Internal Revenue Bulletin 2013-16 (PDF rendition): IRS Announcements

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Bulletin No. 201
3-16
April 15, 2013
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 2013–17, page 911.
This announcement is issued pursuant to § 521(b) of Pub. L.
106–170, the Ticket to Work and Work Incentives Improve-
ment Act of 1999, which requires the Secretary of the Trea-
sury to report annually to the public concerning Advance Pric-
ing Agreements (APAs) and the APMA Program. The first re-
port covered calendar years 1991 through 1999. Subsequent
reports covered separately each calendar year 2000 through
2011. This Fourteenth report describes the experience, struc-
ture, and activities of the APMA Program during calendar year
2012. It does not provide guidance regarding the application
of the arm’s length standard.
INCOME TAX
Notice 2013–24, page 909.
This notice provides transitional relief for late-payment addi-
tions to tax under section 6651(a)(2) of the Code due to the
delayed publication of some IRS forms relating to the 2012 tax
year.
EMPLOYEE PLANS
Notice 2013–23, page 906.
Weighted average interest rate update; corporate bond
indices; 30-year Treasury securities; segment rates.
This notice contains updates for the corporate bond weighted
average interest rate for plan years beginning in March 2013;
the 24-month average segment rates; the funding transitional
segment rates applicable for March 2013; and the minimum
present value transitional rates for February 2013. The rates
in this notice reflect certain changes implemented by the
Moving Ahead for Progress in the 21st Century Act, Public
Law 112–141 (MAP–21).
ADMINISTRATIVE
Notice 2013–24, page 909.
This notice provides transitional relief for late-payment addi-
tions to tax under section 6651(a)(2) of the Code due to the
delayed publication of some IRS forms relating to the 2012 tax
year.
Announcement 2013–23, page 940.
This document contains corrections to final regulations (T.D.
9604, 2012–52 I.R.B. 730) that provides guidance on the ex-
cise tax imposed on the sale of certain medical devices, en-
acted by the Health Care and Education Reconciliation Act of
2010 in conjunction with the Patient Protection and Affordable
Care Act.
Announcements of Disbarments and Suspensions begin on page 940.
Finding Lists begin on page ii.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly.
It is the poli
cy of the Service to publish in the Bulletin all sub-
stantive ru
lings necessary to promote a uniform application of
the tax laws
, including all rulings that supersede, revoke, mod-
ify, or amen
d any of those previously published in the Bulletin.
All publish
ed rulings apply retroactively unless otherwise indi-
cated. Pro
cedures relating solely to matters of internal man-
agement ar
e 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.—1986 Code.
This part includes rulings and decisions based on provisions of
the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, 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 part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The cont
ents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
April 15, 20132013–16 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2013–23
This notice provides guidance on the
corporate bond monthly yield curve (and
the corresponding spot segment rates), and
the 24-month average segment rates under
§ 430(h)(2) of the Internal Revenue Code.
In addition, this notice provides guidance
as to the interest rate on 30-year Trea-
sury securities under § 417(e)(3)(A)(ii)(II)
as in effect for plan years beginning be-
fore 2008, the 30-year Treasury weighted
average rate under § 431(c)(6)(E)(ii)(I),
and the minimum present value segment
rates under § 417(e)(3)(D) as in effect for
plan years beginning after 2007. These
rates reflect certain changes implemented
by the Moving Ahead for Progress in the
21st Century Act, Public Law 112–141
(MAP–21). MAP–21 provides that for
purposes of § 430(h)(2), the segment rates
are limited by the applicable maximum
percentage or the applicable minimum per-
centage based on the average of segment
rates over a 25 year period.
YIELD CURVE AND SEGMENT
RATES
Generally, except for certain plans
under sections 104 and 105 of the Pen-
sion Protection Act of 2006, § 430 of
the Code specifies the minimum funding
requirements that apply to single em-
ployer plans pursuant to § 412. Section
430(h)(2) specifies the interest rates that
must be used to determine a plan’s target
normal cost and funding target. Under
this provision, present value is generally
determined using three 24-month average
interest rates (“segment rates”), each of
which applies to cash flows during speci-
fied periods. To the extent provided under
§ 430(h)(2)(C)(iv), these segment rates are
adjusted by the applicable percentage of
the 25-year average segment rates for the
period ending September 30 of the year
preceding the calendar year in which the
plan year begins. However, an election
may be made under § 430(h)(2)(D)(ii) to
use the monthly yield curve in place of the
segment rates.
Notice 2007–81, 2007–44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond
segment rates used to compute the tar-
get normal cost and the funding target.
Pursuant to Notice 2007–81, the monthly
corporate bond yield curve derived from
February 2013 data is in Table I at the
end of this notice. The spot first, second,
and third segment rates for the month
of February 2013 are, respectively, 0.99,
3.82, and 5.02. For plan years beginning
on or after January 1, 2012, the 24-month
average segment rates determined under
§ 430(h)(2)(C)(iv) must be adjusted by
the applicable percentage of the corre-
sponding 25-year average segment rates.
The 25-year average segment rates for
plan years beginning in 2012 and for plan
years beginning in 2013 were published
in Notices 2012–55 and 2013–11, respec-
tively. The 24-month average corporate
bond segment rates applicable for March
2013 without adjustment, and the adjusted
24-month average segment rates taking
into account the applicable percentages of
corresponding the 25-year average seg-
ment rates, are as follows:
24-Month Average Segment Rates
Not Adjusted
Adjusted 24-MonthAverage Segment
Rates, Based on Applicable Percentage
of 25-Year Average Rates
For Plan
Years
Beginning
In
Applicable
Month
First
Segment
Second
Segment
Third
Segment
First
Segment
Second
Segment
Third
Segment
2012March2013
1.54
4.28
5.325.546.857.52
2013March2013
1.54
4.28
5.32
4.94
6.15
6.76
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 417(e)(3)(A)(ii)(II) (prior to
amendment by PPA) defines the appli-
cable interest rate, which must be used
for purposes of determining the minimum
present value of a participant’s benefit
under § 417(e)(1) and (2), as the annual
rate of interest on 30-year Treasury se-
curities for the month before the date
of distribution or such other time as the
Secretary may by regulations prescribe.
Section 1.417(e)–1(d)(3) of the Income
Tax Regulations provides that the applica-
bleinterestrateforamonthistheannual
rate of interest on 30-year Treasury secu-
rities as specified by the Commissioner
for that month in revenue rulings, notices
or other guidance published in the Internal
Revenue Bulletin.
The rate of interest on 30-year Treasury
securities for February 2013 is 3.17 per-
cent. The Service has determined this rate
as the average of the yield on the 30-year
Treasury bond maturing in November
2042 determined each day through Febru-
ary 13, 2013, and the yield on the 30-year
Treasury bond maturing in February 2043
determined each day for the balance of the
month.
Generally for plan years beginning
after 2007, § 431 specifies the mini-
mum funding requirements that apply to
multiemployer plans pursuant to § 412.
Section 431(c)(6)(B) specifies a minimum
amount for the full-funding limitation
described in section 431(c)(6)(A), based
on the plan’s current liability. Section
431(c)(6)(E)(ii)(I) provides that the inter-
est rate used to calculate current liability
for this purpose must be no more than 5
percent above and no more than 10 percent
below the weighted average of the rates of
2013–16 I.R.B.906April 15, 2013

interest on 30-year Treasury securities dur-
ing the four-year period ending on the last
day before the beginning of the plan year.
Notice 88–73, 1988–2 C.B. 383, provides
guidelines for determining the weighted
average interest rate.The following rates
were determined for plan years beginning
in the month shown below.
For Plan Years
Beginning inPermissible Ra
nge
MonthYear
30-Year
Treasury
Weighted
Average90%to105%
March2013
3.55
3.193.72
MINIMUM PRESENT VALUE
SEGMENT RATES
In general, the applicable interest rates
under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month
average. Notice 2007–81 provides guide-
lines for determining the minimum present
value segment rates. Pursuant to that no-
tice, the minimum present value transi-
tional segment rates determined for Febru-
ary2013areasfollows:
First
Segment
Second
Segment
Third
Segment
0.993.82
5.02
DRAFTING INFORMATION
The principal author of this notice is
Tony Montanaro of the Employee Plans,
Tax Exempt and Government Entities Di-
vision. Mr. Montanaro may be e-mailed at
RetirementPlanQuestions@irs.gov.
April 15, 20139072013–16 I.R.B.

