Internal Revenue Bulletin 2015-13 (PDF rendition): IRS Notices

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# INTERNAL REVENUE BULLETIN

Bulletin No. 2015-13
March 30, 2015

## 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

### Notice 2015-27, page 816.

Notice to invite public comments to the Department of Trea-
sury and Internal Revenue Service on recommendations for
items that should be included on the 2015-2016 Guidance
Priority List.

## INCOME TAX

### REG-143040-14, page 827.

The proposed regulations provide guidance to brokers who (1)
must report OID income on a tax-exempt debt instrument, (2)
must take into account certain debt instrument elections when
computing basis, or (3) must prepare a transfer statement for
the transfer of a debt instrument or section 1256 option that is
a covered security.

### Rev. Rul. 2015-5, page 788.

Interest rates: underpayment and overpayments. The rates for
interest determined under section 6621 of the code for the
calendar quarter beginning April 1, 2015, will be 3 percent for
overpayments (2 percent in the case of a corporation), 3
percent for the underpayments, and 5 percent for large cor-
poration underpayments. The rate of interest paid on the por-
tion of a corporation overpayment exceeding $10,000 will be
0.5 percent.

### Rev. Rul. 2015-6, page 801.

Fringe benefits aircraft valuation formula. For purposes of
section 1.61-21(g) of the Income Tax Regulations, relating to
the rule for valuing non-commercial flights on employer-
provided aircraft, the Standard Industry Fare Level (SIFL) cents-
per-mile rates and terminal charge in effect for the first half of
2015 are set forth.

Finding Lists begin on page ii.

### Announcement 2015-7, page 823.

The Office of Professional Responsibility (OPR) announces re-
cent disciplinary sanctions involving attorneys, certified public
accountants, enrolled agents, enrolled actuaries, enrolled re-
tirement plan agents, and appraisers. These individuals are
subject to the regulations governing practice before the Inter-
nal Revenue Service (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 vio-
lating the regulations.

### Rev. Proc. 2015-23, page 820.

The proposed revenue procedure provides issuers of qualified
mortgage bonds, as defined in section 143(a) of the Internal
Revenue Code, and issuers of mortgage credit certificates as
defined in section 25(c), with the United States median gross
income figure most recently computed by the Department of
Housing and Urban Development (HUD). The proposed revenue
procedure also provides these issuers with guidance concern-
ing the area median gross incomes as computed by HUD.
Issuers of qualified mortgage bonds (QMB) and mortgage
credit certificates (MCC) must use these income figures in
determining whether the income limitation placed on the ben-
eficiaries of the mortgages and certificates may be increased
because the residences to be financed are located in high
housing cost areas. See sections 25(c)(A)(iii)(IV) and 143(f)(5).

### Rev. Proc. 2015-24, page 822.

Corrections to Rev. Proc. 2014-59, which prescribes the loss
payment patterns and discount factors for the 2014 accident
year. These factors are used to compute discounted unpaid
losses under § 846 of the Internal Revenue Code.

(Continued on the next page)

### Notice 2015-25, page 814.

Beginning of Construction for Sections 45 and 48. This notice
updates the guidance provided in Notice 2013-29, Notice
2013-60, and Notice 2014-46, to reflect the statutory ex-
tension by the Tax Increase Prevention Act of 2014, and also
extends the date for the deemed satisfaction of the Continuous
Construction or Continuous Efforts Tests.

### Notice 2015-26, page 814.

This notice explains how a State or local government amends
the nomination of an empowerment zone to provide for a new
termination date of December 31, 2014.

### T.D. 9713, page 802.

The final regulations provide guidance under section 6049 for
broker reporting of bond premium and acquisition premium.
The temporary regulations provide guidance under sections
6045, 6045A, and 6049 for broker reporting of certain trans-
actions involving debt instruments and options, including the
treatment of certain holder elections for reporting a taxpayer's
adjusted basis in a debt instrument, transfer reporting for
section 1256 options and debt instruments, and the reporting
of original issue discount on tax-exempt obligations.

## EMPLOYEE PLANS

### Notice 2015-24, page 811.

This notice sets forth updates on the corporate bond monthly
yield curve, the corresponding spot segment rates for Febru-
ary 2015 used under § 417(e)(3)(D), the 24-month average
segment rates applicable for March 2015, and the 30-year
Treasury rates. These rates reflect the application of
§ 430(h)(2)(C)(iv), which was added by the Moving Ahead for
Progress in the 21st Century Act, Public Law 112-141 (MAP-
21) and amended by section 2003 of the Highway and Trans-
portation Funding Act of 2014 (HATFA).

## EXEMPT ORGANIZATIONS

Rev. Proc. 2015-21, page 817.

This revenue procedure provides correction and disclosure
procedures under which failures to meet the additional require-
ments for charitable hospital organizations added by the Pa-
tient Protection and Affordable Care Act of 2010 will be ex-
cused. This revenue procedure affects charitable hospital
organizations.

## ESTATE TAX

### Announcement 2015-7, page 823.

## GIFT TAX

### Announcement 2015-7, page 823.

## EMPLOYMENT TAX

### Announcement 2015-7, page 823.

(Continued on the next page)

## SELF-EMPLOYMENT TAX

### Announcement 2015-7, page 823.

## EXCISE TAX

### Announcement 2015-7, page 823.

## ADMINISTRATIVE

### Rev. Proc. 2015-23, page 820.

## The IRS Mission

Provide America's taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.

## Introduction

The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all
substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of internal
management are not published; however, statements of inter-
nal 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, identify-
ing 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, Legisla-
tion 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 Sec-
retary (Enforcement).

### Part IV .- Items of General Interest.

This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index for
the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

## Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

### Section 846 .- Discounted Unpaid Losses Defined

The corrections to the loss discount factors pub-
lished in Rev. Proc. 2015-24, page 822.

### Section 6621 .- Determination of Rate of Interest

26 CFR 301.6621-1: Interest rate.

#### Rev. Rul. 2015-5

Section 6621 of the Internal Revenue
Code establishes the interest rates on over-
payments and underpayments of tax. Under
section 6621(a)(1), the overpayment rate is
the sum of the federal short-term rate plus 3
percentage points (2 percentage points in the
case of a corporation), except the rate for the
portion of a corporate overpayment of tax
exceeding $10,000 for a taxable period is
the sum of the federal short-term rate plus
0.5 of a percentage point. Under section
6621(a)(2), the underpayment rate is the
sum of the federal short-term rate plus 3
percentage points.

Section 6621(c) provides that for pur-
poses of interest payable under section 6601
on any large corporate underpayment, the
underpayment rate under section 6621(a)(2)
is determined by substituting “5 percentage
points" for "3 percentage points."

See section 6621(c) and section
301.6621-3 of the Regulations on Proce-
dure and Administration for the definition
of a large corporate underpayment and for
the rules for determining the applicable
date. Section 6621(c) and section

301.6621-3 are generally effective for pe-
riods after December 31, 1990.

Section 6621(b)(1) provides that the
Secretary will determine the federal short-
term rate for the first month in each calendar
quarter. Section 6621(b)(2)(A) provides that
the federal short-term rate determined under
section 6621(b)(1) for any month applies
during the first calendar quarter beginning
after that month. Section 6621(b)(2)(B) pro-
vides that in determining the addition to tax
under section 6654 for failure to pay esti-
mated tax for any taxable year, the federal
short-term rate that applies during the third
month following the taxable year also ap-
plies during the first 15 days of the 4th
month following the taxable year. Section
6621(b)(3) provides that the federal short-
term rate for any month is the federal short-
term rate determined during that month by
the Secretary in accordance with section
1274(d), rounded to the nearest full percent
(or, if a multiple of 1/2 of 1 percent, the rate
is increased to the next highest full percent).

Notice 88-59, 1988-1 C.B. 546, an-
nounced that in determining the quarterly
interest rates to be used for overpayments
and underpayments of tax under section
6621, the Internal Revenue Service will
use the federal short-term rate based on
daily compounding because that rate is
most consistent with section 6621 which,
pursuant to section 6622, is subject to
daily compounding.

The federal short-term rate determined
in accordance with section 1274(d) during
January 2015 is the rate published in Rev-
enue Ruling 2015-3, 2015-6 IRB 580 to
take effect beginning February 1, 2015.
The federal short-term rate, rounded to the
nearest full percent, based on daily com-

pounding determined during the month of
January 2015 is 0 percent. Accordingly,
an overpayment rate of 3 percent (2 per-
cent in the case of a corporation) and an
underpayment rate of 3 percent are estab-
lished for the calendar quarter beginning
April 1, 2015. The overpayment rate for
the portion of a corporate overpayment
exceeding $10,000 for the calendar quar-
ter beginning April 1, 2015 is 0.5 percent.
The underpayment rate for large corporate
underpayments for the calendar quarter
beginning April 1, 2015, is 5 percent.
These rates apply to amounts bearing in-
terest during that calendar quarter.

The 3 percent rate also applies to esti-
mated tax underpayments for the second
calendar quarter in 2015.

Interest factors for daily compound in-
terest for annual rates of 0.5 percent are
published in Appendix A of this Revenue
Ruling. Interest factors for daily com-
pound interest for annual rates of 2 per-
cent, 3 percent and 5 percent are published
in Tables 9, 11, and 15 of Rev. Proc.
95-17, 1995-1 C.B. 563, 565, and 569.

Annual interest rates to be com-
pounded daily pursuant to section 6622
that apply for prior periods are set forth
in the tables accompanying this revenue
ruling.

## DRAFTING INFORMATION

The principal author of this revenue
ruling is Deborah Colbert-James of the
Office of Associate Chief Counsel (Proce-
dure & Administration). For further infor-
mation regarding this revenue ruling, con-
tact Ms. Colbert-James at (202) 317-3400
(not a toll-free number).

### APPENDIX A

365 Day Year

Days

0.5% Compound Rate 184 Days

Factor

Days

Factor

Days

Factor

0.000013699

0.000863380

125

0.001713784

0.000027397

0.000877091

126

0.001727506

0.000041096

0.000890801

127

0.001741228

0.000054796

0.000904512

128

0.001754951

365 Day Year
0.5% Compound Rate 184 Days

Days

Factor

Days

Factor

Days

Factor

0.000068495

0.000918223

129

0.001768673

0.000082195

0.000931934

130

0.001782396

0.000095894

0.000945646

131

0.001796119

0.000109594

0.000959357

132

0.001809843

0.000123294

0.000973069

133

0.001823566

0.000136995

0.000986781

134

0.001837290

0.000150695

0.001000493

135

0.001851013

0.000164396

0.001014206

136

0.001864737

0.000178097

0.001027918

137

0.001878462

0.000191798

0.001041631

138

0.001892186

0.000205499

0.001055344

139

0.001905910

0.000219201

0.001069057

140

0.001919635

0.000232902

0.001082770

141

0.001933360

0.000246604

0.001096484

142

0.001947085

0.000260306

0.001110197

143

0.001960811

0.000274008

0.001123911

144

0.001974536

0.000287711

0.001137625

145

0.001988262

0.000301413

0.001151339

146

0.002001988

0.000315116

0.001165054

147

0.002015714

0.000328819

0.001178768

148

0.002029440

0.000342522

0.001192483

149

0.002043166

0.000356225

0.001206198

150

0.002056893

0.000369929

0.001219913

151

0.002070620

0.000383633

0.001233629

152

0.002084347

0.000397336

0.001247344

153

0.002098074

0.000411041

0.001261060

154

0.002111801

0.000424745

0.001274776

155

0.002125529

0.000438449

0.001288492

156

0.002139257

0.000452154

0.001302208

157

0.002152985

0.000465859

0.001315925

158

0.002166713

0.000479564

0.001329641

159

0.002180441

0.000493269

0.001343358

160

0.002194169

0.000506974

0.001357075

161

0.002207898

0.000520680

100

0.001370792

162

0.002221627

0.000534386

101

0.001384510

163

0.002235356

0.000548092

102

0.001398227

164

0.002249085

0.000561798

103

0.001411945

165

0.002262815

0.000575504

104

0.001425663

166

0.002276544

0.000589211

105

0.001439381

167

0.002290274

0.000602917

106

0.001453100

168

0.002304004

0.000616624

107

0.001466818

169

0.002317734

0.000630331

108

0.001480537

170

0.002331465

0.000644039

109

0.001494256

171

0.002345195

0.000657746

110

0.001507975

172

0.002358926

365 Day Year 0.5% Compound Rate 184 Days

Days

Factor

Days

Factor

Days

Factor

0.000671454

111

0.001521694

173

0.002372657

0.000685161

112

0.001535414

174

0.002386388

0.000698869

113

0.001549133

175

0.002400120

0.000712578

114

0.001562853

176

0.002413851

0.000726286

115

0.001576573

177

0.002427583

0.000739995

116

0.001590293

178

0.002441315

0.000753703

117

0.001604014

179

0.002455047

0.000767412

118

0.001617734

180

0.002468779

0.000781121

119

0.001631455

181

0.002482511

0.000794831

120

0.001645176

182

0.002496244

0.000808540

121

0.001658897

183

0.002509977

0.000822250

122

0.001672619

184

0.002523710

0.000835960

123

0.001686340

0.000849670

124

0.001700062

366 Day Year 0.5% Compound Rate 184 Days

Days

Factor

Days

Factor

Days

Factor

0.000013661

0.000861020

125

0.001709097

0.000027323

0.000874693

126

0.001722782

0.000040984

0.000888366

127

0.001736467

0.000054646

0.000902040

128

0.001750152

0.000068308

0.000915713

129

0.001763837

0.000081970

0.000929387

130

0.001777522

0.000095632

0.000943061

131

0.001791208

0.000109295

0.000956735

132

0.001804893

0.000122958

0.000970409

133

0.001818579

0.000136620

0.000984084

134

0.001832265

0.000150283

0.000997758

135

0.001845951

0.000163947

0.001011433

136

0.001859638

0.000177610

0.001025108

137

0.001873324

0.000191274

0.001038783

138

0.001887011

0.000204938

0.001052459

139

0.001900698

0.000218602

0.001066134

140

0.001914385

0.000232266

0.001079810

141

0.001928073

0.000245930

0.001093486

142

0.001941760

0.000259595

0.001107162

143

0.001955448

0.000273260

0.001120839

144

0.001969136

0.000286924

0.001134515

145

0.001982824

0.000300590

0.001148192

146

0.001996512

0.000314255

0.001161869

147

0.002010201

0.000327920

0.001175546

148

0.002023889

0.000341586

0.001189223

149

0.002037578

#### 366 Day Year 0.5% Compound Rate 184 Days

Days

Factor

Days

Factor

Days

Factor

0.000355252

0.001202900

150

0.002051267

0.000368918

0.001216578

151

0.002064957

0.000382584

0.001230256

152

0.002078646

0.000396251

0.001243934

153

0.002092336

0.000409917

0.001257612

154

0.002106025

0.000423584

0.001271291

155

0.002119715

0.000437251

0.001284969

156

0.002133405

0.000450918

0.001298648

157

0.002147096

0.000464586

0.001312327

158

0.002160786

0.000478253

0.001326006

159

0.002174477

0.000491921

0.001339685

160

0.002188168

0.000505589

0.001353365

161

0.002201859

0.000519257

100

0.001367044

162

0.002215550

0.000532925

101

0.001380724

163

0.002229242

0.000546594

102

0.001394404

164

0.002242933

0.000560262

103

0.001408085

165

0.002256625

0.000573931

104

0.001421765

166

0.002270317

0.000587600

105

0.001435446

167

0.002284010

0.000601269

106

0.001449127

168

0.002297702

0.000614939

107

0.001462808

169

0.002311395

0.000628608

108

0.001476489

170

0.002325087

0.000642278

109

0.001490170

171

0.002338780

0.000655948

110

0.001503852

172

0.002352473

0.000669618

111

0.001517533

173

0.002366167

0.000683289

112

0.001531215

174

0.002379860

0.000696959

113

0.001544897

175

0.002393554

0.000710630

114

0.001558580

176

0.002407248

0.000724301

115

0.001572262

177

0.002420942

0.000737972

116

0.001585945

178

0.002434636

0.000751643

117

0.001599628

179

0.002448331

0.000765315

118

0.001613311

180

0.002462025

0.000778986

119

0.001626994

181

0.002475720

0.000792658

120

0.001640678

182

0.002489415

0.000806330

121

0.001654361

183

0.002503110

0.000820003

122

0.001668045

184

0.002516806

0.000833675

123

0.001681729

0.000847348

124

0.001695413

# TABLE OF INTEREST RATES PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986 OVERPAYMENTS AND UNDERPAYMENTS

In 1995-1 C.B.

PERIOD

RATE

DAILY RATE TABLE

Before Jul. 1, 1975

Table 2, pg. 557

Jul. 1, 1975-Jan. 31, 1976

Table 4, pg. 559

Feb. 1, 1976-Jan. 31, 1978

Table 3, pg. 558

Feb. 1, 1978-Jan. 31, 1980

Table 2, pg. 557

Feb. 1, 1980-Jan. 31, 1982

12%

Table 5, pg. 560

Feb. 1, 1982-Dec. 31, 1982

20%

Table 6, pg. 560

Jan. 1, 1983-Jun. 30, 1983

16%

Table 37, pg. 591

Jul. 1, 1983-Dec. 31, 1983

11%

Table 27, pg. 581

Jan. 1, 1984-Jun. 30, 1984

11%

Table 75, pg. 629

Jul. 1, 1984-Dec. 31, 1984

11%

Table 75, pg. 629

Jan. 1, 1985-Jun. 30, 1985

13%

Table 31, pg. 585

Jul. 1, 1985-Dec. 31, 1985

11%

Table 27, pg. 581

Jan. 1, 1986-Jun. 30, 1986

10%

Table 25, pg. 579

Jul. 1, 1986-Dec. 31, 1986

Table 23, pg. 577

TABLE OF INTEREST RATES FROM JAN. 1, 1987 - DEC. 31, 1998 OVERPAYMENTS UNDERPAYMENTS

RATE

1995-1 C.B. TABLE

RATE

1995-1 C.B. TABLE

Jan. 1, 1987-Mar. 31, 1987

575

577

Apr. 1, 1987-Jun. 30, 1987

575

577

Jul. 1, 1987-Sep. 30, 1987

575

577

Oct. 1, 1987-Dec. 31, 1987

577

10%

579

Jan. 1, 1988-Mar. 31, 1988

10%

627

11%

629

Apr. 1, 1988-Jun. 30, 1988

625

10%

627

Jul. 1, 1988-Sep. 30, 1988

625

10%

627

Oct. 1, 1988-Dec. 31, 1988

10%

627

11%

629

Jan. 1, 1989-Mar. 31, 1989

10%

579

11%

581

Apr. 1, 1989-Jun. 30, 1989

11%

581

12%

583

Jul. 1, 1989-Sep. 30, 1989

11%

581

12%

583

Oct. 1, 1989-Dec. 31, 1989

10%

579

11%

581

Jan. 1, 1990-Mar. 31, 1990

10%

579

11%

581

Apr. 1, 1990-Jun. 30, 1990

10%

579

11%

581

Jul. 1, 1990-Sep. 30, 1990

10%

579

11%

581

Oct. 1, 1990-Dec. 31, 1990

10%

579

11%

581

Jan. 1, 1991-Mar. 31, 1991

10%

579

11%

581

Apr. 1, 1991-Jun. 30, 1991

577

10%

579

Jul. 1, 1991-Sep. 30, 1991

577

10%

579

Oct. 1, 1991-Dec. 31, 1991

577

10%

579

Jan. 1, 1992-Mar. 31, 1992

623

625

TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS

TABLE OF INTEREST RATES FROM JAN. 1, 1987 - DEC. 31, 1998 OVERPAYMENTS UNDERPAYMENTS 1995-1 C.B. 1995-1 C.B. RATE TABLE PG RATE TABLE PG

