Internal Revenue Bulletin 2010-15 (PDF rendition): IRS Announcements

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Bulletin No. 201
0-15
April 12, 2010
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
SPECIAL ANNOUNCEMENT
Announcement 2010–21, page 551.
This document contains the annual report to the public con-
cerning Advance Pricing Agreements (APAs) and the experi-
ence of the APA Program during calendar year 2009. This
document does not provide guidance regarding the application
of the arm’s length standard. Instead, it reports on the struc-
ture and activities of the APA Program.
INCOME TAX
Notice 2010–27, page 531.
This notice provides adjusted limitations on housing for tax
year 2010 for purposes of section 911 of the Code. Notices
2006–87, 2007–25, 2007–77, and 2008–107 superseded.
Notice 2010–28, page 541.
This notice provides interim guidance on stripping transactions
for qualified tax credit bonds under section 54A of the Code
and on certain income tax accounting matters associated with
holding and stripping qualified tax credit bonds. In addition,
this notice describes associated information reporting require-
ments and solicits public comments.
Notice 2010–29, page 547.
This notice provides interim rules to the issuers of variable an-
nuity contracts on issues that arise under sections 807 and
816 of the Code as a result of the adoption of Actuarial Guide-
line XLIII.
EMPLOYEE PLANS
Announcement 2010–20, page 551.
This document announces that the Service will soon issue opin-
ion and advisory letters for pre-approved (i.e.,masterandpro-
totype (M&P) and volume submitter (VS)) defined benefit plans
that were restated for the Economic Growth and Tax Relief Rec-
onciliation Act of 2001 (“EGTRRA”) and other changes in plan
qualification requirements listed in Notice 2007–3 (“the 2006
Cumulative List”) and that were filed with the Service. The Ser-
vice expects to issue the letters on March 31, 2010, or, in
some cases, as soon as possible thereafter. A plan that re-
ceives a favorable letter with respect to its restatement for
EGTRRA and the 2006 Cumulative List is referred to as an
“EGTRRA-approved plan.” Employers using these pre-approved
plan documents to restate a plan for EGTRRA and the 2006
Cumulative List will be required to adopt the EGTRRA-approved
plan document by April 30, 2012. The Service will accept
applications for individual determination letters submitted by
adopters of these pre-approved plans starting on May 1, 2010.
EXEMPT ORGANIZATIONS
Announcement 2010–24, page 587.
The IRS has revoked its determinations that Alpha Assistance,
Inc., of Desoto, TX, and Norcross, GA; DPA Alliance Corpora-
tion of Provo, UT; Interpreter Referral Service of Chicago, IL;
and the Knapp Foundation of Provo, UT, qualify as organizations
described in sections 501(c)(3) and 170(c)(2) of the Code.
Announcements of Disbarments and Suspensions begin on page 588.
Finding Lists begin on page ii.

The IRS Mission
Provide Americ
a’s taxpayers top quality service by helping them
understand an
d meet their tax responsibilities and by applying
the tax law with
integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
April 12, 20102010–15 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Determination of Housing Cost
Amounts Eligible for Exclusion
or Deduction for 2010
Notice 2010–27
SECTION 1. PURPOSE
This notice provides adjustments to the
limitation on housing expenses for pur-
poses of section 911 of the Internal Rev-
enue Code (Code) for specific locations for
2010. These adjustments are made on the
basis of geographic differences in housing
costs relative to housing costs in the United
States.
SECTION 2. BACKGROUND
Section 911(a) of the Code allows a
qualified individual to elect to exclude
from gross income the foreign earned in-
come and housing cost amount of such
individual. Section 911(c)(1) defines the
term “housing cost amount” as an amount
equal to the excess of (A) the housing
expenses of an individual for the taxable
year to the extent such expenses do not
exceed the amount determined under sec-
tion 911(c)(2), over (B) 16 percent of the
exclusion amount (computed on a daily
basis) in effect under section 911(b)(2)(D)
for the calendar year in which such taxable
year begins ($250.68 per day for 2010, or
$91,500 for the full year), multiplied by
the number of days of that taxable year
within the applicable period described in
section 911(d)(1). The applicable period
is the period during which the individual
meets the tax home requirement of section
911(d)(1) and either thebona fideresi-
dence requirement of section 911(d)(1)(A)
or the physical presence requirement of
section 911(d)(1)(B). Assuming that the
entire taxable year ofa qualified individ-
ual is within the applicable period, the
section 911(c)(1)(B) amount for 2010 is
$14,640 ($91,500 x .16).
Section 911(c)(2)(A) of the Code lim-
its the housing expenses taken into account
in section 911(c)(1)(A) to an amount equal
to (i) 30 percent (adjusted as may be pro-
vided under the Secretary’s authority un-
der section 911(c)(2)(B)) of the amount in
effect under section 911(b)(2)(D) for the
calendar year in which the taxable year of
the individual begins, multiplied by (ii) the
number of days of that taxable year within
the applicable period described in section
911(d)(1). Thus, under this general limi-
tation, a qualified individual whose entire
taxable year is within the applicable period
is limited to maximum housing expenses
of $27,450 ($91,500 x .30) in 2010.
Section 911(c)(2)(B) of the Code au-
thorizes the Secretary to issue regulations
or other guidance to adjust the percentage
under section 911(c)(2)(A)(i) based on
geographic differences in housing costs
relative to housing costs in the United
States. Pursuant to this authority, the
Internal Revenue Service (IRS) and the
Treasury Department published Notice
2006–87, 2006–2 C.B. 766, and Notice
2007–25, 2007–1 C.B. 760, for 2006, No-
tice 2007–77, 2007–2 C.B. 735, for 2007,
and Notice 2008–107, 2008–50 I.R.B.
1265, for 2008, to provide adjustments
to the limitation on housing expenses for
qualified individuals incurring housing
expenses in countries with high hous-
ing costs relative to housing costs in the
United States.
SECTION 3. TABLE OF ADJUSTED
LIMITATIONS FOR 2010
The following table provides adjusted
limitations on housing expenses (in lieu
of the otherwise applicable limitation of
$27,450) for 2010.
CountryLocation
LimitationonHousing
Expenses (daily)
Limitation on Housing
Expenses (full year)
AngolaLuanda230.1484,000
ArgentinaBuenos Aires
154.7956,500
AustraliaAdelaide83.2930,400
AustraliaBrisbane82.4730,100
AustraliaGold Coast82.4730,100
AustraliaMelbourne
105.4838,500
AustraliaOakey82.4730,100
AustraliaPerth112.8841,200
AustraliaSydney89.8132,782
AustraliaToowoomba82.4730,100
AustriaVienna96.99
35,400
Bahamas, TheNassau136.1649,700
BahrainBahrain
120.55
44,000
BarbadosBarbados103.2937,700
BelgiumAntwerp
109.59
40,000
2010–15 I.R.B.531April 12, 2010

CountryLocation
LimitationonHousing
Expenses (daily)
Limitation on Housing
Expenses (full year)
BelgiumBrussels144.66
52,800
BelgiumGosselies129.0447,100
BelgiumHoogbuul
109.59
40,000
BelgiumMons129.0447,100
BelgiumSHAPE/Chievres129.0447,100
BermudaBermuda
246.58
90,000
Bosnia-HerzegovinaSarajevo
92.05
33,600
BrazilBrasilia
151.5155,300
BrazilRio de Janeiro96.16
35,100
BrazilSao Paulo127.40
46,500
CanadaCalgary
105.75
38,600
CanadaDartmouth92.6033,800
CanadaEdmonton96.16
35,100
CanadaHalifax92.6033,800
CanadaLondon, Ontario77.8128,400
CanadaMontreal
156.7157,200
CanadaOttawa129.3247,200
CanadaToronto128.2246,800
CanadaVancouver122.7444,800
CanadaVictoria90.9633,200
CanadaWinnipeg84.6630,900
Cayman IslandsGrand Cayman
131.51
48,000
ChileSantiago136.99
50,000
ChinaBeijing
195.07
71,200
ChinaHong Kong
313.15
114,300
ChinaShanghai
156.1757,001
ColombiaBogota148.22
54,100
ColombiaAll cities other than Bogota and
Barranquilla
135.34
49,400
DenmarkCopenhagen119.7443,704
Dominican RepublicSanto Domingo124.66
45,500
EcuadorGuayaquil84.3830,800
EcuadorQuito
83.5630,500
EstoniaTallinn127.6746,600
FranceGarches
257.26
93,900
FranceLe Havre108.22
39,500
FranceLyon
146.5853,500
FranceMarseille136.99
50,000
FranceMontpellier121.3744,300
April 12, 20105322010–15 I.R.B.

CountryLocation
LimitationonHousing
Expenses (daily)
Limitation on Housing
Expenses (full year)
FranceParis
257.26
93,900
FranceSevres
257.26
93,900
FranceSuresnes
257.26
93,900
FranceVersailles
257.26
93,900
GermanyBabenhausen126.3046,100
GermanyBad Aibling107.6739,300
GermanyBad Nauheim100.8236,800
GermanyBaumholder
120.55
44,000
GermanyBerlin
154.2556,300
GermanyBirkenfeld
120.55
44,000
GermanyBoeblingen
153.1555,900
GermanyBonn
115.07
42,000
GermanyButzbach98.6336,000
GermanyDarmstadt126.3046,100
GermanyErlangen79.7329,100
GermanyFrankfurt am Main131.7848,100
GermanyFriedberg100.8236,800
GermanyFuerth79.7329,100
GermanyGarmisch-Partenkirchen
115.07
42,000
GermanyGeilenkirchen82.1930,000
GermanyGelnhausen
158.9058,000
GermanyGermersheim
95.34
34,800
GermanyGiebelstadt109.0439,800
GermanyGiessen98.6336,000
GermanyGrafenwoehr124.11
45,300
GermanyHanau
158.9058,000
GermanyHannover
94.25
34,400
GermanyHeidelberg
119.45
43,600
GermanyIdar-Oberstein
120.55
44,000
GermanyIngolstadt177.8164,900
GermanyKaiserslautern, Landkreis
154.5256,400
GermanyKitzingen109.0439,800
GermanyLeimen
119.45
43,600
GermanyLudwigsburg
153.1555,900
GermanyMainz170.4162,200
GermanyMannheim
119.45
43,600
GermanyMunich177.8164,900
GermanyNellingen
153.1555,900
GermanyNeubruecke
120.55
44,000
2010–15 I.R.B.533April 12, 2010

CountryLocation
LimitationonHousing
Expenses (daily)
Limitation on Housing
Expenses (full year)
GermanyNuernberg79.7329,100
GermanyOber Ramstadt126.3046,100
GermanyOberammergau
115.07
42,000
GermanyPirmasens
154.5256,400
GermanyRheinau
119.45
43,600
GermanySchwabach79.7329,100
GermanySchwetzingen
119.45
43,600
GermanySeckenheim
119.45
43,600
GermanySembach
154.5256,400
GermanyStuttgart
153.1555,900
GermanyVilseck124.11
45,300
GermanyWahn
115.07
42,000
GermanyWertheim109.0439,800
GermanyWiesbaden170.4162,200
GermanyWuerzburg109.0439,800
GermanyZimdorf79.7329,100
GermanyZweibrueken
154.5256,400
GermanyAll cities other than Augsburg,
Babenhausen, Bad Aibling,
Bad Kreuznach, Bad Nauheim,
Baumholder, Berchtesgaden, Berlin,
Birkenfeld, Boeblingen, Bonn,
Bremen, Bremerhaven, Butzbach,
Cologne, Darmstadt, Delmenhorst,
Duesseldorf, Erlangen, Flensburg,
Frankfurt am Main, Friedberg, Fuerth,
Garlstedt, Garmisch-Partenkirchen,
Geilenkirchen, Gelnhausen,
Germersheim, Giebelstadt, Giessen,
Grafenwoehr, Grefrath, Greven,
Gruenstadt, Hamburg, Hanau,
Handorf, Hannover, Heidelberg,
Heilbronn, Herongen, Idar-Oberstein,
Ingolstadt, Kaiserslautern, Landkreis,
Kalkar, Karlsruhe, Kerpen,
Kitzingen, Koblenz, Leimen, Leipzig,
Ludwigsburg, Mainz, Mannheim,
Mayen, Moenchen-Gladbach,
Muenster, Munich, Nellingen,
Neubruecke, Noervenich, Nuernberg,
Ober Ramstadt, Oberammergau,
Osterholz-Scharmbeck, Pirmasens,
Rheinau, Rheinberg, Schwabach,
Schwetzingen, Seckenheim, Sembach,
Stuttgart, Twisteden, Wahn, Wertheim,
Wiesbaden, Worms, Wuerzburg,
Zimdorf, and Zweibrueken
122.1944,600
April 12, 20105342010–15 I.R.B.

CountryLocation
LimitationonHousing
Expenses (daily)
Limitation on Housing
Expenses (full year)
GhanaAccra98.6336,000
GreeceArgyroupolis98.36
35,900
GreeceAthens
120.55
44,000
GreeceElefsis
120.55
44,000
GreeceEllinikon
120.55
44,000
GreeceMt. Hortiatis98.36
35,900
GreeceMt. Parnis
120.55
44,000
GreeceMt. Pateras
120.55
44,000
GreeceNea Makri
120.55
44,000
GreecePerivolaki98.36
35,900
GreecePiraeus
120.55
44,000
GreeceSouda Bay (Crete)78.6328,700
GreeceTanagra
120.55
44,000
GreeceThessaloniki98.36
35,900
GuatemalaGuatemala City108.4939,600
GuyanaGeorgetown
95.8935,000
Holy See, TheHoly See, The171.23
62,500
HungaryBudapest89.04
32,500
HungaryPapa121.92
44,500
IndiaMumbai186.0867,920
IndiaNew Delhi82.88
30,252
IndonesiaJakarta
103.50
37,776
IrelandDublin149.04
54,400
IrelandLimerick84.1130,700
IrelandShannon Area
114.52
41,800
IsraelTel Aviv139.18
50,800
ItalyCatania100.2736,600
ItalyGenoa110.6840,400
ItalyGioia Tauro
85.48
31,200
ItalyLa Spezia110.6840,400
ItalyLeghorn107.4039,200
ItalyMilan
256.1693,500
ItalyNaples162.47
59,300
ItalyPisa107.4039,200
ItalyPordenone-Aviano130.14
47,500
ItalyRome171.23
62,500
ItalySardinia
87.95
32,100
ItalySigonella100.2736,600
ItalyTurin128.2246,800
2010–15 I.R.B.535April 12, 2010

CountryLocation
LimitationonHousing
Expenses (daily)
Limitation on Housing
Expenses (full year)
ItalyVerona81.9229,900
ItalyVicenza131.2347,900
ItalyAll cities other than Avellino, Brindisi,
Catania, Florence, Gaeta, Genoa,
Gioia Tauro, La Spezia, Leghorn,
Milan, Mount Vergine, Naples,
Nettuno, Pisa, Pordenone-Aviano,
Rome, Sardinia, Sigonella, Turin,
Verona, and Vicenza.
103.0137,600
JamaicaKingston112.8841,200
JapanAkashi98.6336,000
JapanAkizuki
86.85
31,700
JapanAtsugi124.66
45,500
JapanCamp Zama124.66
45,500
JapanChiba-Ken124.66
45,500
JapanFussa124.66
45,500
JapanGifu80.0029,200
JapanGotemba
94.25
34,400
JapanHaneda124.66
45,500
JapanIwakuni88.7732,400
JapanKanagawa-Ken124.66
45,500
JapanKomaki80.0029,200
JapanMachidi-Shi124.66
45,500
JapanMisawa108.22
39,500
JapanNagoya
103.52
37,786
JapanOkinawa Prefecture
154.5256,400
JapanOsaka-Kobe248.3990,664
JapanSagamihara124.66
45,500
JapanSaitama-Ken124.66
45,500
JapanSasebo103.2937,700
JapanTachikawa124.66
45,500
JapanTokyo
295.62
107,900
JapanTokyo-to124.66
45,500
JapanYokohama162.19
59,200
JapanYokosuka
150.4154,900
JapanYokota124.66
45,500
KazakhstanAlmaty
131.51
48,000
KoreaCamp Carroll
77.53
28,300
KoreaCamp Colbern140.82
51,400
KoreaCamp Market140.82
51,400
KoreaCamp Mercer140.82
51,400
April 12, 20105362010–15 I.R.B.

CountryLocation
LimitationonHousing
Expenses (daily)
Limitation on Housing
Expenses (full year)
KoreaK–16140.82
51,400
KoreaKimpo Airfield140.82
51,400
KoreaMunsan
85.21
31,100
KoreaOsan AB
87.95
32,100
KoreaPyongtaek86.30
31,500
KoreaSeoul140.82
51,400
KoreaSuwon140.82
51,400
KoreaTaegu
85.48
31,200
KoreaUijongbu82.4730,100
KoreaWaegwan
77.53
28,300
KoreaAll cities other than Ammo Depot #9,
Camp Carroll, Camp Colbern, Camp
Market, Camp Mercer, Changwon,
Chinhae, Chunchon, K–16, Kimhae,
Kimpo Airfield, Kunsun, Kwangju,
Munsan, Osan AB, Pusan, Pyongtaek,
Seoul, Suwon, Taegu, Tongduchon,
Uijongbu, and Waegwan
80.2729,300
KuwaitKuwait City176.4464,400
KuwaitAll cities other than Kuwait City
158.0857,700
LuxembourgLuxembourg
140.5551,300
MacedoniaSkopje96.99
35,400
MalaysiaKuala Lumpur
126.58
46,200
MalaysiaAll cities other than Kuala Lumpur92.3333,700
MaltaMalta
131.51
48,000
MexicoHermosillo76.1627,800
MexicoMazatlan84.9331,000
MexicoMerida103.8437,900
MexicoMexico City
125.2145,700
MexicoMonterrey90.9633,200
MexicoAll cities other than Ciudad Juarez,
Cuernavaca, Guadalajara, Hermosillo,
Matamoros, Mazatlan, Merida,
Metapa, Mexico City, Monterrey,
Nogales, Nuevo Laredo, Tapachula,
Tijuana, Tuxtla Gutierrez, and
Veracruz
107.95
39,400
MicronesiaPohnpei77.2628,200
MozambiqueMaputo98.6336,000
NamibiaWindhoek
87.95
32,100
NetherlandsAmsterdam144.93
52,900
NetherlandsAruba98.6336,000
NetherlandsBrunssum117.2642,800
2010–15 I.R.B.537April 12, 2010

CountryLocation
LimitationonHousing
Expenses (daily)
Limitation on Housing
Expenses (full year)
NetherlandsEygelshoven117.2642,800
NetherlandsHague, The196.4471,700
NetherlandsHeerlen117.2642,800
NetherlandsHoensbroek117.2642,800
NetherlandsHulsberg117.2642,800
NetherlandsKerkrade117.2642,800
NetherlandsLandgraaf117.2642,800
NetherlandsMaastricht117.2642,800
NetherlandsPapendrecht123.0144,900
NetherlandsRotterdam123.0144,900
NetherlandsSchaesburg117.2642,800
NetherlandsSchinnen117.2642,800
NetherlandsSchiphol144.93
52,900
NetherlandsYpenburg196.4471,700
NetherlandsAll cities other than Amsterdam,
Aruba, Brunssum, Coevorden,
Eygelshoven, The Hague, Heerlen,
Hoensbroek, Hulsberg, Kerkrade,
Landgraaf, Maastricht, Margraten,
Papendrecht, Rotterdam, Schaesburg,
Schinnen, Schiphol, and Ypenburg.
104.9338,300
Netherlands AntillesCuracao
125.4845,800
New ZealandAuckland97.81
35,700
New ZealandWellington92.6033,800
NicaraguaManagua87.1231,800
NorwayOslo
145.2153,000
NorwayStavanger
123.5645,100
NorwayAll cities other than Oslo and
Stavanger.
103.2937,700
PanamaPanama City97.26
35,500
PhilippinesCavite100.00
36,500
PhilippinesManila100.00
36,500
PhilippinesAll cities other than Cavite and Manila76.4427,900
PolandPoland
80.55
29,400
PortugalAlverca
156.7157,200
PortugalLajes Field84.1130,700
PortugalLisbon
156.7157,200
QatarDoha
99.35
36,264
QatarAll cities other than Doha88.7732,400
RussiaMoscow
295.89
108,000
RussiaSaint Petersburg164.3860,000
April 12, 20105382010–15 I.R.B.

CountryLocation
LimitationonHousing
Expenses (daily)
Limitation on Housing
Expenses (full year)
RussiaSakhalin Island212.33
77,500
RussiaVladivostok212.33
77,500
RussiaYekaterinburg129.8647,400
RwandaKigali86.30
31,500
Saudi ArabiaJeddah84.0230,667
Saudi ArabiaRiyadh
109.59
40,000
SingaporeSingapore171.7862,700
South AfricaPretoria107.6739,300
SpainBarcelona111.2340,600
SpainMadrid209.0476,300
SpainRota
120.55
44,000
SpainValencia120.0043,800
SpainAll cities other than Barcelona,
Madrid, Rota, and Valencia
90.6833,100
SurinameParamaribo90.4133,000
SwitzerlandBern169.3261,800
SwitzerlandGeneva232.6084,900
SwitzerlandZurich
107.45
39,219
SwitzerlandAll cities other than Bern, Geneva and
Zurich
90.1432,900
TaiwanTaipei
126.54
46,188
ThailandBangkok140.00
51,100
TurkeyAnkara
87.95
32,100
TurkeyElmadag
87.95
32,100
TurkeyIzmir-Cigli
86.58
31,600
TurkeyManzarali
87.95
32,100
TurkeyYamanlar
86.58
31,600
UkraineKiev197.2672,000
United Arab EmiratesAbu Dhabi136.1349,687
United Arab EmiratesDubai
156.6457,174
United KingdomBasingstoke112.6041,099
United KingdomBath112.3341,000
United KingdomBracknell170.1462,100
United KingdomBristol106.0338,700
United KingdomCambridge117.8143,000
United KingdomCaversham202.1973,800
United KingdomCheltenham147.67
53,900
United KingdomCroughton121.1044,200
United KingdomFairford121.1044,200
United KingdomFarnborough149.86
54,700
2010–15 I.R.B.539April 12, 2010

CountryLocation
LimitationonHousing
Expenses (daily)
Limitation on Housing
Expenses (full year)
United KingdomFelixstowe
115.07
42,000
United KingdomGibraltar122.2444,616
United KingdomHarrogate127.1246,400
United KingdomHigh Wycombe170.1462,100
United KingdomKemble121.1044,200
United KingdomLakenheath
150.4154,900
United KingdomLiverpool106.3038,800
United KingdomLondon
233.1585,100
United KingdomLoudwater173.97
63,500
United KingdomMenwith Hill127.1246,400
United KingdomMildenhall
150.4154,900
United KingdomOxfordshire121.1044,200
United KingdomPlymouth121.1044,200
United KingdomPortsmouth121.1044,200
United KingdomReading170.1462,100
United KingdomRochester
125.7545,900
United KingdomSouthampton121.1044,200
United KingdomSurrey132.6148,402
United KingdomWaterbeach
129.59
47,300
United KingdomWiltshire113.9741,600
United KingdomAll cities other than Basingstoke,
Bath, Belfast, Birmingham, Bracknell,
Bristol, Brough, Bude, Cambridge,
Caversham, Chelmsford, Cheltenham,
Chicksands, Croughton, Dunstable,
Edinburgh, Edzell, Fairford,
Farnborough, Felixstowe, Ft.
Halstead, Gibraltar, Glenrothes,
Greenham Common, Harrogate,
High Wycombe, Hythe, Kemble,
Lakenheath, Liverpool, London,
Loudwater, MenwithHill, Mildenhall,
Nottingham, Oxfordshire, Plymouth,
Portsmouth, Reading, Rochester,
Southampton, Surrey, Waterbeach,
Welford, West Byfleet, and Wiltshire.
119.45
43,600
VenezuelaCaracas
156.1657,000
VietnamHanoi128.2246,800
VietnamHo Chi Minh City
115.07
42,000
SECTION 4. HOUSING LIMITATION
FOR 2009
Except as provided in section 5, the
limitation for qualified individuals incur-
ring housing expenses in taxable years
beginning in 2009 is as follows. For
taxable years beginning in calendar year
2009, the foreign earned income exclusion
amount under § 911(b)(2)(D) is $91,400.
Thus, a qualified individual whose entire
2009 taxable year is within the applicable
period is generally limited to maximum
housing expenses of $27,420 ($91,400 x
.30). Because location amounts were not
published for 2009, qualified individuals
incurring housing expenses in 2009 in
locations listed in the “Table of Adjusted
April 12, 20105402010–15 I.R.B.

