Internal Revenue Bulletin 2017-17 (PDF rendition): IRS Revenue Procedures

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

# INTERNAL REVENUE BULLETIN

IRS

Bulletin No. 2017-17
April 24, 2017

## HIGHLIGHTS OF THIS ISSUE

These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.

## INCOME TAX

Rev. Rul. 2017-10, page 1108.

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
2017 are set forth.

### Notice 2017-24, page 1127.

This notice publishes the reference price under § 45K(d)(2)(C)
of the Internal Revenue Code for calendar year 2016. The
reference price applies in determining the amount of the en-
hanced oil recovery credit under § 43, the marginal well pro-
duction credit under § 45I, and the percentage depletion in
case of oil produced from marginal properties under § 613A.

Notice 2017-25, page 1127.

The notice announces the inflation adjustment factor and
phase-out amount for the enhanced oil recovery credit for
taxable years beginning in the 2017 calendar year. The format
of the notice is identical to the format of previously published
notices on this issue. The notice concludes that because the
reference price for the 2016 calendar year ($38.29) does not
exceed $28 multiplied by the inflation adjustment factor for the
2016 calendar year ($28 multiplied by 1.6713 = $46.7964),
the enhanced oil recovery credit for qualified costs paid or
incurred in 2017 is determined without regard to the phase-out
for crude oil price increases. The notice contains the previously
published figures for taxable years beginning in the 1991
through 2016 calendar years. The enhanced oil recovery
credit for qualified costs had been phased out completely for
calendar years 2006 through 2015. Calendar year 2016 was
the first year since calendar year 2005 when the enhanced oil
recovery credit for qualified costs was determined without
regard to the phase out for crude oil price increases.

Finding Lists begin on page ii.

Notice 2017-26, page 1129.

The notice announces that under § 613A(c)(6)(C) of the Internal
Revenue Code, the applicable percentage for purposes of
determining percentage depletion on marginal properties for
calendar year 2017 is 15 percent. The format of the notice is
identical to the format of notices previously published on this
issue.

## EMPLOYMENT TAX

Rev. Proc. 2017-32, page 1109.

This revenue procedure provides general rules and specifica-
tions from the IRS for paper and computer-generated substi-
tutes for Form 941, Schedule B (Form 941), Schedule D (Form
941), Schedule R (Form 941) and Form 8974. This procedure
will be reproduced as the next revision of Publication 4436.
Rev. Proc. 2016-16 is superseded.

## 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

### Taxation of Fringe Benefits Rev. Rul. 2017-10

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

1/1/17 - 6/30/17

$38.85

Up to 500 miles = $.2125 per mile 501-1500 miles = $.1620 per mile Over 1500 miles = $.1558 per mile

#### DRAFTING INFORMATION

The principal author of this revenue
ruling is Kathleen Edmondson of the Of-

fice of Associate Chief Counsel (Tax Ex-
empt/Government Entities). For further
information regarding this revenue ruling,

contact Ms. Edmondson at (202) 317-
6798 (not a toll-free number).

## Part III. Administrative, Procedural, and Miscellaneous

NOTE. This revenue procedure will be reproduced as the next revision of IRS Publication 4436, General Rules and Specifications
for Substitute Form 941, Schedule B (Form 941), Schedule D (Form 941), Schedule R (Form 941), and Form 8974.

Rev. Proc. 2017-32

TABLE OF CONTENTS

Part 1 -

Section 1.1 - Purpose

1109

Section 1.2 - What's New

1111

Section 1.3 - General Requirements for Reproducing IRS Official Form 941, Schedule B, Schedule D, Schedule R, and Form 8974

1111

Section 1.4 - Reproducing Form 941, Schedule B, Schedule D, Schedule R, and Form 8974 for Software-Generated Paper Forms

1113

Section 1.5 - Specific Instructions for Schedule D

1114

Section 1.6 - Specific Instructions for Schedule R

1114

Section 1.7 - Specific Instructions for Form 8974

1115

Section 1.8 - OMB Requirements for Substitute Forms

1115

Section 1.9 - Order Forms and Instructions

1116

Section 1.10 - Effect on Other Documents

1116

Section 1.11 - Helpful Information

1116

Section 1.12 - Exhibits.

1118

# Part 1

Section 1.1 - Purpose

.01 The purpose of this revenue procedure is to provide general rules and specifications from the
IRS for paper and computer-generated substitutes for Form 941, Employer's QUARTERLY
Federal Tax Return; Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule
Depositors (referred to in this revenue procedure as "Schedule B"); Schedule D (Form 941),
Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations (referred
to in this revenue procedure as "Schedule D"); Schedule R (Form 941), Allocation Schedule for
Aggregate Form 941 Filers (referred to in this revenue procedure as "Schedule R"); and Form
8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities.

!
CAUTION

Before creating a substitute Form 941, see Pub. 1167, General Rules and Specifi-
cations for Substitute Forms and Schedules, for additional rules and specifications
for payment vouchers (Vouchers), printing in margins (Marginal Printing), and
additional instructions (Additional Instructions for All Forms).

Note. Substitute territorial forms (941-PR, Planilla para la Declaración Federal TRIMESTRAL
del Patrono; 941-SS, Employer's QUARTERLY Federal Tax Return (American Samoa, Guam,
the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands); and Anexo B
(Formulario 941-PR), Registro de la Obligación Contributiva para los Despositantes de Itinerario
Bisemanal) should also conform to the specifications outlined in this revenue procedure.

.02 This revenue procedure provides information for substitute Form 941, Schedule B, Schedule
D, Schedule R, and Form 8974. If you need more in-depth information on who must complete
these forms and how to complete them, see the Instructions for Form 941, Instructions for

Schedule B, Instructions for Schedule D, instructions included with Schedule R, Instructions for
Form 8974, and Pub. 15, Employer's Tax Guide, or visit IRS.gov.

Note. Failure to produce acceptable substitutes of the forms and schedules listed in this revenue
procedure may result in delays in processing and penalties.

.03 Forms that completely follow the guidelines in this revenue procedure and are exact replicas
of the official IRS forms do not need to be submitted to the IRS for specific approval. Substitute
forms and schedules need to be scanned using IRS scanning equipment.

If you are uncertain of any specification and want clarification, do the following.

1\. Submit a letter citing the specification.

2\. State your understanding of the specification.

3\. Enclose an example (if appropriate) of how the form would appear if produced using your
understanding.

4\. Be sure to include your name, complete address, phone number, and, if applicable, your
email address with your correspondence. Send your request to SCRIPS@irs.gov or
substituteforms@irs.gov, or use the following address.

Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:P:TP
5000 Ellin Road, C6-440
Lanham, MD 20706

Note. Allow at least 30 days for the IRS to respond.

.04 However, software developers and form producers should send a blank copy of their substitute
Form 941 and Schedule B in Portable Document Format (PDF) to SCRIPS@irs.gov. The purpose
is not specifically for approval but to assist the IRS in preparing to scan these forms. Submitters
will only receive comments if a significant problem is discovered through this process. Submitters
are not expected to delay marketing their forms in order to receive feedback. Submitters must not
include any "live" taxpayer data on any substitute form submitted for review.

.05 The following six-digit form ID codes are used on Form 941, the schedules for Form 941, and
Form 8974.

· Official paper forms: 950117 (Form 941, page 1); 950217 (Form 941, page 2); 960311 (Schedule
B); 950417 (Schedule R, page 1); 950517 (Schedule R, page 2); 950613 (Schedule R, page 3); and
950817 (Form 8974).

