Internal Revenue Bulletin 2021-18 (PDF rendition): IRS Announcements

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Bulletin No. 2021–18
May 3, 2021
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.
ADMINISTRATIVE
Announcement 2021-8, page 1146.
The Office of Professional Responsibility (OPR) announces re-
cent disciplinary sanctions involving attorneys, certified pub-
lic accountants, enrolled agents, enrolled actuaries, enrolled
retirement 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
violating the regulations.
ADMINISTRATIVE, EMPLOYMENT TAX
Notice 2021-24, page 1122.
This notice that amplifies the guidance in Notice 2020-22,
2020-17 I.R.B. 664, which provides for penalty relief un-
der section 6656 of the Code for an employer’s failure to
timely deposit Employment Taxes with the IRS. This notice
provides relief from section 6656 for employers required
to pay qualified sick leave wages and qualified family leave
wages, and qualified health plan expenses allocable to
these wages, mandated by the Families First Coronavirus
Response Act, as amended by the COVID-related Tax Relief
Act of 2020, and the American Rescue Plan Act of 2021
(American Rescue Plan Act). This notice also provides relief
from section 6656 for certain employers subject to a full
or partial closure order due to COVID-19 or experiencing a
statutorily specified decline in business under the Corona-
virus Aid, Relief, and Economic Security Act, as amended
by the Taxpayer Certainty and Disaster Tax Relief Act of
2020 and the American Rescue Plan Act. Finally, this notice
provides relief from section 6656 for certain employers for
which COBRA continuation coverage premiums were not
paid by assistance eligible individuals for such coverage
by reason of section 9501(a)(1) of the American Rescue
Plan Act.
EMPLOYEE PLANS
Notice 2021-27, page 1125.
This notice sets forth updates on the corporate bond month-
ly yield curve, the corresponding spot segment rates for
April 2021 used under § 417(e)(3)(D), the 24-month average
segment rates applicable for April 2021, and the 30-year
Treasury rates, as reflected by the application of § 430(h)
(2)(C)(iv). In addition, it contains 24-month average segment
rates for January 2020 through April 2021 determined un-
der § 430(h)(2)(C)(iv) reflecting the modifications made by §
9706(a) of the American Rescue Plan Act of 2021.
INCOME TAX
REG-121095-19, page 1131.
The Opportunity Zone (“OZ”) provision allows taxpayers un-
der certain circumstances to defer capital gain that they
reinvest in qualified opportunity funds. These proposed reg-
ulations include requirements that certain foreign persons
and certain foreign-owned partnerships must meet to defer
their capital gains. The proposed regulations also allow, un-
der certain circumstances, for the reduction or elimination
of withholding tax under certain Code sections on the capi-
tal gain that is deferred under the OZ provision. In addition,
these regulations provide flexibility for qualified opportunity
zone businesses regarding the working capital safe harbor
in the case of Federally declared disasters. REG-121095-19.
Published [INSERT PUBLICATION DATE].
Rev. Rul. 2021-8, page 1120.
Federal rates; adjusted federal rates; adjusted federal long-
term rate, and the long-term tax exempt rate. For purposes
of sections 382, 1274, 1288, 7872 and other sections of
the Code, tables set forth the rates for May 2021.
Finding Lists begin on page ii.

SPECIAL ANNOUNCEMENT
Notice 2021-28, page 1130.
This notice requests public recommendations for published
guidance projects to be included on the 2021-2022 Priority
Guidance Plan.

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 of-
ficial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
May 3, 2021 Bulletin No. 2021–18

Part I
Section 1274.—
Determination of Issue
Price in the Case of Certain
Debt Instruments Issued for
Property
(Also Sections 42, 280G, 382, 467, 468, 482, 483,
1288, 7520, 7872.)
Rev. Rul. 2021-8
This revenue ruling provides vari-
ous prescribed rates for federal income
tax purposes for May 2021 (the current
month). Table 1 contains the short-
term, mid-term, and long-term applica-
ble federal rates (AFR) for the current
month for purposes of section 1274(d)
of the Internal Revenue Code. Table 2
contains the short-term, mid-term, and
long-term adjusted applicable federal
rates (adjusted AFR) for the current
month for purposes of section 1288(b).
Table 3 sets forth the adjusted feder-
al long-term rate and the long-term
tax-exempt rate described in section
382(f). Table 4 contains the appropri-
ate percentages for determining the
low-income housing credit described in
section 42(b)(1) for buildings placed in
service during the current month. How-
ever, under section 42(b)(2), the appli-
cable percentage for non-federally sub-
sidized new buildings placed in service
after July 30, 2008, shall not be less
than 9%. Finally, Table 5 contains the
federal rate for determining the present
value of an annuity, an interest for life
or for a term of years, or a remainder or
a reversionary interest for purposes of
section 7520.
REV. RUL. 2021-8 TABLE 1
Applicable Federal Rates (AFR) for May 2021
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR0.13%0.13%0.13%0.13%
110% AFR0.14%0.14%0.14%0.14%
120% AFR0.16%0.16%0.16%0.16%
130% AFR0.17%0.17%0.17%0.17%
Mid-term
AFR1.07%1.07%1.07%1.07%
110% AFR 1.18%1.18%1.18%1.18%
120% AFR1.28%1.28%1.28%1.28%
130% AFR1.39%1.39%1.39%1.39%
150% AFR1.62%1.61%1.61%1.60%
175% AFR1.88%1.87%1.87%1.86%
Long-term
AFR2.16%2.15%2.14%2.14%
110% AFR2.38%2.37%2.36%2.36%
120% AFR2.60%2.58%2.57%2.57%
130% AFR2.82%2.80%2.79%2.78%
REV. RUL. 2021-8 TABLE 2
Adjusted AFR for May 2021
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted AFR0.10%0.10%0.10%0.10%
Mid-term adjusted AFR0.81%0.81%0.81%0.81%
Long-term adjusted AFR1.64%1.63%1.63%1.62%
May 3, 2021 1120 Bulletin No. 2021–18

REV. RUL. 2021-8 TABLE 3
Rates Under Section 382 for May 2021
Adjusted federal long-term rate for the current month1.64%
Long-term tax-exempt rate for ownership changes during the current month (the highest of
the adjusted federal long-term rates for the current month and the prior two months.)
1.64%
REV. RUL. 2021-8 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for May 2021
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July
30, 2008, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit7.37%
Appropriate percentage for the 30% present value low-income housing credit 3.16%
REV. RUL. 2021-8 TABLE 5
Rate Under Section 7520 for May 2021
Applicable federal rate for determining the present value of an annuity, an interest for life or a
term of years, or a remainder or reversionary interest
1.2%
Section 42.—Low-Income
Housing Credit
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
May 2021. See Rev. Rul. 2021-8, page 1120.
Section 280G.—Golden
Parachute Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
May 2021. See Rev. Rul. 2021-8, page 1120.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and
Certain Built-In Losses
Following Ownership
Change
The adjusted applicable federal long-term rate
is set forth for the month of May 2021. See Rev.
Rul. 2021-8, page 1120.
Section 467.—Certain
Payments for the Use of
Property or Services
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
May 2021. See Rev. Rul. 2021-8, page 1120.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The applicable federal short-term rates are set
forth for the month of May 2021. See Rev. Rul.
2021-8, page 1120.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
May 2021. See Rev. Rul. 2021-8, page 1120.

Section 483.—Interest on
Certain Deferred Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
May 2021. See Rev. Rul. 2021-8, page 1120.
Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month of
May 2021. See Rev. Rul. 2021-8, page 1120.
Section 7520.—Valuation
Tables
The applicable federal mid-term rates are set
forth for the month of May 2021. See Rev. Rul.
2021-8, page 1120.
Section 7872.—Treatment
of Loans With Below-
Market Interest Rates
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
May 2021. See Rev. Rul. 2021-8, page 1120.

Bulletin No. 2021–18 1121 May 3, 2021

May 3, 2021 1122 Bulletin No. 2021–18
Part III
Relief from Penalty
for Failure to Deposit
Employment Taxes
Notice 2021-24
SECTION 1. PURPOSE
This notice amplifies the guidance
in Notice 2020-22, 2020-17 I.R.B. 664,
which provides for penalty relief under
section 6656 of the Internal Revenue
Code (Code) for an employer’s failure to
timely deposit Employment Taxes
1
with
the Internal Revenue Service (IRS). This
notice extends the penalty relief provided
in Notice 2020-22 to apply to deposits of
Employment Taxes reduced in anticipa-
tion of the following credits:
a. Paid sick and family leave credits
under the Families First Coronavirus
Response Act (Families First Act),
Pub. L. No. 116-127, 134 Stat. 179
_ (March 18, 2020), as amended by
the COVID-related Tax Relief Act
of 2020 (Tax Relief Act), enacted as
Subtitle B of the Consolidated Ap-
propriations Act, 2021 (Appropria-
tions Act), Pub. L. No. 116-260, 134
Stat. 1182 (December 27, 2020), with
respect to qualified leave wages paid
with respect to the period beginning
January 1, 2021, and ending March
31, 2021;
b. Paid sick and family leave credits
under sections 3131, 3132, and 3133
of the Code, added by section 9641
of the American Rescue Plan Act of
2021 (ARP), Pub. L. No. 117-2, 135
Stat. 4 (March 11, 2021), with respect
to qualified leave wages paid with
respect to the period beginning April
1, 2021, and ending September 30,
2021;
c. The employee retention credit under
section 2301 of the Coronavirus Aid,
Relief, and Economic Security Act
(CARES Act), Pub. L. No. 116-136,
134 Stat. 281 (March 27, 2020), as
amended by the Taxpayer Certainty
and Disaster Tax Relief Act of 2020
(Relief Act), enacted as Division EE
of the Appropriations Act, with re-
spect to qualified wages paid with re-
spect to the period beginning January
1, 2021, and ending June 30, 2021;
d. The employee retention credit under
section 3134 of the Code, added by
section 9651 of the ARP, with respect
to qualified wages paid with respect
to the period beginning July 1, 2021,
and ending December 31, 2021; and
e. The credit for Continuation Coverage
Premium Assistance under section
6432 of the Code, as added by sec-
tion 9501(b) of the ARP, for COBRA
continuation coverage premiums not
paid by assistance eligible individuals
for such coverage by reason of sec-
tion 9501(a)(1) of the ARP during the
period beginning April 1, 2021, and
ending September 30, 2021.
SECTION 2. BACKGROUND
Section 3111(a) of the Code (employ-
er’s share of the Old Age, Survivors, and
Disability Insurance (social security) por-
tion of FICA tax), section 3111(b) of the
Code (employer’s share of the Hospital In-
surance (Medicare) portion of FICA tax),
section 3221(a) of the Code (employer’s
share of the social security and Medicare
portions of RRTA tax), and section 3402
of the Code related to Federal income tax
withholding impose Employment Tax lia-
bility on employers. For most employers,
this liability is reported on the quarterly
Form 941, Employer’s QUARTERLY
Federal Tax Return.
Although Form 941 is due quarterly,
section 6302 of the Code and regulations
under that section generally require depos-
its of Employment Taxes to be made on a
monthly or semiweekly basis. Employers
that accumulate $100,000 or more of Em-
ployment Taxes on any day within a de-
posit period are required to deposit those
liabilities with the IRS the next banking
day. See § 31.6302-1(c) of the Employ-
ment Taxes and Collection of Income Tax
at Source Regulations.
Paid Sick and Family Leave Credits
The Families First Act generally re-
quired employers of fewer than 500 em-
ployees to provide paid sick leave and
expanded family and medical leave, up to
specified limits, to employees unable to
work or telework due to certain circum-
stances related to COVID-19, through
December 31, 2020. Generally, employers
that were required to pay qualified sick
leave wages and qualified family leave
wages by the Families First Act (collec-
tively, Qualified Leave Wages), as well as
qualified health plan expenses allocable to
Qualified Leave Wages (Qualified Health
Plan Expenses) under the Families First
Act are entitled to refundable tax credits
administered by the IRS.
The Tax Relief Act did not extend
the requirement to provide the Qualified
Leave Wages and Qualified Health Plan
Expenses, but did extend the refundable
tax credits for Qualified Leave Wages
and Qualified Health Plan Expenses, with
modifications, paid for periods of leave
after December 31, 2020, and before April
1, 2021, that would have been required to
have been paid if the requirement to pro-
vide such leave had been extended.
Specifically, sections 7001 and 7003
of the Families First Act, as amended by
the Tax Relief Act, provide refundable tax
credits against an employer’s share of the
social security portion of FICA tax, and so
much of the Railroad Retirement Tax Act
Tier 1 rate as is attributable to an employ-
er’s share of the social security portion of
FICA tax, for each calendar quarter in an
amount equal to the Qualified Leave Wag-
es paid by the employer plus Qualified
Health Plan Expenses with respect to that
calendar quarter, with respect to periods
of leave beginning on April 1, 2020, and
ending on March 31, 2021. For purposes
of this notice, an employer’s share of the
social security portion of FICA tax and so
much of the Railroad Retirement Tax Act
Tier 1 rate as is attributable to an employ-
er’s share of the social security portion
of FICA tax, as applicable, are referred
to as Creditable Employer Social Securi-
1
“Employment Taxes” means withheld income taxes, taxes under the Federal Insurance Contributions Act (FICA), and taxes under the Railroad Retirement Tax Act (RRTA).

Bulletin No. 2021–18 1123 May 3, 2021
ty Taxes. The credits under section 7001
and 7003 are increased by the amount of
the employer’s share of Medicare tax (or
the portion of the Railroad Retirement Tax
Act Tier 1 rate as is attributable to the em-
ployer’s share of Medicare tax) imposed
on Qualified Leave Wages. See section
7005(b)(1) of the Families First Act. For
purposes of this notice, the increase in the
credit under section 7005(b)(1) is treated
as a credit under section 7001 or section
7003.
The ARP added sections 3131 and
3132 to the Code, under which eligi-
ble employers can claim refundable tax
credits for qualified sick leave wages and
qualified family leave wages, respective-
ly, with respect to periods of leave be-
ginning on April 1, 2021, and ending on
September 30, 2021 (also referred to as
Qualified Leave Wages for the remainder
of this notice). The refundable tax cred-
its under sections 3131 and 3132 of the
Code apply against an employer’s share
of the Medicare portion of FICA tax, and
so much of the Railroad Retirement Tax
Act Tier 1 rate as is attributable to the
employer’s share of Medicare tax, which
for purposes of this notice, are referred to
as Creditable Employer Medicare Taxes.
The refundable tax credits are increased
by the health plan expenses (also referred
to as Qualified Health Plan Expenses for
the remainder of this notice) and certain
collectively bargained contributions paid
by an eligible employer that are properly
allocable to the related Qualified Leave
Wages (Qualified Collectively Bargained
Contributions), and both the employer’s
share of the social security and Medicare
portions of FICA tax (and the employ-
er’s share of the Railroad Retirement Tax
Act Tier 1 rate) imposed on the Qualified
Leave Wages. See I.R.C. § § 3131(d),
3131(e), 3132(d), 3133(e), and 3133. For
purposes of this notice, the increase in
the credit under section 3133 is treated
as a credit under section 3131 or 3132 of
the Code.
The refundable tax credits under sec-
tion 7001 and 7003 of the Families First
Act and sections 3131 and 3132 of the
Code are reported on the employer’s re-
turn for reporting its liability for FICA
tax or RRTA tax, as applicable, which
for most employers subject to FICA tax
is the quarterly Form 941. An employer
may claim an advance payment of the re-
fundable tax credits by filing Form 7200,
Advance Payment of Employer Credits
Due to COVID-19, in accordance with the
instructions to the form.
Employee Retention Credits
Section 2301 of the CARES Act, as
originally enacted, provided for an em-
ployee retention credit for eligible em-
ployers that pay qualified wages, includ-
ing certain health plan expenses, to some
or all employees after March 12, 2020, and
before January 1, 2021. Eligible employ-
ers were allowed to claim a refundable
tax credit under the CARES Act for fifty
percent of qualified wages paid, limited
to $10,000 per employee over all calendar
quarters combined in 2020 (Qualified Re-
tention Wages).
Section 206 of the Relief Act amended
section 2301 of the CARES Act to modify
the employee retention credit for qualified
wages paid after March 12, 2020, and be-
fore January 1, 2021, primarily relating
to who may claim the credit. Section 207
of the Relief Act further amended section
2301 of the CARES Act to modify and
extend the application of the employee re-
tention credit for qualified wages paid af-
ter December 31, 2020, and before July 1,
2021. Under section 2301 of the CARES
Act, as amended by section 207 of the Re-
lief Act, eligible employers can claim a re-
fundable tax credit for seventy percent of
qualified wages paid, limited to $10,000
per employee per calendar quarter in 2021
for the first and second calendar quarters
of 2021 (also referred to as Qualified Re-
tention Wages for the remainder of this
notice).
Section 9651 of the ARP enacted sec-
tion 3134 of the Code, which provides a
substantially similar employee retention
credit for qualified wages paid after June
30, 2021, and before January 1, 2022. Un-
der section 3134 of the Code, eligible em-
ployers can claim a refundable tax credit
for seventy percent of qualified wages
paid, limited to $10,000 per employee per
calendar quarter in 2021 for the third and
fourth calendar quarters of 2021 (also re-
ferred to as Qualified Retention Wages for
the remainder of this notice).
The refundable tax credit under section
2301 of the CARES Act applies against
Creditable Employer Social Security Tax-
es for each calendar quarter. The refund-
able tax credit under section 3134 of the
Code applies against Creditable Employer
Medicare Taxes for each calendar quarter.
The refundable tax credits under section
2301 of the CARES Act, as amended, and
section 3134 of the Code are reported on
the employer’s return for reporting its lia-
bility for FICA tax or RRTA tax, as appli-
cable, which for most employers subject
to FICA tax is the quarterly Form 941. For
calendar quarters in 2021, eligible small
employers may claim an advance payment
of the refundable tax credits for Qualified
Retention Wages under section 2301 of
the CARES Act and section 3134 of the
Code by filing Form 7200 in accordance
with the instructions to the form.
COBRA Continuation Coverage Premium
Assistance Credit
Section 9501(b) of the ARP added sec-
tion 6432 of the Code
2
which provides a
refundable tax credit for premiums pay-
able for COBRA continuation coverage
under section 9501(a)(1). The credit is cal-
culated with respect to premiums not paid
by assistance eligible individuals for such
coverage by reason of section 9501(a)(1)
during the period beginning April 1, 2021,
and ending September 30, 2021.
The refundable tax credit applies
against Creditable Employer Medicare
Taxes for each calendar quarter. The re-
fundable tax credit is reported on the em-
ployer’s return for reporting its liability
for FICA tax or RRTA tax, as applicable,
which for most employers subject to FICA
tax is the quarterly Form 941. An employ-
er may claim an advance payment of the
refundable tax credit by filing Form 7200
in accordance with the instructions to the
form.
2
A version of section 6432 was originally added to the Code in 2009 by section 3001 of the American Recovery and Reinvestment Act of 2009 (ARRA), Pub. Law 111-5, 123 Stat. 115
(February 17, 2009) (ARRA). Section 6432 was repealed by section 401(d)(7)(A) of Division U of Title IV of the Consolidated Appropriations Act, 2018, Pub. Law 115-141, 132 Stat. 348
(March 23, 2018).