Limitations for 2008” in Notice 2008–107
should use the amounts found in that table
(which can also be found in the Instruc-
tions to Form 2555 (2009)) to determine
their adjusted limitation for 2009.
SECTION 5. ELECTION TO APPLY
2010 ADJUSTED LIMITATIONS TO
2009 TAXABLE YEAR
For some locations, the limitation on
housing expenses provided in section 3 of
this notice may be higher than the limita-
tion on housing expenses provided in the
“Table of Adjusted Limitations for 2008”
in Notice 2008–107. A qualified individ-
ual incurring housing expenses in such a
location during 2009 may apply the ad-
justed limitation on housing expenses pro-
videdinsection3ofthisnoticeinlieu
of the amounts provided in the “Table of
Adjusted Limitations for 2008” in Notice
2008–107 (and as set forth in the Instruc-
tions to Form 2555 (2009)).
Treasury and the IRS anticipate that fu-
ture annual notices providing adjustments
to housing expense limitations will make a
similar election available to qualified indi-
viduals that incur housing expenses in the
immediately preceding year. For example,
when adjusted housing expense limitations
for 2011 are issued, it is expected that tax-
payers will be permitted to apply those ad-
justed limitations to the 2010 taxable year.
EFFECT ON OTHER DOCUMENTS
This notice supersedes Notice 2006–87,
2006–2 C.B. 766, Notice 2007–25, 2007–1
C.B. 760, Notice 2007–77, 2007–2 C.B.
735, and Notice 2008–107, 2008–50
I.R.B. 1265.
EFFECTIVE DATE
This notice is effective for taxable years
beginning on or after January 1, 2010.
However, as provided in section 5, a tax-
payer may elect to apply the 2010 adjusted
housing limitationscontained in section 3
of this notice to his or her taxable year be-
ginning in 2009.
DRAFTING INFORMATION
The principal author of this notice is
Susan E. Massey of the Office of Associate
Chief Counsel (International). For further
information regarding this notice, contact
Ms. Massey at (202) 622–3840 (not a toll-
free call).
Stripping Transactions for
Qualified Tax Credit Bonds
Notice 2010–28
SECTION 1. INTRODUCTION
This notice describes regulations that
the Treasury Department and the Inter-
nal Revenue Service (IRS) expect to is-
sue concerning both stripping transactions
for qualified tax credit bonds under sec-
tion 54A of the Internal Revenue Code and
certain income tax accounting matters as-
sociated with holding and stripping these
bonds. Pending the promulgation and ef-
fective date of future administrative or reg-
ulatory guidance, this notice provides in-
terim guidance on which taxpayers may
rely. In addition, this notice describes an-
ticipated related information reporting re-
quirements and solicits public comments
on the interim guidance and the informa-
tion reporting requirements.
SECTION 2. BACKGROUND
Section 54A(a) provides that a taxpayer
that holds a qualified tax credit bond on
one or more credit allowance dates dur-
ing any taxable year is allowed a tax credit
for such year in an amount equal to the
sum of the credits determined under sec-
tion 54A(b) with respect to such dates.
Section 54A(d)(1) defines a qualified
tax credit bond to include the following
types of bonds if they meet applicable re-
quirements: (1) qualified forestry conser-
vation bonds, (2) new clean renewable en-
ergy bonds, (3) qualified energy conser-
vation bonds, (4) qualified zone academy
bonds, and (5) qualified school construc-
tion bonds.
Section 54A(e)(1) provides that the
credit allowance dates for a qualified
tax credit bond are March 15, June 15,
September 15, and December 15 of any
year in which the bond is outstanding and
the last day on which the bond is outstand-
ing.
Under section 54A(b)(2), the annual
credit on a qualified tax credit bond is
the product of the applicable credit rate
multiplied by the outstanding face amount
of the bond. Subject to special rules in
section 54A(b)(4) for short periods, sec-
tion 54A(b)(1) provides that the amount of
credit for any credit allowance date is 25
percent of the annualcredit on a qualified
tax credit bond.
For holders of new clean renewable
energy bonds and qualified energy conser-
vation bonds, section 54C(b) and section
54D(b) limit the amount of the annual
credit otherwise determined under section
54A(b) to 70 percent of the amount so de-
termined without regard to section 54C(b)
and section 54D(b).
Section 54A(c)(1) generally provides
that the credit allowed under section
54A(a) for any taxable year may not ex-
ceed the excess of (1) the sum of the
regular and the alternative minimum tax
liability of the taxpayer, over (2) the sum
of certain allowable credits. Under sec-
tion 54A(c)(2), unused excess credits may
be carried forward for use in succeeding
taxable years.
Section 54A(f) provides that, for Fed-
eral income tax purposes, the credit deter-
mined under section 54A(a) is treated as
interest that is includible in gross income.
Section 54A(i)(1) provides that, under
regulations prescribed by the Secretary,
there may be a separation (including at
issuance) of the ownership of a qualified
tax credit bond and the entitlement to the
credit with respect tothat bond. Section
54A(i)(1) further provides that, in case
of any such separation, the credit under
section54Aisallowedtothepersonwho
on the credit allowance date holds the in-
strument evidencing the entitlement to the
credit and not to the holder of the bond.
Section 54A(i)(2) further provides that, in
the case of any such separation, the rules
ofsection1286aretoapplytothequali-
fied tax credit bond as if it were a stripped
bond and to the credit under section 54A
as if it were a stripped coupon.
SECTION 3. INTERIM GUIDANCE
AND RELIANCE
.01 IN GENERAL
Sections 3.02 and 3.03 of this notice
describe the substance of regulations that
the IRS and the Treasury Department ex-
pect to issue. Pending the promulgation
and effective date of future administrative
2010–15 I.R.B.541April 12, 2010

or regulatory guidance, this notice pro-
vides interim guidance on which taxpay-
ers may rely with respect to qualified tax
credit bonds issued under section 54A. For
further information regarding the effective
date and scope of application, see Section
7 of this notice.
.02 QUALIFIED TAX CREDIT
BONDS—TREATMENT OF THE
CREDIT BY HOLDERS
(a)Allowance of credit—(1)General
rule. In general, a taxpayer that holds a
qualified tax credit bond on one or more
credit allowance dates (as defined in sec-
tion 54A(e)(1)) of the bond occurring dur-
ing a taxable year is allowed as a credit
against income tax for the taxable year an
amount equal to the sum of the credits
determined under section 54A(b) with re-
spect to those credit allowance dates. Un-
less otherwise specifically provided, for
purposes of this notice references to the
“allowance of a credit” or an “allowed
credit” mean the amount of the credit de-
termined under section 54A(b) (as limited
by sections 54C(b) and 54D(b)) before ap-
plication of the limitation under section
54A(c).
(2)Allowance of a credit treated as a
payment of stated interest on a taxable
bond. For Federal income tax purposes,
the allowance of a credit on a qualified tax
credit bond on a credit allowance date is
treated as a payment, in the amount of the
allowed credit, of stated interest on a debt
obligation the interest on which is includ-
able in gross income. Thus, the allowance
of a credit on a bond that has not undergone
a stripping transaction is treated as a pay-
ment of qualified stated interest (within the
meaning of § 1.1273–1(c) of the Income
Tax Regulations) to the same extent that
a payment of stated interest in cash in the
same amount and on the same date would
have been so treated.
(3)Accounting method—(i)General
rule. In general, a holder’s regular method
of accounting determines when the holder
recognizes qualified stated interest income
from a qualified tax credit bond. Thus, if
the holder of a qualified tax credit bond
uses the cash receipts and disbursements
method of accounting, interest income in
the amount of the allowed credit is gen-
erally included in income on the credit
allowance date. If the holder of such a
bond uses an accrual method of account-
ing, this interest income is included in
income as it accrues over each accrual
period.See§ 1.1272–1(b)(1)(ii) to deter-
mine the accrual periods and § 1.446–2(b)
to determine how qualified stated inter-
est accrues over the accrual period (or
periods) to which it is attributable. (For
qualified tax credit bonds that have not
undergone a stripping transaction, because
of the regular quarterly credit allowance
dates, the maximum permitted length of
the accrual periods is three months.)
(ii)Other rules with respect to account-
ing for interest. Under certain circum-
stances, other rules may require the holder
of a bond (including a tax credit bond) to
adjust the amount of interest income that
the holder recognizes.See,e.g., section
171 (amortization of bond premium by a
bond purchaser); § 1.61–7(c) (purchaser’s
treatment of a bond purchased between in-
terest payment dates); § 1.61–7(d) (seller’s
treatment of a bond sold between interest
payment dates); section 1272 (accrual of
original issue discount (OID) by a holder);
and Section 3.03 of this notice and section
1286 (treatment of stripping transactions).
(4)Examples. The following exam-
ples illustrate the application of this Sec-
tion 3.02(a):
Example 1. Assume that, on December 15, 2011,
CityXissues a qualified tax credit bond with a stated
principal amount of $12,000, a credit rate of 10%
compounded quarterly, and a maturity date of Decem-
ber 15, 2013.Bpurchases the bond at original issue
for $12,000 and thus has a $12,000 basis in the bond.
Bis a calendar year taxpayer that uses the cash re-
ceipts and disbursements method of accounting. Un-
der Section 3.02(a) of this notice and § 1.1273–1(c),
the allowance of the $300 tax credit on each credit
allowance date is treated as a payment of qualified
stated interest of $300 on those dates. On March 16,
2012,Bsells the bond for $12,000. On March 15,
2012, the first credit allowance date occurring after
the issuance of the bond,Bbecomes entitled to a $300
tax credit and, with respect to that credit, must include
in income $300 of interest in 2012. No interest is in-
cludable in 2011.
Example 2. The facts are the same as inExample
1, except thatBuses an accrual method of account-
ing. As inExample 1,Bbecomes entitled to a $300
tax credit on March 15, 2012.B, however, must in-
clude in income $50 of interest in 2011 and $250 of
interest in 2012 (based on a 30 day/360 day counting
convention).
Example 3—(i)ThefactsarethesameasinEx-
ample 1, except that on March 16, 2012,Bsells the
bond for $12,100 toC, a taxpayer that uses the cash
receipts and disbursements method and the calendar
year.Chas not previously elected to amortize bond
premium under section 171. Under § 1.61–7(d),B
treats the entire $12,100 as sales proceeds. Because
B’s basis in the bond was $12,000, B has a $100 gain
on the sale.Chas a $12,100 basis in the bond. Be-
causeCacquired the bond with premium of $100,C
may elect to amortize the $100 bond premium under
section 171.
(ii) Assume further thatCholds the bond until its
retirement on December 15, 2013.Chas $900 of tax
credits in 2012 and $1,200 in 2013. IfCdoes not elect
to amortize the bond premium,Chas $900 of interest
income in taxable year 2012 and $1,200 of interest in-
come in taxable year 2013. In addition,Chas a $100
loss in taxable year 2013. IfCelects to amortize the
$100 of bond premium, the amortized portion of that
bond premium reducesC’s interest income in 2012
and 2013, and C does not have a $100 loss in taxable
year 2013.
Example 4.ThefactsarethesameasinExample
3
, except thatBsells the bond toCon January 15,
2012, at a sales price of $12,100. (Based on the treat-
ment of the credits under section 3.02(a)(2) of this
notice, there was $100 of accrued but unpaid inter-
est with respect to the bond on the sale date.) Under
§ 1.61–7(d),Btreats $100 of the sales price as the
receipt of interest accrued on the bond, includes this
amount in income in 2012, and treats the remaining
$12,000 as sales proceeds. BecauseB’s basis in the
bond is $12,000,Bhas no gain or loss on the sale of
the bond. On March 15, 2012,Cbecomes entitled to
the $300 credit. Under § 1.61–7(c), the amount of in-
terest income included byCwith respect to the credit
is $200, andC’s basis in the bond is $12,000.
(b)Limitation based on amount of
tax—(1)In general. The credit allowed
under section 54A(a) and this Section
3.02 is subject to the limitation in section
54A(c)(1) based on the taxpayer’s income
tax liability.
(2)Carryover of unused credit—(i)In
general. Under section 54A(c)(2), if the
credit allowable for the taxable year un-
der section 54A(a) exceeds the limitation
imposed for the taxable year by section
54A(c)(1), the excess credit (an excess
credit) is carried to the succeeding taxable
year and added to the credit allowable un-
der section 54A(a) (asadjusted by sections
54C(b) and 54D(b)) for the succeeding
taxable year (determined before the appli-
cation of the limitation for the succeeding
taxable year under section 54A(c)(1)).
(ii)No time limit on carryovers of ex-
cess credits. An excess credit under sec-
tion 54A(c)(2) can be carried forward to
succeeding taxable years and used in a suc-
ceeding year to the extent that the excess
credit does not exceed the limitation for
that taxable year. Any allowed credit, in-
cluding any excess credit from a prior year,
however, must be taken for the first taxable
year in which, and to the extent that, the al-
lowed credit, including the excess credit,
does not exceed the limitation under sec-
April 12, 20105422010–15 I.R.B.

tion 54A(c)(1) and Section 3.02(b)(2)(i) of
this notice.
(c)Qualified tax credit bonds and cor-
porate earnings and profits—(1)Adjust-
ments to earnings and profits. A corpora-
tion generally adjusts its earnings and prof-
its in accordance with its method of ac-
counting.See§ 1.312–6. For this pur-
pose, a corporation increases its earnings
and profits for interest income (including
interestdescribedinsection54A(f)). A
corporation reducesits earnings and prof-
its when, and to the extent that, it would
have reduced its earnings and profits had
it satisfied its tax liability with cash rather
than reducing that liability with tax credits
from qualified tax credit bonds.
(2)RICs and REITs. If, under section
853A or section 54A(h), a regulated in-
vestment company or a real estate invest-
ment trust, respectively, distributes with
respect to its stock a tax credit from a qual-
ified tax credit bond or from a stripped
credit coupon from a qualified tax credit
bond (including a credit passed through
from a partnership or trust), then the earn-
ings and profits of the regulated invest-
ment company or real estate investment
trust are reduced when, and to the extent
that, the earnings and profits would have
been reduced if the distribution had con-
sisted of cash in the amount of the credit.
.03 QUALIFIED TAX CREDIT
BONDS—TREATMENT OF
STRIPPING TRANSACTIONS
(a)Overview. This Section 3.03 ad-
dresses stripping transactions involv-
ing qualified tax credit bonds. Section
54A(i)(1) provides generally that, under
regulations, there may be a separation,
including at issuance,of the ownership of
a qualified tax credit bond and the entitle-
ment to a credit under section 54A with
respect to the bond. In the case of any
such separation, the credit is allowed to
the person who on the credit allowance
date holds the instrument evidencing the
entitlement to the credit and not to the
holder of the bond. Section 54A(i)(2)
further provides that, in the case of such a
separation, the rules of section 1286 are to
apply to the qualified tax credit bond as if
it were a stripped bond and to the credit as
if it were a stripped coupon.
(b)Definitions. The following defini-
tions apply for purposes of this Section 3:
(1)Credit couponmeans the right to
receive a tax credit under section 54A with
respect to a qualified tax credit bond on a
credit allowance date.
(2)Issuemeans issue as defined in
§ 1.150–1(c) except that, in applying that
definition for purposes of this Section
3.03, the only bonds taken into account
are qualified tax credit bonds as defined in
section 54A(d)(1).
(3)Stripping transactionmeans a trans-
action that results in the separation in
ownership between any credit coupon
with respect to a qualified tax credit bond
for any credit allowance date that has
not yet occurred and any right to receive
cash (whether stated principal or stated
interest) that has not yet become payable.
Notwithstanding the preceding sentence,
the term stripping transaction does not
include a transaction with respect to a
particular bond in which the post-trans-
action future rights (that is, rights to cash
that is not yet payable and credits whose
credit allowance dates have not yet oc-
curred) reflect apro ratadivision of all the
pre-transaction future rights.
(4)Stripped credit couponmeans a
credit coupon with respect to a qualified
tax credit bond if the bond has undergone
a stripping transaction.
(c)Strippable Issue. For purposes of
this notice, the term “strippable issue”
means an issue of qualified tax credit
bonds that complies with all of the follow-
ing requirements:
(1)Designation requirement.Theis-
suer on or before the date of issue in-
cludes a statement in the bond documents
(as defined in § 1.150–1(b)) that the issue
of qualified tax credit bonds is strippable.
For an issue of qualified tax credit bonds
that is issued before March 31, 2010, this
designation may be effected on or before
May 17, 2010.
(2)Identification requirement.Onan
information return filed with the IRS un-
der section 54A(d)(3), the issuer identifies
the issue of qualified tax credit bonds as
a strippable issue. Except as provided in
the next sentence, the identification must
be on the first information return filed un-
der section 54A(d)(3) with respect to the
issue of qualified tax credit bonds. For an
issue of qualified tax credit bonds that is is-
sued before March 31, 2010, the identifica-
tion may instead be on an amended infor-
mation return filed before May 17, 2010.
(3)Registration requirement. The issue
of qualified tax credit bonds is issued in
registered form. For this purpose, regis-
tered form means that all rights to stated
principal, stated cash interest, and tax
credits under the bond may be transferred
only through book entry on the registration
books of the issuer or an agent or nominee
(or chain of nominees) for this purpose.
In addition, a bond is not considered to
be in registered form unless book entries
are maintained (by the issuer, an agent,
or nominee) in a manner that makes all
the entries available for inspection upon
request by the Commissioner or his de-
signees.
(4)CUSIP number requirement.A
CUSIP number is assigned to the issue
of qualified tax credit bonds, a separate
CUSIP number is assigned to all rights
to receive tax credits on each credit al-
lowance date with respect to the issue,
and at least one separate CUSIP number
is assigned to all rights to receive cash
(whether stated principal or stated interest)
with respect to the issue.
(d)Allowance of the tax credit to a
holder of a stripped credit coupon.Atax-
payer who holds a stripped credit coupon
on a credit allowance date is allowed the
tax credit only if all of the following re-
quirements are satisfied:
(1)Strippable issue. The bond is part
of a strippable issue within the meaning of
paragraph (c) of this Section 3.03.
(2)Stripped credit coupons.The
stripped credit coupon is either a whole
credit coupon or a proportional share of
a whole credit coupon. Thus, if a person
holds any other division of a whole credit
coupon, including any direct or indirect
division or modification of a whole credit
coupon effected through a partnership,
trust, or other investment arrangement
that, in substance, causes the person to
hold a variable share of the whole credit
coupon, then no tax credit is allowed with
respect to that interest in the credit coupon.
For example, if a person holds an interest
in a partnership or a share of a trust that ef-
fects any division of a whole credit coupon
held by the partnership or trust other than
a proportional division, then that person
(and any other person to whom the person
directly or indirectly passes the credit) is
not entitled to a tax credit with respect to
the person’s allocable share or beneficial
2010–15 I.R.B.543April 12, 2010

interest in that division of the whole credit
coupon.
(3)Broker accounts. The taxpayer
holds the stripped credit coupon in an ac-
count with—
(i) A broker as defined in section
6045(c)(1); or
(ii) Any other person to the extent pro-
vided by the Commissioner in published
guidance.
(e)Treatment of a stripping transaction
involving a qualified tax credit bond—(1)
In general. Except to the extent that a
provision of this Section 3.03 explicitly
provides otherwise, subsections (a), (b),
and (e) of section 1286 apply to stripping
transactions involving qualified tax credit
bonds. In applying these provisions of
section 1286, the allowance of a credit is
treated in the same manner as a cash pay-
ment of stated interest on the credit al-
lowance date.SeeSection 3.02(a)(2) of
this notice.
(2)Aggregation and other rules.If,ona
single date, a taxpayer purchases (includ-
ing a purchase under section 1286(b)(4)),
as part of a single transaction or series of
related transactions, more than one com-
ponent (stated principal, stated cash inter-
est, or credit coupons) of a qualified tax
credit bond that has been subject to a strip-
ping transaction, then, for purposes of sec-
tions 1271 through 1286 and the regula-
tions thereunder, the taxpayer must treat
the components so purchased as a single
debt instrument (the aggregated debt in-
strument) that was newly issued on the pur-
chase date. Notwithstanding the prior sen-
tence, none of the payments on the aggre-
gated debt instrument is treated as qual-
ified stated interest under § 1.1273–1(c).
If, in a manner described in the first sen-
tence of this Section 3.03(e)(2), the tax-
payer purchases all of the then-outstanding
components of a qualified tax credit bond,
then the resulting aggregated debt instru-
ment is treated as of the purchase date as if
it had not been subject to a previous strip-
ping transaction, and thus the second sen-
tence of this Section 3.03(e)(2) does not
apply.
(f)Examples. The rules in this Section
3.03 are illustrated by the following exam-
ples.
Example 1—(i)Facts. On December 15, 2011,
CityXissues an issue of qualified school construction
bonds as a single bond with a stated principal amount
of $12,000, a credit rate of 10% compounded quar-
terly, and a maturity date of December 15, 2013. As-
sume that none of the interest on the bond is payable
in cash. (That is, there is no supplemental cash inter-
est coupon.)X, on or before the date of issue, includes
in the bond documents a statement that the issue is
strippable and issues the issue in registered form.X
obtains 10 CUSIP numbers with respect to the issue
(1 CUSIP number for the $12,000 issue of qualified
school construction bonds, a separate CUSIP for the
credit coupons for each of the 8 credit allowance dates
through the scheduled maturity of the issue, and 1
CUSIP number for the scheduled principal payment
at maturity). On the first information return thatX
files with the IRS with respect to this issue under sec-
tion 54A(d)(3),Xindicates that the issue is a strip-
pable issue of qualified school construction bonds.
(ii)Analysis.X’s issue of qualified school con-
struction bonds is a strippable issue because it satis-
fies the requirements of Section 3.03(c)(1) through
(4)ofthisnotice.
Example 2. The facts are the same as inExam-
ple 1, except that, on December 15, 2011,Xsells the
$12,000 bond toY.Ysells on December 15, 2011,
a $6,000pro rataportion of the bond toA,acash
method, calendar year taxpayer, and a $6,000pro rata
portion of the bond toB, an accrual method, calen-
dar year taxpayer. (Thus,Y’s sales toAandBdo
not constitute a stripping transaction, because they ef-
fect apro ratadivision of the future rights under the
bond.) The purchase prices paid byAandBwere
$6,000 each. On March 15, 2012 (and all subsequent
credit allowance dates), subject to the limitations con-
tained in section 54A(c)(1) and Section 3.02(b)(1) of
this notice,AandBare each entitled to claim a $150
tax credit.
Example 3—(i)Facts. The facts are the same as
inExample 2, except that, on December 15, 2011,A
sells the December 15, 2013, credit coupon of $150 to
C, a cash method calendar year taxpayer for $123.75
(its fair market value). After the sale,Aholds the
right to receive $6,000 at maturity as well as the first
7 credit coupons (the “8 retained components”), and
Cholds only the December15, 2013, credit coupon.
(ii)Application of definitions. The sale is a
stripping transaction within the meaning of Section
3.03(b)(3) of this notice. The credit coupon held
byCand the 7 credit coupons retained byAare all
stripped credit coupons. The treatment ofB’s bond
is not affected by the sale.
(iii)A’s treatment of the sale. Under Section
3.03(e)(1) of this notice, section 1286(b) applies to
this stripping transaction. Section 1286(b)(4) treats
Aas having purchased the 8 retained components on
thedateonwhichAsells the December 15, 2013,
credit coupon toC. Under Section 3.03(e)(2) of this
notice, the 8 retained components must be treated as
an aggregated debt instrument that is newly issued
on the date of the sale of that credit coupon.
Prior to the sale of the credit coupon,A’s basis
in the unstripped $6,000 bond isA’s purchase price
of $6,000. Because no interest is treated as having
accrued on the bond prior to the sale,Ais not re-
quired to include an amount in income under section
1286(b)(1)(A), and thus no amount needs to be added
toA’s basis under section 1286(b)(2). Pursuant to
section 1286(b)(3),Amust allocate its basis in the
bond ($6,000) between the credit coupon thatAsold
andA’s aggregated debt instrument, based on their
respective fair market values. Assume that, on the
date of the sale, the fair market value ofA’s aggre-
gated debt instrument is $5,877.10 and the fair market
value of the December 15, 2013, credit coupon sold
byAis $123.75 (total fair market value of $6,000.85).
Based on these fair market values,A’s basis in the ag-
gregated debt instrument is $5,876.27 ($6,000 basis x
[$5,877.10 / $6,000.85]) andA’s basis in the Decem-
ber 15, 2013, credit coupon is $123.73 ($6,000 basis
x [$123.75 / $6,000.85]). As a result,Arealizes a gain
of $0.02 on the sale of the December 15, 2013, credit
coupon (amount realized of $123.75, minus basis of
$123.73).
(iv)A’s treatment of the aggregated debt instru-
ment. Under section 1286(b)(4),Ais treated as pur-
chasing the aggregated debt instrument for $5,876.27.
The purchase is treated as taking place on the date
of the sale toC, and the purchase price is equal to
the portion ($5,876.27) ofA’s $6,000 basis that is
allocated to the aggregated debt instrument. Under
Section 3.03(e)(2) of this notice,Amust treat the
aggregated debt instrument as newly issued on that
date for $5,876.27. Thus, the aggregated debt instru-
ment has an issue price of $5,876.27. Under Section
3.03(e)(2) of this notice, no payment on the aggre-
gated debt instrument is qualified stated interest un-
der § 1.1273–1(c). As a result, the stated redemption
price at maturity of the aggregated debt instrument is
$7,050 ($6,000 + [7 × $150]). The aggregated debt
instrument, therefore, has OID of $1,173.73 ($7,050
- $5,876.27). AlthoughAgenerally uses the cash re-
ceipts and disbursements method of accounting,A
must include the OID in income as it accrues on a
constant yield basis over the term of the aggregated
debt instrument in accordance with section 1272 and
the regulationsthereunder.
(v)C’s treatment of the stripped tax credit
coupon. Under Section 3.03(e)(1) of this notice,
section 1286(a) applies toC’s purchase of the
December 15, 2013, stripped credit coupon. Section
1286(a) requiresCto treat the purchase of this
stripped credit couponas the purchase of a zero
coupon bond that is issued on the date of purchase
(December 15, 2011). The stripped credit coupon
has a stated redemption price at maturity of $150
and an issue price of $123.75, resulting in OID of
$26.25 ($150 - $123.75). The term of the stripped
credit coupon begins on December 15, 2011, and
ends on December 15, 2013. AlthoughCgenerally
uses the cash receipts and disbursements method of
accounting,Cmust include the OID in income as
it accrues on a constant yield basis over that term
in accordance with section 1272 and the regulations
thereunder.
C’s basis in the stripped credit coupon is increased
by the amount of OID that is included in C’s income.
As a result,C’s basis in the stripped credit coupon
on the December 15, 2013, credit allowance date will
be $150. On that date,Cwill become entitled to the
$150 of credit. Thus,Cdoes not have any gain or loss
when the coupon matures andCbecomes entitled to
the $150 tax credit.
April 12, 20105442010–15 I.R.B.