· Substitute 6x10 grids: 970117 (Form 941, page 1); 970217 (Form 941, page 2); 970311
(Schedule B); 970417 (Schedule R, page 1); 970517 (Schedule R, page 2); 970617 (Schedule R,
page 3); and 970817 (Form 8974).

Generally, the last two digits of the form ID code represent the last year in which the IRS made
major formatting changes to the layout of the form.

Note. Page 3 of Schedule R is not required to be filed with the IRS as part of a substitute Schedule
R. However, if page 3 of the substitute Schedule R is filed, it must include the form ID code.

.06 This revenue procedure will be updated only if there are major formatting changes to the
layout of the forms or there are other changes that impact the processing of substitute forms.

Section 1.2 - What's New

.01 Qualified small business payroll tax credit for increasing research activities. For tax years
beginning after December 31, 2015, a qualified small business may elect to claim up to $250,000
of its credit for increasing research activities as a payroll tax credit against the employer's share
of social security tax. The portion of the credit used against the employer's share of social security
tax is allowed in the first calendar quarter beginning after the date that the qualified small business
filed its income tax return. The election and determination of the credit amount that will be used
against the employer's share of social security tax is made on Form 6765, Credit for Increasing
Research Activities. The amount from Form 6765, line 44, must then be reported on Form 8974,
Qualified Small Business Payroll Tax Credit for Increasing Research Activities. Form 8974 is
used to determine the amount of the credit that can be used in the current quarter. The amount
from Form 8974, line 12, is reported on Form 941, line 11. If you are claiming the research payroll
tax credit on your Form 941, you must attach Form 8974 to that Form 941.

.02 New certification program for professional employer organizations. The Tax Increase
Prevention Act of 2014 required the IRS to establish a voluntary certification program for
professional employer organizations (PEOs). PEOs handle various payroll administration and tax
reporting responsibilities for their business clients and are typically paid a fee based on payroll
costs. To become and remain certified under the certification program, certified professional
employer organizations (CPEOs) must meet tax status, background, experience, business loca-
tion, financial reporting, bonding and other requirements described in sections 3511 and 7705 and
related published guidance. The IRS began accepting applications for PEO certification in July
2016. Certification as a CPEO affects the employment tax liabilities of both the CPEO and its
customers. A CPEO is generally treated as the employer of any individual performing services for
a customer of the CPEO and covered by a contract described in section 7705(e)(2) between the
CPEO and the customer (CPEO contract), but only for wages and other compensation paid to the
individual by the CPEO. For more information, visit the IRS website at IRS.gov/cpeo.

CPEOs generally must file Form 941 and Schedule R electronically. For more information about
a CPEO's requirement to file electronically, see Rev. Proc. 2017-14, 2017-3 I.R.B. 426, available
at IRS.gov/irb/2017-03_IRB/ar14.html.

.03 Schedule R redesigned. Schedule R has been redesigned to include filing by CPEOs and
reporting of the qualified small business payroll tax credit for increasing research activities.

## Section 1.3 - General Requirements for Reproducing IRS Official Form 941, Schedule B, Schedule D, Schedule R, and Form 8974

.01 Submit substitute Form 941, Schedule B, Schedule D, Schedule R, and Form 8974 to the IRS
for specifications review. Substitute Form 941, Schedule B, Schedule D, Schedule R, and Form
8974 that completely conform to the specifications contained in this revenue procedure do not
require prior approval from the IRS, but should be submitted to SCRIPS@irs.gov to ensure that
they conform to IRS format and scanning specifications.

.02 Print the form on standard 8.5 inches wide by 11-inch paper.

.03 Use white paper that meets generally accepted weight, color, and quality standards (minimum
20 lb. white bond paper).

Note. Reclaimed fiber in any percentage is permitted provided that the requirements of this
standard are met.

.04 The IRS prefers printing Form 941 on both sides of a single sheet of paper, but it is acceptable
to print on one side of each of two separate sheets of paper.

.05 Make the substitute paper form as identical to the official form as possible.

.06 Print the substitute form using nonreflective black (not blue or other-colored) ink. Printing in
an ink color other than black may reduce readability in the scanning process. This may result in
figures being too faint to be recognizable.

.07 Use typefaces that are substantially identical in size and shape to the official form and use
rules and shading (if used) that are substantially identical to those on the official form. Use font
size as large as possible within the fields.

.08 In the same location as shown on the official IRS forms, print the six-digit form ID code (if
one exists on the official form) on each form using nonreflective black, carbon-based, 12-point.
The use of non-OCR-A font may reduce readability for scanning. Use the official form to develop
your substitute form.

Note. Maintain as much white space as possible around the form ID code. Do not allow character
strings to print adjacent to the code.

The year digits represent the last year in which the IRS made major formatting changes to the
layout of the form. Therefore, the last two digits may not be the same as the current tax year. For
tax year 2017 and until this revenue procedure is superseded, print "950117" on Form 941, page
1; "950217" on Form 941, page 2; "960311" on Schedule B; "950417" on Schedule R, page 1;
"950517" on Schedule R, page 2; "950617" on Schedule R, page 3; and "950817" on Form 8974.
See Section 1.4 for information on form ID codes for software-generated forms.

Note. Page 3 of Schedule R is not required to be filed with the IRS as part of a substitute Schedule
R. However, if page 3 of the substitute Schedule R is filed, it must include the form ID code.

.09 Print the OMB number in the same location as on the official form. Be sure to include the
OMB number on Form 941, Schedule B, Schedule D, Schedule R, and Form 8974.

.10 Print all entry boxes and checkboxes exactly as shown (location and size) on the official
forms.

Note. Instead of a four-sided checkbox for the entry, just the bottom line of the box can be used
as long as the location and size remain the same.

.11 Print "For Privacy Act and Paperwork Reduction Act Notice, see the back of the Payment
Voucher." at the bottom of page 1 of Form 941.

.12 Print "For Paperwork Reduction Act Notice, see separate instructions." at the bottom of
Schedule B and Schedule D.

.13 Print "For Paperwork Reduction Act Notice, see the instructions." at the bottom of Schedule
R.

.14 Print "Paperwork Reduction Act Notice, see the separate instructions." at the bottom of Form
8974.

.15 Do not print the form catalog number ("Cat. No.") at the bottom of the forms or instructions.
Instead, print your IRS-issued three letter substitute form source code in place of the catalog
number on the left at the bottom of page 1 of Form 941, Schedule B, Schedule D, Schedule R,
and Form 8974.

Note. You can obtain a three-letter substitute form source code by requesting it by email at
substituteforms@irs.gov. Please enter "Substitute Forms" on the subject line.

.16 Do not print the Government Printing Office (GPO) symbol at the bottom of the forms or
instructions.

## Section 1.4 - Reproducing Form 941, Schedule B, Schedule D, Schedule R, and Form 8974 for Software-Generated Paper Forms

.01 You may use the PDF files to develop the layout for your forms. Draft forms found at
IRS.gov/draftforms can be used to develop interim formats until the forms are finalized. When
forms become finalized, they are posted and can be found at IRS.gov/forms. You may use 6x10
grid formats to develop software versions of Form 941, Schedule B, Schedule D, Schedule R, and
Form 8974. Please follow the specifications exactly to develop the fields.

.02 If you are developing software using the 6x10 grid, you may make the following modifica-
tions.

· "970117" for Form 941, page 1; "970217" for Form 941, page 2; "970311" for Schedule B;
"970417" for Schedule R, page 1; "970517" for Schedule R, page 2; "970617" for Schedule R,
page 3; and "970817" for Form 8974, as the form ID codes.