May 3, 2021 1124 Bulletin No. 2021–18
Failure to Deposit Penalty Relief
Section 6656 of the Code imposes a
penalty for any failure to deposit amounts
as required by the Code or regulations on
the date prescribed therefor, unless such
failure is due to reasonable cause and not
due to willful neglect. A failure to deposit
taxes as required under section 6302 of the
Code would generally subject an employ-
er to the section 6656 penalty.
Sections 7001(i) and 7003(i) of the
Families First Act (as added by section
3606(a) and (c) of the CARES Act) and
section 2301(k) of the CARES Act instruct
the Secretary of the Treasury or her dele-
gate (Secretary) to waive the penalty under
section 6656 of the Code for failure to de-
posit the Creditable Employer Social Secu-
rity Taxes in anticipation of the allowance
of the refundable tax credits allowed under
the Families First Act and the CARES Act,
respectively. Sections 3131(i), 3132(i),
3134(k) and 6432(c)(2)(C) of the Code
instruct the Secretary to waive the penalty
under section 6656 of the Code for failure
to deposit Creditable Employer Medicare
Taxes in anticipation of the allowance of
the refundable tax credits allowed under
sections 3131, 3132, 3134 and 6432 of the
Code, respectively. Furthermore, sections
7001(f) and 7003(f) of the Families First
Act and sections 3131(g)(3) and 3132(g)
(3) of the Code specifically authorize guid-
ance providing for penalty relief for failure
to deposit amounts in anticipation of the
allowance of the credits provided by the
Families First Act and sections 3131 and
3132 of the Code, respectively. Section 3 of
this notice provides relief from the penalty
under section 6656 pursuant to the Fami-
lies First Act, the CARES Act, and sections
3131(i), 3132(i), 3134(k), and 6432(c)(2)
(C) of the Code.
SECTION 3. RELIEF FROM FAILURE
TO MAKE A DEPOSIT OF TAXES
a. Reduced Deposits for Paid Sick and
Family Leave Credit
An employer will not be subject to a
penalty under section 6656 for failing to
deposit Employment Taxes in a calendar
quarter if—
(1) The employer paid Qualified Leave
Wages, Qualified Health Plan Expenses,
or Qualified Collectively Bargained Con-
tributions with respect to the period be-
ginning on April 1, 2021, and ending on
September 30, 2021, to its employees in
the calendar quarter prior to the time of
the required deposit,
(2) The amount of Employment Taxes
that the employer does not timely deposit
is less than or equal to the amount of the
employer’s anticipated credits under sec-
tions 7001 and 7003 of the Families First
Act or sections 3131 and 3132 of the Code
for the calendar quarter as of the time of
the required deposit, and
(3) The employer did not seek payment
of an advance credit by filing Form 7200
with respect to the anticipated credits it re-
lied upon to reduce its deposits.
Thus, an employer may reduce without
a penalty under section 6656 of the Code
the amount of a deposit of Employment
Taxes by the amount of the paid sick or
family leave credit anticipated for the cal-
endar quarter prior to the required deposit,
as long as the employer does not also seek
an advance credit with regard to the same
amount.
For purposes of this section 3.a of this
notice, the total amount of any reduction
in any required deposit may not exceed
the total amount of the employer’s antic-
ipated credit under section 7001 or 7003
of the Families First Act or section 3131
or 3132 of the Code as of the time of the
required deposit, minus any amount of
such anticipated credits that had previous-
ly been used (1) to reduce a prior required
deposit in the calendar quarter and obtain
the relief provided by this notice or (2) to
seek payment of an advance credit.
b. Reduced Deposits for the Employee
Retention Credit
An eligible employer will not be sub-
ject to a penalty under section 6656 for
failing to deposit Employment Taxes in a
calendar quarter if—
(1) The employer paid Qualified Re-
tention Wages with respect to the period
beginning January 1, 2021 and ending De-
cember 31, 2021, to its employees in the
calendar quarter prior to the time of the
required deposit,
(2) The amount of Employment Taxes
that the employer does not timely depos-
it, reduced by the amount of Employment
Taxes not deposited in anticipation of the
credits claimed under sections 7001 and
7003 of the Families First Act or sections
3131 and 3132 of the Code (as described
in section 3.a of this notice), is less than or
equal to the amount of the employer’s an-
ticipated credits under section 2301 of the
CARES Act or section 3134 of the Code
for the calendar quarter as of the time of
the required deposit, and
(3) The employer did not seek payment
of an advance credit by filing Form 7200,
with respect to the anticipated credits it re-
lied upon to reduce its deposits.
Thus, after a reduction, if any, of a de-
posit of Employment Taxes by the amount
of the anticipated paid sick or family leave
credits, an employer may further reduce,
without a penalty under section 6656 of
the Code, the amount of the deposit of
Employment Taxes by the amount of the
employer’s employee retention credit
anticipated for the calendar quarter pri-
or to the required deposit, as long as the
employer does not also seek an advance
credit with regard to the same amount.
For purposes of this section 3.b of this
notice, the total amount of any reduction
in any required deposit may not exceed the
total amount of the employer’s anticipated
credit under section 2301 of the CARES
Act or section 3134 of the Code as of the
time of the required deposit, minus any
amount of such anticipated credit that had
previously been used (1) to reduce a prior
required deposit in the calendar quarter and
obtain the relief provided by this notice or
(2) to seek payment of an advance credit.
c. Reduced Deposits for the COBRA
Continuation Coverage Premium
Assistance Credit
An employer will not be subject to a
penalty under section 6656 for failing to
deposit Employment Taxes in a calendar
quarter if—
(1) The employer is a “person to whom
premiums are payable” under section
6432(b) of the Code,
(2) The amount of Employment Taxes
that the employer does not timely depos-
it, reduced by the amount of Employment
Taxes not deposited in anticipation of the
credits claimed under sections 7001 and
7003 of the Families First Act or sections
3131 and 3132 of the Code (as described

Bulletin No. 2021–18 1125 May 3, 2021
in section 3.a of this notice), and the credits
claimed under section 2301 of the CARES
Act or section 3134 of the Code (as de-
scribed in section 3.b of this notice), is less
than or equal to the amount of the employ-
er’s anticipated credits under section 6432
of the Code for the calendar quarter as of
the time of the required deposit, and
(3) The employer did not seek payment
of an advance credit by filing Form 7200
with respect to the anticipated credits it re-
lied upon to reduce its deposits.
Thus, after a reduction, if any, of a de-
posit of Employment Taxes by the amount
of the anticipated paid sick or family leave
credits and the anticipated employee re-
tention credit, an employer may further
reduce without a penalty under section
6656 of the Code the amount of the de-
posit of Employment Taxes by the amount
of the employer’s COBRA continuation
coverage premium assistance credit antic-
ipated for the calendar quarter prior to the
required deposit, as long as the employer
does not also seek an advance credit with
regard to the same amount.
For purposes of this section 3.c of this
notice, the total amount of any reduction
in any required deposit may not exceed
the total amount of the employer’s an-
ticipated credit under section 6432 of the
Code in the calendar quarter as of the time
of the required deposit, minus any amount
of such anticipated credit that had previ-
ously been used (1) to reduce a prior re-
quired deposit in the calendar quarter and
obtain the relief provided by this notice or
(2) to seek payment of an advance credit.
SECTION 4. EFFECT ON OTHER
DOCUMENTS
Notice 2020-22 is amplified.
SECTION 5. CONTACT
INFORMATION
The principal author of this notice is
Michael A. Franklin of the Office of the
Associate Chief Counsel (Procedure and
Administration). For further information,
please contact Mr. Franklin at (202) 317-
5436 (not a toll-free number).
Update for Weighted
Average Interest Rates,
Yield Curves, and Segment
Rates
Notice 2021-27
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 aver-
age segment rates under § 430(h)(2) of the
Internal Revenue Code. In addition, this
notice provides guidance as to the interest
rate on 30-year Treasury securities 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).
In addition to providing these rates
for current periods, this notice provides
24-month average segment rates for ear-
lier periods for plan years beginning
in 2020 and 2021, determined under §
430(h)(2)(C)(iv) of the Code reflecting the
modifications made by § 9706(a) of the
American Rescue Plan Act of 2021, Pub.
L. No. 117-2 (ARP), which was enacted
on March 11, 2021.
YIELD CURVE AND SEGMENT
RATES
Section 430 specifies the minimum
funding requirements that apply to sin-
gle-employer plans (except for CSEC
plans under § 414(y)) pursuant to § 412.
Section 430(h)(2) specifies the inter-
est rates that must be used to determine
a plan’s target normal cost and funding
target. Under this provision, present val-
ue is generally determined using three
24-month average interest rates (“seg-
ment rates”), each of which applies to
cash flows during specified periods. To
the extent provided under § 430(h)(2)
(C)(iv), these segment rates are adjusted
by the applicable percentage of the 25-
year average segment rates for the period
ending September 30 of the year preced-
ing the calendar year in which the plan
year begins.
1
However, an election may
be made under § 430(h)(2)(D)(ii) to use
the monthly yield curve in place of the
segment rates.
Notice 2007-81, 2007-44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond seg-
ment rates used to compute the target nor-
mal cost and the funding target. Consistent
with the methodology specified in Notice
2007-81, the monthly corporate bond
yield curve derived from March 2021 data
is in Table 2021-3 at the end of this notice.
The spot first, second, and third segment
rates for the month of March 2021 are, re-
spectively, 0.69, 2.92, and 3.69.
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) to be within the appli-
cable minimum and maximum percentag-
es of the corresponding 25-year average
segment rates.
The 25-year average segment rates for
plan years beginning in 2020 and 2021
were published Notice 2019-51, 2019-41
I.R.B. 866, and Notice 2020-72, 2020-40
I.R.B. 789, respectively.
24-MONTH AVERAGE CORPORATE
BOND SEGMENT RATES
The three 24-month average corporate
bond segment rates applicable for March
2021 without adjustment for the 25-year
average segment rate limits are as follows:
24-Month Average Segment Rates Without 25-Year Average Adjustment
Applicable Month First Segment Second Segment Third Segment
April 2021 1.45 2.85 3.52
1
Pursuant to § 433(h)(3)(A), the 3
rd
segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount
of the full funding limitation under § 433(c)(7)(C)).

May 3, 2021 1126 Bulletin No. 2021–18
25-YEAR AVERAGE SEGMENT
RATES
Section 9706(a) of ARP changes the
25-year average segment rates and the
applicable minimum and maximum per-
centages used under § 430(h)(3)(C)(iv) of
the Code to adjust the 24-month average
segment rates. Prior to this change, the ap-
plicable minimum and maximum percent-
ages were 90% and 110% for a plan year
beginning in 2020, and 85% and 115% for
a plan year beginning in 2021, respective-
ly. After this change, the applicable mini-
mum and maximum percentages are 95%
and 105% for a plan year beginning in
2020 or 2021. In addition, pursuant to this
change, any 25-year average segment rate
that is less than 5% is deemed to be 5%.
2
Pursuant to § 9706(c)(1) of ARP, these
changes apply with respect to plan years
beginning on or after January 1, 2020.
However, § 9706(c)(2) of ARP provides
that a plan sponsor may elect not to have
these changes apply to any plan year be-
ginning before January 1, 2022.
3
The adjusted 24-month average seg-
ment rates reflecting § 430(h)(2)(C)(iv) of
the Code as amended by § 9706(a) of ARP
for January 2020 through March 2021, ap-
plicable for plan years beginning in 2020
and 2021, are set forth in the Appendix.
The adjusted 24-month average seg-
ment rates set forth in the chart below
reflect § 430(h)(2)(C)(iv) of the Code as
amended by § 9706(a) of ARP. These ad-
justed 24-month average segment rates
apply only for plan years for which an
election under § 9706(c)(2) of ARP is not
in effect. For a plan year for which such an
election does not apply, the 24-month av-
erages applicable for April 2021, adjusted
to be within the applicable minimum and
maximum percentages of the correspond-
ing 25-year average segment rates in ac-
cordance with § 430(h)(2)(C)(iv) of the
Code, are as follows:
Adjusted 24-Month Average Segment Rates
For Plan Years
Beginning In
Applicable
Month
First
Segment
Second
Segment
Third
Segment
2020April 20214.755.506.27
2021April 20214.755.366.11
The adjusted 24-month average seg-
ment rates set forth in the chart below do
not reflect the changes to § 430(h)(2)(C)
(iv) of the Code made by § 9706(a) of
ARP. These adjusted 24-month average
segment rates apply only for plan years for
which an election under § 9706(c)(2) of
ARP is in effect. For a plan year for which
such an election applies, the 24-month av-
erages applicable for April 2021, adjusted
to be within the applicable minimum and
maximum percentages of the correspond-
ing 25-year average segment rates in ac-
cordance with § 430(h)(2)(C)(iv) of the
Code, are as follows:
Pre-ARP Adjusted 24-Month Average Segment Rates
For Plan Years
Beginning In
Applicable
Month
First
Segment
Second
Segment
Third
Segment
2020April 20213.645.215.94
2021April 20213.324.795.47
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 431 specifies the minimum
funding requirements that apply to multi-
employer plans pursuant to § 412. Section
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) pro-
vides that the interest rate used to calculate
current liability for this purpose must be
no more than 5 percent above and no more
than 10 percent below the weighted aver-
age of the rates of interest on 30-year Trea-
sury securities during the four-year period
ending on the last day before the beginning
of the plan year. Notice 88-73, 1988-2 C.B.
383, provides guidelines for determining
the weighted average interest rate. The
rate of interest on 30-year Treasury secu-
rities for March 2021 is 2.34 percent. The
Service determined this rate as the average
of the daily determinations of yield on the
30-year Treasury bond maturing in Febru-
ary 2051. For plan years beginning in April
2021, the weighted average of the rates of
interest on 30-year Treasury securities and
the permissible range of rates used to cal-
culate current liability are as follows:
Treasury Weighted Average Rates
For Plan Years
Beginning In
30-Year Treasury
Weighted Average
Permissible Range
90% to 105%
April 20212.242.02 to 2.36
2
Pursuant to this change, the 25-year averages of the first segment rate for 2020 and 2021 are increased to 5.00% because those 25-year averages as originally published are below 5.00%.
3
This election may be made either for all purposes for which the amendments under § 9706 of ARP apply or solely for purposes of determining the adjusted funding target attainment per-
centage under § 436 of the Code for the plan year.

Bulletin No. 2021–18 1127 May 3, 2021
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 March 2021 are
as follows:
Minimum Present Value Segment Rates
Month First Segment Second Segment Third Segment
March 2021 0.69 2.92 3.69
DRAFTING INFORMATION
The principal author of this notice is
Tom Morgan of the Office of the Asso-
ciate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the IRS participated in the development
of this guidance. For further information
regarding this notice, contact Mr. Morgan
at 202-317-6700 or Paul Stern at 202-317-
8702 (not toll-free numbers).