SECTION 4. INFORMATION
REPORTING REQUIREMENTS
RELATED TO TAX CREDIT BONDS
.01 IN GENERAL
Qualified tax credit bonds—in par-
ticular, stripping transactions involving
these bonds—raise significant tax compli-
ance and tax administration issues. The
Treasury Department and the IRS plan to
implement and maintain a robust system
of information reporting in this area to
facilitate tax compliance and strengthen
tax administration.
Section 54A(d)(3) requires issuers of
qualified tax credit bonds to submit infor-
mation reports regarding the bonds sim-
ilar to the reports required under section
149(e).
Section 6049(d)(9)(A) provides that,
for purposes of the information report-
ing requirements under section 6049(a)
regarding payments of interest, the term
interest includes amounts includible in
gross income under section 54A, and those
amounts are treated as paid on the credit
allowance date.
Under section 6049(d)(6), section
6049(a) generallyrequires OID on any
obligation to be reported as if it were paid
at the time that the OID is includible in in-
come under section 1272. This provision
governs section 6049 information report-
ing when a tax credit under a qualified tax
credit bond is included in an instrument’s
stated redemption price at maturity, and
thus contributes to OID. (This occurs when
the allowance of the credit is not treated
as a payment of qualified stated interest
on an instrument, for example, when a
stripped credit coupon is part of an aggre-
gated debt instrument that is subject to the
second sentence of Section 3.03(e)(2) of
this notice.)
Section 6049(b)(2)(B)(i) and section
6049(b)(4) generally exempt from infor-
mation reporting interest that is paid to
certain persons. Section 6049(d)(9)(B),
however, generally makes this exemption
inapplicable for interest on qualified tax
credit bonds that is treated as paid to the
following entities: (i) corporations; (ii)
dealers in securities or commodities re-
quired to register under the laws of the
United States, any State, the District of
Columbia or any United States posses-
sion; (iii) real estate investment trusts
(as defined in section 856); (iv) entities
registered at all times during the taxable
year under the Investment Company Act
of 1940; (v) common trust funds (as de-
fined in section 584(a); and (vi) trusts
exempt from tax under section 664(c).
Notwithstanding the preceding sentence,
the exemption continues to apply to inter-
est that is covered by an express regulatory
exception.
Section 6049(d)(9)(C) provides broad
authority to the Treasury Department to is-
sue regulations as necessary or appropri-
ate to carry out the purposes of section
6049(d)(9), including regulations that re-
quire more frequent or more detailed re-
porting.
The Treasury Department and the IRS
will attempt to ensure that both the IRS
and investors receiveaccurate information
about interest income (including OID) that
is includable in income as a result of hold-
ing qualified tax credit bonds and compo-
nents stripped from these bonds. The Trea-
sury Department and the IRS will also seek
to ensure that tax credits from qualified
tax credit bonds (including tax credits from
stripped credit coupons) are claimed only
when the claimant is entitled to those cred-
its.
To these ends, the Treasury Department
and the IRS anticipate implementing the
integrated system of information reporting
that is described below in this Section 4.
This may involve implementing new re-
quirements. Revised forms and, if neces-
sary, regulations will be issued to imple-
ment these information reporting require-
ments. For example, when a taxpayer
holds a stripped credit coupon in an ac-
count with a broker as defined in section
6045(c)(1) (see Section 3.03(d)(3) of this
notice), future guidance is expected to re-
quire the broker to compute, and report to
the holder of the stripped credit coupon
and to the IRS, the OID that accrues on that
coupon under Section 3.03(e) of this notice
and section 1286(a)-(b).
This system of information reporting
will be subject to the same penalties that
apply generally withrespect to the failure
to accurately file required forms. These
include but are not limited to the penal-
ties under sections 6049, 6721, and 6722
(which are applied to issuers, issuers’
agents, and independent intermediaries)
and the penalty under section 6694 and
Rev. Proc. 2009–11, 2009–3 I.R.B. 313
(which is applied to paid preparers).
As the forms and instructions to be
used to implement the integrated infor-
mation reporting system become avail-
able for use or for review in draft form,
the IRS plans to publish them on its
web site athttp://www.irs.gov/app/pick-
list/list/formsInstructions.htmland
http://www.irs.gov/app/picklist/list/draft-
TaxForms.html, respectively. Taxpay-
ers wishing to provide comments to the
IRS on draft tax forms can do so on the
IRS web site athttp://www.irs.gov/form-
spubs/page/0,,id=10179,00.html.
.02 INFORMATION RETURNS UNDER
SECTION 54A(d)(3)
Section 54A(d)(3) requires issuers of
qualified tax credit bonds to file informa-
tion returns. Although Form 8038 is now
used for this purpose, the IRS intends to
publish a new form (Form 8038–TC) to be
used in this situation. As is provided by
Section 3.03(c)(2) of this notice, the issuer
of a strippable issue is now required, as
part of this reporting obligation, to iden-
tifytheissueasastrippableissueandto
provide all of the CUSIP numbers that
Section 3.03(c)(4) of this notice requires.
Issuers must provide this information on
Form 8038 or an attachment thereto until
the new Form 8038–TC becomes available
and thereafter on this new form.
.03 REPORT OF A TAXPAYER
CLAIMING A TAX CREDIT ON AN
INCOME TAX RETURN
If a taxpayer claims on its income tax
return a tax credit authorized by section
54A, the taxpayer is required to include
Form 8912 as part of the return. The
IRS and Treasury Department anticipate
that the information required on this form
will be modified to include not only the
type of tax credit bond and the amount of
credit claimed but also the tax identifica-
tion number of the issuer of the bond and
the CUSIP number for the qualified tax
credit bond (or the stripped credit coupon)
that is the basis of the credit being claimed.
.04 TAX CREDIT ALLOWANCE
INFORMATION RETURN
Under section 6049, the IRS expects to
publish a new form, Form 1097–BTC, to
2010–15 I.R.B.545April 12, 2010

inform both the IRS and any recipient of a
credit under section 54A of the amount of
the tax credit that the credit recipient has
received for each credit allowance date.
The amount to be reported is the amount
of the allowed credit to which the recipi-
ent is entitled within the meaning of Sec-
tion 3.02(a)(1). It is anticipated that this
form will be used in two distinct situations.
First, it will have to be filed by, or on be-
half of, the issuer. Second, a filing will also
be required of each broker or intermediary
that is not acting on behalf of the issuer (an
independent intermediary).
As for the issuer requirement, the
principles under section 6049(d)(4) are
expected to apply to limit this requirement
to the last responsible person or interme-
diary acting on behalf of the issuer.
The requirement for independent inter-
mediaries is expected to apply whenever
such an intermediary serves as an agent or
nominee with respect to a credit or the in-
termediary receives a credit and passes it
on either to another independent interme-
diary or to the taxpayer that will ultimately
claim the credit. (Examples of indepen-
dent intermediaries include a broker that is
not reporting on behalf of the issuer, a part-
nership, a trust, an estate, and a regulated
investment company or real estate invest-
ment trust that distributes tax credits with
respect to its stock under section 853A or
section 54A(h)).
It is anticipated that this form will oper-
ate in the following fashion—
•The information required by the form
will include not only the amount of the
credit transferred to the recipient but
also the bond issuer’s tax identification
number and the CUSIP number for the
qualified tax credit bond (or stripped
credit coupon) that is the basis for the
credit being transmitted.
•Effective starting with credits received
in 2010, responsible persons under sec-
tion 6049 will be required to submit
a form to the IRS annually after the
close of the calendar year. The form
will include the total amount of tax
credits for which the responsible per-
sons served as a responsible person
during the taxable year with respect
to each independent intermediary and
each holder of a tax credit bond or
stripped credit coupon. The form will
require the CUSIP number of the bond
(or the stripped credit coupon) generat-
ing that tax credit and the tax identifi-
cation number of the issuer of the bond
that underlies the tax credit.
•Effective starting with credits received
in 2011, responsible persons under
section6049willberequiredtosend
this form to the credit recipient quar-
terlywithin30to60daysfollowing
the credit allowance date to which the
tax credit relates.
•The form will require that the entity
generating the form indicate whether
the entity is the bond issuer (including
a person acting on behalf of the bond
issuer) or whether it is an independent
intermediary and thus is not only the
generator of a form but also the recip-
ient of such a form from another inde-
pendent intermediary or from the bond
issuer (including a person acting on be-
half of the bond issuer).
.05 REPORT FOR INCOME FROM
INTEREST, ORIGINAL ISSUE
DISCOUNT, OR DIVIDENDS
(a) For qualified tax credit bonds, in-
formation reporting for interest and OID
under section 6049 will be expanded.
Responsible persons under section 6049
will generally be required annually to pro-
vide the IRS and the holder of a qualified
tax credit bond or stripped credit coupon
with an information return indicating the
amount of interest income paid (or treated
as paid for purposes of section 6049) to
the holder during that annual period with
respect to any qualified tax credit bond.
As stated above, when a taxpayer holds a
stripped credit coupon in an account with
a broker as defined in section 6045(c)(1)
(see Section 3.03(d)(3) of this notice),
future guidance isexpected to require
the broker to compute, and report, the
OID on that coupon that accrues under
Section 3.03(e) of this notice and section
1286(a)-(b). An analogous requirement
may apply to any other stripped compo-
nent from a qualified tax credit bond.
(b) It is expected that if a regulated in-
vestment company or a real estate invest-
ment trust receives tax credits allowed by
section 54A (either because it holds a qual-
ified tax credit bond or stripped coupon
or because it received the credits from an
independent intermediary) and distributes
with respect to its stock some or all of those
credits, then when thatentity reports under
section 6042 dividends paid to its share-
holders, the entity must include distributed
tax credits that are treated as dividends.
SECTION 5. REQUEST FOR
COMMENTS
The Treasury Department and the IRS
solicit comments generally on the ex-
pected regulations that are described in
Section 3 of this notice, other aspects of
stripping transactions under section 1286
on which guidance is needed, and the
various anticipated information reporting
requirements that are described in Section
4 of this notice.
In particular, the Treasury Department
and the IRS solicit comments regarding—
•Systems challenges, time needed to
implement systems changes to enable
affected parties to comply with the
anticipated information reporting re-
quirements, and alternative approaches
to alleviate systems challenges con-
sistent with the overall objectives for
information reporting in this area;
•The application of the principles in
this notice to tax credit Build America
Bonds under section 54AA and any
additional rules that may be necessary
to accommodate that application; and
•Whether any particular guidance is
needed to limit potential duplicative
claims of entitlement to tax credits
(e.g., specifying that credits are al-
lowable only to record holders as of
a particular time in a particular time
zone on a credit allowance date).
Comments should be submitted
in writing and can be e-mailed to
notice.comments@irscounsel.treas.gov
(include “Notice 2010–28” in the
subject line) or mailed to Office of
Associate Chief Counsel (Financial
Institutions and Products), Re: Notice
2010–28, CC:FIP:B5, Room 3547, 1111
Constitution Avenue, NW, Washington
DC 20224. The due date for the public
comments is May 24, 2010. Comments
that are submitted will be made available
to the public.
April 12, 20105462010–15 I.R.B.

SECTION 6. OMB NUMBER UNDER
THE PAPERWORK REDUCTION
ACT
The information collection contained in
this notice has been approved by the Of-
fice of Management and Budget (OMB) in
accordance with the Paperwork Reduction
Act (44 U.S.C. chapter 35) under control
number 1545–2167. Under the Paperwork
Reduction Act, an agency may not conduct
or sponsor and a person is not required to
respondtoacollectionofinformationun-
less it displays a valid OMB control num-
ber.
The collection of information in this
notice is in Section 3.03(c). The infor-
mation is required in order to inform the
IRS and holders of qualified tax credit
bonds whether the credit coupons relating
to those bonds may be stripped. The col-
lections of information are required for the
issuer to enjoy the benefit of having these
bonds treated as part of a strippable issue.
The likely respondents are states or local
governments and certain other eligible is-
suers of qualified tax credit bonds.
We estimate the total number of respon-
dents to be 1,000 and the total annual re-
sponses to be 1,000. We estimate it will
take 1 hour to comply. Estimates of the an-
nualized cost to respondents for the hour
burdens shown are notavailable at this
time.
Books or records relating to a collection
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 return informa-
tion are confidential, as required by section
6103.
SECTION 7. EFFECTIVE DATE
.01 The effective date of this notice is
March 23, 2010.
.02 The interim guidance in Sections
3.02 and 3.03 of this notice applies to—
(1) Stripping transactions (as defined in
Section 3.03(b)(3) of this notice) that occur
on or after the effective date of this notice;
and
(2) Taxable years ending on or after the
effective date of this notice for holders of
qualified tax credit bonds and of cash or
credit coupons stripped from qualified tax
credit bonds.
.03 Taxpayers may choose to apply the
interim guidance in Section 3.02 of this
notice consistently to taxable years ending
before the effective date of this notice.
.04 The IRS and the Treasury Depart-
ment anticipate that the date of applicabil-
ity of the expected regulations described in
this notice will be March 23, 2010. If, and
to the extent, the expected regulations dif-
fer from the interim guidance in this no-
tice, the different provisions of the final
regulations will be applied without adverse
retroactive effect.
SECTION 8. DRAFTING
INFORMATION
The principal authors of this notice are
Aviva Roth and Timothy Jones of the Of-
fice of Associate Chief Counsel (Finan-
cial Institutions & Products). For further
information regarding this notice, contact
Timothy Jones at (202) 622–3980 (not a
toll-free call). Forquestions on earnings
and profits, contact Russell P. Subin at
(202) 622–7790 (not a toll-free call).
Life Insurance Reserves —
Actuarial Guideline XLIII
Notice 2010–29
SECTION 1. PURPOSE
This notice provides interim guidance
to issuers of variable annuity contracts
on issues that arise under §§ 807 and 816
of the Internal Revenue Code (Code) as
a result of the adoption by the National
Association of Insurance Commissioners
(NAIC) of Actuarial Guideline XLIII,
Commissioners’ Annuity Reserve Valua-
tion Methodology (CARVM) for Variable
Annuities (AG 43).
SECTION 2. BACKGROUND
Overview
.01 A life insurance company is re-
quired to account for its obligations to
policyholders using reserve methods of
accounting. Statutory Accounting Prin-
ciples (SAP) govern the preparation of
the company’s annual statement, which is
filed with the relevant state insurance reg-
ulators. Generally Accepted Accounting
Principles (GAAP) govern the preparation
of an insurer’s financial statements, which
are provided to shareholders, bondholders,
banks and rating agencies. GAAP differs
in some respects from SAP.
.02 Clear reflection of the income of a
life insurance company for federal income
tax purposes requires an appropriate mea-
surement of the company’s life insurance
reserves. Tax accounting rules used to
compute the taxable income of a life insur-
ance company differ in some respects from
SAP or GAAP, including with respect to
the computation of life insurance reserves.
.03 Although all insurance companies
are required by the respective states in
which they do business to maintain re-
serves, not all reserves that a company
maintains (or is required to maintain) qual-
ify as “life insurance reserves” for Federal
income tax purposes.
Use and Computation of Life Insurance
Reserves
.04 Under § 816(a), an insurance com-
pany is a life insurance company if the
sum of (1) its life insurance reserves, plus
(2) unearned premiums, and unpaid losses
(whether or not ascertained), on noncan-
cellable life, accident, or health policies
not included in life insurance reserves,
comprise more than 50 percent of its total
reserves.
.05 Section 816(c) defines “total re-
serves” as the sum of (1) life insurance
reserves, (2) unearned premiums, and un-
paid losses (whether or not ascertained),
not included in life insurance reserves, and
(3) all other insurance reserves required
by law.
.06 Section 816(b) defines “life insur-
ance reserves” as amounts that are (1)
computed or estimated on the basis of rec-
ognized mortality or morbidity tables and
assumed rates of interest, and (2) set aside
to mature or liquidate, either by payment
or reinsurance, future unaccrued claims
arising from life insurance, annuity, and
noncancellable accident and health insur-
ance contracts (including life insurance
or annuity contracts combined with non-
cancellable accident and health insurance)
involving, at the time with respect to which
the reserve is computed, life, accident, or
health contingencies. Reserves generally
mustberequiredbylawtoqualifyaslife
insurance reserves.See also§ 1.801–4(d)
and (e) (setting forth reserves that qualify,
2010–15 I.R.B.547April 12, 2010

and reserves that do not qualify, as life
insurance reserves for Federal income tax
purposes under the predecessor of § 816);
Rev. Rul. 67–435, 1967–2 C.B. 232
(concluding that a reserve maintained for
abnormal mortality or depreciation and
losses on assets owned by the company is
not a life insurance reserve).
.07 A life insurance company must pay
tax on its “life insurance company taxable
income,” which is defined in § 801(b) as
life insurance gross income less life insur-
ance deductions. Life insurance gross in-
come is defined in § 803(a) to mean the
sum of (i) premiums, (ii) net decreases
in certain reserves under § 807(a), and
(iii) other amounts generally included by
a taxpayer in gross income. Life insur-
ance deductions are defined in § 804 to
mean the general deductions provided un-
der § 805 and the small life insurance de-
duction (if any) determined under § 806.
Section 805(a)(2) authorizes a deduction
for the net increase in certain reserves un-
der § 807(b). The reserves taken into ac-
count under § 807(a) and (b) include life
insurance reserves (as defined in § 816(b)).
See§ 807(c)(1).
.08 Section 807(d) through (f) sets forth
rules to compute the amount of the life in-
surance reserve for a contract for purposes
of determining taxable income. Section
807(d)(1) provides that the amount of the
life insurance reserve for any contract is
the greater of the net surrender value of the
contract (determined under § 807(e)(1))
or the federally prescribed reserve deter-
mined under § 807(d)(2). This amount
cannot, however, exceed the amount that
would be taken into account with respect to
the contract in determining “statutory re-
serves” (as defined in § 807(d)(6)).
.09 Section 807(e)(1) provides that the
net surrender value of any contract is deter-
mined with regard to any penalty or charge
that would be imposed on surrender but
without regard to any market value ad-
justment on surrender (except for certain
modified guaranteed contracts defined in
§817A(d)).
.10 Section 807(d)(2) provides that the
federally prescribed reserve for a contract
is computed using (a) the “tax reserve
method” applicable to the contract, (b) the
greater of the applicable Federal interest
rate (“AFIR”) or the prevailing State as-
sumed interest rate (“PSAIR”), and (c) the
prevailing commissioners’ standard tables
for mortality and morbidity, adjusted as
appropriate to reflect the risks (such as
substandard risks) incurred under the con-
tract which are not otherwise taken into
account.
.11 In the case of a contract to which
the Commissioners’ Annuities Reserve
Valuation Method (“CARVM”) ap-
plies (generally, an annuity contract),
§ 807(d)(3)(A)(ii) and 807(d)(3)(B)(ii)
provides that the tax reserve method ap-
plicable to the contract is the CARVM as
prescribed by the NAIC which is in effect
on the date the contract is issued. Other
parameters, such as the appropriate inter-
est rate and mortality tables, are likewise
generally determined with reference to the
date the contract is issued.
.12 Section 807(d)(6) provides that the
term “statutory reserves” means the aggre-
gate amount set forth in the annual state-
ment with respect to items described in
§ 807(c).See alsoRev. Rul. 2008–37,
2008–28 I.R.B. 77 (statutory reserves un-
der § 807(d)(6) equal the highest aggregate
reserve amount for § 807(c) items actually
held and set forth on the annual statement
pursuant to the minimum reserve require-
ments of any state in which a taxpayer does
business). The term does not, however, in-
clude any reserve attributable to a deferred
and uncollected premium if the establish-
ment of such a reserve is not permitted un-
der § 811(c).
.13 Section 807(f) provides that if the
basis for determining any item referred
to in § 807(c) (for example, life insur-
ance reserves taken into account under
§ 807(c)(1)) as of the close of any taxable
year differs from the basis for that deter-
mination as of the close of the preceding
taxable year, then so much of the differ-
ence between the amount of the item at the
close of the taxable year computed on the
new basis, and the amount of the item at
the close of the taxable year computed on
the old basis, as is attributable to contracts
issued before the taxable year is taken into
account ratably for each of the succeeding
ten taxable years.
.14 Notice 2008–18, 2008–5 I.R.B.
363, was published on February 4, 2008,
and described two reserve methodology
projects that were then in development by
the NAIC: One would provide a princi-
ples-based approach for calculating statu-
tory reserves for life insurance contracts
(Proposed Life PBR); the other, which was
subsequently adopted as AG 43, would set
forth a new Actuarial Guideline that would
constitute CARVM for variable annu-
ities (Proposed AG VACARVM). Notice
2008–18 alerted life insurance companies
to federal income tax issues that could
arise as a result of the adoption of either
project and requested comments on those
issues. Several organizations submitted
comments in response to the notice.
Adoption of AG 43
.15 The NAIC adopted Pro-
posed AG VACARVM as AG 43
with regard to contracts issued on
or after January 1, 1981, effective
December 31, 2009. Section V of
AG 43 provides, however, that where
the application of AG 43 produces
higher reserves than a company had
otherwise established by its previously
used interpretation, the company
may request a grade-in period, not
to exceed three years, from the
domiciliary insurance commissioner upon
satisfactory demonstration of the previous
interpretation, and that such a delay of
implementation will not cause a hazardous
financial condition or potential harm to
policyholders.
.16 The purpose of AG 43 is to interpret
the standards for the valuation of reserves
for variable annuity and other contracts in-
volving certain guaranteed benefits simi-
lar to those offered with variable annuities.
Generally, AG 43 requires that the aggre-
gate reserve for contracts falling within
its scope equal the Conditional Tail Ex-
pectation Amount (the “CTE Amount”)
1
but not be less than the Standard Scenario
Amount.
2
1
The CTE Amount is determined based on a projection of contracts falling within the scope of AG 43, and the assets supporting these contracts, over a broad range of stochastically generated
projection scenarios and using prudent estimate assumptions. Although the CTE Amount is determined on an aggregate basis for the contracts falling within the scope of AG 43, Appendix 6
of the Guideline provides a method for allocating the aggregate reserve to individual contracts based on each contract’s cash surrender value or Standard Scenario Amount, as applicable.
2
The Standard Scenario Amount is the aggregate of the reserves determined byapplying the standard scenario method (as outlined in Appendix 3 of AG 43) to each of the contracts falling
within the scope of AG 43.
April 12, 20105482010–15 I.R.B.