Note. Maintain as much white space as possible around the form ID code. Do not allow
character strings to print adjacent to the code.

· Place all 6x10 grid boxes and entry spaces in the same field locations as indicated on the official
forms.

· Use single lines for "Employer Identification Number (EIN)" and other entry areas in the entity
section of Form 941, page 1; Schedule B; Schedule R, pages 1 and 2; and Form 8974.

· Reverse type is not needed as shown on the official form.

· Do not pre-print decimal points in the data boxes. However, where the amounts are required, the
amounts should be printed with decimal points and place holders for cents.

· Delete the pre-printed formatting in any "date" boxes.

· Use a single box for "Personal Identification Number (PIN)" on Form 941.

· You may delete all shading when using the 6x10 grid format.

.03 If producing both the form and the data or the form only, print your three-letter source code
at the bottom of Form 941, page 1; Schedule B; Schedule D; Schedule R, page 1; or Form 8974.
See Section 1.3.15.

.04 If producing only the data on the form, print your four-digit software industry vendor code on
Form 941. The four-digit vendor code preceded by four zeros and a slash (0000/9876) must be
pre-printed. If you have a valid vendor code issued to you through the National Association of
Computerized Tax Processors (NACTP), you should use that code. If you do not have a valid
vendor code, contact the NATCP via email at president@natcp.org for information on these
codes.

.05 Print "For Privacy Act and Paperwork Reduction Act Notice, see the back of the Payment
Voucher." at the bottom of Form 941, page 1.

.06 Print "For Paperwork Reduction Act Notice, see separate instructions." at the bottom of
Schedule B and Schedule D.

.07 Print "For Paperwork Reduction Act Notice, see the instructions." at the bottom of Schedule
R, page 1.

.08 Print "For Paperwork Reduction Act Notice, see the separate instructions." at the bottom of
Form 8974.

.09 Be sure to print the OMB number in the same location as on the official forms on substitute
Form 941, Schedule B, Schedule D, Schedule R, and Form 8974.

.10 Do not print the form catalog number ("Cat. No.") at the bottom of the forms or instructions.

.11 Do not print the Government Printing Office (GPO) symbol at the bottom of the forms or
instructions.

.12 To ensure accurate scanning and processing, enter data on Form 941, Schedule B, Schedule
D, Schedule R, and Form 8974 as follows.

· Display/print the name and EIN on all pages and attachments in the proper associated fields.

· Use 12-point (minimum 10-point) Courier font (where possible).

· Omit dollar signs, but use commas when showing amounts.

· Except for Form 941, lines 1 and 2, leave blank any data field with a value of zero.

· Enter negative amounts with a minus sign. For example, report "-10.59" instead of "(10.59)."

Note. The IRS prefers that you use a minus sign for negative amounts instead of parentheses
or some other means. However, if your software only allows for parentheses in reporting
negative amounts, you may use them.

### Section 1.5 - Specific Instructions for Schedule D

.01 To properly file and to reduce delays and contact from the IRS, Schedule D must be produced
as close as possible to the official form.

.02 Use Schedule D to explain why you have certain discrepancies. See the Instructions for
Schedule D for more information. In many cases, the information on Schedule D helps the IRS
resolve discrepancies without contacting you.

.03 If a substitute Schedule D is not submitted in similar format to the official IRS schedule, the
substitutes may be returned, you may be contacted by the IRS, delays in processing may occur,
and you may be subject to penalties.

### Section 1.6 - Specific Instructions for Schedule R

.01 To properly file and to reduce delays and contact from the IRS, Schedule R and Continuation
Sheets for Schedule R must be produced as close as possible to the official form.

Note. Do not present the information in spreadsheet or similar format. We may not be able to
properly process nonconforming documents with an excessive number of entries. Complete as
many Continuation Sheets for Schedule R (Schedule R, page 2) as necessary. If Continuation
Sheets are not used or they vary in form from the official form, processing may be delayed and
you may be subject to penalties.

.02 Use Schedule R to allocate the aggregate information reported on Form 941 to each client. If
you have more than 10 clients, complete as many Continuation Sheets for Schedule R as
necessary. Attach Schedule R, including any Continuation Sheets, to your aggregate Form 941
and file it with your return. Enter your business information carefully.

Make sure all information exactly matches the information shown on the aggregate Form 941.
Compare the total of each column on Schedule R, line 14 (including your information on line 13),
to the amounts reported on the aggregate Form 941. For each column total of Schedule R, the
relevant line from Form 941 is noted in the column heading. If the totals on Schedule R, line 14,
do not match the totals on Form 941, there is an error that must be corrected before submitting
Form 941 and Schedule R.

.03 Do:

· Develop and submit only conforming Schedules R.

· Follow the format and fields exactly as on the official Schedule R.

· Maintain the same number of entry lines on the substitute Schedule R as on the official form.

.04 Do not:

· Add or delete entry lines.

· Submit spreadsheets, database printouts, or similar formatted documents instead of using the
Schedule R format to report data.

· Reduce or expand font size to add or delete extra data or lines.

.05 If substitute Schedules R and Continuation Sheets for Schedule R are not submitted in similar
format to the official schedule, the substitutes may be returned, you may be contacted by the IRS,
delays in processing may occur, and you may be subject to penalties.

### Section 1.7 - Specific Instructions for Form 8974

.01 To properly file and to reduce delays and contact from the IRS, Form 8974 must be produced
as close as possible to the official form.

.02 Use Form 8974 only if you are claiming the qualified small business payroll tax credit for
increasing research activities.

.03 If a substitute Form 8974 is not submitted in similar format to the official IRS form, the
substitutes may be returned, you may be contacted by the IRS, delays in processing may occur,
and you may be subject to penalties.

### Section 1.8 - OMB Requirements for Substitute Forms

.01 The Paperwork Reduction Act (the Act) of 1995 (Public Law 104-13) requires the following.

· The Office of Management and Budget (OMB) approves all IRS tax forms that are subject to the Act.

· Each IRS form contains the OMB approval number, if assigned. The official OMB numbers may
be found on the official IRS-printed forms.

· Each IRS form (or its instructions) states:

1\. Why the IRS needs the information,

2\. How it will be used, and

3\. Whether or not the information is required to be furnished to the IRS.

.02 This information must be provided to any users of official or substitute IRS forms or
instructions.

.03 The OMB requirements for substitute IRS forms are the following.

· Any substitute form or substitute statement to a recipient must show the OMB number as it
appears on the official form.

· For Form 941, Schedule B, Schedule D, Schedule R, and Form 8974, the OMB number
(1545-0029) must appear exactly as shown on the official form.

· For Form 941, Schedule B, Schedule D, Schedule R, and Form 8974, the OMB number must use
one of the following formats.

1\. OMB No. 1545-0029 (preferred).

2\. OMB # 1545-0029 (acceptable).

.04 If no instructions are provided to users of your forms, you must furnish to them the exact text
of the Privacy Act and Paperwork Reduction Act Notice.

### Section 1.9 - Order Forms and Instructions

.01 You can order forms and instructions at IRS.gov/orderforms.

### Section 1.10 - Effect on Other Documents

.01 Revenue Procedure 2016-16, 2016-10 I.R.B. 394, dated March 7, 2016, is superseded.

### Section 1.11 - Helpful Information

.01 Please follow the specifications and guidelines to produce substitute Form 941, Schedule B,
Schedule D, Schedule R, and Form 8974.

.02 These forms are subject to review and possible changes as required. Therefore, employers are
cautioned against overstocking supplies of privately printed substitutes.

.03 Here is a review of references that were listed throughout this document.

