Internal Revenue Bulletin 2010-24 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 201
0-24
June 14, 2010
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Notice 2010–46, page 757.
This notice addresses the U.S. tax imposed on substitute divi-
dend payments received by foreign taxpayers that lend U.S. div-
idend paying securities in securities lending transactions. The
notice announces the upcoming withdrawal of Notice 97–66,
outlines a proposed regulatory framework to address potential
over-withholding that may occur as a result of the HIRE Act, and
provides transaction relief with respect to substitute dividend
payments made between the effective date of the HIRE Act and
the issuance of regulations. Notice 97–66 modified.
EMPLOYEE PLANS
T.D. 9484, page 748.
Final regulations under section 401(a)(35) of the Code relate
to diversification requirements for certain defined contribution
plans holding publicly traded employer securities. The regula-
tions will affect administrators of, employers maintaining, par-
ticipants in, and beneficiaries of defined contribution plans that
are invested in employer securities. The regulations apply for
plan years beginning on or after January 1, 2011.
EXEMPT ORGANIZATIONS
Notice 2010–39, page 756.
This notice solicits comments regarding the application of cer-
tain requirements imposed by new section 501(r), added to
the Code by section 9007(a) of the Patient Protection and Af-
fordable Care Act (Affordable Care Act). Comments should be
submitted by July 22, 2010.
ADMINISTRATIVE
Rev. Proc. 2010–23, page 762.
Qualified mortgage bonds; mortgage credit certificates;
national median gross income.Guidance is provided con-
cerning the use of the national and area median gross income
figures by issuers of qualified mortgage bonds and mortgage
credit certificates in determining the housing cost/income ratio
described in section 143(f) of the Code. Rev. Proc. 2009–27
obsoleted in part.
Finding Lists begin on page ii.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
June 14, 20102010–24 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 401.—
Qualified
Pension, Profit-Sharing,
and Stock Bonus Plans
26 CFR 1.401(a)(35)–1: Diversification require-
ments for certain defined contribution plans.
T.D. 9484
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Diversification Requirements
for Certain Defined
Contribution Plans
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains final
regulations under section 401(a)(35) of the
Internal Revenue Code (Code) relating to
diversification requirements for certain de-
fined contribution plans holding publicly
traded employer securities. These regula-
tions will affect administrators of, employ-
ers maintaining, participants in, and bene-
ficiaries of defined contribution plans that
are invested in employer securities.
DATES:Effective date:These regulations
are effective on May 19, 2010.
Applicability Date:These regulations
apply for plan years beginning on or after
January 1, 2011.
FOR FURTHER INFORMATION
CONTACT: R. Lisa Mojiri-Azad or
Jamie Dvoretzky at (202) 622–6060 (not a
toll-free number).
SUPPLEMENTAR
Y INFORMATION:
Background
This document
contains final regu-
lations under
section 401(a)(35) of the
Code, which wa
s added by section 901 of
the Pension P
rotection Act of 2006, Pub-
lic Law 109–2
80 (120 Stat. 780 (2006))
(PPA ’06).
1
Section 401(
a)(35)(A) provides that a
trust which i
s part of an applicable defined
contributi
on plan is not a qualified trust un-
der section
401(a) unless the plan satisfies
the diversi
fication requirements of section
401(a)(35)
(B), (C), and (D). Under section
401(a)(35)
(B), each individual must have
the right to
direct the plan to divest em-
ployer sec
urities allocated to the individ-
ual’s acco
unt that are attributable to em-
ployee con
tributions or elective deferrals
andtorein
vest an equivalent amount in
other inv
estment options meeting the re-
quiremen
ts of section 401(a)(35)(D).
2
Under sec
tion 401(a)(35)(C), each indi-
vidual wh
o is a participant who has com-
pleted at
least three years of service, a
benefici
ary of a participant who has com-
pleted a
t least three years of service, or a
benefic
iary of a deceased participant must
be permi
tted to elect to direct the plan
to dives
t employer securities allocated to
the indi
vidual’s account and to reinvest an
equiva
lent amount in other investment op-
tions m
eeting the requirements of section
401(a)
(35)(D).