Table I
Monthly Yield Curve for February 2013
DerivedfromFebruary2013Data
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.5
0.31
20.5
4.73
40.55.0660.55.1880.55.24
1.00.4821.0
4.75
41.0
5.06
61.0
5.18
81.0
5.24
1.50.6521.5
4.76
41.55.0761.55.1881.55.24
2.00.8022.04.7742.0
5.07
62.0
5.18
82.0
5.24
2.5
0.93
22.5
4.78
42.55.0762.55.1982.55.24
3.01.0623.04.8043.05.0863.05.1983.05.24
3.5
1.19
23.5
4.81
43.55.0863.55.1983.55.25
4.01.3424.04.8244.0
5.09
64.0
5.19
84.0
5.25
4.51.5024.5
4.83
44.55.0964.55.1984.55.25
5.0
1.67
25.0
4.84
45.05.0965.05.1985.05.25
5.5
1.86
25.54.8545.55.1065.55.2085.55.25
6.02.0526.04.8646.05.1066.05.2086.05.25
6.52.2526.5
4.87
46.55.1066.55.2086.55.25
7.0
2.45
27.04.8847.0
5.11
67.0
5.20
87.0
5.25
7.52.6527.5
4.89
47.55.1167.55.2087.55.25
8.02.8428.04.8948.0
5.11
68.0
5.20
88.0
5.25
8.5
3.03
28.5
4.90
48.55.1268.55.2188.55.26
9.03.2029.04.9149.05.1269.05.2189.05.26
9.5
3.36
29.5
4.92
49.55.1269.55.2189.55.26
10.0
3.52
30.04.93
50.05.13
70.0
5.21
90.0
5.26
10.5
3.66
30.5
4.94
50.55.1370.55.2190.55.26
11.03.7931.0
4.9551.05.13
71.0
5.21
91.0
5.26
11.5
3.90
31.54.9551.55.1471.55.2291.55.26
12.04.0132.04.9652.05.1472.05.2292.05.26
12.5
4.10
32.5
4.97
52.55.1472.55.2292.55.26
13.04.1933.04.97
53.05.14
73.0
5.22
93.0
5.26
13.5
4.26
33.5
4.98
53.55.1573.55.2293.55.26
14.04.3334.04.99
54.05.15
74.0
5.22
94.0
5.26
14.5
4.39
34.5
4.99
54.55.1574.55.2294.55.27
15.04.4435.05.0055.05.1575.05.2395.05.27
15.5
4.48
35.55.0155.55.1675.55.2395.55.27
16.0
4.52
36.0
5.0156.05.16
76.0
5.23
96.0
5.27
16.54.5636.55.0256.55.1676.55.2396.55.27
17.0
4.59
37.0
5.0257.05.16
77.0
5.23
97.0
5.27
17.5
4.62
37.55.0357.55.1777.55.2397.55.27
18.04.6438.05.0358.05.1778.05.2398.05.27
18.5
4.66
38.55.0458.55.1778.55.2398.55.27
19.04.6839.0
5.0459.05.17
79.0
5.24
99.0
5.27
19.5
4.70
39.55.0559.55.1779.55.2499.55.27
20.04.7240.0
5.05
60.0
5.18
80.0
5.24
100.0
5.27
2013–16 I.R.B.908April 15, 2013

Penalty Relief for Delayed
2012 Forms
Notice 2013–24
This notice provides transitional re-
lief for additions to tax under section
6651(a)(2) of the Internal Revenue Code
due to the delayed publication of some
IRS forms relating to the 2012 tax year.
BACKGROUND
Generally, individuals, estates, and
trusts are required to file income tax re-
turns and pay any tax due by April 15;
corporations and certain other entities
must file returns and pay tax by March 15.
Section 6081 provides that the Secre-
tary may grant a reasonable extension of
time for filing any return, but, except in the
case of taxpayers who are abroad, no such
extension shall be for more than 6 months.
To qualify for an extension, taxpayers must
properly estimate their tax liability using
any available information and report that
tax liability on the extension application.
An extension of time to file a return, how-
ever, does not extend the time to pay the
tax and taxpayers generally must pay the
tax by the original due date of the return.
Section 6651(a)(2) imposes an addition
to tax for payments made after the due date
(determined with regard to any extension
of time for payment) with respect to tax
shownonareturn.Thesection6651(a)(2)
addition to tax will not be imposed if the
taxpayer shows that the failure was due to
reasonable cause and not willful neglect.
On January 2, 2013, Congress enacted
the American Taxpayer Relief Act of 2012
(ATRA), Pub. L. No. 112–240, 126 Stat.
2313. The ATRA affected a number of tax
forms. Revising those forms required ex-
tensive programming and testing of IRS
systems, which delayed the IRS’s ability
to release, accept, and process those forms.
These delays may affect the ability of some
taxpayers to timely estimate and pay their
2012 tax liability when requesting an ex-
tension to file.
TRANSITIONAL RELIEF
Generally, the IRS automatically as-
sesses the section 6651(a)(2) addition to
tax against taxpayers who pay late, and
then it sends notice and demand for pay-
ment of the addition to tax. For each
taxpayer who requests or has requested
an extension to file a 2012 income tax
return that includes one of the forms listed
in Exhibit 1 of this notice, the IRS will
deem the taxpayer to have demonstrated
reasonable cause and lack of willful ne-
glect, provided a good faith effort was
made to properly estimate the tax liability
on the extension application, the estimated
amount is paid by the original due date of
thereturn,andanytaxowedonthereturn
is fully paid no later than the extended
due date of the return. The IRS will abate
any section 6651(a)(2) additions to tax as-
sessed with respect to these 2012 income
tax returns. When responding to the as-
sessment notice, a taxpayer should submit
a letter describing the taxpayer’s eligibil-
ity for this relief, identifying which of the
form(s)listedinExhibit1ofthisnotice
was included with the taxpayer’s return
as filed, and referencing this notice by
number [Notice 2013–24] to the address
listed in the assessment notice.
Forms, instructions, and other tax assis-
tance are available onIRS.gov.TheIRS
toll-free number for general tax questions
is 1–800–829–1040.
CONTACT INFORMATION
The principal author of this notice is
David W. Skinner of the Office of the
Associate Chief Counsel (Procedure and
Administration). For further information
regarding this notice, contact Mr. Skinner
at 202–622–4940 (not a toll-free call).
April 15, 20139092013–16 I.R.B.

EXHIBIT 1 –Delayed 2012 forms (available in February 2013 or the first week of March 2013)
•Form 3800,General Business Credit
•Form 4136,Credit for Federal Tax Paid on Fuels
•Form 4562,Depreciation and Amortization (Including Information on Listed Property)
•Form 5074,Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands (CNMI)
•Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations
•Form 5695,Residential Energy Credits
•Form 5735,American Samoa Economic Development Credit
•Form 5884,Work Opportunity Credit
•Form 6478,Alcohol and Cellulosic Biofuel Fuels Credit (Including Second Generation Biofuel)
•Form 6765,Credit for Increasing Research Activities
•Form 8396,Mortgage Interest Credit
•Form 8582,Passive Activity Loss Limitations
•Form 8820,Orphan Drug Credit
•Form 8834,Qualified Plug-in Electric and Electric Vehicle Credit
•Form 8839,Qualified Adoption Expenses
•Form 8844,Empowerment Zone Employment Credit
•Form 8845,Indian Employment Credit
•Form 8859,District of Columbia First-Time Homebuyer Credit
•Form 8863,Education Credits (American Opportunity and Lifetime Learning Credits)
•Form 8864,Biodiesel and Renewable Diesel Fuels Credit
•Form 8874,New Markets Credit
•Form 8900,Qualified Railroad Track Maintenance Credit
•Form 8903,Domestic Production Activities Deduction
•Form 8908,Energy Efficient Home Credit
•Form 8909,Energy Efficient Appliance Credit
•Form 8910,Alternative Motor Vehicle Credit
•Form 8911,Alternative Fuel Vehicle Refueling Property Credit
•Form 8912,Credit to Holders of Tax Credit Bonds
•Form 8923,Mine Rescue Team Training Credit
•Form 8932,Credit for Employer Differential Wage Payments
•Form 8936,Qualified Plug-in Electric Drive Motor Vehicle Credit
2013–16 I.R.B.910April 15, 2013