.17 Based on the requirements of §§ 807
and 816, the terms of AG 43, and the data
that are available to date, the Treasury De-
partment and the Internal Revenue Service
(IRS) have reached interim conclusions as
to some of the issues identified in Notice
2008–18 and are continuing to consider
others. Accordingly, section 3 of this no-
tice provides interim guidance to taxpay-
ers on some of the issues that arise under
AG 43.
SECTION 3. INTERIM GUIDANCE
.01Reserve Ratio Test.For purposes of
determining under § 816(a) whether an in-
surance company satisfies the 50 percent
of reserves test for qualification as a life
insurance company for taxable years end-
ing on or after December 31, 2009—
(a) the Standard Scenario Amount de-
termined under AG 43 is included in life
insurance reserves as defined in § 816(b)
and total reserves as defined in § 816(c);
and
(b) a taxpayer that delays implementa-
tion of AG 43 with permission of its domi-
ciliary insurance commissioner under sec-
tion V of AG 43 must consistently delay
implementation for purposes of determin-
ing life insurance reserves and total re-
serves under § 816(b) and (c).
.02Statutory Reserve Cap. For pur-
poses of applying the statutory reserve cap
of § 807(d)(1) for taxable years ending on
or after December 31, 2009 —
(a) the term “statutory reserves” under
§ 807(d)(6) includes the Standard Scenario
Amount determined under AG 43. Thus, a
reserve will not be excluded from statutory
reserves under § 807(d)(6) solely because
the reserve represents the Standard Sce-
nario Amount determined under AG 43,
provided the requirements of § 807(d)(6)
are otherwise met. For example, under
§ 807(d)(6) statutory reserves do not in-
clude any amount attributable to a deferred
and uncollected premium if the establish-
ment of such reserve is not permitted under
§811(c);and
(b) to the extent that a taxpayer delays
implementation of AG 43 with permission
of its domiciliary insurance commissioner
under section V of AG 43, it must consis-
tently delay implementation for purposes
of determining the amount of statutory re-
serves under § 807(d)(6).
.03Federally-Prescribed Reserve.For
purposes of determining the amount of
the reserve under § 807(d)(2) with respect
to a contract falling within the scope of
AG 43 and issued on or after December
31, 2009, the provisions for determining
the Standard Scenario Amount are taken
into account, and the provisions for
determining the CTE Amount are not
taken into account. Accordingly—
(a) for a contract issued before Decem-
ber 31, 2009, the tax reserve method under
§ 807(d)(2)(A) and (d)(3) is the method
applicable to such contract when issued,
as prescribed under relevant actuarial
guidance in effect before the adoption of
AG 43; and
(b) for a contract falling within the
scope of AG 43 and issued on or after De-
cember 31, 2009, the tax reserve method
with respect to such a contract under
§ 807(d)(2)(A) and (d)(3) is the method
prescribed in AG 43 for determining the
Standard Scenario Amount, applied using
the appropriate valuation interest rate un-
der § 807(d)(2)(B) and other adjustments
to the method described below.See, e.g.,
AG 43, Appendix 3;
(c) the PSAIR under § 807(d)(2)(B)(ii)
and (d)(4)(B) with respect to such a con-
tract is the highest assumed interest rate
permitted to be used in computing the
Standard Scenario Amount for annu-
ity contracts falling within the scope of
AG 43 under the insurance laws of at
least 26 states, as of the beginning of the
calendar year in which the contract was
issued;
(d) the prevailing commissioners’ stan-
dard tables with respect to such a contract
under § 807(d)(2)(C) and (d)(5) means the
most recent commissioners’ standard ta-
bles prescribed by the NAIC that are per-
mitted to be used in computing the Stan-
dard Scenario Amount for such a contract
under AG 43 under the insurance laws of
at least 26 states when the contract was is-
sued; and
(e) whether a taxpayer delays imple-
mentation of AG 43 with permission of its
domiciliary insurance commissioner under
section V of that guideline has no effect on
the determination of the amount of the re-
serve under § 807(d)(2).
.04Ten-year spread. If the amount de-
termined under § 807(d)(1) as of the last
day of the first taxable year ending on or
after the date of a taxpayer’s implemen-
tation of AG 43 (generally, December 31,
2009) differs from the amount that would
have been determined as of that date had
AG 43 not been implemented—
(a) the difference between the amount
determined with regard to AG 43 and
the amount determined without regard
to AG 43 (i.e., under prior actuarial
guidelines) must be spread over 10 taxable
years, using the method prescribed by
§ 807(f)(1)(B); and
(b) to the extent that a taxpayer delays
implementation of AG 43 with permission
of its domiciliary insurance commissioner
under section V of that guideline, it must
consistently delay implementation of the
ten-year spread under this section 3.04.
.05Standard Scenario Amount.The
Standard Scenario Amount determined un-
der AG 43 will be treated as a life insur-
ance reserve for Federal income tax pur-
poses if the requirements of that guideline,
including the account value return assump-
tions, are met.
.06Reliance on interim guidance.Tax-
payers may rely upon the interim guidance
provided in this notice pending further
published guidance by the Treasury De-
partment and the IRS. If, and to the extent,
future published guidance differs from the
interim guidance in this notice, the dif-
ferent provisions of that future guidance
will be applied without adverse retroactive
effect.
.07No Inference on prior actuarial
guidelines or Life PBR, or on other tax
issues. No inference should be drawn
from this notice regarding any federal tax
issues that arise under any actuarial guide-
line other than AG 43 or that could arise
under Life PBR. In addition, this notice is
not intended to address any other federal
tax issues implicated in the adoption of
AG 43 by the NAIC.
SECTION 4. EFFECTIVE DATE
This notice is effective March 25, 2010.
SECTION 5. PROCEDURAL
INFORMATION
This notice serves as an “administra-
tive pronouncement” as that term is used
in § 1.6662–4(d)(3)(iii) of the regulations
and may be relied upon to the same extent
as a revenue ruling or revenue procedure.
2010–15 I.R.B.549April 12, 2010

DRAFTING INFORMATION
The principal author of this notice is
Chris Lieu of the Office of the Associate
Chief Counsel (Financial Institutions &
Products). For furtherinformation regard-
ing this notice, contact Mr. Lieu at (202)
622–3970 (not a toll-free call).
April 12, 20105502010–15 I.R.B.

Part IV. Items o
fGeneralInterest
Issuance of Op
inion and
Advisory Lett
ers and
Opening of the
EGTRRA
Determinati
on Letter Program
for Pre-Appr
oved Defined
Benefit Pla
ns
Announceme
nt 2010–20
The Service
will soon issue opinion
and advisor
y letters for pre-approved (i.e.,
master and p
rototype (M&P) and volume
submitter
(VS)) defined benefit plans that
were resta
ted for the Economic Growth
and Tax Rel
ief Reconciliation Act of 2001,
Pub. L. 107
–16, (“EGTRRA”) and other
changes i
n plan qualification requirements
listed in
Notice 2007–3, 2007–1 C.B. 255
(“the 200
6 Cumulative List”) and that
were file
d with the Service. The Service
expects
to issue the letters on March 31,
2010, or
, in some cases, as soon as possible
thereaf
ter. A plan that receives a favorable
letter w
ith respect to its restatement for
EGTRRA a
nd the 2006 Cumulative List
is refe
rred to as an “EGTRRA-approved
plan.”
Employers using these pre-ap-
proved
plan documents to restate a plan for
EGTRRA
and the 2006 Cumulative List
will be
required to adopt the EGTRRA-ap-
prove
d plan document by April 30, 2012.
The Se
rvice will accept applications for
indiv
idual determination letters submitted
by ado
pters of these pre-approved plans
start
ing on May 1, 2010.
Background
Rev. Proc. 200
5–16, 2005–1 C.B. 674,
and Rev. Proc
. 2007–44, 2007–2, C.B.
54, as modifi
ed by Rev. Proc. 2008–56,
2008–40 I.R.
B. 826, describe a staggered
remedial ame
ndment system for plans
that are qua
lified under § 401(a) of the
Internal Re
venue Code, with five-year
amendment/
approval cycles for individu-
ally design
ed plans and six-year cycles for
pre-approv
ed plans. These revenue proce-
dures requ
ire sponsors and practitioners to
restate th
eir pre-approved defined benefit
plans for E
GTRRA and the 2006 Cumu-
lative Lis
t and apply for new opinion or
advisory
letters.
Section 16
.03 of Rev. Proc. 2007–44
provides
that when the review of a cycle
for pre-a
pproved plans has neared comple-
tion, the
Service will publish an announce-
ment prov
iding the date by which adopting
employer
s must adopt the newly approved
plans. T
his date is intended to give adopt-
ing empl
oyers a window of approximately
two year
s in which to adopt the plans.
Deadli
ne for Employer Adoption of
EGTRRA
-approved Defined Benefit M&P
andVSP
lans
An ado
pting employer whose defined
benef
it plan is eligible for the six-year re-
media
l amendment cycle under section 17
of Re
v. Proc. 2007–44, as modified by
Rev.
Proc. 2008–56, and who adopts an
EGTRRA-appro
ved M&P or VS defined
benefit plan b
y April 30, 2012, will have
adopted the pl
an within the employer’s six-
year remedial
amendment cycle. The end
of the plan’s r
emedial amendment cycle
with respect
to EGTRRA and the changes
in plan quali
fication requirements on the
2006 Cumulat
ive List is April 30, 2012.
Opening of In
dividual Determination
Letter Progr
am for EGTRRA-approved
Defined Ben
efit M&P and VS Plans
Adopting em
ployers may apply for in-
dividual de
termination letters with respect
to an EGTRRA
-approved M&P or VS de-
fined benef
it plan beginning May 1, 2010.
Additiona
l information regarding determi-
nation let
ter applications for pre-approved
plans, inc
luding the application forms and
other docu
ments that must be submitted
with an ap
plication, may be found in sec-
tion 9 of R
ev. Proc. 2010–6, 2010–1
I.R.B. 19
3, and the frequently asked ques-
tions at:
Retirement Plans FAQs Regarding
EGTRRA De
termination Letter Program
for Pre-A
pproved Plans.
ANNO
UNCEMENT AND REPORT CONCERNING ADVANCE PRICING AGREEMENTS
ANNO
UNCEMENT 2010–21
March 29, 2010
This Announcement is issued pursuant to § 521(b) of Pub. L. 106–170, the Ticket to Work and Work Incentives Improvement Act
of 1999, which requires the Secretary of the Treasury to report annually to the public concerning Advance Pricing Agreements
(APAs) and the APA Program. The first report covered calendar years 1991 through 1999. Subsequent reports covered separately
each calendar year 2000 through 2008. This eleventh report describes the experience, structure, and activities of the APA Program
during calendar year 2009. It does not provide guidance regarding the application of the arm’s length standard.
Craig A. Sharon
Director, Advance Pricing Agreement Program
2010–15 I.R.B.551April 12, 2010

Background
Internal Revenue Code (IRC) § 482 providesthat the Secretary may distribute, apportion, or allocate gross income, deductions,
credits, or allowances between or among two or more commonly controlled businesses if necessary to reflect clearly the income
of such businesses. Under the § 482 regulations, the standard to beapplied in determining the true taxable income of a controlled
business is that of a business dealing at arm’s length with an unrelated business. The arm’s length standard has also been
adopted by the international community and is incorporated intothe transfer pricing guidelines issued by the Organization for
Economic Cooperation and Development (OECD). OECD,TRANSFER PRICING GUIDELINES FOR MULTINATIONAL
ENTERPRISES AND TAX ADMINISTRATORS (1995). Transfer pricing issues by their nature are highly factual and have
traditionally been one of the largest issues identified by the IRS in its audits of multinational corporations. The APA Program
is designed to resolve actual or potential transfer pricing disputes in a principled, cooperative manner, as an alternative to the
traditional examination process. An APA is a binding contract between the IRS and a taxpayer by which the IRS agrees not to
seek a transfer pricing adjustment under IRC § 482 for a covered transaction if the taxpayer files its tax return for a covered year
consistent with the agreed transfer pricing method (TPM). In2009, the IRS and taxpayers executed 63 APAs and amended 8 APAs.
Since 1991, with the issuance of Rev. Proc. 91–22, 1991–1 C.B. 526, the IRS has offered taxpayers, through the APA Program,
the opportunity to reach an agreement in advance of filing a tax return on the appropriate TPM to be applied to related party
transactions. In 1996, the IRS issued internal procedures for processing APA requests. Chief Counsel Directives Manual
(CCDM), ¶¶ 42.10.10 — 42.10.16 (November 15, 1996).
1
Also in 1996, the IRS updated Rev. Proc. 91–22 with the release of
Rev. Proc. 96–53, 1996–2 C.B. 375.
2
In 1998, the IRS published Notice 98–65, 1998–2 C.B. 803,
3
which set forth streamlined
APA procedures for small business taxpayers. Then on July 1, 2004, the IRS updated and superseded both Rev. Proc. 96–53 and
Notice 98–65 by issuing Rev. Proc. 2004–40, 2004–2 I.R.B. 50,
4
effective for all APA requests filed on or after August 19, 2004.
On December 19, 2005, the IRS again updatedthe procedural rules for processing and administering APAs with the release of
Rev. Proc. 2006–09, 2006–1 C.B. 278.
5
Rev. Proc. 2006–09 supersedes Rev. Proc. 2004–40 and is effective for all APA requests
filed on or after February 1, 2006. On May 21, 2008, the IRS released Rev. Proc. 2008–31, 2008–23 I.R.B. 1133, which revised
Rev. Proc. 2006–09 to describe further the types of issues that may be resolved in the APA process.
6
Specifically, Rev. Proc.
2008–31 added a new sentence to Section 2.01 of Rev. Proc. 2006–09, to advise that the APA process may be used to resolve any
issue for which transfer pricing principlesmay be relevant, such as attribution of profit to a permanent establishment under certain
U.S. income tax treaties, the amount of income effectively connected with the conduct of a U.S. trade or business, and the amount
of income derived from sources partly within and partly without the United States.
Advance Pricing Agreements
An APA generally combines an agreement between a taxpayer andthe IRS on an appropriate TPM for the transactions at issue
(Covered Transactions) with an agreement between the U.S. andone or more foreign tax authorities (under the authority of the
mutual agreement process of our income tax treaties) that the TPM is correct. With such a“bilateral” APA, the taxpayer ordinarily
is assured that the income associated with the Covered Transactions will not be subject to double taxation by both the U.S. and
the foreign jurisdiction. The policy of the United States, as reflected in §§ 2.08 and 7 of Rev. Proc. 2006–09, is to encourage
taxpayers that enter the APA Program to seek bilateral or multilateral APAs when competent authority procedures are available
with respect to the foreign country or countries involved. However, the IRS may execute an APA with a taxpayer without
reaching a competent authorityagreement (a unilateral APA).
A unilateral APA is an agreement between a taxpayer and the IRS establishing an approved TPM for U.S. tax purposes. A
unilateral APA binds the taxpayer and the IRS, but does not preventa foreign tax administration from taking a different position
on the appropriate TPM for a transaction. As stated in § 7.07 of Rev. Proc. 2006–09, should a transaction covered by a unilateral
APA be subject to double taxation as the result of an adjustment by a foreign tax administration, the taxpayer may seek relief
by requesting that the U.S. Competent Authority consider initiating a mutual agreement proceeding pursuant to an applicable
income tax treaty (if any).
When a unilateral APA involves taxpayers operating in a countrythat is a U.S. treaty partner, information relevant to the APA
(including a copy of the APA and APA annual reports) may be provided to the treaty partner under normal rules and principles
governing the exchange of information under income tax treaties.
1
Current CCDM provisions regardingAPA procedures are available athttp://www.irs.gov/irm/part32/ch04s01.html.
2
Available athttp://www.irs.gov/pub/irs-irbs/irb96–49.pdf.
3
Available athttp://www.irs.gov/pub/irs-irbs/irb98–52.pdf.
4
Available athttp://www.irs.gov/pub/irs-irbs/irb04–29.pdf.
5
Available at http://www.irs.gov/irb/2006–02_IRB/ar12.html.
6
Available athttp://www.irs.gov/pub/irs-irbs/irb08–31.pdf.
April 12, 20105522010–15 I.R.B.

The APA Program
An IRS team headed by an APA team leader is responsible for the consideration of each APA. As of December 31, 2009, the
APA Program had 19 team leaders. The team leader is responsible for organizing the IRS APA team. The IRS APA team leader
arranges meetings with the taxpayer, secures whatever informationis necessary from the taxpayer to analyze the taxpayer’s related
party transactions and the available facts under the arm’s lengthstandard of IRC § 482 and the regulations thereunder, and leads
the discussions with the taxpayer.
The APA team generally includes an economist, an LMSB international examiner, LMSB field counsel, and, in a bilateral
case, a U.S. Competent Authority analyst who leads the discussions with the treaty partner. The economist may be from the
APA Program or the IRS field organization. As of December31, 2009, the APA Program had 8 economists on staff, plus one
economist manager. The APA team may also include an LMSB International Technical Advisor, other LMSB exam personnel,
and/or an Appeals Officer.
The APA Process
The APA process is voluntary. Taxpayers submit an application for an APA, together with a user fee as set forth in Rev. Proc.
2006–09, § 4.12. The APA process can be broken into five phases: (1) application; (2) due diligence; (3) analysis; (4) discussion
and agreement; and (5) drafting, review, and execution.
(1)A
pplication
In many APA cases, the taxpayer’s application is preceded by a pre-file conference with the APAstaff in which the taxpayer can
solicit the informal views of the APA Program. Pre-file conferences can occur on an anonymous basis, although a taxpayer must
disclose its identity when it applies for an APA. The APA Program has been requiring taxpayers interested in an APA under Rev.
Proc. 2008–31 to schedule a pre-file conference before submitting a formal APA application.
As part of a taxpayer’s APA application, the taxpayer must file the appropriate user fee on or before the due date, including
extensions, of the tax return for the first taxable year that the taxpayer proposes to be covered by the APA. (If the taxpayer receives
an extension to file its tax return, it must file its user fee no later than the actual filing date of the return.) Many taxpayers file
a user fee first and then follow up with a fullapplication later — a “dollar file” in APA parlance. The procedures for pre-file
conferences, user fees, and applications canbe found in §§ 3 and 4 of Rev. Proc. 2006–09.
The APA application can be a relatively modest document forsmall businesses. Section 9 of Rev. Proc. 2006–09 describes
the special APA procedures for small business taxpayers. For most taxpayers, however, the APA application is a substantial
document filling several binders. APA applications must be accompanied by a declaration, signed by an authorized corporate
officer, attesting to the accuracy and completeness of the information presented.
The application is assigned to an APA team leader who is responsible for the case. The APA team leader’s first responsibility
is to organize the APA team. This involves contacting the appropriate LMSB International Territory Manager to secure the
assignment of an international examiner to the APA case and the LMSB Counsel’s office to secure a field counsel lawyer. In a
bilateral case, the U.S. Competent Authority will assign a U.S. Competent Authority analyst to the team. In a large APA case, the
international examiner may invite his or her manager and other LMSB personnel familiar with the taxpayer to join the team. If the
APA may affect taxable years in Appeals, the appropriate appellate conferee will be invited to join the team. In cases involving
cost-sharing arrangements, other complex intangibles and services transactions, or novel issues, the APA team leader contacts the
Manager, LMSB International Technical Advisors, to determine whether or not to include a technical advisor on the team. The
multi-functional nature of APA teams combines the APA Program’s transfer pricing expertise and APA experience with other
elements of the IRS that possess complementary or supplementary knowledge about the taxpayer, the taxpayer’s industry, related
or ancillary tax issues, the foreign competent authority, and other relevant issues. By bringing all relevant parties to the table in a
single proceeding, the APA process is able to resolve transfer pricing issues early on in a more principled, efficient, consistent,
and comprehensive manner than the standard administrative process (i.e., audit, appeals, litigation).
The APA team leader distributes copies of the APA application to all team members, makes initial contact with the taxpayer to
confirm the APA Program’s receipt of the taxpayer’s application, and sets up an opening conference with the taxpayer. Under
current APA case management procedures, the APA office strivesto (i) make initial contact with the taxpayer within 21 days
of its receipt of the APA application and (ii) hold the opening conference within 45 days from the date that the APA team
expects to begin actively working the case — the “Start Date” under the revised case management procedures. Because of
heavy caseloads (especially among APA economists) and staff turnover during 2009, we were unable to hold many opening
conferences within the 45-day target.
2010–15 I.R.B.553April 12, 2010

On or about the opening conference, the APAteam leader proposes a case plan appropriate for the case. Case plans are generally
targeted to complete a unilateral APA or, in the case of a bilateral APA, the recommended U.S. negotiating position within 12
months from the date the full application is filed. The targeted completion date in a particular case, however, may vary from the
12-month benchmark, depending on the complexity of the case, APA team workloads, taxpayer schedules, and other factors. Case
plans are signed by both an APA manager and an authorized official of the taxpayer and, under the new APA case management
procedures, will generally be adhered to except in unforeseen orexceptional circumstances. Theactual median and average times
for completing unilateral and bilateral APAs, recommended negotiating positions for bilateral APAs, and APAs for small business
taxpayers are shown below in Tables 2, 5, and 11, respectively.
(2)D
ueDiligence
The APA team must satisfy itself that the relevant facts submittedby the taxpayer are complete and accurate. This due diligence
aspect of the APA is vital to the process.It is because of this due diligence that the IRS can reachadvance agreements with
taxpayers in the highly factual setting of transfer pricing.Due diligence can proceed in a number of ways. Typically, the APA
team leader will submit in advance of the opening conference a list of questions to the taxpayer for discussion at the conference.
The opening conference may result in additional questions and an agreement to meet one or more times in the future. These
questions and meetings are not an audit and are focused on the transfer pricing issues associated with the transactions in the
taxpayer’s application, or other transactionsthat the taxpayer and the IRS may agree to add.
(3)A
nalysis
A significant part of the analytical work associated with anAPA is done typically by the APA economist and/or an IRS field
economist assigned to the case. The analysis may result in the need for additional information. Once the IRS APA team has
completed its due diligence and analysis, it begins discussions with the taxpayer over the various aspects of the APA including the
covered transactions, the TPM, the selection of comparable transactions, asset intensity and otheradjustments, the appropriate
critical assumptions, the APA term, and other key issues. The APA team leader will discuss particularly difficult issues with his or
her managers, but generally the APA teamleader is empowered to negotiate the APA.
(4)D
iscussionandAgreement
The discussion and agreement phase differs for bilateral and unilateral cases. In a bilateral case, the discussions proceed in two
parts and involve two IRS offices — the APA Program and the U.S. Competent Authority. In thefirst part, the APA team will
attempt to reach a consensus with the taxpayer regarding the recommended position that the U.S.Competent Authority should
take in negotiations with its treaty partner. This recommended U.S. negotiating position is a paper drafted by the APA team leader,
reviewed by APA management, and signed by the APA Directorthat provides the APA Program’s view of the best TPM for
the Covered Transactions, taking into account IRC § 482 and the regulations thereunder, the relevant tax treaty, and the U.S.
Competent Authority’s experience with the treaty partner.
The experience of the APA office and the U.S. Competent Authority is that APA negotiations are likely to proceed more rapidly
with a foreign competent authority if the U.S. negotiating position is fully supported by the taxpayer. Consequently, the APA
office works together with the taxpayer in developing the recommended U.S. negotiating position. Often, however, the taxpayer
will disagree with part or all of the recommended U.S. position. In these cases, the APA office will send a recommended U.S.
negotiating position to the U.S. Competent Authority that identifies and explains the elements of the recommended position with
which the taxpayer disagrees. The APA team leader also solicits the views of the other members of the APA team, and, in the
vast majority of APA cases, the other members of the APA teamconcur in the position prepared by the APA team leader. If
there is any disagreement, it is noted in the position paper.
After the APA Program completes the recommended U.S. negotiating position, the APA process shifts from the APA Program
to the U.S. Competent Authority. The U.S. Competent Authority analyst assigned to theAPA takes the recommended U.S.
negotiating position and prepares the final U.S. negotiating position, which is then transmitted to the foreign competent authority.
The negotiations with the foreign competent authority are conducted by the U.S. Competent Authority analyst, most often in
face-to-face negotiating sessions conducted periodicallythroughout the year. At the request of the U.S. Competent Authority,
APA Program staff may assist in the negotiations.
In unilateral APA cases, the discussions proceed solely betweenthe APA Program and the taxpayer. In a unilateral case, the
taxpayer and the APA Program must reachagreement to conclude an APA. As in bilateral cases, the APA team leader almost
always will achieve a consensus with the IRS field personnelassigned to the APA team regarding the final APA. Under APA
Program procedures, IRS field personnel assigned to a case are solicited formally for their concurrence in the final APA. This
concurrence, or any item in disagreement, is noted in a memorandum prepared by the APA team leader that accompanies the final
APA sent forward for review and execution.
April 12, 20105542010–15 I.R.B.