· Form 941, Employer's QUARTERLY Federal Tax Return.

· Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors
(referred to in this revenue procedure as "Schedule B").

· Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or
Consolidations (referred to in this revenue procedure as "Schedule D").

· Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers (referred to in this
revenue procedure as "Schedule R").

· Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities.

· Substitute territorial forms (941-PR, 941-SS, and Anexo B (Formulario 941-PR)).

. Instructions for Form 941.

· Instructions for Schedule B (Form 941).

. Instructions for Form 8974.

· Pub. 15, Employer's Tax Guide.

· SCRIPS@irs.gov for submissions.

· substituteforms@irs.gov for questions.

· For questions:

Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:P:TP
5000 Ellin Road, C6-440
Lanham, MD 20706

· IRS.gov/draftforms for draft forms.

· IRS.gov/forms for final forms.

#### Exhibit A

Form 941 Page 1

.50 in

Form
(Rev. January 2017)

941 for 2017: Employer's QUARTERLY Federal Tax Return
Department of the Treasury - Internal Revenue Service

950117
OMB No. 1545-0029

Employer identification number (EIN)

Report for this Quarter of 2017
(Check one.)

.27 in

5.00 in

Name (not your trade name)

3.50 in

☐
1: January, February, March

☐
2: April, May, June

2.50 in

2.33 in

Trade name (if any)

3.80 in

☐
3: July, August, September

Address

4.30 in

☐
4: October, November, December

1.88 in

Number

Street

Suite or room number

Instructions and prior year forms are
available at www.irs.gov/form941.

2.60 in

.50 in

1.00 in

City

State

ZIP code

2.15 in

2.00 in

1.20 in

.90 in

Foreign country name

Foreign province/county

Foreign postal code

Read the separate instructions before you complete Form 941. Type or print within the boxes.

Part 1:
Answer these questions for this quarter.

1
Number of employees who received wages, tips, or other compensation for the pay period
including: Mar. 12 (Quarter 1), June 12 (Quarter 2), Sept. 12 (Quarter 3), or Dec. 12 (Quarter 4)

20 in

50 in

2
Wages, tips, and other compensation

3
Federal income tax withheld from wages, tips, and other compensation

If no wages, tips, and other compensation are subject to social security or Medicare tax

☐
Check and go to line 6.

1.70 in

7.81 in

15
Overpayment. If line 13 is more than line 12, enter the difference
You MUST complete both pages of Form 941 and SIGN it.
For Privacy Act and Paperwork Reduction Act Notice, see the back of the Payment Voucher.

.
Check one:
☐
Apply to next retum.
22 in

☐
Send a refund
Next

Cat. No. 17001Z

Form 941 (Rev. 1-2017)

Column 1

Column 2

5a Taxable social security wages

× 0.124 =

5b Taxable social security tips

× 0.124 =

5c Taxable Medicare wages &amp; tips.

× 0.029 =

5d Taxable wages &amp; tips subject to

Additional Medicare Tax withholding

× 0.009 =

1.30 in .

Add Column 2 from lines 5a, 5b, 5c, and 5d

1.80 in .

Section 3121(q) Notice and Demand-Tax due on unreported tips (see instructions)

Total taxes before adjustments. Add lines 3, 5e, and 5f

Current quarter's adjustment for fractions of cents

Current quarter's adjustment for sick pay

Current quarter's adjustments for tips and group-term life insurance

Total taxes after adjustments. Combine lines 6 through 9

Qualified small business payroll tax credit for increasing research activities. Attach Form 8974

Total taxes after adjustments and credits. Subtract line 11 from line 10

Total deposits for this quarter, including overpayment applied from a prior quarter and overpayments applied from Form 941-X, 941-X (PR), 944-X, or 944-X (SP) filed in the current quarter

Balance due. If line 12 is more than line 13, enter the difference and see instructions 3.70 in

### Exhibit B

.50 in

450217

Name (not your trade name)

Employer identification number (EIN)

Part 2:
Tell us about your deposit schedule and tax liability for this quarter.

If you are unsure about whether you are a monthly schedule depositor or a semiweekly schedule depositor, see section 11
of Pub. 15.

16 Check one:
☐
Line 12 on this return is less than $2,500 or line 12 (line 10 if the prior quarter was the fourth quarter of 2016) on the return
for the prior quarter was less than $2,500, and you didn't incur a $100,000 next-day deposit obligation during the current
quarter. If line 12 (line 10 if the prior quarter was the fourth quarter of 2016) for the prior quarter was less than $2,500 but line 12 on
this return is $100,000 or more, you must provide a record of your federal tax liability. If you are a monthly schedule depositor,
complete the deposit schedule below; if you are a semiweekly schedule depositor, attach Schedule B (Form 941). Go to Part 3.
☐
You were a monthly schedule depositor for the entire quarter. Enter your tax liability for each month and total
liability for the quarter, then go to Part 3.

.50 in
1.12 in

9.86 in

Tax liability: Month 1

1.81 in
.

Month 2

2.91 in

.50 in

Month 3
.

Total liability for quarter
.
Total must equal line 12.
☐
You were a semiweekly schedule depositor for any part of this quarter. Complete Schedule B (Form 941),
Report of Tax Liability for Semiweekly Schedule Depositors, and attach it to Form 941.

Part 3:
Tell us about your business. If a question does NOT apply to your business, leave it blank.

17 If your business has closed or you stopped paying wages
☐
Check hele, and
enter the final date you paid wages
/ /
.
1.10 in

18 If you are a seasonal employer and you don't have to file a return for every quarter of the year
☐
Check hele.

Part 4:
May we speak with your third-party designee?

Do you want to allow an employee, a paid tax preparer, or another person to discuss this return with the IRS? See the instructions
for details.
2.40 in
1.50 in
☐
Yes. Designee's name and phone number

Select a 5-digit Personal Identification Number (PIN) to use when talking to the IRS.
☐ ☐
No.

1.41 in

Part 5:
Sign here. You MUST complete both pages of Form 941 and SIGN it.

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge
and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

X
☒
Sign your
name here

Print your
name here

3.00 in

1.90 in

.60 in

Print your
title here

Date

1 1
1.10 in

Best daytime phone

1.50 in

Paid Preparer Use Only

Check if you are self-employed
☐
.

Preparer's name

PTIN

1.70 in

Preparer's signature

Date

/ /

Firm's name (or yours
if self-employed)

EIN

Address

3.60 in

Phone

City

2.50 in

State

.50 in

ZIP code

#### Exhibit C

1
50 in

Form 941-V,
Payment Voucher

0
Detach Here and Mail With Your Payment and Form 941.

.50 in

2 941-V Form

Payment Voucher Don't staple this voucher or your payment to Form 941.

L OMB No. 1545-0029 2017

Department of the Treasury Internal Revenue Service

1 Enter your employer identification number (EIN).

2 Enter the amount of your payment. Make your check or money order payable to "United States Treasury"

Dollars

Cents

3 Tax Period

4 Enter your business name (individual name if sole proprietor).

☐ 1st Quarter

☐ 3rd Quarter

Enter your address.

2.92 in

☐ 2nd Quarter

☐ 4th Quarter

Enter your city, state, and ZIP code or your city, foreign country name,

foreign province/county, and foreign postal code.