Part IV. Items o
fGeneralInterest
Announcement
and Report
Concerning Ad
vance Pricing
Agreements
Announcemen
t 2013–17
March 25, 2013
This Announc
ement is issued pursuant to § 521(b) of Pub. L. 106–170, the Ticket to Work and Work Incentives Improvement Act
of 1999, whic
h requires the Secretary of the Treasury to report annually to the public concerningadvance pricing agreements
(APAs) and th
e APA Program. The first report covered calendar years 1991 through 1999. Subsequent reports covered separately
each calend
ar year 2000 through 2011. This fourteenth report describes the experience, structure, and activities of the APA
Program dur
ing calendar year 2012. It does not provide guidance regarding the application of the arm’s length standard.
As describe
d in greater detail below, in the first quarter of calendar year 2012, the APA Program was moved from the Office of
Chief Couns
el and merged with that portion of the Office of the U.S. Competent Authority (USCA) that resolves transfer pricing
cases under
the mutual agreement procedures of the United States’ bilateral income tax conventions. As the successor to the APA
Program, th
e new Advance Pricing and Mutual Agreement (APMA) Program has prepared and finalized this report.
During 2012
, the APMA Program saw immediate returns from the merger of functions, increased resources available, and
processin
g efficiencies implemented throughout the year, and increased the number of APAs executed from 42 in 2011 to a
single-ye
ar high of 140 in 2012. The average time to complete an APA decreased from 40.7 months in 2011 to 39.8 months in
2012, and f
or the first year in the program’s history there were moreAPAs executed (140) than applications filed (126). It is
expected t
hat the average processing time for APAs will continue to decrease over the next few years as the APMA Program
continues
to use its increased resources to reduce the older inventory of pending cases and accelerate the processing of newer cases.
As part of t
he evolution of the APA Program into the APMA Program, those who have read this report in past years will notice
signific
ant changes in how the APMA Program is communicating its results for 2012 to Congress and the public. Sections
describi
ng the background and general procedures regarding APAs have been deleted, and readers are referred to the revenue
procedur
es that currently govern APA submissions and the relevant Treasury regulations for the details previously included
therein.
Part I of the report summarizes the merger of programs andoperations; Part II presents APMA program results, both in
table and
graphical format; and Part III includes general descriptions of various elements of the executed APAs,e.g.,transfer
pricing m
ethods used, types of transactions covered in APAs, and thecountries with which the United States reached agreements.
Calendar
year 2012 provided many challenges to the leadership and staff of both legacy APA and legacy USCA, but as will be seen
below, t
he new APMA Program has achieved many of its goals for 2012 and expects to continue its progress in the years to come.
Richard J
.McAlonan,Jr.
Directo
r, Advance Pricing and Mutual Agreement Program
April 15, 20139112013–16 I.R.B.

Part I. The APMA Program — Structure, Composition and Operation
[PUB. L. 106–170 § 521(b)(2)(A)]
The former APA Program was moved from the Office of Chief Counsel to the Office of Transfer Pricing Operations, Large
Business and International Division ofthe IRS (TPO) in February of 2012 and combined with the USCA staff responsible for
transfer pricing cases, thereby forming the Advance Pricing and Mutual Agreement (APMA) Program. The APMA Program
Director, Richard McAlonan, joined the Program in May of 2012. Beginning in late 2010, the staffs of the APA Program and
the USCA office began working more closely together in processing APAs, with USCA staff handling APAs from application
to resolution, and APA Program staff analyzing and resolving double tax cases under the mutual agreement procedure (MAP)
included in the U.S. bilateral income tax conventions.
Staffing Increases, Focus on Economists
Beginning in mid–2011, the USCA office began a hiring process that continues to the present, to add both analysts (now called
team leaders) and economists to the USCA (now APMA) staff. Overall staffing increased from a total of approximately 70 staff
(analysts, team leaders and economists) and seven managers between the APA Program and the USCA office in early 2011, to
a total of 92 team leaders and economists and 12 APMA managers at present. In particular the hiring focused on economists,
with the addition of two economist managers and 20 economists drawn from both the private sector and the IRS field economist
group. This focus on economist hiring was intended, among other things, to improve the ability of the IRS to develop APA
positions expeditiously, and reduce the average time from submission to resolution. Further, by adding experienced transfer
pricing economists to the team the APMA Program is creating a “deep bench,” that allows resources to be deployed strategically.
By more than doubling the number of economists within APMA,and tripling the number of economist managers from one to
three, the Program is better able to perform the proper level of analysis for every case, which in turn should continue to result
in reduced processing times while maintaining the same high quality of analysis.
Impact of Merger, Office Move
As with any organizational merger, the combination of the APA Program with the USCA office presented challenges. These
challenges were heightened by the fact that Washington, DC personnel, which represents the largest cadre of APMA, also went
through an office move in September. In addition, the rapid increase in headcount, including the addition of economists located
in Chicago and New York, necessitated additional training as the merged organization began to develop and implement new
processes for both APA and double tax cases.
Operating Efficiencies Include Elimination of “Handoffs”
Despite the challenges noted above, the merger nonetheless created significant benefits, in addition to the positive impact of
staffing increases noted above. One result of the merger that has paid immediate dividends in the processing of bilateral APAs is
the elimination of two “handoffs” that existed under the legacysystem. That is, before the merger a developed APA position was
“handed off” from an APA team leader to a USCA analyst, the latter of whom would then discuss the case with the treaty partner.
When the USCA office reached agreement with the treaty partner and entered into a mutual agreement under the treaty, that
agreement was “handed off” from the USCA analyst back to the APA Director and team leader to draft the domestic APA.
After the merger, the team that develops the IRS position in the case is also responsible for discussing the case with the
treaty partner, obtaining an agreement, and finalizing the APA with the taxpayer. This compression of functions eliminates
inefficiencies, and also requires the teamin a bilateral case to take the potential challenges or roadblocks that could be posed by
the treaty partner into account when developing the U.S. position.This in turn is expected to alsolead to a shortening of the time
it takes to reach resolution once a case is setfor discussion with the treaty partner.
1
Summary, Look Ahead
Although as of December 31, 2012, the APMA Program had been inexistence for less than one year, the Program accomplished
much during 2012. In addition to a significant increase in APA output, the recruitment and hiring of highly qualified and
experienced team leaders and economists increases internal transfer pricing expertise, which in turn benefits the overall efforts of
the Office of Transfer Pricing Operations. In 2013 the Programexpects to release new revenue procedures governing both APA
applications and MAP applications, and to replace the current revenue procedures that were released in 2006 and, in the case of
APAs, supplemented in 2008. These revenue procedures will reflect the changes in structure, and also and more importantly, will
be informed by the cumulative experience of more than twentyyears of APA practice in the United States, which has produced
more than eleven hundred unilateral and bilateral agreements since 1991.
1
In the past, no systematic effort was made to measure how much of the time from submission to agreement of a bilateral APA was spent on the discussions with treaty partners, but anecdotal
evidence from the APMA Program’s experience with Japan, the treaty partnerresponsible for more than half of the bilateral APAs in 2012, suggests thatthere was a reduction in the number
of meetings needed to reach an agreement in 2012, and this trend can be expected to continue.
2013–16 I.R.B.912April 15, 2013

The model APA agreement, which was last revised significantly in 2009 and is currently under review for future changes, appears
in this report as Appendix A. (See Pub. L. 106–170 § 521(b)(2)(B)). A list of primary APMA contacts is included as Appendix B.
April 15, 20139132013–16 I.R.B.

Part II. APMA Program Statistical Data
[Pub. L. 106–170 § 521(b)(2)(C) and (E)]
The statistical information required under § 521(b)(2)(C) and (E)is presented below, in either table or graphical format. The 126
APA applications received during 2012 represented a significant increase from 2011, when 96 applications were submitted, but
short of the all-time high of 144 submissions received in 2010. With the additional resources and added efficiencies from its recent
restructuring, APMA expects APAs to continue to be attractive to taxpayers and applications to continue to trend upwards in 2013.
Table 1: APA Applications Filed
§ 521(b)(2)(C)(i)
UnilateralBilateralMultilateral
Total
Filed 1991–20111619
2
Filedin201224101 1126
Total Filed 1991–20121745
2
The first APA Statutory Report, which compiled APA data from 1991–1999, didnot report the cumulative number of applications for those years by submission type, so the cumulative
totals before 2012 that include that data cannot be reported in that manner.
2013–16 I.R.B.914April 15, 2013

Table 2: Executed and Pending APAs
§ 521(b)(2)(C)(ii-vi)
UnilateralBilateralMultilateralTotal
Total Executed 1991–2011413
589
13
1015
Total Executed in 2012371030140
Total Executed 1991–2012450692131155
Total Pending743161391
Renewals Executed in 20122855083
Renewals Pending381431182
April 15, 20139152013–16 I.R.B.

Table 3: APAs Revoked or Cancelled and Withdrawn
§ 521(b)(2)(C)(vii)
UnilateralBilateralMultilateralTotal
Revoked or Cancelled 20120000
Total Revoked or Cancelled
1991–2012
11
APA Applications Withdrawn in
2012
2406
Total APA Applications
Withdrawn 1991–2012
180
Table 4: APAs Finalized or Renewed by Industry
§ 521(b)(2)(C)(viii)
Industry
Manufacturing
59
Wholesale/Retail Trade49
Management11
Services10
Finance, Insurance and Real Estate7
Natural Resources and Transportation4
2013–16 I.R.B.916April 15, 2013

Table 4a: Manufacturing APAs Finalized or Renewed
Manufacturing
Computer and Electronic Products18
Chemicals11
Transportation Equipment8
Electrical Equipment, Appliances
and Components
6
Other Manufacturing16
Table 4b: Wholesale/RetailTrade APAs Finalized or Re
newed
Wholesale/Retail Trade
Merchant Wholesalers, Durable Goods31
Merchant Wholesalers, Nondurable Goods13
Retail Trade
5
April 15, 20139172013–16 I.R.B.