Sectio
n 401(a)(35)(D)(i) requires an
applic
able defined contribution plan to
offer i
ndividuals not less than three in-
vestme
nt options, other than employer
secur
ities, to which the individuals may
direc
t the proceeds from the divestment
of emp
loyer securities, each of which is
diver
sified and has materially different
risk a
nd return characteristics.
Under
section 401(a)(35)(D)(ii)(I), a
plan d
oes not fail to meet the requirements
of se
ction 401(a)(35)(D) if it allows in-
divi
duals to divest employer securities
and reinvest t
he proceeds at periodic, rea-
sonable oppor
tunities occurring no less
frequently th
an quarterly.
Under section
401(a)(35)(D)(ii)(II), a
plan is not per
mitted to impose restrictions
or condition
s with respect to the invest-
ment of emplo
yer securities that are not
imposed on th
e investment of other assets
of the plan. H
owever, this rule does not
applytores
trictions or conditions imposed
to comply wi
th securities laws. The Secre-
tary is auth
orized to issue regulations pro-
viding addi
tional exceptions to the require-
ments of se
ction 401(a)(35)(D)(ii)(II).
An applicab
le defined contribution
plan under
section 401(a)(35) is a defined
contribut
ion plan that holds any publicly
traded emp
loyer securities. A publicly
traded emp
loyer security is defined as an
employer
security under section 407(d)(1)
of the Emp
loyee Retirement Income Se-
curity Ac
t of 1974, Public Law 93–406
(88 Stat.
829 (1974)) (ERISA) which is
readily t
radable on an established secu-
rities ma
rket. Section 401(a)(35)(F)(i)
provide
s that a plan that holds employer
securit
ies that are not publicly traded em-
ployer s
ecurities is nevertheless treated
as holdi
ng publicly traded employer se-
curiti
es if any employer corporation or
any mem
ber of a controlled group of cor-
porati
ons which includes the employer
(deter
mined by applying section 1563(a),
except
substituting 50 percent for 80 per-
cent)
has issued a class of stock that is a
publi
cly traded employer security. How-
ever,
section 401(a)(35)(F) does not apply
to a pl
an if no employer corporation, or
paren
t corporation (as defined in section
424(
e)) of an employer corporation, has
issu
ed any publicly traded employer secu-
rity
and no employer or parent corporation
has i
ssued any special class of stock which
gran
ts particular rights to, or bears par-
ticu
lar risks for, the holder or issuer with
res
pect to any corporation described in
sec
tion 401(a)(35)(F)(i) which has issued
any
publicly traded employer security.
1
Section 901 of PPA ’06 also added a parallel provision to section 401(a)(35)at section 204(j) of the Employee Retirement Income Security Act of 1974, Public Law 93–406 (88 Stat. 829
(1974)) (ERISA). Under section 101 of Reorganization Plan No. 4 of 1978 (43 FR 47713), the Secretary of Treasury has interpretative jurisdiction overthe subject matter addressed in these
final regulations for purposes of section 204(j) of ERISA. Thus, the guidance provided in these final regulations with respect to section 401(a)(35)of the Code also applies for purposes of
section 204(j) of ERISA.
2
Section 401(a)(28)(B) provides certain diversification rights to participants in an employee stock ownership plan within the meaning of section 4975(e)(7) (ESOP). Section 401(a)(28)(B)(v),
as added by section 901(a)(2)(A) of PPA ’06, provides that section 401(a)(28)(B) does not to apply to a plan to which section 401(a)(35) applies.
2010–24 I.R.B.748June 14, 2010

Section 401(a)(35)(E) provides that
section 401(a)(35) does not apply to an
employee stock ownership plan within the
meaning of section 4975(e)(7) (ESOP) that
holds no contributions (or earnings there-
under) that are subject to section 401(k) or
(m) (generally relating to elective defer-
rals and matching and employee after-tax
contributions) and the ESOP is a separate
plan for purposes of section 414(l) with
respect to any other defined benefit plan or
defined contribution plan maintained by
the same employer or employers. Section
401(a)(35)(E) furtherprovides that section
401(a)(35) does not apply to one-partici-
pant retirement plans (within the meaning
of section 401(a)(35)(E)(iv)).