May 3, 2021 1128 Bulletin No. 2021–18
Table 2021-3
Monthly Yield Curve for March 2021
Derived from March 2021 Data
MaturityYieldMaturityYieldMaturityYieldMaturityYieldMaturityYield
0.50.2020.53.5240.53.7160.53.7880.53.82
1.00.2621.03.5341.03.7161.03.7881.03.82
1.50.3421.53.5441.53.7161.53.7881.53.82
2.00.4422.03.5442.03.7262.03.7882.03.82
2.50.5622.53.5542.53.7262.53.7882.53.82
3.00.7023.03.5643.03.7263.03.7983.03.82
3.50.8523.53.5643.53.7263.53.7983.53.82
4.01.0124.03.5744.03.7364.03.7984.03.82
4.51.1724.53.5844.53.7364.53.7984.53.82
5.01.3325.03.5845.03.7365.03.7985.03.82
5.51.5025.53.5945.53.7365.53.7985.53.82
6.01.6626.03.5946.03.7366.03.7986.03.82
6.51.8226.53.6046.53.7466.53.7986.53.82
7.01.9827.03.6047.03.7467.03.7987.03.82
7.52.1227.53.6147.53.7467.53.7987.53.82
8.02.2628.03.6148.03.7468.03.8088.03.82
8.52.4028.53.6248.53.7468.53.8088.53.83
9.02.5229.03.6249.03.7569.03.8089.03.83
9.52.6329.53.6349.53.7569.53.8089.53.83
10.02.7430.03.6350.03.7570.03.8090.03.83
10.52.8330.53.6450.53.7570.53.8090.53.83
11.02.9231.03.6451.03.7571.03.8091.03.83
11.53.0031.53.6551.53.7571.53.8091.53.83
12.03.0732.03.6552.03.7672.03.8092.03.83
12.53.1332.53.6652.53.7672.53.8092.53.83
13.03.1833.03.6653.03.7673.03.8093.03.83
13.53.2333.53.6653.53.7673.53.8193.53.83
14.03.2834.03.6754.03.7674.03.8194.03.83
14.53.3134.53.6754.53.7674.53.8194.53.83
15.03.3435.03.6855.03.7775.03.8195.03.83
15.53.3735.53.6855.53.7775.53.8195.53.83
16.03.4036.03.6856.03.7776.03.8196.03.83
16.53.4236.53.6956.53.7776.53.8196.53.83
17.03.4437.03.6957.03.7777.03.8197.03.83
17.53.4537.53.6957.53.7777.53.8197.53.83
18.03.4738.03.6958.03.7778.03.8198.03.83
18.53.4838.53.7058.53.7778.53.8198.53.84
19.03.4939.03.7059.03.7879.03.8199.03.84
19.53.5039.53.7059.53.7879.53.8199.53.84
20.03.5140.03.7160.03.7880.03.81100.03.84

Bulletin No. 2021–18 1129 May 3, 2021
Appendix
Adjusted 24-Month Average Segment Rates Reflecting ARP for Plan Years Beginning in 2020
First SegmentSecond SegmentThird Segment
January 20204.755.506.27
February 20204.755.506.27
March 20204.755.506.27
April 20204.755.506.27
May 20204.755.506.27
June 20204.755.506.27
July 20204.755.506.27
August 20204.755.506.27
September 20204.755.506.27
October 20204.755.506.27
November 20204.755.506.27
December 20204.755.506.27
January 20214.755.506.27
February 20214.755.506.27
March 20214.755.506.27
Adjusted 24-Month Average Segment Rates Reflecting ARP for Plan Years Beginning in 2021
First SegmentSecond SegmentThird Segment
September 20204.755.366.11
October 20204.755.366.11
November 20204.755.366.11
December 20204.755.366.11
January 20214.755.366.11
February 20214.755.366.11
March 20214.755.366.11

May 3, 2021 1130 Bulletin No. 2021–18
Public Recommendations
Invited on Items to be
Included on the 2021-2022
Priority Guidance Plan
Notice 2021-28
The Department of the Treasury (Trea-
sury Department) and the Internal Reve-
nue Service (Service) invite the public to
submit recommendations for items to be
included on the 2021-2022 Priority Guid-
ance Plan.
The Treasury Department’s Office of
Tax Policy and the Service use the Pri-
ority Guidance Plan each year to identify
and prioritize the tax issues that should
be addressed through regulations, reve-
nue rulings, revenue procedures, notices,
and other published administrative guid-
ance. The 2021-2022 Priority Guidance
Plan will identify guidance projects that
the Treasury Department and the Ser-
vice intend to actively work on as prior-
ities during the period from July 1, 2021,
through June 30, 2022.
The Treasury Department and the
Service recognize the importance of
public input in formulating a Priority
Guidance Plan that focuses resources
on guidance items that are most import-
ant to taxpayers and tax administration.
Published guidance plays an important
role in increasing voluntary compliance
by helping to clarify ambiguous areas
of the tax law. The published guidance
process is most successful if the Trea-
sury Department and the Service have
the benefit of the experience and knowl-
edge of taxpayers and practitioners who
must apply the rules implementing the
tax laws.
This solicitation reflects an emphasis
on taxpayer engagement with the Trea-
sury Department and the Service through
a variety of channels, consistent with the
directive of the Taxpayer First Act, Pub.
L. 116-25, 133 Stat. 981.
In reviewing recommendations and se-
lecting additional projects for inclusion on
the 2021-2022 Priority Guidance Plan, the
Treasury Department and the Service will
consider the following:
1. Whether the recommended guidance
resolves significant issues relevant to
a broad class of taxpayers;
2. Whether the recommended guidance
reduces controversy and lessens the
burden on taxpayers or the Service;
3. Whether the recommended guidance
relates to recently enacted legislation;
4. Whether the recommendation in-
volves existing regulations or other
guidance that is outdated, unnec-
essary, ineffective, insufficient, or
unnecessarily burdensome and that
should be modified, streamlined, ex-
panded, replaced, or withdrawn;
5. Whether the recommended guidance
promotes sound tax administration;
6. Whether the Service can administer
the recommended guidance on a uni-
form basis; and
7. Whether the recommended guidance
can be drafted in a manner that will
enable taxpayers to easily understand
and apply the guidance.
Please submit recommendations for
guidance by Friday, May 28, 2021, for
possible inclusion on the original 2021-
2022 Priority Guidance Plan. Taxpayers
may, however, submit recommendations
for guidance at any time during the year.
The Treasury Department and the Ser-
vice will update the 2021-2022 Priority
Guidance Plan periodically to reflect addi-
tional guidance that the Treasury Depart-
ment and the Service intend to publish or
have published during the plan year. The
periodic updates allow the Treasury De-
partment and the Service to respond in a
timely manner to the need for additional
guidance that may arise during the plan
year.
Taxpayers are not required to submit
recommendations for guidance in any
particular format. Taxpayers should, how-
ever, briefly describe the recommended
guidance and explain the need for the guid-
ance. In addition, taxpayers may include
an analysis of how the issue should be re-
solved. For recommendations to modify,
streamline, or withdraw existing regula-
tions or other guidance, taxpayers should
explain how the changes would reduce
taxpayer cost and/or burden or benefit tax
administration. It would be helpful if tax-
payers suggesting more than one guidance
project prioritize the projects by order of
importance. If a large number of projects
are being suggested, it would be helpful if
the projects were grouped by subject mat-
ter and then 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 con-
siderations described in this notice.
Taxpayers are strongly encouraged to
submit recommendations for guidance
electronically via the Federal eRulemak-
ing Portal at www.regulations.gov (type
IRS-2021-0004 in the search field on the
regulations.gov homepage to find this no-
tice and submit recommendations). Tax-
payers submitting recommendations by
mail should send them to:
Internal Revenue Service
Attn: CC:PA:LPD:PR (Notice 2021-28)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20044
All recommendations for guidance
submitted by the public in response to
this notice will be available for public in-
spection and copying in their entirety. For
further information regarding this notice,
contact Emily M. Lesniak of the Office of
the Associate Chief Counsel (Procedure
and Administration) at (202) 317-5409
(not a toll-free number).

Bulletin No. 2021–18 1131 May 3, 2021
Part IV
Notice of Proposed
Rulemaking
Requirements for Certain
Foreign Persons and
Certain Foreign-Owned
Partnerships Investing
in Qualified Opportunity
Funds and Flexibility for
Working Capital Safe
Harbor Plans
REG-121095-19
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking.
SUMMARY: This document contains
proposed regulations that include require-
ments that certain foreign persons and
certain foreign-owned partnerships must
meet in order to elect the Federal income
tax benefits provided by section 1400Z-2
of the Internal Revenue Code (Code). This
document also contains proposed regula-
tions that allow, under certain circum-
stances, for the reduction or elimination of
withholding under section 1445, 1446(a),
or 1446(f) of the Code on transfers that
give rise to gain that is deferred under sec-
tion 1400Z-2(a). Finally, this document
contains additional guidance regarding
the 24-month extension of the working
capital safe harbor in the case of Federal-
ly declared disasters. The proposed regu-
lations affect qualified opportunity funds
and their investors.
DATES: Written or electronic comments
and requests for a public hearing must be
received by June 11, 2021. Requests for a
public hearing must be submitted as pre-
scribed in the “Comments and Requests
for Public Hearing” section.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submis-
sions via the Federal eRulemaking Portal
at www.regulations.gov (indicate IRS and
REG-121095-19) by following the online
instructions for submitting comments.
Once submitted to the Federal eRulemak-
ing Portal, comments cannot be edited or
withdrawn. The IRS expects to have lim-
ited personnel available to process public
comments that are submitted on paper
through the mail. Until further notice,
any comments submitted on paper will
be considered to the extent practicable.
The Department of the Treasury (Trea-
sury Department) and the IRS will pub-
lish for public availability any comment
submitted electronically, and to the extent
practicable on paper, to its public docket.
Send paper submissions to: CC:PA:LP-
D:PR (REG-121095-19), room 5203,
Internal Revenue Service, PO Box 7604,
Ben Franklin Station, Washington, D.C.
20044.
FOR FURTHER INFORMATION
CONTACT: Concerning proposed
§ §1.1400Z2(a)-2 and 1.1445-3, Milton
Cahn at (202) 317-4934; concerning pro-
posed § §1.1446-3, 1.1446-6 and 1.1446-
7, Ronald Gootzeit at (202) 317-4953;
concerning proposed § 1.1446(f)-2, Subin
Seth at (202) 317-5003; concerning pro-
posed § §1.1400Z2(a)-1(a), 1.1400Z2(b)-
1(c), and 1.1400Z2(d)-1(d), Erika Reigle
at (202) 317-7006; concerning submis-
sions of comments and/or requests for a
public hearing, Regina L. Johnson, (202)
317-5177 (not toll free numbers).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed
amendments to 26 CFR part 1 under
sections 1400Z-2, 1445, and 1446 (pro-
posed regulations). Section 13823 of
Public Law 115-97, 131 Stat. 2054, 2184
(2017), commonly referred to as the Tax
Cuts and Jobs Act (TCJA), added sections
1400Z-1 and 1400Z-2 to the Code. The
purposes of section 1400Z-2 and the sec-
tion 1400Z-2 regulations (that is, the final
regulations set forth in § §1.1400Z2(a)-1
through 1.1400Z2(f)-1, 1.1502-14Z, and
1.1504-3) are to provide specified Federal
income tax benefits to owners of qualified
opportunity funds (QOFs) to encourage
the making of longer-term investments,
through QOFs and qualified opportunity
zone businesses, of new capital in one or
more qualified opportunity zones desig-
nated under section 1400Z-1 and to in-
crease economic growth in such qualified
opportunity zones. See § 1.1400Z2(f)-1(c)
(1) (describing the purposes of section
1400Z-2 and the section 1400Z-2 regula-
tions; Notice 2018-48, 2018-28 I.R.B. 9,
and Notice 2019-42, 2019-29 I.R.B. 352
(setting forth the combined list of popula-
tion census tracts designated as qualified
opportunity zones).
Section 1400Z-1 provides the proce-
dural rules for designating qualified op-
portunity zones and related definitions.
Section 1400Z-2 provides two main tax
incentives to encourage investment in
qualified opportunity zones. See section
1400Z-2(b) and (c). First, a taxpayer,
upon making a valid election, may gener-
ally defer, until the earlier of an inclusion
event or December 31, 2026, certain gains
in gross income that would otherwise be
recognized in the tax year if the taxpayer
invests a corresponding amount in a qual-
ifying investment in a QOF within 180
days of the date of the sale or exchange.
See section 1400Z-2(b)(1)(A) and (B).
The taxpayer may potentially exclude ten
percent of such deferred gain from gross
income if the taxpayer holds the quali-
fying investment in the QOF for at least
five years. See section 1400Z-2(b)(2)(B)
(iii). An additional five percent of such
gain may potentially be excluded from
gross income if the taxpayer holds the
qualifying investment for at least seven
years. See section 1400Z-2(b)(2)(B)(iv).
Second, a taxpayer, upon making a second
valid election under section 1400Z-2(c),
may also exclude from gross income any
appreciation on the taxpayer’s qualifying
investment in the QOF if the qualifying
investment is held for at least ten years.
Section 1400Z-2(e)(4) provides that the
Secretary of the Treasury or his delegate
shall prescribe regulations as may be nec-
essary or appropriate to carry out the pur-
poses of section 1400Z-2, including rules
to prevent abuse.

May 3, 2021 1132 Bulletin No. 2021–18
On October 29, 2018, the Treasury De-
partment and the IRS published in the Fed-
eral Register (83 FR 54279) a notice of
proposed rulemaking (REG-115420-18)
providing guidance under section 1400Z-
2 for investing in qualified opportunity
funds (83 FR 54279 (October 29, 2018))
(October 2018 proposed regulations). A
second notice of proposed rulemaking
(REG-120186-18) was published in the
Federal Register (84 FR 18652) on May
1, 2019, containing additional proposed
regulations under section 1400Z-2 (May
2019 proposed regulations). The May
2019 proposed regulations also updated
portions of the October 2018 proposed
regulations. On January 13, 2020, fi-
nal regulations (TD 9889) under section
1400Z-2 were published in the Federal
Register (85 FR 1866, as corrected at 85
FR 19082), effective for taxable years
beginning after March 13, 2020 (section
1400Z-2 regulations).
Under the section 1400Z-2 regulations,
a taxpayer qualifies for deferral under sec-
tion 1400Z-2(a) only if the taxpayer is an
eligible taxpayer. Section 1.1400Z2(a)-
1(a)(1). An eligible taxpayer is defined
as a person that is required to report the
recognition of gains during the taxable
year under Federal income tax accounting
principles. Section 1.1400Z2(a)-1(b)(13).
If an eligible taxpayer that is a partner-
ship does not elect to defer gain, a part-
ner of such partnership may elect to defer
its distributive share of the gain. Section
1.1400Z2(a)-1(c)(8).
The section 1400Z-2 regulations pro-
vide that only gains that are eligible gains
may be deferred. Section 1.1400Z2(a)-
1(b)(11). In general, an eligible gain is
gain that (i) is treated as a capital gain or
is a qualified 1231 gain, (ii) would be rec-
ognized for Federal income tax purposes
and subject to tax under subtitle A of the
Code before January 1, 2027, if section
1400Z-2(a)(1) did not apply to defer the
gain, and (iii) does not arise from a sale
or exchange of property with certain re-
lated persons. Id. Thus, for example, a
nonresident alien individual or foreign
corporation generally may make a deferral
election with respect to an item of capital
gain that is effectively connected with a
U.S. trade or business, because this gain
otherwise is subject to Federal income
tax. When a partnership chooses to make
a deferral election, the section 1400Z-2
regulations provide an exception to the
general requirement that gain be subject to
Federal income tax in order to constitute
eligible gain, subject to an anti-abuse rule.
Section 1.1400Z2(a)-1(b)(11)(ix)(B).
Foreign persons are generally subject
to U.S. income tax on amounts that are ef-
fectively connected with the conduct of a
trade or business within the United States
(ECI). A foreign person that directly or in-
directly is engaged in a trade or business
in the United States must file a U.S. in-
come tax return and pay any tax due.
To ensure the collection of tax, in cer-
tain circumstances, the Code imposes
withholding requirements on payments or
allocations of ECI to foreign persons. See
sections 1445, 1446(a), and 1446(f). The
amount of withholding under these provi-
sions is intended to serve as a proxy for the
amount of the foreign person’s substantive
tax liability and may not match the actual
amount of tax due. The amount withheld
may be claimed as a credit against the
amount of tax due and shown on the for-
eign person’s tax return.
Specifically, section 1445(a) requires a
transferee to withhold tax on a disposition
of a United States real property interest
(as defined in section 897(c)) (U.S. real
property interest) by a foreign person.
Generally, the transferee must withhold 15
percent of the amount realized and depos-
it the tax with the IRS within 20 days of
the transfer. Certain exceptions and reduc-
tions to the rate of withholding can apply,
including by the foreign person obtaining
a withholding certificate from the IRS to
reduce or eliminate the amount required to
be withheld on the transfer.
Section 1445(e)(1) requires a domestic
partnership, trust, or estate that disposes
of a United States real property interest to
withhold on any portion of the gain that is
allocable to a foreign partner or beneficia-
ry. The rate of withholding is the highest
rate of tax in effect under section 11(b)
(currently 21 percent).
Section 1445(e)(2) requires a foreign
corporation that recognizes gain on the
distribution of a United States real prop-
erty interest to withhold on the gain at the
highest rate of tax in effect under section
11(b).
Section 1445(e)(3) requires a do-
mestic corporation that is or has been a
United States real property holding cor-
poration to withhold 15 percent of a dis-
tribution to a nonresident alien or foreign
corporation.
Section 1445(e)(6) requires a qualified
investment entity to withhold at the high-
est rate of tax specified in section 11(b) on
the amount of the distribution that is treat-
ed as gain from the sale or exchange of a
United States real property interest.
Section 1446(a) generally requires a
partnership to withhold tax on effectively
connected taxable income as determined
under § 1.1446-2 (ECTI) allocable to a
foreign partner, with limited adjustments,
regardless of whether the income is dis-
tributed to the partner (section 1446(a)
tax). A partnership must generally with-
hold section 1446(a) tax on a foreign part-
ner’s allocable share of ECTI at the high-
est rate of tax specified in section 1 (for a
foreign partner other than a corporation)
or section 11(b) (for a foreign partner that
is a corporation). A partnership is general-
ly required to pay the section 1446(a) tax
in four installment payments. The partner-
ship may consider certain partner-level
deductions and losses as a reduction to the
ECTI on which it must withhold section
1446(a) tax. See § 1.1446-6.
Section 1446(f) requires withholding
under certain circumstances in connection
with a disposition of a partnership interest.
Specifically, if, on a disposition (which in-
cludes a distribution from a partnership to
a partner) of a partnership interest, section
864(c)(8) treats any portion of a foreign
partner’s gain as effectively connected
gain, section 1446(f) requires the transfer-
ee to withhold tax equal to 10 percent of
the amount realized, unless an exemption
or reduced rate of withholding applies.
The transferee must deposit the tax with
the IRS within 20 days of the transfer.
See § 1.1446(f)-2. For purposes of section
1446(f), a transferor may in certain cases
certify to the transferee that the transfer
is not subject to withholding or otherwise
qualifies for an exception to withholding
or an adjustment to the amount required to
be withheld. Id.
Under sections 33 and 1462, a foreign
person subject to withholding under sec-
tion 1445, 1446(a), or 1446(f) may credit
the amount withheld against the amount
of income tax liability shown on the per-
son’s tax return.