Part III. General Descriptions of APAs Executed in 2012
[Pub. L. 106–170 § 521(b)(2)(D)]
Nature of the Relationships
§ 521(b)(2)(D)(i)
As in prior years, more than half of the APAs executed in 2012 involved transactions between foreign parents and U.S.
subsidiaries. In 2012 the percentages were approximately 75 percent foreign parents and 25 percent U.S. parents; in 2011
those percentages were 61 and 39, respectively.
As shown in the graph below, of the total number of bilateralAPAs executed in 2012, more than half were agreed between the
United States and Japan, with the other two treaty countries with significant activity being Canada and the United Kingdom.
As the IRS gains additional experience with other treaty partners it would be expected that the relative representation of other
treaty partners will increase over time.
Tested Parties, Covered Transactions, Functions and Risks
§ 521(b)(2)(D)(ii-iii)
T
estedPartiesandCoveredTransactions:As shown in the following graph, and consistent with prior years, the tested parties
includedinAPAsexecutedin2012fell primarily into two categories,i.e., U.S. distributors and U.S. service providers, each of
which represents approximately 30 percent of the total. No other single type of entity represents even ten percent of the total.
Consistent with this result, more than 40 percent of the transactions covered in APAs executedin2012involvedtransfersof
tangible goods, and close to 40 percent involved the provisionof services. Most of the rest of the transactions involved the
use of intangible property.
2013–16 I.R.B.918April 15, 2013

Althoug
h a high percentage of agreements involved tangible goods and services transactions, the IRS has successfully completed
numerou
s APAs involving intangibles. While complex transactionsinvolving intangibles may be more challenging in some cases
than oth
er types of transactions, and represent a smaller percentageof the APA inventory than the other types of transactions,
the IRS w
ill continue to seek opportunities to work with taxpayers and treaty partners to provide prospective certainty for such
transac
tions wherever appropriate.
F
unctio
nsandRisks:As shown in the graphs below, most of the functions and risks of the tested parties in the APAs executed in
2012 we
re routine functions and risks, with more than 70 percent of the cases involving distribution or related functions,e.g.
market
ing and product support. Similarly, the risks borne by the tested parties were primarilystandard business risks,e.g.,
market
risk and credit risk. A small percentage of the tested parties performed more complex or high value functions such as
manufa
cturing and research and development, and a similarly small percentage of the tested parties bore non-routine and
potent
ially significant risks such as product liability or research and development risk.
April 15, 20139192013–16 I.R.B.

Transfer Pricing Methods Used
§ 521(b)(2)(D)(iv)
As shown on the following graphs, and consistent with prior years, the primary transfer pricingmethodusedfortransfersof
both tangible and intangible property in APAs executed in 2012 was the Comparable Profits Method/Transactional Net Margin
Method (CPM/TNMM).
2013–16 I.R.B.920April 15, 2013

Regarding the various profit level indicators typically used tobenchmark results for transfers of property under the CPM/TNMM,
the Operating Margin, defined
3
as the ratio of operating profits to sales, accountsfor more than 60 percent of the cases, while the
Berry Ratio, defined
4
as the ratio of gross profit to operating expenses,accounts for approximately 15 percent of the cases. Other
profit level indicators, in the aggregate,account for less than ten percent of the cases.
For service
s transactions, while the CPM/TNMM still predominates, a significant percentage of cases involving services used the
Services Co
st Method or the Cost of Services Plus Method. The Services Cost Method evaluates whether the amount charged for
certain ser
vices is arm’s length with reference to the total services costs; the Cost of Services Plus Method determines whether
prices are a
rm’s length by reference to the gross services profit markup in comparable uncontrolled transactions. When the
CPM/TNMM i
s used to benchmark services transactions, theBerry Ratio is the most frequently used PLI.
3
Treas. Reg. § 1.482–5(b)(4)(ii)(A).
4
Treas. Reg. § 1.482–5(b)(4)(ii)(B).
April 15, 20139212013–16 I.R.B.

Sources of Comparables, Comparables Selection Criteria, and Nature of Adjustments to Comparable or Tested Party Data
§ 521(b)(2)(D)(v-vii)
For the majority of the APAs executed in 2012 where external comparables data was used in the analysis, the data source for
comparables was Standard and Poors’ Compustat database; the following other sources were also used in appropriate cases,e.g.,
where the tested party was not the U.S. entity:
Additional Sources of Comparable Data
DisclosureMergent
Moody’sJapan Company Handbook
WorldscopeGlobalVantage
AmadeusOneSource
Jade
Regarding selection criteria, in the majority of cases the selection process included consideration of whether the comparable
company was comparable regarding its functions, risks and industry. Also considered in some cases was the existence of
comparable intangibles or comparable products.
Regarding adjustments, the standard balance sheet adjustments covered by Treas. Reg. § 1.482–1(d) and –5(c), including
adjustments to payables, receivables and inventory, were made in the majority of cases, and approximately 30 percent of the cases
also involved an adjustment to plant, property and equipment. In addition, where appropriate,accounting adjustments were made
to convert from LIFO to FIFO inventory accounting, and a small number of the casesalso involved the accounting reclassification
of expenses,e.g., from COGS to operating expenses, or from operating expenses to extraordinary items.
Ranges, Targets and Adjustment Mechanisms
§ 521(b)(2)(D)(viii-ix)
The majority of the transactions covered in APAs executed in 2012 target an interquartile range as described in Treas. Reg.
§ 1.482–1(e)(2)(iii)(C). A substantial minority of those transactions also include a specific point within the CPM/TNMM range
that is not a floor or ceiling, but that represents either an interim or a final target, and in a few cases the CPM/TNMM does not set
a range, but sets either a floor or a ceiling,i.e., an upper or lower bound for the results of the particular transaction. Where the
transaction involves a royalty payment for the use of intangible property both points and rangeshave been used, and in some cases
where the covered transaction is the payment of a royalty basedsolely on external royalty agreements, a secondary method,e.g.,a
test of the payor’s post-royalty operating margin, has been imposed. The testing periods set in the APAs executed in 2012 included:
a) a single year; b) the term of the APA not including any rollback years; or c) the term of the APA including rollback years.
2013–16 I.R.B.922April 15, 2013

APAs executed in 2012 included a number of mechanisms for making adjustments to tested party results when they are outside the
range or point required by the APA. Among the mechanisms included in 2012, which apply to the APA term and/or rollback years,
were: a) an adjustment to the closest edge of the range applied to the results of a single year; b) adjustment to the closest edge of
the range applied to the results over the APA term; c) adjustment to the specified point or royalty rate; and d) adjustment to the
median of the range for a single year. For bilateral APAs, compensating adjustments that are required under the terms of the APA
can sometimes be subject to further discussions between the APMA team and its counterpart in the foreign jurisdiction, and the
amount and/or timing of the compensating adjustment can be the subject of an additional agreement between the countries.
Critical Assumptions
§ 521(b)(2)(D)(v)
The model APA used by the IRS (included as Appendix A of this report) includes a standard critical assumption that there will be
no material changes to the taxpayer’s business or to its tax or financial accounting practices during the APA term, and all the
APAs executed in 2012 included that standard critical assumption.A few bilateral cases have included critical assumptions tied to
either the taxpayer’s profitability in a certain year or over the term of the APA, or to the amount of non-covered transactions
as a percentage of the taxpayer’s revenue. Under § 11.03(2) of Rev. Proc. 2006–9, the IRS may require the taxpayer to show
compliance with all the critical assumptions included in the APA. Taxpayers must report to the IRS the failure of a critical
assumption, including the event or events causing such failure, and under § 11.06(3) of Rev. Proc. 2006–9, unless the APMA
Director agrees to modify the APA, the APA is cancelled. The IRS did not cancel any APAs in 2012 due to the failure of a
critical assumption.
Term Lengths for APAs
§ 521(b)(2)(D)(x)
As described in § 4.07 of Rev. Proc. 2006–9, taxpayers should request at least a five-year term in their APA submissions, although
the appropriate APA term is decided on a case-by-case basis. Of theAPAs executed in 2012, almost half had five-year terms, and
80 percent had terms of between five and eight years. For APAs with terms of between six and eight years, a substantial number
of those were submitted as a request for a five-year term, andthe additional years were agreed to between the taxpayer and the
IRS (or, in the case of a bilateral APA, between the IRS and the foreign government upon taxpayer’s request) in order to ensure a
reasonable amount of prospectivity in the APA term. In 2012, ten percent of the APAs included terms exceeding nine years.
These longer-than-normal terms were agreed based on the particular circumstances of those cases, and it is expected that the
instances of APA terms exceeding 9 years will continue to be rare in future years.
April 15, 20139232013–16 I.R.B.

Table 5: Term Lengths (Including Rollback Years)
Term LengthNumber of APAs
1≤3
2≤3
34
47
557
617
727
811
9≤3
104
11≤3
120
13≤3
14≤3
15
≤3
20≤3
Average6 years
Amount of Time Taken to Complete New and Renewal APAs
§ 521(b)(2)(E)
As noted in the introduction to this report, the average time taken to complete the 140 APAs executed in 2012 was slightly less
than the average time taken in 2011, and the IRS expects this average processing time to continue to go down as a result of the
increased resources dedicated to the program in 2011 and 2012 and continued process improvements.
2013–16 I.R.B.924April 15, 2013

Table 6: Months to Complete New and Renewal APAs
§ 521(b)(2)(E)
UnilateralBilateral
Unilatera
l & Bilateral
AverageMedianAverageMedian
AverageMedian
New28.4
26.547.551.244.550.6
Renewal30.120.844.842.4
39.834.5
New & Renewal29.727.846.044.941.739.8
April 15, 20139252013–16 I.R.B.