Section 401(a)(35) is generally effec-
tive for plan years beginning after De-
cember 31, 2006. Section 401(a)(35)(H)
generally provides a three year phase-in
rule with respect to anindividual’s right
to direct the divestment of employer se-
curities attributable to employer contribu-
tions, except with respect to certain par-
ticipants who have attained age 55. Sec-
tion 901(c)(2) of PPA ’06 includes a spe-
cial rule for a plan maintained pursuant to
one or more collective bargaining agree-
ments between employee representatives
and one or more employers that was rat-
ified on or before August 17, 2006. Un-
der this rule, section 401(a)(35) is not ef-
fective until plan years beginning after the
earlier of (1) the later of (a) December 31,
2007 or (b) the date on which the last of
such collective bargaining agreements ter-
minates (determined without regard to any
extension thereof after August 17, 2006) or
(2) December 31, 2008.
Section 101(m) of ERISA as amended
by section 507 of PPA ’06 requires the plan
administrator to furnish a notice to individ-
uals not later than 30 days before the first
date on which an individual is eligible to
exercise his or her right to divest employer
securities with respect to any type of con-
tribution. The notice must set forth the di-
versification rights under section 204(j) of
ERISA (which is the parallel provision in
ERISA to section 401(a)(35)) and describe
the importance of diversifying the invest-
ment of retirement account assets.
Notice 2006–107, 2006–2 C.B.
1114 (December 18, 2006)), (see
§601.601(d)(2)(ii)(b)) includes guid-
ance and transitional rules with re-
spect to the diversification require-
ments of section 401(a)(35). Notice
2006–107 also includes guidance re-
garding the related notice requirements
of section 101(m) of ERISA, includ-
ing a model notice. Notice 2008–7,
2008–1 C.B. 276 (January 22, 2008)),
(see §601.601(d)(2)(ii)(b)) extends the
transitional guidance and transitional relief
that was included in Notice 2006–107 until
the final regulations become effective.
Notice 2009–97, 2009–52 I.R.B.
972 (December 28, 2009)), (see
§601.601(d)(2)(ii)(b)) extends the dead-
line for adopting an interim or discre-
tionary plan amendment under certain
provisions of PPA ’06, including section
401(a)(35), to the last day of the first plan
year that begins on or after January 1,
2010.
On January 3, 2008, proposed regu-
lations (REG–136701–07, 2008–1 C.B.
616) under section 401(a)(35) of the Code
were published in theFederal Register
(73 FR 421). No public hearing was re-
quested. Written comments responding to
the notice of proposed rulemaking were
received. After consideration of all the
comments, the proposed regulations are
adopted, as amended by this Treasury de-
cision. The most significant revisions are
discussed in the Summary of Comments
and Explanation of Revisions.
Summary of Comments and
Explanation of Revisions
Certain defined contribution plans or
investment funds not treated as holding
employer securities
The proposed regulations provided
that certain investment funds that include
employer securities as part of a broader
fund were treated as not holding employer
securities. This exception was limited to
the extent the employer securities were
held indirectly through an investment
company registered under the Investment
Company Act of 1940; a common or col-
lective trust fund or pooled investment
fund maintained by a bank or trust com-
pany supervised by a State or a Federal
agency; a pooled investment fund of an
insurance company that is qualified to do
business in a State; or any other investment
fund designated by the Commissioner in
revenue rulings, notices, or other guid-
ance published in the Internal Revenue
Bulletin. The proposed regulations also
provided that this exception was limited to
funds where the investment is independent
of the employer and where the employer
securities do not exceed 10 percent of the
fund.
Commentators requested that this ex-
ception be broadened to include funds that
are managed by an investment manager
within the meaning of section 3(38) of
ERISA. The final regulations do not pro-
vide for this expansion because such a fund
would not necessarily be holding employer
securities only as an indirect result of its
investment policy. However, the final reg-
ulations provide that, in the case of a mul-
tiemployer plan, an investment option will
not be treated as holding employer secu-
rities to the extent the employer securities
are held indirectly through an investment
fund managed by an investment manager
if the investment is independent of the em-
ployer and the percentage limitation rule is
satisfied.