Bulletin No. 2021–18 1133 May 3, 2021
Explanation of Provisions
I. Overview of Proposed Regulations
These proposed regulations provide re-
quirements for certain foreign persons and
certain foreign-owned partnerships in-
vesting in QOFs and flexibility for work-
ing capital safe harbor plans.
II. Requirements for Certain Foreign
Persons and Certain Foreign-owned
Partnerships Investing in QOFs
A. Coordination of the deferral election
under section 1400Z-2(a) with the
withholding rules under sections 1445,
1446(a) and 1446(f)
The existing section 1400Z-2 reg-
ulations do not coordinate the deferral
election under section 1400Z-2(a) with
the withholding rules in sections 1445,
1446(a), and 1446(f). Generally, these
withholding provisions subject a foreign
person to withholding to ensure the col-
lection of tax due to the increased risk of
noncompliance by a person that is not a
United States person. In general, the with-
holding may be claimed as a credit or
refund when the foreign person files its
return and pays any substantive tax due.
Thus, a foreign person subject to with-
holding that elects to defer gain under sec-
tion 1400Z-2(a) may be entitled to apply
the credit for withholding against tax on
other income or claim a refund for the year
in which withholding was applied, as the
foreign person will not be required to pay
substantive tax on all or a portion of the
deferred gain until the gain is recognized
upon the earlier of an inclusion event or
December 31, 2026. In these circumstanc-
es, the withholding will not serve its in-
tended purpose to ensure that the substan-
tive tax is collected. To address the risk of
noncompliance by certain foreign persons
with respect to their U.S. tax obligations
related to deferred gain under section
1400Z-2(a), the Treasury Department and
the IRS have determined that coordination
is needed between section 1400Z-2 and
sections 1445, 1446(a), and 1446(f).
To ensure that the compliance pur-
poses of sections 1445, 1446(a), and
1446(f) are not undermined when a for-
eign person elects to defer gain under
section 1400Z-2(a), these proposed reg-
ulations provide that security-required
persons (certain foreign persons and for-
eign-owned partnerships) investing gain
that is a security-required gain (general-
ly, gain from a transfer subject to with-
holding under section 1445, 1446(a), or
1446(f)) may not make a deferral elec-
tion under section 1400Z–2(a) unless an
eligibility certificate is obtained with re-
spect to that gain. See section II.B of this
Explanation of Provisions. At the same
time, the proposed regulations eliminate
or reduce withholding under section 1445,
1446(a), or 1446(f) on security-required
persons that obtain an eligibility certifi-
cate and provide security to the IRS before
the transaction giving rise to the gain. As
discussed in Part II.C of this Explanation
of Provisions, this exemption responds to
comments received on the proposed regu-
lations under section 1400Z-2 requesting
withholding relief so that foreign persons
have funds available to invest the entire
amount of eligible gain into a QOF. A se-
curity-required person that does not obtain
an eligibility certificate before the transfer,
and thus is withheld upon, must still ob-
tain an eligibility certificate to make a de-
ferral election under section 1400Z-2(a).
The security-required person (or, if ap-
plicable, its partner, owner, or beneficia-
ry) may also claim a credit or refund for
the amount withheld on the deferred gain
when filing its return. The IRS intends to
require any claim for credit or refund for
amounts withheld under section 1445,
1446(a), or 1446(f) on deferred gain un-
der section 1400Z-2(a) to include a copy
of the eligibility certificate for the covered
transfer (or a statement providing that the
transfer was not a covered transfer).
B. Requirement for certain persons to
obtain eligibility certificate
1. In General
The proposed regulations provide that
a taxpayer that is a security-required per-
son may not make a deferral election un-
der section 1400Z–2(a) with respect to
part or all of a security-required gain from
a covered transfer unless the taxpayer
obtains an eligibility certificate from the
IRS with respect to such security-required
gain by the date on which the deferral
election is filed with the IRS. Proposed
§ 1.1400Z2(a)-1(a)(3). The eligibility cer-
tificate must specify the permitted deferral
amount, and the taxpayer may not make
a deferral election with respect to the se-
curity-required gain in an amount that ex-
ceeds the permitted deferral amount. Id.
2. Security-Required Persons
A security-required person means a
person that is either (i) a foreign person
other than a partnership or (ii) a specified
partnership. Proposed § 1.1400Z2(a)-2(b)
(1). To minimize burden, the Treasury De-
partment and the IRS have decided not to
require that all partnerships electing to de-
fer gain under section 1400Z-2(a) obtain
an eligibility certificate. Rather, the rules
regarding specified partnerships are in-
tended to impose this requirement only on
partnerships that pose a compliance risk
with respect to the collection of tax on any
deferred gain and that either hold a signifi-
cant amount of U.S. real property interests
or assets used in a U.S. trade or business
or that generate a significant amount of
gain that the partnership elects to defer.
An abusive avoidance of the rules regard-
ing specified partnerships is subject to the
existing anti-abuse rule in § 1.1400Z2(f)-
1(c)(1) (providing that if a significant pur-
pose of a transaction is to achieve a Fed-
eral income tax result that is inconsistent
with the purposes of section 1400Z-2 and
the section 1400Z-2 regulations, a transac-
tion (or series of transactions) will be re-
cast or recharacterized for Federal income
tax purposes as appropriate to achieve tax
results that are consistent with the pur-
poses of section 1400Z–2 and the section
1400Z–2 regulations).
A specified partnership is a partner-
ship, foreign or domestic, that meets three
tests with respect to a transfer that pro-
duces a security-required gain: an owner-
ship test, a closely-held test, and a gain or
asset test. Proposed § 1.1400Z2(a)-2(b)
(3). The ownership test is met if, at the
time of transfer, 20 percent or more of
the capital or profits interests in the part-
nership are owned (directly or indirectly
through one or more partnerships, trusts,
or estates) by one or more nonresident
aliens or foreign corporations. Proposed
§ 1.1400Z2(a)-2(b)(3)(i). The close-
ly-held test is met if, at any time during a

May 3, 2021 1134 Bulletin No. 2021–18
look-back period, a partnership has 10 or
fewer direct partners that own 90 percent
or more of the capital or profits interests in
the partnership, with any related partners
(within the meaning of section 267(b)
or 707(b)(1)) being treated as a single
partner. Proposed § 1.1400Z2(a)-2(b)
(3)(ii). For purposes of the closely-held
test, the look-back period is the period
that begins on the later of the date that
is one year before the date of the trans-
fer or the date on which the partnership
was formed, and that ends on the date of
the transfer. Id. Further, a partner that is a
partnership or trust is considered a direct
partner. Id. The gain or asset test is met
if either: (i) The amount of security-re-
quired gain from the transfer exceeds $1
million (the gain test) or (ii) at any time
during a look-back period, the value of
the partnership’s assets that are U.S. real
property interests or assets used in a U.S.
trade or business exceeds 25 percent of
the total value of the partnership’s assets
(the asset test). Proposed § 1.1400Z2(a)-
2(b)(3)(iii). For purposes of the asset
test, the look-back period is the same as
the look-back period for purposes of the
closely held test. Id. The proposed regu-
lations allow the partnership to determine
the value of an asset on the last day of the
taxable year preceding the year in which
the look-back period begins or, for any
asset acquired after this date (including
upon formation of the partnership), on
the date of acquisition. Id. The proposed
regulations also provide rules for looking
through interests in other partnerships to
value assets that are held indirectly. Id.
Finally, the proposed regulations state
that the value of each asset will be mea-
sured according to its gross fair market
value. Id. The Treasury Department and
the IRS request comments on whether a
method of valuing assets other than fair
market value should be used for purposes
of the asset test. The Treasury Depart-
ment and the IRS also request comments
on whether net value, instead of gross
value, should be used for purposes of the
asset test.
3. Covered Transfer and Security-
Required Gain
A covered transfer is defined as: (i) A
disposition by, or a distribution to, a se-
curity-required person that is subject to
withholding under section 1445; (ii) a
disposition by, or a distribution to, a se-
curity-required person that is subject to
withholding under section 1446(f); (iii) a
disposition by a specified partnership of
property, other than an interest in another
partnership or a U.S. real property inter-
est, or a distribution to a specified partner-
ship, if any gain that arises is included in
computing ECTI; or (iv) a disposition by a
partnership that is not a specified partner-
ship of property, or a distribution to such
a partnership, if any gain that arises is in-
cluded in determining the allocable share
of a security-required person’s ECTI.
1
Pro-
posed § 1.1400Z2(a)-2(c)(2)(i). The pro-
posed regulations generally provide that a
transfer subject to section 1445 or 1446(f)
is not a covered transfer if an exception
to withholding applies under those provi-
sions. Proposed § 1.1400Z2(a)-2(c)(2)(ii).
However, in order to impose the eligibili-
ty certificate requirements on security-re-
quired persons that are domestic specified
partnerships, if the exception to withhold-
ing is based on the non-foreign status of
the transferor, the transfer will continue to
be treated as a covered transfer. Id. For the
same reason, a domestic specified partner-
ship is treated as a foreign person in de-
termining whether a transfer is a covered
transfer as defined in (A), (B), and (D) of
proposed § 1.1400Z2(a)-2(c)(2)(i).
Security-required gain is certain
gain that arises from a covered trans-
fer. Proposed § 1.1400Z2(a)-2(c)(1). For
a covered transfer defined in proposed
§ 1.1400Z2(a)-2(c)(2)(i)(C) (described in
(iii) in the first sentence of the preceding
paragraph), the amount of security-re-
quired gain is the gain that is included
in computing ECTI under § 1.1446-2,
disregarding § 1.1446-2(b)(4)(i). Id. For
a covered transfer defined in proposed
§ 1.1400Z2(a)-2(c)(2)(i)(D) (described in
(iv) in the first sentence of the preceding
paragraph), the amount of security-re-
quired gain is the gain that is included in
computing ECTI under § 1.1446-2 that is
allocable to the security-required person.
Id.
4. Application for an eligibility certificate
and acceptable security
To obtain an eligibility certificate with
respect to any security-required gain,
a security-required person must sub-
mit an application to the IRS. Proposed
§ 1.1400Z2(a)-2(d)(2). The IRS is con-
sidering requiring electronic submission
of the application; this process would
be described in forms, instructions, pub-
lications, or guidance published in the
Internal Revenue Bulletin. The applica-
tion must generally include the follow-
ing: (i) Certain information about the
security-required person and the cov-
ered transfer; (ii) an agreement for the
deferral of tax and provision of security
(deferral agreement); (iii) an agreement
with a U.S. agent (as defined in pro-
posed § 1.1400Z2(a)-2(d)(4)(ii)(D));
and (iv) acceptable security that secures
the amount of security-required gain for
which the eligibility certificate is being
obtained. Proposed § 1.1400Z2(a)-2(d)
(3). The application includes the require-
ment to provide a U.S. taxpayer identi-
fication number. If applicants do not yet
have a U.S. taxpayer identification num-
ber, additional time should be allocated
to ensure that a U.S. taxpayer identifi-
cation number can be obtained; see the
instructions to Forms W-7 and SS-4. The
IRS may prescribe in forms or instruc-
tions or in publications or guidance pub-
lished in the Internal Revenue Bulletin
(see § §601.601(d)(2) and 601.602 of
this chapter) procedures for obtaining a
U.S. taxpayer identification number un-
der these circumstances.
Acceptable security is defined as an
irrevocable standby letter of credit is-
sued by a U.S. bank that meets certain
capital and other requirements specified
1
While both categories (iii) and (iv) describe dispositions or distributions, the gain from which is used in the calculation of ECTI under § 1.1446-2, category (iii) describes transactions
directly involving a specified partnership, while category (iv) describes transactions involving a partnership that is not a specified partnership that produce gain allocable to a partner that is a
security-required person. The transactions described in category (iii) are limited to those involving property other than partnership interests and U.S. real property interests because the direct
transfer by a specified partnership of a partnership interest is subject to withholding under section 1446(f) (and thus is already described in category (ii)), and the direct transfer of a U.S. real
property interest is subject to withholding under section 1445 (and thus is already described in category (i)).

Bulletin No. 2021–18 1135 May 3, 2021
in these proposed regulations. Proposed
§ 1.1400Z2(a)-2(d)(6)(ii). The proposed
regulations provide that the IRS may
identify in published guidance addition-
al financial institutions that may quali-
fy as issuers of letters of credit. Id. The
Treasury Department and the IRS request
comments on financial institutions other
than banks that should qualify as issuers
of letters of credit. The Treasury Depart-
ment and the IRS also request comments
on whether additional types of security are
needed. Any additional proposed types of
security should preserve administrative
flexibility to require electronic submission
of applications and protect the IRS’s col-
lection ability.
5. Deferral Agreement and Events of
Default
In general, under the deferral agree-
ment, the security-required person agrees
to do the following: timely file a Federal
income tax return and pay any tax liabil-
ity due on the security-required gain for
which the security-required person seeks
to defer gain under section 1400Z–2(a)
when required; report any security-re-
quired gain in accordance with the reg-
ulations under section 1400Z-2; provide
security to the IRS with respect to any tax
liability due on security-required gain for
which the security-required person seeks
to defer gain under section 1400Z–2(a);
and appoint a U.S. person to act as the se-
curity-required person’s limited agent for
certain purposes specified in the deferral
agreement. Proposed § 1.1400Z2(a)-2(d)
(4)(ii). The deferral agreement must con-
form to the template provided in guidance
published in the Internal Revenue Bulle-
tin. Proposed § 1.1400Z2(a)-2(d)(4)(i).
An event of default under the deferral
agreement is an inclusion event that trig-
gers recognition of the security-required
gain for which the security-required per-
son seeks to defer gain under section
1400Z–2(a). Proposed § 1.1400Z2(a)-
2(d)(4)(ii)(E). Defaults, upon which an
event of default may be based, will be
specified in the deferral agreement, and
may include the following: a determina-
tion that the security is no longer adequate
to protect the IRS’s interests; a change in
the creditworthiness of the issuer of a let-
ter of credit; and a failure by the securi-
ty-required person to file returns or attach
an eligibility certificate (when required)
during the period covered by the deferral
agreement. Proposed § 1.1400Z2(a)-2(d)
(4)(ii)(E). In addition, the deferral agree-
ment will specify whether notice of de-
fault and an opportunity to cure will be
provided to the security-required person
before an event of default arises. Id.
6. Amount of Eligibility Certificate
The proposed regulations provide that
an eligibility certificate will be issued for
a permitted deferral amount. Proposed
§ 1.1400Z2(a)-2(d)(1). If a security-re-
quired person provides security in an
amount equal to the maximum security
amount, the permitted deferral amount is
the total amount of security-required gain.
Proposed § 1.1400Z2(a)-2(d)(7)(i). If a
security-required person provides security
in an amount less than the maximum secu-
rity amount, the permitted deferral amount
is the total amount of security-required
gain multiplied by the ratio of the amount
of security provided over the maximum
security amount. Id.
The proposed regulations provide spe-
cific rules for determining the maximum
security amount, which is generally com-
puted by reference to either a percentage
of the amount realized on the covered
transfer or the amount of tax due on the
security-required gain. See proposed
§ 1.1400Z2(a)-2(d)(7)(ii). The maximum
security amount on a direct disposition
by, or a distribution to, a security-required
person that is subject to withholding un-
der section 1445 is the lesser of: (i) The
amount realized multiplied by the rate
specified under section 1445(a) (or, for
transfers subject to section 1445(e)(1), (e)
(2), or (e)(6), the rate specified in the ap-
plicable provision) or (ii) the security-re-
quired gain multiplied by the highest rate
of tax applicable to the gain, based on the
type of property, holding period, and the
classification of the security-required per-
son. Proposed § 1.1400Z2(a)-2(d)(7)(ii)
(A). The maximum security amount on a
direct disposition by, or a distribution to, a
security-required person that is subject to
withholding under section 1446(f) is the
lesser of: (i) The amount realized multi-
plied by the rate specified under section
1446(f)(1) or (ii) the security-required
gain multiplied by the highest rate of tax
applicable to the gain based on the type
of property, holding period, and the clas-
sification of the security-required person.
Proposed § 1.1400Z2(a)-2(d)(7)(ii)(B). If
a direct disposition of a partnership inter-
est is subject to withholding under both
sections 1445 and 1446(f), the proposed
regulations provide that the rate specified
in section 1445 is used for purposes of de-
termining the maximum security amount.
Proposed § 1.1400Z2(a)-2(d)(7)(ii)(A)
and (B).
For a direct disposition of property,
other than an interest in another partner-
ship or a U.S. real property interest, by
a specified partnership, or a distribution
to a specified partnership, the maximum
security amount is the security-required
gain multiplied by the highest rate of tax
applicable to the gain, treating the spec-
ified partnership as an individual for this
purpose, and taking into account the type
of property and holding period. Proposed
§ 1.1400Z2(a)-2(d)(7)(ii)(C). Therefore,
a specified partnership that has gain aris-
ing from the direct sale or exchange of
an asset used in a U.S. trade or business
(other than a U.S. real property interest)
will generally be required to obtain an eli-
gibility certificate for such gain if it wants
to elect to defer all or part of the gain by
investing in a QOF.
For a disposition of property (including
an interest in another partnership or a U.S.
real property interest) by a partnership
that is not a specified partnership, or a dis-
tribution to such a partnership, that gives
rise to gain that is included in determining
the allocable share of a security-required
person’s ECTI, the maximum security
amount is the security-required gain mul-
tiplied by the highest rate of tax applicable
to the gain, taking into account the type
of property, holding period, and the clas-
sification of the security-required person.
Proposed § 1.1400Z2(a)-2(d)(7)(ii)(D).
C. Elimination or reduction of
withholding based on an eligibility
certificate
Comments on the May 2019 proposed
regulations requested relief from with-
holding under section 1445, 1446(a), or
1446(f) on transactions if gain from those
transactions was deferred under section