Efforts to Ensure Compliance with APAs
§ 521(b)(2)(F)
As described in § 11.01 of Rev. Proc. 2006–09, 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 APMA 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 Transfer Pricing Methods
(TPMs) adopted in the APA process.
All reports received by the APMA Program are assigned to a designated APMA team leader or economist. Whenever possible,
annual report reviews are assigned to the team leader who worked the case, or another staff member who is already familiar
with the relevant facts and terms of the agreement. Other team leaders and economists may assist the assigned team leader as
well. Once received by the APMA Program, the annual report is also sent to the field personnel with exam jurisdiction over the
taxpayer. The field personnel conduct a parallel compliance review, and work with APMA personnel to resolve any questions or
problems that might arise.
Nature of Documentation Required in Annual Report
§ 521(b)(2)(D)(xi)
APAs executed in 2012 required that taxpayers provide various documents with their annual reports, depending on the facts of the
case. While not every annual report will include every one of the documents listed below (e.g., where no compensating adjustment
occurs no documentation is required) the documents listed arerequired where the facts demonstrate a need for the document.
1.
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. If there have been no
such material differences, a statement to that effect.
2.
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
accounting methods and classifications or methods of estimation, a statement to that effect.
3.
Description of any failure to meet Critical Assumptions. If there has been none, a statement to that effect.
4.
Copy of the APA
5.Financial analysis demonstrating Taxpayer’s compliance with TPM.
6.
Organizational chart
7.Any change to the taxpayer notice information in section 14 of the APA.
8.
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.
9.
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.
10.
Financial Statements and any necessary account detail to show compliance with the TPM, with a copy of the opinion
from an independent CPA or other documentation required by paragraph 5(f) of the APA.
11.
Where required by paragraph 5(f) of the APA, 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.
12.
Where applicable, financial statements asprepared in accordance with a foreign GAAP
13.
Various work papers
14.
Where applicable, certified public accountant’s review of financial statements
2013–16 I.R.B.926April 15, 2013

Approaches for Sharing of Currency or Other Risks
§ 521(b)(2)(D)(xii)
In appropriate cases, APAs may provide specific approaches for dealing with currency risk, such as adjustment mechanisms
and/or critical assumptions.In2012veryfewexecutedAPAsincludedeither adjustment mechanismsor critical assumptions
regarding currency or other similar risks, and most of the casesthat did so involved bilateral agreements with Japan, which has
experienced significant, extreme currencyfluctuations over the last several years.
April 15, 20139272013–16 I.R.B.

APPENDIX A — Model APA (based on Rev. Proc. 2006–9)
[§ 521(b)(2)(B)]
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 Taxpayer 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 principal place of business is [City, State]. [Insert general description of taxpayer and other relevant parties].
This APA contains the Parties’ agreement on the best method for determining arm’s-length prices of the Covered Transactions
under I.R.C. section 482, the Treasury Regulations thereunder, and any applicable tax treaties.
{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 the APA Term, as defined in Appendix A.
4.Operation.
a. Revenue Procedure 2006–9 governs the interpretation, legal effect, and administration of this APA.
b. Nonfactual oral and written representations, within the meaning of sections 10.04 and 10.05 of Revenue Procedure 2006–9
(including any proposals to use particularTPMs), made in conjunction with the APA Request constitute statements made in com-
promise negotiations 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 is consistent 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 any taxable year covered by this APA
(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 isconsistent 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. {Use or edit the following 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 the aggregate between Taxpayer and Foreign Participants with respect to the
Covered Transactions. Except as explicitly provided, this APAdoes not address 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 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.
2013–16 I.R.B.928April 15, 2013

d. If Taxpayer does not comply with the termsand conditions of this APA, then the IRS may:
i.enforce the terms and conditions of this APA and makeor 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 willprovide 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, the Financial State-
ments, and other APA Records, for the APA Term and any other year necessary to verify compliance. For Taxpayer to comply with
this APA,{use the following or an alternative}an independent certified public accountant must 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 the 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 Director of the
Advance Pricing and Mutual Agreement Program, to the extent reasonably practicable, before seeking alternative remedies.
9.Materiality.In this APA the terms “material” and “materially” will be interpreted consistently withthe 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 15, 20139292013–16 I.R.B.

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.
[TaxpayerNameinallcaps]
By:
Date:,20
Jane Doe
Sr. Vice President (Taxes)
IRS
By:
Date:,20
Richard J. McAlonan, Jr.
Director, Advance Pricing and Mutual Agreement Program
2013–16 I.R.B.930April 15, 2013

APPENDIX A
COVERED TRANSACTIONS AND TRANSFER PRICING METHOD (TPM)
1.Covered Transactions.
[Define the Covered Transactions.]
2.APA Term.
This APA applies to Taxpayer’s taxable years ending
through(APA Term).
3.
TPM.
{Note: If appro
priate, adapt language from the following examples.}
[The Tested Part
yis
.]
•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 M
ethod (RPM)
The TPM is the re
sale price method (RPM). The Tested Party’s Gross Margin for any APA Year is
defined as foll
ows: the Tested Party’s gross profit divided by its sales revenue (as those terms are
definedinTrea
sury Regulations sections 1.482–5(d)(1) and (2)) for that APA Year. The Arm’s Length
Range is betwe
en
%and%, and the Median of the Arm’s Length Range is%.
•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 are defined in
Treasury Regulations sections 1.482–3(d)(1) and (2)) for that APA Year. The Arm’s Length Range is
between
%and%, and the Median of the Arm’s Length Range is%.
•CPM with Berry Ratio PLI
The TPM is the comparable profits method (CPM). Theprofit 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 termsare defined in Treasury Regulations sections
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 Pa
rty’s Operating Margin is defined as follows for any APA Year: the Tested Party’s
operating p
rofit divided by its sales revenue (as those terms are defined inTreasury Regulations section
1.482–5(d)
(1) and (4)) for that APA Year. The Arm’s Length Range is between
%and%, and
the Median o
f 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 Averageoperating 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
%.
April 15, 20139312013–16 I.R.B.

•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.]
4.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 APAYear under this Appendix A.
5.
APA Revenue Procedure Treatment
If Taxpayer makes an adjustment under paragraph 4 of this Appendix A (a “primary adjustment”), Taxpayer and its related foreign
entity may elect APA Revenue Procedure Treatment in accordancewith section 11.02(3) of Revenue Procedure 2006–9 and avoid
the possible adverse tax consequences ofa secondary adjustment that would otherwise follow the primary adjustment.
[Insert additional provisions as needed.]
2013–16 I.R.B.932April 15, 2013

APPENDIX B
CRITICAL ASSUMPTIONS
This APA’s crit
ical assumptions are:
1. The business a
ctivities, functions performed, risks assumed, assets employed, and financial and tax accounting methods and
classificatio
ns [and methods of estimation] of Taxpayer in relation to the Covered Transactions will remain materially the same as
described or us
ed in Taxpayer’s APA Request. A mere change in business results will not be a material change.
[Insert additi
onal provisions as needed.]
April 15, 20139332013–16 I.R.B.

APPENDIX C
APA RECORDS AND ANNUAL REPORT
APA RECORDS
The APA Records will consist of 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 (and each of the four copies required by paragraph 5(e) of this APA) will include:
1. Two copies of a properly completed APA Annual Report Summary in the form of Appendix E to this APA, one copy of the
form bound with, and one copy provided separately from, the rest of the Annual Report.
2. A table of contents, organized as follows:
3. Statements that fully identify,describe, analyze, and explain:
a. All material differences between the U.S. Group’s business operations (including functions, risks assumed, markets,
contractual terms, economic conditions, property, services, andassets employed) during the APA Year from the business operations
described in the APA Request. If there have been no material differences, the Annual Report will include a statement to that effect.
b. All material differences between the U.S. Group’s accounting methods and classifications, andmethods of estimation used
during the APA Year, from those described or used in the APA Request. If any change was made to conform to changes in U.S.
GAAP (or other relevant accounting standards) Taxpayer will specifically identify the 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 paragraph 14 of this APA.
d. Any failure to meet any critical assumption. If there has been no failure, the Annual Report will include a statement
to that effect.
e. Whether or not material information submitted while the APA Request was pending is discovered to be false, incorrect,
or incomplete.
f. Any change to any entity classification for federal income tax purposes (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.
g. The amount, reason for, and financialanalysis of (1) any primary adjustments made under Appendix A for the APA Year;
and (2) any (a) secondary adjustments that follow such primary adjustments or (b) accounts receivable that Taxpayer establishes,
in lieu of secondary adjustments, by electing APA Revenue Procedure Treatment pursuant to paragraph 5 of Appendix A and
Revenue Procedure 2006–9, section 11.02(3), for the APA Year, including but not limited to:
i.the amounts due or owed, and 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;
iii. the date(s) and means by which the payments are or will be made; and
iv.
whether or not APA Revenue Procedure was elected pursuant to paragraph 5 of Appendix A and Revenue
Procedure 2006–09, section 11.02(3).
h. The amounts, description, reason for, and financial analysisof 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.
i. Whether Taxpayer contemplates requesting, orhas requested, to renew, modify, or cancel the APA.
2013–16 I.R.B.934April 15, 2013

