transaction that is substantially similar
(within the meaning of §1.6011-4(c)(4)) to
a transaction described in paragraph (c) of
this section includes, but is not limited to:
(1) A transaction that is described in
paragraph (c) of this section except that
the partners of the partnership are not
related and one or more partners of the
partnership is a tax-indifferent party that
facilitates, by receiving a distribution of
property from the partnership or other-
wise, an increase in the basis of partner-
ship property or an increase in the basis
of property held by another partner in the
partnership; and
(2) A transaction in which a partner
transfers an interest in a partnership to a
related partner in a recognition transaction,
and the $5 million threshold described in
paragraph (c)(3) of this section is met.
(e) Participation--(1) In general.
Whether a taxpayer has participated in a
transaction of interest described in para-
graph (c) of this section during a taxable
year is determined under this paragraph
(e).
(2) Participating partners. A partici-
pating partner participates in a transaction
of interest described in paragraph (c) of
this section in any taxable year in which
the partner directly receives a distribution
of property or an interest in a participat-
ing partnership, or directly transfers an
interest in a participating partnership, in a
transaction described in paragraph (c) of
this section.
(3) Participating partnerships. A par-
ticipating partnership participates in a
transaction of interest described in para-
graph (c) of this section in any taxable
year in which the partnership makes a
distribution of property to a participating
partner in a transaction described in para-
graph (c)(1) of this section, or a participat-
ing partnership interest is transferred in a
transaction described in paragraph (c)(2)
of this section.
(4) Related subsequent transferees. A
related subsequent transferee participates
in a transaction of interest described in
paragraph (c) of this section in any tax-
able year in which the related subsequent
transferee directly receives, in a nonrec-
ognition transaction, a transfer (including
a distribution) of property that was sub-
ject to an increase in basis as a result of a
transaction described in paragraph (c) of
this section.
(5) Subsequent realization of tax ben-
efit. A participating partnership, partici-
pating partner or related subsequent trans-
feree also participates in a transaction of
interest described in paragraph (c) of this
section in any taxable year in which its tax
return reflects the tax consequences of a
basis increase resulting from a transac-
tion of interest described in paragraph (c)
of this section. For example, if a partici-
pating partner sells property the basis of
which has been increased as a result of a
transaction of interest described in para-
graph (c) of this section during a taxable
year after the year in which the transaction
of interest described in paragraph (c) of
this section resulting in the basis increase
occurred, the participating partner partici-
pates in a transaction of interest described
in paragraph (c) of this section during
the taxable year(s) in which the tax con-
sequences of the sale are reported on the
participating partner’s tax return.
(f) Disclosure requirements--(1) In
general. Participants must provide the
information required under §1.6011-
4(d) and the Instructions to Form 8886,
Reportable Transaction Disclosure State-
ment (or successor form) for each taxable
year in which the participant participated
in a transaction described in paragraph
(c) of this section as determined under
paragraph (e) of this section. For all par-
ticipants, describing the transaction in
sufficient detail includes describing the
information described in paragraphs (f)(1)
(i) through (iii) of this section, as applica-
ble, on Form 8886 (or successor form) for
the taxable year of a transaction described
in paragraph (c) of this section.
(i) The names and identifying numbers
of all participants, including the partici-
pating partnership, participating partners
and any related subsequent transferees or
tax-indifferent parties.
(ii) All basis adjustments resulting
from a transaction described in paragraph
(c) of this section, and basis information,
including the participating partnership’s
adjusted basis in the distributed property
immediately before the distribution, any
adjustments to basis under section 732(a)
(2), (b), (d) or 734(b), any adjustments to
basis under section 743(b) with respect to
a participating partner that is transferred
an interest in a participating partnership,
and with respect to a participating partner
that transfers an interest in a participating
partnership, that participating partner’s
adjusted basis in the participating partner-
ship interest and share of the participating
partnership’s adjusted basis in its property
immediately before the transfer.
(iii) Any Federal income tax conse-
quences realized during the taxable year,
as a result of a transaction described in
paragraph (c) of this section, including
cost recovery allowances attributable to
an increase in basis as a result of a trans-
action described in paragraph (c) of this
section, and taxable gain or taxable loss
attributable to the disposition of property
that was subject to an increase in basis as
a result of a transaction described in para-
graph (c) of this section. For example, in
the case of a distribution of depreciable
property that was subject to an increase in
basis as a result of a transaction described
in paragraph (c) of this section, the Fed-
eral income tax consequences realized
during the taxable year include the basis
increase and cost recovery allowances
attributable to the basis increase during
the taxable year.
(2) Disposition in subsequent tax-
able years. If the property subject to an
increase in basis as a result of a trans-
action described in paragraph (c) of this
section is disposed of in a transaction in
which gain or loss is recognized in whole
or in part in a subsequent taxable year,
the participant must send a copy of Form
8886 to the Office of Tax Shelter Analysis
(OTSA). This requirement is in addition