Apr. 1, 1992-Jun. 30, 1992

621

623

Jul. 1, 1992-Sep. 30, 1992

621

623

Oct. 1, 1992-Dec. 31, 1992

619

621

Jan. 1, 1993-Mar. 31, 1993

571

573

Apr. 1, 1993-Jun. 30, 1993

571

573

Jul. 1, 1993-Sep. 30, 1993

571

573

Oct. 1, 1993-Dec. 31, 1993

571

573

Jan. 1, 1994-Mar. 31, 1994

571

573

Apr. 1, 1994-Jun. 30, 1994

571

573

Jul. 1, 1994-Sep. 30, 1994

573

575

Oct. 1, 1994-Dec. 31, 1994

575

577

Jan. 1, 1995-Mar. 31, 1995

575

577

Apr. 1, 1995-Jun. 30, 1995

577

10%

579

Jul. 1, 1995-Sep. 30, 1995

575

577

Oct. 1, 1995-Dec. 31, 1995

575

577

Jan. 1, 1996-Mar. 31, 1996

623

625

Apr. 1, 1996-Jun. 30, 1996

621

623

Jul. 1, 1996-Sep. 30, 1996

623

625

Oct. 1, 1996-Dec. 31, 1996

623

625

Jan. 1, 1997-Mar. 31, 1997

575

577

Apr. 1, 1997-Jun. 30, 1997

575

577

Jul. 1, 1997-Sep. 30, 1997

575

577

Oct. 1, 1997-Dec. 31, 1997

575

577

Jan. 1, 1998-Mar. 31, 1998

575

577

Apr. 1, 1998-Jun. 30, 1998

573

575

Jul. 1, 1998-Sep. 30, 1998

573

575

Oct. 1, 1998-Dec. 31, 1998

573

575

RATE

1995-1 C.B. TABLE

PAGE

Jan. 1, 1999-Mar. 31, 1999

573

Apr. 1, 1999-Jun. 30, 1999

575

Jul. 1, 1999-Sep. 30, 1999

575

Oct. 1, 1999-Dec. 31, 1999

575

Jan. 1, 2000-Mar. 31, 2000

623

Apr. 1, 2000-Jun. 30, 2000

625

Jul. 1, 2000-Sep. 30, 2000

625

Oct. 1, 2000-Dec. 31, 2000

625

# TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS

RATE

1995-1 C.B. TABLE

PAGE

Jan. 1, 2001-Mar. 31, 2001

577

Apr. 1, 2001-Jun. 30, 2001

575

Jul. 1, 2001-Sep. 30, 2001

573

Oct. 1, 2001-Dec. 31, 2001

573

Jan. 1, 2002-Mar. 31, 2002

571

Apr. 1, 2002-Jun. 30, 2002

571

Jul. 1, 2002-Sep. 30, 2002

571

Oct. 1, 2002-Dec. 31, 2002

571

Jan. 1, 2003-Mar. 31, 2003

569

Apr. 1, 2003-Jun. 30, 2003

569

Jul. 1, 2003-Sep. 30, 2003

569

Oct. 1, 2003-Dec. 31, 2003

567

Jan. 1, 2004-Mar. 31, 2004

615

Apr. 1, 2004-Jun. 30, 2004

617

Jul. 1, 2004-Sep. 30, 2004

615

Oct. 1, 2004-Dec. 31, 2004

617

Jan. 1, 2005-Mar. 31, 2005

569

Apr. 1, 2005-Jun. 30, 2005

571

Jul. 1, 2005-Sep. 30, 2005

571

Oct. 1, 2005-Dec. 31, 2005

573

Jan. 1, 2006-Mar. 31, 2006

573

Apr. 1, 2006-Jun. 30, 2006

573

Jul. 1, 2006-Sep. 30, 2006

575

Oct. 1, 2006-Dec. 31, 2006

575

Jan. 1, 2007-Mar. 31, 2007

575

Apr. 1, 2007-Jun. 30, 2007

575

Jul. 1, 2007-Sep. 30, 2007

575

Oct. 1, 2007-Dec. 31, 2007

575

Jan. 1, 2008-Mar. 31, 2008

621

Apr. 1, 2008-Jun. 30, 2008

619

Jul. 1, 2008-Sep. 30, 2008

617

Oct. 1, 2008-Dec. 31, 2008

619

Jan. 1, 2009-Mar. 31, 2009

569

Apr. 1, 2009-Jun. 30, 2009

567

Jul. 1, 2009-Sep. 30, 2009

567

Oct. 1, 2009-Dec. 31, 2009

567

Jan. 1, 2010-Mar. 31, 2010

567

Apr. 1, 2010-Jun. 30, 2010

567

Jul. 1, 2010-Sep. 30, 2010

567

Oct. 1, 2010-Dec. 31, 2010

567

Jan. 1, 2011-Mar. 31, 2011

565

Apr. 1, 2011-Jun. 30, 2011

567

## TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS

RATE

1995-1 C.B. TABLE

PAGE

Jul. 1, 2011-Sep. 30, 2011

567

Oct. 1, 2011-Dec. 31, 2011

565

Jan. 1, 2012-Mar. 31, 2012

613

Apr. 1, 2012-Jun. 30, 2012

613

Jul. 1, 2012-Sep. 30, 2012

613

Oct. 1, 2012-Dec. 31, 2012

613

Jan. 1, 2013-Mar. 31, 2013

565

Apr. 1, 2013-Jun. 30, 2013

565

Jul. 1, 2013-Sep. 30, 2013

565

Oct. 1, 2013-Dec. 31, 2013

565

Jan. 1, 2014-Mar. 31, 2014

565

Apr. 1, 2014-Jun. 30, 2014

565

Jul. 1, 2014-Sep. 30, 2014

565

Oct. 1, 2014-Dec. 31, 2014

565

Jan. 1, 2015-Mar. 31, 2015

565

Apr. 1, 2015-Jun. 30, 2015

565

TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT CORPORATE OVERPAYMENTS AND UNDERPAYMENTS

OVERPAYMENTS

UNDERPAYMENTS

RATE

1995-1 C.B. TABLE

RATE

1995-1 C.B. TABLE

Jan. 1, 1999-Mar. 31, 1999

571

573

Apr. 1, 1999-Jun. 30, 1999

573

575

Jul. 1, 1999-Sep. 30, 1999

573

575

Oct. 1, 1999-Dec. 31, 1999

573

575

Jan. 1, 2000-Mar. 31, 2000

621

623

Apr. 1, 2000-Jun. 30, 2000

623

625

Jul. 1, 2000-Sep. 30, 2000

623

625

Oct. 1, 2000-Dec. 31, 2000

623

625

Jan. 1, 2001-Mar. 31, 2001

575

577

Apr. 1, 2001-Jun. 30, 2001

573

575

Jul. 1, 2001-Sep. 30, 2001

571

573

Oct. 1, 2001-Dec. 31, 2001

571

573

Jan. 1, 2002-Mar. 31, 2002

569

571

Apr. 1, 2002-Jun. 30, 2002

569

571

Jul. 1, 2002-Sep. 30, 2002

569

571

Oct. 1, 2002-Dec. 31, 2002

569

571

Jan. 1, 2003-Mar. 31, 2003

567

569

Apr. 1, 2003-Jun. 30, 2003

567

569

# TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT CORPORATE OVERPAYMENTS AND UNDERPAYMENTS

OVERPAYMENTS

UNDERPAYMENTS

RATE

1995-1 C.B. TABLE

RATE

1995-1 C.B. TABLE

Jul. 1, 2003-Sep. 30, 2003

567

569

Oct. 1, 2003-Dec. 31, 2003

565

567

Jan. 1, 2004-Mar. 31, 2004

613

615

Apr. 1, 2004-Jun. 30, 2004

615

617

Jul. 1, 2004-Sep. 30, 2004

613

615

Oct. 1, 2004-Dec. 31, 2004

615

617

Jan. 1, 2005-Mar. 31, 2005

567

569

Apr. 1, 2005-Jun. 30, 2005

569

571

Jul. 1, 2005-Sep. 30, 2005

569

571

Oct. 1, 2005-Dec. 31, 2005

571

573

Jan. 1, 2006-Mar. 31, 2006

571

573

Apr. 1, 2006-Jun. 30, 2006

571

573

Jul. 1, 2006-Sep. 30, 2006

573

575

Oct. 1, 2006-Dec. 31, 2006

573

575

Jan. 1, 2007-Mar. 31, 2007

573

575

Apr. 1, 2007-Jun. 30, 2007

573

575

Jul. 1, 2007-Sep. 30, 2007

573

575

Oct. 1, 2007-Dec. 31, 2007

573

575

Jan. 1, 2008-Mar. 31, 2008

619

621

Apr. 1, 2008-Jun. 30, 2008

617

619

Jul. 1, 2008-Sep. 30, 2008

615

617

Oct. 1, 2008-Dec. 31, 2008

617

619

Jan. 1, 2009-Mar. 31, 2009

567

569

Apr. 1, 2009-Jun. 30, 2009

565

567

Jul. 1, 2009-Sep. 30, 2009

565

567

Oct. 1, 2009-Dec. 31, 2009

565

567

Jan. 1, 2010-Mar. 31, 2010

565

567

Apr. 1, 2010-Jun. 30, 2010

565

567

Jul. 1, 2010-Sep. 30, 2010

565

567

Oct. 1, 2010-Dec. 31, 2010

565

567

Jan. 1, 2011-Mar. 31, 2011

563

565

Apr. 1, 2011-Jun. 30, 2011

565

567

Jul. 1, 2011-Sep. 30, 2011

565

567

Oct. 1, 2011-Dec. 31, 2011

563

565

Jan. 1, 2012-Mar. 31, 2012

611

613

Apr. 1, 2012-Jun. 30, 2012

611

613

Jul. 1, 2012-Sep. 30, 2012

611

613

Oct. 1, 2012-Dec. 31, 2012

611

613

Jan. 1, 2013-Mar. 31, 2013

563

565

Apr. 1, 2013-Jun. 30, 2013

563

565

Jul. 1, 2013-Sep. 30, 2013

563

565

## TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT CORPORATE OVERPAYMENTS AND UNDERPAYMENTS

OVERPAYMENTS

UNDERPAYMENTS

RATE

1995-1 C.B. TABLE

RATE

1995-1 C.B. TABLE

Oct. 1, 2013-Dec. 31, 2013

563

565

Jan. 1, 2014-Mar. 31, 2014

563

565

Apr. 1, 2014-Jun. 30, 2014

563

565

Jul. 1, 2014-Sep. 30, 2014

563

565

Oct. 1, 2014-Dec. 31, 2014

563

565

Jan. 1, 2015-Mar. 31, 2015

563

565

Apr. 1, 2015-Jun. 30, 2015

563

565

TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS FROM JANUARY 1, 1991 - PRESENT

RATE

1995-1 C.B.

TABLE

Jan. 1, 1991-Mar. 31, 1991

13%

585

Apr. 1, 1991-Jun. 30, 1991

12%

583

Jul. 1, 1991-Sep. 30, 1991

12%

583

Oct. 1, 1991-Dec. 31, 1991

12%

583

Jan. 1, 1992-Mar. 31, 1992

11%

629

Apr. 1, 1992-Jun. 30, 1992

10%

627

Jul. 1, 1992-Sep. 30, 1992

10%

627

Oct. 1, 1992-Dec. 31, 1992

625

Jan. 1, 1993-Mar. 31, 1993

577

Apr. 1, 1993-Jun. 30, 1993

577

Jul. 1, 1993-Sep. 30, 1993

577

Oct. 1, 1993-Dec. 31, 1993

577

Jan. 1, 1994-Mar. 31, 1994

577

Apr. 1, 1994-Jun. 30, 1994

577

Jul. 1, 1994-Sep. 30, 1994

10%

579

Oct. 1, 1994-Dec. 31, 1994

11%

581

Jan. 1, 1995-Mar. 31, 1995

11%

581

Apr. 1, 1995-Jun. 30, 1995

12%

583

Jul. 1, 1995-Sep. 30, 1995

11%

581

Oct. 1, 1995-Dec. 31, 1995

11%

581

Jan. 1, 1996-Mar. 31, 1996

11%

629

Apr. 1, 1996-Jun. 30, 1996

10%

627

Jul. 1, 1996-Sep. 30, 1996

11%

629

Oct. 1, 1996-Dec. 31, 1996

11%

629

Jan. 1, 1997-Mar. 31, 1997

11%

581

Apr. 1, 1997-Jun. 30, 1997

11%

581

Jul. 1, 1997-Sep. 30, 1997

11%

581

## TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS FROM JANUARY 1, 1991 - PRESENT

RATE

1995-1 C.B. TABLE

Oct. 1, 1997-Dec. 31, 1997

11%

581

Jan. 1, 1998-Mar. 31, 1998

11%

581

Apr. 1, 1998-Jun. 30, 1998

10%

579

Jul. 1, 1998-Sep. 30, 1998

10%

579

Oct. 1, 1998-Dec. 31, 1998

10%

579

Jan. 1, 1999-Mar. 31, 1999

577

Apr. 1, 1999-Jun. 30, 1999

10%

579

Jul. 1, 1999-Sep. 30, 1999

10%

579

Oct. 1, 1999-Dec. 31, 1999

10%

579

Jan. 1, 2000-Mar. 31, 2000

10%

627

Apr. 1, 2000-Jun. 30, 2000

11%

629

Jul. 1, 2000-Sep. 30, 2000

11%

629

Oct. 1, 2000-Dec. 31, 2000

11%

629

Jan. 1, 2001-Mar. 31, 2001

11%

581

Apr. 1, 2001-Jun. 30, 2001

10%

579

Jul. 1, 2001-Sep. 30, 2001

577

Oct. 1, 2001-Dec. 31, 2001

577

Jan. 1, 2002-Mar. 31, 2002

575

Apr. 1, 2002-Jun. 30, 2002

575

Jul. 1, 2002-Sep. 30, 2002

575

Oct. 1, 2002-Dec. 31, 2002

575

Jan. 1, 2003-Mar. 31, 2003

573

Apr. 1, 2003-Jun. 30, 2003

573

Jul. 1, 2003-Sep. 30, 2003

573

Oct. 1, 2003-Dec. 31, 2003

571

Jan. 1, 2004-Mar. 31, 2004

619

Apr. 1, 2004-Jun. 30, 2004

621

Jul. 1, 2004-Sep. 30, 2004

619

Oct. 1, 2004-Dec. 31, 2004

621

Jan. 1, 2005-Mar. 31, 2005

573

Apr. 1, 2005-Jun. 30, 2005

575

Jul. 1, 2005-Sep. 30, 2005

575

Oct. 1, 2005-Dec. 31, 2005

577

Jan. 1, 2006-Mar. 31, 2006

577

Apr. 1, 2006-Jun. 30, 2006

577

Jul. 1, 2006-Sep. 30, 2006

10%

579

Oct. 1, 2006-Dec. 31, 2006

10%

579

Jan. 1, 2007-Mar. 31, 2007

10%

579

Apr. 1, 2007-Jun. 30, 2007

10%

579

Jul. 1, 2007-Sep. 30, 2007

10%

579

Oct. 1, 2007-Dec. 31, 2007

10%

579

Jan. 1, 2008-Mar. 31, 2008

625

Apr. 1, 2008-Jun. 30, 2008

623

# TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS FROM JANUARY 1, 1991 - PRESENT

RATE

1995-1 C.B. TABLE

Jul. 1, 2008-Sep. 30, 2008

621

Oct. 1, 2008-Dec. 31, 2008

623

Jan. 1, 2009-Mar. 31, 2009

573

Apr. 1, 2009-Jun. 30, 2009

571

Jul. 1, 2009-Sep. 30, 2009

571

Oct. 1, 2009-Dec. 31, 2009

571

Jan. 1, 2010-Mar. 31, 2010

571

Apr. 1, 2010-Jun. 30, 2010

571

Jul. 1, 2010-Sep. 30, 2010

571

Oct. 1, 2010-Dec. 31, 2010

571

Jan. 1, 2011-Mar. 31, 2011

569

Apr. 1, 2011-Jun. 30, 2011

571

Jul. 1, 2011-Sep. 30, 2011

571

Oct. 1, 2011-Dec. 31, 2011

569

Jan. 1, 2012-Mar. 31, 2012

617

Apr. 1, 2012-Jun. 30, 2012

617

Jul. 1, 2012-Sep. 30, 2012

617

Oct. 1, 2012-Dec. 31, 2012

617

Jan. 1, 2013-Mar. 31, 2013

569

Apr. 1, 2013-Jun. 30, 2013

569

Jul. 1, 2013-Sep. 30, 2013

569

Oct. 1, 2013-Dec. 31, 2013

569

Jan. 1, 2014-Mar. 31, 2014

569

Apr. 1, 2014-Jun. 30, 2014

569

Jul. 1, 2014-Sep. 30, 2014

569

Oct. 1, 2014-Dec. 31, 2014

569

Jan. 1, 2015-Mar. 31, 2015

569

Apr. 1, 2015-Jun. 30, 2015

569

TABLE OF INTEREST RATES FOR CORPORATE OVERPAYMENTS EXCEEDING $10,000 FROM JANUARY 1, 1995 - PRESENT

RATE

1995-1 C.B. TABLE

Jan. 1, 1995-Mar. 31, 1995

6.5%

572

Apr. 1, 1995-Jun. 30, 1995

7.5%

574

Jul. 1, 1995-Sep. 30, 1995

6.5%

572

Oct. 1, 1995-Dec. 31, 1995

6.5%

572

Jan. 1, 1996-Mar. 31, 1996

6.5%

620

Apr. 1, 1996-Jun. 30, 1996

5.5%

618

Jul. 1, 1996-Sep. 30, 1996

6.5%

620

Oct. 1, 1996-Dec. 31, 1996

6.5%

620

# TABLE OF INTEREST RATES FOR CORPORATE OVERPAYMENTS EXCEEDING $10,000 FROM JANUARY 1, 1995 - PRESENT

RATE

1995-1 C.B. TABLE

Jan. 1, 1997-Mar. 31, 1997

6.5%

572

Apr. 1, 1997-Jun. 30, 1997

6.5%

572

Jul. 1, 1997-Sep. 30, 1997

6.5%

572

Oct. 1, 1997-Dec. 31, 1997

6.5%

572

Jan. 1, 1998-Mar. 31, 1998

6.5%

572

Apr. 1, 1998-Jun. 30, 1998

5.5%

570

Jul. 1. 1998-Sep. 30, 1998

5.5%

570

Oct. 1, 1998-Dec. 31, 1998

5.5%

570

Jan. 1, 1999-Mar. 31, 1999

4.5%

568

Apr. 1, 1999-Jun. 30, 1999

5.5%

570

Jul. 1, 1999-Sep. 30, 1999

5.5%

570

Oct. 1, 1999-Dec. 31, 1999

5.5%

570

Jan. 1, 2000-Mar. 31, 2000

5.5%

618

Apr. 1, 2000-Jun. 30, 2000

6.5%

620

Jul. 1, 2000-Sep. 30, 2000

6.5%

620

Oct. 1, 2000-Dec. 31, 2000

6.5%

620

Jan. 1, 2001-Mar. 31, 2001

6.5%

572

Apr. 1, 2001-Jun. 30, 2001

5.5%

570

Jul. 1, 2001-Sep. 30, 2001

4.5%

568

Oct. 1, 2001-Dec. 31, 2001

4.5%

568

Jan. 1, 2002-Mar. 31, 2002

3.5%

566

Apr. 1, 2002-Jun. 30, 2002

3.5%

566

Jul. 1, 2002-Sep. 30, 2002

3.5%

566

Oct. 1, 2002-Dec. 31, 2002

3.5%

566

Jan. 1, 2003-Mar. 31, 2003

2.5%

564

Apr. 1, 2003-Jun. 30, 2003

2.5%

564

Jul. 1, 2003-Sep. 30, 2003

2.5%

564

Oct. 1, 2003-Dec. 31, 2003

1.5%

562

Jan. 1, 2004-Mar. 31, 2004

1.5%

610

Apr. 1, 2004-Jun. 30, 2004

2.5%

612

Jul. 1, 2004-Sep. 30, 2004

1.5%

610

Oct. 1, 2004-Dec. 31, 2004

2.5%

612

Jan. 1, 2005-Mar. 31, 2005

2.5%

564

Apr. 1, 2005-Jun. 30, 2005

3.5%

566

Jul. 1, 2005-Sep. 30, 2005

3.5%

566

Oct. 1, 2005-Dec. 31, 2005

4.5%

568

Jan. 1, 2006-Mar. 31, 2006

4.5%

568

Apr. 1, 2006-Jun. 30, 2006

4.5%

568

Jul. 1, 2006-Sep. 30, 2006

5.5%

570

Oct. 1, 2006-Dec. 31, 2006

5.5%

570

Jan. 1, 2007-Mar. 31, 2007

5.5%

570

Apr. 1, 2007-Jun. 30, 2007

5.5%

570

Jul. 1, 2007-Sep. 30, 2007

5.5%

570

TABLE OF INTEREST RATES FOR CORPORATE OVERPAYMENTS EXCEEDING $10,000 FROM JANUARY 1, 1995 - PRESENT

1995-1 C.B.

RATE

TABLE

Oct. 1, 2007-Dec. 31, 2007

5.5%

570

Jan. 1, 2008-Mar. 31, 2008

4.5%

616

Apr. 1, 2008-Jun. 30, 2008

3.5%

614

Jul. 1, 2008-Sep. 30, 2008

2.5%

612

Oct. 1, 2008-Dec. 31, 2008

3.5%

614

Jan. 1, 2009-Mar. 31, 2009

2.5%

564

Apr. 1, 2009-Jun. 30, 2009

1.5%

562

Jul. 1, 2009-Sep. 30, 2009

1.5%

562

Oct. 1, 2009-Dec. 31, 2009

1.5%

562

Jan. 1, 2010-Mar. 31, 2010

1.5%

562

Apr. 1, 2010-Jun. 30, 2010

1.5%

562

Jul. 1, 2010-Sep. 30, 2010

1.5%

562

Oct. 1, 2010-Dec. 31, 2010

1.5%

562

Jan. 1, 2011-Mar. 31, 2011

0.5%*

Apr. 1, 2011-Jun. 30, 2011

1.5%

562

Jul. 1, 2011-Sep. 30, 2011

1.5%

562

Oct. 1, 2011-Dec. 31, 2011

0.5%*

Jan. 1, 2012-Mar. 31, 2012

0.5%*

Apr. 1, 2012-Jun. 30, 2012

0.5%*

Jul. 1, 2012-Sep. 30, 2012

0.5%*

Oct. 1, 2012-Dec. 31, 2012

0.5%*

Jan. 1, 2013-Mar. 31, 2013

0.5%*

Apr. 1, 2013-Jun. 30, 2013

0.5%*

Jul. 1, 2013-Sep. 30, 2013

0.5%*

Oct. 1, 2013-Dec. 31, 2013

0.5%*

Jan. 1, 2014-Mar. 31, 2014

0.5%*

Apr. 1, 2014-Jun. 30, 2014

0.5%*

Jul. 1, 2014-Sep. 30, 2014

0.5%*

Oct. 1, 2014-Dec. 31, 2014

0.5%*

Jan. 1, 2015-Mar. 31, 2015

0.5%*

Apr. 1, 2015-Jun. 30, 2015

0.5%*

* The asterisk reflects the interest factors for daily compound interest for annual rates of 0.5 percent are published in Ap- pendix A of this Revenue Ruling.

# Section 61.Gross Income Defined

26 CFR 1.61-21: Taxation of fringe benefits.

# Rev. Rul. 2015-6

For purposes of the taxation of fringe
benefits under section 61 of the Internal

Revenue Code, section 1.61-21(g) of
the Income Tax Regulations provides a
rule for valuing noncommercial flights
on employer-provided aircraft. Section
1.61-21(g)(5) provides an aircraft valu-
ation formula to determine the value of
such flights. The value of a flight is
determined under the base aircraft val-
uation formula (also known as the Stan-

dard Industry Fare Level formula or
SIFL) by multiplying the SIFL cents-
per-mile rates applicable for the period
during which the flight was taken by the
appropriate aircraft multiple provided in
section 1.61-21(g)(7) and then adding
the applicable terminal charge. The
SIFL cents-per-mile rates in the formula
and the terminal charge are calculated

by the Department of Transportation
and are reviewed semi-annually.

The following chart sets forth the ter-
minal charge and SIFL mileage rates:

Period During Which the Flight Is Taken

Terminal Charge

SIFL Mileage Rates

1/1/15-6/30/15

$45.52

Up to 500 miles = $.2490 per mile 501-1500 miles = $.1898 per mile Over 1500 miles = $.1825 per mile

# DRAFTING INFORMATION

The principal author of this revenue
ruling is Kathleen Edmondson of the
Office of Associate Chief Counsel (Tax
Exempt/Government Entities). For fur-
ther information regarding this revenue
ruling, contact Ms. Edmondson at (202)
317-6798 (not a toll-free number).