May 3, 2021 1136 Bulletin No. 2021–18
1400Z-2. One comment requested that a
foreign taxpayer engaging in a sale sub-
ject to withholding under section 1445 be
able to provide a certificate or other form
of documentation to avoid withholding
based on the taxpayer’s intention to invest
the resulting gain in a QOF pursuant to a
deferral election under section 1400Z-2(a)
(1). In addition, the comment suggested
that a foreign taxpayer would be required
to certify that it will file a tax return in
the year the QOF interest is sold. Anoth-
er comment requested an exemption from
withholding when a foreign person enters
into an agreement with the IRS to pay the
tax when the deferred gain is included
under section 1400Z-2(a)(1)(B) and (b),
similar to when a gain recognition agree-
ment is “triggered” under section 367
and the regulations thereunder. Another
comment suggested that the IRS provide
a reduced FIRPTA withholding certificate
for foreign persons who intend to invest
in QOFs.
The comments noted that withholding
may reduce the amount of funds avail-
able to the foreign person to invest in the
QOF fund within the 180-day investment
period. Even though the foreign person
may later obtain a refund of the amount
withheld, there may be a temporary lack
of liquidity that could prevent an investor
from investing all of its eligible gain into
a QOF.
The proposed regulations address
these comments by allowing a securi-
ty-required person to use an eligibili-
ty certificate as a basis for reducing or
eliminating withholding under section
1445, 1446(a), or 1446(f) on a covered
transfer. For purposes of section 1445, a
security-required person may apply for
a withholding certificate from the IRS
based on an eligibility certificate. For
purposes of section 1446(f), the pro-
posed regulations add a rule to allow a
transferee to rely on an eligibility certifi-
cate to qualify for an exception or adjust-
ment to withholding.
Section 1.1446-3 currently allows a
partnership to consider certain partner
level deductions and losses certified in ac-
cordance with § 1.1446-6 in determining
its section 1446 tax. The proposed regu-
lations modify the rules in § §1.1446-3
and 1.1446-6 to allow a partnership to
also consider in determining its section
1446 tax the permitted deferral amount
of an eligibility certificate submitted by
a partner. When determining installments
of 1446 tax, to ensure that the reduction
in effectively connected items by the per-
mitted deferral amount is fully taken into
account, the eligibility certificate must
be considered before the effectively con-
nected items are annualized. Proposed
§ §1.1446-3(b)(2)(i)(B)(1) and 1.1446-
6(c)(1)(iv).
Because the withholding requirement
on a transfer or distribution with respect to
an interest in a publicly traded partnership
(PTP) is generally imposed on a broker (or
nominee), and it would be administrative-
ly difficult for a broker to timely obtain an
eligibility certificate, the procedures for
using an eligibility certificate to reduce
or eliminate withholding do not apply for
these purposes. A security-required person
that has gain arising from a disposition or
distribution with respect to a PTP inter-
est is, however, still required to obtain an
eligibility certificate to defer security-re-
quired gain.
III. Flexibility with Respect to Working
Capital Safe Harbor Plans in the Event of
a Federally Declared Disaster
After the major disaster declarations
issued in response to the ongoing novel
coronavirus 2019 (COVID-19) pandem-
ic
2
, commenters expressed a need for ad-
ditional regulatory guidance regarding the
operation of the 24-month extension for
the working capital safe harbor included in
the section 1400Z-2 regulations for Feder-
ally declared disasters. Although the final
regulations provide a qualified opportuni-
ty zone business an additional 24 months
to expend its working capital assets, the
qualified opportunity zone business must
do so in a manner substantially consistent
with the original, pre-disaster written des-
ignation in which the amount of working
capital assets subject to the safe harbor
are designated and according to the orig-
inal, pre-disaster written schedule for ex-
pending such amounts. In some cases, the
commenters pointed out, the post-disaster
environment facing the qualified opportu-
nity zone business may render the original
plan suboptimal or even infeasible.
In response, this notice of proposed
rulemaking proposes to add three new
sentences at the end of § 1.1400Z2(d)-
1(d)(3)(v)(D) that provide flexibility for
qualified opportunity zone businesses to
revise or replace the original written des-
ignation and written plan, provided that
the remaining working capital assets are
expended within the original regulatorily
required 31-month period, increased by
the 24 additional months provided in re-
sponse to the Federally declared disaster.
IV. Applicability Dates
A. Proposed regulations related to
covered transfers
The proposed regulations relating to
covered transfers, including the require-
ment for eligibility certificates, will apply
to any covered transfer that occurs after
the date that these regulations are pub-
lished as final regulations in the Federal
Register. Taxpayers should not submit
applications for eligibility certificates
before the date that these regulations are
published as final regulations in the Fed-
eral Register. Any applications submitted
before such date will not be processed by
the IRS.
B. Proposed regulations related to
Federally declared disasters
The three new sentences proposed to
be added at the end of § 1.1400Z2(d)-1(d)
(3)(v)(D) are proposed to apply to taxable
years beginning after the date these regu-
lations are published as final regulations
in the Federal Register. Additionally, a
taxpayer may rely on the three new sen-
tences proposed to be added at the end of
§ 1.1400Z2(d)-1(d)(3)(v)(D) for taxable
years beginning after December 31, 2019.
Special Analyses
I. Regulatory Planning and Review
This proposed regulation is not subject
to review under section 6(b) of Executive
Order 12866 pursuant to the Memoran-
2
See https://www.fema.gov/coronavirus/disaster-declarations.

Bulletin No. 2021–18 1137 May 3, 2021
dum of Agreement (April 11, 2018) be-
tween the Treasury Department and the
Office of Management and Budget regard-
ing review of tax regulations.
II. Paperwork Reduction Act
A. Collection of information for proposed
§ 1.1400Z2(a)-2
Proposed § 1.1400Z2(a)-2 contains
collections of information that are not on
existing or new IRS forms. The proposed
regulations require that security-required
persons submit to the IRS an application
that includes the following information
and documents to obtain an eligibility cer-
tificate with respect to security-required
gain.
1. Identification of security-required
person (proposed § 1.1400Z2(a)-2(d)(3)
(ii));
2. Information about the covered trans-
fer (proposed § 1.1400Z2(a)-2(d)(3)(iii));
3. Agreement for deferral of tax
and provision of security (proposed
§ 1.1400Z2(a)-2(d)(4));
4. U.S. agent agreement (proposed
§ 1.1400Z2(a)-2(d)(5)); and
5. Security and any related required
documents (proposed § 1.1400Z2(a)-2(d)
(6)).
The collections of information con-
tained in this notice of proposed rulemak-
ing have been submitted to the Office of
Management and Budget (OMB) for re-
view in accordance with the Paperwork
Reduction Act. Commenters are strongly
encouraged to submit public comments
electronically. Comments and recom-
mendations for the proposed information
collection may be submitted via www.
reginfo.gov/public/do/PRAMain. Find
this particular information collection by
selecting “Currently under Review - Open
for Public Comments” then by using the
search function. Comments can also be
emailed to the IRS at omb.unit@irs.gov
(indicate REG-121095-19 on the subject
line). Comments also may be mailed to
OMB, Attn: Desk Officer for the Depart-
ment of the Treasury, Office of Informa-
tion and Regulatory Affairs, Washington,
DC 20503, with copies mailed to the IRS,
Attn: IRS Reports Clearance Officer,
SE:W:CAR:MP:T:T:SP, Washington, DC
20224. Comments on the collections of
information should be received by June
14, 2021. Comments are specifically re-
quested concerning:
Whether the proposed collection of in-
formation is necessary for the proper per-
formance of the IRS, including whether
the information will have practical utility;
The accuracy of the estimated burden
associated with the proposed collection
of information (including underlying as-
sumptions and methodology);
How the quality, utility, and clarity of
the information to be collected may be en-
hanced;
How the burden of complying with
the proposed collections of information
may be minimized, including through the
application of automated collection tech-
niques or other forms of information tech-
nology; and
Estimates of capital or start-up costs
and costs of operation, maintenance, and
purchase of service to provide informa-
tion.
The likely respondents required to
comply with these proposed regulations
are business, other for-profit taxpayers,
or individuals. The proposed frequency of
recordkeeping and reporting requirement
will be as needed.
Estimated total annual reporting
burden: 35,000 hours.
Estimated average annual burden
hours per respondent: Approximately
10 hours.
Estimated number of respondents:
3,500.
Estimated annual frequency of
responses: On occasion (as the
collections of information do not
occur on an annual basis).
B. Collection of information for proposed
§ 1.1400Z2(d)-1(d)(3)(v)(D)
Proposed § 1.400Z2(d)-1(d)(3)(v)
(D) imposes an additional information
collection requirement in the form of
recordkeeping. The creation of, or modi-
fication of, existing written schedules as
required under proposed § 1.1400Z2(d)-
1(d)(3)(v)(D) will be performed by qual-
ified opportunity zone businesses that
want to receive an additional 24 months
to expend their working capital assets,
under the extension of time permitted
by proposed § 1.1400Z2(d)-1(d)(3)(v)
(D). This recordkeeping requirement will
not be conducted using a new or existing
IRS form. Such businesses must main-
tain, as part of their records, a copy of
the written working plan including any
modifications to the plan and provide
these records to the IRS upon its request.
This modification encourages investment
in QOFs by providing greater specificity
to how an entity may consistently satisfy
the statutory requirements to be a quali-
fied opportunity zone business in light of
the current economic climate. However,
the increase in burden on these entities
is minimal as these entities were required
to maintain such records prior to the pro-
posed modification if they wanted to uti-
lize a working capital safe harbor under
§ 1.1400Z2(d)-1(d)(3)(v).
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless it dis-
plays 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 re-
quired by 26 U.S.C. 6103.
III. Regulatory Flexibility Act
It is hereby certified that the proposed
regulations under § §1.1400Z2(a)-1,
1.1400Z2(a)-2, 1.1400Z2(b)-1, 1.1445-
3, 1.1446-3, 1.1446-6, 1.1446-7 and
1.1446(f)-2, if adopted, will not have a
significant economic impact on a sub-
stantial number of domestic small entities
within the meaning of section 601(6) of
the Regulatory Flexibility Act (5 U.S.C.
chapter 6). Although these proposed reg-
ulations would primarily affect foreign
persons, they may have an impact on a
small number of domestic partnerships.
The domestic partnerships affected by
these regulations are closely-held partner-
ships with significant foreign ownership
and that either have substantial assets that
are either U.S. real property interests or
assets used in a U.S. trade or business or a
large amount of gain from the sale of such
assets. This is a narrow set of taxpayers
and is likely a small subset of persons that
invest in a QOF.

May 3, 2021 1138 Bulletin No. 2021–18
It is hereby certified that the proposed
regulation under § 1.1400Z2(d)-1(d)(3)
(v)(D), if adopted, will not have a signif-
icant economic impact on a substantial
number of small entities within the mean-
ing of section 601(6) of the Regulatory
Flexibility Act. The Treasury Department
and the IRS anticipate that this proposed
regulation will provide added clarity for
qualified opportunity zone businesses to
create or modify existing written plans to
expend working capital in the event of a
Federally declared disaster.
Taxpayers affected by these proposed
regulations include QOFs, investors in
QOFs and qualified opportunity zone
businesses in which a QOF holds an own-
ership interest. The proposed regulations
will not directly affect the taxable incomes
and tax liabilities of qualified opportuni-
ty zone businesses; they will affect only
the taxable income and tax liabilities of
QOFs (and owners of QOFs) that invest
in such businesses. Although there is a
lack of available data regarding the extent
to which small entities invest in QOFs,
will certify as QOFs, or receive equity
investments from QOFs, the Treasury
Department and the IRS project that most
of the investment flowing into QOFs will
come from large corporations and wealthy
individuals though some of these funds
would likely flow through an intermedi-
ary investment partnership. It is expected
that some QOFs and qualified opportu-
nity zone businesses would be classified
as small entities; however, the number of
small entities significantly affected is not
likely to be substantial. Accordingly, the
Secretary certifies that these rules will not
have a significant economic impact on a
substantial number of small entities.
Notwithstanding this certification, the
Treasury Department and the IRS invite
comments on any impact these regulations
would have on small entities.
Pursuant to section 7805(f), these reg-
ulations have been submitted to the Chief
Counsel for the Office of Advocacy of the
Small Business Administration for com-
ment on their impact on small business.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 requires that agencies
assess anticipated costs and benefits and
take certain other actions before issuing a
final rule that includes any Federal man-
date that may result in expenditures in any
one year by a state, local, or tribal govern-
ment, in the aggregate, or by the private
sector, of $100 million in 1995 dollars,
updated annually for inflation. This rule
does not include any Federal mandate that
may result in expenditures by state, local,
or tribal governments, or by the private
sector in excess of that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (entitled
“Federalism”) prohibits an agency from
publishing any rule that has federalism
implications if the rule either imposes
substantial, direct compliance costs on
state and local governments, and is not
required by statute, or preempts state law,
unless the agency meets the consultation
and funding requirements of section 6 of
the Executive Order. This proposed rule
does not have federalism implications,
does not impose substantial direct compli-
ance costs on state and local governments,
and does not preempt state law within the
meaning of the Executive Order.
Comments and Requests for Public
Hearing
Before these proposed amendments
to the regulations are adopted as final
regulations, consideration will be given
to comments that are submitted timely
to the IRS as prescribed in the preamble
under the “ADDRESSES” section. The
Treasury Department and the IRS request
comments on all aspects of the proposed
regulations. Any electronic comments
submitted, and to the extent practicable
any paper comments submitted, will be
made available at www.regulations.gov or
upon request.
A public hearing will be scheduled if
requested in writing by any person who
timely submits electronic or written com-
ments. Requests for a public hearing are
also encouraged to be made electronically.
If a public hearing is scheduled, notice of
the date and time for the public hearing
will be published in the Federal Register.
Announcement 2020-4, 2020-17 IRB 1,
provides that until further notice, public
hearings conducted by the IRS will be
held telephonically. Any telephonic hear-
ing will be made accessible to people with
disabilities.
Drafting Information
The principal authors of these proposed
regulations are Milton Cahn, L. Ulysses
Chatman, Ronald M. Gootzeit, and Subin
Seth of the Office of the Associate Chief
Counsel (International) and Erika Reigle
of the Office of the Associate Chief Coun-
sel (Income Tax & Accounting). However,
other personnel from the Treasury Depart-
ment and the IRS participated in their de-
velopment.
Statement of Availability of IRS
Documents
IRS Revenue Procedures, Revenue
Rulings, Notices, and other guidance cit-
ed in this document are published in the
Internal Revenue Bulletin or Cumulative
Bulletin and are available from the Su-
perintendent of Documents, U.S. Govern-
ment Publishing Office, Washington, DC
20402, or by visiting the IRS website at
http://www.irs.gov.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
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 an entry
for § 1.1400Z2(a)-2 and revising the en-
tries for § §1.1445-3, 1.1446-3, 1.1446-6,
1.1446-7 and 1.1446(f)-2 to read in part
as follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
Section 1.1400Z2(a)-2 also issued un-
der 26 U.S.C. 1400Z-2(e)(4).
* * * * *
Section 1.1445-3 also issued under
26 U.S.C. 1400Z-2(e)(4) and 26 U.S.C.
1445(e)(7).