7.50 in

50 in

.50 in

50 in

##### Schedule B (Form 941):

1.00 in

960311

3.50 in

###### Report of Tax Liability for Semiweekly Schedule Depositors

OMB No. 1545-0029

(Rev. January 2017)

Department of the Treasury - Internal Revenue Service

3.27 in

Employer identification number
(EIN)

##### Report for this Quarter ... (Check one.)

3.50 in

☐
1: January, February, March

2.20 in

Name (not your trade name)

☐
2: April, May, Jun

Calendar year

(Also check quarter)

☐
3: July, August, September

1.33 in

2.50 in

☐
4: October, November, December

Use this schedule to show your TAX LIABILITY for the quarter; don't use it to show your deposits. When you file this form with Form 941 or
Form 941-SS, don't change your tax liability by adjustments reported on any Forms 941-X or 944-X. You must fill out this form and attach it to
Form 941 or Form 941-SS if you're a semiweekly schedule depositor or became one because your accumulated tax liability on any day was
$100,000 or more. Write your daily tax liability on the numbered space that corresponds to the date wages were paid. See Section 11 in
Pub. 15 for details.

Month 1

1.20 in

20 in

Tax liability for Month 1

.60 in

1.80 in

1.57 in

Month 2 .20 in

6.30 in

Tax liability for Month 2

1.58 in

Month 3

Tax liability for Month 3

.50 in

1.41 in

Total liability for the quarter

.55 in

Fill in your total liability for the quarter (Month 1 + Month 2 + Month 3) >
Total must equal line 12 on Form 941 or Form 941-SS.

.50 in
.

For Paperwork Reduction Act Notice, see separate instructions.

IRS.gov/form941
1.20 in

Cat. No. 11967Q

Schedule B (Form 941) (Rev. 1-2017)

.50 in

50 in

Schedule D (Form 941):
Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations
(Rev. June 2011) Department of the Treasury-Internal Revenue Service

OMB No. 1545-0029

Employer Identification Number (EIN)

Tax Year of Discrepancies (Fill in)

2.85 in

75 in

Name (not your trade name)

3.40 in

Format: YYYY

Trade name (if any)

3.70 in

4.20 in

Type of Submission (Check one)

Address

Number

Street

Suite or room number

2.60 in

50 in

.90 in

☐
Original

1.08 in

2.20 in

City

State

ZIP code

☐
Corrected

Phone number

2.29 in

##### About this schedule

Each year the Internal Revenue Service (IRS) and the Social Security Administration (SSA) compare the totals on your Forms 941,
Employer's QUARTERLY Federal Tax Retum, with the totals on Forms W-2, Wage and Tax Statement, to verify that:

. The wages you reported on Forms 941 match those you reported on Forms W-2 (Copy A) so that your
employees' social security earnings records are complete for benefit purposes; and
. You have paid the appropriate taxes.

Generally, the totals on your Forms W-2 (Copy A) should equal the totals you reported on Forms 941. Use this schedule if discrepancies
exist between the totals you reported on those forms ONLY as a result of an acquisition, statutory merger, or consolidation. In many cases,
the information on this schedule should help the IRS resolve discrepancies without contacting you. If you are an eligible employer
who elects to use the alternate procedure set forth in Rev. Proc. 2004-53, explained in the instructions, you should file this schedule.

Read the separate instructions before you fill out this schedule.

##### Part 1: Answer these background questions.

1\. Are you filing this schedule -
☐
After a statutory merger or consolidation? (See Rev. Rul. 62-60, 1962-1 C.B. 186 and Rev. Proc. 2004-53, 2004-2 C.B. 320.)

You are either:
☐
An acquired corporation or
☐
A surviving corporation.

☐
After an acquisition and you are using the alternate procedure under Rev. Proc. 2004-53, 2004-2 C.B. 320?

You are either:
☐
A predecessor or

☐
A successor.

4.91 in

2\. The effective date of the statutory merger/consolidation or acquisition is

1.70 in

3\. The OTHER PARTY in this transaction is . ..

1
DD

1
YYYY

Other party's EIN

Other party's name

6.00 in

Trade name (if any)

Address

Number

Street

Suite or room number

City

State

ZIP code

Phone number

2.30 in

For Paperwork Reduction Act Notice, see separate instructions.

Cat. No. 38791Y

Schedule D (Form 941) (RevT6-2011)

50 in

.50 in

Your EIN

2.86 in

Tax Year of Discrepancies (Fill in)

.50 in

Name (not your trade name)

3.60 in

.80 in

Format: YYYY

2.20 in

Other party's EIN

7.09 in

If you are filing for one transaction only, STOP here. If you are filing for more than one transaction, go to Part 3.

### Part 3: Fill this part out ONLY if you are filing more than one Schedule D (Form 941) for any calendar year.

9\. File one Schedule D (Form 941) for each separate transaction. This is schedule

.70 in

of
(Example: This is schedule 1 of 3.)

Column A

Column B

Column C

Amount you reported to IRS
for the tax year for the
employees affected by the
transaction reported on this
Schedule D (Form 941)

\- Amount you reported to SSA
for the tax year for the
employees affected by the
transaction reported on this
Schedule D (Form 941)

= The difference

Totals from Forms 941 as corrected
by any Forms 941-X

Totals from Forms W-2 (Copy A) as
corrected by any Forms W-2c (Copy A)

10\. Social security wages

11\. Medicare wages and tips

12\. Social security tips

13\. Federal income tax
withheld

14\. Advance earned income credit
(EIC) payments (for tax years
ending before January 1, 2011)

Page 2

Schedule D (Form 941) (Rev. 6-2011)

1.51 in

.50 in

Part 2: Tell us about the discrepancies with your returns.

Column A

Column B

Column C

Amount you reported to IRS for the tax year

- Amount you reported to SSA for the tax year

= The difference

Totals from Forms 941 as corrected by any Forms 941-X Totals from Forms W-2 (Copy A) as corrected by any Forms W-2c (Copy A) .20 in

4. Social security wages

1.80 in

5. Medicare wages and tips

6. Social security tips

7. Federal income tax withheld

8. Advance earned income credit (EIC) payments (for tax years

ending before January 1, 2011)

5.80 in

.50 in

#### Schedule R (Form 941): Allocation Schedule for Aggregate Form 941 Filers

.85 in

(Rev. January 2017)
Department of the Treasury - Internal Revenue Service

OMB No. 1545-0029

.50 in

Report for calendar year:

150417

.50 in

5.69 in

Employer identification number (EIN)

3.31 in

Check the quarter (same as Form 941):
☐
1: January, February, March

1.16 in

Name as shown on Form 941

1.75 in

3.90 in

☐
2: April, May, June

2.42 in

Type of filer (check one):
☐
Section 3504 Agent
☐
Certified Professional Employer Organization (CPEO)

1.26 in

☐
3: July, August, September

2.10 in

Read the instructions before you complete Schedule R. Type or print within the boxes. Complete a separate line for the amounts
allocated to each of your clients. The term "client" as used on this form includes the term "customer." See the instructions.

☐
4: October, November, December

.83 in

.16 in

For Paperwork Reduction Act Notice, see the instructions.

IRS.gov/form941

Cat. No. 49301K

Schedule R (Form 941) (Rev. 1-2017)

(a) Client's Employer identification number (EIN) 1.00 in

(b) Type of wages, tips, and other compensation (CPEO Use Only)

Wages, tips, and (c) other compensation allocated to the listed client EIN from Form 941, line 2

(d) Federal income tax withheld from wages, tips, and other compensation allocated to the listed client EIN from Form 941, line 3

Total social security (e) and Medicare taxes allocated to the listed client EIN from Form 941, line 5e

Section 3121(q) Notice (f) and Demand-Tax due on unreported tips allocated to the listed client EIN from Form 941, line 5f

Qualified small business (g) payroll tax creditfor increasing research activities allocated to the listed client EIN from Form 941, line 11

(h) Total taxes after adjustments and credits allocated to the listed client EIN from Form 941, line 12

Total deposits (i) from Form 941, line 13, plus any payments made with the return allocated to the listed client EIN

.90 in

1.10 in.