26 CFR 1.6045-1: Returns of information of brokers
and barter exchanges.

26 CFR 1.6045-IT: Returns of information of bro-
kers and barter exchanges (temporary).

26 CFR 1.6045A-1T: Statements of information re-
quired in connection with transfers of securities
(temporary).

26 CFR 1.6049-9: Premium subject to reporting for
a debt instrument acquired on or after January 1,
2014.

26 CFR 1.6049-10T: Reporting of original issue
discount on a tax-exempt obligation (temporary).

TD 9713

## DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1

Reporting for Premium; Basis Report-
ing by Securities Brokers and Basis De-
termination for Debt Instruments and Op-
tions

AGENCY: Internal Revenue Service (IRS),
Treasury.

ACTION: Final and temporary regulations.

SUMMARY: This document contains fi-
nal regulations relating to information
reporting by brokers for bond premium
and acquisition premium. This docu-
ment also contains final and temporary
regulations relating to information re-
porting by brokers for transactions in-
volving debt instruments and options,
including the reporting of original issue

discount (OID) on tax-exempt obliga-
tions, the treatment of certain holder
elections for reporting a taxpayer's ad-
justed basis in a debt instrument, and
transfer reporting for section 1256 op-
tions and debt instruments. The regula-
tions in this document provide guidance
to brokers and payors and to their cus-
tomers. The text of the temporary regu-
lations in this document also serves as
the text of the proposed regulations
(REG-143040-14) set forth in the Pro-
posed Rules section in this issue of the
Federal Register.

DATES: Effective date: These regulations
are effective on March13, 2015.

Applicability dates: For the dates of
applicability, see §§ 1.6045-1(m)(2)(ii)(B),
1.6045-1T(n)(11)(i)(A), 1.6045-1T(n)(11)
(i)(B), 1.6045A-1T(e)(1), 1.6045A-1T(f),
1.6049-9(a), and 1.6049-10T(c).

FOR FURTHER INFORMATION
CONTACT: Pamela Lew of the Office of
the Associate Chief Counsel (Financial
Institutions and Products) at (202) 317-
7053 (not a toll-free number).

### SUPPLEMENTARY INFORMATION:

#### Paperwork Reduction Act

Section 1.6049-9 of the final regula-
tions in this document requires a payor to
report amortizable bond premium on
taxable and tax-exempt debt instruments
acquired on or after January 1, 2014,
and acquisition premium on taxable debt
instruments acquired on or after January
1, 2014. This information is required to
enable the IRS to verify that a taxpayer
is reporting the correct amount of inter-
est (including OID) each year. In addi-
tion, because this information is used to
report a taxpayer's adjusted basis in a
debt instrument under section 6045(g),
this information is required to enable the

IRS to verify that a taxpayer is reporting
the correct amount of gain or loss upon
the sale of a debt instrument. The bur-
den for the collection of information
contained in § 1.6049-9 will be re-
flected in the burdens on Form 1099-
INT (OMB control number 1545-0112)
and Form 1099-OID (OMB control
number 1545-0117) when revised to re-
quest the additional information in the
regulations.

Section 1.6049-10T of the temporary
regulations in this document requires a
payor to report OID and acquisition pre-
mium on tax-exempt obligations acquired
on or after January 1, 2017. This informa-
tion is required to enable the IRS to verify
that a taxpayer is reporting the correct
amount of tax-exempt interest each year
for alternative minimum tax and other
purposes. In addition, because this infor-
mation is used to report a taxpayer's ad-
justed basis in a debt instrument under
section 6045(g), this information is re-
quired to enable the IRS to verify that a
taxpayer is reporting the correct amount
of gain or loss upon the sale of a tax-
exempt obligation. The burden for the col-
lection of information contained in
§ 1.6049-10T will be reflected in the bur-
den on Form 1099-OID (OMB control
number 1545-0117) when revised to re-
quest the additional information in the
regulations.

of § 1.6045A-1T in this document, a bro-
ker did not have to provide a transfer
statement for a section 1256 option. In
addition, a broker did not have to provide
the last date on or before the transfer date
that the broker made an adjustment for a
particular item relating to a debt instru-
ment. Section 1.6045A-1T, however, now
requires a broker to transfer this informa-
tion for a section 1256 option transferred
on or after January 1, 2016, and for a debt
instrument transferred on or after June 30,
2015.

The collection of information con-
tained in § 1.6045A-1 relating to the
furnishing of information in connection
with the transfer of securities has been
reviewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under control
number 1545-2186. The collection of
information in § 1.6045A-1T and the
cross-reference notice of proposed rule-
making under § 1.6045A-1 is necessary
to allow brokers that effect sales of
transferred section 1256 options and
debt instruments that are covered secu-
rities to determine and report the ad-
justed basis of these securities in com-
pliance with section 6045(g). This
collection of information is required to
comply with the provisions of section
403 of the Energy Improvement and Ex-
tension Act of 2008, Division B of Pub-
lic Law 110-343 (122 Stat. 3765, 3854
(2008)) (the Act). The collection of in-
formation contained in § 1.6045A-1T
and the cross-reference notice of pro-
posed rulemaking under § 1.6045A-1 is
an increase in the total annual burden
under control number 1545-2186. The
likely respondents are brokers transfer-
ring section 1256 options and debt in-
struments that are covered securities.

Estimated total annual reporting bur-
den is 3,333 hours.

Estimated average annual burden per
respondent is 2 hours.

Estimated average burden per response
is 4 minutes.

Estimated number of respondents is
7,500.

Estimated total frequency of responses
is 200,000.

The collection of information is re-
quired to comply with the provisions of
section 403 of the Act.

The holder of a debt instrument is
permitted to make a number of elections
that affect how basis is computed. To
minimize the need for reconciliation be-
tween information reported by a broker
to both a customer and the IRS and the
amounts reported on the customer's tax
return, a broker is required to take into
account certain specified elections, in-
cluding the election under § 1.1272-3 to
treat all interest as OID and the election
under section 1276(b)(2) to accrue mar-
ket discount on a constant yield method,
in reporting information to the cus-
tomer. A customer, therefore, must pro-
vide certain information concerning an
election to the broker in a written noti-
fication. A written notification includes
a writing in electronic format. See
§ 1.6045-1(n)(5).

The collection of information con-
tained in § 1.6045-1(n)(5) relating to the
furnishing of information by a customer to
a broker in connection with the sale or
transfer of a debt instrument that is a
covered security has been reviewed and
approved by the Office of Management
and Budget in accordance with the Paper-
work Reduction Act of 1995 (44 U.S.C.
3507(d)) under control number 1545-
2186. Under § 1.6045-1T(n)(11)(i)(A) of
the temporary regulations in this docu-
ment, unlike the rule in current § 1.6045-
1(n)(5) adopted in 2013, a broker must not
take into account the election under
§ 1.1272-3 in reporting a customer's ad-
justed basis in a debt instrument. There-
fore, a customer is no longer required to
notify the broker that the customer has
made or revoked an election under
§ 1.1272-3. This change represents a de-
crease in the total annual burden under
OMB control number 1545-2186. In ad-
dition, under § 1.6045-1T(n)(11)(i)(B), a
broker must take into account the election
under section 1276(b)(2) unless the cus-
tomer timely notifies the broker that the
customer has not made the election. The
temporary regulations reverse the assump-
tion in current § 1.6045-1(n)(5) adopted
in 2013. Because the section 1276(b)(2)
election results in a more taxpayer-
favorable result than the default ratable
method for accruing market discount in

most cases, it is anticipated that more cus-
tomers will want to use this method and
these customers will no longer need to
notify their brokers that they have made
the election. As a result, this change rep-
resents a decrease in the total annual bur-
den under OMB control number 1545-
2186.

An agency may not conduct or spon-
sor, and a person is not required to re-
spond to, a collection of information un-
less it displays a valid control number
assigned by the Office of Management
and Budget.

Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by section 6103.

#### Background

Section 6045 of the Internal Revenue
Code (Code) generally requires a broker
to report gross proceeds upon the sale of
a security. Section 6045 was amended
by section 403 of the Act to require the
reporting of adjusted basis for a covered
security and whether any gain or loss
upon the sale of the security is long-
term or short-term. In addition, the Act
added section 6045A of the Code, which
requires certain information to be re-
ported in connection with a transfer of a
covered security to another broker, and
section 6045B of the Code, which re-
quires an issuer of a specified security to
file a return relating to certain actions
that affect the basis of the security.
Section 6049 of the Code requires the
reporting of interest payments (includ-
ing accruals of OID treated as pay-
ments).

On November 25, 2011, the Treasury
Department and the IRS published in the
Federal Register (76 FR 72652) pro-
posed regulations (REG-102988-11) re-
lating to information reporting by brokers,
transferors, and issuers of securities under
sections 6045, 6045A, and 6045B for debt
instruments, options, and securities fu-
tures contracts (the 2011 proposed basis
reporting regulations). On April 18, 2013,
the Treasury Department and the IRS pub-
lished in the Federal Register (TD 9616
at 78 FR 23116) final regulations under

sections 6045, 6045A, and 6045B (the
2013 final basis reporting regulations). A
number of commenters on the 2011 pro-
posed basis reporting regulations re-
quested that the rules for reporting interest
income associated with a debt instrument
acquired at a premium be conformed to
the rules regarding basis reporting for
these debt instruments. Accordingly, TD
9616 also contained temporary regula-
tions relating to information reporting for
bond premium and acquisition premium
under section 6049 (the 2013 temporary
interest reporting regulations). A notice of
proposed rulemaking cross-referencing
the 2013 temporary interest reporting reg-
ulations also was published in the Federal
Register on April 18, 2013 (REG-
154563-12 at 78 FR 23183) (the 2013
proposed interest reporting regulations).

No written comments were received on
the 2013 proposed interest reporting reg-
ulations. No public hearing was requested
or held. These final regulations adopt the
provisions of the 2013 proposed interest
reporting regulations with certain clarifi-
cations and one conforming change for
acquisition premium. These final regula-
tions also remove the corresponding 2013
temporary interest reporting regulations.

After the publication of the 2013 final
basis reporting regulations in the Federal
Register, the Treasury Department and
the IRS received written comments on
certain provisions of the 2013 final basis
reporting regulations. In response to these
written comments, this document contains
final and temporary regulations under sec-
tions 6045 and 6045A relating to certain
aspects of the 2013 final basis reporting
regulations, as discussed in this preamble.

#### Explanation of Provisions

##### A. Final regulations for reporting bond premium and acquisition premium

Under section 171, a taxpayer may
elect to amortize bond premium on a tax-
able debt instrument and must amortize
bond premium on a tax-exempt debt in-
strument. In general, a taxpayer amortizes
bond premium by offsetting the qualified
stated interest allocable to an accrual pe-
riod by the amount of the bond premium
allocable to the accrual period. This offset
occurs when the taxpayer takes the qual-
ified stated interest into account under the

taxpayer's regular method of accounting.
For example, the offset occurs when a
cash method taxpayer receives a payment
of qualified stated interest. See section
171(e) and § 1.171-2. As a result, only the
portion of qualified stated interest that is
not offset by the amortized bond premium
is treated as interest for federal income tax
purposes. A taxpayer's basis in a debt
instrument acquired with bond premium is
reduced by amortized bond premium. For
purposes of section 6045, a broker is re-
quired to report the adjusted basis of a
taxable debt instrument that is a covered
security and that is acquired with bond
premium by presuming that the taxpayer
has elected to amortize bond premium un-
less the taxpayer notifies the broker in
writing that the taxpayer does not want to
amortize bond premium. See § 1.6045-
1(n)(5) of the 2013 final basis reporting
regulations.

Under section 1272(a)(7) and
§ 1.1272-2, a taxpayer who purchases a
debt instrument with acquisition premium
is required to reduce the amount of OID
includible in income each year by the
amount of acquisition premium allocable
to the taxable year. In general, the amount
of acquisition premium allocable to a tax-
able year is determined using a ratable
method, although a taxpayer may elect
under § 1.1272-3 to determine the amount
of acquisition premium allocable to a tax-
able year based on a constant yield
method. See § 1.1272-2(b)(5). A taxpay-
er's basis in a taxable debt instrument
purchased with acquisition premium is in-
creased by the amount of OID included in
income by the taxpayer. A taxpayer's ba-
sis in a tax-exempt debt instrument pur-
chased with acquisition premium is in-
creased by the amount of OID that accrues
in accordance with section 1272(a), in-
cluding section 1272(a)(7). For purposes
of section 6045, a broker currently is re-
quired to report the adjusted basis of a
debt instrument that is a covered security
using the ratable method for acquisition
premium, unless the taxpayer notifies the
broker in writing that the taxpayer has
elected to determine the amount of acqui-
sition premium allocable to a taxable year
based on a constant yield method. See
§ 1.6045-1(n)(5) of the 2013 final basis
reporting regulations. However, as ex-
plained in Part B.2.a in this preamble,

under these final regulations, for a debt
instrument acquired on or after January 1,
2015, a broker must use the ratable
method to determine the amount of acqui-
sition premium allocable to a taxable year
for purposes of basis reporting under sec-
tion 6045, regardless of any election under
§ 1.1272-3.

Under section 6049(a), the Secretary
may prescribe regulations to implement
the reporting of interest payments, which
includes the determination of the amount
of a payment that is reportable interest.
Similarly, under section 6049(a) the Sec-
retary may prescribe by regulations how
to determine the amount reportable as
OID.

Section 1.6049-9T of the 2013 tempo-
rary interest reporting regulations was is-
sued by the Treasury Department and the
IRS in response to comments suggesting
that the rules under section 6049 for re-
porting interest income associated with a
debt instrument acquired at a premium be
conformed to the rules under section 6045
for basis reporting for these debt instru-
ments. Section 6045 generally requires a
broker to report on an information return,
such as a Form 1099-B, the adjusted ba-
sis of a debt instrument that is a covered
security, including basis adjustments at-
tributable to amortized bond premium or
acquisition premium. See § 1.6045-1(n)
of the 2013 final basis reporting regula-
tions. However, prior to the issuance of
§ 1.6049-9T, interest income (including
OID) on a debt instrument acquired at a
premium was reported under section 6049
without adjustment for amortized bond
premium or acquisition premium. Conse-
quently, a customer generally could not
reconcile the interest income reported to
the customer on Form 1099-INT or Form
1099-OID, whichever was applicable,
with the adjusted basis reported to the
customer on Form 1099-B upon the sale
of the debt instrument. The Treasury De-
partment and the IRS issued the 2013 tem-
porary interest reporting regulations to co-
ordinate the information reporting for
income and basis. Under § 1.6049-9T of
the 2013 temporary interest reporting reg-
ulations, a broker generally is required to
report to a customer any amortized bond
premium and acquisition premium on a
debt instrument that is a covered security.
The amount reported may either be a

gross number for both stated interest and
amortized bond premium (or OID and am-
ortized acquisition premium) or a net
number that reflects the offset of the stated
interest (or OID) by the amortized bond
premium (or amortized acquisition pre-
mium).

No comments were received on the
2013 proposed interest reporting regula-
tions and the final regulations in this doc-
ument generally adopt the provisions of
the 2013 temporary interest reporting reg-
ulations. However, as explained in the fi-
nal paragraph of this Part A in this pre-
amble, the final regulations contain a
change for the reporting of acquisition
premium for a debt instrument acquired
on or after January 1, 2015, to conform to
the change in this document for reporting
basis adjustments for acquisition premium
under section 6045.

Under these final regulations, for pur-
poses of section 6049, a broker is required
to presume that a customer has elected to
amortize bond premium on taxable debt
instruments unless the broker has been
notified that the customer does not want
the broker to take into account the election
or has revoked the election. This presump-
tion applies only to the information re-
ported by the broker to its customer. Thus,
a customer that chooses not to make the
section 171 election may report interest on
the customer's income tax return unad-
justed for bond premium because the in-
formation reporting rules do not change
the substantive rules affecting amortizable
bond premium (or any of the other rules
pertaining to OID or acquisition pre-
mium). If a broker is required to report
amounts reflecting amortization of bond
premium, the final regulations allow a
broker to report either a gross amount for
both stated interest and amortized bond
premium or a net amount of stated interest
that reflects the offset of the stated interest
payment by the amount of amortized bond
premium allocable to the payment.

In addition, under these final regula-
tions, unlike the 2013 temporary interest
reporting regulations, a broker must report
OID adjusted for acquisition premium
based on the ratable method. Under these
final regulations, for a debt instrument
acquired on or after January 1, 2015, even
if a customer has made an election to
amortize acquisition premium based on a

constant yield under § 1.1272-3, a broker
must not take the election into account for
reporting acquisition premium. This
change conforms the rules for reporting
OID with the rules for reporting adjust-
ments to basis attributable to acquisition
premium described in section B.2.a of this
preamble. See § 1.6045-1T(n)(11)(i)(A).
As in the 2013 temporary interest report-
ing regulations, the final regulations allow
a broker to report either a gross amount
for both OID and acquisition premium, or
a net amount of OID that reflects the off-
set of the OID by the amount of amortized
acquisition premium allocable to the OID.

###### B. Final and temporary regulations relating to basis and transfer reporting

After the publication of the 2013 final
basis reporting regulations, commenters
recommended a number of changes to the
2013 final basis reporting regulations.
Upon consideration of these comments,
the Treasury Department and the IRS
have decided to make the following
changes to the 2013 final basis reporting
regulations and to add broker reporting for
OID on tax-exempt obligations under sec-
tion 6049.

1\. Request for delayed effective date for
options on certain foreign debt
instruments.

Under the 2013 final basis reporting
regulations, if a debt instrument requires a
payment of either interest or principal in a
currency other than the U.S. dollar or if
the debt instrument is issued by a non-
U.S. issuer, a broker is required to report
the debt instrument's basis only if the
instrument is acquired on or after January
1, 2016. See § 1.6045-1(n)(2)(ii)(D) and
(G). The 2013 final basis reporting regu-
lations delayed the applicability date for
these types of debt instruments to address
commenters' concerns that it would take
extra time to build the systems to account
for the complexity of these debt instru-
ments (for example, brokers would be re-
quired to track and retain on a daily basis
foreign exchange rates for translation pur-
poses) and, in some cases, a lack of pub-
licly available information.

Under the 2013 final basis reporting
regulations, a broker is required to report

gross proceeds and basis for certain op-
tions on a debt instrument granted or ac-
quired on or after January 1, 2014. See
§ 1.6045-1(m). The 2013 final basis re-
porting regulations apply to an option on a
debt instrument that requires a payment of
either interest or principal in a currency
other than the U.S. dollar or an option on
a debt instrument issued by a non-U.S.
issuer. Because a broker is not required to
report basis for these types of debt instru-
ments until January 1, 2016, one com-
menter requested a delay in the applica-
bility date for reporting gross proceeds
and basis for these types of options. The
commenter stated that the data collection
and computation difficulties related to the
underlying debt instruments also exist for
options on these types of debt instruments.
Responding to this comment, the final reg-
ulations in this document delay until Jan-
uary 1, 2016, the applicability date for
reporting gross proceeds and basis for op-
tions on debt instruments that provide for
one or more payments denominated in a
foreign currency and options on debt in-
struments issued by non-U.S. issuers.

##### 2. Certain debt elections relating to broker basis reporting.

Under the 2013 final basis reporting
regulations, for purposes of reporting ad-
justed basis to a customer, a broker must
take into account only the debt-related
elections specified in § 1.6045-1(n)(4). If
an election is not specified in § 1.6045-
1(n)(4), a broker may not take the election
into account for reporting adjusted basis
to a customer. In general, a broker must
take into account a specified election if a
customer timely notifies the broker that
the customer has made the election. Two
of the specified elections are the election
to treat all interest as OID under
§ 1.1272-3 and the election to accrue mar-
ket discount based on a constant yield
under section 1276(b)(2).

##### a. Election to treat all interest as OID.

Under § 1.1272-3, a customer may
elect to treat all interest on a debt instru-
ment, adjusted by any amortizable bond
premium or acquisition premium, as OID.
If this election is made, the amount of
interest (including any adjustment) that

accrues during a period is based on a
constant yield. This election is made on a
debt instrument by debt instrument basis;
however, if made, the election may affect
other debt instruments with amortizable
bond premium or market discount held by
the customer even if the debt instrument is
held in a separate account with the broker
or any other broker.

One commenter on the 2013 final basis
reporting regulations indicated that it was
extremely difficult to program the election
given its effects on other debt instruments.
Another commenter argued that the re-
sults of the election could mostly be
achieved by a combination of other debt
elections that the brokers also must sup-
port. Also, according to the commenters,
the types of customers who receive Forms
1099-B, such as individuals, partner-
ships, or S corporations, rarely make the
election to treat all interest as OID.

In consideration of the comments re-
ceived and the burden that the rule in the
2013 final basis reporting regulations
would impose, these temporary and pro-
posed regulations provide that a broker
may not take into account the election
under § 1.1272-3 when computing basis.
The temporary and proposed regulations
supersede the 2013 final basis reporting
regulations relating to the broker's treat-
ment of the election under § 1.1272-3.

In general, the amount of acquisition
premium allocable to a taxable year is
determined using a ratable method, unless
the taxpayer elects under § 1.1272-3 to
determine the amount of acquisition pre-
mium allocable to a taxable year based on
a constant yield method. See § 1.1272-
2(b)(4) and (5). As noted in the final para-
graph in Part A in this preamble, to con-
form the rules for reporting OID with the
rules for reporting adjustments to basis
attributable to acquisition premium, a bro-
ker must report acquisition premium for
purposes of section 6049 on the ratable
method even if a customer has made the
election under § 1.1272-3 to use a con-
stant yield method.

The temporary regulations apply to a
debt instrument acquired on or after Jan-
uary 1, 2015. A broker may, however, rely
on the temporary regulations for a debt
instrument acquired on or after January 1,
2014, and before January 1, 2015.

b. Constant yield election for market
discount.

Under section 1276(b)(2), a customer
may elect to accrue market discount on a
constant yield method rather than a ratable
method. The election may be made on a
debt instrument by debt instrument basis
and must be made for the earliest taxable
year for which the customer is required to
determine accrued market discount. The
election may not be revoked once it has
been made.