4. The Financial Statements, and any necessary account detail to show compliance with the TPM, including consolidating
financial statements, segmented financial data, records from the general ledger, orsimilar information if the assets, liabilities,
income, or expenses relevant to showing compliance with the TPM are a subset of the assets, liabilities, income, or expenses
presented in the Financial Statements.
5.{Use the following or the alternative prescribed by paragraph 5(f) of this APA:}A copy of the independent certified public
accountant’s opinion required by paragraph 5(f) of this APA.
6. A financial analysis that reflects Taxpayer’s TPM calculations for the APA Year. The calculations must reconcile with
and reference the information required under item 4 above in sufficient account detail to allow the IRS to determine whether
Taxpayer has complied with the TPM.
7. 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.
8. A copy of the APA and any amendment.
9. A penalty of perjury statement, executed in accordance with Revenue Procedure 2006–09, section 11.01(6) and (7).
April 15, 20139352013–16 I.R.B.

APPENDIX D
DEFINITIONS
The following d
efinitions control for all purposes of this APA.The definitions appearalphabetically below:
Term
Definition
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.
APA Year
This term is defined in paragraph 5(a) of this APA.
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[name the 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
2006–9
Rev. Proc. 2006–9, 2006–1 C.B. 278.
Transfer Pricing
Method (TPM)
A transfer 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.
2013–16 I.R.B.936April 15, 2013

APPENDIX E
APA ANNUAL REPORT SUMMARY FORM
The APA Annual R
eport Summary below and on the next page is a required APA Record. The APMA Team Leader supplies
some of the info
rmation requested on the form. Taxpayer is to supply theremaining 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
Large Business and International Division
Transfer Pricing Operations Advance Pricing
and Mutual Agreement Program
APA no.
Team Leader
Economist
Intl Examiner
Taxpayer Name:
Taxpayer EIN:NAICS:
APA Term: Taxable years endingto.
Original APA [ ] Renewal APA [ ]
Annual Report due dates:
,20for all APA Years through APA Year ending in 20; 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
April 15, 20139372013–16 I.R.B.

APA date executed:,20
This APA Annual Report Summary is for APA Year(s) ending in 20and was filed on
,20
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): 20
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
APA Annual
Report
Checklist of
Key Contents
(to be completed
by the Taxpayer)
Other APA records and documents included:
Authorized RepresentativePhoneNumberAffiliation and Address
Contact
Information
2013–16 I.R.B.938April 15, 2013

Appendix B — APMA Contacts
DIRECTOR AND DEPUTY
DirectorMcAlonan, Richard
202–283–8594
richard.j.mcalonanjr@irs.gov
Deputy DirectorMasuda, Tina202–283–8700tina.b.masuda@irs.gov
SPECIAL PROJECTS & ADMINISTRATION
Senior ManagerMantegani, Barbara202–283–2202barbara.j.mantegani@irs.gov
GROUP 1 — WASHINGTON, DC
China, India, Indonesia, Japan, Korea & Thailand
Senior ManagerO’Bryan, Ann202–283–8364ann.w.obryan@irs.gov
GROUP 2 — WASHINGTON, DC
DC & New York Economists
Senior ManagerKwiat, Russell
202–283–8549
russell.j.kwiat@irs.gov
GROUP 3 — WASHINGTON, DC
Australia, Germany, Israel, Kazakhstan, Netherlands, NewZealand, Russia & Ukraine
Senior ManagerCohen, Judith202–283–8402judith.c.cohen@irs.gov
GROUP 4 — SAN FRANCISCO, CA
Japan & South Africa
Senior ManagerRock, Peter
415–547–3776
peter.c.rock@irs.gov
GROUP 5 — WASHINGTON, DC
Austria, Belgium, Canada & Italy
Senior ManagerMarion, David202–283–8396david.marion@irs.gov
GROUP 7 — WASHINGTON, DC
Denmark, Ireland, Norway, Sweden, Switzerland & UK
Senior ManagerHughes, John202–283–8714john.c.hughes@irs.gov
GROUP 8 — WASHINGTON, DC
Argentina, Canada, Caribbean, Jamaica, Mexico, Portugal, Puerto Rico, Spain & Venezuela
Senior ManagerWood, Kenneth202–283–0893kenneth.w.wood@irs.gov
GROUP 9 — WASHINGTON, DC
Canada, France, Greece, Hungary, Romania & Turkey
Senior ManagerFouts, Patricia202–283–8301patricia.a.fouts@irs.gov
GROUP 10 — SAN FRANCISCO, CA
Guam, Japan, Morocco & Philippines
Senior ManagerJohnson, Fred
415–837–6682
fred.c.johnson@irs.gov
GROUP 11 — WASHINGTON, DC
DC & Chicago Economists
Senior ManagerDhawale, Hareesh202–283–8331hareesh.dhawale@irs.gov
GROUP 12 — LAGUNA NIGUEL, CA
Laguna Niguel & San Francisco Economists
Senior ManagerThayer, Victor
949–360–3435
victor.e.thayer@irs.gov
As of March 25, 2013
April 15, 20139392013–16 I.R.B.

Taxable Medical Devices;
Correction
Announcement 2013–23
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correction to final regulations.
SUMMARY: This document contains cor-
rections to final regulations (T.D. 9604,
2012–52 I.R.B. 730) that were published
in theFederal Registeron Friday, Decem-
ber 7, 2012 (77 FR 72924). The final regu-
lations provide guidance on the excise tax
imposed on the sale of certain medical de-
vices, enacted by the Health Care and Ed-
ucation Reconciliation Act of 2010 in con-
junction with the Patient Protection and
Affordable Care Act.
DATES: This correction is effective on
March 13, 2013, and is applicable after De-
cember 31, 2012.
FOR FURTHER INFORMATION
CONTACT:NataliePayne,
Michael Beker, or Stephanie Bland, at
(202) 622–3130 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final regulations (T.D. 9604) that
are the subject of thiscorrection is under
section 4191 of the Internal Revenue Code.
Need for Correction
As published, the final regulations
(T.D. 9604) contain errors that may prove
to be misleading and are in need of clarifi-
cation.
Correction of Publication
Accordingly, the final regulations (T.D.
9604), that are the subject of FR Doc.
2012–29628, are corrected as follows:
1. On page 72925, column 1, in the
preamble, under the paragraph heading
“Background”, second full paragraph of
the column, lines 2 through 9, the lan-
guage “regulations identified two issues
that the IRS and the Treasury Depart-
ment will study further and on which the
IRS and the Treasury Department have
requested additional comments. Those
issues are discussed later in this preamble.
Comments with regard to those issues
should be submitted in” is corrected to
read “regulations identified one issue that
the IRS and the Treasury Department will
study further and on which the IRS and the
Treasury Department have requested addi-
tional comments. That issue is discussed
later in this preamble. Comments with
regard to that issue should be submitted
in”.
2. On page 72926, column 2, in the pre-
amble, under the paragraph heading “Hu-
manitarian Use Devices”, line 6 from the
bottom of the column, the language “ex-
cluding HUDs from the definition of ” is
corrected to read “excluding HUDs from
the definition of a”.
3. On page 72927, column 3, under
the paragraph heading “Nonexclusivity of
Factors”, line 4 from the bottom of the
column, the language “the final regulations
include seven” is corrected to read “the
final regulations include eight”
4. On page 72928, column 2, under the
paragraph heading “Cost”, line 6 from the
bottom of the column, the language “used
in hospitals, doctors offices and” is cor-
rected to read “used in hospitals, doctors’
offices and”.
5. On page 72929, column 2, under the
paragraph heading “Documents Submitted
for FDA Notification or Approval”, line 3
from the top of the column, the language
“by the general public for individual use.”
is corrected to read “by the general public
at retail for individual use.”
6. On page 72929, column 3, under
the paragraph heading “Capped Rental De-
vices”, first full paragraph of the column,
line 2, the language “in consultation with
the Center for” is corrected to read “in con-
sultation with the Centers for”.
7. On page 72930, column 2, under
the paragraph heading “A. Proposed Reg-
ulations”, line 6, the language “of taxable
medical device to the FDA’s” is corrected
to read “of a taxable medical device to the
FDA’s”.
8. On page 72931, column 1, under
the paragraph heading “Installment Sales,
Leases, and Long-Term Contracts”, line 3
from the bottom of the column, the lan-
guage “Payments made pursuant to a con-
tract” is corrected to read “Payments made
on or after January 1, 2013, pursuant to a
contract”.
9. On page 72932, column 2, under the
paragraph heading “Consolidated Form
637 Registration”, line 3, the language
“effectuate tax-free sales. Several” is cor-
rected to read “effectuate tax-free sales for
further manufacture or export. Several”.
LaNita VanDyke,
Chief, Publications and
Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on March 12,
2013, 8:45 a.m., and published in the issue of the Federal
Register for March 13, 2013, 78 F.R. 15877)
Announcement of Disciplinary
Sanctions From the Office of
Professional Responsibility
Announcement 2013-26
The Office of Professional Responsi-
bility (OPR) announces recent 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
2013–16 I.R.B.940April 15, 2013