1.29 in

1.10 in.

1.29 in

1.00 in

1.09 in.

1.21 in .

11 Subtotals for clients. Add all amounts on lines 1 through 10

.50 in

12 Enter the combined subtotal from line 24 of all Continuation Sheets for Schedule R

.83 in

13 Enter Form 941 amounts for your employees

.50 in

14 Totals. Add lines 11, 12, and 13. The column totals must match the related lines on the aggregate Form 941

.83 in

Page
of

.50 in

##### Continuation Sheet for Schedule R (Form 941) (Rev. January 2017)

Employer identification number (EIN)

Name as shown on Form 941

Type of filer (check one):
☐
Section 3504 Agent
☐
Certified Professional Employer Organization (CPEO)

Report for calendar year:

Check the quarter (same as Form 941):
☐
1: January, February, March
☐
2: April, May, June
☐
3: July, August, September
☐
4: October, November, December

{a} Client's Employer identification number (EIN)

(b) Type of wages, tips, and other compensation (CPEO Use Only)

Wages, tips, and (c) other compensation allocated to the listed client EIN from Form 941, line 2

Federal income tax (d) withheld from wages, tips, and other compensation allocated to the listed client EIN from Form 941, line 3

Total social security (e) and Medicare taxes allocated to the listed client EIN from Form 941, line 5e

Section 3121(q) Notice (f) and Demand-Tax due on unreported tips allocated to the listed client EIN from Form 941, line 5f

Qualified small business (g) payroll tax credit for increasing research activities allocated to the listed client EIN from Form 941, line 11

(h) Total taxes after adjustments and credits allocated to the listed client EIN from Form 941, line 12

Total deposits 0 from Form 941, line 13, plus any payments made with the return allocated to the listed client EIN

24 Subtotals for clients. Add lines 1 through 23. Include the subtotals from line 24 on line 12 of Schedule R.

950517

Exhibit H Must be in Landscape

50 in

Form
8974:1
Qualifled Small Business Payroll Tax Credit for Increasing Research Activities
(January 2017)
42 in
Department of the Treasury - Internal Revenue Service

9508174

.50 in

OMB No. 1545-0029

Employer identification number (EIN)

\-
3.27 in

Report for this quarter

Check only one box.
☐
1: January, February, March

Name (not your trade name)

3.50 in

1.57 in

1.26 in

The credit from Fart 2, line 12, will be
☐
Form 941, 941-PR, or 941-SS
reported on (check only one box):

☐
2: April, May, June
☐
3: July, August, September
☐
4: October, November, December

2.23 in

1.23 in
☐
Reserved
☐
Reserved

2.13 in

Calendar year

1.04 in
You must select a quarter if you file Form 941, 941-PR, or 941-SS.

Part 1:

Tell us about your income tax return.

Which income tax return did you file that elected a qualified small business payroll tax credit on Form 6765, Credit for Increasing Research Activities?
1

.44 in

Check only one box.
☐
Form 1065
Form 1040
☐
1.06 in

☐

Form 1120
☐
Form 1120-F
☐
Form 1120S

.97 in

1.06 in

1.16 in

What tax period was covered by your income tax return?
.73 in

40 in

1.28 in

48 in

Calendar year

1.11 in

or tax year beginning
1

/ 1.10 in
ending

1
/ 1.10 in

When did you file your income tax return?

.53 in

If the EIN shown above isn't the same as the EIN used on
Form 6766, enter the EIN used on Form 6765.
2.50 in

3.26 in

.32 in

Part 2:
Determine the credit that you can use this period.

3.70 in

5
Enter the amount from Form 6765, line 44, or, if applicable,

the amount that was allocated to your EIN

1.80 in
.

Enter the amount of the credit from line 5 that was taken
on a previous period(s)
6

.91 in

7
Subtract fine o from line
5.70 in

.79 in

Enter the amount from Form 941 (941-PR or 941-SS),
line 5a, Column 2

6.50 in

Enter the amount from Form 941 (941-PR or 941-SS), line
5b, Column 2

45 in

1.94 in

10
Add lines 8 and 9

Multiply line 10 by 50% (0.50). See the instructions if you're a third-party payer of sick pay or if
you received a Section 3121(q) Notice and Demand

Credit. Enter the smaller of line 7 or line 11. Also enter this amount on Form 941 (941-PR or
941-SS), line 11

20 in

For Paperwork Reduction Act Notice, see the separate instructions. IRS gov/form8974

Cat. No. 37797C

Form 8974 (1-2017)

# 2016 Section 45K(d)(2)(C) Reference Price Notice 2017-24 SECTION 1. PURPOSE

This notice publishes the reference
price under § 45K(d)(2)(C) of the Internal
Revenue Code for calendar year 2016.
The credit period for the nonconventional
source production credit under § 45K
ended on December 31, 2013, for facili-
ties producing coke or coke gas (other
than from petroleum based products).
However, the reference price continues to
apply in determining the amount of the
enhanced oil recovery credit under § 43,
the marginal well production credit for
qualified crude oil production under § 45I,
and the percentage depletion in case of oil
and natural gas produced from marginal
properties under § 613A.

## SECTION 2. BACKGROUND

Section 45K(d)(2)(C) provides that the
term "reference price" means, with re-
spect to a calendar year, the Secretary's
estimate of the annual average wellhead
price per barrel for all domestic crude oil
the price of which is not subject to regu-
lation by the United States.

Section 43(a) provides that, for pur-
poses of § 38, the enhanced oil recovery
credit for any taxable year is an amount
equal to 15 percent of the taxpayer's qual-
ified enhanced oil recovery costs for such
taxable year.

Section 43(b)(1) provides that the
amount of enhanced oil recovery credit
for any taxable year shall be reduced by
an amount which bears the same ratio to
the amount of such credit (determined
without regard to this paragraph) as - (A)
the amount by which the reference price
for the calendar year preceding the calen-
dar year in which the taxable year begins
exceeds $28, bears to (B) $6. Section
43(b)(2) provides that the term "reference
price" means, with respect to any calendar
year, the reference price determined for
such calendar year under § 45K(d)(2)(C).

Section 45I(a) provides that, for pur-
poses of § 38, the marginal well produc-
tion credit for any taxable year is an
amount equal to the product of the credit

amount and the qualified crude oil produc-
tion and the qualified natural gas produc-
tion which is attributable to the taxpayer.

Section 45I(b)(1) provides that for
crude oil, the amount of the marginal well
production credit is $3 per barrel of qual-
ified crude oil production.

Section 45I(b)(2) provides that the $3
amount under § 45I(b)(1) shall be reduced
(but not below zero) by an amount which
bears the same ratio to such amount (de-
termined without regard to this paragraph)
as - (i) the excess (if any) of the applica-
ble reference price over $15, bears to (ii)
$3. The applicable reference price for a
taxable year is the reference price of the
calendar year preceding the calendar year
in which the taxable year begins.

Section 45I(c) provides that the term
reference price means, with respect to any
calendar year - (i) in the case of qualified
crude oil production, the reference price
determined under § 45K(d)(2)(C).