Bulletin No. 2021–18 1139 May 3, 2021
* * * * *
Section 1.1446-3 also issued under
26 U.S.C. 1400Z-2(e)(4) and 26 U.S.C.
1446(g).
* * * * *
Section 1.1446-6 also issued under
26 U.S.C. 1400Z-2(e)(4) and 26 U.S.C.
1446(g).
Section 1.1446-7 also issued under
26 U.S.C. 1400Z-2(e)(4) and 26 U.S.C.
1446(g).
* * * * *
Section 1.1446(f)-2 also issued un-
der 26 U.S.C. 1400Z-2(e)(4), 26 U.S.C.
1446(f)(6), and 26 U.S.C. 1446(g).
* * * * *
Par. 2. Section 1.1400Z2-0 is amended
by:
1. Revising the introductory text.
2. Adding an entry for § 1.1400Z2(a)-
1(a)(3).
3. Revising the entry for § 1.1400Z2(a)-
1(g)(2).
4. Adding an entry for § 1.1400Z2(a)-
2.
5. Adding an entry for § 1.1400Z2(b)-
1(j)(3).
6. Revising the entry for § 1.1400Z2(d)-
1(e)(2).
The revisions and additions read as fol-
lows:
§ 1.1400Z2-0 Table of Contents.
This section lists the table of con-
tents for § §1.1400Z2(a)-1 through
1.1400Z2(f)-2.
§ 1.1400Z2(a)-1 Deferring tax on capital
gains by investing in opportunity zones.
(a) * * *
(3) Eligibility certificate needed to es-
tablish the permitted deferral amount for
certain foreign persons and foreign-owned
partnerships.
* * * * *
(g) * * *
(2) Exceptions.
§ 1.1400Z2(a)-2 Certain foreign persons
and foreign-owned partnerships required
to provide security.
(a) In general.
(b) Security-required person.
(1) In general.
(2) Foreign person.
(3) Specified partnership.
(c) Security-required gain.
(1) Definition.
(2) Covered transfer.
(d) Eligibility certificate.
(1) In general.
(2) Application materials.
(3) Application.
(4) Deferral agreement.
(5) U.S. agent agreement.
(6) Security.
(7) Permitted deferral amount.
(e) Example.
(f) Applicability date.
§ 1.1400Z2(b)-1 Inclusion of gains
that have been deferred under section
1400Z-2(a).
* * * * *
(j) * * *
(3) Specific rules.
§ 1.1400Z2(d)-1 Qualified opportunity
funds and qualified opportunity zone
businesses.
* * * * *
(e) * * *
(2) Exceptions.
* * * * *
Par. 3. Section 1.1400Z2(a)-1 is
amended by:
1. Adding paragraph (a)(3).
2. Revising paragraph (g)(1).
3. Redesignating paragraphs (g)(2)
introductory text and (g)(2)(i) and (ii) as
paragraphs (g)(2)(i) and (g)(2)(i)(A) and
(B), respectively.
4. Adding a subject heading for newly
redesignated paragraph (g)(2).
5. Adding new paragraph (g)(2)(ii).
The revisions and additions read as fol-
lows:
§ 1.1400Z2(a)-1 Deferring tax on capital
gains by investing in opportunity zones.
(a) * * *
(3) Eligibility certificate needed to es-
tablish the permitted deferral amount for
certain foreign persons and foreign-owned
partnerships. Notwithstanding any other
provision of this section, if a taxpayer is
a security-required person (as defined in
§ 1.1400Z2(a)–2(b)(1)) with respect to a
gain and that gain is a security-required
gain (as defined in § 1.1400Z2(a)–2(c)
(1)), then the taxpayer may not make a de-
ferral election under section 1400Z–2(a)
with respect to part or all of that gain un-
less the requirements in paragraph (a)(3)
(i), (ii), and (iii) of this section are satis-
fied.
(i) Not later than the date on which
the deferral election is filed with the IRS
under paragraph (a)(2) of this section, the
person obtains an eligibility certificate
with respect to that gain (as defined in
§ 1.1400Z2(a)–2(d)(1));
(ii) The eligibility certificate provides
a permitted deferral amount (as defined in
§ 1.1400Z2(a)-2(d)(7)); and
(iii) The amount of gain sought to be
deferred does not exceed the permitted de-
ferral amount.
(iv) See § 1.1400Z2(a)-2 for additional
requirements for certain foreign persons
and foreign-owned partnerships to make a
valid deferral election.
(v) Examples. The examples in this
paragraph (a)(3)(v) illustrate the rule in
paragraph (a)(3) of this section.
(A) Example 1. Eligibility certificate for a per-
mitted deferral amount that is less than the total
amount of security-required gain. Taxpayer realizes
a $100x gain, which is an eligible gain. In addition,
Taxpayer is a security-required person with respect
to that gain, and the gain is a security-required gain.
Taxpayer invests $100x in a QOF, and, without tak-
ing into account the limitation in paragraph (a)(3)
(i) of this section, Taxpayer would be able to make
a valid deferral election with respect to the entire
$100x gain. Taxpayer applies for an eligibility certif-
icate with respect to that gain and receives the eligi-
bility certificate before timely filing Taxpayer’s Fed-
eral income tax return for the taxable year in which
the gain would be recognized. The eligibility certifi-
cate, however, provides a permitted deferral amount
of $75x. Under paragraph (a)(3) of this section,
therefore, a valid deferral election is limited to that
deferral amount. Consequently, $75x of Taxpayer’s
investment in the QOF is a qualifying investment,
which is described in section 1400Z-2(e)(1)(A)(i),
and no election under section 1400Z-2(a) can apply
to the remaining $25x ($100x - $75x) investment.
As a result, that remaining investment in the QOF is
a non-qualifying investment, which is described in
section 1400Z-2(e)(1)(A)(ii).
(B) Example 2. Deferring gain from inclusion. In
2022, Taxpayer realizes a gain of $x, Taxpayer was
a security-required person with respect to that gain,
and the gain was a security-required gain. Comply-
ing with all the requirements in this section (includ-
ing paragraph (a)(3) of this section), Taxpayer made
a valid election to defer a gain of $x, after having
invested $x in a QOF. In 2025, after Taxpayer’s in-
terest in the QOF had appreciated by $y, Taxpayer
sold that interest for $x + $y. The sale was an inclu-

May 3, 2021 1140 Bulletin No. 2021–18
sion event, requiring Taxpayer to include in income
the deferred gain of $x. Under paragraph (c)(1) of
this section, the $x inclusion is a security-required
gain because the deferred gain was a security-re-
quired gain. If Taxpayer wants to elect to defer the
$x of included gain and Taxpayer is a security-re-
quired person with respect to the included gain, the
limitation in paragraph (a)(3) of this section applies.
Whether the $y gain from the sale is a security-re-
quired gain is determined by whether, independent
of the treatment of the inclusion, the $y gain on the
sale is within the definition of security-required gain
in § 1.1400Z2(a)–2(c).
* * * * *
(g) * * *
(1) In general. Except as provided in
paragraph (g)(2) of this section, the pro-
visions of this section are applicable for
taxable years beginning after March 13,
2020.
(2) Exceptions. * * *
(ii) Eligibility certificate requirement.
Paragraph (a)(3) of this section applies
to any security-required gain (as defined
in § 1.1400Z2(a)-2(c)(1)) from a covered
transfer (as defined in § 1.1400Z2(a)-2(c)
(2)) that occurs after [DATE OF PUBLI-
CATION OF FINAL RULE].
Par. 4. Section 1.1400Z2(a)-2 is added
to read as follows:
§ 1.1400Z2(a)-2 Certain foreign persons
and foreign-owned partnerships required
to provide security.
(a) In general. This section provides
definitions and procedures for certain
foreign persons and foreign-owned part-
nerships to obtain an eligibility certifi-
cates in order to meet the requirement in
§ 1.1400Z2(a)-1(a)(3) to make a defer-
ral election with respect to certain gains.
Paragraph (b) of this section describes the
persons required to obtain an eligibility
certificate. Paragraph (c) of this section
describes the gains for which an eligibil-
ity certificate must be obtained. Paragraph
(d) of this section provides the procedures
for obtaining an eligibility certificate and
defines the type and amount of security
required.
(b) Security-required person—(1) In
general. A security-required person is,
with respect to a gain, a person that would
be required to report the recognition of the
gain under Federal income tax principles
and that is either—
(i) A foreign person that is not a part-
nership, or
(ii) A specified partnership (as defined
in paragraph (b)(3) of this section).
(2) Foreign person. The term foreign
person means a person that is not a United
States person under section 7701(a)(30).
(3) Specified partnership. The term
specified partnership means, with respect
to a transfer that gives rise to a security-re-
quired gain, a partnership that satisfies
the requirements of paragraphs (b)(3)(i)
through (iii) of this section. For purpos-
es of paragraphs (b)(3)(ii) and (iii) of this
section, the look-back period is the peri-
od that begins on the later of the date that
is one year before the date of the transfer
or the date on which the partnership was
formed, and that ends on the date of such
transfer. A domestic specified partnership
means a specified partnership that is a do-
mestic partnership.
(i) Ownership test. A partnership satis-
fies the requirements of this paragraph (b)
(3)(i) if, at the time of transfer, 20 percent
or more of the capital or profits interests in
the partnership are owned (directly or in-
directly through one or more partnerships,
trusts, or estates) by one or more nonresi-
dent aliens or foreign corporations.
(ii) Closely-held test. A partnership sat-
isfies the requirements of this paragraph
(b)(3)(ii) if, at any time during the look-
back period, it has ten or fewer direct part-
ners that own 90 percent or more of the
capital or profits interests in the partner-
ship. For this purpose, any partners that
are related (within the meaning of section
267(b) or 707(b)(1)) are treated as one
partner.
(iii) Gain or asset test. A partnership
satisfies the requirements of this paragraph
(b)(3)(iii) if either the security-required
gain is $1 million or more (the gain test),
or the aggregate value of the partnership’s
assets that are United States real proper-
ty interests (as defined in section 897(c))
or assets used in the conduct of a trade or
business within the United States is, at any
time during the look-back period, equal to
or greater than 25 percent of the value of
all of the assets of the partnership (the as-
set test). In making the calculation under
the asset test described in this paragraph
(b)(3)(iii)—
(A) The value of each asset is deter-
mined on the last day of the taxable year
before the year in which the look-back
period begins or, for any asset acquired
after this date, on the date of acquisition
(including upon formation of the partner-
ship);
(B) The value of each asset is measured
according to its gross fair market value;
and
(C) The partnership must include the
value of the proportionate share of any
assets held by a partnership in which the
first-mentioned partnership is a direct or
indirect partner, but the first-mentioned
partnership must not include the value of
a direct or indirect interest in another part-
nership.
(c) Security-required gain—(1) Defi-
nition. The term security-required gain
means—
(i) The gain from a covered transfer de-
scribed in paragraphs (c)(2)(i)(A) or (B)
of this section;
(ii) The gain from a covered transfer
described in paragraph (c)(2)(i)(C) of this
section that is included in computing ef-
fectively connected taxable income, as
determined under § 1.1446-2 (ECTI), dis-
regarding § 1.1446-2(b)(4)(i); or
(iii) The gain from a covered transfer
described in paragraph (c)(2)(i)(D) of
this section that is included in computing
ECTI allocated to a security-required per-
son.
(2) Covered transfer—(i) In general.
The term covered transfer means—
(A) A disposition by, or a distribution
to, a security-required person that is sub-
ject to withholding under section 1445
(treating a security-required person that is
a domestic specified partnership as a for-
eign person for this purpose);
(B) A disposition by, or a distribution
to, a security-required person that is sub-
ject to withholding under section 1446(f)
(treating a security-required person that is
a domestic specified partnership as a for-
eign person for this purpose);
(C) A disposition by a specified part-
nership of property, other than an interest
in another partnership or a U.S. real prop-
erty interest, or a distribution to a speci-
fied partnership, if any gain that arises is
includible in computing ECTI; or
(D) A disposition by a partnership of
property, or a distribution to such a part-
nership, if any gain that arises is includi-
ble (by any partnership) in determining
the allocable share of a security-required
person’s ECTI (treating a security-re-

Bulletin No. 2021–18 1141 May 3, 2021
quired person that is a domestic specified
partnership as a foreign person for this
purpose).
(ii) Exceptions to withholding. A dis-
position or distribution described in para-
graph (c)(2)(i)(A) or (B) of this section
is not a covered transfer if an exception
under § 1.1445-2, 1.1446(f)-2(b), or
1.1446(f)-4(b) applies (other than an ex-
ception pertaining to non-foreign status
in § 1.1445-2(b), § 1.1446(f)-2(b)(2),
or § 1.1446(f)-4(b)(2)). In determining
whether an exception applies for pur-
poses of this paragraph (c)(2)(ii), any re-
quirement to provide a certification to the
transferee in order to claim the applicable
exception is disregarded.
(d) Eligibility certificate—(1) In gener-
al. This paragraph (d) defines an eligibili-
ty certificate with respect to a gain and de-
scribes the procedures for obtaining such
a certificate. The term eligibility certifi-
cate means, with respect to a security-re-
quired gain, a document issued by the IRS
pursuant to this paragraph (d) that pro-
vides the permitted deferral amount. The
eligibility certificate will also include the
maximum security amount, the amount
of security provided, and any other infor-
mation as may be prescribed in forms or
instructions or in publications or guidance
published in the Internal Revenue Bulletin
(see § §601.601(d)(2) and 601.602 of this
chapter). Generally, the IRS will make a
determination with respect to a complete
application for an eligibility certificate not
later than the 90th day after the date that
all information necessary for the IRS to
make a determination is received. At its
discretion, the IRS may extend this period
in unusual circumstances after notifying
the security-required person no later than
the 45th day after the date that all informa-
tion necessary for the IRS to make a de-
termination is received. The IRS will send
a notification to the security-required per-
son of its determination and, if the appli-
cation is approved, provide an eligibility
certificate to the security-required person.
For the use of an eligibility certificate to
reduce or eliminate certain withholding
taxes, see § §1.1445-3(e)(5), 1.1446-6(c)
(1)(iv), and 1.1446(f)-2(b)(8) and (c)(5).
(2) Application materials. To obtain an
eligibility certificate with respect to secu-
rity-required gain, a security-required per-
son must submit to the IRS the application
described in paragraph (d)(3) of this sec-
tion, the deferral agreement described in
paragraph (d)(4) of this section, the U.S.
agent agreement described in paragraph
(d)(5) of this section, and the security (or
evidence of security) of the type and in the
amount described in paragraphs (d)(6) and
(7) of this section.
(3) Application—(i) In general. An
application for an eligibility certificate
must be submitted in the form and in
the manner prescribed in forms or in-
structions or in publications or guidance
published in the Internal Revenue Bul-
letin (see § §601.601(d)(2) and 601.602
of this chapter). An application for an
eligibility certificate must include the in-
formation described in paragraphs (d)(3)
(ii) and (iii) of this section and any oth-
er information prescribed in forms or in-
structions or in publications or guidance
published in the Internal Revenue Bulletin
(see § §601.601(d)(2) and 601.602 of this
chapter). The security-required person
must sign the application and represent
under penalties of perjury that all informa-
tion provided on or with the application is
true, correct, and complete to the best of
that person’s knowledge and belief.
(ii) Identification of security-required
person and U.S. agent. The application for
an eligibility certificate must include the
name, address, and U.S. taxpayer identi-
fication number of the security-required
person, and the name, address, and U.S.
taxpayer identification number of the se-
curity-required person’s U.S. agent (as
defined in paragraph (d)(4)(ii)(D) of this
section).
(iii) Information about the covered
transfer—(A) Required information. The
application must identify the type of cov-
ered transfer. For a covered transfer de-
scribed in paragraph (c)(2)(i)(A), (B), or
(C) of this section that is not a distribution,
the application must include a description
of the property transferred in the covered
transfer, the amount of security-required
gain, the amount realized, the adjusted ba-
sis in the property, and the maximum se-
curity amount. For a covered transfer de-
scribed in paragraph (c)(2)(i)(A), (B), or
(C) of this section that is a distribution, the
application must include the amount of the
distribution, a description of the property
distributed (including cash), the amount of
security-required gain, and the maximum
security amount. For a covered transfer
described in paragraph (c)(2)(i)(D) of this
section, the application must include the
amount of security-required gain and the
maximum security amount. In each case,
the application for the eligibility certificate
must also identify the amount of security
that has been provided and the amount of
security-required gain for which the eli-
gibility certificate is being obtained. If an
amount described in this paragraph is not
known when the application is submitted,
a security-required person may include a
reasonable estimate of the amount if the
estimate is determined no earlier than 120
days before the covered transfer and the
security-required person also includes in
the application documentation of the basis
for the estimate (for example, a purchase
contract).
(B) Definition of amount realized. The
term amount realized means for a cov-
ered transfer described in paragraph (c)
(2)(i)(A) of this section, the amount de-
termined under § 1.1445-1(g)(5); for a
covered transfer described in paragraph
(c)(2)(i)(B) of this section, the amount de-
termined under § 1.1446(f)-2(c)(2)(i) (or
the amount determined using the alterna-
tive procedures under § 1.1446(f)-2(c)(2)
(ii), disregarding any requirement to pro-
vide a certification) or § 1.1446(f)-4(c)(2)
(i); and for a covered transfer described in
paragraph (c)(2)(i)(C) of this section, the
amount determined under section 1001(b).
(4) Deferral agreement—(i) In gener-
al. A deferral agreement is an agreement
entered into between a security-required
person and the IRS for the deferral of tax
and provision of security. The term of the
deferral agreement must not end sooner
than 36 months after the due date (with
extensions) for the filing of the securi-
ty-required person’s Federal income tax
return for the taxable year that includes
the date specified in section 1400Z-2(b)
(1). The deferral agreement must conform
to any template provided in forms or in-
structions or in publications or guidance
published in the Internal Revenue Bulletin
(see § §601.601(d)(2) and 601.602 of this
chapter).
(ii) Minimum terms and conditions.
The minimum terms and conditions of a
deferral agreement are provided in para-
graphs (d)(4)(ii)(A) through (D) of this
section. The deferral agreement must also