(5)Drafting,Review,andExecution
Once the IRS and the taxpayer reach agreement, the final APA is drafted. The APA Program has developed standard language
that is incorporated into every APA. Thecurrent version of this language is found in Attachment A. APAs are reviewed by the
APA Branch Chief and the APA Director. In addition, the teamleader prepares a summary memorandum for approval by the
Associate Chief Counsel (International) (ACC(I)). On March 1, 2001, the ACC(I) delegated to the APA Director the authority
to execute APAs on behalf of the IRS.SeeChief Counsel Notice CC–2001–016. The APA is executed for the taxpayer by an
appropriate corporate officer.
Model APA at Attachment A
[§ 521(b)(2)(B)]
Attachment A contains the current version of the model APA language.
The Current APA Office Structure, Composition, and Operation
In 2009, the APA office consisted of four branches, with Branches 1 and 3 staffed with APA team leaders and Branch 2 staffed
with economists based in Washington, D.C. Branch 4, the APA West Coast branch, is headquartered in Laguna Niguel, California,
with an additional office in San Francisco, and is staffed with both team leaders and economists.
APA staffing fluctuated during 2009, starting at 33 at the end of 2008, falling to a low of 30 in early 2009, and building back up to
39 by the end of the year. As of December 31, 2009, the APA staff was as follows:
Consistent with the increase in total APA headcount from 2008 to 2009, total APA staffing measured by hours increased in 2009
compared to 2008. APA staff hours in 2009 were similar to APA staff hours in 2006 and 2007, when APA staffing levels
were similar at year end (39 in 2009 vs. 40 in 2006 and 37 in 2007), with the small variation in staff hours due primarily
to the timing of departures and hires within a year. The change in APA professional staffing levels over the last eight years is
reflected in the table below.
2010–15 I.R.B.555April 12, 2010

Hours of APA attorneys, economists, and paralegal staff by year (excluding holiday and leave):
APAIssue/I
ndustryCoordinationTeams
In May 2005, the IRS Chief Counsel announced a series of initiatives to improve APA Program performance. One initiative was
to increase specialization within the office by creating teams of select individuals to handle all cases of a particular type. The
purpose was to increase efficiency, quality, and consistency.
The APA Program selected five categories of cases for specialization — cases involving cost sharing arrangements, financial
products, the semiconductor industry, the automotive industry, and the pharmaceutical industry. These categories were selected
because they each had a sufficient number of cases and commonality of issues to warrant their assignment to teams. Cases falling
within these five categories have historically accounted for about 40 percent of the APA Program’s case load and about half of its
total case time. At the end of 2009, cases within these five categories accounted for 86 of the 222 cases pending in the office that
were either unilateral APAs or bilateral APAs that had not yet been forwarded to Competent Authority.
April 12, 20105562010–15 I.R.B.

Staffing of the coordination teams at the end of 2009 is indicated below:
The APA Program is mindful that the purpose of the coordination effort is not to impose the same transfer pricing method on all
taxpayers in an industry. The appropriate transfer pricing method remains a case-by-case determination, influenced by numerous
factors that are not common to all companies operating in a particular industry. While the coordination effort may result in the
APA Program promoting a commonapproach on some issues where appropriate, the Program expects that the greater industry
familiarity developed through the coordination effort will also allow it to develop a more sophisticated understanding of issues
that will permit more tailored approaches, thereby promoting more (appropriately) varied results than might otherwise be the case.
A
PATraining
In 2009, the APA office continued its training activities. Training sessions addressed APA-related current developments, the
application of Rev. Proc. 2008–31, regulatory developments, new APA office practices and procedures, and international
tax law issues. The training materials used for new hiresare available to the public through the APA internet site at
http://www.irs.gov/businesses/corporations/article/0,,id=96221,00.html. The APA’s new-hire materials, which were originally
prepared in 2003 and have not been updated, do not constitute guidance on the application of the arm’s length standard and are
not to be relied upon or cited as precedent. Also available to thepublic is a spreadsheet model that performs calculations in a
Comparable Profits Method (CPM) analysis, which APA economists developed in 2007 and which is now routinely used by the
APA office when performing APA analyses. An electronic version of the model may be obtained by contacting the APA office in
Washington, D.C. at (202) 435–5220 (not a toll-free number).
2010–15 I.R.B.557April 12, 2010

APA Program Statistical Data
[§ 521(b)(2)(C) and (E)]
The statistical information required under § 521(b)(2)(C) is contained in Tables 1 and 10 below; the information required under
§ 521(b)(2)(E) is contained in Tables 2 and 3 below. The 127 APA applications during 2009 represented a new one-year high for
the Program, following a record-breaking yearin 2008 when we received 123 applications.
7
From 2000–2007, the APA Program
averaged 91 applications per year, and it had never received more than 110 applications in a single year. The APA Program
expects APA applications to continue in 2010 at the same high levels as in 2008 and 2009.
TABLE 1: APA APPLICATIONS, EXECUTED APAs, AND PENDING APAs
UnilateralBilateralMultilateral
Year
Total
Cumulative
Total
APA applications filed during 200939881271,379
All APAs executed
8
Year 20092142063904
1991–200836446413841
APA renewals executed during 200982028261
APAs revised or amended during
2009
44861
Pending requests for APAs70282
352
Pending requests for new
APAs
47174221
Pending requests for renewal
APAs
23108131
APAs canceled or revoked0009
APAs withdrawn6814146
TABLE 2: MONTHS TO COMPLETE APAS
Months to Complete Advance Pricing Agreements in 2009
All NewAll RenewalsAll Combined
Average38.0Average37.9Average37.9
Median33.6Median31.4Median33.1
Unilateral
New
Unilateral
Renewals
Unilateral
Combined
Average
25.5
Average
20.5
Average23.6
Median19.2Median
15.1
Median18.2
7
Of the 127 new APA applications in 2009 — the first full year in which Rev. Proc. 2008–31 was in effect — approximately ten submissions invoked APA jurisdiction under Rev. Proc.
2008–31.
8
“All APAs executed” includes APA renewals, but not APAs revised or amended.
April 12, 20105582010–15 I.R.B.

Months to Complete Advance Pricing Agreements in 2009
Bilateral/Multilateral
New
Bilateral/Multilateral
Renewals
Bilateral/Multilateral
Combined
Average
45.4
Average44.9Average
45.1
Median42.1Median37.9Median40.6
TABLE 3: APA COMPLETION TIME – MONTHS PER APA
Months
Number
of APAsMonths
Number
of APAsMonths
Number
of APAs
12651
1
227
1
52
2
32853
429
1
54
2
5
30
1552
631
2
56
3
7
32
157
833
4
58
1
9
2
34
1
59
103560
11
1
36
2
61
12
3
37
1
62
1
13
1
38
2
63
143964
154065
16
2
41
3
66
1
17
1
42
1
67
18
3
4368
19
1
44
2
69
20
2
45
1
70–79
21
1
4680
2
224787
1
23
2
4892
1
24
1
49122
1
25
2
50
TABLE 4: RECOMMENDED NEGOTIATING POSITIONS
Recommended Negotiating Positions Completed in 2009
35
2010–15 I.R.B.559April 12, 2010

Table 5: MONTHS TO COMPLETE RECOMMENDED NEGOTIATING POSITIONS
NewRenewal
Combined
Average
18.5
Average21.0Average19.9
Median17.2Median21.0Median18.6
TABLE 6: RECOMMENDED NEGOTIATING POSITIONS COMPLETION TIME – MONTHS PER APA
MonthsNumberMonthsNumberMonthsNumberMonthsNumber
11223
1
34
21324
2
35
314
2
25
1
36
1
4
1
15
1
2637
5
16
2
2738
617
4
2839
71
18
3
29
3
40
819
1
30
1
41
9203142
10
1
21
3
32
1
43
11
2
22
3
33
1
44
TABLES 7 AND 8 BELOW SHOW HOW LONG EACH APA REQUEST PENDING AT THE END OF 2009 HAS BEEN IN
THE SYSTEM AS MEASURED FROM THE FILING DATE OF THE APA SUBMISSION. THE NUMBERS FOR PENDING
UNILATERAL AND BILATERAL CASES DIFFER FROM THE NUMBERS IN TABLE 1 BECAUSE TABLES 7 AND 8
REFLECT ONLY CASES FOR WHICH SUBMISSIONS HAVE BEEN RECEIVED, WHILE TABLE 1 INCLUDES ANY
CASE FOR WHICH A USER FEE HAS BEEN PAID.
TABLE 7: UNILATERAL APAs – TIME IN INVENTORY – MONTHS PER APA
Months
Number
of APAsMonths
Number
of APAsMonths
Number
of APAsMonths
Number
of APAs
1
7
9
2
1725
3
2
1
10
1
18
4
26
3
1
11
3
19
2
27
4
3
12
1
20
1
28
52
13
4
21
2
29
1
6
4
1422
3
30
1
7
15
1
2343
1
8516
1
24
3
April 12, 20105602010–15 I.R.B.

TABLE 8: BILATERAL APAs – TIME IN INVENTORY – MONTHS PER APA
Months
Number
of APAsMonths
Number
of APAsMonths
Number
of APAsMonths
Number
of APAs
1
12
25
7
49
1
73
2
3
26
3
50
1
74
3
2
27
4
51
275
4
8
28552
1
76
57
29
6
53
277
6
8
30
2
54
1
78
79
31
455
79
8
12
32
1
56
1
80
9
7
33
8573
81
10
6
345882
11
6
35
4
59
1
83
1
12
10
36
4
60
2
84
13
9
37
3
6185
1
145386286
15
3
39
1
63
2
87
16
8
40
6
6488
17
9
416589
18
4
42
1
6690
19
8
43
1
6791
20
3
44
1
68
1
92
21
10
45
1
6993
22546
1
70
2
94
1
23
12
47
1
7195
24
4
48
6
7296+
Of the 321 cases in the APA Program’s inventory shown in Tables 7 and 8, 99 cases (all of which are reflected in Table 8) are
bilateral cases that have been forwarded to the Competent Authority office for discussion with a treaty partner. This leaves 222
cases in the APA Program’s active inventory at the end of 2009 thatare either unilateral APAs (57 cases) or bilateral APAs for
which the APA Program has not yet completed a recommended negotiating position (165 cases). Of the 222 active APA cases, 20
involve small business taxpayer (SBT) cases, as defined in Rev. Proc. 2006–9, § 4.12(5).
The table below shows the average age (in months) of the 222 active cases in inventory at the end of 2009, along with a
comparison of the number of active cases and their average ageat year-end for each year back to 2004. The table also shows the
same information for cases that were at least 6-months old or 1-year old (the latter being a subset of the former) at the end of
each year to allow comparison without potential distortions caused by year-to-year variations in the number of cases received
in the latter half or during the course of the year. The build-up in inventory during 2009 primarily reflects the delays caused
by the significant fluctuations in APA personnel combined withthe record number of new APA applications during the past
two years. The increases in APA applications and inventory levels have, in fact, masked improvements in recent years in
APA productivity, as measured by the number of completed APA items (e.g., APAs, APA amendments, and recommended US
negotiating positions) divided by total APA staff hours during a year.
2010–15 I.R.B.561April 12, 2010

TABLE 9: NUMBER AND AVERAGE AGE OF ACTIVE CASES IN INVENTORY AT YEAR-END
200420052006200720082009
Active cases130133110
105
161222
Average age (months)
15.2
13.210.69.110.212.9
Active cases 6+ months106878166110176
Average age (months)17.8
18.5
13.013.0
13.515.6
Active cases 1+ year60
55
3227
51
116
Average age (months)24.223.319.4
18.5
18.7
19.5
TABLE 10: SMALL BUSINESS TAXPAYER APAs
Small Business Taxpayer APAs Completed in 20095
New4
Renewals1
Unilateral2
Bilateral3
TABLE 11: MONTHS TO COMPLETE SMALL BUSINESS TAXPAYER APAs
Months to Complete Small Business Taxpayer APAs in 2009
NewRenewal
Combined
Average29.3Average21.6Average27.7
Median29.3Median21.6Median23.1
Although the APA Program strives to complete SBT cases on an expedited basis, our experienceis that such cases require nearly
the same level of resources and the same commitment of timeas non-SBT cases. This phenomenon may be explained by a
number of factors, including the fact that the complexity or novelty of transfer pricing issues do not necessarily depend on the
dollar volume of the related-party transactions, the lesser transfer pricing experience and/or resources of many SBTs, and the
importance to both SBTs and non-SBTs of obtaining APA outcomesthat reflect each taxpayer’s particular facts and circumstances
(as opposed to an analysis based on streamlined factual development and general transfer pricing principles).
April 12, 20105622010–15 I.R.B.

TABLE 12: INDUSTRIES COVERED
9
Industry Involved – NAICS Codes
Number
Wholesale trade, durable goods – 42110–12
Wholesale trade, nondurable goods – 42210–12
Transportation equipment manufacturing – 3367–9
Computer and electronic product manufacturing – 3344–6
Motor vehicle and parts dealers – 4414–6
Chemical manufacturing – 325
4–6
Electronic equipment, appliance,and component manufacturing – 335
1–3
Machinery manufacturing – 3331–3
Apparel manufacturing – 315
1–3
Oil and gas extraction – 2121–3
Publishing industries – 511
1–3
Miscellaneous manufacturing – 3391–3
Professional, scientific, and technical services – 545
1–3
Information service and data processing – 514
1–3
Fabricated metal manufacturing – 3321–3
Food and beverage stores – 445
1–3
Wood product manufacturing – 3211–3
Electronic and appliance stores – 4431–3
Trades or Businesses
[§ 521(b)(2)(D)(i)]
The nature of the relationships between the related organizations, trades, or businesses covered by APAs executed in 2009 is
set forth in Table 13 below:
TABLE 13: NATURE OF RELATIONSHIPS BETWEEN RELATED ENTITIES
RelationshipNumber of APAs
Foreign Parent – U.S. Subsidiary (-ies)
45
Unilateral18
Bilateral27
U.S. Parent – Foreign Subsidiary (-ies)≤16
Unilateral≤3
Bilateral13
Partnership≤3
9
The categories in this table are drawn from the North American Industry Classification System (NAICS), which has replaced the U.S. Standard Industrial Classification (SIC) system. NAICS
was developed jointly by the United States, Canada, and Mexico to provide new comparability in statistics about business activity across North America.
2010–15 I.R.B.563April 12, 2010

Covered Transactions
[§ 521(b)(2)(D)(ii)]
The controlled transactions covered by APAs executedin2009aresetforthinTables14and15below:
TABLE 14: TYPES OF COVERED TRANSACTIONS
Transaction Type
Number
Sale of tangible property into the United States29
Performance of services by U.S. entity18
Use of intangible property by non-U.S. entity
15
Performance of services by non-U.S. entity14
Use of intangible property by U.S. entity10
Sale of tangible property from the United States9
Other8
Cost Sharing – U.S. parent/foreign subsidiary≤3
TABLE 15: TYPES OF SERVICES INCLUDED IN COVERED TRANSACTIONS
Intercompany Services Involved in the Covered TransactionsNumber
Marketing10
Headquarter costs7
Contract research and development6
Technical support services
5
Distribution
5
Administrative
5
Logistical support4
Sales support4
Purchasing4
IT4
Research and development≤3
Legal≤3
Corporate and public relations≤3
Warranty services≤3
Tax≤3
Management≤3
Assembly≤3
Health, safety, environmental, and regulatory affairs≤3
Accounting and auditing≤3
Product support≤3
Benefits≤3
April 12, 20105642010–15 I.R.B.

Intercompany Services Involved in the Covered TransactionsNumber
Staffing and recruiting≤3
Accounts receivable≤3
Payroll≤3
Treasury activities≤3
Budgeting≤3
Business Functions Performed and Risks Assumed
[§ 521(b)(2)(D)(ii)]
The general descriptions of the business functions performed and risks assumed by the organizations, trades, or businesses whose
results are tested in the Covered Transactions in the APAs executed in 2009 are set forth in Tables 16 and 17 below:
TABLE 16: FUNCTIONS PERFORMED BY THE TESTED PARTY
Functions Performed
Number
Distribution
59
Manufacturing41
Product service
35
Marketing functions29
Research and development16
Purchasing and materials management13
Transportation and warehousing13
Product assembly or packaging12
Product testing and quality control11
Managerial, legal, accounting, finance, personnel, and other support services10
Product design and engineering8
Licensing of intangibles8
Technical training and technical support8
Process engineering4
Engineering and construction-related services≤3
TABLE 17: RISKS ASSUMED BY THE TESTED PARTY
Risks Assumed
Number
Market risks, including fluctuations in costs, demand, pricing, and inventory73
General business risks (e.g., related to ownership of PP&E)61
Credit and collection risks47
Product liability risks38
Financial risks, including interest rates and currency30
Research and development risks
15
2010–15 I.R.B.565April 12, 2010

Discussion
The majority of APAs have Covered Transactions that involve numerous business functions and risks. For instance, with respect
to functions, multinational groups that manufacture products typically conduct research and development (R&D), engage in
product design and engineering, manufacture the product, market and distribute the product, and perform support functions such
as legal, finance, and human resources services. Regarding risks, these groups are subject to market risks, R&D risks, financial
risks, credit and collection risks, product liability risks, and general business risks. In the APA evaluation process, a significant
amount of time and effort is devoted to understanding how the functions and risks are allocated among the controlled group of
companies that are party to the Covered Transactions.
In its APA submission, the taxpayer must provide a functional analysis. The functional analysis identifies the economic activities
performed, the assets employed, the economic costs incurred, and the risks assumed by each of the controlled parties. The
importance of the functional analysis derives from the economic theory positing that there is a positive relationship between risk
and expected return and that different functions provide different value and have different opportunity costs associated with them.
It is important that the functional analysis go beyond simply categorizing the tested party as, say, a distributor. It should provide
more specific information because, in the example of distributors, not all distributors undertake similar functions and risks.
The functional analysis is critical in determining the appropriate TPM (including the selection of comparables, tested party, and
profit level indicator (PLI)). In conjunction with evaluating thefunctional analysis, the APA Program considers contractual terms
between the controlled parties, the allocation of risk between the parties, the relevant economic conditions, and the type of property
or services at issue. In assessing contractual terms and risk allocations, the APA Program considers not only written agreements
between the parties, but also the economic substance of the transactions as indicated by the conduct of the parties over time, the
financial capacity of each party to fund losses arising from risks, and the managerial or operational control each party exercises
over activities giving rise to risk. Relevant economic conditions reviewed often include the geographic market and the level of the
market in which the functions are performed, and the business cycle or general economic condition of the industry under review.
During 2009, the APA Program received numerous inquiries about the potential effect of the economic downturn on existing
and pending APAs. On existing APAs, the APA Program, in consultation with the U.S. Competent Authority, has adopted a
general policy not to re-open closed cases absent a special Critical Assumption on point.
10
The APA Program has dealt with
pending APA applications (whether pending with the U.S. Competent Authority or the APA Program) on a case-by-case basis.
Whether or not a special “down-economy adjustment” might be appropriate depends on a variety of factors, including whether or
not the tested party and the comparables have been similarly affected by the downturn, the tested party’s historic risk profile
and performance, and a taxpayer’s willingness to accept a symmetrical adjustment (e.g., in a renewal APA) when the economy
improves. Approaches to the down economy that have been considered include changing the APA term, waiting for more current
financial data, using a different set of comparables, and/or applying a longer testing period.
The APA Program’s evaluation of the functional analysis also considers the assets or other resources employed by each controlled
party. In this evaluation, each party’s ownership or investment in valuable intangible assets is often an important consideration.
Related Organizations, Trades, or BusinessesWhose Prices or Results Are Tested to Determine
Compliance with APA Transfer Pricing Methods
[§ 521(b)(2)(D)(iii)]
The related organizations, trades, or businesses whose prices orresults are tested to determine compliance with TPMs prescribed
in APAs executed in 2009 are set forth in Table 18 below:
10
See Table 21 and accompanying text.
April 12, 20105662010–15 I.R.B.