Section 613A(c)(6)(A) provides, in
general, the allowance for depletion under
§ 611 shall be computed in accordance
with § 613 with respect to - (i) so much of
the taxpayer's average daily marginal pro-
duction of domestic crude oil as does not
exceed the taxpayer's depletable oil quan-
tity (determined without regard to para-
graph (3)(A)(ii)), and (ii) so much of the
taxpayer's average daily marginal produc-
tion of domestic natural gas as does not
exceed the taxpayer's depletable natural
gas quantity (determined without regard
to paragraph (3)(A)(ii)), and the applica-
ble percentage shall be deemed to be spec-
ified in subsection (b) of § 613 for pur-
poses of subsection (a) of that section.

Section 613A(c)(6)(C) provides that
the term "applicable percentage" means
the percentage (not greater than 25 per-
cent) equal to the sum of - (i) 15 percent,
plus (ii) 1 percentage point for each whole
dollar by which $20 exceeds the reference
price for crude oil for the calendar year
preceding the calendar year in which the
taxable year begins. For purposes of this
paragraph, the term "reference price"
means, with respect to any calendar year,
the reference price determined for such
calendar year under § 45K(d)(2)(C).

## SECTION 3. REFERENCE PRICE

The reference price under § 45K(d)
(2)(C) for calendar year 2016 is $38.29.

## SECTION 4. DRAFTING INFORMATION

The principal author of this notice is
Martha M. Garcia of the Office of As-
sociate Chief Counsel (Passthroughs &
Special Industries). For further informa-
tion regarding this notice, contact Ms.
Garcia on (202) 317-6853 (not a toll-
free number).

## 2017 Section 43 Inflation Adjustment

### Notice 2017-25

Section 43(b)(3)(B) of the Internal
Revenue Code requires the Secretary to
publish an inflation adjustment factor. The
enhanced oil recovery credit under § 43
for any taxable year is reduced if the "ref-
erence price," determined under § 45K(d)
(2)(C), for the calendar year preceding the
calendar year in which the taxable year
begins is greater than $28 multiplied by
the inflation adjustment factor for that
year.

The term "inflation adjustment factor"
means, with respect to any calendar year,
a fraction the numerator of which is the
GNP implicit price deflator for the preced-
ing calendar year and the denominator of
which is the GNP implicit price deflator
for 1990.

Because the reference price for the
2016 calendar year ($38.29) does not ex-
ceed $28 multiplied by the inflation ad-
justment factor for the 2016 calendar year
($28 multiplied by 1.6713 = $46.7964),
the enhanced oil recovery credit for qual-
ified costs paid or incurred in 2017 is
determined without regard to the phase-
out for crude oil price increases.

Table 1 contains the GNP implicit
price deflator used for the 2017 calendar
year, as well as the previously published
GNP implicit price deflators used for the
1991 through 2016 calendar years.

Notice 2017-25 TABLE 1 GNP IMPLICIT PRICE DEFLATORS

Calendar Year

GNP Implicit Price Deflator

1990

112.9 (used for 1991)

1991

117.0 (used for 1992)

1992

120.9 (used for 1993)

1993

124.1 (used for 1994)

1994

126.0 (used for 1995)*

1995

107.5 (used for 1996)

1996

109.7 (used for 1997) **

1997

112.35 (used for 1998)

1998

112.64 (used for 1999) ***

1999

104.59 (used for 2000)

2000

106.89 (used for 2001)

2001

109.31 (used for 2002)

2002

110.63 (used for 2003)

2003

105.67 (used for 2004) ****

2004

108.23 (used for 2005)

2005

112.129 (used for 2006)

2006

116.036 (used for 2007)

2007

119.656 (used for 2008)

2008

122.407 (used for 2009)

2009

109.764 (used for 2010)

2010

110.654 (used for 2011)

2011

113.347 (used for 2012)

2012

115.387 (used for 2013)

2013

106.710 (used for 2014)

2014

108.407 (used for 2015) ********

2015

109.868 (used for 2016)

2016

111.528 (used for 2017)

\* Beginning in 1995, the GNP implicit price deflator was rebased relative to 1992. The 1990 GNP implicit price deflator
used to compute the 1996 § 43 inflation adjustment factor is 93.6.

** Beginning in 1997, two digits follow the decimal point in the GNP implicit price deflator. The 1990 GNP price defla-
tor used to compute the 1998 § 43 inflation adjustment factor is 93.63.

*** Beginning in 1999, the GNP implicit price deflator was rebased relative to 1996. The 1990 GNP implicit price defla-
tor used to compute the 2000 § 43 inflation adjustment factor is 86.53.

**** Beginning in 2003, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to
compute the 2004 § 43 inflation adjustment factor is 81.589.

***** Beginning in 2009, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to
compute the 2010 § 43 inflation adjustment factor is 72.199.

****** Beginning in 2011, the 1990 GNP implicit price deflator used to compute the 2012 § 43 inflation adjustment fac-
tor is 72.260.

Beginning in 2013, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used
to compute the 2014 § 43 inflation adjustment factor is 66.803.

******** Beginning in 2014, the 1990 GNP implicit price deflator used to compute the 2015 § 43 inflation adjustment
factor is 66.732.

Table 2 contains the inflation adjust-
ment factor and the phase-out amount

for taxable years beginning in the 2017
calendar year as well as the previously

published inflation adjustment factors
and phase-out amounts for taxable years

beginning in the 1991 through 2016 cal-
endar years.

Notice 2017-25 TABLE 2 INFLATION ADJUSTMENT FACTORS AND PHASE-OUT AMOUNTS

Calendar Year

Inflation Adjustment Factor

Phase-out Amount

1991

1.0000

1992

1.0363

1993

1.0708

1994

1.0992

1995

1.1160

1996

1.1485

1997

1.1720

1998

1.1999

1999

1.2030

2000

1.2087

2001

1.2353

2002

1.2633

2003

1.2785

2004

1.2952

2005

1.3266

2006

1.3743

100 percent

2007

1.4222

100 percent

2008

1.4666

100 percent

2009

1.5003

100 percent

2010

1.5203

100 percent

2011

1.5326

100 percent

2012

1.5686

100 percent

2013

1.5968

100 percent

2014

1.5974

100 percent

2015

1.6245

100 percent

2016

1.6464

2017

1.6713

## DRAFTING INFORMATION

The principal author of this notice is
Martha M. Garcia of the Office of Asso-
ciate Chief Counsel (Passthroughs and
Special Industries). For further informa-
tion regarding this notice, contact Ms.
Garcia at (202) 317-6853 (not a toll-free
number).

### 2017 Marginal Production Rates

#### Notice 2017-26

This notice announces the applicable
percentage under § 613A of the Internal
Revenue Code to be used in determining
percentage depletion for marginal proper-
ties for the 2017 calendar year.

Section 613A(c)(6)(C) defines the term
"applicable percentage" for purposes of
determining percentage depletion for oil
and gas produced from marginal proper-

ties. The applicable percentage is the per-
centage (not greater than 25 percent)
equal to the sum of 15 percent, plus one
percentage point for each whole dollar by
which $20 exceeds the reference price
(determined under § 45K(d)(2)(C)) for
crude oil for the calendar year preceding
the calendar year in which the taxable
year begins. The reference price deter-
mined under § 45K(d)(2)(C) for the 2016
calendar year is $38.29.

The following table contains the appli-
cable percentages for marginal production
for taxable years beginning in calendar
years 1991 through 2017.