May 3, 2021 1142 Bulletin No. 2021–18
include any additional terms and condi-
tions provided in a template provided in
forms or instructions or in publications or
guidance published in the Internal Reve-
nue Bulletin (see § §601.601(d)(2) and
601.602 of this chapter).
(A) The security-required person will
timely file a Federal income tax return
and pay any tax liability due on securi-
ty-required gain deferred under section
1400Z-2(a) and the regulations thereunder
for each taxable year in which the securi-
ty-required person is required to include
the gain or a portion thereof in income un-
der § 1.1400Z2(b)-1.
(B) The security-required person will
report any security-required gain invest-
ed in a QOF held at any point during
the taxable year in accordance with
§ 1.1400Z2(a)-1(d)(2).
(C) The security-required person pro-
vides security to the IRS in the amount
required for the security-required gain for
which the security-required person seeks
to defer gain under section 1400Z–2(a).
The security may be replaced during the
term of the deferral agreement, to the
extent provided in forms or instructions
or in publications or guidance published
in the Internal Revenue Bulletin (see
§ §601.601(d)(2) and 601.602 of this
chapter). Upon a failure to pay any tax
due on security-required gain for which
the security-required person seeks to defer
gain under section 1400Z–2(a) when the
tax is due or upon an event of default (as
described in paragraph (d)(4)(iii) of this
section) under the deferral agreement, the
IRS may collect the entire amount of the
liability by recourse to the security and
may exercise any other rights and reme-
dies of a secured party under applicable
law.
(D) The security-required person ap-
points a U.S. person to act as the securi-
ty-required person’s limited agent for pur-
poses of accepting communication related
to the deferral agreement from the IRS,
accepting service of process for the timely
enforcement of the terms of the deferral
agreement, and any other purposes speci-
fied in the deferral agreement (U.S. agent).
See paragraph (d)(5) of this section for the
agreement that the security-required per-
son must enter into with the U.S. agent.
(iii) Events of default. The deferral
agreement will specify what is considered
a default, the circumstances that give rise
to an event of default, and whether a no-
tice of default and an opportunity to cure
will be provided to the security-required
person before an event of default arises.
Defaults include, but are not limited to, a
failure by an issuer of a letter of credit to
continue to meet the requirements of para-
graph (d)(6)(ii) of this section throughout
the term of the deferral agreement; a de-
termination by the IRS that the security
does not otherwise adequately secure the
interests of the IRS; a determination by the
IRS that the U.S. agent agreement is no
longer in effect; a resignation of the U.S.
agent; a failure by the security-required
person to file any required Federal income
tax returns and information returns or pay
any tax due during the term of the defer-
ral agreement; and a failure by the securi-
ty-required person to attach a copy of the
eligibility certificate to any tax returns,
information returns, forms, or other filings
with the IRS as required in the deferral
agreement. The deferral agreement will
specify which defaults will require notifi-
cation from the IRS and an opportunity to
cure before a default becomes an event of
default. For example, the deferral agree-
ment will provide that a security-required
person that fails to report any security-re-
quired gain invested in a QOF held at any
point during the taxable year in accordance
with § 1.1400Z2(a)-1(d)(2) for any given
taxable year will be permitted to cure the
default by making the report described in
the first sentence of § 1.1400Z2(a)-1(d)
(2) or establishing to the satisfaction of
the Commissioner that an inclusion event
described in § 1.1400Z2(b)-1(c) did not
occur during that taxable year. The defer-
ral agreement will specify the date of an
event of default. See § 1.1400Z2(b)-1(c)
(1)(v) for the consequences of an event of
default under a deferral agreement.
(5) U.S. agent agreement. The secu-
rity-required person must enter into a
binding agreement with a U.S. agent (as
defined in paragraph (d)(4)(ii)(D) of this
section) authorizing the U.S. agent to act
as an agent (U.S. agent agreement). The
U.S. agent agreement must include the
terms and conditions provided in forms or
instructions or in publications or guidance
published in the Internal Revenue Bulletin
(see § §601.601(d)(2) and 601.602 of this
chapter). The U.S. agent agreement must
be executed by the security-required per-
son and the U.S. agent and must remain in
effect for as long as the deferral agreement
remains in effect.
(6) Security—(i) In general. The secu-
rity-required person must provide to the
IRS security described in paragraph (d)(6)
(ii) of this section. The proposed security
(and any required documents described in
forms or instructions or in publications or
guidance published in the Internal Reve-
nue Bulletin (see § §601.601(d)(2) and
601.602 of this chapter)) must generally
be submitted to the IRS with the securi-
ty-required person’s application for an
eligibility certificate. The maturity date
or expiration of the security must not be
earlier than 36 months after the due date
(with extensions) for the filing of the secu-
rity-required person’s Federal income tax
return for the taxable year that includes
the date specified in section 1400Z-2(b)
(1). The security cannot be accelerat-
ed, cancelled, or otherwise terminated
before maturity, other than at the direc-
tion of, or with the consent of, the IRS.
Additional terms and conditions for the
security may be specified in forms or in-
structions or in publications or guidance
published in the Internal Revenue Bulletin
(see § §601.601(d)(2) and 601.602 of this
chapter). See paragraph (d)(7) of this sec-
tion for determining the required amount
of the security.
(ii) Letter of credit. The IRS may ac-
cept as security an irrevocable standby let-
ter of credit that is issued by a U.S. bank
that is categorized as well capitalized in
accordance with applicable Federal bank-
ing regulations and regularly issues letters
of credit in the ordinary course of business
to customers other than security-required
persons under this paragraph (d)(6), or
any other financial institution acceptable
to the IRS, as provided in forms or in-
structions or in publications or guidance
published in the Internal Revenue Bulletin
(see § §601.601(d)(2) and 601.602 of this
chapter).
(7) Permitted deferral amount—(i) In
general. The permitted deferral amount is
the amount for which an eligibility certifi-
cate is issued to a security-required person
with respect to a security-required gain. If
a security-required person provides secu-
rity in an amount equal to the maximum
security amount, the permitted deferral

Bulletin No. 2021–18 1143 May 3, 2021
amount is the total amount of security-re-
quired gain. If a security-required person
provides security in an amount less than
the maximum security amount, the per-
mitted deferral amount is the total amount
of security-required gain multiplied by the
ratio of the amount of security provided
over the maximum security amount.
(ii) Maximum security amount. The
term maximum security amount means—
(A) For a covered transfer described in
paragraph (c)(2)(i)(A) of this section, the
lesser of the amount realized (as defined
in paragraph (d)(3)(iii)(B) of this section)
multiplied by the rate specified in section
1445(a) (or, for a covered transfer subject
to section 1445(e)(1), (e)(2), or (e)(6), the
security-required gain multiplied by the
rate specified under the applicable provi-
sion) or the security-required gain multi-
plied by the highest rate of tax applicable
to the gain, taking into account the type
of property, holding period, and classi-
fication of the security-required person
(treating a security-required person that is
a partnership or trust as an individual for
this purpose);
(B) For a covered transfer described
solely in paragraph (c)(2)(i)(B) of this
section, the lesser of the amount realized
(as defined in paragraph (d)(3)(iii)(B) of
this section) multiplied by the rate spec-
ified in section 1446(f)(1), or the securi-
ty-required gain multiplied by the highest
rate of tax applicable to the gain, taking
into account the type of property, holding
period, and classification of the securi-
ty-required person (treating a security-re-
quired person that is a partnership or trust
as an individual for this purpose);
(C) For a covered transfer described in
paragraph (c)(2)(i)(C) of this section, the
security-required gain multiplied by the
highest rate of tax applicable to the gain,
taking into account the type of property
and the specified partnership’s holding pe-
riod, and treating the specified partnership
as an individual for this purpose; or
(D) For a covered transfer described in
paragraph (c)(2)(i)(D) of this section, the
security-required gain multiplied by the
highest rate of tax applicable to the gain,
taking into account the type of property,
the holding period and classification of the
security-required person (treating a secu-
rity-required person that is a partnership
or trust as an individual for this purpose).
(iii) Example. SRP, an individual who is a secu-
rity-required person, disposes of U.S. real property
that SRP has held for more than one year and that
has a basis of $80x in a covered transfer subject
to withholding under section 1445(a). The amount
realized is $200x, and the amount of the securi-
ty-required gain is $120x of long-term capital gain
($200x amount realized less $80x basis). Because
the covered transfer is described in paragraph (c)(2)
(i)(A) of this section, the maximum security amount
is $24x (the lesser of $30x (the amount realized of
$200x multiplied by the rate specified in section
1445(a), (in 2021, 15%)) and $24x (the security-re-
quired gain of $120x multiplied by the highest rate of
tax applicable to the gain taking into account the type
of property, holding period and the classification of
the security-required person (in 2021, 20%))). SRP
applies for and receives an eligibility certificate in
accordance with paragraph (d)(1). SRP provides se-
curity in the amount of $15x. Because SRP has pro-
vided security in an amount less than the maximum
security amount, the eligibility certificate will be
issued for less than the total amount of security-re-
quired gain. The permitted deferral amount shown
on the eligibility certificate is the total amount of se-
curity-required gain ($120x) multiplied by the ratio
of the amount of security provided by SRP ($15x)
over the maximum security amount ($24x). There-
fore, SRP will obtain an eligibility certificate for a
permitted deferral amount of $75x ($120x multiplied
by 62.5%).
(e) Example. The example in this paragraph (e)
illustrates the rules in this section and § 1.1400Z2(a)-
1(a)(3).
(1) Facts. Partnership P is an eligible taxpayer
within the meaning of § 1.1400Z2(a)-1(b)(13) of
this section. The relevant events take place during
Years 1 through 3, all of which end earlier than 2027.
At all times during those years, P was owned by 10
equal partners.
(i) Three eligible gains. During Year 2, P recog-
nized three gains—G
1
, G
2
, and G
3
—for, respectively,
$750,000 on September 1, $2 million on October 1,
and $2 million on December 20. All three gains were
eligible gains within the meaning of § 1.1400Z2(a)-
1(b)(11) and the transactions that gave rise to the
gains were subject to withholding under section
1445 or 1446.
(ii) Ownership test. On September 1, Year 2, P
satisfied the ownership test in paragraph (b)(3)(i) of
this section because on that date partners O
1
through
O
7
were United States persons, and partners O
8

through O
10
were foreign individuals. On October 1,
Year 2, P did not satisfy the ownership test in para-
graph (b)(3)(i) of this section because as of that date
partners O
9
and O
10
had been replaced by O
11
and

O
12,

who were both United States persons. On December
20, Year 2, P satisfied the ownership test in paragraph
(b)(3)(i) of this section because as of that date part-
ners O
11
and O
12
had been replaced by O
13
and

O
14
,
which were both foreign corporations.
(iii) Closely-held test. At all times during Years
1 through 2, P satisfied the closely-held test in para-
graph (b)(3)(ii) of this section because P was owned
by 10 partners.
(iv) Asset test. At all times during Years 1 through
3, P did not satisfy the asset test in paragraph (b)(3)
(iii) of this section because P had total assets in ex-
cess of $100 million, of which less than $25 million
was United States real property interests or assets
used in the conduct of a trade or business within the
United States.
(v) Investment in a QOF and election to defer.
On January 15 of Year 3, P invested $4.75 million
in a QOF, and on P’s timely filed Federal income tax
return for Year 2, P indicated that it was electing to
defer all three gains under § 1.1400Z2(a)-1(a). These
three elections are proper unless they are barred by
§ 1.1400Z2(a)-1(a)(3).
(2) Analysis—(i) G
1
. P satisfies the ownership
test as of the date of the transfer. P also satisfies the
closely-held test during the look-back period for G
1
,
but does not satisfy the asset test during the look-
back period for G
1
. P does not satisfy the gain test
in paragraph (b)(3)(iii) of this section because the
amount of the G
1
gain is less than $1 million. As a
result, P is not a specified partnership with respect to
G
1
. Accordingly, P is not a security-required person
with respect to G
1
, and, thus, P does not need an eli-
gibility certificate with respect to G
1
in order to make
a proper deferral election with respect to G
1
.
(ii) G
2
. Unlike G
1
, G
2
($2 million) is large enough
to satisfy the gain test in paragraph (b)(3)(iii) of this
section ($1 million or more). P also satisfies the
closely-held test during the look-back period for G
2
.
However, P does not satisfy the ownership test as of
the date of transfer. Accordingly, P is not a specified
partnership with respect to G
2
and, thus, P is not a
security-required person with respect to G
2
. P does
not need an eligibility certificate with respect to G
2

in order to make a proper deferral election with re-
spect to G
2.

(iii) G
3
. P satisfies the ownership test as of the
date of the transfer. P also satisfies the closely-held
test during the look-back period for G
3
. Also, G
3
is
large enough to satisfy the gain test. Accordingly, P
is a security-required person with respect to G
3
, and
G
3
is a security-required gain. Consequently, P may
not elect to defer G
3
unless, not later than the date on
which P files its Federal income tax return for Year 2,
P has received an eligibility certificate with respect
to G
3
. Even if P has received such an eligibility cer-
tificate, P may not elect to defer a larger amount of
G
3
than the permitted deferral amount shown on the
eligibility certificate.
(f) Applicability date. This section ap-
plies to any covered transfer that occurs
after [DATE OF PUBLICATION OF FI-
NAL RULE].
Par. 5. Section 1.1400Z2(b)-1 is
amended by:
1. Revising paragraph (c)(1)(iv).
2. Adding paragraph (c)(1)(v).
3. Revising paragraph (j)(1).
4. Adding paragraph (j)(3).
The revisions and additions read as fol-
lows:
§ 1.1400Z2(b)-1 Inclusion of gains
that have been deferred under section
1400Z-2(a).
* * * * *

May 3, 2021 1144 Bulletin No. 2021–18
(c) * * *
(1) * * *
(iv) A QOF in which an eligible tax-
payer holds a qualifying investment loses
its status as a QOF; or
(v) An event of default occurs un-
der a deferral agreement (described in
§ 1.1400Z2(a)-2(d)(4)) entered into be-
tween a security-required person and the
IRS (in which case the deferred gain to be
included is the gain whose deferral was
made possible by the eligibility certificate
that was based on the agreement).
* * * * *
(j) * * *
(1) In general. Except as provided in
paragraph (j)(3) of this section, the pro-
visions of this section are applicable for
taxable years beginning after March 13,
2020.
* * * * *
(3) Specific rules. Paragraph (c)(1)
(v) of this section applies to any deferral
agreement (as defined in § 1.1400Z2(a)-
2(d)(4)) entered into after [DATE OF
PUBLICATION OF FINAL RULE].
Par. 6. Section 1.1400Z2(d)-1 is
amended by:
1. Revising paragraphs (d)(3)(v)(D)
and (e)(1).
2. Redesignating paragraphs (e)(2)
introductory text and (e)(2)(i) and (ii) as
paragraphs (e)(2)(i) and (e)(2)(i)(A) and
(B).
3. Adding a subject heading for newly
redesignated paragraph (e)(2).
4. Adding new paragraph (e)(2)(ii).
The revisions and additions read as fol-
lows:
§ 1.1400Z2(d)-1 Qualified opportunity
funds and qualified opportunity zone
businesses.
* * * * *
(d) * * *
(3) * * *
(v) * * *
(D) Federally declared disasters. If
the qualified opportunity zone business
is located in a qualified opportunity zone
impacted by a federally declared disas-
ter (as defined in section 165(i)(5)(A)),
the qualified opportunity zone business
may receive not more than an additional
24 months to expend its working capital
assets, as long as it otherwise meets the
requirements of paragraph (d)(3)(v) of
this section. For purposes of the preced-
ing sentence, meeting the requirements of
paragraph (d)(3)(v) of this section may be
determined by reference either to the orig-
inal amount of working capital assets des-
ignated in writing under paragraph (d)(3)
(v)(A) of this section and reasonable writ-
ten schedule under paragraph (d)(3)(v)(B)
of this section or to a new or revised writ-
ten designation and written schedule that
satisfy the requirements of paragraph (d)
(3)(v)(A) and (B) of this section, respec-
tively. A new or revised written designa-
tion of the amount of working capital as-
sets and reasonable written schedule for
expending that amount may be used only
if adopted not later than 120 days after the
close of the incident period, as defined in
44 CFR 206.32(f), with respect to that di-
saster. In determining whether a new or
revised schedule satisfies the requirements
of paragraph (d)(3)(v)(B) of this section,
the planned completion of spending must
take into account the up-to-31 month peri-
od originally allowed under paragraph (d)
(3)(v)(B) of this section, plus the up-to-24
additional months provided in this para-
graph (d)(3)(v)(D).
* * * * *
(e) * * *
(1) In general. Except as provided in
paragraph (e)(2) of this section, the pro-
visions of this section are applicable for
taxable years beginning after March 13,
2020.
(2) Exceptions. * * *
(ii) Flexibility with respect to working
capital safe harbor plans in the event of
a federally declared disaster. The final
three sentences in paragraph (d)(3)(v)(D)
are applicable for taxable years beginning
after [DATE OF PUBLICATION OF FI-
NAL RULE].
Par. 7. Section 1.1445-3 is amended by
adding paragraph (e)(5) to read as follows:
§ 1.1445-3 Adjustments to amount
required to be withheld pursuant to
withholding certificate.
* * * * *
(e) * * *
(5) Special rule for gain deferred under
section 1400Z-2(a). The Internal Revenue
Service will issue a withholding certifi-
cate under this paragraph (e) that excuses
withholding or that permits a transferee to
withhold a reduced amount if the trans-
feror has obtained an eligibility certificate
under § 1.1400Z2(a)-2 from the IRS with
respect to the transfer. The amount by
which the transferee may reduce the with-
holding (including a reduction to zero) is
the amount of security provided on the el-
igibility certificate. If this paragraph (e)(5)
applies, the requirements in paragraphs
(e)(1) through (e)(4) of this section are
deemed to have been satisfied. This para-
graph (e)(5) applies to any covered trans-
fer defined in § 1.1400Z2(a)-2(c)(2) that
occurs after [DATE OF PUBLICATION
OF FINAL RULE].
* * * * *
Par. 8. Section 1.1446-3 is amended by
revising paragraph (b)(2)(i)(B)(1) intro-
ductory text to read as follows:
§ 1.1446-3 Time and manner of
calculating and paying over the 1446 tax.
* * * * *
(b) * * *
(2) * * *
(i) * * *
(B) * * *
(1) To the extent applicable, in comput-
ing the 1446 tax due with respect to a for-
eign partner, a partnership may consider a
certificate received from such partner un-
der § 1.1446-6(c)(1)(i), (ii) or (iv) and the
amount of state and local taxes permitted
to be considered under § 1.1446-6(c)(1)
(iii). For this purpose, a partnership shall
first consider under § 1.1446-6(c)(1)(iv)
the partner’s permitted deferral amounts
and then annualize the partner’s allocable
share of the partnership’s items of effec-
tively connected income, gain, deduction,
and loss before—
* * * * *
Par. 9. Section 1.1446-6 is amended by:
1. Revising paragraph (a)(1).
2. Revising the first sentence of para-
graph (a)(2).
3. Adding a sentence at the end of para-
graph (c)(1).
4. Adding paragraph (c)(1)(iv).
5. Adding a sentence at the end of para-
graph (c)(2)(i).
6. Revising the seventh sentence of
paragraph (d)(3)(i).
7. Adding a sentence at the end of para-
graph (f).