TABLE 18: RELATED ORGANIZATIONS, TRADES, OR BUSINESSES WHOSE
PRICES OR RESULTS ARE TESTED
11
Type of Organization
Number
U.S. distributor31
U.S. manufacturer17
U.S. provider of services17
Non-U.S. manufacturer7
Non-U.S. provider of services7
Non-U.S. distributor
5
Other
5
U.S. licensor of intangible property≤3
Non-U.S. licensor of intangible property≤3
Non-U.S. participant in cost sharing agreement≤3
Transfer Pricing Methods and the Circumstances Leading to the Use of Those Methods
[§ 521(b)(2)(D)(iv)]
TheTPMsusedinAPAsexecutedin2009aresetforthinTables19and20below:
TABLE 19: TRANSFER PRICING METHODS USED FOR TRANSFERS OF
TANGIBLE AND INTANGIBLE PROPERTY
12
TPM UsedNumber
CPM: PLI is operating margin30
CPM: PLI is Berry ratio14
Unspecified method12
Residual profit split9
CPM: PLI is return on assets or capital employed7
CPM: PLI is markup on total costs7
CUT (intangibles only)
5
Comparable Other profit split profit split≤3
Cost Plus Method (tangibles only)≤3
CPM: PLI is other PLI≤3
CPM: PLI is gross margin≤3
CPM: PLI is markup on other costs≤3
11
“Multiple tested parties” includes covered transactions that utilize profit splits, CUPs, and CUTs.
12
PLIs used with the Comparable Profit Method of Treas. Reg. § 1.482–5, and as used in these TPM tables, are as follows: (1) operating margin (ratio of operating profit to sales); (2) Berry
ratio (ratio of gross profit to operating expenses); (3) gross margin (ratio of gross profit to sales); (4) markup on total costs (percentage markup ontotal costs); and (5) rate of return on assets
or capital employed (ratio of operating profit to operating assets).
2010–15 I.R.B.567April 12, 2010

TABLE 20: TRANSFER PRICING METHODS USED FOR SERVICES
TPM UsedNumber
CPM: PLI is operating profit to total services cost ratio11
Services Cost Method: Specified Covered Services4
CPM: PLI is operating margin≤3
CPM: PLI is Berry ratio≤3
CPM: PLI is return on assets or capital employed≤3
Cost of Services Plus Method≤3
Services Cost Method: Low Margin Covered Services≤3
Comparable Uncontrolled Services Price Method≤3
Discussion
The TPMs used in APAs completed during 2009 were based on the section 482 regulations. Under Treas. Reg. § 1.482–3, the
arm’s length amount for controlled transfers of tangible property may be determined using the Comparable Uncontrolled Price
(CUP) Method, the Resale Price Method, the Cost Plus Method,the Comparable Profits Method (CPM), or the Profit Split
Method. Under Treas. Reg. § 1.482–4, the arm’s length amount for controlled transfers of intangible property may be determined
using the Comparable Uncontrolled Transaction (CUT) Method, the CPM, or the Profit Split Method. An “Unspecified Method”
may be used for transfers of either tangible or intangible property if it provides a more reliable result than the enumerated
methods under the best method rule of Treas. Reg. § 1.482–1(c).
For transfers involving the provision of services, Treas. Reg. § 1.482–2(b) provided that services performed for the benefit of
another member of a controlled group should bear an arm’s length charge, either deemed to be equal to the cost of providing
the services or an amount that would have been charged between independent parties. Generally effective beginning in 2007,
Temp. Reg. § 1.482–9T provides that the arm’s length charge for controlled services transactions may be determined under the
Services Cost Method, the Comparable Uncontrolled Services Price (CUSP) Method, the Gross Services Margin Method, the Cost
of Services Plus Method, the CPM, the Profit Split Method, oran Unspecified Method. In addition, Treas. Reg. § 1.482–2(a)
provides rules concerning the proper treatment of loans or advances.
On January 5, 2009, the IRS issued new temporary regulations,Treas. Reg. § 1.482–7T, which provide rules for qualified cost
sharing arrangements under which the parties agree to share the costs of developing intangibles in proportion to their shares
of reasonably anticipated benefits. APAsinvolving cost sharing arrangements generally address both the method of allocating
costs among the parties as well as determining the appropriate amount of the payment for “platform contribution transactions”
(PCTs) due for the transfer of pre-existing intangibles, and thecommitment of services with embedded intangibles, among the
controlled participants (known as “buy ins” in the previous cost-sharing regulations). In 2009, the APA Program completed its
recommendations on three or fewer bilateral cost sharing/PCTcases and sent those on to Competent Authority. In addition, the
APA Program is currently workingon nearly ten cases involving cost-sharing/PCTs, split almost evenly between bilateral and
unilateral. The PCT cases include both initial and subsequent buy-in/buy-out transactions. The methods used in the completed
and pending PCT cases include valuations based on the income method, including cases involving a split of the discounted present
value of platform contributions made by two or more parties, and other types of analyses.
In reviewing the TPMs applicable to transfers of tangible and intangible property reflected in Table 19, the majority of the APAs
followed the specified methods. However,several points should be made. The section 482 regulations note that for transfers
of tangible property, the CUP Method will generally be the mostdirect and reliable measure of an arm’s length price for the
controlled transaction if sufficiently reliable comparable transactions can be identified. Treas. Reg. § 1.482–3(b)(2)(ii)(A). As in
earlier years, it was the experience of the APA Program in 2009, that in the cases thatcame into the APA Program, sufficiently
reliable CUP transactions were difficult to find.
Similar to the CUP Method, for transfers of intangible property, the CUT Method will generally provide the most reliable measure
of an arm’s length result if sufficiently reliable comparablesmay be found. Treas. Reg. § 1.482–4(c)(2)(ii). It has generally been
difficult to identify external comparables, and APAs using the CUT Method tend to rely on internal transactions between the
taxpayer and unrelated parties. In 2009, fiveCovered Transactions utilized the CUT TPM.
April 12, 20105682010–15 I.R.B.

The Resale Price Method was not applied in 2009. See Treas. Reg. § 1.482–3(c), (d).
The CPM is frequently applied in APAs. That is because reliable public data on comparable business activities of independent
companies may be more readily available than potential CUP data, and comparability of resources employed, functions, risks, and
other relevant considerations are more likely to exist than comparability of product. The CPM also tends to be less sensitive than
other methods to differences in accounting practices between the tested party and comparable companies,e.g., classification of
expenses as cost of goods sold or operating expenses. Treas. Reg. § 1.482–3(c)(3)(iii)(B) and (d)(3)(iii)(B). In addition, the
degree of functional comparability required to obtain a reliableresult under the CPM is generally less than that required under
the Resale Price Method or the Cost Plus Method. Lesser functional comparability is required because differences in functions
performed often are reflected in operating expenses, and thus taxpayers performing different functions may have very different
gross profit margins but earn similar levels of operating profit. Treas. Reg. § 1.482–5(c)(2).
Table 19 reflects at least 61 uses of the CPM (with varying PLIs) in Covered Transactions involving tangible or intangible
property. In some APAs, the CPM was also used concurrently with other methods.
The CPM has proven to be versatile in partbecause of the various PLIs that can be used in connection with the method. Reaching
agreement on the appropriate PLI has beenthe subject of much discussion in many ofthe cases, and it depends heavily on the
facts and circumstances. Some APAs have called for different PLIs to apply to different parts of the Covered Transactions or
applied a secondary PLI as a check against the primary PLI.
The CPM was also used regularly with services as the Covered Transactions in APAsexecuted in 2009. There were at least 14
services Covered Transactions using the CPM Method with various PLIs according to thespecific facts of the taxpayers involved.
At least five services-related APAs completed in 2009 applied the new Services Cost Method under the § 1.482–9T regulations.
Table 20 reflects the methods used to determine the arm’s length results for APAs involving services transactions.
In 2009, nine APAs involving tangible or intangible property used the Residual Profit Split Method. Treas. Reg. § 1.482–6(c)(3).
In residual profit split cases, routine contributions by the controlled parties are allocated routine market returns, and the residual
income is allocated among the controlled taxpayers based upon the relative value of their contributions of non-routine intangible
property to the relevant business activity.
Profit splits have also been used in a number of financial product APAs in which the primary income-producing functions
are performed in more than one jurisdiction.
Critical Assumptions
[§ 521(b)(2)(D)(v)]
Critical Assumptions used in APAs executed in 2009 are described in Table 21 below:
TABLE 21: CR
ITICAL ASSUMPTIONS
Critical Assumptions involving the following:Number of APAs
Material changes to tax and/or financial accounting practices63
Material changes to the business63
Assets will remain substantially same
15
Other10
Changes in affiliated companies≤3
Material sales fluctuations≤3
Currency fluctuations≤3
Other financial ratios≤3
2010–15 I.R.B.569April 12, 2010

Discussion
APAs include critical assumptions upon which their respective TPMs depend. A critical assumption is any fact (whether or not
within the control of the taxpayer) related to the taxpayer, a third party, an industry, or business and economic conditions, the
continued existence of which is material to the taxpayer’s proposed TPM. Critical assumptions might include, for example, a
particular mode of conducting business operations, a particularcorporate or business structure, or a range of expected business
volume. Rev. Proc. 2006–09, § 4.05. Failure to meet a critical assumption may render an APA inappropriate or unworkable. Most
APAs contain only the standard criticalassumption language set forth in Appendix B of the Model APA (Attachment A to this
Announcement and Report). Where appropriate, additional critical assumption language may be added, but the APA Program
generally seeks to limit additionalcritical assumption language to objective, measurable benchmarks.
A critical assumption may change or fail to materialize due to changes in economic circumstances, such as a fundamental and
dramatic change in the economic conditions of a particular industry. In addition,a critical assumption may change or fail to
materialize due to a taxpayer’s actions that are initiated for good faith business reasons, such as a change in business strategy,
mode of conducting operations, or the cessation or transfer of a business segment or entity covered by the APA.
If a critical assumption has not been met, the APA may be revisedby agreement of the parties. If such an agreement cannot be
achieved, the APA is canceled. If a critical assumption has not beenmet, the taxpayer must notify and discuss the APA terms with
the Service, and, in the case of a bilateral APA, competent authority consideration is initiated. Rev. Proc. 2006–09, §§ 11.05, 11.06.
Sources of Comparables, Selection Criteria, and the Nature of Adjustments to Comparables and Tested Parties
[§ 521(b)(2)(D)(v), (vi), and (vii)]
The sources of comparables, selection criteria, and rationale used in determining the selection criteria for APAs executed in
2009 are described in Tables 22 through 24 below. Various formulas for making adjustments to comparables are included as
Attachment B.
TABLE 22: SOURCES OF COMPARABLES
Comparable Sources
Number of Times This
Source Used
Compustat78
Disclosure31
No Comparables used19
Worldscope
15
Other14
Global Vantage10
Moody’s9
Global Symposium7
Osiris≤3
Mergent FIS≤3
Japan Accounts and Data on Enterprises (JADE)≤3
Orbis≤3
Bonds Franchise Guide≤3
April 12, 20105702010–15 I.R.B.

TABLE 23: COMPARABLES SELECTION CRITERIA
Selection Criteria Considered
Number of Times This
Criterion Used
Comparable functions81
Comparable risks
56
Comparable industry
56
Comparable intangibles33
Comparable products30
Comparable terms6
TABLE 24: ADJUSTMENTS TO COMPARABLES OR TESTED PARTIES
AdjustmentNumber of Times Used
Balance sheet adjustments
Payables
54
Receivables
52
Inventory
52
Property, plant, equipment4
Other≤3
Accounting adjustments
LIFO to FIFO inventory accounting34
Other
15
Accounting reclassifications (e.g., from COGS to operating expenses)≤3
Profit level indicator adjustments (used to “back into” one PLI from another PLI)
Operating expense≤3
Other≤3
Miscellaneous adjustments
Other6
Goodwill value or amortization≤3
Stock-based compensation≤3
Geographic adjustments≤3
Discussion
At the core of most APAs are comparables. The APA Program works closely with taxpayers to find the best and most reliable
comparables for each Covered Transaction. In some cases, CUPs or CUTs can be identified. In other cases, profit data on
comparable business activities of independent companies areused in applying the CPM or a Profit Split Method. Generally,
in the APA Program’s experience since 1991, CUPs and CUTs have been most often derived from the internal transactions of
the taxpayer.
2010–15 I.R.B.571April 12, 2010

For profit-based methods in which comparable business activities or functions of independent companies are sought, the APA
Program typically has selected them using a three-part process. First, a pool of companies with potentially comparable business
activities has been identified through broadsearches. From this pool, companies performing business activities that are clearly
not comparable to those of the tested party have been eliminatedthrough the use of quantitative and qualitative analyses,i.e.,
quantitative screens and review of business descriptions. Then,based on a review of available descriptive and financial data,
a set of comparable independent companies has been finalized. The comparability of the final set has then been enhanced by
adjusting their financial data.
S
ourcesofComparables
Comparables used in APAs can be U.S. or foreign, depending on the relevant market, the type of transaction being evaluated,
the availability of relevant data, and the results of the functional and risk analyses. In general, comparables have been located
by searching a variety of databases that provide data on U.S. publicly traded companies and on a combination of public and
private non-U.S. companies. Table 22 shows the various databases and other sources used in selecting comparables for
the APAs executed in 2009.
Although comparables were most often identified from the databases cited in Table 22, in some cases, comparables were found
from other sources, such as comparables derived internally from taxpayer transactions with third parties.
S
electingComparables
Initial pools of potential comparables generally are derived from the databases using a combination of industry and keyword
identifiers. Then, the pool is refined using a variety of selection criteria specific to the transaction or business activity being
tested and the TPM being used.
The listed databases allow for searches byindustrial classification, by keywords, or by both. These searches can yield a number of
companies whose business activities may or may not be comparable to those of the entity being tested. Therefore, comparables
based solely on industry classification or keyword searches are rarely used in APAs. Instead, the pool of comparables is examined
closely, and companies are selected based on a combination of screens, business descriptions, and other information such as
that found in the companies’ Annual Reports to shareholders and filings with the U.S. Securities and Exchange Commission
(SEC), company websites, and investment analyst reports.
Business activities of independent companies generally mustmeet certain basic comparability criteria to be considered
comparable. The independent company’s functions, risks, and economic conditions, and the property (product or intangible) and
services associated with the company’s business activities, must be comparable to those involved in the Covered Transaction.
Determining comparability requires judgment — the goal has been touse comparability criteria restrictive enough to eliminate
business activities that are not comparable, but yet not so restrictive as to leave no comparables remaining. The APA Program
normally has begun with relatively strict comparability criteria and then has relaxed them slightly if necessary to derive a pool
of reliable comparables. A determination on the appropriate size of the comparables set, as well as the business activities that
comprise the set, is highly fact-specific anddepends on the reliability of the results.
In addition, the APA Program, consistent with the section 482 regulations, generally has looked at the results of comparables over
a multi-year period (the analysis window).Often this has been a three-year or a five-year period, but other periods are sometimes
used depending on the circumstances of the controlled transaction. Using a shorter period might result in the inclusion of
comparables in different stages of economic development or use of atypical years of a comparable due to cyclical fluctuations in
business conditions. The economic downturn has focused particular attention on the appropriate analysis window for APAs with
terms that include 2008 and 2009, given the different economic conditions that may have confronted the comparables during the
years comprising the analysis window, which typically lags behind the years covered by an APA (e.g., the comparables results
for 2004–08 may be used to test the taxpayer’s results under the APA from 2008–2012). As noted in the discussion following
Table 17, the APA Program has been dealing with the economic downturn in various ways, including waiting for more current
comparables’ financial data to developa more contemporaneous analysis window.
Many Covered Transactions have been tested with comparables that have been chosen using additional criteria and/or screens.
These include sales level criteria and testsfor financial distress and product comparability. These common selection criteria and
screens have been used to increase the overall comparability of a group of companies and as a basis for further research. The sales
level screen, for example, has been used to remove companies that,due to their smaller size, might face fundamentally different
economic conditions from those of the transaction or business activities being tested. In addition, APA analyses have incorporated
selection criteria designed to identify andremove companies experiencing “financial distress” because of concerns that companies
in financial distress face unusual circumstances and operational constraints that render them not comparable to the business
activity being tested. These “financial distress” criteria may include an unfavorable auditor’s opinion, bankruptcy, failure to
comply with financial obligations (e.g., debt covenants), and, in certain circumstances, operating losses in a given number of years.
April 12, 20105722010–15 I.R.B.

An additional important class of selection criteria is the development and ownership of intangible property. Most often,
comparables are sought to test the results of a business activity that does not employ significant intangible assets or engage in
intangible development. Thus, for example, in some cases in which the tested business activity is manufacturing conducted by
a controlled entity that does not own significant manufacturing intangibles or conduct R&D, several criteria have been used
to ensure that the comparables similarly do not own significant intangibles or conduct R&D. These selection criteria have
included determining the importance of patents to a companyor screening for R&D expenditures as a percentage of sales.
Similar selection criteria may be applied to ensure, where appropriate, that the comparables do not own or develop significant
marketing intangibles such as valuable trademarks. Again, quantitative screens related toidentifying comparables with significant
intangible property generally have been used in conjunction with an understanding of the comparable derived from publicly
available business information.
Selection criteria relating to asset comparability and operating expense comparability have also been used at times. A screen of
property, plant, and equipment (PP&E) as a percentage of sales or assets, combined with a reading of a company’s SEC filings,
has been used to help ensure that distributors (generally lower PP&E) were not compared with manufacturers (generally higher
PP&E), regardless of their industry classification. Similarly, a test involving the ratio of operating expenses to sales has helped to
determine whether a company undertakes a significant marketing and distribution function.
Table 25 shows the number of times various screens were used in APAs executed in 2009:
TABLE 25: COMPARABILITY SCREENS
Comparability/Financial Distress ScreenTimes Used
Comparability screens used
R&D/sales40
Foreign sales/total sales26
Sales26
Other22
Government sales7
Non-startup or start-up
5
PP&E total assets≤3
PP&E/sales≤3
SG&A/sales≤3
Financial distress
Bankruptcy
51
Unfavorable auditor’s opinion34
Losses in one or more years10
Other6
AdjustingComparables
After the comparables have been selected, theregulations require that “[i]f there are material differences between the controlled
and uncontrolled transactions, adjustments must be made if the effect of such differences on prices or profits can be ascertained
with sufficient accuracy to improve the reliability of the results.” Treas. Reg. § 1.482–1(d)(2). In almost all cases involving
income-statement-based PLIs used in the CPM or the Residual Profit Split Method, certain “asset intensity” or “balance sheet”
adjustments for factors that have generallyagreed-upon effects on profits are calculated. In addition, in specific cases, additional
adjustments are performed to improve reliability.
2010–15 I.R.B.573April 12, 2010

The most common balance sheet adjustments used in APAs are adjustments for differences in accounts receivable, inventories,
and accounts payable. The APA Program generally has required adjustments for receivables, inventory, and payables based on the
principle that there is an opportunity cost for holding assets. For these assets, it is generally assumed that the cost is appropriately
measured by the interest rate on short-term debt.
To compare the profits of two business activities with different relative levels of receivables, inventory, or payables, the APA
Program estimates the carrying costs of eachitem and adjusts profits accordingly. Although different formulas have been used in
specific APA cases, Attachment B presents one set of formulas used in many APAs. Underlying these formulas are the notions
that (1) balance sheet items normally should be expressed as mid-year averages, (2) formulas should try to avoid using data items
that are being tested by the TPM (for example, if sales are controlled, then the denominator of the balance sheet ratio should not
be sales), (3) a short term interest rate should be used, and (4) an interest factor should recognize the average holding period of the
relevant asset. As in 2007 and 2008, during the course of 2009, the APA Program used an interest rate equal to LIBOR (3 months)
plus 200 basis points for purposes of calculating adjustments for accounts receivable and accounts payable for U.S. companies
in many cases. In addition, the APA Program often used an interest rate equal to the Corporate Bonds (Moody’s) Baa rate for
purposes of calculating inventory adjustments for U.S. companies. However, the facts and circumstances surrounding a given case
will ultimately determine the reliability of making balance sheet adjustments and the selection of the most reliable interest rate.
The APA Program also requires that financial data be compared on a consistent accounting basis. For example, although financial
statements may be prepared on a first-in first-out (FIFO) basis, cross-company comparisons are less meaningful if one or more of
the comparables use last-in first-out (LIFO) inventory accounting methods. This adjustment directly affects costs of goods sold
and inventories, and therefore affects both profitability measures and inventory adjustments.
In some cases, the APA Program has made an adjustment to accountfor differences in relative levels of PP&E between a tested
business activity and the comparables. Ideally, comparables and the business activity being tested will have fairly similar relative
levels of PP&E, since major differences can be a sign of fundamentally different functions and risks. Typically, the PP&E
adjustment is made using a medium-term interest rate. Duringthe course of 2009, the APA Program often used the Corporate
Bonds (Moody’s) Baa rate as the interest rate for purposes of calculating adjustments for inventory and PP&E for U.S. companies.
Again, however, the facts and circumstancessurrounding a given case will ultimately determine the reliability of making balance
sheet adjustments and the selection of the most reliable interest rate.
Additional adjustments used less frequently include those for differences in other balance sheet items, operating expenses, R&D,
or currency risk. Accounting adjustments, such as reclassifying items from cost of goods sold to operating expenses, are also
made when warranted to increase reliability. Often, data are not available for both the controlled and uncontrolled transactions
in sufficient detail to allow for these types of adjustments.
The adjustments made to comparables or tested parties inAPAsexecutedin2009arereflectedinTable24above.
Ranges, Targets, and Adjustment Mechanisms
[§ 521(b)(2)(D)(viii)-(ix)]
The types of ranges, targets, and adjustment mechanisms usedin APAs executed in 2009 are described in Tables 26 and 27 below.
TABLE 26: RANGES AND TARGETS
13
Type of RangeNumber
Interquartile range
50
Specific point within CPM range (not floor or ceiling)21
Cost-only services11
Other9
Specific point (royalty)7
Full range≤3
Ceiling (i.e., result must be no more than x)≤3
13
The numbers do not include TPMs with cost or cost-plus methodologies.
April 12, 20105742010–15 I.R.B.

TABLE 27: ADJUSTMENTS WHEN OUTSIDE THE RANGE
Adjustment mechanismNumber
Taxpayer makes an adjustment: to specified point or royalty rate40
Taxpayer makes an adjustment: to closest edge of multi-year average29
Taxpayer makes an adjustment based on subsequent Competent Authority negotiations6
Taxpayer makes an adjustment:to median of multi-year average
5
Taxpayer makes an adjustment: to closest edge of single year
5
Taxpayer makes an adjustment: to a specific dollar amount≤3
Taxpayer makes an adjustment: to median of current year≤3
Discussion
Treas. Reg. § 1.482–1(e)(1) states that sometimes a pricing method will yield “a single result that is the most reliable measure of
an arm’s length result.” Sometimes, however, a method may yield“a range of reliable results,” called the “arm’s length range.” A
taxpayer whose results fall within the arm’s length range will not be subject to adjustment.
Under Treas. Reg. § 1.482–1(e)(2)(i), such a range is normally derived by considering a set of more than one comparable
uncontrolled transaction of similar comparability and reliability. If these comparables are of very high quality, as defined in the
section 482 regulations, then under Treas. Reg. § 1.482–1(e)(2)(iii)(A), the arm’s length range includes the results of all of the
comparables (from the least to the greatest). However, the APA Program has only rarely identifiedcases meeting the requirements
for the full range. If the comparables are of lesser quality, then under Treas. Reg. § 1.482–1(e)(2)(iii)(B), “the reliability of the
analysis must be increased, when it is possible to do so, by adjusting the range through application of a valid statistical method to
the results of all of the uncontrolled comparables.” One such method, the “interquartile range,” is ordinarily acceptable, although a
different statistical method “may be applied if it provides a more reliable measure.” The interquartile range is defined as,
roughly, the range from the 25th to the 75th percentile of the comparables’ results. See Treas. Reg. § 1.482–1(e)(2)(iii)(C). The
interquartile range was used 50 times in 2009.
Twenty-eight Covered Transactions reflected on Table 26 were tested against a single, specific result. Some APAs — deliberately
infrequent — specify not a point or a range, but a “floor” or a “ceiling.” When a floor is used, the tested party’s result must be
greater than or equal to some particular value. When a ceiling is used, the tested party’s result must be less than or equal to some
particular value. Three or fewer APAs executed in 2009 used a floor or a ceiling.
Some APAs look to a tested party’s results over a period of years (multi-year averaging) to determine whether a taxpayer has
complied with the APA. In 2009, rolling multi-year averaging was used for four Covered Transactions. All four of these Covered
Transactions used four-year averages. Two Covered Transactions used cumulative multi-year averaging, while 42 Covered
Transactions used term averages and seven Covered Transactions used partial-term averages.
A
djustments
Where a taxpayer’s actual transactions do not produce results that conform to the TPM, a taxpayer must nonetheless report its
taxable income in an amount consistent with the TPM (an APA primary adjustment), as further discussed in § 11.02 of Rev.
Proc. 2006–09. When the TPM specifies an arm’s length range, an APA primary adjustment is necessary only if the taxpayer’s
actual transactional result falls outside the specified range.
Under Treas. Reg. § 1.482–1(e)(3), if a taxpayer’s results fall outside the arm’s length range, theService may adjust the result “to
any point within the arm’s length range.” Accordingly, an APA may permit or require a taxpayer to make an adjustment after the
year’s end to put the year’s results within the range, or at the point specified by the APA. Similarly, to enforce the terms of an
APA, the Service may make such an adjustment. When the APA specifies a range, the adjustment is sometimes to the closest
edge of the range, and sometimes to another point such as the median of the interquartile range. Depending on the facts of each
case, automatic adjustments are not always permitted. APAs mayspecify that in such a case there will be a negotiation between
the competent authorities involved to determine whether and to what extent an adjustment should be made. APAs may permit
automatic adjustments unless the result is far outside the range specified in the APA. Thus, APAs provide flexibility and efficiency,
permitting adjustments when normal business fluctuations and uncertainties push the result somewhat outside the range.
2010–15 I.R.B.575April 12, 2010

APA Term and Rollback Lengths
[§ 521(b)(2)(D)(x)]
The various term lengths for APAs executed in 2009 are set forth in Table 28 below:
TABLE 28: TERMS OF APAs
APA Term in YearsNumber of APAs
3≤3
48
5
27
613
74
87
9≤3
10 or more≤3
The number of rollback years to which an APA TPM was applied in 2009 is set forth in Table 29 below:
TABLE 29: NUMBER OF YEARS COVERED BY ROLLBACK OF APA TPM
Number of Rollback YearsNumber of APAs
1≤3
2
5
37
4
5
5ormore
≤3
Together, Tables 28 and 29 indicate that the 63 APAs completed in 2009 covered more than 410 taxable years. In terms of
dollar value, 46 of the 63 completed APAs involved Covered Transactions exceeding $100 million per year, with 34 APAs
covering transactions exceeding $250 million per year. Combining the total covered years and the total dollar-value of Covered
Transactions representsone measure of the effectiveness of the APA Program.
Nature of Documentation Required
[§ 521(b)(2)(D)(xi)]
APAs executed in 2009 required that taxpayers provide various documents with their annual reports. These documents are
described in Table 30 below:
April 12, 20105762010–15 I.R.B.