Notice 2017-26 APPLICABLE PERCENTAGE FOR MARGINAL PRODUCTION

Calendar Year

Applicable Percentage

1991

15 percent

1992

18 percent

1993

19 percent

1994

20 percent

1995

21 percent

1996

20 percent

1997

16 percent

1998

17 percent

1999

24 percent

2000

19 percent

2001

15 percent

2002

15 percent

2003

15 percent

2004

15 percent

2005

15 percent

2006

15 percent

2007

15 percent

2008

15 percent

2009

15 percent

2010

15 percent

2011

15 percent

2012

15 percent

2013

15 percent

2014

15 percent

2015

15 percent

2016

15 percent

2017

15 percent

The principal author of this notice is Martha M. Garcia of the Office of Associate Chief Counsel (Passthroughs and Special
Industries). For further information regarding this notice contact Ms. Garcia at (202) 317-6853 (not a toll-free number).

# 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.

GP-General Partner.

TFR-Transferor.

CI-City.

GR-Grantor.

T.I.R .- Technical Information Release.

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.

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.

T-Target Corporation.

T.C .- Tax Court.

C-Individual.

T.D .- Treasury Decision.

C.B .- Cumulative Bulletin.

TFE-Transferee.

CFR-Code of Federal Regulations.

COOP-Cooperative.

IC-Insurance Company.

M-Minor.

Y-Corporation.

Z-Corporation.

DISC-Domestic International Sales Corporation.

E-Estate.

EE-Employee.

E.O .- Executive Order.

ER-Employer.

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

F-Fiduciary.

FC-Foreign Country.

FICA-Federal Insurance Contributions Act.

FISC-Foreign International Sales Company.

FPH-Foreign Personal Holding Company.

BK-Bank.

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

Numerical Finding List1

Revenue Procedures:

Bulletin 2017-1 through 2017-17

2017-1, 2017-1 I.R.B. 1 2017-2, 2017-1 I.R.B. 106

Action on Decision:

2017-3, 2017-1 I.R.B. 130

2017-4, 2017-1 I.R.B. 146

2017-1, 2017-7 I.R.B. 868

2017-5, 2017-1 I.R.B. 230

2017-2, 2017-15 I.R.B. 1072

2017-7, 2017-1 I.R.B. 269

2017-3, 2017-15 I.R.B. 1072

2017-12, 2017-3 I.R.B. 424

2017-4, 2017-15 I.R.B. 1073

2017-13, 2017-6 I.R.B. 787

2017-14, 2017-3 I.R.B. 426

Announcements:

2017-15, 2017-3 I.R.B. 437

2017-16, 2017-3 I.R.B. 501

2017-01, 2017-08 I.R.B. 941

2017-18, 2017-5 I.R.B. 743

2017-02, 2017-10 I.R.B. 1007

2017-19, 2017-7 I.R.B. 913

2017-03, 2017-15 I.R.B. 1077

2017-21, 2017-6 I.R.B. 791

2017-04, 2017-16 I.R.B. 1106

2017-22, 2017-6 I.R.B. 863

2017-23, 2017-7 I.R.B. 915

Notices:

2017-24, 2017-7 I.R.B. 916

2017-1, 2017-2 I.R.B. 367

2017-25, 2017-14 I.R.B. 1039

2017-2, 2017-4 I.R.B. 539

2017-26, 2017-13 I.R.B. 1036

2017-3, 2017-2 I.R.B. 368

2017-27, 2017-14 I.R.B. 1042

2017-4, 2017-4 I.R.B. 541

2017-28, 2017-14 I.R.B. 1061

2017-5, 2017-6 I.R.B. 779

2017-29, 2017-14 I.R.B. 1065

2017-6, 2017-3 I.R.B. 422

2017-31, 2017-16 I.R.B. 1104

2017-7, 2017-3 I.R.B. 423

2017-32, 2017-17 I.R.B. 1109

2017-8, 2017-3 I.R.B. 423

2017-9, 2017-4 I.R.B. 542

Revenue Rulings:

2017-10, 2017-4 I.R.B. 544

2017-1, 2017-3 I.R.B. 377

2017-12, 2017-5 I.R.B. 742

2017-2, 2017-2 I.R.B. 364

2017-13, 2017-6 I.R.B. 780

2017-3, 2017-4 I.R.B. 522

2017-14, 2017-6 I.R.B. 783

2017-4, 2017-6 I.R.B. 776

2017-15, 2017-6 I.R.B. 783

2017-5, 2017-9 I.R.B. 1000

2017-16, 2017-7 I.R.B. 913

2017-6, 2017-12 I.R.B. 1011

2017-17, 2017-15 I.R.B. 1074

2017-7, 2017-10 I.R.B. 1009

2017-18, 2017-9 I.R.B. 997

2017-8, 2017-14 I.R.B. 1037

2017-19, 2017-9 I.R.B. 1000

2017-10, 2017-17 I.R.B. 1108

2017-20, 2017-11 I.R.B. 1010

2017-21, 2017-13 I.R.B. 1026

Treasury Decisions:

2017-22, 2017-13 I.R.B. 1033

2017-23, 2017-16 I.R.B. 1100

9794, 2017-2 I.R.B. 273

2017-24, 2017-17 I.R.B. 1127

9795, 2017-2 I.R.B. 326

2017-25, 2017-17 I.R.B. 1127

9796, 2017-3 I.R.B. 380

2017-26, 2017-17 I.R.B. 1129

9801, 2017-2 I.R.B. 355

9802, 2017-2 I.R.B. 361

Proposed Regulations:

9803, 2017-3 I.R.B. 384

9804, 2017-3 I.R.B. 406

REG-137604-07, 2017-7 I.R.B. 923

9806, 2017-4 I.R.B. 524

REG-128276-12, 2017-2 I.R.B. 369

9807, 2017-5 I.R.B. 573

REG-103477-14, 2017-5 I.R.B. 746

9808, 2017-5 I.R.B. 580

REG-112324-15, 2017-4 I.R.B. 547

9809, 2017-5 I.R.B. 664

REG-127203-15, 2017-7 I.R.B. 918

9810, 2017-6 I.R.B. 775

REG-131643-15, 2017-6 I.R.B. 865

9811, 2017-7 I.R.B. 869

REG-134438-15, 2017-2 I.R.B. 373

9814, 2017-7 I.R.B. 878

REG-112800-16, 2017-4 I.R.B. 569

9815, 2017-9 I.R.B. 944

REG-123829-16, 2017-5 I.R.B. 764

9817, 2017-9 I.R.B. 968

REG-123841-16, 2017-5 I.R.B. 766

REG-133353-16, 2017-2 I.R.B. 372

REG-134247-16, 2017-5 I.R.B. 744

REG-135122-16, 2017-9 I.R.B. 1005

1A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2016-27 through 2016-52 is in Internal Revenue Bulletin
2016-52, dated December 26, 2016.

# Finding List of Current Actions on Previously Published Items1

Bulletin 2017-1 through 2017-17

Notices:

2002-1
Amplified by
Notice 2017-1, 2017-2 I.R.B. 367

2010-46
Obsoleted by
Notice 2017-1, 2017-2 I.R.B. 367

2016-29
Modified by
Notice 2017-6, 2017-3 I.R.B. 422

## Revenue Procedures:

2013-22
Clarified by
Rev. Proc. 2017-18, 2017-05 I.R.B. 743

2015-57
Modified by
Rev. Proc. 2017-24, 2017-07 I.R.B. 916

## Treasury Decisions:

2010-46
Obsoleted by
T.D. 9815 2017-09 I.R.B. 944

# Internal Revenue Service Washington, DC 20224

Official Business
Penalty for Private Use, $300

# INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletins are available at www.irs.gov/irb/.

# We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we
would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page
(www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave.
NW, IR-6230 Washington, DC 20224.

Internal Revenue Bulletin 2017-17 (PDF rendition): IRS Revenue Procedures

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