Bulletin No. 2021–18 1145 May 3, 2021
The revisions and additions read as fol-
lows:
§ 1.1446-6 Special rules to reduce a
partnership’s 1446 tax with respect to
a foreign partner’s allocable share of
effectively connected taxable income.
(a) In general—(1) Purpose and scope.
This section provides rules regarding
when a partnership required to pay with-
holding tax under section 1446 (1446 tax),
or an installment of 1446 tax, may con-
sider certain partner-level deductions and
losses and eligibility certificates under
§ 1.1400Z2(a)-2(d) in computing its 1446
tax obligation under § 1.1446-3. This sec-
tion also provides rules regarding when a
partnership is not required to pay a de mi-
nimis amount of 1446 tax due with respect
to a nonresident alien individual partner.
A partnership determines the applicabili-
ty of the rules of this section on a part-
ner-by-partner basis for each installment
period and when completing its Form
8804, “Annual Return for Partnership
Withholding Tax (Section 1446),” and
paying 1446 tax for the partnership tax-
able year. Except with respect to certain
state and local taxes paid by the partner-
ship on behalf of the partner, to apply the
rules of this section with respect to a for-
eign partner, the partnership must receive
a certificate described in § 1.1446-6(c)(1)
(i) and (ii) from such partner for each part-
nership taxable year or an eligibility certif-
icate described in § 1.1400Z2(a)-2(d) for
each security-required gain (as defined in
§ 1.1400Z2(a)–2(c)(1)). Paragraph (b) of
this section identifies the foreign partners
to which this section applies. Paragraph
(c) of this section identifies the deductions
and losses and security-required gains
that a foreign partner may certify to the
partnership as well as the state and local
taxes paid by the partnership on behalf of
the foreign partner that can be taken into
account without a certification, and estab-
lishes an exception that permits a part-
nership to not pay a de minimis amount
of 1446 tax with respect to a nonresident
alien partner. Paragraph (c) of this section
also sets forth the requirements for a val-
id certificate. Paragraphs (a)(2) and (d) of
this section establish when a partnership
may rely on and consider a foreign part-
ner’s certificate in computing its 1446 tax,
and the effects of relying on such a cer-
tificate. Paragraph (d) of this section also
describes the effects of a partnership rely-
ing on a certificate (including an updated
certificate) and the reporting requirements
of a partnership with respect to a certifi-
cate. Paragraph (e) of this section sets
forth examples that illustrate the rules of
this section. Paragraph (f) of this section
provides the Effective/Applicability date.
Paragraph (g) of this section provides a
transition rule.
(2) Reasonable reliance on a certifi-
cate. Subject to § 1.1446-2 and the rules
of this section, a partnership receiving a
certificate (including an updated certifi-
cate or status update under paragraph (c)
(2)(ii)(B) of this section) of deductions
and losses or an eligibility certificate from
a partner provided in accordance with the
provisions of this section may reason-
ably rely on the certificate of deductions
and losses (to the extent of the certified
deductions and losses or other represen-
tations set forth in the certificate) or eli-
gibility certificate (to the extent of the
permitted deferral amount determined in
§ 1.1400Z2(a)-2(d)(7)) until such time
that it has actual knowledge or reason to
know that the certificate is defective or
that the time for receiving an updated cer-
tificate or status update from the partner
under paragraph (c)(2)(ii)(B) of this sec-
tion has expired. * * *
* * * * *
(c) * * *
(1) * * * Under paragraph (c)(1)(iv) of
this section, a partnership may take into
account eligibility certificates submitted
by a foreign partner with respect to securi-
ty-required gains.
* * * * *
(iv) Consideration of eligibility cer-
tificates. A partner that is a nonresident
alien or foreign corporation that satisfies
the requirements of § 1.1400Z2(a)-1(a)(3)
may provide a copy of an eligibility certif-
icate, as defined in § 1.1400Z2(a)–2(d)(1),
for each of the partner’s security-required
gains, as defined in § 1.1400Z2(a)-2(c)(1).
* * * * *
(2) * * *
(i) * * * A partner’s certification under
paragraph (c)(1)(iv) of this section shall
be the eligibility certificate described in
§ 1.1400Z2(a)-2(d)(1).
* * * * *
(d) * * *
(3) * * *
(i) * * * For an installment period other
than the first installment period for which
the partnership considers a foreign part-
ner’s certificate or updated certificate, the
partnership may, instead of attaching any
partner’s certificate, attach to Form 8813 a
list containing the name, TIN, the amount
of certified deductions and losses, the
amount of gain excluded resulting from
an eligibility certificate, and the amount of
state and local taxes the partnership may
consider under paragraph (c)(1)(iii) of this
section for each foreign partner whose
certificate was relied upon.
* * * * *
(f) * * * Paragraph (c)(1)(iv) of this
section and the references in paragraphs
(a)(1), (a)(2), (c)(1), and (d)(3)(i) of this
section to eligibility certificates, covered
transfers and security-required gains, ap-
ply to any covered transfers (as defined
in § 1.1400Z2(a)-2(c)(2)) occurring after
[DATE OF PUBLICATION OF FINAL
RULE].
* * * * *
Par. 10. Section 1.1446-7 is amended
by adding a sentence at the end of the sec-
tion to read as follows:
§ 1.1446-7 Effective/Applicability date.
* * * The references in § 1.1446-3(b)
(2)(i)(B)(1) to § 1.1446-6(c)(1)(iv) apply
to partnership taxable years ending after
[DATE OF PUBLICATION OF FINAL
RULE].
Par. 11. Section 1.1446(f)-2 is amend-
ed by adding paragraphs (b)(8) and (c)
(5) and by adding a sentence to the end of
paragraph (f) to read as follows:
§ 1.1446(f)-2 Withholding on the transfer
of a non-publicly traded partnership
interest.
* * * * *
(b) * * *
(8) Gain deferred under section
1400Z-2(a). A transferee may rely on a cer-
tification from the transferor that includes
a copy of an eligibility certificate (as de-
scribed in § 1.1400Z2(a)-2(d)) with respect
to the transfer for an amount of security that
is greater than or equal to the maximum se-
curity amount. See paragraph (c)(5) of this

May 3, 2021 1146 Bulletin No. 2021–18
section for when an eligibility certificate
provides an amount of security that is less
than the maximum security amount.
(c) * * *
(5) Gain deferred under section
1400Z-2(a). A transferee may rely on a
certification from a transferor that in-
cludes a copy of an eligibility certificate
(as described in § 1.1400Z2(a)-2(d))
with respect to the transfer to reduce the
amount required to be withheld under this
section by the amount of security provid-
ed on the eligibility certificate.
* * * * *
(f) Applicability date. * * * Paragraphs
(b)(8) and (c)(5) of this section apply
to any covered transfer (as defined in
§ 1.1400Z2(a)-2(c)(2)) that occurs after
[DATE OF PUBLICATION OF FINAL
RULE].
Sunita Lough,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register on April
12, 2021, 4:15 p.m., and published in the issue of the
Federal Register for April 14, 2021, 86 F.R. 19585)
Announcement of
Disciplinary Sanctions
From the Office of
Professional Responsibility
Announcement 2021-8
The Office of Professional Responsi-
bility (OPR) announces recent disciplinary
sanctions involving attorneys, certified
public accountants, enrolled agents, en-
rolled actuaries, enrolled retirement plan
agents, appraisers, and unenrolled/unli-
censed return preparers (individuals who
are not enrolled to practice and are not
licensed as attorneys or certified public
accountants). Licensed or enrolled practi-
tioners are subject to the regulations gov-
erning practice before the Internal Revenue
Service (IRS), which are set out in Title 31,
Code of Federal Regulations, Subtitle A,
Part 10, and which are released as Treasury
Department Circular No. 230. The regula-
tions prescribe the duties and restrictions
relating to such practice and prescribe the
disciplinary sanctions for violating the
regulations. Unenrolled/unlicensed return
preparers are subject to Revenue Procedure
81-38 and superseding guidance in Reve-
nue Procedure 2014-42, which govern a
preparer’s eligibility to represent taxpayers
before the IRS in examinations of tax re-
turns the preparer both prepared for the tax-
payer and signed as the preparer. Addition-
ally, unenrolled/unlicensed return preparers
who voluntarily participate in the Annual
Filing Season Program under Revenue
Procedure 2014-42 agree to be subject to
the duties and restrictions in Circular 230,
including the restrictions on incompetent or
disreputable conduct.
The disciplinary sanctions to be im-
posed for violation of the applicable stan-
dards 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) for a
minimum period of five (5) years.
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
individual was acting on its behalf and 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.
Ineligible for limited practice—An
unenrolled/unlicensed return preparer
who fails to comply with the requirements
in Revenue Procedure 81-38 or to comply
with Circular 230 as required by Revenue
Procedure 2014-42 may be determined in-
eligible to engage in limited practice as a
representative of any taxpayer.
Under the regulations, individuals sub-
ject to Circular 230 may not assist, or ac-
cept assistance from, individuals who are
suspended or disbarred with respect to
matters constituting practice (i.e., repre-
sentation) before the IRS, and they may
not aid or abet suspended or disbarred in-
dividuals 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 by decision, and
Disqualified after hearing—An adminis-
trative law judge (ALJ) issued a decision
imposing one of these sanctions after the
ALJ either (1) granted the government’s
summary judgment motion or (2) con-
ducted an evidentiary hearing upon OPR’s
complaint alleging violation of the regu-
lations. After 30 days from the issuance
of the decision, in the absence of an ap-
peal, the ALJ’s decision becomes 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 was filed, granted OPR’s mo-
tion for a default judgment and issued a
decision imposing one of these sanctions.
Disbarment by decision on appeal,
Suspended by decision on appeal, Cen-
sured by decision on appeal, Monetary
penalty imposed by decision on 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 sanctions.
Disbarred by consent, Suspended by
consent, Censured by consent, Mone-
tary penalty imposed by consent, and
Disqualified by consent—In lieu of a
disciplinary proceeding being instituted or
continued, an individual offered a consent
to one of these sanctions and OPR accept-
ed the offer. Typically, an offer of consent
will provide for: suspension for an indef-
inite term; conditions that the individual
must observe during the suspension; and
the individual’s opportunity, after a stat-
ed number of months, to file with OPR a
petition for reinstatement affirming com-

Bulletin No. 2021–18 1147 May 3, 2021
pliance with the terms of the consent and
affirming current fitness and eligibility
to practice (i.e., an active professional li-
cense or active enrollment status, with no
intervening violations of the regulations).
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, in-
cluding loss of a professional license for
cause, and criminal convictions).
Determined ineligible for limited
practice—There has been a final deter-
mination that an unenrolled/unlicensed
return preparer is not eligible for limited
representation of any taxpayer because the
preparer violated standards of conduct or
failed to comply with any of the require-
ments to act as a representative.
A practitioner who has been disbarred
or suspended under 31 C.F.R. § 10.60, or
suspended under § 10.82, or a disqualified
appraiser may petition for reinstatement
before the IRS after the expiration of 5
years following such disbarment, suspen-
sion, or disqualification (or immediately
following the expiration of the suspension
or disqualification period if shorter than 5
years). Reinstatement will not be granted
unless the IRS is satisfied that the peti-
tioner is not likely to engage thereafter in
conduct contrary to Circular 230, and that
granting such reinstatement would not be
contrary to the public interest.
Reinstatement decisions are published
at the individual’s request, and described
in these terms:
Reinstated to practice before the
IRS—The individual’s petition for re-
instatement has been granted. The
agent, and eligible to practice before the
IRS, or in the case of an appraiser, the in-
dividual is no longer disqualified.
Reinstated to engage in limited prac-
tice before the IRS—The individual’s pe-
tition for reinstatement has been granted.
The individual is an unenrolled/unlicensed
return preparer and eligible to engage in
limited practice before the IRS, subject to
requirements the IRS has prescribed for
limited practice by tax return preparers.
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 final deci-
sion; (2) the individual has settled a disci-
plinary case by signing OPR’s “consent to
sanction” agreement admitting to one or
more violations of the regulations and con-
senting to the disclosure of the admitted vi-
olations (for example, failure to file Federal
income tax returns, lack of due diligence,
conflict of interest, etc.); (3) OPR has is-
sued a decision in an expedited proceeding
for indefinite suspension; or (4) OPR has
made a final determination (including any
decision on appeal) that an unenrolled/un-
licensed return preparer is ineligible to rep-
resent any taxpayer before the IRS.
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 state and second by the last
names of the sanctioned individuals.
City & State
NameProfessional
Designation
Disciplinary SanctionEffective Date(s)
Arizona
ScottsdaleKetelaar, Erik A.C PASuspended by decision in
expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
March 19, 2021
California
FresnoGroom, Kendall J.C PASuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
February 19, 2021
LakewoodDatta, Gaurav D.AttorneySuspended by decision in
expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
January 25, 2021
PleasantonRamanan,
Subramanian E.
C PASuspended by decision in
expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
March 25, 2021
Colorado
DenverYobst, Stephen J.C PASuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
February 19, 2021
Connecticut
DanburyO’Reilly, Francis J.AttorneySuspended by decision in
expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
March 25, 2021
FairfieldGlass, David L.C PASuspended by decision in
expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
January 8, 2021

May 3, 2021 1148 Bulletin No. 2021–18
City & StateNameProfessional
Designation
Disciplinary SanctionEffective Date(s)
Georgia
CantonBryan, Matthew A.AttorneySuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
January 25, 2021
Indiana
IndianapolisWilson, Randall D.Unenrolled Tax
Return Preparer
Reinstated to practice
before the IRS, effective
January 29, 2021
Kentucky
Grand RiversCraft, Joseph H.C PASuspended by consent for
admitted violations of
31 C.F.R. § 10.51(a)(10)
Indefinite from
February 19, 2021
Massachusetts
MedfieldGaffey, Richard J.C PASuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
February 19, 2021
Maryland
PotomacRobbins,
Jonathan D.
AttorneySuspended by decision in
expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
February 24, 2021
Michigan
N. BloomfieldHoffert, Myles B.AttorneySuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
February 24, 2021
Minnesota
RochesterQuinn, Michael J.AttorneySuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
January 25, 2021
New York
BrooklynShweky, Alan J.AttorneyReinstated to practice
before the IRS, effective
March 10, 2021
New YorkStamm, Dennis H.C PASuspended by decision in
expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
January 25, 2021
North Carolina
CaryThacker, Sarah K.AttorneySuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
February 19, 2021
Tennessee
White BluffWallick, StephenEnrolled AgentDisbarred by Decision on
Appeal
Indefinite from
July 24, 2019

Bulletin No. 2021–18 i May 3, 2021
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 be-
ing made clear because the language has
caused, or may cause, some confusion. It
is not used where a position in a prior rul-
ing is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previous-
ly 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 cas-
es in litigation, or the outcome of a Ser-
vice study.
Abbreviations
The following abbreviations in current use
and formerly used will appear in material
published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

May 3, 2021 ii Bulletin No. 2021–18
Numerical Finding List
1
Bulletin 2021–18
AOD:
2021-1, 2021-15 I.R.B. 985
Announcements:
2021-01, 2021-04 I.R.B. 506
2021-02, 2021-08 I.R.B. 892
2021-03, 2021-08 I.R.B. 892
2021-04, 2021-09 I.R.B. 895
2021-05, 2021-13 I.R.B. 965
2021-06, 2021-15 I.R.B. 1011
2021-07, 2021-15 I.R.B. 1061
2021-08, 2021-18 I.R.B. 1146
Notices:
2021-01, 2021-02 I.R.B. 315
2021-03, 2021-02 I.R.B. 316
2021-04, 2021-02 I.R.B. 319
2021-02, 2021-03 I.R.B. 478
2021-05, 2021-03 I.R.B. 479
2021-07, 2021-03 I.R.B. 482
2021-09, 2021-05 I.R.B. 678
2021-06, 2021-06 I.R.B. 822
2021-08, 2021-06 I.R.B. 823
2021-11, 2021-06 I.R.B. 827
2021-12, 2021-06 I.R.B. 828
2021-13, 2021-06 I.R.B. 832
2021-10, 2021-07 I.R.B. 888
2021-15, 2021-10 I.R.B. 898
2021-16, 2021-10 I.R.B. 907
2021-18, 2021-11 I.R.B. 911
2021-19, 2021-11 I.R.B. 920
2021-20, 2021-11 I.R.B. 922
2021-17, 2021-14 I.R.B. 984
2021-21, 2021-15 I.R.B. 986
2021-22, 2021-15 I.R.B. 987
2021-23, 2021-16 I.R.B. 1113
2021-25, 2021-17 I.R.B. 1118
2021-24, 2021-18 I.R.B. 1122
2021-27, 2021-18 I.R.B. 1125
2021-28, 2021-18 I.R.B. 1130
Proposed Regulations:
REG-130081-19, 2021-02 I.R.B. 321
REG-114615-16, 2021-03 I.R.B. 489
REG-111950-20, 2021-05 I.R.B. 683
REG-115057-20, 2021-05 I.R.B. 714
REG-121095-19, 2021-18 I.R.B. 1131
Revenue Procedures:
2021-01, 2020-01 I.R.B. 1
2021-02, 2020-01 I.R.B. 116
2021-03, 2020-01 I.R.B. 140
Revenue Procedures:—Continued
2021-04, 2020-01 I.R.B. 157
2021-05, 2020-01 I.R.B. 250
2021-07, 2020-01 I.R.B. 290
2021-09, 2020-03 I.R.B. 485
2021-08, 2020-04 I.R.B. 502
2021-10, 2020-04 I.R.B. 503
2021-12, 2020-05 I.R.B. 681
2021-11, 2020-06 I.R.B. 833
2021-15, 2020-08 I.R.B. 891
2021-17, 2020-15 I.R.B. 991
2021-18, 2020-15 I.R.B. 1007
2021-19, 2020-15 I.R.B. 1008
2021-21, 2020-17 I.R.B. 1118
Revenue Rulings:
2021-01, 2021-02 I.R.B. 294
2021-02, 2021-04 I.R.B. 495
2021-03, 2021-05 I.R.B. 674
2021-04, 2021-06 I.R.B. 724
2021-05, 2021-10 I.R.B. 896
2021-06, 2021-12 I.R.B. 946
2021-07, 2021-14 I.R.B. 982
2021-08, 2021-18 I.R.B. 1120
Treasury Decisions:
9925, 2021-02 I.R.B. 296
9940, 2021-02 I.R.B. 311
9932, 2021-03 I.R.B. 345
9939, 2021-03 I.R.B. 376
9941, 2021-03 I.R.B. 396
9942, 2021-03 I.R.B. 450
9937, 2021-04 I.R.B. 495
9936, 2021-05 I.R.B. 508
9943, 2021-05 I.R.B. 577
9945, 2021-05 I.R.B. 627
9946, 2021-06 I.R.B. 726
9947, 2021-06 I.R.B. 748
9948, 2021-06 I.R.B. 801
9938, 2021-07 I.R.B. 838
9944, 2021-16 I.R.B. 1062
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2020–27 through 2020–52 is in Internal Revenue Bulletin
2020–52, dated December 27, 2020.

Bulletin No. 2021–18 iii May 3, 2021
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2021–18
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2020–27 through 2020–52 is in Internal Revenue Bulletin
2020–52, dated December 27, 2020.

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