The 2011 proposed basis reporting reg-
ulations attempted to simplify broker re-
porting by requiring brokers to compute
accrued market discount by assuming that
a customer had made an election under
section 1276(b)(2) to use a constant yield
method. The use of a constant yield
method to determine accruals of market
discount backloads market discount and is
therefore more taxpayer favorable than
the use of a ratable method in most cases.
A number of commenters to the 2011 pro-
posed basis reporting regulations indi-
cated a desire by brokers to support debt
instrument election choices made by their
customers rather than rely on assumptions
provided in the regulations. In response to
these comments, the 2013 final basis re-
porting regulations instructed brokers to
assume that a customer did not make an
election to determine accrued market dis-
count using a constant yield method un-
less the broker received timely notifica-
tion from the customer that the election
had been or would be made.

After the 2013 final basis reporting
regulations were published, the majority
of commenters reconsidered their initial
objections to the 2011 proposed basis re-
porting regulations requirement to use a
constant yield method to determine ac-
crued market discount. These commenters
indicated that the use of the constant yield
method would generally result in a more
favorable tax result for most Form
1099-B recipients. The commenters
therefore requested that the broker as-
sumption for calculating accrued market
discount be changed so that brokers will
assume that a customer has made the elec-
tion unless the customer timely notifies
the broker otherwise. The Treasury De-
partment and the IRS agree with the rec-
ommendation that brokers should assume

the constant yield method for accruing
market discount. Accordingly, the tempo-
rary regulations supersede the assumption
in the 2013 final debt reporting regula-
tions and provide that for a debt instru-
ment acquired on or after January 1, 2015,
brokers are required to assume that a cus-
tomer has elected to determine accrued
market discount using a constant yield
method unless the customer notifies the
broker otherwise. A customer that does
not want to use a constant yield method to
determine accrued market discount must,
by the end of the calendar year in which
the customer acquired the debt instru-
ment in an account with the broker, no-
tify the customer's broker in writing that
the customer wants the broker to use the
ratable method to determine accrued
market discount.

##### 3. Transfer reporting.

a. Section 1256 options.

Under § 1.6045A-1(a)(1)(vi) of the
2013 final basis reporting regulations, a
transferring broker is not required to pro-
vide a transfer statement for the transfer of
a section 1256 option. In response to the
2013 final basis reporting regulations, a
number of commenters stated that brokers
often treat the transfer of a section 1256
option in the same manner as transfers of
equities or debt instruments and do not
treat the transferred section 1256 option
contract as being novated. Thus, com-
menters stated that a transfer statement, as
provided for by section 6045A, is neces-
sary to ensure that a receiving broker has
all relevant data required to properly re-
port information for section 1256 options.

In response to these comments, these
temporary and proposed regulations su-
persede the exception for section 1256
options in the 2013 final basis reporting
regulations and extend transfer reporting
to section 1256 options. Because the 2013
final basis reporting regulations explicitly
instruct brokers not to send transfer state-
ments for section 1256 options, it is un-
derstood that brokers may need some ad-
ditional time to modify their systems to
generate the required transfer statements.
The temporary regulations therefore pro-
vide that a transfer statement is required
for the transfer of a section 1256 option

that occurs on or after January 1, 2016.
The temporary regulations also list the
data specific to section 1256 options that
must be provided in addition to the data
required for the transfer of a non-section
1256 option.

##### b. Debt instruments.

Under § 1.6045A-1 of the 2013 final
basis reporting regulations, brokers are re-
quired to provide to a receiving broker
certain information relating to a transfer
of a debt instrument that is a covered
security. The preamble to the 2013 final
basis reporting regulations indicated that
the information required to be provided
included the date through which the trans-
feror broker made adjustments. However,
several commenters on the 2013 final ba-
sis reporting regulations noted that this
item of information was not included in
the list of information required to be pro-
vided in the 2013 final basis reporting
regulations. The temporary and proposed
regulations correct this omission by add-
ing the date through which the transfer-
ring broker made adjustments to the list of
information required to be provided upon
the transfer of a debt instrument that is a
covered security. This change applies to a
transfer that occurs on or after June 30,
2015.

###### 4. Reporting of OID on a tax-exempt obligation.

The 2013 final basis reporting regula-
tions require a broker to report the ad-
justed basis for a debt instrument that is a
covered security, including a tax-exempt
obligation. However, under Notice
2006-93 (2006-2 CB 798), for purposes
of section 6049, a broker is not required to
report OID on tax-exempt obligations un-
til further guidance is issued.

Several commenters on the 2013 final
basis reporting regulations pointed out
that the section 6045 rules now require a
broker to compute the OID on a tax-
exempt obligation to properly report ad-
justed basis at the time of a transfer, sale,
or other disposition of a tax-exempt obli-
gation. These commenters requested that,
similar to what was done in § 1.6049-9T
for amortizable bond premium and acqui-
sition premium on a debt instrument that

is a covered security, reporting of OID
under section 6049 be coordinated with
reporting of basis for tax-exempt obliga-
tions.

To align the rules and improve consis-
tency between OID reporting and basis
reporting, § 1.6049-10T of the temporary
regulations in this document provides that
a payor must report under section 6049
the daily portions of OID on a tax-exempt
obligation. The daily portions of OID are
determined as if section 1272 and
§ 1.1272-1 applied to a tax-exempt obli-
gation. A payor must determine whether a
tax-exempt obligation was issued with
OID and the amount that accrues for each
relevant period. In addition, OID on a
tax-exempt obligation is determined with-
out regard to the de minimis rule in sec-
tion 1273(a)(3) and § 1.1273-1(d). Be-
cause the temporary regulations require
the reporting of OID, payors also must
report amortized acquisition premium
(which offsets OID) on a tax-exempt ob-
ligation. A broker may report either a
gross amount for both OID and amortized
acquisition premium, or a net amount of
OID that reflects the offset of the OID by
the amount of amortized acquisition pre-
mium allocable to the OID. To provide
payors with time to adapt their systems to
report this information, the temporary reg-
ulations apply to a tax-exempt obligation
acquired on or after January 1, 2017.

#### Applicability Dates

The final regulations under section
6049 apply to a debt instrument that is a
covered security (that is, a debt instrument
described in § 1.6045-1(a)(15)(i)(C) ac-
quired on or after January 1, 2014, or a
debt instrument described in § 1.6045-
1(a)(15)(i)(D) acquired on or after Janu-
ary 1, 2016). The temporary regulations
under section 6049 apply to a tax-exempt
obligation acquired on or after January 1,
2017. The temporary regulations under
section 6045A apply to a transfer of a
section 1256 option that occurs on or after
January 1, 2016, and to a transfer of a debt
instrument that occurs on or after June 30,
2015. The temporary regulations under
section 6045 apply to a debt instrument
acquired on or after January 1, 2015. The
final regulations under section 6045 apply
to an option on a debt instrument that
provides for one or more payments de-

nominated in a foreign currency or a debt
instrument issued by a non-U.S. issuer if
the option is granted or acquired on or
after January 1, 2016.

#### Special Analyses

It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866, as supplemented by Executive Or-
der 13563. Therefore, a regulatory assess-
ment is not required. It also has been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these regula-
tions.

It is hereby certified that the final reg-
ulations in this document will not have a
significant economic impact on a substan-
tial number of small entities. Therefore, a
Regulatory Flexibility Analysis under the
Regulatory Flexibility Act (5 U.S.C.
chapter 6) is not required. It is anticipated
that the requirements in the final regula-
tions in this document will fall only on
financial services firms with annual re-
ceipts greater than the $38.5 million
threshold and, therefore, on no small
entities.

In addition, any economic impact is
expected to be minimal because a broker
already is required to determine the amor-
tization of bond premium and acquisition
premium for purposes of determining and
reporting a customer's adjusted basis on
Form 1099-B under section 6045. The
information provided to a customer on
Form 1099-INT or Form 1099-OID,
whichever is applicable, generally will al-
low a customer to reconcile the interest
information reported to the customer with
the adjusted basis information reported to
the customer on Form 1099-B. Moreover,
any effect on small entities by the rules in
the final regulations flows from section
6049 of the Code and section 403 of the
Act.

Therefore, because the final regulations
in this document will not have a signifi-
cant economic impact on a substantial
number of small entities, a regulatory
flexibility analysis is not required.

For the applicability of the Regulatory
Flexibility Act to the other regulations in
this document, please refer to the cross-
reference notice of proposed rulemaking

published elsewhere in this issue of the
Federal Register.

Pursuant to section 7805(f) of the In-
ternal Revenue Code, the proposed regu-
lations preceding the final regulations in
this document were submitted to the Chief
Counsel for Advocacy of the Small Busi-
ness Administration for comment on their
impact on small businesses. No comments
were received. In addition, the proposed
regulations accompanying the temporary
regulations in this document have been
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administra-
tion for comment on their impact on small
business.

#### Drafting Information

The principal author of these regula-
tions is Pamela Lew, Office of Associate
Chief Counsel (Financial Institutions and
Products). However, other personnel from
the IRS and the Treasury Department par-
ticipated in their development.

* * * * *

#### Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 1 is
amended as follows:

#### PART 1-INCOME TAXES

Paragraph 1. The authority citation for
part 1 is amended by removing the entry
for § 1.6049-9T and adding entries for
§§ 1.6045-1T, 1.6045A-1T, 1.6049-9,
and 1.6049-10T in numerical order to
read in part as follows:

Authority: 26 U.S.C. 7805

Section 1.6045-1T also issued under
26 U.S.C. 6045(g).

Section 1.6045A-1T also issued under

26 U.S.C. 6045A(a). * * *

Section 1.6049-9 also issued under 26
U.S.C. 6049(a). * * *

Section 1.6049-10T also issued under
26 U.S.C. 6049(a).

Par. 2. Section 1.6045-1 is amended
by:

1\. Revising paragraph (m)(2)(ii).

2\. Adding a sentence at the end of
paragraph (n)(4)(iv).

3\. Adding a sentence at the end of
paragraph (n)(5)(i).

4\. Adding paragraph (n)(11).

The revision and additions read as fol-
lows:

##### § 1.6045-1 Returns of information of brokers and barter exchanges.

** * * *

(m) * * *

(2) * * *

(ii) Delayed effective date for certain
options-(A) Notwithstanding paragraph
(m)(2)(i) of this section, if an option,
stock right, or warrant is issued as part of
an investment unit described in § 1.1273-
2(h), paragraph (m) of this section applies
to the option, stock right, or warrant if it is
acquired on or after January 1, 2016.

(B) Notwithstanding paragraph (m)(2)(i)
of this section, if the property referenced
by an option (that is, the property under-
lying the option) is a debt instrument that
is issued by a non-U.S. person or that
provides for one or more payments de-
nominated in, or determined by reference
to, a currency other than the U.S. dollar,
paragraph (m) of this section applies to
the option if it is granted or acquired on or
after January 1, 2016.

* * * * *

(n) * * *

(4) * * *

(iv) * * * However, see § 1.6045-
1T(n)(11)(i)(A) for a debt instrument ac-
quired on or after January 1, 2014.

* * * * *

(5) * * *

(i) * * * However, see § 1.6045-
1T(n)(11) for the treatment of an election
described in paragraph (n)(4)(iii) of this
section (election to accrue market dis-
count based on a constant yield) and an
election described in paragraph (n)(4)(iv)
of this section (election to treat all interest
as OID).

* * * * *

(11) [Reserved]. For further guidance,
see § 1.6045-1T(n)(11).

* * * * *

Par. 3. Section 1.6045-1T is amended
by revising paragraphs (h) through (p) to
read as follows:

§ 1.6045-1T Returns of information of
brokers and barter exchanges
(temporary).

* * * * *

(h) through (n)(10) [Reserved]. For
further guidance, see § 1.6045-1(h)
through (n)(10).

(11) Additional rules for certain holder
elections-(i) In general. For purposes of
§ 1.6045-1, the rules in this paragraph
(n)(11) apply notwithstanding any other
rule in § 1.6045-1(n).

(A) Election to treat all interest as
OID. A broker must report the informa-
tion required under § 1.6045-1(d) without
taking into account any election described
in § 1.6045-1(n)(4)(iv) (the election to
treat all interest as OID in § 1.1272-3). As
a result, for example, a broker must deter-
mine the amount of any acquisition pre-
mium taken into account each year for
purposes of § 1.6045-1 in accordance
with § 1.1272-2(b)(4). This paragraph
(n)(11)(i)(A) applies to a debt instrument
acquired on or after January 1, 2015. A
broker may, however, rely on this para-
graph (n)(11)(i)(A) for a debt instrument
acquired on or after January 1, 2014, and
before January 1, 2015.

(B) Election to accrue market discount
based on a constant yield. A broker must
report the information required under
§ 1.6045-1(d) by assuming that a cus-
tomer has made the election described in
§ 1.6045-1(n)(4)(iii) (the election to ac-
crue market discount based on a constant
yield). However, if a customer notifies a
broker in writing that the customer does
not want the broker to take into account
this election, the broker must report the
information required under § 1.6045-1(d)
without taking into account this election.
The customer must provide this notifica-
tion to the broker by the end of the calen-
dar year in which the customer acquired
the debt instrument in an account with the
broker. This paragraph (n)(11)(i)(B) ap-
plies to a debt instrument acquired on or
after January 1, 2015.

(ii) Expiration date. The applicability
of this paragraph (n)(11) expires on or
before March 12, 2018.

(o) through (p) [Reserved]. For further
guidance, see § 1.6045-1(o) through (p).
* * * * *

Par. 4. Section 1.6045A-1 is amended
by removing paragraph (a)(1)(vi) and add-
ing paragraphs (e) and (f) to read as fol-
lows:

§ 1.6045A-1 Statements of information
required in connection with transfers of
securities.

(e) Section 1256 options. [Reserved.]
For further guidance, see § 1.6045A-
1T(e).

(f) Additional information required for
a debt instrument. [Reserved.] For further
guidance, see § 1.6045A-1T(f).

Par. 5. Section 1.6045A-1T is added to
read as follows:

§ 1.6045A-1T Statements of information
required in connection with transfers of
securities (temporary).

(a) through (d) [Reserved.] For further
guidance, see § 1.6045A-1(a) through (d).

(e) Section 1256 options-(1) In gen-
eral. A transferor of an option described
in § 1.6045-1(m)(3) (section 1256 option)
is required to furnish to the receiving bro-
ker a transfer statement for a transfer that
occurs on or after January 1, 2016. The
transfer statement must include the infor-
mation described in § 1.6045A-1(b) and
paragraph (e)(2) of this section for a sec-
tion 1256 option that is a covered security
or in § 1.6045A-1(b) for a section 1256
option that is a noncovered security.

(2) Additional information required for
a section 1256 option. In addition to the
information required in § 1.6045A-1(b),
the following information is required for a
transfer of a section 1256 option that is a
covered security:

(i) The original basis of the option; and

(ii) The fair market value of the option
as of the end of the prior calendar year.

(f) Additional information required for
a debt instrument. In addition to the infor-
mation required in § 1.6045A-1(b)(3) for
a transfer of a debt instrument that is a
covered security, the transferor must pro-
vide the last date on or before the transfer
date that the transferor made an adjust-
ment for a particular item (for example,
the last date on or before the transfer date
that bond premium was amortized). This
paragraph (f) applies to a transfer that
occurs on or after June 30, 2015.

(g) Expiration date. The applicability
of this section expires on or before March
12, 2018.

Par. 6. Section 1.6049-5 is amended
by adding a sentence after the third sen-
tence in paragraph (f) to read as follows:

§ 1.6049-5 Interest and original issue
discount subject to reporting after
December 31, 1982.

* * * * *

(f) * * * However, see § 1.6049-9 for
the reporting of premium for a debt instru-
ment acquired on or after January 1, 2014.
* * *

* * * * *

Par. 7. Section 1.6049-9 is added to
read as follows:

§ 1.6049-9 Premium subject to
reporting for a debt instrument acquired
on or after January 1, 2014.

(a) General rule. Notwithstanding
§ 1.6049-5(f), for a debt instrument ac-
quired on or after January 1, 2014, if a
broker (as defined in § 1.6045-1(a)(1)) is
required to file a statement for the debt
instrument under § 1.6049-6, the broker
generally must report any bond premium
(as defined in § 1.171-1(d)) or acquisition
premium (as defined in § 1.1272-2(b)(3))
for the calendar year. This section, how-
ever, only applies to a debt instrument that
is a covered security as defined in
§ 1.6045-1(a)(15).

(b) Reporting of bond premium amor-
tization. Unless a broker has been notified
in writing in accordance with § 1.6045-
1(n)(5) that a customer does not want to
amortize bond premium under section
171, the broker must report the amount of
any amortizable bond premium allocable
to a stated interest payment made to the
customer during the calendar year. See
§§ 1.171-2 and 1.171-3 to determine the
amount of amortizable bond premium al-
locable to a stated interest payment. In-
stead of reporting a gross amount for both
stated interest and amortizable bond pre-
mium, a broker may report a net amount
of stated interest that reflects the offset of
the stated interest payment by the amount
of amortizable bond premium allocable to
the payment. In this case, the broker must
not report the amortizable bond premium
as a separate item. This paragraph (b) also
applies to amortizable bond premium on a
tax-exempt obligation, which is required
to be amortized under section 171.

(c) Reporting of acquisition premium
amortization. A broker must report the
amount of any acquisition premium amor-
tization that reduces the amount of origi-
nal issue discount includible in income by
the customer during a calendar year. For a
debt instrument acquired on or after Jan-
uary 1, 2015, a broker must use the rules
in § 1.1272-2(b)(4) to determine the
amount of acquisition premium amortiza-
tion. However, for a debt instrument ac-
quired on or after January 1, 2014, and
before January 1, 2015, if a customer
timely notifies the broker in accordance
with § 1.6045-1(n)(5), a broker may use
the rules in § 1.1272-3 to determine the
amount of acquisition premium amortiza-
tion. Instead of reporting a gross amount
for both original issue discount and acqui-
sition premium amortization, a broker
may report a net amount of original issue
discount that reflects the offset of the orig-
inal issue discount includible in income
by the customer for the calendar year by
the amount of acquisition premium allo-
cable to the original issue discount. In this
case, the broker must not report the acqui-
sition premium amortization as a separate
item. See § 1.6049-10T for the reporting
of acquisition premium on a tax-exempt
obligation.

## § 1.6049-9T [Removed]

Par. 8. Section 1.6049-9T is removed.
Par. 9. Section 1.6049-10T is added to
read as follows:

§ 1.6049-10T Reporting of original
issue discount on a tax-exempt
obligation (temporary).

(a) In general. For purposes of section
6049, a payor (as defined in § 1.6049-
4(a)(2)) of original issue discount (OID)
on a tax-exempt obligation (as defined in
section 1288(b)(2)) is required to report
the daily portions of OID on the obliga-
tion as if the daily portions of OID that
accrued during a calendar year were paid
to the holder (or holders) of the obligation
in the calendar year. The amount of the
daily portions of OID that accrues during
a calendar year is determined as if section
1272 and § 1.1272-1 applied to a tax-
exempt obligation. Notwithstanding any
other rule in section 6049 and the regula-
tions thereunder, a payor must determine

whether a tax-exempt obligation was is-
sued with OID and the amount of OID
that accrues for each relevant period. As
prescribed by section 1288(b)(1), OID on
a tax-exempt obligation is determined
without regard to the de minimis rules in
section 1273(a)(3) and § 1.1273-1(d).

(b) Acquisition premium. A payor is
required to report acquisition premium
amortization on a tax-exempt obligation

in accordance with the rules in § 1.6049-
9(c) as if section 1272 applied to a tax-
exempt obligation. See paragraph (a) of
this section to determine the amount of
OID allocable to an accrual period.

(d) Expiration date. The applicability
of this section expires on or before March
12, 2018.

John Dalrymple
Deputy Commissioner for
Services and Enforcement.

Approved: February 19, 2015

Mark J. Mazur
Assistant Secretary of the
Treasury (Tax Policy).

(Filed by the Office of the Federal Register on March 12,
2015, 8:45 a.m., and published in the issue of the Federal
Register for March 13, 2015, 80 F.R. 13233)

# Part III. Administrative, Procedural, and Miscellaneous

## Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

### Notice 2015-24

This notice provides guidance on the
corporate bond monthly yield curve, the
corresponding spot segment rates used
under § 417(e)(3), and the 24-month
average segment rates under § 430(h)(2)
of the Internal Revenue Code. In addi-
tion, this notice provides guidance as to
the interest rate on 30-year Treasury se-
curities under § 417(e)(3)(A)(ii)(II) as
in effect for plan years beginning before
2008 and the 30-year Treasury weighted
average rate under § 431(c)(6)(E)(ii)(I).
The rates in this notice reflect the appli-
cation of § 430(h)(2)(C)(iv), which was
added by the Moving Ahead for Prog-
ress in the 21st Century Act, Public Law
112-141 (MAP-21) and amended by
section 2003 of the Highway and Trans-
portation Funding Act of 2014, Public
Law 113-159 (HATFA).

### YIELD CURVE AND SEGMENT RATES

Generally, except for certain plans
under sections 104 and 105 of the Pen-
sion Protection Act of 2006 and CSEC
plans under § 414(y), § 430 of the Code
specifies the minimum funding require-
ments that apply to single-employer
plans pursuant to § 412. Section
430(h)(2) specifies the interest rates that
must be used to determine a plan's tar-
get normal cost and funding target. Un-

der this provision, present value is gen-
erally determined using three 24-month
average interest rates ("segment rates"),
each of which applies to cash flows dur-
ing specified periods. To the extent pro-
vided under § 430(h)(2)(C)(iv), these
segment rates are adjusted by the appli-
cable percentage of the 25-year average
segment rates for the period ending Sep-
tember 30 of the year preceding the cal-
endar year in which the plan year be-
gins. However, an election may be made
under § 430(h)(2)(D)(ii) to use the
monthly yield curve in place of the seg-
ment 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 seg-
ment rates used to compute the target nor-
mal cost and the funding target. Consis-
tent with the methodology specified in
Notice 2007-81, the monthly corporate
bond yield curve derived from February
2015 data is in Table I at the end of this
notice. The spot first, second, and third
segment rates for the month of February
2015 are, respectively, 1.35, 3.52, and
4.47.