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—In lieu of a
disciplinary proceeding being instituted
or continued, an individual offered a con-
sent to one of these sanctions and OPR
accepted the offer. Typically, an offer
of consent will provide for: suspension
for an indefinite term; conditions that the
individual must observe during the sus-
pension; and the individual’s opportunity,
after a stated number of months, to file
with OPR a petition for reinstatement af-
firming compliance with the terms of the
consent and affirming current eligibility
to practice (i.e., an active professional
license or active enrollment status).
Suspended indefinitely by decision in
expedited proceeding, Suspended indef-
initely by default decision in expedited
proceeding, Suspended by consent in
expedited proceeding—OPR instituted
an expedited proceeding for suspension
(based on certain limited grounds, includ-
ing loss of a professional license for cause,
and criminal convictions).
OPR has authority to disclose the
grounds for disciplinary sanctions in these
situations: (1) an ALJ or the Secretary’s
delegate on appeal has issued a decision
on or after September 26, 2007, which
was the effective date of amendments to
the regulations that permit making such
decisions publicly available; (2) the indi-
vidual 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 reg-
ulations and to consent to the disclosure
of the individual’s own return information
related to the admitted violations (for ex-
ample, failure to file Federal income tax
returns); or (3) OPR has issued a decision
in an expedited proceeding for indefinite
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
Arizona
BuckeyeCarlson, Steven M.CPASuspended by default
decision in expedited
proceeding under § 10.82
(suspension of CPA
license in Washington
State)
Indefinite from
November 13, 2012
April 15, 20139412013–16 I.R.B.

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Camp VerdeAndre, Damian C.Enrolled AgentSuspended by default
decision in expedited
proceeding under § 10.82
(conviction under
Arizona law for fraud
and misrepresentation
concerning worker’s
compensation insurance)
Indefinite from
January 10, 2013
Arkansas
Ash FlatMorris, James B.Public AccountantSuspended by default
decision in expedited
proceeding under § 10.82
(conviction under 26
U.S.C. § 7206(2),
aiding and abetting
the preparation of false
income tax returns; 18
U.S.C. § 641, aiding and
abetting theft of social
security funds, 42 U.S.C
§ 408, concealment of
a material fact as to
social security funds, 18
U.S.C. § 641, theft of
veteran’s administration
funds, 18 U.S.C. § 371
conspiracy to defraud
the government, 10
U.S.C. § 1097, aiding and
abetting obtaining title IV
fundsbyfraudandfalse
statements; revocation
of Arkansas Public
Accountant license)
Indefinite from
November 13, 2012
Van BurenJenkins, Jr., Newton D. AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(suspension of attorney
license)
Indefinite from
January 7, 2013
California
LompocTannous, GeorgeEnrolled AgentSuspended by default
decision in expedited
proceeding under § 10.82
(conviction under 18
U.S.C. § 371, conspiracy,
and 26 U.S.C. § 7206,
subscribing to a false tax
return)
Indefinite from
November 13, 2012
2013–16 I.R.B.942April 15, 2013

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Santa MonicaKerekes, Michael S.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(conviction under 18
U.S.C. § 371, conspiracy,
and26U.S.C.§7201,
tax evasion in the USDC,
SDNY)
Indefinite from
January 10, 2013
District of Columbia
Assaraf, Steven M.,
See Maryland
Florida
HialeahSanders, BertaCPASuspended by default
decision in expedited
proceeding under § 10.82
(conviction under 18
U.S.C. § 1349, conspiracy
to commit bank fraud)
Indefinite from
November 13, 2012
Illinois
MoneeGalvin, Laura M.CPAReinstated to
practice before
the IRS, effective
December 3, 2012
South HollandIhejirika, ChristopherCPASuspended by default
decision in expedited
proceeding under § 10.82
(conviction under 26
U.S.C. § 7201, tax
evasion)
Indefinite from
November 13, 2012
Indiana
IndianapolisFreeman, Timothy D.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(suspension of attorney
license)
Indefinite from
January 16, 2013
IndianapolisSheedy, Stacy L.CPASuspended by default
decision in expedited
proceeding under § 10.82
(conviction under state
law, theft; receiving stolen
property)
Indefinite from
January 9, 2013
April 15, 20139432013–16 I.R.B.

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Maryland
Coppola, John M.,
See Virginia
BaltimoreGoldstein, David B.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment by
the Court of Appeals of
Maryland, and conviction
under 18 U.S.C. §§ 2252
and 2256, distribution
of visual depictions
of minors engaged in
sexually explicit conduct)
Indefinite from
November 9, 2012
BaltimoreStern, Gary F.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment by
the Court of Appeals of
Maryland)
Indefinite from
October 18, 2012
RockvilleAssaraf, Steven M.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment by
the Court of Appeals of
Maryland, and suspension
of attorney license in the
District of Columbia)
Indefinite from
November 9, 2012
Silver SpringRomanus, Joyce A.Enrolled AgentDisbarment by consent
for admitted violation of
§ 10.51 (failure to pay
Federal tax liability for
tax years 2007–2010,
failure to pay Employer’s
Quarterly Federal tax for
taxyears2009(3rdqtr.);
2010, 2011 (1st & 2nd
qtrs.)
Indefinite from
January 15, 2013
Massachusetts
ChathamEdgar, Charles M.CPASuspended by default
decision in expedited
proceeding under § 10.82
(revocation of CPA
license)
Indefinite from
January 9, 2013
KingstonLamond, III, John F.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(resignation in lieu of loss
of license for cause)
Indefinite from
November 13, 2012
2013–16 I.R.B.944April 15, 2013

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Mississippi
West PointHamilton, Gary C.CPASuspended by default
decision in expedited
proceeding under § 10.82
(conviction under 18
U.S.C. § 371 and 26
U.S.C. § 7201, conspiracy
to evade taxes, and
evade income taxes;
and revocation of CPA
license)
Indefinite from
January 10, 2013
Missouri
Maryland HtsBlack, Todd R.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment)
Indefinite from
January 22, 2013
Nebraska
OmahaKiroff, Mark A.CPASuspended by default
decision in expedited
proceeding under § 10.82
(revocation of CPA
license)
Indefinite from
August 7, 2012
Nevada
Las VegasTewolde, BenaymUnenrolled PreparerDisbarred by consent
for admitted violation of
§ 10.51(a) (disreputable
and incompetent conduct
which conduct renders
the practitioner unfit to
practice before the IRS)
Indefinite from
December 18, 2012
NewYork
Kerekes, Michael S.,
See California
New YorkPark, Sun H.Enrolled AgentSuspended by decision
in expedited proceeding
under § 10.82 (conviction
under 18 U.S.C. § 1341,
mail fraud, 18 U.S.C.
§ 1349 & 1344,
conspiracy to commit
bank fraud, 26 U.S.C.
§ 7206, aiding another
in the preparation and
presentation of a false
income tax return)
Indefinite from
October 31, 2012
April 15, 20139452013–16 I.R.B.

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
NorthCarolina
ButnerHarris, Ephrain D.Enrolled AgentSuspended by decision
in expedited proceeding
under § 10.82 (conviction
under 18 U.S.C. § 1346,
conspiracy to commit
mail and wire fraud in
USDC, EDVA)
Indefinite from
October 31, 2012
NorthDakota
FargoMcDonagh, Alan M.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(conviction under North
Dakota law, forgery
or counterfeiting; and
suspension of attorney
license)
Indefinite from
December 10, 2012
Ohio
Cleveland HeightsDrake, Charles C.CPASuspended by decision
in expedited proceeding
under § 10.82 (revocation
of CPA license)
Indefinite from
November 28, 2012
Tennessee
FranklinHeath, Stewart O.CPASuspended by default
decision in expedited
proceeding under § 10.82
(voluntarily revocation of
CPA license)
Indefinite from
November 13, 2012
Virginia
McLeanCoppola, John M.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment by
the Court of Appeals of
Maryland, and suspension
of attorney license)
Indefinite from
January 16, 2013
Harris, Ephrain D.,
See North Carolina
Washington
Carlson, Steven M.,
See Arizona
2013–16 I.R.B.946April 15, 2013

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 15, 2013i2013–16 I.R.B.