TABLE 30: NATURE OF DOCUMENTATION REQUIRED
DocumentationNumber
Statement identifying all material differences between Taxpayer’s business operations during APA Year
and description of Taxpayer’s business operations contained in Taxpayer’s request for APA, or if there
have been no such material differences, a statement to that effect.
63
Statement of all material changes in the Taxpayer’s accounting methods and classifications, and
methods of estimation, from those described or used in Taxpayer’s request for the APA. If there has
been no material change in accountings methods andclassifications or methods of estimation, a
statement to that effect.
63
Description of any failure to meet Critical Assumptions or, if there have been none, a statement to
that effect.
63
Copy of the APA63
Financial analysis demonstrating Taxpayer’s compliance with TPM.63
Organizational chart63
Any change to the taxpayer notice information in section 14 of the APA.63
The amount, reason for, and financial analysis of any compensating adjustment under Paragraph 4 of
Appendix A and Rev. Proc. 2006–9, § 11.02(3), for the APA year, including but not limited to: the
amounts paid or received by each affected entity; the character (such as capital or ordinary expense)
and country source of the funds transferred, and the specific line item(s) of any affected U.S. tax return;
and any change to any entity classification for federal income tax purposes of any member of the
Taxpayer’s group that is relevant to the APA.
63
The amounts, description, reason for, and financial analysis of any book-tax difference relevant to the
TPM for the APA Year, as reflected on Schedule M–1 or Schedule M–3 of the U.S. return for the
APA Year.
63
Financial Statements and any necessary account detail to show compliance with the TPM, with a copy
of the opinion from an independent CPA required by paragraph 5(f) of the APA.
63
Certified public accountant’s opinion that financial statements present fairly the financial position of
Taxpayer and the results of its operations, in accordance with a foreign GAAP.
5
CPA review of Taxpayer’s financial statements
5
Other4
Financial statements prepared in accordance with a foreign GAAP.≤3
Pertinent intercompany agreements≤3
Various work papers≤3
Approaches for Sharing of Currency or Other Risks
[§ 521(b)(2)(D)(xii)]
During 2009, there were 30 tested parties that faced financial risks, including interest rate and currency risks. In appropriate cases,
APAs may provide specific approaches for dealing with currency risk, such as adjustment mechanisms and/or critical assumptions.
Efforts to Ensure Compliance with APAs
[§ 521(b)(2)(F)]
As described in Rev. Proc. 2006–09, § 11.01, APA taxpayers are required to file annual reports to demonstrate compliance with
the terms and conditions of the APA. The filing and review of annual reports is a critical part of the APA process. Through annual
report review, the APA Program monitors taxpayer compliance with the APA on a contemporaneous basis. Annual report review
provides current information on the success or problems associated with the various TPMs adopted in the APA process.
2010–15 I.R.B.577April 12, 2010

All reports received by the APA Program are assigned to a designated APA team leader. Whenever possible, annual report reviews
are assigned to the team leader who negotiated the case, since that person will already be familiar with the relevant facts and terms
of the agreement. Other team leaders andeconomists may assist the assigned team leader as well. Once received by the APA
Program, the annual report is also sent to the field personnel with exam jurisdiction over the taxpayer.
The statistics for the review of APA annual reports are reflected in Table 31 below. As of December 31, 2009, there were 259
pending annual reports. In 2009, 414 reports were closed.
TABLE 31: STATISTICS OF ANNUAL REPORTS
Number of APA annual reports pending as of December 31, 2009
259
Number of APA annual reports closed in 2009414
Number of APA annual reports requiring adjustment in 20097
Number of taxpayers involved in adjustments7
Number of APA annual report cases over one-year old186
April 12, 20105782010–15 I.R.B.

Attachment A
Model APA — Based on Revenue Procedure 2006–9
ADVANCE PRICING AGREEMENT
between
[Insert Taxpayer’s Name]
and
THE INTERNAL REVENUE SERVICE
PARTIES
The Parties to this Advance Pricing Agreement (APA) are the Internal Revenue Service (IRS) and [Insert Taxpayer’s Name],
EIN
.
RECITALS
[Insert Taxpay
er Name] is the common parent of an affiliated group filing consolidated U.S. tax returns (collectively referred to
as “Taxpayer”)
, and is entering into this APA on behalf of itself and other members of its consolidated group.
Taxpayer’s pri
ncipal place of business is [City, State]. [Insert general description of taxpayer and other relevant parties].
This APA contai
ns the Parties’ agreement on the best method for determining arm’s-length prices of the Covered Transactions
under I.R.C. se
ction 482, any applicable tax treaties, and the Treasury Regulations.
{If renewal, add}[Taxpayer and IRS previously entered into an APA covering taxable years ending
to,
executed on
.]
AGREEMENT
The Parties agree as follows:
1.Covered Transactions.This APA applies to the Covered Transactions, as defined in Appendix A.
2.Transfer Pricing Method.Appendix A sets forth the Transfer Pricing Method (TPM) for the Covered Transactions.
3.Term. This APA applies to Taxpayer’s taxable years ending
through(APA Term).
4.Operation.
a. Revenue Procedure 2006–9 governs the interpretation, legal effect, and administration of this APA.
b. Nonfactual o
ral and written representations, within the meaning of sections 10.04 and 10.05 of Revenue Procedure 2006–9
(including any
proposals to use particular TPMs), made in conjunction with the APA Request constitute statements made in
compromise neg
otiations within the meaning of Rule 408 of the Federal Rules of Evidence.
5.Compliance.
a. Taxpayer must report its taxable income in an amount that isconsistent with Appendix A and all other requirements of this
APA on its timely filed U.S. Return. However, if Taxpayer’s timely filed U.S. Return for an APA Year is filed prior to, or no later
than 60 days after, the effective date of this APA, then Taxpayer must report its taxable income for that APA Year in an amount that
is consistent with Appendix A and all other requirements of this APA either on the original U.S. Return or on an amended U.S.
Return filed no later than 120 days after the effective date of this APA, or through such other means as may be specified herein.
b. {Insert when U.S. Group or Foreign Group contains more than one member.}[This APA addresses the arm’s-length
nature of prices charged or received in theaggregate between Taxpayer and ForeignParticipants with respect to the Covered
Transactions. Except as explicitly provided, this APA does notaddress and does not bind the IRS with respect to prices charged
or received, or the relative amounts of income or loss realized, by particular legal entities that are members of U.S. Group or
that are members of Foreign Group.]
c. For each taxable year covered by this APA (APA Year), if Taxpayer complies with the terms and conditions of this APA, then
the IRS will not make or propose any allocation or adjustment under I.R.C. section 482 to the amounts charged in the aggregate
between Taxpayer and Foreign Participant[s]with respect to the Covered Transactions.
2010–15 I.R.B.579April 12, 2010

d. If Taxpayer does not comply with the terms and conditions of this APA, then the IRS may:
i. enforce the terms and conditions of this APA and make or propose allocations or adjustments under I.R.C. section 482
consistent with this APA;
ii. cancel or revoke this APA under section 11.06 of Revenue Procedure 2006–9; or
iii. revise this APA, if the Parties agree.
e. Taxpayer must timely file an Annual Report (an original and four copies) for each APA Year in accordance with Appendix C
and section 11.01 of Revenue Procedure 2006–9. Taxpayer must file the Annual Report for all APA Years through the APA Year
ending [insert year] by [insert date]. Taxpayer must file the Annual Report for each subsequent APA Year by [insert month and
day] immediately following the close of that APA Year. (If any date falls on a weekend or holiday, the Annual Report shall be
due on the next date that is not a weekend or holiday.) The IRS may request additional information reasonably necessary to
clarify or complete the Annual Report. Taxpayer will provide such requested information within 30 days. Additional time may
be allowed for good cause.
f. The IRS will determine whether Taxpayer has complied with this APA based on Taxpayer’s U.S. Returns, Financial
Statements, and other APA Records, for the APA Term and any other year necessary to verifycompliance. For Taxpayer to
comply with this APA, an independent certified public accountant must{use the following or an alternative}render an opinion
that Taxpayer’s Financial Statements present fairly, in all material respects, Taxpayer’s financial position under U.S. GAAP.
g. In accordance with section 11.04 of Revenue Procedure 2006–9, Taxpayer will (1) maintain its APA Records, and (2) make
them available to the IRS in connection with an examination under section 11.03. Compliance with this subparagraph constitutes
compliance with the record-maintenanceprovisions of I.R.C. sections 6038A and 6038C for the Covered Transactions for any
taxable year during the APA Term.
h. The True Taxable Income within the meaning of Treasury Regulations sections 1.482–1(a)(1) and (i)(9) of a member of an
affiliated group filing a U.S. consolidated return will be determined under the I.R.C. section 1502 Treasury Regulations.
i.{Optional for US Parent Signatories}To the extent that Taxpayer’s compliance with this APA depends on certain acts of
Foreign Group members, Taxpayer will ensure thateach Foreign Group member will perform such acts.
6.Critical Assumptions.This APA’s critical assumptions, within the meaning of Revenue Procedure 2006–9, section 4.05, appear
in Appendix B. If any critical assumption has not been met, then Revenue Procedure 2006–9, section 11.06, governs.
7.Disclosure.This APA, and any background information related to this APA or the APA Request, are: (1) considered “return
information” under I.R.C. section 6103(b)(2)(C); and (2) not subject to public inspection as a “written determination” under I.R.C.
section 6110(b)(1). Section 521(b) of Pub. L. 106–170 provides that the Secretary of the Treasury must prepare a report for public
disclosure that includes certain specifically designated information concerning all APAs, including this APA, in a form that does
not reveal taxpayers’ identities, trade secrets, and proprietary or confidential business or financial information.
8.Disputes.If a dispute arises concerning the interpretation of this APA, the Parties will seek a resolution by the IRS Associate
Chief Counsel (International) to the extent reasonably practicable, before seeking alternative remedies.
9.Materiality.In this APA the terms “material” and “materially” will be interpreted consistently with the definition of “material
facts” in Revenue Procedure 2006–9, section 11.06(4).
10.Section Captions.This APA’s section captions, which appear initalics, are for convenience and reference only. The captions
do not affect in any way the interpretation or application of this APA.
11.Terms and Definitions. Unless otherwise specified, terms in the plural include the singular and vice versa. Appendix D
contains definitions for capitalized terms not elsewhere defined in this APA.
12.Entire Agreement and Severability.This APA is the complete statement of the Parties’ agreement. The Parties will sever,
delete, or reform any invalid or unenforceable provision in this APA to approximate the Parties’ intent as nearly as possible.
13.Successor in Interest.This APA binds, and inures to the benefitof, any successor in interest to Taxpayer.
14.Notice.Any notices required by this APA or Revenue Procedure 2006–9 must be in writing. Taxpayer will send notices to the
IRS at the address and in the manner set forth in Revenue Procedure 2006–9, section 4.11. The IRS will send notices to:
April 12, 20105802010–15 I.R.B.

Taxpayer Corporation
Attn: Jane Doe, Sr. Vice President (Taxes)
1000 Any Road
Any City, USA 10000
(phone:
)
15.Effective Date and Counterparts.This APA is effective starting on the date, or later date of the dates, upon which all Parties
execute this APA. The Parties may execute this APA in counterparts, with each counterpart constituting an original.
WITNESS,
The Parties have executed this APA on the dates below.
[Taxpayer Name in all caps]
By:
Date:,20
Jane Doe
Sr. Vice President (Taxes)
IRS
By:
Date:,20
Craig A. Sharon
Director, Advance Pricing Agreement Program
APPENDIX A
COVERED TRANSACTIONS AND TRANSFER PRICING METHOD (TPM)
1. Covered Transactions.
[Define the Covered Transactions.]
2. TPM.
{Note: If appro
priate, adapt language from the following examples.}
[The Tested Par
ty is
.]
•CUP Method
The TPM is the comparable uncontrolled price (CUP) method. The Arm’s Length Range of the price charged for
is betweenandper unit.
•CUT Method
The TPM is the CUT Method. The Arm’s Length Range of the royalty charged for the license of
is between
%and% of [Taxpayer’s, Foreign Participants’, or other specified party’s] Net Sales Revenue. [Insert definition of net
sales revenue or other royalty base.]
•Resale Price
Method (RPM)
The TPM is the r
esale price method (RPM). The Tested Party’s Gross Margin for any APA Year is defined as follows: the
Tested Party’
s gross profit divided by its sales revenue (as those terms are defined in Treasury Regulations section 1.482–5(d)(1)
and (2)) for th
at APA Year. The Arm’s Length Range is between
%and%, and the Median of the Arm’s Length
Range is
%.
2010–15 I.R.B.581April 12, 2010

•Cost Plus Method
The TPM is the cost plus method. The Tested Party’s Cost Plus Markup is defined as follows for any APA Year: the Tested
Party’s ratio of gross profit to production costs (as those terms aredefined in Treasury Regulationssection 1.482–3(d)(1) and (2))
for that APA Year. The Arm’s Length Range is between
%andand the Median of the Arm’s Length Range is%.
•CPM with Berry Ratio PLI
The TPM is the comparable profits method (CPM). The profit level indicator is a Berry Ratio. The Tested Party’s Berry
Ratio is defined as follows for any APA Year: the Tested Party’s gross profit divided by its operating expenses (as those terms are
defined in Treasury Regulations section 1.482–5(d)(2) and (3)) for that APA Year. The Arm’s Length Range is between
and, and the Median of the Arm’s Length Range is.
•CPM using an Operating Margin PLI
The TPM is the comparable profits method (CPM). The profit level indicator is an operating margin. The Tested Party’s
Operating Margin is defined as follows for any APA Year: the Tested Party’s operating profit divided by its sales revenue (as
those terms are defined in Treasury Regulations section 1.482–5(d)(1) and (4)) for that APA Year. The Arm’s Length Range is
between
%and%, and the Median of the Arm’s Length Range is%.
•CPM using a Three-year Rolling Average Operating Margin PLI
The TPM is the comparable profits method (CPM). The profit level indicator is an operating margin. The Tested Party’s
Three-Year Rolling Average operating margin is defined as follows for any APA Year: the sum of the Tested Party’s operating
profit (within the meaning of Treasury Regulations section 1.482–5(d)(4) for that APA Year and the two preceding years, divided
by the sum of its sales revenue (within the meaning of Treasury Regulations section 1.482–5(d)(1)) for that APA Year and the two
preceding years. The Arm’s Length Range is between
%and%, and the Median of the Arm’s Length Range is%.
•Residual Profit Split Method
The TPM is the residual profit split method. [Insert description of routine profit level determinations and residual
profit-split mechanism].
[Insert additional provisions as needed.]
3. Application of TPM.
For any APA Year, if the results of Taxpayer’s actual transactions produce a [price per unit, royalty rate for the Covered
Transactions] [or] [Gross Margin, Cost Plus Markup, Berry Ratio, Operating Margin, Three-Year Rolling Average Operating
Margin for the Tested Party] within the Arm’s Length Range, then the amounts reported on Taxpayer’s U.S. Return must
clearly reflect such results.
For any APA year, if the results of Taxpayer’s actual transactions produce a [price per unit, royalty rate] [or] [Gross Margin,
Cost Plus Markup, Berry Ratio, Operating Margin, Three-Year Rolling Average Operating Margin for the Tested Party] outside
the Arm’s Length Range, then amounts reported on Taxpayer’s U.S. Return must clearly reflect anadjustment that brings the
[price per unit, royalty rate] [or] [Tested Party’s Gross Margin, Cost Plus Markup, Berry Ratio, Operating Margin, Three-Year
Rolling Average Operating Margin] to the Median.
For purposes of this Appendix A, the “results of Taxpayer’s actual transactions” means the results reflected in Taxpayer’s and
Tested Party’s books and records as computed under U.S. GAAP [insert another relevant accounting standard if applicable], with
the following adjustments:
(a) [The fair value of stock-based compensation as disclosed in the Tested Party’s audited financial statements shall be treated as
an operating expense]; and
(b) To the extent that the results in any prior APA Year are relevant (for example, to compute a multi-year average), such results
shall be adjusted to reflect the amount of any adjustment made for that prior APA Year under this Appendix A.
4. APA Revenue Procedure Treatment
If Taxpayer makes a primary adjustment under the terms of this Appendix A, Taxpayer mayelect APA Revenue Procedure
Treatment in accordance with section 11.02(3) of Revenue Procedure 2006–9.
[Insert additional provisions as needed.]
April 12, 20105822010–15 I.R.B.

APPENDIX B
CRITICAL ASSUMPTIONS
This APA’s critical assumptions are:
1. The business activities, functions performed, risks assumed,assets employed, and financial and tax accounting methods and
classifications [and methods of estimation]of Taxpayer in relation to the Covered Transactions will remain materially the same as
described or used in Taxpayer’s APA Request. A mere change in business results will not be a material change.
[Insert additional provisions as needed.]
APPENDIX C
APA RECORDS AND ANNUAL REPORT
APA RECORDS
The APA Records will consist of:
1. All documents listed below for inclusion in the Annual Report,as well as all documents, notes, work papers, records, or other
writings that support the information provided in such documents.
ANNUAL REPORT
The Annual Report will include two copies of a properly completed APA Annual Report Summary in the form of Exhibit E to this
APA, one copy of the form bound with, and one copy bound separately from, the rest of the Annual Report. In addition, the
Annual Report will include a table of contents and the information and exhibits identified below, organized as follows.
1. Statements that fully identify,describe, analyze, and explain:
a. All material differences between any of the U.S. Entities’ business operations (including functions, risks assumed, markets,
contractual terms, economic conditions, property, services, and assets employed) during the APA Year and the description of
the business operations contained in the APA Request. If there have been no material differences, the Annual Report will
include a statement to that effect.
b. All material changes in the U.S. Entities’ accounting methods and classifications, and methods of estimation, from those
described or used in Taxpayer’s request for this APA. If any such change was made to conform to changes in U.S. GAAP (or
other relevant accounting standards), Taxpayer will specifically identify such change. If there has been no material change in
accounting methods and classifications or methods of estimation, the Annual Report will include a statement to that effect.
c. Any change to the Taxpayer notice information in section 14 of this APA.
d. Any failure to meet any critical assumption. If there hasbeen no failure, the Annual Report will include a statement
to that effect.
e. Any change to any entity classification for federal income taxpurposes (including any change that causes an entity to be
disregarded for federal income tax purposes) of any Worldwide Group member that is a party to the Covered Transactions or
is otherwise relevant to the TPM.
f. The amount, reason for, and financial analysis of any compensating adjustments under paragraph 4 of Appendix A and
Revenue Procedure 2006–9, section 11.02(3), for the APA Year, including but not limited to:
i. the amounts paid or received by each affected entity;
ii. the character (such as capital, ordinary, income, expense) and country source of the funds transferred, and the specific
affected line item(s) of any affected U.S. Return; and
iii. the date(s) and means by which the payments are or will be made.
g. The amounts, description, reason for,and financial analysis of any book-tax difference relevant to the TPM for the APA
Year, as reflected on Schedule M–1 or Schedule M–3 of the U.S. Return for the APA Year.
2. The Financial Statements, and any necessary account detailto show compliance with the TPM, with a copy of the independent
certified public accountant’s opinion required by paragraph 5(f) of this APA.
2010–15 I.R.B.583April 12, 2010

3. A financial analysis that reflects Taxpayer’s TPM calculations for the APA Year. The calculations must reconcile with and
reference the Financial Statements in sufficient account detail to allow the IRS to determine whether Taxpayer has complied
with the TPM.
4. An organizational chart for the Worldwide Group, revised annually to reflect all ownership or structural changes of entities
that are parties to the Covered Transactions or are otherwise relevant to the TPM.
5. A copy of the APA.
APPENDIX D
DEFINITIONS
The following definitions control for all purposes of this APA. The definitions appear alphabetically below:
TermDefinition
Annual ReportA report within the meaning of Revenue Procedure 2006–9, section 11.01.
APAThis Advance Pricing Agreement, which is an “advance pricing agreement” within the
meaning of Revenue Procedure 2006–9, section 2.04.
APA RecordsThe records specified in Appendix C.
APA RequestTaxpayer’s request for this APA dated, including any amendments or
supplemental or additional information thereto.
Covered Transaction(s)This term is defined in Appendix A.
Financial StatementsFinancial statements preparedin accordance with U.S. GAAP and stated in U.S. dollars.
Foreign GroupWorldwide Group members that are not U.S. persons.
Foreign Participants[namethe foreign entities involved in Covered Transactions].
I.R.C.The Internal Revenue Code of 1986, 26 U.S.C., as amended.
Pub. L. 106–170The Ticket to Work and Work Incentives Improvement Act of 1999.
Revenue Procedure 2006–9Rev. Proc. 2006–9, 2006–1 C.B. 278.
Transfer Pricing Method (TPM)Atransfer pricing method within the meaning of Treasury Regulations section 1.482–1(b)
and Revenue Procedure 2006–9, section 2.04.
U.S. GAAPU.S. generally-accepted accounting principles.
U.S. GroupWorldwide Group members that are U.S. persons.
U.S. ReturnFor each taxable year, the “returns with respect to income taxes under subtitle A” that
Taxpayer must “make” in accordance with I.R.C. section 6012. {Or substitute for
partnership:For each taxable year, the “return” that Taxpayer must “make” in accordance
with I.R.C. section 6031.}
Worldwide GroupTaxpayer and all organizations, trades, businesses, entities, or branches (whether or not
incorporated, organized in the United States,or affiliated) owned or controlled directly or
indirectly by the same interests.
April 12, 20105842010–15 I.R.B.

APPENDIX E
APA ANNUAL REPORT SUMMARY FORM
The APA Annual Report Summary on the next page is a required APA Record. The APA Team Leader has supplied some of
the information requested on the form. Taxpayer is to supply the remaining information requested by the form and submit the
form as part of its Annual Report.
APA Annual
Report
SUMMARY
Department of the Treasury—
Internal Revenue Service
Office of Associate Chief Counsel
(International)
Advance Pricing Agreement Program
APA no.
Team Leader
Economist
Intl Examiner
CA Analyst
Taxpayer Name:
Taxpayer EIN:NAICS:
APA Term: Taxable years endingto.
Original APA [ ] Renewal APA [ ]
Annual Report due dates:
,200for all APA Years through APA Year ending in 200; for each APA Year
thereafter, on
[month and day] immediately following the close of the APA Year.
Principal foreign country(ies) involved in covered transaction(s):
Type of APA: [ ] unilateral [ ] bilateral with
Tested party is [ ] US [ ] foreign [ ] both
Approximate dollar volume of covered transactions (on an annual basis) involving tangible goods
and services:
[ ] N/A [ ] <$50 million [ ] $50–100 million [ ] $100–250 million [ ] $250–500 million
[ ] >$500 million
APA tests on (check all that apply):
[]annualbasis[]multi-year basis [ ] term basis
APA provides (check all that apply) a:
[ ] range [ ] point [ ] floor only [ ] ceiling only [ ] other
APA Information
APA provides for adjustment (check all that apply) to:
[ ] nearest edge [ ] median [ ] other point
2010–15 I.R.B.585April 12, 2010

APA date executed:,200
This APA Annual Report Summary is for APA Year(s) ending in 200and was filed on,
200
Check here [ ] if Annual Report was filed after original due date but in accordance with extension.
Has this APA been amended or changed? [ ] yes [ ] noEffective Date:
Has Taxpayer complied with all APA terms and conditions? [ ] yes [ ] no
Were all the critical assumptions met? [ ] yes [ ] no
Has a Primary Compensating Adjustment been made in any APA Year covered by this Annual
Report?
[ ] yes [ ] noIf yes, which year(s): 200
Have any necessary Secondary Compensating Adjustments been made? [ ] yes [ ] no
Did Taxpayer elect APA Revenue Procedure treatment? [ ] yes [ ] no
Any change to the entity classification of a party to the APA? [ ] yes [ ] no
Taxpayer notice information contained in the APA remains unchanged? [ ] yes [ ] no
APA Annual
Report
Information
(to be completed
by the Taxpayer)
Taxpayer’s current US principalplace of business: (City, State)
Financial analysis reflecting TPM calculations[ ] yes [ ] no
Financial statements showing compliance with TPM(s)[ ] yes [ ] no
Schedule M–1 or M–3 book-tax differences[ ] yes [ ] no
Current organizational chart of relevant portion of world-wide group[ ] yes [ ] no
Attach copy of APA[ ] yes [ ] no
Other APA records and documents included:
[The information required in the following section should be tailored to the particular case]
[]yes[]no
[]yes[]no
[]yes[]no
[]yes[]no
APA Annual
Report
Checklist of
Key Contents
(to be completed
by the Taxpayer)
[]yes[]no
Authorized RepresentativePhoneNumberAffiliation and Address
Contact
Information
April 12, 20105862010–15 I.R.B.