The 24-month average segment rates
determined under § 430(h)(2)(C)(i)
through (iii) must be adjusted pursuant to
§ 430(h)(2)(C)(iv) by the applicable per-
centage of the corresponding 25-year av-
erage segment rates. Section 2003(a) of
HATFA amended the applicable percent-
ages under § 430(h)(2)(C)(iv). This
change generally applies to plan years be-
ginning on or after January 1, 2013. How-
ever, pursuant to section 2003(e)(2) of
HATFA, a plan sponsor can elect not to
have the amendments made to the appli-

cable percentages by section 2003 of
HATFA apply to any plan year beginning
in 2013. These elections can be made ei-
ther for all purposes or, alternatively, for
purposes of determining the adjusted
funding target attainment percentage un-
der § 436. The 25-year average segment
rates for plan years beginning in 2012,
2013, 2014 and 2015 were published in
Notice 2012-55, 2012-36 I.R.B. 332, No-
tice 2013-11, 2013-11 I.R.B. 610, Notice
2013-58, 2013-40 I.R.B. 294, and Notice
2014-50, 2014-40 I.R.B. 590, respec-
tively.

For plan years beginning in years 2012
through 2017, pursuant to the changes
made by HATFA, the applicable mini-
mum percentage is 90% and the applica-
ble maximum percentage is 110%. These
applicable percentages are referred to as
HATFA applicable percentages. As de-
scribed in the preceding paragraph, a
special election is available for any plan
year beginning in 2013 under which this
change made by HATFA can be disre-
garded for all purposes or for limited
purposes. To the extent such an election
is made, the applicable minimum per-
centage for a plan year beginning in
2013 is 85% and the applicable maxi-
mum percentage for that plan year is
115%. These applicable percentages are
referred to as MAP-21 applicable per-
centages.

# 24-MONTH AVERAGE CORPORATE BOND SEGMENT RATES

The three 24-month average corporate
bond segment rates applicable for March
2015 without adjustment for the 25-year
average segment rate limits are as follows:

Applicable Month

First Segment

Second Segment

Third Segment

March 2015

1.25

4.08

5.15

Based on § 430(h)(2)(C)(iv) as
amended by section 2003 of HATFA,
the 24-month averages applicable for

March 2015 adjusted for the HATFA sponding 25-year average segment
applicable percentages of the corre-
rates, are as follows:

For Plan Years Beginning In

Adjusted 24-Month Average Segment Rates, Based on the HATFA Applicable Percentage of 25-Year Average Rates

Applicable Month

First Segment

Second Segment

Third Segment

2014

March

2015

4.99

6.32

6.99

2015

March

2015

4.72

6.11

6.81

# 30-YEAR TREASURY SECURITIES INTEREST RATES

Generally for plan years beginning af-
ter 2007, § 431 specifies the minimum
funding requirements that apply to mul-
tiemployer plans pursuant to § 412. Sec-
tion 431(c)(6)(B) specifies a minimum
amount for the full-funding limitation
described in § 431(c)(6)(A), based on
the plan's current liability. Section
431(c)(6)(E)(ii)(I) provides that the in-
terest rate used to calculate current lia-

bility 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 interest on 30-year Trea-
sury securities during the four-year pe-
riod ending on the last day before the
beginning of the plan year. Notice 88-
73, 1988-2 C.B. 383, provides guide-
lines for determining the weighted aver-
age interest rate. The rate of interest on
30-year Treasury securities for February
2015 is 2.57 percent. The Service deter-
mined this rate as the average of the

daily determinations of yield on the 30-
year Treasury bond maturing in Novem-
ber 2044 determined each day through
February 11, 2015, and the yield on the
30-year Treasury bond maturing in Feb-
ruary 2045 determined each day for the
balance of the month. For plan years
beginning in the month shown below,
the weighted average of the rates of
interest on 30-year Treasury securities
and the permissible range of rate used to
calculate current liability are as follows:

For Plan Years Beginning in

30-Year Treasury Weighted Average

Permissible Range

Month

Year

90%

105%

March

2015

3.27

2.94

3.44

# 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 pres-
ent value segment rates. Pursuant to that
notice, the minimum present value seg-

ment rates determined for February 2015
are as follows:

First Segment

Second Segment

Third Segment

1.35

3.52

4.47

# DRAFTING INFORMATION

The principal author of this notice is
Tom Morgan of the Office of the Associ-

ate Chief Counsel (Tax Exempt and Gov-
ernment Entities). However, other person-
nel from the IRS participated in the
development of this guidance. For further

information regarding this notice, contact
Mr. Morgan at 202-317-8719 or Tony
Montanaro at 202-317-8698 (not toll-free
numbers).

Table I Monthly Yield Curve for February 2015 Derived from February 2015 Data

Maturity

Yield

Maturity

Yield

Maturity

Yield

Maturity

Yield

Maturity

Yield

0.5

0.32

20.5

4.17

40.5

4.50

60.5

4.62

80.5

4.68

1.0

0.62

21.0

4.19

41.0

4.51

61.0

4.62

81.0

4.68

1.5

0.90

21.5

4.20

41.5

4.51

61.5

4.62

81.5

4.68

2.0

1.15

22.0

4.21

42.0

4.52

62.0

4.63

82.0

4.68

2.5

1.36

22.5

4.23

42.5

4.52

62.5

4.63

82.5

4.68

3.0

1.53

23.0

4.24

43.0

4.52

63.0

4.63

83.0

4.68

3.5

1.69

23.5

4.25

43.5

4.53

63.5

4.63

83.5

4.69

4.0

1.84

24.0

4.27

44.0

4.53

64.0

4.63

84.0

4.69

4.5

1.99

24.5

4.28

44.5

4.54

64.5

4.64

84.5

4.69

5.0

2.13

25.0

4.29

45.0

4.54

65.0

4.64

85.0

4.69

5.5

2.27

25.5

4.30

45.5

4.54

65.5

4.64

85.5

4.69

6.0

2.40

26.0

4.31

46.0

4.55

66.0

4.64

86.0

4.69

6.5

2.54

26.5

4.32

46.5

4.55

66.5

4.64

86.5

4.69

7.0

2.66

27.0

4.33

47.0

4.55

67.0

4.64

87.0

4.69

7.5

2.79

27.5

4.34

47.5

4.56

67.5

4.65

87.5

4.69

8.0

2.90

28.0

4.35

48.0

4.56

68.0

4.65

88.0

4.69

8.5

3.02

28.5

4.36

48.5

4.56

68.5

4.65

88.5

4.70

9.0

3.12

29.0

4.36

49.0

4.57

69.0

4.65

89.0

4.70

9.5

3.22

29.5

4.37

49.5

4.57

69.5

4.65

89.5

4.70

10.0

3.31

30.0

4.38

50.0

4.57

70.0

4.65

90.0

4.70

10.5

3.40

30.5

4.39

50.5

4.57

70.5

4.65

90.5

4.70

11.0

3.47

31.0

4.40

51.0

4.58

71.0

4.66

91.0

4.70

11.5

3.55

31.5

4.40

51.5

4.58

71.5

4.66

91.5

4.70

12.0

3.61

32.0

4.41

52.0

4.58

72.0

4.66

92.0

4.70

12.5

3.67

32.5

4.42

52.5

4.58

72.5

4.66

92.5

4.70

13.0

3.73

33.0

4.42

53.0

4.59

73.0

4.66

93.0

4.70

13.5

3.78

33.5

4.43

53.5

4.59

73.5

4.66

93.5

4.70

14.0

3.83

34.0

4.44

54.0

4.59

74.0

4.66

94.0

4.70

14.5

3.87

34.5

4.44

54.5

4.59

74.5

4.67

94.5

4.71

15.0

3.91

35.0

4.45

55.0

4.60

75.0

4.67

95.0

4.71

15.5

3.94

35.5

4.45

55.5

4.60

75.5

4.67

95.5

4.71

16.0

3.97

36.0

4.46

56.0

4.60

76.0

4.67

96.0

4.71

16.5

4.00

36.5

4.47

56.5

4.60

76.5

4.67

96.5

4.71

17.0

4.03

37.0

4.47

57.0

4.61

77.0

4.67

97.0

4.71

17.5

4.05

37.5

4.48

57.5

4.61

77.5

4.67

97.5

4.71

18.0

4.08

38.0

4.48

58.0

4.61

78.0

4.67

98.0

4.71

18.5

4.10

38.5

4.49

58.5

4.61

78.5

4.67

98.5

4.71

19.0

4.12

39.0

4.49

59.0

4.61

79.0

4.68

99.0

4.71

19.5

4.14

39.5

4.50

59.5

4.62

79.5

4.68

99.5

4.71

20.0

4.15

40.0

4.50

60.0

4.62

80.0

4.68

100.0

4.71

# Beginning of Construction for Sections 45 and 48

## Notice 2015-25

## SECTION 1. PURPOSE

On December 19, 2014, the Tax In-
crease Prevention Act of 2014, Pub. L.
No. 113-295, 128 Stat. 4010 (TIPA), ex-
tended by one year the date by which
construction of a qualified facility (as de-
scribed in section 45(d) of the Internal
Revenue Code) must begin. Accordingly,
a taxpayer will be eligible for the renew-
able electricity production tax credit under
section 45 (PTC), or the energy invest-
ment tax credit under section 48 (ITC) in
lieu of the PTC, with respect to such a
facility if construction of such facility be-
gan before January 1, 2015.

This notice updates the guidance pro-
vided in Notice 2013-29, 2013-1 C.B.
1085, Notice 2013-60, 2013-2 C.B. 431,
and Notice 2014-46, 2014-36 I.R.B. 520
(collectively "the prior IRS notices") con-
sistent with this statutory extension. The
Internal Revenue Service (Service) will
not issue private letter rulings to taxpayers
regarding the application of this notice or
the application of the beginning of con-
struction requirement under sections 45(d)
and 48(a)(5).

## SECTION 2. EXTENSION OF BEGINNING OF CONSTRUCTION DATE

Prior to TIPA, sections 45(d) and
48(a)(5) required that construction of a
qualified facility begin before January 1,
2014 for the facility to be eligible for the
PTC or ITC. Based on sections 45 and 48
as in effect before the enactment of TIPA,
the prior IRS notices provide guidance to
determine whether construction has begun
on a qualified facility prior to January 1,
2014. Because TIPA extended the date by
which construction of a qualified facility
must begin to January 1, 2015, this notice
updates all references to "January 1,
2014" in the prior IRS notices as they
relate to the date by which construction
must begin on a facility by replacing "Jan-
uary 1, 2014" with "January 1, 2015."
Except as otherwise specified in this no-
tice, the guidance provided in the prior
IRS notices continues to apply.

## SECTION 3. CONTINUOUS CONSTRUCTION/CONTINUOUS EFFORTS TESTS

The prior IRS notices provide that a
taxpayer may establish the beginning of
construction by either (1) starting physical
work of a significant nature (Physical
Work Test) or (2) paying or incurring five
percent or more of the total cost of facility
(Safe Harbor). Both methods require that
a taxpayer make continuous progress to-
wards completion once construction has
begun (as set forth in section 4.06 (Con-
tinuous Construction Test) and section
5.02 (Continuous Efforts Test) of Notice
2013-29, respectively). Section 3.02 of
Notice 2013-60 further provides that if a
facility is placed in service before January
1, 2016, the facility will be considered to
satisfy the Continuous Construction Test
(for purposes of satisfying the Physical
Work Test) or the Continuous Efforts Test
(for purposes of satisfying the Safe Har-
bor).

Consistent with the one-year extension
of the beginning of construction date, this
notice extends the placed in service date
provided in section 3.02 of Notice
2013-60 to January 1, 2017. Thus, if a
taxpayer begins construction on a facility
prior to January 1, 2015, and places the
facility in service before January 1, 2017,
the facility will be considered to satisfy
the Continuous Construction Test (for
purposes of satisfying the Physical Work
Test) or the Continuous Efforts Test (for
purposes of satisfying the Safe Harbor),
regardless of the amount of physical work
performed or the amount of costs paid or
incurred with respect to the facility after
December 31, 2014 and before January 1,
2017.

## SECTION 4. DRAFTING INFORMATION

The principal author of this notice is
Jennifer C. Bernardini of the Office of
Associate Chief Counsel (Passthroughs &
Special Industries). For further informa-
tion regarding this notice contact Ms. Ber-
nardini on (202) 317-6853 (not a toll-free
number).

# Empowerment Zone Designation Extension Notice 2015-26

## I. PURPOSE

This notice explains how a State or
local government amends the nomination
of an empowerment zone to provide for a
new termination date of December 31,
2014, as provided for by § 1391 of the
Internal Revenue Code, as amended by
§ 753(c) of the Tax Relief, Unemploy-
ment Insurance Reauthorization, and Job
Creation Act of 2010, Pub. L. No. 111-
312, 124 Stat. 3296 (December 17, 2010)
(TRUIRJCA), § 327(c) of the American
Taxpayer Relief Act of 2012, Pub. L.
112-240, 126 Stat. 2313 (January 2, 2013)
(ATRA), and § 139(b) of the Tax Increase
Prevention Act of 2014, Pub. L. 113-295,

Stat.
(December 19, 2014)
(TIPA).

# II. BACKGROUND

In 1993, § 1391 was enacted to allow a
State or local government ("entity") to
nominate an area or areas in its jurisdic-
tion for designation as an empowerment
zone. Subsequently, the Secretary of
Housing and Urban Development, in the
case of any nominated area that is located
in an urban area, and the Secretary of
Agriculture, in the case of any nominated
area that is located in a rural area, have
designated which nominated areas are em-
powerment zones. The entities generally
provided in their nomination that the des-
ignation would remain in effect for 10
years. This 10-year period in the nomina-
tion typically ended on December 31,
2009, but in some cases, it expired before
December 31, 2009. In the latter cases,
§ 112 of the Community Renewal Tax
Relief Act of 2000, Pub. L. No. 106-554,
114 Stat. 2763A-587 (December 21,
2000) (CRTRA), amended § 1391(d)(1) to
extend the designation of those empower-
ment zones through December 31, 2009,
regardless of the period provided in the
nomination. Accordingly, the nomination
for all empowerment zones originally had
a termination date of December 31, 2009.

Prior to the enactment of TRUIRJCA,
ATRA, and TIPA, § 1391(d)(1) provided
that any designation of an empowerment

zone ends on the earliest of (A) December
31, 2009, (B) the termination date desig-
nated by the State and local governments
as provided for in their nomination, or (C)
the date the appropriate Secretary revokes
the designation. Section 1393(a)(1) de-
fines the term "appropriate Secretary" as
meaning the Secretary of Housing and
Urban Development in the case of any
nominated area that is located in an urban
area, and the Secretary of Agriculture in
the case of any nominated area that is
located in a rural area.

Section 753(a) of TRUIRJCA amended
§ 1391(d)(1) to allow a two-year extension
of the period for which the designation of an
empowerment zone is in effect. As amended
by § 753(a) of TRUIRJCA, § 1391(d)(1)
provided that any designation of an empow-
erment zone ends on the earliest of (A)
December 31, 2011, (B) the termination
date designated by the State and local gov-
ernments as provided for in their nomina-
tion, or (C) the date the appropriate Sec-
retary revokes the designation. Section
753(c) of TRUIRJCA provided that where
the nomination of an empowerment zone
included a termination date of December
31, 2009, § 1391(d)(1)(B) shall not apply
with respect to such designation if, after
the date of the enactment of TRUIRJCA,
the entity that made such nomination
amends the nomination, in such manner as
the Secretary of the Treasury may pro-
vide, to provide for a new termination
date. The amendments made by § 753 of
TRUIRJCA apply to periods after Decem-
ber 31, 2009.

Section 327(a) of ATRA further
amended § 1391(d)(1) to allow an addi-
tional extension of two years of the period
for which the designation of an empower-
ment zone is in effect. As amended by
§ 327(a) of ATRA, § 1391(d)(1) provided
that any designation of an empowerment
zone ends on the earliest of (A) December
31, 2013, (B) the termination date desig-
nated by the State and local governments
as provided for in their nomination, or (C)
the date the appropriate Secretary revokes
the designation. Section 327(c) of ATRA
provided that where a nomination of an
empowerment zone included a termina-
tion date of December 31, 2011,
§ 1391(d)(1)(B) shall not apply with re-
spect to such designation if, after the date
of the enactment of ATRA, the entity that

made such nomination amends the nomi-
nation, in such manner as the Secretary of
the Treasury may provide, to provide for a
new termination date. The amendments
made by § 327 of ATRA apply to periods
after December 31, 2011.

In 2013, the Treasury Department and
the Internal Revenue Service (IRS) issued
Notice 2013-38, 2013-25 I.R.B. 1251,
under TRUIRJCA and ATRA. Notice
2013-38 provided that any nomination for
an empowerment zone that was in effect
on December 31, 2009, is deemed to be
amended to provide for a new termination
date of December 31, 2013, unless the
nominating entity declined the extension
in a written notification to the IRS. No
nominating entity declined the extension.
Accordingly, the designations of all em-
powerment zones that were in effect on
December 31, 2009, currently have a ter-
mination date of December 31, 2013.

Section 139(a) of TIPA further
amended § 1391(d)(1) to allow an addi-
tional extension of one year of the period
for which the designation of an empower-
ment zone is in effect. As amended by
§ 139(a) of TIPA, § 1391(d)(1) provides
that any designation of an empowerment
zone ends on the earliest of (A) December
31, 2014, (B) the termination date desig-
nated by the State and local governments
as provided for in their nomination, or (C)
the date the appropriate Secretary revokes
the designation. Section 139(b) of TIPA
provides that where a nomination of an
empowerment zone included a termina-
tion date of December 31, 2013,
§ 1391(d)(1)(B) shall not apply with re-
spect to such designation if, after the date
of the enactment of TIPA, the entity that
made such nomination amends the nomi-
nation, in such manner as the Secretary of
the Treasury may provide, to provide for a
new termination date. The amendments
made by § 139 of TIPA apply to periods
after December 31, 2013.

Thus, under TIPA, to have an empow-
erment zone designation remain in effect
through December 31, 2014, the entity
that made the nomination of the empow-
erment zone must amend the nomination
to provide for a new termination date of
December 31, 2014, as provided in this
guidance.

III. AMENDMENT OF A
NOMINATION TO EXTEND
EMPOWERMENT ZONE
DESIGNATION THROUGH
DECEMBER 31, 2014

Any nomination for an empowerment
zone with a current termination date (as
amended by CRTRA and Notice 2013-38)
of December 31, 2013, is deemed to be
amended to provide for a new termination
date of December 31, 2014, unless the nom-
inating entity sends written notification to
the IRS by May 11, 2015. The written no-
tification must affirmatively decline exten-
sion of the empowerment zone nomination
through December 31, 2014. If the United
States mail is used, the notification should
be sent to the following address:

Internal Revenue Service
Attn: Charles Magee, CC:ITA:7,
Room 4136
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20044

If a private delivery service is used, the
notification should be sent to the follow-
ing address:

Internal Revenue Service
Attn: Charles Magee, CC:ITA:7,
Room 4136
1111 Constitution Ave., NW
Washington, D.C. 20044

If the entity that nominated an empow-
erment zone does not send written notifi-
cation, the nomination of that empower-
ment zone will be deemed extended from
December 31, 2013, through December
31, 2014. Accordingly, § 1391(d)(1)(B)
does not apply and, pursuant to
§ 1391(d)(1)(A)(i), the designation of that
empowerment zone ends on December 31,
2014.

# IV. DRAFTING INFORMATION

The principal author of this notice is
Charles Magee of the Office of Associate
Chief Counsel (Income Tax & Account-
ing). For further information regarding
this notice contact Mr. Magee at (202)
317-7005 (not a toll-free number).

# Public Comment Invited on Recommendations for 2015-2016 Priority Guidance Plan

Notice 2015-27

The Department of Treasury and Inter-
nal Revenue Service (Service) invite pub-
lic comment on recommendations for
items that should be included on the
2015-2016 Priority Guidance Plan.

The Treasury Department's Office of
Tax Policy and the Service use the Prior-
ity Guidance Plan each year to identify
and prioritize the tax issues that should be
addressed through regulations, revenue
rulings, revenue procedures, notices, and
other published administrative guidance.
The 2015-2016 Priority Guidance Plan
will identify guidance projects that the
Treasury Department and the Service in-
tend to work on actively as priorities dur-
ing the period from July 1, 2015, through
June 30, 2016. The Treasury Department
and the Service recognize the importance
of public input to formulate a Priority
Guidance Plan that focuses resources on
guidance items that are most important to
taxpayers and tax administration. Published
guidance plays an important role in increas-
ing voluntary compliance by helping to clar-
ify ambiguous areas of the tax law. The
published guidance process is most success-
ful if the Treasury Department and the Ser-
vice have the benefit of the experience and
knowledge of taxpayers and practitioners
who must apply the rules implementing the
internal revenue laws.

As is the case whenever significant leg-
islation is enacted, the Treasury Depart-
ment and the Service have continued to
dedicate substantial resources during the
current plan year to published guidance
projects necessary to implement the pro-
visions of various tax Acts that have been
enacted over the past several years includ-
ing, but not limited to, the Hiring Incen-
tives to Restore Employment Act, Pub. L.
No. 111-147, 124 Stat. 71, which was
enacted on March 18, 2010; the Patient
Protection and Affordable Care Act, Pub.
L. No. 111-148, 124 Stat. 119, which was
enacted on March 23, 2010; the Health
Care and Education Reconciliation Act,
Pub. L. No. 111-152, 124 Stat. 1029,

which was enacted on March 30, 2010;
the Consolidated and Further Continuing
Appropriations Act, 2015, Pub. L. No.
113-235, 128 Stat. 2130 (which includes
the Expatriate Health Coverage Clarifica-
tion Act of 2014 (Division M) and the Mul-
tiemployer Pension Reform Act of 2014
(Division O)), enacted on December 16,
2014; and the Tax Increase Prevention Act
of 2014, Pub. L. No. 113-295, 128 Stat.
4010 (which includes the Tax Technical
Corrections Act of 2014 and the Achieving
a Better Life Experience Act of 2014), en-
acted on December 19, 2014. The Treasury
Department and the Service will continue to
evaluate the priority of each guidance proj-
ect in light of the above-mentioned tax leg-
islation and other developments occurring
during the 2015-2016 plan year.