Numerical Finding List
1
Bulletins 2013–1 through 2013–16
Announcements:
2013-1, 2013-1 I.R.B.251
2013-2, 2013-2 I.R.B.271
2013-3, 2013-2 I.R.B.271
2013-4, 2013-4 I.R.B.440
2013-5, 2013-3 I.R.B.306
2013-6, 2013-3 I.R.B.307
2013-7, 2013-3 I.R.B.308
2013-8, 2013-4 I.R.B.440
2013-9, 2013-4 I.R.B.441
2013-10, 2013-3 I.R.B.311
2013-11, 2013-6 I.R.B.483
2013-12, 2013-11 I.R.B.651
2013-13, 2013-9 I.R.B.532
2013-14, 2013-11 I.R.B.651
2013-15, 2013-11 I.R.B.652
2013-16, 2013-14 I.R.B.738
2013-17, 2013-16 I.R.B.911
2013-19, 2013-14 I.R.B.760
2013-20, 2013-14 I.R.B.761
2013-23, 2013-16 I.R.B.940
2013-26, 2013-16 I.R.B.940
Notices:
2013-1, 2013-3 I.R.B.281
2013-2, 2013-6 I.R.B.473
2013-3, 2013-7 I.R.B.484
2013-4, 2013-9 I.R.B.527
2013-5, 2013-9 I.R.B.529
2013-6, 2013-10 I.R.B.540
2013-7, 2013-6 I.R.B.477
2013-8, 2013-7 I.R.B.486
2013-9, 2013-9 I.R.B.529
2013-10, 2013-8 I.R.B.503
2013-11, 2013-11 I.R.B.610
2013-12, 2013-10 I.R.B.543
2013-13, 2013-12 I.R.B.659
2013-14, 2013-13 I.R.B.712
2013-15, 2013-14 I.R.B.739
2013-16, 2013-14 I.R.B.740
2013-18, 2013-14 I.R.B.742
2013-19, 2013-14 I.R.B.743
2013-20, 2013-15 I.R.B.902
2013-21, 2013-15 I.R.B.903
2013-22, 2013-15 I.R.B.904
2013-23, 2013-16 I.R.B.906
2013-24, 2013-16 I.R.B.909
Proposed Regulations:
REG-155929-06, 2013-11 I.R.B.650
REG-106918-08, 2013-13 I.R.B.714
REG-141066-09, 2013-3 I.R.B.289
Proposed Regulations— Continued:
REG-148873-09, 2013-7 I.R.B.494
REG-102966-10, 2013-10 I.R.B.579
REG-140649-11, 2013-12 I.R.B.666
REG-118315-12, 2013-14 I.R.B.746
REG-122707-12, 2013-5 I.R.B.450
REG-148500-12, 2013-13 I.R.B.716
Revenue Procedures:
2013-1, 2013-1 I.R.B.1
2013-2, 2013-1 I.R.B.92
2013-3, 2013-1 I.R.B.113
2013-4, 2013-1 I.R.B.126
2013-5, 2013-1 I.R.B.170
2013-6, 2013-1 I.R.B.198
2013-7, 2013-1 I.R.B.233
2013-8, 2013-1 I.R.B.237
2013-9, 2013-2 I.R.B.255
2013-10, 2013-2 I.R.B.267
2013-11, 2013-2 I.R.B.269
2013-12, 2013-4 I.R.B.313
2013-13, 2013-6 I.R.B.478
2013-14, 2013-3 I.R.B.283
2013-15, 2013-5 I.R.B.444
2013-16, 2013-7 I.R.B.488
2013-17, 2013-11 I.R.B.612
2013-18, 2013-8 I.R.B.503
2013-19, 2013-11 I.R.B.648
2013-20, 2013-14 I.R.B.744
2013-21, 2013-12 I.R.B.660
Revenue Rulings:
2013-1, 2013-2 I.R.B.252
2013-2, 2013-10 I.R.B.533
2013-3, 2013-8 I.R.B.500
2013-4, 2013-9 I.R.B.520
2013-5, 2013-9 I.R.B.525
2013-6, 2013-13 I.R.B.701
2013-7, 2013-11 I.R.B.608
2013-8, 2013-15 I.R.B.763
2013-9, 2013-15 I.R.B.764
Tax Conventions:
2013-16, 2013-14 I.R.B.738
Treasury Decisions:
9601, 2013-10 I.R.B.535
9603, 2013-3 I.R.B.273
9605, 2013-11 I.R.B.587
9606, 2013-11 I.R.B.586
9607, 2013-6 I.R.B.469
9608, 2013-3 I.R.B.274
9609, 2013-12 I.R.B.655
9610, 2013-15 I.R.B.765
9611, 2013-13 I.R.B.699
9612, 2013-13 I.R.B.678
Treasury Decisions— Continued:
9613, 2013-15 I.R.B.900
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2012–27 through 2012–52 is in Internal Revenue Bulletin
2012–52, dated December 27, 2012.
2013–16 I.R.B.iiApril 15, 2013

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2013–1 through 2013–16
Announcements:
2012-42
Obsoleted by
T.D. 9610, 2013-15 I.R.B.765
Notices:
2000-45
Modified and superseded by
Notice 2013-18, 2013-14 I.R.B.742
2010-60
Obsoleted by
T.D. 9610, 2013-15 I.R.B.765
2011-14
Amplified and supplemented by
Notice 2013-7, 2013-6 I.R.B.477
2011-34
Obsoleted by
T.D. 9610, 2013-15 I.R.B.765
2011-38
Obsoleted by
REG-148873-09, 2013-7 I.R.B.494
2011-53
Obsoleted by
T.D. 9610, 2013-15 I.R.B.765
2012-60
Superseded by
Notice 2013-1, 2013-3 I.R.B.281
2013-1
Modified and superseded by
Notice 2013-16, 2013-14 I.R.B.740
Proposed Regulations:
REG-140668-07
Corrected by
Ann. 2013-6, 2013-3 I.R.B.307
Revenue Procedures:
87-57
Modified by
Rev. Proc. 2013-13, 2013-6 I.R.B.478
2004-66
Modified and superseded by
Rev. Proc. 2013-11, 2013-2 I.R.B.269
2008-35
Modified and superseded by
Rev. Proc. 2013-14, 2013-3 I.R.B.283
Revenue Procedures— Continued:
2008-50
Modified and superseded by
Rev. Proc. 2013-12, 2013-4 I.R.B.313
2011-14
Modified by
Rev. Proc. 2013-20, 2013-14 I.R.B.744
2011-49
Modified by
Rev. Proc. 2013-6, 2013-1 I.R.B.198
2011-52
Modified and partly superseded by
Rev. Proc. 2013-15, 2013-5 I.R.B.444
2011-55
Amplified and supplemented by
Notice 2013-7, 2013-6 I.R.B.477
2011-61
Superseded by
Rev. Proc. 2013-17, 2013-11 I.R.B.612
2011-62
Superseded by
Rev. Proc. 2013-18, 2013-8 I.R.B.503
2012-1
Superseded by
Rev. Proc. 2013-1, 2013-1 I.R.B.1
2012-2
Superseded by
Rev. Proc. 2013-2, 2013-1 I.R.B.92
2012-3
Superseded by
Rev. Proc. 2013-3, 2013-1 I.R.B.113
2012-4
Superseded by
Rev. Proc. 2013-4, 2013-1 I.R.B.126
2012-5
Superseded by
Rev. Proc. 2013-5, 2013-1 I.R.B.170
2012-6
Superseded by
Rev. Proc. 2013-6, 2013-1 I.R.B.198
2012-7
Superseded by
Rev. Proc. 2013-7, 2013-1 I.R.B.233
2012-8
Superseded by
Rev. Proc. 2013-8, 2013-1 I.R.B.237
2012-9
Superseded by
Rev. Proc. 2013-9, 2013-2 I.R.B.255
Revenue Procedures— Continued:
2012-10
Superseded by
Rev. Proc. 2013-10, 2013-2 I.R.B.267
2012-30
Corrected and clarified by
Ann. 2013-3, 2013-2 I.R.B.271
Updated by
Ann. 2013-10, 2013-3 I.R.B.311
2012-46
Corrected by
Ann. 2013-11, 2013-6 I.R.B.483
2013-1
Corrected by
Ann. 2013-9, 2013-4 I.R.B.441
2013-6
Revised by
Ann. 2013-15, 2013-11 I.R.B.652
Corrected by
Ann. 2013-13, 2013-9 I.R.B.532
2013-14
Modified by
Rev. Proc. 2013-19, 2013-11 I.R.B.648
Revenue Rulings:
92-19
Supplemented in part by
Rev. Rul. 2013-4, 2013-9 I.R.B.520
Treasury Decisions:
9564
Corrected by
Ann. 2013-4, 2013-4 I.R.B.440
Amended by
Ann. 2013-7, 2013-3 I.R.B.308
9604
Corrected by
Ann. 2013-19, 2013-14 I.R.B.760
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2012–27 through 2012–52 is in Internal Revenue Bulletin 2012–52, dated December 27,
2012.
April 15, 2013iii2013–16 I.R.B.

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ashington,DC20224
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INTERNAL REVENUE BULLETIN
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