Bulletin No. 2024–28 55 July 8, 2024
to the requirement that a participant send
a copy of Form 8886 to OTSA for the tax-
able year of the basis increase.
(g) Examples. The following examples
illustrate the provisions of this section.
(1) Example 1: Reporting by a participating
partner and participating partnership in the tax-
able year of the transaction, including cost recovery
allowances—(i) Facts. ABC Partnership is owned by
partners A, B and C. Partners A, B and C are related
within the meaning of paragraphs (b)(8) and (9) of
this section. At the beginning of taxable year 1, ABC
Partnership distributes a depreciable asset, Property
X, to Partner A in liquidation of Partner A’s interest
in ABC Partnership. The distribution is a transaction
described in paragraph (c)(1)(ii) of this section. As a
result of the distribution, the basis of Property X is
increased by $5 million. On its tax return for taxable
year 1, Partner A reports deductions for depreciation
expense attributable to the $5 million increase in the
basis of Property X resulting from the transaction
under paragraph (c)(1)(ii) of this section. ABC Part-
nership and Partner A have the same taxable year.
(ii) Analysis. Partner A is a participant during
taxable year 1 within the meaning of paragraph (e)
of this section because it is a participating partner
within the meaning of paragraph (b)(3) of this sec-
tion since it directly received a distribution of prop-
erty during taxable year 1 in a transaction described
in paragraph (c) of this section. ABC Partnership is a
participant during taxable year 1 within the meaning
of paragraph (e) of this section because it is a partic-
ipating partnership within the meaning of paragraph
(b)(4) of this section since it made a distribution of
property to a participating partner during taxable
year 1 in a transaction described in paragraph (c) of
this section. As part of its disclosure requirements
under paragraph (f) of this section and §1.6011-4(d)
and (e), Partner A must disclose the distribution as
a transaction of interest under this section on Form
8886 (or successor form) and file the form with its
tax return for taxable year 1. Partner A must include
the information described in paragraph (f) of this
section, including the amount of the deductions
attributable to the $5 million increase in the basis of
Property X resulting from the transaction described
in paragraph (c)(1)(ii) of this section. As part of its
disclosure requirements under paragraph (f) of this
section and §1.6011-4(d) and (e), ABC Partnership
must disclose the distribution as a transaction of
interest under this section on Form 8886 (or suc-
cessor form) and file the form with its tax return for
taxable year 1, including the information described
in paragraph (f) of this section. In addition, Partner
A and ABC Partnership must send a copy of their
respective Form 8886 (or successor form) to OTSA.
(2) Example 2: Reporting of the Federal income
tax consequences (cost recovery allowances) of the
transaction in all taxable years—(i) Facts. Under
the same facts as in paragraph (g)(1)(i) of this section
(Example 1), on its tax returns for taxable years 2
through 5, Partner A reports deductions for depreci-
ation expense attributable to the $5 million increase
in the basis of Property X related to the transaction
described in paragraph (c)(1)(ii) of this section,
which occurred in taxable year 1.
(ii) Analysis. As part of its disclosure require-
ments under paragraph (f) of this section and
§1.6011-4(d) and (e), Partner A must disclose the
deductions on Form 8886 (or successor form) for
taxable years 2 through 5 as the Federal income tax
consequences of the transaction described in para-
graph (c)(1)(ii) of this section. As a result, for each
taxable year 2 through 5, Partner A must file the form
with its tax return for the taxable year with the infor-
mation described in paragraph (f) of this section,
including the amount of the deductions attributable
to the $5 million increase in the basis of Property X
resulting from the transaction described in paragraph
(c)(1)(ii) of this section.
(3) Example 3: Reporting by a participating
partner, participating partnership, and related sub-
sequent transferee in the taxable year of the trans-
action—(i) Facts. The facts are the same as in para-
graph (g)(1)(i) of this section (Example 1), except
that at the beginning of taxable year 1, ABC Partner-
ship distributes a nondepreciable asset, Land with an
adjusted basis of $1 million, to Partner A in liquida-
tion of Partner A’s interest in ABC Partnership. The
distribution is a transaction described in paragraph
(c)(1)(ii) of this section. As a result of the distribu-
tion, the basis of Land is increased to $6 million.
Subsequently in taxable year 1, Partner A contributes
Land to another partnership, AX Partnership, in a
transfer that is treated as a contribution of property
under section 721(a). Partner A and AX Partnership
are related within the meaning of paragraph (b)(8)
of this section. ABC Partnership, Partner A and AX
Partnership have the same taxable year.
(ii) Analysis. Partner A is a participant during