In reviewing recommendations and se-
lecting projects for inclusion on the 2015-
2016 Priority Guidance Plan, the Treasury
Department and the Service will consider
the following:

1\. Whether the recommended guidance
resolves significant issues relevant to
many taxpayers;

2\. Whether the recommended guidance
promotes sound tax administration;

3\. Whether the recommended guidance
can be drafted in a manner that will
enable taxpayers to easily understand
and apply the guidance;

4\. Whether the recommended guidance
involves regulations that are out-
moded, ineffective, insufficient, or ex-
cessively burdensome and that should
be modified, streamlined, expanded, or
repealed;

5\. Whether the Service can administer the
recommended guidance on a uniform
basis; and

6\. Whether the recommended guidance
reduces controversy and lessens the
burden on taxpayers or the Service.

Please submit recommendations by
May 1, 2015, for possible inclusion on the
original 2015-2016 Priority Guidance
Plan. Taxpayers may, however, submit
recommendations for guidance at any
time during the year. The Treasury De-
partment and the Service may update the
2015-2016 Priority Guidance Plan peri-
odically to reflect additional guidance that
the Treasury Department and the Service
intend to publish during the plan year. The

periodic updates allow the Treasury De-
partment and the Service to respond to the
need for additional guidance that may
arise during the plan year.

Taxpayers are not required to submit rec-
ommendations for guidance in any particu-
lar format. Taxpayers should, however,
briefly describe the recommended guidance
and explain the need for the guidance. In
addition, taxpayers may include an analysis
of how the issue should be resolved. It
would be helpful if taxpayers suggesting
more than one guidance project prioritize
the projects by order of importance. If a
large number of projects are being sug-
gested, it would be helpful if the projects
were grouped in terms of high, medium, or
low priority. Requests for guidance in the
form of petitions for rulemaking will be
considered with other recommendations for
guidance in accordance with the consider-
ations described in this notice.

Taxpayers may mail comments to:

Internal Revenue Service

Attn: CC:PA:LPD:PR (Notice
2015-27)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20044

or hand deliver comments Monday
through Friday between the hours of 8
a.m. and 4 p.m. to:

Courier's Desk
Internal Revenue Service
Attn: CC:PA:LPD:PR (Notice
2015-27)
1111 Constitution Avenue, N.W.
Washington, D.C. 20224

Alternatively, taxpayers may submit
comments electronically via the Federal
eRulemaking Portal at www.regulations.
gov (type IRS-2015-0008 in the search
field on the regulations.gov homepage to
find this notice and submit comments). All
recommendations for guidance submitted
by the public in response to this notice
will be available for public inspection and
copying in their entirety.

For further information regarding this
notice, contact Emily M. Lesniak of the
Office of Associate Chief Counsel (Proce-
dure and Administration) at (202) 317-
3400 (not a toll-free number).

# 26 CFR 601.201: Rulings and determination letters (Also Part I, §§ 501(c)(3), 501(r), 1.501(r)-2) Rev. Proc. 2015-21

## SECTION 1. PURPOSE

This revenue procedure provides guid-
ance regarding correction and disclosure
procedures for hospital organizations to
follow so that certain failures to meet the
requirements of § 501(r) of the Internal
Revenue Code will be excused for pur-
poses of § 501(r)(1) and 501(r)(2)(B).

## SECTION 2. BACKGROUND

Section 9007 of the Patient Protection
and Affordable Care Act, Public Law
111-148 (124 Stat. 119 (2010)), enacted
§ 501(r), which imposes additional re-
quirements on charitable hospital organi-
zations. Section 501(r)(1) provides that a
hospital organization described in
§ 501(r)(2) will not be treated as described
in § 501(c)(3) unless the organization
meets the requirements of § 501(r)(3)
through (r)(6).

Section 501(r)(2)(A) defines a hospital
organization as including any organiza-
tion that operates a facility required by a
state to be licensed, registered, or simi-
larly recognized as a hospital.

Section 501(r)(2)(B) requires a hospi-
tal organization that operates more than
one hospital facility to meet the require-
ments of § 501(r) separately with respect
to each hospital facility and provides that
such a hospital organization will not be
treated as described in § 501(c)(3) with
respect to any hospital facility for which
the requirements of § 501(r) are not sep-
arately met.

Section 501(r)(3) requires a hospital
organization to conduct a community
health needs assessment (CHNA) every
three years and to adopt an implementa-
tion strategy to meet the community
health needs identified through such as-
sessment. Section 4959 imposes a
$50,000 excise tax on a hospital organi-
zation that fails to meet the requirements
of § 501(r)(3).

Section 501(r)(4) requires a hospital
organization to establish a financial assis-
tance policy (FAP) and a policy relating to
emergency medical care.

Section 501(r)(5) requires a hospital
organization to limit amounts charged for

emergency or other medically necessary
care that is provided to individuals eligi-
ble for assistance under the organization's
FAP (FAP-eligible) to not more than the
amounts generally billed to individuals
who have insurance covering such care.
Section 501(r)(5) also prohibits the use of
gross charges.

Section 501(r)(6) requires a hospital
organization to make reasonable efforts to
determine whether an individual is FAP-
eligible before engaging in extraordinary
collection actions (ECAs) against the in-
dividual.

The statutory requirements of § 501(r)
(except for § 501(r)(3)) apply to taxable
years beginning after March 23, 2010.
Section 501(r)(3) applies to taxable years
beginning after March 23, 2012.

On December 29, 2014, the Depart-
ment of the Treasury ("Treasury Depart-
ment") and the Internal Revenue Service
("IRS") released final regulations (TD
9708) that contain guidance on the re-
quirements of § 501(r)(3) through (r)(6)
and the consequences for failing to meet
any of these requirements.

Under § 1.501(r)-2(b) of the Treasury
Regulations, a hospital facility's omission
of required information from a report or
policy described in § 1.501(r)-3 or
§ 1.501(r)-4, or error with respect to the
implementation or operational require-
ments described in § 1.501(r)-3 through
§ 1.501(r)-6, will not be considered a
failure to meet a requirement of § 501(r)
if: (1) such omission or error was minor
and either inadvertent or due to reasonable
cause; and (2) the hospital facility corrects
such omission or error as promptly after
discovery as is reasonable given the na-
ture of the omission or error. For purposes
of this provision, correction must include
the establishment (or review and, if nec-
essary, revision) of practices or proce-
dures (formal or informal) that are reason-
ably designed to promote and facilitate
overall compliance with the requirements
of § 501(r).

Under § 1.501(r)-2(c), a hospital facil-
ity's failure to meet the requirements of
§ 1.501(r)-3 through § 1.501(r)-6 that is
neither willful nor egregious shall be ex-
cused for purposes of § 501(r)(1) and
501(r)(2)(B) if the hospital facility cor-
rects and makes disclosure in accordance
with rules set forth by revenue procedure,

notice, or other guidance published in the
Internal Revenue Bulletin.

## SECTION 3. PRINCIPAL CHANGES FROM DRAFT REVENUE PROCEDURE

.01 In Notice 2014-3, 2014-3 I.R.B.
408 (Dec. 31, 2013), the Treasury Depart-
ment and the IRS invited comments re-
garding the procedures set forth in a pro-
posed revenue procedure regarding
correction and disclosure of failures to
meet the requirements of § 501(r), includ-
ing what additional examples, if any,
would be helpful to include and whether
hospital organizations should be required
to make disclosure in ways other than
reporting on their Forms 990, Return of
Organization Exempt From Income Tax,
such as on their Web sites. The Treasury
Department and the IRS received six com-
ments in response to Notice 2014-3.

.02 In response to the comments re-
garding Notice 2014-3 and to conform
this revenue procedure with the final reg-
ulations under § 501(r) (TD 9708), this
revenue procedure includes the following
changes to the revenue procedure pro-
posed in Notice 2014-3:

(1) Section 3.02 of Notice 2014-3
(section 4.02 of this revenue procedure)
has been modified to conform with
§ 53.4959-1(b)(1), which makes clear
that a hospital organization failing to meet
the requirements of § 501(r)(3) will be
subject to the excise tax under § 4959.

(2) Section 5.03 of this revenue proce-
dure has been added in response to a com-
ment requesting clarification that certain
minor omissions and errors that are de-
scribed in and corrected in accordance
with § 1.501(r)-2(b) are not considered
failures to meet a requirement of § 501(r)
and are therefore outside the scope of this
revenue procedure. Section 5.03 also in-
cludes two examples of minor errors sug-
gested by a commenter that the Treasury
Department and the IRS agree are the type
of minor errors that are described in and
may be corrected in accordance with
§ 1.501(r)-2(b). These are not the only
kinds of omissions or errors that may be
described in § 1.501(r)-2(b).

(3) Section 4.02 of Notice 2014-3
(section 5.04 of this revenue procedure)
has been modified to conform with
§ 1.501(r)-2(c), which states that an egre-

gious failure includes only a very serious
failure, taking into account the severity of
the impact and the number of affected
persons, and that a hospital facility's cor-
rection and disclosure of a failure is a
factor tending to show that the failure was
not willful.

(4) Section 5.01(1) of Notice 2014-3
(section 6.01(1) of this revenue proce-
dure) has been modified to provide that
the correction principle requiring restora-
tion of affected individuals applies only to
failures to meet the requirements of
§ 501(r)(4)(A), (r)(5), or (r)(6). This sec-
tion also has been modified to conform
with §§ 1.501(r)-5(d)(3) and 1.501(r)-
6(c)(6)(i)(C)(2) by specifying that restora-
tion of FAP-eligible individuals does not
require a refund of excess payments if the
excess payment was less than $5.

(5) Section 5.01(4) of Notice 2014-3
(section 6.01(4) of this revenue proce-
dure) has been modified to conform with
the language in § 1.501(r)-2(a)(5),
(b)(1)(ii), and (b)(4), which refer to the
establishment of practices or procedures
(formal or informal) reasonably designed
to promote and facilitate overall compli-
ance with the § 501(r) requirements.

(6) Section 5.02(4) of Notice 2014-3
(section 6.02(3) of this revenue proce-
dure) has been modified to conform with
§ 1.501(r)-4(b)(1)(ii), which requires a
hospital facility to widely publicize its
FAP.

(7) Section 6(1) of Notice 2014-3
(section 7.01(1) of this revenue proce-
dure) has been revised to require an "es-
timate of" the number of persons affected
and the dollar amounts involved and to
eliminate the requirement to describe the
practices and procedures (if any) that were
in place prior to the occurrence of the
failure to detect or prevent the type of
failure that occurred. Section 7.01(1) and
(2) of this revenue procedure also clarify
that information about multiple errors of
the same type and corrections of those
errors should be aggregated in a summary.

(8) Section 6(2) of Notice 2014-3,
which required a description of the dis-
covery of the failure, was deleted.

(9) Section 7.02 of this revenue proce-
dure has been added to provide that hos-
pital organizations that do not have a
Form 990 filing requirement may disclose
their failures and corrections on a Web
site.

.03 In addition to the aforementioned
changes, this revenue procedures makes
other minor revisions to the revenue pro-
cedure proposed in Notice 2014-3 that
are not intended to have substantive ef-
fect, such as updating section numbers
and making corresponding changes to
cross-references.

## SECTION 4. EFFECT

.01 In general. The IRS will not treat a
hospital organization's failure to meet a
requirement of § 501(r) as a failure for
purposes of § 501(r)(1) and 501(r)(2)(B)
if the failure falls within the scope of
section 5 of this revenue procedure and if
the hospital organization corrects and dis-
closes the failure in accordance with sec-
tions 6 and 7 of this revenue procedure.

.02 Excise tax under § 4959. Unless a
hospital organization's failure to meet the
requirements of § 501(r)(3) involves an
omission or error that is described in and
corrected in accordance with § 1.501(r)-
2(b) (and is thus not considered a failure),
a failure to meet the requirements of
§ 501(r)(3) will result in a tax being im-
posed on the organization under § 4959,
notwithstanding the organization's correc-
tion and disclosure of the failure in accor-
dance with sections 6 and 7 of this reve-
nue procedure.

## SECTION 5. SCOPE

.01 In general. A hospital organization
may use the provisions of this revenue
procedure to correct and disclose any fail-
ure to meet a requirement of § 501(r) that
is not willful or egregious, subject to the
conditions of section 5.02 of this revenue
procedure.

.02 Effect of exam. In the case of a
hospital organization that is contacted by
the IRS concerning an examination of the
organization, the hospital organization
may use the provisions of this revenue

procedure to correct and disclose a
§ 501(r) failure only if, at the time the
organization is first contacted by the IRS,
the following conditions are satisfied:

(1) The hospital organization has cor-
rected or is in the process of correcting the
failure in accordance with section 6 of this
revenue procedure; and

(2) If the due date (allowing for exten-
sions) for the annual return for the tax
year in which the failure was discovered
has passed (or would have passed, in the
case of a hospital organization that is not
required to file an annual return), the hos-
pital organization has already disclosed
the failure in accordance with section 7 of
this revenue procedure.

.03 Minor and Inadvertent Omissions
and Errors. Under § 1.501(r)-2(b), a hos-
pital facility's omission or error with re-
spect to the requirements of § 1.501(r)-3
through § 1.501(r)-6 will not be consid-
ered a failure to meet a requirement of
§ 501(r) if such omission or error was
minor and either inadvertent or due to
reasonable cause and the hospital facility
corrects such omission or error in accor-
dance with § 1.501(r)-2(b). Because mi-
nor omissions and errors that are either
inadvertent or due to reasonable cause and
are corrected in accordance with
§ 1.501(r)-2(b) are not considered failures
to meet a requirement of § 501(r), hospital
organizations do not need to use the cor-
rection and disclosure procedures de-
scribed in this revenue procedure for such
omissions and errors. However, an orga-
nization that wants to correct such a minor
omission or error may rely on the princi-
ples regarding correction described in sec-
tion 6 of this revenue procedure in meet-
ing the correction requirements of
§ 1.501(r)-2(b)(1)(ii).1 This section 5.03
may be illustrated by the following exam-
ples:

(1) A hospital facility's CHNA report or FAP is
unavailable on a Web site for a short period of time
due to an inadvertent technological malfunction.
Promptly upon discovery of the technological mal-
function, the hospital facility corrects the error by
ensuring that the CHNA report or FAP is available
on its Web site and reviews its relevant practices and
procedures and determines that no revisions are nec-
essary to prevent this type of error from recurring.

1In addition, § 1.501(r)-2(a)(8) provides that, for purposes of determining whether to continue to recognize the § 501(c)(3) status of a hospital organization, the IRS will consider whether
a hospital organization corrected a failure as promptly after discovery as was reasonable given the nature of the failure. A hospital organization that cannot or does not have an error or
omission excused by following the correction and disclosure procedures outlined in this revenue procedure may nevertheless use the principles regarding correction described in section 6
of this revenue procedure in demonstrating that they satisfy the factor described in § 1.501(r)-2(a)(8).

Because the error was minor and inadvertent and the
hospital facility corrects the error promptly upon
discovery in accordance with § 1.501(r)-2(b)(1)(ii),
the error would not be considered a failure to meet
the requirements of § 501(r) and, thus, would be
outside the scope of this revenue procedure.

(2) A hospital facility's usual signage about its
FAP is not conspicuously displayed in its emergency
room for a short period of time because an inadver-
tent disruption results in the signs falling down or
being obstructed. The hospital facility corrects the
error promptly upon discovery by replacing the signs
or removing the obstruction and reviews its relevant
practices and procedures and determines that no re-
visions are necessary to prevent this type of error
from recurring. Because the error was minor and
inadvertent and the hospital facility corrects the error
promptly upon discovery in accordance with
§ 1.501(r)-2(b)(1)(ii), the error would not be con-
sidered a failure to meet the requirements of § 501(r)
and, thus, would be outside the scope of this revenue
procedure.

.04 Willful or egregious. A failure that
is willful includes a failure due to gross
negligence, reckless disregard, or willful
neglect. An egregious failure includes
only a very serious failure, taking into
account the severity of the impact and the
number of affected persons. Whether a
failure is willful or egregious will be de-
termined based on all of the facts and
circumstances. A hospital organization's
correction and disclosure of a failure in
accordance with sections 6 and 7 of this
revenue procedure is a factor tending to
show that the failure was not willful.

## SECTION 6. CORRECTION

.01 Correction principles. Correction
must be made in accordance with the fol-
lowing principles:

(1) Restoration of affected individuals.
With respect to failures to meet the re-
quirements of § 501(r)(4)(A), (r)(5), or
(r)(6) and to the extent reasonably feasi-
ble, the hospital organization should make
the correction with respect to all affected
individuals and should restore any af-
fected individual to the position in which
he or she would have been had the failure
not occurred, regardless of whether the
harm suffered by the individual occurred
in a prior year and regardless of whether
such prior year is a closed taxable year.
Restoration of a FAP-eligible individual
who has paid more than he or she owes as
a FAP-eligible individual does not re-
quire a refund if such excess payment was
less than $5.

(2) Reasonable and appropriate cor-
rection. The correction should be reason-
able and appropriate for the failure. De-
pending on the nature of the failure, there
may be more than one reasonable and
appropriate correction.

(3) Timing. The correction should oc-
cur as promptly after discovery as is rea-
sonable given the nature of the failure.

(4) Implementation/modification of
safeguards. If the hospital organization
has not established practices or proce-
dures (formal or informal) for its hospital
facility or facilities that are reasonably
designed to promote and facilitate each
facility's overall compliance with the re-
quirements of § 501(r), the hospital orga-
nization should establish such practices or
procedures as part of its correction. If the
hospital organization has established such
practices or procedures, the hospital orga-
nization should determine if changes to its
practices or procedures are needed to re-
duce the likelihood of that type of failure
recurring and to assure prompt identifica-
tion and correction of any such failures
that do occur. If it identifies any such
changes to its practices or procedures, it
should implement those changes.

.02 Examples. The provisions of sec-
tion 6.01 may be illustrated by the follow-
ing examples. For purposes of these ex-
amples, assume that the hospital facility
corrected the failure as promptly after dis-
covery as is reasonable given the nature of
the failure and put into place revised or
newly established practices or procedures
to minimize the likelihood of the failure
recurring.

(1) A hospital facility has failed to
adopt a CHNA report that contains all of
the elements required by § 1.501(r)-3. It
may correct the failure by preparing and
adopting a CHNA report containing all of
the required elements and making the cor-
rected CHNA report widely available to
the public within the meaning of
§ 1.501(r)-3(b)(7).

(2) A hospital facility has failed to
adopt a FAP that contains all of the ele-
ments required by § 1.501(r)-4. It may
correct the failure by establishing a FAP
containing all of the required elements
and widely publicizing that corrected FAP
within the meaning of § 1.501(r)-4(b)(5).

(3) A hospital facility has failed to
widely publicize its FAP in the manner

described in § 1.501(r)-4(b)(5) because
the FAP is not available on the hospital
facility's (or any other) Web site for sev-
eral months. The hospital facility may cor-
rect the failure by beginning to make the
FAP widely available on a Web site as
described in § 1.501(r)-1(b)(29) and do-
ing additional public outreach to let af-
fected individuals know the FAP is now
available on the hospital facility's Web
site (for example, through an "email blast"
to patients whose email addresses the hos-
pital facility has on record).

(4) A hospital facility has failed to
meet the requirements of § 1.501(r)-5 be-
cause, due to processing errors, it charged
FAP-eligible individuals more than an
amount permitted under that section and
discovers the errors during the month-end
accounting period closing. The hospital
facility may correct the failure by provid-
ing all of the affected FAP-eligible indi-
viduals with an explanation of the error, a
corrected billing statement, and a refund
of any payments the individuals made in
excess of the amounts owed after FAP
discounts are applied (in cases in which
the excess is $5 or more).

## SECTION 7. DISCLOSURE

.01 In general. Except as provided in
section 7.02 of this revenue procedure, a
failure is disclosed for purposes of this
revenue procedure only if the hospital or-
ganization reports the following informa-
tion on its Form 990, pursuant to the in-
structions for that Form, for the tax year in
which the failure is discovered:

(1) A description of the failure, includ-
ing the type of failure, the cause of the
failure, the hospital facility or facilities
where the failure occurred, the date(s) of
the failure and its discovery, and the num-
ber of occurrences. Information about
multiple errors of the same type should be
reported in the aggregate in a summary
that includes the time period over which
the errors occurred and, in the case of
errors involving the operational require-
ments described in § 1.501(r)-5 or
§ 1.501(r)-6, an estimate of the number of
individuals affected and the dollar
amounts involved.

(2) A description of the correction of
the failure, including the method of cor-
rection, the date of correction, and, in the
case of a failure to meet the requirements

of § 501(r)(4)(A), (r)(5), or (r)(6), a de-
scription of how affected individuals were
restored to the position they would have
been in had the failure not occurred. In-
formation about corrections of multiple
errors of the same type should be reported
in the aggregate in a summary that in-
cludes the time period over which the
corrections occurred. If restoration of one or
more individuals affected by a failure to
meet the requirements of § 501(r)(4)(A),
(r)(5), or (r)(6) was not reasonably feasible,
the hospital organization should state this
and explain why.

(3) A description of the practices or
procedures, if any, that the hospital orga-
nization revised or newly established for
its hospital facility or facilities to mini-
mize the likelihood of the type of failure
recurring and to facilitate the prompt iden-
tification and correction of any such future
failures that do occur, or, if the hospital
organization did not revise previously ex-
isting practices or procedures to minimize
such likelihood, an explanation of why no
changes in practices or procedures were
necessary.

.02 Organizations not required to file
Form 990. A hospital organization that is
not required to file Form 990 will have
disclosed a failure discovered in a tax year
for purposes of this revenue procedure if
the organization reports all of the infor-
mation described in section 7.01 on a
Form 990 for the tax year as described in
that section or if it makes such informa-
tion widely available on a Web site within
the meaning of § 1.501(r)-1(b)(29) by the
date its Form 990 for the tax year would
have been due if the hospital organization
were required to file a Form 990.

## SECTION 8. EFFECTIVE DATE

This revenue procedure is effective on
and after March 10, 2015. In addition, a
hospital organization will be considered to
have corrected and made disclosure in ac-
cordance with § 1.501(r)-2(c) if it cor-
rected and disclosed a failure falling
within the scope of this revenue procedure
or Notice 2014-3 in a manner consistent
with this revenue procedure or in accor-
dance with Notice 2014-3 prior to March
10, 2015.