ATTACHMENT B
EXAMPLE FORMULAS FOR BALANCE SHEET ADJUSTMENTS
The formulas below provide examples of the balance sheet adjustment formulas used in the APA Program’s CPM spreadsheet
model.
14
The formulas below are applicable to the operating margin profit level indicator. The APA Program’s calculations measure
balance sheet intensity by reference to the denominator of the profit level indicator (e.g., for the Berry ratio, the denominator used
is operating expenses). Therefore, the formulas vary for each profit level indicator.
D
efinitionsofVariables:
AP= average accounts payable
AR= average trade accounts receivable, net of allowance for bad debt
cogs= cost of goods sold
INV= average inventory, stated on FIFO basis
opex= operating expenses (general, sales, administrative, and depreciation expenses)
PPE= property, plant, and equipment,net of accumulated depreciation
sales= net sales
h= average accounts payable or trade accounts receivable holding period, stated as a fraction of a year
i= interest rate
t= entity being tested
c= comparable
E
quations:
Example Assuming Profit Level Indicator is Operating Margin:
Receivables Adjustment (“RA”):RA = {[(AR
t
/ sales
t
)xsales
c
]-AR
c
}x{i/[1+(ixh
c
)]}
Payables Adjustment (“PA”):PA = {[(AP
t
/ sales
t
)xsales
c
]-AP
c
}x{i/[1+(ixh
c
)]}
Inventory Adjustment (“IA”):IA = {[(INV
t
/ sales
t
)xsales
c
]-INV
c
}xi
PP&E Adjustment (“PPEA”):PPEA = {[(PPE
t
/ sales
t
)xsales
c
] - PPE
c
}xi
Then Adjust Comparables as Follows:
adjusted sales
c
= sales
c
+RA
adjusted cogs
c
= cogs
c
+PA-IA
adjusted opex
c
= opex
c
- PPEA
Deletions From Cumulative
List of Organizations
Contributions to Which
are Deductible Under Section
170 of the Code
Announcement 2010–24
The Internal Revenue Service has re-
voked its determination that the organi-
zations listed below qualify as organiza-
tions described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the Service will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the Service is not
precluded from disallowing a deduction
for any contributions made after an or-
ganization ceases to qualify under section
170(c)(2) if the organization has not timely
filed a suit for declaratory judgment under
section 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declara-
tory judgment has been timely filed, con-
14
Copies of the APA Program’s CPM spreadsheet model are available from the APA Program by calling (202) 435–5220 (not a toll-free number) or by writing totheOfficeofAssociate
Chief Counsel (International), Advance Pricing Agreement Program, Attn: CC:INTL:APA, MA2–266, 1111 Constitution Ave., NW, Washington DC, 20224.
2010–15 I.R.B.587April 12, 2010

tributions from individuals and organiza-
tions described in section 170(c)(2) that
are otherwise allowable will continue to
be deductible. Protection under section
7428(c) would begin on April 12, 2010,
and would end on the date the court first
determines that the organization is not de-
scribed in section 170(c)(2) as more partic-
ularly set forth in section 7428(c)(1). For
individual contributors, the maximum de-
duction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any indi-
vidual, in whole or in part, for the acts or
omissions of the organization that were the
basis for revocation.
Alpha Assistance, Inc.
Desoto, TX & Norcross, GA
DPA Alliance Corporation
Provo, UT
Interpreter Referral Service
Chicago, IL
Knapp Foundation
Provo, UT
Announcement of Disciplinary Sanctions From the Office
of Professional Responsibility
Announcement 2010-25
TheOfficeofProfessionalResponsi-
bility (OPR) announcesrecent disciplinary
sanctions involving attorneys, certified
public accountants, enrolled agents, en-
rolled actuaries, enrolled retirement plan
agents, and appraisers. These individuals
are subject to the regulations governing
practice before the Internal Revenue Ser-
vice (IRS), which are set out in Title 31,
Code of Federal Regulations, Part 10, and
which are published in pamphlet form as
Treasury Department Circular No. 230.
The regulations prescribe the duties and
restrictions relating to such practice and
prescribe the disciplinary sanctions for
violating the regulations.
The disciplinary sanctions to be im-
posed for violation of the regulations are:
Disbarred from practice before the
IRS—An individual who is disbarred is
not eligible to represent taxpayers before
the IRS.
Suspended from practice before the
IRS—An individual who is suspended is
not eligible to represent taxpayers before
the IRS during the term of the suspension.
Censured in practice before the
IRS—Censure is a public reprimand. Un-
like disbarment or suspension, censure
does not affect an individual’s eligibility
to represent taxpayers before the IRS, but
OPR may subject the individual’s future
representations to conditions designed to
promote high standards of conduct.
Monetary penalty—A monetary
penalty may be imposed on an individual
who engages in conduct subject to sanc-
tion or on an employer, firm, or entity
if the individual was acting on its behalf
and if it knew, or reasonably should have
known, of the individual’s conduct.
Disqualification of appraiser—An
appraiser who is disqualified is barred
from presenting evidence or testimony in
any administrative proceeding before the
Department of the Treasury or the IRS.
Under the regulations, attorneys, cer-
tified public accountants, enrolled agents,
enrolled actuaries, and enrolled retirement
plan agents may not assist, or accept assis-
tance from, individuals who are suspended
or disbarred with respect to matters consti-
tuting practice (i.e., representation) before
the IRS, and they may not aid or abet sus-
pended or disbarred individuals to practice
before the IRS.
Disciplinary sanctions are described in
these terms:
Disbarred by decision after hearing,
Suspended by decision after hearing,
Censured by decision after hearing,
Monetary penalty imposed after hear-
ing, and Disqualified after hearing—An
administrative law judge (ALJ) conducted
an evidentiary hearing upon OPR’s com-
plaint alleging violation of the regulations
and issued a decision imposing one of
these sanctions. After 30 days from the
issuance of the decision, in the absence of
an appeal, the ALJ’s decision became the
final agency decision.
Disbarred by default decision, Sus-
pended by default decision, Censured by
default decision, Monetary penalty im-
posed by default decision, and Disqual-
ified by default decision—An ALJ, after
findingthatnoanswertoOPR’scomplaint
had been filed, granted OPR’s motion for a
default judgment and issued a decision im-
posing one of these sanctions.
Disbarment by decision on appeal,
Suspended by decision on appeal, Cen-
sured by decision on appeal, Monetary
penalty imposed by decision on ap-
peal, and Disqualified by decision on
appeal—The decision of the ALJ was
appealed to the agency appeal authority,
acting as the delegate of the Secretary
of the Treasury, and the appeal authority
issued a decision imposing one of these
sanctions.
Disbarred by consent, Suspended by
consent, Censured by consent, Mone-
tary penalty imposed by consent, and
Disqualified by consent—Inlieuofa
disciplinary proceeding being instituted
or continued, an individual offered a con-
sent to one of these sanctions and OPR
accepted the offer. Typically, an offer
of consent will provide for: suspension
for an indefinite term; conditions that the
individual must observe during the sus-
pension; and the individual’s opportunity,
after a stated number of months, to file
with OPR a petition for reinstatement af-
firming compliance with the terms of the
consent and affirming current eligibility
to practice (i.e., an active professional
license or active enrollment status). An
enrolled agent or an enrolled retirement
plan agent may also offer to resign in order
to avoid a disciplinary proceeding.
Suspended by decision in expedited
proceeding, Suspended by default de-
cision in expedited proceeding, Sus-
pended by consent in expedited pro-
ceeding—OPR instituted an expedited
proceeding for suspension (based on cer-
tain limited grounds, including loss of a
professional license and criminal convic-
tions).
OPR has authority to disclose the
grounds for disciplinary sanctions in these
April 12, 20105882010–15 I.R.B.

situations: (1) an ALJ or the Secretary’s
delegate on appeal has issued a decision
on or after September 26, 2007, which was
the effective date of amendments to the
regulations that permit making such deci-
sions publicly available; (2) the individual
has settled a disciplinary case by signing
OPR’s “consent to sanction” form, which
requires consenting individuals to admit to
one or more violations of the regulations
and to consent to the disclosure of the in-
dividual’s own return information related
to the admitted violations (for example,
failure to file Federal income tax returns);
or (3) OPR has issued a decision in an
expedited proceeding for suspension.
Announcements of disciplinary sanc-
tions appear in the Internal Revenue Bul-
letin at the earliest practicable date. The
sanctions announced below are alphabet-
ized first by the names of states and sec-
ond by the last names of individuals. Un-
less otherwise indicated, section numbers
(e.g., § 10.51) refer to the regulations.
City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
California
Huntington BeachCrandall, Jeffrey D.Enrolled AgentSuspended by default
decision in expedited
proceeding under
§ 10.82 (conviction
under 18 U.S.C. §§ 1341,
1343, and 1346 and 2,
mail fraud, wire fraud,
honest services fraud, and
aiding and abetting)
Indefinite from
February 24, 2010
Palo AltoGonzales, JuanitaEnrolled AgentSuspended by decision
on appeal for violation of
§ 10.51 (failure to timely
file Federal tax returns)
Indefinite from
November 10, 2008,
butatleast36
months
Sierra MadreLibman, Arnold C.CPASuspended by default
decision in expedited
proceeding under § 10.82
(conviction under
26 U.S.C. § 7206(2),
aiding in the preparation
and presentation of
fraudulent return)
Indefinite from
January 12, 2010
Long BeachScott, Robert K.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment)
Indefinite from
February 17, 2010
RiversideWashington, ShawnCPASuspended by consent
for admitted violations
of § 10.51 (failure to file
and failure to timely file
Federal tax returns and
failure to fully pay Federal
employment taxes)
Indefinite from
December 4, 2009,
butatleast24
months
2010–15 I.R.B.589April 12, 2010

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Connecticut
WatertownAriola, Thomas M.CPASuspended by default
decision in expedited
proceeding under
§ 10.82 (conviction
under 18 U.S.C. § 666,
bribery concerning a
program receiving federal
funds; 18 U.S.C. § 371,
conspiracy to defraud the
Internal Revenue Service;
and 2 U.S.C. §§ 441 and
437, illegal corporate,
personal political, and
contributions)
Indefinite from
February 24, 2010
Florida
OrlandoCollazo, Humberto N. Enrolled AgentSuspended by default
decision in expedited
proceeding under §10.82
(permanently enjoined
by U.S. District Court
from preparing returns
that include frivolous
positions and from other
activities)
Indefinite from
February 24, 2010
NaplesGramer, Gary W.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment in
New York)
Indefinite from
February 12, 2010
Illinois
GodfreyJohnson, Ralph D.Enrolled AgentSuspended by
decision in expedited
proceeding under §10.82
(permanently enjoined
by U.S. District Court
from preparing returns
that include frivolous
positions and from other
activities)
Indefinite from
February 12, 2010
Louisiana
West MonroeHooever, Gary D.CPASuspended by default
decision in expedited
proceeding under
§ 10.82 (conviction
under 26 U.S.C. § 7207,
fraudulent returns,
statements, or other
documents)
Indefinite from
February 12, 2010
April 12, 20105902010–15 I.R.B.

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Maryland
Owings MillsFoltz, III, Richard N.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment)
Indefinite from
February 12, 2010
Gilland, Michael, B.,
See Pennsylvania
Massachusetts
BrooklineAllen, Peter A.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
February 12, 2010
DuxburyKilduff, KevinAttorneySuspended by decision
on appeal for violation
of § 10.51 (failure to
file a Federal tax return
and failure to timely file
Federal tax returns for
five years)
Indefinite from
January 20, 2010,
butatleast48
months
MiltonRichard, Joyce A.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
February 12, 2010
Missouri
St. LouisCoon, Jr., Eugene E.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment)
Indefinite from
February 12, 2010
New Hampshire
Wyatt, Jr., Donald L.,
See Texas
New York
Gramer, Gary W.,
See Florida
2010–15 I.R.B.591April 12, 2010

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
New York (Continued)
BrooklynNissenbaum, MartinAttorneySuspended by decision
in expedited proceeding
under § 10.82 (conviction
under 18 U.S.C. § 371,
conspiracy to defraud
the U.S. by impeding
the IRS, evading taxes,
and making materially
false statements under
U.S. Govt. jurisdiction;
26 U.S.C. §§ 7201,
tax evasion; and 7212,
obstructing the IRS)
Indefinite from
February 25, 2010
Rye BrookShapiro, Richard J.AttorneySuspended by decision
in expedited proceeding
under § 10.82 (conviction
under 18 U.S.C. § 371,
conspiracy to defraud
the U.S. by impeding the
IRS, evading taxes, and
making materially false
statements under U.S.
Govt. jurisdiction, and
26 U.S.C. § 7201, tax
evasion)
Indefinite from
February 25, 2010
Oregon
MilwaukieStapleton, Gary D.CPASuspended by default
decision in expedited
proceeding under § 10.82
(revocation of CPA
license)
Indefinite from
January 22, 2010
Pennsylvania
YorkGilland, Michael B.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment in
Maryland)
Indefinite from
February 12, 2010
Tennessee
NashvilleWeed, David S.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
January 22, 2010
April 12, 20105922010–15 I.R.B.

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Texas
HeathDicus, Brian G.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
January 22, 2010
San AntonioGreen, Bret C.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
January 22, 2010
DallasOlsen, Edwin C.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(attorney disbarment)
Indefinite from
January 22, 2010
AustinPhillips, Travis R.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
January 22, 2010
The WoodlandsWyatt, Jr., Donald L.AttorneySuspended by decision
in expedited proceeding
under §10.82 (suspension
of attorney license in New
Hampshire)
Indefinite from
February 12, 2010
Vermont
NewportHeath, Kenneth J.CPADisbarred by consent
for admitted violation
of §§ 10.51(a)(3) and
10.51(a)(10) (conviction
of a felony under Federal
or state law for which the
conduct involved renders
the practitioner unfit to
practice before the IRS,
and revocation of CPA
license)
Indefinite from
January 19, 2010,
butatleast60
months
Wyoming
JacksonMcDaniel, John C.CPASuspended by ALJ default
decision for violation of
§ 10.51 (willful failure to
timely file three Federal
tax returns)
Indefinite from
December 30,
2009, but at least
24 months
2010–15 I.R.B.593April 12, 2010

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
April 12, 2010i2010–15 I.R.B.

Numerical Finding List
1
Bulletins 2010–1 through 2010–15
Announcements:
2010-1, 2010-4 I.R.B.333
2010-2, 2010-2 I.R.B.271
2010-3, 2010-4 I.R.B.333
2010-4, 2010-5 I.R.B.384
2010-5, 2010-6 I.R.B.402
2010-6, 2010-6 I.R.B.402
2010-7, 2010-6 I.R.B.403
2010-8, 2010-7 I.R.B.408
2010-9, 2010-7 I.R.B.408
2010-10, 2010-7 I.R.B.410
2010-11, 2010-10 I.R.B.438
2010-12, 2010-7 I.R.B.410
2010-13, 2010-8 I.R.B.426
2010-14, 2010-11 I.R.B.449
2010-15, 2010-10 I.R.B.438
2010-16, 2010-11 I.R.B.450
2010-17, 2010-13 I.R.B.515
2010-18, 2010-12 I.R.B.460
2010-19, 2010-14 I.R.B.529
2010-20, 2010-15 I.R.B.551
2010-21, 2010-15 I.R.B.551
2010-24, 2010-15 I.R.B.587
2010-25, 2010-15 I.R.B.588
Notices:
2010-1, 2010-2 I.R.B.251
2010-2, 2010-2 I.R.B.251
2010-3, 2010-2 I.R.B.253
2010-4, 2010-2 I.R.B.253
2010-5, 2010-2 I.R.B.256
2010-6, 2010-3 I.R.B.275
2010-7, 2010-3 I.R.B.296
2010-8, 2010-3 I.R.B.297
2010-9, 2010-3 I.R.B.298
2010-10, 2010-3 I.R.B.299
2010-11, 2010-4 I.R.B.326
2010-12, 2010-4 I.R.B.326
2010-13, 2010-4 I.R.B.327
2010-14, 2010-5 I.R.B.344
2010-15, 2010-6 I.R.B.390
2010-16, 2010-6 I.R.B.396
2010-17, 2010-14 I.R.B.519
2010-18, 2010-14 I.R.B.525
2010-19, 2010-7 I.R.B.404
2010-20, 2010-8 I.R.B.422
2010-21, 2010-12 I.R.B.451
2010-22, 2010-10 I.R.B.435
2010-23, 2010-11 I.R.B.441
2010-24, 2010-12 I.R.B.452
2010-25, 2010-14 I.R.B.527
2010-26, 2010-14 I.R.B.527
Notices— Continued:
2010-27, 2010-15 I.R.B.531
2010-28, 2010-15 I.R.B.541
2010-29, 2010-15 I.R.B.547
Proposed Regulations:
REG-132232-08, 2010-6 I.R.B.401
REG-137036-08, 2010-6 I.R.B.398
REG-101896-09, 2010-5 I.R.B.347
REG-117501-09, 2010-11 I.R.B.442
REG-131028-09, 2010-4 I.R.B.332
REG-148681-09, 2010-11 I.R.B.443
Revenue Procedures:
2010-1, 2010-1 I.R.B.1
2010-2, 2010-1 I.R.B.90
2010-3, 2010-1 I.R.B.110
2010-4, 2010-1 I.R.B.122
2010-5, 2010-1 I.R.B.165
2010-6, 2010-1 I.R.B.193
2010-7, 2010-1 I.R.B.231
2010-8, 2010-1 I.R.B.234
2010-9, 2010-2 I.R.B.258
2010-10, 2010-3 I.R.B.300
2010-11, 2010-2 I.R.B.269
2010-12, 2010-3 I.R.B.302
2010-13, 2010-4 I.R.B.329
2010-14, 2010-12 I.R.B.456
2010-15, 2010-7 I.R.B.404
2010-17, 2010-8 I.R.B.425
2010-18, 2010-9 I.R.B.451
2010-19, 2010-13 I.R.B.469
2010-20, 2010-14 I.R.B.528
2010-21, 2010-13 I.R.B.473
Revenue Rulings:
2010-1, 2010-2 I.R.B.248
2010-2, 2010-3 I.R.B.272
2010-3, 2010-3 I.R.B.272
2010-4, 2010-4 I.R.B.309
2010-5, 2010-4 I.R.B.312
2010-6, 2010-6 I.R.B.387
2010-7, 2010-8 I.R.B.417
2010-8, 2010-10 I.R.B.432
2010-9, 2010-13 I.R.B.461
2010-10, 2010-13 I.R.B.461
2010-11, 2010-14 I.R.B.516
Treasury Decisions:
9474, 2010-4 I.R.B.322
9475, 2010-4 I.R.B.304
9476, 2010-5 I.R.B.336
9477, 2010-6 I.R.B.385
9478, 2010-4 I.R.B.315
9480, 2010-11 I.R.B.439
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2009–27 through 2009–52 is in Internal Revenue Bulletin
2009–52, dated December 28, 2009.
2010–15 I.R.B.iiApril 12, 2010

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2010–1 through 2010–15
Announcements:
2009-51
Supplemented and superseded by
Ann. 2010-16, 2010-11 I.R.B.450
2010-4
Corrected by
Ann. 2010-10, 2010-7 I.R.B.410
Notices:
2005-88
Superseded by
Notice 2010-13, 2010-4 I.R.B.327
2006-87
Superseded by
Notice 2010-27, 2010-15 I.R.B.531
2007-25
Superseded by
Notice 2010-27, 2010-15 I.R.B.531
2007-77
Superseded by
Notice 2010-27, 2010-15 I.R.B.531
2008-41
Modified by
Notice 2010-7, 2010-3 I.R.B.296
2008-55
Modified by
Notice 2010-3, 2010-2 I.R.B.253
2008-88
Modified by
Notice 2010-7, 2010-3 I.R.B.296
2008-107
Superseded by
Notice 2010-27, 2010-15 I.R.B.531
2008-113
Modified by
Notice 2010-6, 2010-3 I.R.B.275
2008-115
Modified by
Notice 2010-6, 2010-3 I.R.B.275
2009-11
Amplified by
Notice 2010-9, 2010-3 I.R.B.298
2009-13
Obsoleted by
T.D. 9478, 2010-4 I.R.B.315
REG-131028-09, 2010-4 I.R.B.332
Notices— Continued:
2009-35
Supplemented by
Notice 2010-17, 2010-14 I.R.B.519
2009-38
Amplified and superseded by
Notice 2010-2, 2010-2 I.R.B.251
2009-62
Modified and supplemented by
Notice 2010-23, 2010-11 I.R.B.441
Proposed Regulations:
REG-127270-06
Hearing scheduled by
Ann. 2010-6, 2010-6 I.R.B.402
Revenue Procedures:
80-59
Modified and superseded by
Rev. Proc. 2010-11, 2010-2 I.R.B.269
87-35
Obsoleted by
Rev. Proc. 2010-3, 2010-1 I.R.B.110
2008-14
Updated by
Rev. Proc. 2010-15, 2010-7 I.R.B.404
2009-1
Superseded by
Rev. Proc. 2010-1, 2010-1 I.R.B.1
2009-2
Superseded by
Rev. Proc. 2010-2, 2010-1 I.R.B.90
2009-3
Superseded by
Rev. Proc. 2010-3, 2010-1 I.R.B.110
2009-4
Superseded by
Rev. Proc. 2010-4, 2010-1 I.R.B.122
2009-5
Superseded by
Rev. Proc. 2010-5, 2010-1 I.R.B.165
2009-6
Superseded by
Rev. Proc. 2010-6, 2010-1 I.R.B.193
2009-7
Superseded by
Rev. Proc. 2010-7, 2010-1 I.R.B.231
2009-8
Superseded by
Rev. Proc. 2010-8, 2010-1 I.R.B.234
Revenue Procedures— Continued:
2009-9
Superseded by
Rev. Proc. 2010-9, 2010-2 I.R.B.258
2009-15
Amplified and superseded by
Rev. Proc. 2010-12, 2010-3 I.R.B.302
2009-17
Superseded by
Rev. Proc. 2010-21, 2010-13 I.R.B.473
2009-25
Superseded by
Rev. Proc. 2010-3, 2010-1 I.R.B.110
2009-55
Corrected by
Ann. 2010-11, 2010-10 I.R.B.438
2010-1
Corrected by
Ann. 2010-5, 2010-6 I.R.B.402
Revenue Rulings:
67-436
Obsoleted by
REG-101896-09, 2010-5 I.R.B.347
92-19
Supplemented in part by
Rev. Rul. 2010-7, 2010-8 I.R.B.417
2008-52
Supplemented and superseded by
Rev. Rul. 2010-2, 2010-3 I.R.B.272
Treasury Decisions:
9424
Corrected by
Ann. 2010-18, 2010-12 I.R.B.460
9443
Corrected by
Ann. 2010-8, 2010-7 I.R.B.408
9458
Corrected by
Ann. 2010-7, 2010-6 I.R.B.403
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2009–27 through 2009–52 is in Internal Revenue Bulletin 2009–52, dated December 28,
2009.
April 12, 2010iii2010–15 I.R.B.

2010–15 I.R.B.April 12, 2010

April 12, 20102010–15 I.R.B.

INTERNAL REVENUE BULLETIN
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