taxable year 1 within the meaning of paragraph (e)
of this section because it is a participating partner
within the meaning of paragraph (b)(3) of this sec-
tion since it directly received a distribution of prop-
erty during taxable year 1 in a transaction described
in paragraph (c) of this section. ABC Partnership is a
participant during taxable year 1 within the meaning
of paragraph (e) of this section because it is a partic-
ipating partnership within the meaning of paragraph
(b)(4) of this section since it made a distribution of
property to a participating partner during taxable
year 1 in a transaction described in paragraph (c) of
this section. AX Partnership is a participant during
taxable year 1 within the meaning of paragraph (e) of
this section because it is a related subsequent trans-
feree within the meaning of paragraph (b)(10) of this
section since it directly received in a nonrecognition
transaction, a transfer of property during taxable
year 1 that was subject to an increase in basis as a
result of a transaction described in paragraph (c) of
this section. As part of its disclosure requirements
under paragraph (f) of this section and §1.6011-4(d)
and (e), Partner A must disclose the distribution as
a transaction of interest under this section on Form
8886 (or successor form) and file the form with its
tax return for taxable year 1. Partner A must include
the information described in paragraph (f) of this
section. As part of its disclosure requirements under
paragraph (f) of this section and §1.6011-4(d) and
(e), ABC Partnership must disclose the distribution
as a transaction of interest under this section on Form
8886 (or successor form) and file the form with its
tax return for taxable year 1, including the infor-
mation described in paragraph (f) of this section.
Further, AX Partnership is subject to the disclosure
requirements under paragraph (f) of this section and
§1.6011-4(d) and (e). AX Partnership must disclose
that it is a related subsequent transferee within the
meaning of paragraph (b)(10) of this section that
received, in a nonrecognition transaction, a transfer
of property that was distributed in a transaction of
interest under this section on Form 8886 (or suc-
cessor form) and file the form with its tax return for
taxable year 1. In addition, Partner A, ABC Partner-
ship and AX Partnership must send a copy of their
respective Form 8886 (or successor form) to OTSA.
(4) Example 4: Reporting of the Federal income
tax consequences (reduced taxable gain) of the
transaction in the taxable year of disposition of the
property—(i) Facts. Under the same facts as in para-
graph (g)(3)(i) of this section (Example 3), in taxable
year 2, AX Partnership disposes of Land in a taxable
sale for its fair market value of $6 million and recog-
nizes gain of zero.
(ii) Analysis. As part of its disclosure require-
ments under paragraph (f) of this section and
§1.6011-4(d) and (e), AX Partnership must disclose
the taxable gain (zero) on the disposition of Land on
Form 8886 (or successor form) for taxable year 2 as
the Federal income tax consequences of the transac-
tion described in paragraph (c)(1)(ii) of this section.
AX must file the form with its tax return for taxable
year 2 and send a copy of the form to OTSA.
(h) Applicability date. This section’s
identification of transactions that are the
same as or substantially similar (within
the meaning of §1.6011-4(c)(4)) to the
transactions described in paragraph (c) of
this section as transactions of interest for
purposes of §1.6011-4(b)(6) and sections
6111 and 6112 of the Code is effective on
the date the regulations are published as
final regulations in the Federal Register.
Douglas W. O’Donnell,
Deputy Commissioner.
(Filed by the Office of the Federal Register June 17,
2024, 8:45 a.m., and published in the issue of the
Federal Register for June 18, 2024, 89 FR 51476)

Bulletin No. 2024–28 i July 8, 2024
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is 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
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings 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.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.
—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

July 8, 2024 ii Bulletin No. 2024–28
Numerical Finding List
1
Bulletin 2024–28
Announcements:
2024-26, 2024-27 I.R.B. 14
2024-27, 2024-27 I.R.B. 14
2024-28, 2024-28 I.R.B. 39
Notices:
2024-47, 2024-27 I.R.B. 1
2024-52, 2024-27 I.R.B. 2
2024-53, 2024-27 I.R.B. 4
2024-54, 2024-28 I.R.B. 24
2024-55, 2024-28 I.R.B. 31
Proposed Regulations:
REG-124593-23, 2024-28 I.R.B. 40
Revenue Procedures:
2024-26, 2024-27 I.R.B. 7
Revenue Rulings:
2024-13, 2024-28 I.R.B. 18
2024-14, 2024-28 I.R.B. 18
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2024–27 through 2024–52 is in Internal Revenue Bulletin
2024–52, dated December 30, 2024.

Bulletin No. 2024–28 iii July 8, 2024
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2024–28
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2024–27 through 2024–52 is in Internal Revenue Bulletin
2024–52, dated December 30, 2024.

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