## SECTION 9. PAPERWORK REDUCTION ACT

The collections of information contained
in this revenue procedure have been re-
viewed and approved by the Office of Man-
agement and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C.
3507(c)) under control number 1545-0047.

The collections of information in this
revenue procedure are in sections 7.01 and
7.02, which describe the information re-
garding a hospital organization's failure to
meet one or more of the requirements of
§ 1.501(r)-3 through § 1.501(r)-6 that the
organization must disclose for the failure
to be excused under § 1.501(r)-2(c). Sec-
tion 7.01 describes the information that
must be disclosed and requires disclosure to
be made on the Form 990. The Treasury
Department and the IRS have reached the
following reporting burden estimates for
those organizations disclosing information
on a Form 990 pursuant to section 7.01:

Estimated total annual reporting
burden: 4,914

Estimated average annual burden
hours per recordkeeper: 2

Estimated number of recordkeepers:
2,457

Estimated frequency of collections of
such information: Annual

Section 7.02 applies only to hospital
organizations that are not required to file
Form 990 and permits such organizations
to disclose the information described in
section 7.01 on a Web site rather than on
a Form 990. The Treasury Department
and the IRS have reached the following
reporting burden estimates for those orga-
nizations that may disclose information on
a Web site pursuant to section 7.02:

Estimated total annual reporting
burden: 702

Estimated average annual burden
hours per recordkeeper: 2

Estimated number of recordkeepers:
351

Estimated frequency of collections of
such information: Annual

An agency may not conduct or spon-
sor, and a person is not required to re-
spond to, a collection of information un-
less the collection of information displays
a valid OMB control number.

Books or records relating to a collection
of information must be retained as long as
their contents may become material in the
administration of any internal revenue law.
Generally, tax returns and tax return informa-
tion are confidential, as required by § 6103.

## SECTION 10. DRAFTING INFORMATION

The principal author of this revenue
procedure is Stephanie N. Robbins of the
Office of Associate Chief Counsel (Tax
Exempt and Government Entities). For
further information regarding this revenue
procedure, contact Stephanie N. Robbins
at 202-317-5800 (not a toll-free number).

26 CFR 601.601: Rules and Regulations.
(Also Part I, §§ 25, 103, 143; 1.25-4T, 1.103-1,
6a.1034-2.)

## Rev. Proc. 2015-23 SECTION 1. PURPOSE

This revenue procedure provides guid-
ance with respect to the United States and
area median gross income figures that are
to be used by issuers of qualified mort-
gage bonds, as defined in § 143(a) of the
Internal Revenue Code, and issuers of
mortgage credit certificates, as defined in
§ 25(c), in computing the income require-
ments described in § 143(f).

## SECTION 2. BACKGROUND

.01 Section 103(a) provides that, ex-
cept as provided in § 103(b), gross income
does not include interest on any state or
local bond. Section 103(b)(1) provides
that § 103(a) shall not apply to any private
activity bond that is not a qualified bond
(within the meaning of § 141). Section
141(e) provides that the term "qualified
bond" includes any private activity bond
that (1) is a qualified mortgage bond, (2)
meets the applicable volume cap require-
ments under § 146, and (3) meets the
applicable requirements under § 147.

.02 Section 143(a)(1) provides that the
term "qualified mortgage bond" means a
bond that is issued as part of a "qualified
mortgage issue". Section 143(a)(2)(A)
provides that the term "qualified mortgage
issue" means an issue of one or more
bonds by a state or political subdivision
thereof, but only if (i) all proceeds of the

issue (exclusive of issuance costs and a
reasonably required reserve) are to be
used to finance owner-occupied residenc-
es; (ii) the issue meets the requirements of
subsections (c), (d), (e), (f), (g), (h), (i),
and (m)(7) of § 143; (iii) the issue does
not meet the private business tests of para-
graphs (1) and (2) of § 141(b); and (iv)
with respect to amounts received more
than 10 years after the date of issuance,
repayments of $250,000 or more of prin-
cipal on financing provided by the issue
are used not later than the close of the first
semi-annual period beginning after the
date the prepayment (or complete repay-
ment) is received to redeem bonds that are
part of the issue.

.03 Section 143(f) imposes eligibility
requirements concerning the maximum
income of mortgagors for whom financing
may be provided by qualified mortgage
bonds. Section 25(c)(2)(A)(iii)(IV) pro-
vides that recipients of mortgage credit
certificates must meet the income require-
ments of § 143(f). Generally, under
§§ 143(f)(1) and 25(c)(2)(A)(iii)(IV),
these income requirements are met only if
all owner-financing under a qualified
mortgage bond and all certified indebted-
ness amounts under a mortgage credit cer-
tificate program are provided to mortgag-
ors whose family income is 115 percent or
less of the applicable median family in-
come. Under § 143(f)(6), the income lim-
itation is reduced to 100 percent of the
applicable median family income if there
are fewer than three individuals in the
family of the mortgagor.

.04 Section 143(f)(4) provides that the
term "applicable median family income"
means the greater of (A) the area median
gross income for the area in which the
residence is located, or (B) the statewide
median gross income for the state in
which the residence is located.

.05 Section 143(f)(5) provides for an
upward adjustment of the income limita-
tions in certain high housing cost areas.
Under § 143(f)(5)(C), a high housing cost
area is a statistical area for which the
housing cost/income ratio is greater than
1.2. The housing cost/income ratio is de-
termined under § 143(f)(5)(D) by dividing
(a) the applicable housing price ratio by
(b) the ratio that the area median gross
income bears to the median gross income
for the United States. The applicable

housing price ratio is the new housing
price ratio (new housing average purchase
price for the area divided by the new
housing average purchase price for the
United States) or the existing housing
price ratio (existing housing average area
purchase price divided by the existing
housing average purchase price for the
United States), whichever results in the
housing cost/income ratio being closer to
1\. This income adjustment applies only to
bonds issued, and nonissued bond
amounts elected, after December 31,
1988\. See § 4005(h) of the Technical and
Miscellaneous Revenue Act of 1988,
1988-3 C.B. 1, 311 (1988).

.06 The Department of Housing and
Urban Development (HUD) has computed
the median gross income for the United
States, the states, and statistical areas
within the states. The income information
was released to the HUD regional offices
on March 06, 2015, and may be obtained
by calling the HUD reference service at
1-800-245-2691. The income information
is also available at HUD's World Wide
Web site, http://www.huduser.org/portal/
datasets/il.html, which provides a menu
from which you may select the year and
type of data of interest.

.07 The most recent nationwide aver-
age purchase prices and average area pur-
chase price safe harbor limitations were
published on May 12, 2014, in Rev. Proc.
2014-31, 2014-20 I.R.B. 1009.

## SECTION 3. APPLICATION

.01 When computing the income re-
quirements of § 143(f), issuers of qualified
mortgage bonds and mortgage credit cer-
tificates must use either (1) the median
gross income for the United States, the
states, and statistical areas within the
states, as released to the HUD regional
offices on December 18, 2013, or (2) the
median gross income for the United
States, the states, and statistical areas
within the states, as released to the HUD
regional offices on March 06, 2015.

.02 If an issuer uses the median gross
income for the United States, the states,
and statistical areas within the states, as
released to the HUD regional offices on
December 18, 2013, to compute the hous-
ing cost/income ratio under § 143(f)(5),
the issuer must use the median gross in-
come for the United States, the states, and

statistical areas within the states, as re-
leased to the HUD regional offices on
December 18, 2013, for all purposes un-
der § 143(f). Likewise, if an issuer uses
the median gross income for the United
States, the states, and statistical areas
within the states, as released to the HUD
regional offices on March 06, 2015, to
compute the housing cost/income ratio
under § 143(f)(5), the issuer must use the
median gross income for the United
States, the states, and statistical areas
within the states, as released to the HUD
regional offices on March 06, 2015, for all
purposes under § 143(f).

## SECTION 4. EFFECT ON OTHER REVENUE PROCEDURES

.01 Rev. Proc. 2014-23, 2014-12 I.R.B.
684, is obsolete except as provided in §§ 3.01,
3.02, or 5.01 of this revenue procedure.

.02 This revenue procedure does not
affect the effective date provisions of Rev.
Rul. 86-124, 1986-2 C.B. 27. Those ef-
fective date provisions will remain opera-
tive at least until the Service publishes a
new revenue ruling that conforms the ap-
proach to effective dates set forth in Rev.
Rul. 86-124 to the general approach
taken in this revenue procedure.

## SECTION 5. EFFECTIVE DATES

.01 Issuers must use the United States
and area median gross income figures
specified in § 3.01 of this revenue proce-
dure for commitments to provide financ-
ing that are made, or (if the purchase
precedes the financing commitment) for
residences that are purchased, in the pe-
riod that begins on March 06, 2015, and
ends on the date when these United
States and area median gross income
figures are rendered obsolete by a new
revenue procedure.

## DRAFTING INFORMATION

The principal authors of this revenue
procedure are David White and James
Polfer of the Office of Associate Chief
Counsel (Financial Institutions & Prod-
ucts). For further information regarding
this revenue procedure contact Mr. White
or Mr. Polfer at (202) 317-6980 (not a
toll-free number).

26 CFR 601.201: Rulings and determination letters.
(Also: Part I, Sections 846; 1.846-1.)

## Rev. Proc. 2015-24

### SECTION 1. PURPOSE

This revenue procedure contains five
corrections to Rev. Proc. 2014-59,
2014-47 I.R.B. 843. Rev. Proc. 2014-59
prescribes the loss payment patterns and
discount factors for the 2014 accident
year. These factors are used to compute
discounted unpaid losses under § 846 of
the Internal Revenue Code.

### SECTION 2. CORRECTIONS

.01 The loss discount factor for Tax
Year 2016 and later years in the table for
Auto Physical Damage provided in sec-
tion 3.04 of Rev. Proc. 2014-59 was in-
correct. The revenue procedure incor-
rectly stated that it is 98.1168 percent. The
revenue procedure should have stated that
it is 99.1168 percent.

.02 The composite method loss dis-
count factor language in the table for Auto
Physical Damage provided in section 3.04
of Rev. Proc. 2014-59 misstated that it
applied to losses incurred in 2013 and
prior years. The last sentence in the table
for Auto Physical Damage provided in
section 3.04 of the revenue procedure
should have stated:

Taxpayers that use the composite
method of Notice 88-100 should
use 99.1168 percent to discount un-
paid losses incurred in this [the
Auto Physical Damage] line of busi-
ness in 2014 and prior years and that
are outstanding at the end of the
2016 taxable year.

.03 The composite method loss dis-
count factor language in the table for
Composite provided in section 3.04 of
Rev. Proc. 2014-59 misstated that it ap-
plied to losses incurred in 2013 and prior
years. The last sentence in the table for
Composite provided in section 3.04 of the
revenue procedure should have stated:

Taxpayers that use the composite
method of Notice 88-100 should
use 94.8470 percent to discount un-
paid losses incurred in this [the
Composite] line of business in 2014
and prior years and that are out-
standing at the end of the 2024 tax-
able year.

.04 The composite method loss dis-
count factor language in the table for Fi-
nancial Guaranty/Mortgage Guaranty pro-
vided in section 3.04 of Rev. Proc.
2014-59 provided the wrong discount
factor for 2014 and prior years that are
outstanding at the end of the 2016 taxable
year. The revenue procedure incorrectly
stated that it is 98.1168 percent. The last
sentence in the table for Financial Guar-
anty/Mortgage Guaranty provided in sec-

tion 3.04 of the revenue procedure should
have stated that it is 99.1168 percent.

.05 The loss discount factor for Tax
Year 2021 in the table for International
(Composite) provided in section 3.04 of
Rev. Proc. 2014-59 was incorrect. The
revenue procedure incorrectly stated that
it is 91.5719 percent. The revenue proce-
dure should have stated that it is 92.5719
percent.

## SECTION 3. EFFECT ON OTHER REVENUE PROCEDURES

Rev. Proc. 2014-59 is modified.

## SECTION 4. PROSPECTIVE APPLICATION

Under the authority of section 7805(b),
the corrected discount factors and lan-
guage will not be applied adversely with
respect to tax returns filed on or before
March 12, 2015.

## SECTION 5. DRAFTING INFORMATION

The principal author of this revenue
procedure is David Remus of the Office of
Associate Chief Counsel (Financial Insti-
tutions & Products). For further informa-
tion regarding this revenue procedure con-
tact Mr. Remus on (202) 317-6995 (not a
toll free number).

## Part IV. Items of General Interest

### Announcement of Disciplinary Sanctions From the Office of Professional Responsibility Announcement 2015-7

The Office of Professional Responsi-
bility (OPR) announces recent disciplin-
ary sanctions involving attorneys, certi-
fied public accountants, enrolled agents,
enrolled actuaries, enrolled retirement
plan agents, and appraisers. These indi-
viduals are subject to the regulations gov-
erning practice before the Internal Reve-
nue Service (IRS), which are set out in
Title 31, Code of Federal Regulations,
Part 10, and which are published in pam-
phlet form as Treasury Department Circu-
lar 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 practice before the IRS as
defined at 31 C.F.R. § 10.2(a)(4).

Suspended from practice before the
IRS-An individual who is suspended is
not eligible to practice before the IRS as
defined at 31 C.F.R. § 10.2(a)(4) 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 practice before the IRS, but OPR may
subject the individual's future practice
rights to conditions designed to promote
high standards of conduct.

Monetary penalty-A monetary pen-
alty may be imposed on an individual who
engages in conduct subject to sanction or
on an employer, firm, or entity if the in-
dividual 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, certi-
fied public accountants, enrolled agents,
enrolled actuaries, and enrolled retirement
plan agents may not assist, or accept as-
sistance from, individuals who are sus-
pended or disbarred with respect to mat-
ters constituting practice (i.e.,
representation) before the IRS, and they
may not aid or abet suspended or dis-
barred individuals to practice before the
IRS.

Disciplinary sanctions are described in
these terms:

Disbarred by decision, Suspended by
decision, Censured by decision, Mone-
tary penalty imposed, and Disqualified
after hearing-An administrative law
judge (ALJ) either 1) granted the govern-
ment's summary judgment motion or 2)
conducted an evidentiary hearing upon
OPR's complaint alleging violation of the
regulations; and 3) issued a decision im-
posing one of these sanctions. After 30
days from the issuance of the decision, in
the absence of an appeal, the ALJ's deci-
sion became the final agency decision.

Disbarred by default decision, Sus-
pended by default decision, Censured
by default decision, Monetary penalty
imposed by default decision, and Dis-
qualified by default decision-An ALJ,
after finding that no answer to OPR's
complaint had been filed, granted OPR's
motion for a default judgment and issued
a decision imposing one of these sanc-
tions.

Disbarment by decision on appeal,
Suspended by decision on appeal, Cen-
sured by decision on appeal, Monetary
penalty imposed by decision on appeal,
and Disqualified by decision on ap-
peal-The decision of the ALJ was ap-
pealed to the agency appeal authority, act-
ing as the delegate of the Secretary of the
Treasury, and the appeal authority issued
a decision imposing one of these sanc-
tions.

Disbarred by consent, Suspended by
consent, Censured by consent, Mone-
tary penalty imposed by consent, and

Disqualified by consent-In lieu of a dis-
ciplinary proceeding being instituted or
continued, an individual offered a consent
to one of these sanctions and OPR ac-
cepted the offer. Typically, an offer of
consent will provide for: suspension for
an indefinite term; conditions that the in-
dividual must observe during the suspen-
sion; and the individual's opportunity, af-
ter a stated number of months, to file with
OPR a petition for reinstatement affirming
compliance with the terms of the consent
and affirming current eligibility to prac-
tice (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 individ-
uals to admit to one or more violations of
the regulations and to consent to the dis-
closure of the individual's own return in-
formation related to the admitted viola-
tions (for example, 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 &amp; State

Name

Professional Designation

Disciplinary Sanction

Effective Date(s)

Arizona Forrest City

Williams, Kevin C.

CPA

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from December 10, 2014

California Torrance

Biggins, Jr., James A.

Enrolled Agent

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 22, 2014

Calabasas

Birnbaum, Richard J.

CPA

Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from November 18, 2014

Porter Ranch

Chotani, Masood A.

CPA

Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from November 17, 2014

Los Angeles

Duban, Dennis L.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 22, 2014

Huntington Beach

Dugan, Patrick D.

CPA

Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from November 18, 2014

Visalia

Frantz, Mark A.

CPA

Reinstated to practice before the IRS November 24, 2014

Jacquot, David L., see Idaho

Mission Viejo

Nitschke, Peter D.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from December 8, 2014

Concord

Reiser, Mary F.

CPA

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from December 10, 2014

Carlsbad

Rusch, Chris M.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 22, 2014

San Diego

Shields, L. Scott

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 22, 2014

San Jose

Watson, Robert J.

CPA

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from December 8, 2014

Colorado Brighton

Conradt, Thomas C.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 27, 2014

Nitschke, Peter D., see California

Connecticut

Gostomski, Michael S.

CPA

Reinstated to practice before the IRS October 22, 2014

Stamford

District of Columbia

Miller, Karen J., see Maryland

City &amp; State

Name

Professional Designation

Disciplinary Sanction

Effective Date(s)

Florida

Kennedy, Paul R.

Attorney/ CPA

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 27, 2014

Miami

Georgia

Augusta

Hewett, Thomas J.

Enrolled Agent

Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from December 10, 2014

Idaho

Coeur D' Alene

Jacquot, David

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 27, 2014

Illinois

Williams, Kevin C., see Arizona

Indiana

Bloomington

Bonnell, Michael K.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from December 8, 2014

Indianapolis

Groll, James K.

CPA

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 16, 2014

Fort Wayne

Ouellette, Steven J.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 1, 2014

Maryland

Conradt, Thomas C., see Colorado

Ft. Washington

Miller, Karen J.

Attorney

Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from November 18, 2014

Massachusetts

South Boston

Delehanty, Thomas K.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 27, 2014

Duxbury

Kilduff, Kevin J.

Attorney

Reinstated to practice before the IRS October 8, 2014

Teague, Denis T., see Vermont

Michigan

Marion

Yoder, Daniel L.

Enrolled Agent

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 22, 2014

#### Minnesota

Mendota Heights

Ahl, Vicki M.

Attorney

Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 27, 2014

Lake Elmo

Cumming, William

Attorney

Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from November 17, 2014

Missouri

Smithville

Sommers, John

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 27, 2014

Joplin

Whitworth, Daniel D.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from December 8, 2014

New York

Freeport

Barnett, Joell C.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 27, 2014

Duban, Dennis L., see California

Clayville

Podosek, Craig T.

Enrolled Agent

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 22, 2014

Oklahoma

Oklahoma City

Faulkner, Marvin C.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from December 8, 2014

Warr Acres

Hampton, Dennis L.

CPA

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from December 8, 2014

Knight, David W., see Texas

Pennsylvania

Gibsonia

Bujaky, Martin

CPA

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 27, 2014

Aubudon

Weinstein, Brett

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from November 17, 2014

Tennessee

Oakland

Anderson, Sharon K.

Attorney

Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from November 18, 2014

Nashville

Hamblen, John T.

CPA

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from November 18, 2014

Cookeville

Harris, Samuel J.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from November 21, 2014

Texas Irving

Bean, John E.

CPA

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 27, 2014

#### Texas (Continued)

Austin

Garner, Darrow C.

CPA

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 27, 2014

Dallas

Kimes, Larry W.

CPA/ Attorney

Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 8, 2014

Wichita Falls

Knight, David W.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from November 18, 2014

Vermont

Middlebury

Teague, Denis T.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from December 8, 2014

Virginia

Leesburg

Smith, Connie

Enrolled Agent

Suspended by consent under 31 C.F.R. § 10.51(a)(6) (Revs. 4-2008 and 08-2011)

Indefinite from November 17, 2014

West Virginia

Aleshire, David A.

Charleston

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from November 18, 2014

Wisconsin

Rhinelander

Voss, Richard W.

Attorney

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from October 22, 2014

ISRAEL

Beitar Illit

Cohen, Mordecai N.

Enrolled Agent

Suspended by consent under 31 C.F.R. §§ 10.51(a)(6) and 10.22(a)(2)

Indefinite from October 22, 2014

#### Reporting of Original Issue Discount on Tax-Exempt Obligations; Basis and Transfer Reporting by Securities Brokers for Debt Instruments and Options

##### REG-143040-14

AGENCY: Internal Revenue Service
(IRS), Treasury.

ACTION: Notice of proposed rulemaking
by cross-reference to temporary regulations.

SUMMARY: In the Rules and Regula-
tions section of this issue of the Federal
Register, the IRS is issuing temporary
regulations relating to information report-
ing by brokers for transactions involving
debt instruments and options, including
the reporting of original issue discount
(OID) and acquisition premium on tax-
exempt obligations, the treatment of cer-
tain holder elections for reporting a tax-

payer's adjusted basis in a debt
instrument, and transfer reporting for sec-
tion 1256 options and debt instruments.
The text of those regulations also serves
as the text of these proposed regulations.

DATES: Written or electronic comments
must be received by June 11, 2015.

ADDRESSES: Send submissions to: CC:
PA:LPD:PR (REG-143040-14), room
5203, Internal Revenue Service, PO Box
7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be hand-
delivered Monday through Friday between
the hours of 8 a.m. and 4 p.m. to CC:PA:
LPD:PR (REG-143040-14), Courier's
Desk, Internal Revenue Service, 1111
Constitution Avenue, N.W., Washington,
DC, or sent electronically via the Federal eR-
ulemaking Portal at www.regulations.gov
(IRS REG-143040-14).

FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Pamela Lew, (202) 317-7053;

concerning submissions of comments, Re-
gina Johnson, (202) 317-6901 (not toll-
free numbers).

## SUPPLEMENTARY INFORMATION:

### Paperwork Reduction Act

Section 1.6049-10T, which is pub-
lished elsewhere in this issue of the Fed-
eral Register, requires a payor to report
OID and acquisition premium on tax-
exempt obligations acquired on or after
January 1, 2017. This information is re-
quired to enable the IRS to verify that a
taxpayer is reporting the correct amount
of tax-exempt interest each year for alter-
native minimum tax and other purposes.
In addition, because this information is
used to report a taxpayer's adjusted basis
in a debt instrument under section
6045(g), this information is required to
enable the IRS to verify that a taxpayer is
reporting the correct amount of gain or
loss upon the sale of a tax-exempt obliga-
tion. The burden for the collection of in-

formation contained in § 1.6049-10T and
the corresponding proposed regulations in
this document will be reflected in the bur-
den on Form 1099-OID (OMB control
number 1545-0117) when revised to re-
quest the additional information in the
regulations.

Upon the transfer of a covered security,
section 6045A and § 1.6045A-1 require
the transferring broker to provide to the
transferee broker a transfer statement con-
taining certain information relating to the
security. This transfer statement generally
provides the transferee broker the infor-
mation needed to determine a customer's
adjusted basis and whether any gain or
loss with respect to the security is long-
term, short-term, or ordinary as required
by section 6045(g). Prior to the publica-
tion of § 1.6045A-1T in this issue of the
Federal Register, a broker did not have to
provide a transfer statement for a section
1256 option. In addition, a broker did not
have to provide the last date on or before
the transfer date that the broker made an
adjustment for a particular item relating to
a debt instrument. Section 1.6045A-1T,
however, now requires a broker to transfer
this information for a section 1256 option
transferred on or after January 1, 2016,
and for a debt instrument transferred on or
after June 30, 2015.

The collection of information con-
tained in § 1.6045A-1 relating to the fur-
nishing of information in connection with
the transfer of securities has been re-
viewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under control
number 1545-2186. The collection of in-
formation in § 1.6045A-1T and the cor-
responding proposed regulations in this
document is necessary to allow brokers
that effect sales of transferred section
1256 options and debt instruments that are
covered securities to determine and report
the adjusted basis of these securities in
compliance with section 6045(g). This
collection of information is required to
comply with the provisions of section 403
of the Energy Improvement and Extension
Act of 2008, Division B of Public Law
110-343 (122 Stat. 3765, 3854 (2008))
(the Act). The collection of information
contained in § 1.6045A-1T is an increase
in the total annual burden under control

number 1545-2186. The likely respon-
dents are brokers transferring section
1256 options and debt instruments that are
covered securities.

Estimated total annual reporting bur-
den is 3,333 hours.

Estimated average annual burden
per respondent is 2 hours.

Estimated average burden per re-
sponse is 4 minutes.

Estimated number of respondents is
7,500.

Estimated total frequency of re-
sponses is 200,000.

The collection of information is re-
quired to comply with the provisions of
section 403 of the Act.

The holder of a debt instrument is per-
mitted to make a number of elections that
affect how basis is computed. To mini-
mize the need for reconciliation between
information reported by a broker to both a
customer and the IRS and the amounts
reported on the customer's tax return, a
broker is required to take into account
certain specified elections in reporting in-
formation to the customer. A customer,
therefore, must provide certain informa-
tion concerning an election to the broker
in a written notification. A written notifi-
cation includes a writing in electronic for-
mat. See § 1.6045-1(n)(5).

The collection of information con-
tained in § 1.6045-1(n)(5) relating to the
furnishing of information by a customer to
a broker in connection with the sale or
transfer of a debt instrument that is a
covered security has been reviewed and
approved by the Office of Management
and Budget in accordance with the Paper-
work Reduction Act of 1995 (44 U.S.C.
3507(d)) under control number 1545-
2186. Under § 1.6045-1T(n)(11)(i)(A),
which is published elsewhere in this issue
of the Federal Register, unlike the rule in
current § 1.6045-1(n)(5) adopted in 2013,
a broker must not take into account the
election under § 1.1272-3 in reporting a
customer's adjusted basis in a debt instru-
ment. Therefore, a customer is no longer
required to notify the broker that the cus-
tomer has made or revoked an election
under § 1.1272-3. This change represents
a decrease in the total annual burden un-
der OMB control number 1545-2186. In
addition, under § 1.6045-1T(n)(11)(i)(B),

a broker must take into account the elec-
tion under section 1276(b)(2) unless the
customer timely notifies the broker that
the customer has not made the election.
The temporary regulations reverse the as-
sumption in current § 1.6045-1(n)(5) ad-
opted in 2013. Because the section
1276(b)(2) election results in a more
taxpayer-favorable result than the default
ratable method for accruing market dis-
count in most cases, it is anticipated that
more customers will want to use this
method and these customers will no lon-
ger need to notify their brokers that they
have made the election. As a result, this
change represents a decrease in the total
annual burden under OMB control num-
ber 1545-2186.

### Background and Explanation of Provisions

Section 6045 generally requires a bro-
ker to report gross proceeds upon the sale
of a security. Section 6045 was amended
by section 403 of the Act to require the
reporting of adjusted basis for a covered
security and whether any gain or loss
upon the sale of the security is long-term
or short-term. In addition, the Act added
section 6045A, which requires certain in-
formation to be reported in connection
with a transfer of a covered security to
another broker. Section 6049 requires the
reporting of interest payments (including
accruals of OID treated as payments).

On April 18, 2013, the Treasury De-
partment and the IRS published in the
Federal Register (TD 9616 at 78 FR
23116) final regulations under sections
6045 and 6045A (the 2013 final basis re-
porting regulations). After the publication
of the 2013 final basis reporting regula-
tions in the Federal Register, the Trea-
sury Department and the IRS received

written comments on certain provisions of
the 2013 final basis reporting regulations.
In response to these written comments,
temporary regulations in the Rules and
Regulations section of this issue of the
Federal Register amend the Income Tax
Regulations (26 CFR part 1) relating to
sections 6045, 6045A, and 6049. The tem-
porary regulations (1) amend § 1.6045-
1(n) of the 2013 final basis reporting reg-
ulations to change a broker's treatment of
the election to treat all interest as OID
under § 1.1272-3 and the election to ac-
crue market discount based on a constant
yield under section 1276(b)(2), (2) amend
§ 1.6045A-1 of the 2013 final basis re-
porting regulations to require transfer
statement reporting under section 6045A
for section 1256 options, (3) amend
§ 1.6045A-1 of the 2013 final basis re-
porting regulations to require an addi-
tional item of information to be provided
on transfer statements for debt instru-
ments, and (4) require information report-
ing under section 6049 for OID and ac-
quisition premium on tax-exempt
obligations. The text of the temporary reg-
ulations also serves as the text of these
proposed regulations.

#### Consideration of Administrative Burdens Related to Basis Reporting

A number of commenters have indi-
cated that compliance with basis reporting
requirements and the use of basis and
other information reported by brokers will
require considerable resources and effort
on the part of return preparers and infor-
mation recipients. The Treasury Depart-
ment and the IRS are continuing to review
all aspects of the information reporting
process and are exploring ways to reduce
the compliance burden for both brokers
and for information recipients.

### Special Analyses

It has been determined that this notice
of proposed rulemaking is not a signifi-
cant regulatory action as defined in Exec-
utive Order 12866, as supplemented by
Executive Order 13563. Therefore, a reg-
ulatory assessment is not required. It also
has been determined that section 553(b) of
the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these
regulations.

It is hereby certified that the collection
of information in these regulations will
not have a significant economic impact on
a substantial number of small entities.
Therefore, a Regulatory Flexibility Anal-
ysis under the Regulatory Flexibility Act
(5 U.S.C. chapter 6) is not required. Any
effect on small entities by the rules in the
regulations generally flows directly from
section 403 of the Act. In addition, it is
anticipated that the requirements in the
regulations in this document will fall only
on financial services firms with annual
receipts greater than the $38.5 million
threshold and, therefore, on no small en-
tities.

Section 403(a) of the Act requires a
broker to report the adjusted basis of a
debt instrument that is a covered security.
Although a holder of a debt instrument
(customer) is permitted to make a number
of elections that affect how basis is com-
puted, a broker only is required to take
into account specified elections in report-
ing a debt instrument's adjusted basis, in-
cluding the election under section
1276(b)(2) to determine accruals of mar-
ket discount on a constant yield method.
Under the 2013 final basis reporting reg-
ulations, a customer had to notify the bro-
ker that the customer had made the section
1276(b)(2) election. However, § 1.6045-
1T(n)(11)(i)(B) requires a broker to take
into account the election under section
1276(b)(2) in reporting a debt instru-
ment's adjusted basis unless the customer
timely notifies the broker that the cus-
tomer has not made the election. The no-
tification must be in writing, which in-
cludes a writing in electronic format. In
most cases, this election results in a more
taxpayer-favorable result than the default
ratable method. It is anticipated that this
collection of information in the regula-
tions will not fall on a substantial number
of small entities, especially because fewer
customers will need to notify brokers
about the election. Further, the regulations
generally implement the statutory require-
ments for reporting adjusted basis under
section 403 of the Act. Moreover, any
economic impact is expected to be mini-
mal because it should take a customer no
more than seven minutes to satisfy the
information-sharing requirement in these
regulations.

Section 403(c) of the Act added section
6045A, which requires applicable persons
to provide a transfer statement in connec-
tion with the transfer of custody of a cov-
ered security. Section 1.6045A-1T and
the corresponding proposed regulations in
this document effectuate the Act by giving
the broker who receives the transfer state-
ment the information necessary to deter-
mine and report adjusted basis and
whether any gain or loss with respect to a
debt instrument or section 1256 option is
long-term or short-term as required by
section 6045 when the security is subse-
quently sold. Consequently, § 1.6045A-1T
and the corresponding proposed regulations
in this document do not add to the impact on
small entities imposed by the statutory pro-
visions. Instead, the regulations limit the
information to be reported to only those
items necessary to effectuate the statutory
scheme.

The information required under
§ 1.6049-10T and the corresponding pro-
posed regulations in this document will
enable the IRS to verify that a taxpayer is
reporting the correct amount of tax-
exempt interest each year for alternative
minimum tax and other purposes. In ad-
dition, because this information is used to
report a taxpayer's adjusted basis in a debt
instrument under section 6045(g), this in-
formation is required to enable the IRS to
verify that a taxpayer is reporting the cor-
rect amount of gain or loss upon the sale
of a tax-exempt obligation. Any economic
impact on small entities is expected to be
minimal because a broker already is re-
quired to determine the accruals of OID
and acquisition premium for purposes of
determining and reporting a customer's
adjusted basis on Form 1099-B under
section 6045. Moreover, any effect on
small entities by the rules in the final
regulations flows from section 6049 and
section 403 of the Act.

Pursuant to section 7805(f) of the In-
ternal Revenue Code, this notice of pro-
posed rulemaking has been submitted to
the Chief Counsel for Advocacy of the
Small Business Administration for com-
ment on its impact on small businesses.

### Comments and Request for Public Hearing

Before these proposed regulations are
adopted as final regulations, consideration

will be given to any written (a signed
original and eight (8) copies) or electronic
comments that are submitted timely to the
IRS as prescribed in the preamble under
the "Addresses" heading. The Treasury
Department and the IRS welcome com-
ments on the clarity of the proposed rules
and how they can be made easier to un-
derstand. All comments will be available
at www.regulations.gov for public inspec-
tion and copying. A public hearing may be
scheduled if requested in writing by any
person that timely submits written com-
ments. If a public hearing is scheduled,
notice of the date, time, and place for a
public hearing will be published in the
Federal Register.

### Drafting Information

* * * * *

### Proposed Amendments to the Regulations

Accordingly, 26 CFR part 1 is pro-
posed to be amended as follows:

## PART 1-INCOME TAXES

Paragraph 1. The authority citation for
part 1 is amended by adding entries in
numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *

Section 1.6045-1(n)(11) also issued
under 26 U.S.C. 6045(g). * * *

Section 1.6045A-1(e) and (f) also is-
sued under 26 U.S.C. 6045A(a). * * *

Section 1.6049-10 also issued under
26 U.S.C. 6049(a). * *

Par. 2. Section 1.6045-1(n)(11) is
added to read as follows:

§ 1.6045-1 Returns of information of
brokers and barter exchanges.

[The text of proposed § 1.6045-
1(n)(11) is the same as the text of
§ 1.6045-1T(n)(11) published elsewhere
in this issue of the Federal Register].

Par. 3. Sections 1.6045A-1(e) and (f)
are added to read as follows:

§ 1.6045A-1 Statements of information
required in connection with transfers of
securities.

[The text of proposed § 1.6045A-1(e)
and (f) is the same as the text of

§ 1.6045A-1T(e) and (f) published else-
where in this issue of the Federal Reg-
ister].

Par. 4. Section 1.6049-10 is added to
read as follows:

§ 1.6049-10 Reporting of original issue
discount on a tax-exempt obligation.

[The text of proposed § 1.6049-10 is
the same as the text of § 1.6049-10T
published elsewhere in this issue of the
Federal Register].

John Dalrymple
Deputy Commissioner for
Services and Enforcement.

(Filed by the Office of the Federal Register on March 12,
2015, 8:45 a.m., and published in the issue of the Federal
Register for March 13, 2015, 80 F.R. 13292)

## Definition of Terms

Revenue rulings and revenue procedures
(hereinafter referred to as "rulings ") that
have an effect on previous rulings use the
following defined terms to describe the
effect:

Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).

Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.

Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.

Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A

and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).

Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future 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.

Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.

Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the new
ruling does more than restate the sub-

stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.

Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.

Suspended is used in rare situations to
show that the previous published 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 following abbreviations in current
use and formerly used will appear in ma-
terial published in the Bulletin.

A-Individual.

Acq .- Acquiescence.

B-Individual.

BE-Beneficiary.

F.R .- Federal Register.

FUTA-Federal Unemployment Tax Act.

FX-Foreign corporation.

G.C.M .- Chief Counsel's Memorandum.

GE-Grantee.

TFE-Transferee.

CFR-Code of Federal Regulations.

GP-General Partner.

TFR-Transferor.

CI-City.

GR-Grantor.

T.I.R .- Technical Information Release.

COOP-Cooperative.

IC-Insurance Company.

TP-Taxpayer.

Ct.D .- Court Decision.

I.R.B .- Internal Revenue Bulletin.

TR-Trust.

CY-County.

LE-Lessee.

TT-Trustee.

D-Decedent.

LP-Limited Partner.

U.S.C .- United States Code.

DC-Dummy Corporation.

LR-Lessor.

X-Corporation.

DE-Donee.

M-Minor.

Del. Order-Delegation Order.

Nonacq .- Nonacquiescence.

O Organization.

DR-Donor.

P-Parent Corporation.

PHC-Personal Holding Company.

PO Possession of the U.S.

PR-Partner.

PRS-Partnership.

PTE-Prohibited Transaction Exemption.
Pub. L .- Public Law.

REIT-Real Estate Investment Trust.

Rev. Proc .- Revenue Procedure.

Rev. Rul .- Revenue Ruling.

S Subsidiary.

S.P.R .- Statement of Procedural Rules.

Stat .- Statutes at Large.

BK-Bank.

T-Target Corporation.

B.T.A .- Board of Tax Appeals.

T.C .- Tax Court.

C-Individual.

T.D .- Treasury Decision.

C.B .- Cumulative Bulletin.

ERISA-Employee Retirement Income Security Act.
EX-Executor.

F-Fiduciary.

FC-Foreign Country.

FICA-Federal Insurance Contributions Act.

FISC-Foreign International Sales Company.

FPH-Foreign Personal Holding Company.

Y-Corporation.

Z-Corporation.

DISC-Domestic International Sales Corporation.

E-Estate.

EE-Employee.

E.O .- Executive Order.

ER-Employer.

### Numerical Finding List1

Bulletin 2015-1 through 2015-13

#### Announcements:

2015-1, 2015-11 I.R.B. 758
2015-2, 2015-3 I.R.B. 324

2015-3, 2015-3 I.R.B. 328
2015-4, 2015-5 I.R.B. 565
2015-5, 2015-7 I.R.B. 602
2015-6, 2015-8 I.R.B. 685
2015-7, 2015-13 I.R.B. 823
2015-8, 2015-9 I.R.B. 698
2015-10, 2015-11 I.R.B. 758
2015-12, 2015-12 I.R.B. 770

#### Proposed Regulations:

REG-109187-11, 2015-2 I.R.B. 277
REG-132751-14, 2015-2 I.R.B. 279
REG-145878-14, 2015-2 I.R.B. 290
REG-153656-3, 2015-5 I.R.B. 566
REG-102648-15, 2015-10 I.R.B. 745
REG-136018-13, 2015-11 I.R.B. 759
REG-143416-14, 2015-11 I.R.B. 757
REG-100400-14, 2015-12 I.R.B. 779
REG-132253-11, 2015-12 I.R.B. 771
REG-143040-14, 2015-13 I.R.B. 827

#### Notices:

2015-1, 2015-2 I.R.B. 249
2015-2, 2015-4 I.R.B. 334
2015-3, 2015-6 I.R.B. 583
2015-4, 2015-5 I.R.B. 407
2015-5, 2015-5 I.R.B. 408
2015-6, 2015-5 I.R.B. 412
2015-7, 2015-6 I.R.B. 585
2015-8, 2015-6 I.R.B. 589
2015-9, 2015-6 I.R.B. 590
2015-11, 2015-8 I.R.B. 618
2015-15, 2015-9 I.R.B. 687
2015-12, 2015-8 I.R.B. 700
2015-13, 2015-10 I.R.B. 722
2015-14, 2015-10 I.R.B. 722
2015-16, 2015-10 I.R.B. 732
2015-19, 2015-9 I.R.B. 690
2015-20, 2015-11 I.R.B. 754
2015-18, 2015-12 I.R.B. 765
2015-21, 2015-12 I.R.B. 765
2015-22, 2015-12 I.R.B. 768
2015-23, 2015-12 I.R.B. 769
2015-24, 2015-13 I.R.B. 811
2015-25, 2015-13 I.R.B. 814
2015-26, 2015-13 I.R.B. 814
2015-27, 2015-13 I.R.B. 816

Revenue Procedures:

2015-1, 2015-1 I.R.B. 1
2015-2, 2015-1 I.R.B. 105
2015-3, 2015-1 I.R.B. 129
2015-4, 2015-1 I.R.B. 144
2015-5, 2015-1 I.R.B. 186
2015-6, 2015-1 I.R.B. 194
2015-7, 2015-1 I.R.B. 231
2015-8, 2015-1 I.R.B. 235
2015-9, 2015-2 I.R.B. 249
2015-10, 2015-2 I.R.B. 261
2015-12, 2015-2 I.R.B. 265
2015-13, 2015-5 I.R.B. 419
2015-14, 2015-5 I.R.B. 450
2015-15, 2015-5 I.R.B. 564
2015-16, 2015-7 I.R.B. 596
2015-17, 2015-7 I.R.B. 599
2015-18, 2015-8 I.R.B. 642
2015-19, 2015-8 I.R.B. 678
2015-20, 2015-9 I.R.B. 694
2015-21, 2015-13 I.R.B. 817
2015-22, 2015-11 I.R.B. 754
2015-23, 2015-13 I.R.B. 820
2015-24, 2015-13 I.R.B. 822

#### Revenue Rulings:

2015-1, 2015-4 I.R.B. 331
2015-2, 2015-3 I.R.B. 321
2015-3, 2015-6 I.R.B. 580
2015-4, 2015-10 I.R.B. 743
2015-5, 2015-13 I.R.B. 788
2015-6, 2015-13 I.R.B. 801

#### Treasury Decisions:

9707, 2015-2 I.R.B. 247
9708, 2015-5 I.R.B. 337
9709, 2015-7 I.R.B. 593
9710, 2015-8 I.R.B. 603
9711, 2015-11 I.R.B. 748

9712, 2015-11 I.R.B. 750
9713, 2015-13 I.R.B. 802

1A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2014-27 through 2014-52 is in Internal Revenue Bulletin
2014-52, dated December 28, 2014.

#### Finding List of Current Actions on Previously Published Items1

Bulletin 2015-1 through 2015-13

##### Announcements:

2010-3
Amplified by
Ann. 2015-3, 2015-3 I.R.B. 328

##### Revenue Procedures:

2014-01
Superseded by
Rev. Proc. 2015-01, 2015-01 I.R.B. 1

2014-02
Superseded by
Rev. Proc. 2015-02, 2015-01 I.R.B. 105

2014-03
Superseded by
Rev. Proc. 2015-03, 2015-01 I.R.B. 129

2014-04
Superseded by
Rev. Proc. 2015-04, 2015-01 I.R.B. 144

2014-05
Superseded by
Rev. Proc. 2015-05, 2015-01 I.R.B. 186

2014-06
Superseded by
Rev. Proc. 2015-06, 2015-01 I.R.B. 194

2014-07
Superseded by
Rev. Proc. 2015-07, 2015-01 I.R.B. 231
2014-08
Superseded by
Rev. Proc. 2015-08, 2015-01 I.R.B. 235

2014-10
Superseded by
Rev. Proc. 2015-10, 2015-2 I.R.B. 261

2003-63
Superseded by
Rev. Proc. 2015-12, 2015-2 I.R.B. 265

2011-14
Modified by
Rev. Proc. 2015-12, 2015-2 I.R.B. 265

2011-14
Modified by
Rev. Proc. 2015-13, 2015-5 I.R.B. 419

Revenue Procedures-Continued:

2011-14
Amplified by
Rev. Proc. 2015-13, 2015-5 I.R.B. 419

2011-14
Clarified by
Rev. Proc. 2015-13, 2015-5 I.R.B. 419

1997-27
Clarified by
Rev. Proc. 2015-13, 2015-5 I.R.B. 419

1997-27
Modified by
Rev. Proc. 2015-13, 2015-5 I.R.B. 419

2012-11
Superseded by
Rev. Proc. 2015-17, 2015-7 I.R.B. 599

2015-9
Modified by
Rev. Proc. 2015-17, 2015-7 I.R.B. 599

2015-14
Modified by
Rev. Proc. 2015-20, 2015-9 I.R.B. 694

2013-22
Modified by
Rev. Proc. 2015-22, 2015-11 I.R.B. 754

2015-8
Modified by
Rev. Proc. 2015-22, 2015-11 I.R.B. 754

2014-59
Modified by
Rev. Proc. 2015-24, 2015-13 I.R.B. 822

##### Revenue Rulings:

92-19
Supplemented by
Rev. Rul. 2015-02, 2015-3 I.R.B. 321

Notices:

2013-01
Modified by
Notice 2015-20, 2015-11 I.R.B. 754

2013-01
Superseded by
Notice 2015-20, 2015-11 I.R.B. 754

1A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2014-27 through 2014-52 is in Internal Revenue Bulletin 2014-52, dated December 28,
2014.

# Internal Revenue Service Washington, DC 20224

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# INTERNAL REVENUE BULLETIN

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