The final regulations replace the ref-
erence to a fund that is an investment
company registered under the Investment
Company Act of 1940 with a regulated
investment company as described in Code
section 851(a). This change extends the
types of investment companies to include
exchange traded funds, which are unit
investment trusts if they satisfy section
851(a). The final regulations also retain
the rule from the proposed regulations that
allows the Commissioner to designate ad-
ditional types of funds as eligible for this
exception.
Commentators requested that the per-
centage limitation rule be eliminated.
They argued that it would be difficult and
costly to monitor the investment fund to
ensure that the aggregate value of the em-
ployer securities held in such fund was
not in excess of 10 percent of the total
assets of all the fund’s investments. In
response to these comments, the final reg-
ulations provide that the determination of
whether the value of employer securities
exceeds 10 percent of the total value of the
fund’s investments is made for the plan
year as of the end of the preceding plan
year. The determination can be based on
the information in the latest disclosure of
the fund’s portfolio holdings (for exam-
ple, Form N-CSR,“Certified Shareholder
Report of Registered Management Invest-
ment Companies”)thatwasfiledwiththe
June 14, 20107492010–24 I.R.B.

Securities and Exchange Commission in
that preceding plan year.
The final regulations also provide that
in a case where a fund that indirectly
holds employer securities fails to meet the
requirement that the investment be inde-
pendent of the employer (including the
situationwherethefundnolongermeets
the percentage limitation rule), the plan
does not fail to satisfy the diversification
requirements under section 401(a)(35)
merely because it does not offer those
rightsforupto90daysaftertheinvest-
ment fund is treated as holding employer
securities.
Prohibition on restrictions or conditions
Section 401(a)(35)(D)(ii)(II) provides
that a plan is not permitted to impose re-
strictions or conditions with respect to the
investment of employer securities that are
not imposed on the investment of other as-
sets of the plan. Like the proposed regu-
lations, the final regulations provide that
the prohibition on restrictions or condi-
tions with respect to the investment of em-
ployer securities applies to any direct or in-
direct restriction on an individual’s right to
divest an investment in employer securi-
ties that is not imposed on an investment
that is not employer securities, as well as a
direct or indirect benefit that is conditioned
on investment in employer securities.
The proposed regulations provided for a
number of permitted restrictions and con-
ditions. The proposed regulations would
have permitted a plan to impose a restric-
tion or condition either directly or indi-
rectly because of applicable securities laws
or because the plan becomes an applicable
defined contribution plan, limits invest-
ments in employer securities, limits trad-
ing frequency, does not permit investment
in a frozen fund, imposes a fee on other in-
vestment options that is not imposed on the
investment in employer securities or im-
poses a reasonable fee on the divestment
of employer securities, or allows invest-
mentstobemadeinastablevalueorsimi-
lar fund more frequently than other invest-
ment funds.
A commentator requested clarification
with respect to the exception for frozen
funds. The commentator requested that
a frozen fund include a plan that rein-
vests employer security dividends in addi-
tional employer securities as long as the
plan does not permit any further invest-
ment in employer securities. The final reg-
ulations clarify that the plan is permitted
to allow reinvestment of dividends paid on
employer securities. The final regulations
also clarify that the frozen fund exception
is only available for a plan that does not
have another employer securities fund.
Commentators requested that the list
for permitted indirectrestrictions or con-
ditions be expanded to include certain de-
fined contribution plans that make match-
ing contributions in employer securities
and allow participants to divest employer
securities attributable to such contribu-
tions, but do not permit participants to
later elect to reinvest any portion of their
account balances in employer stock. The
final regulations do not adopt this sugges-
tion. The IRS and the Treasury Depart-
ment (Treasury) have concluded that the
inability to reinvest in employer securities
generally acts as a material deterrent to
an individual who might otherwise have
elected to diversify his or her account bal-
ance of employer securities. However, the
final regulations provide a transitional rule
for certain leveraged ESOPs. An employer
stock fund does not fail to be a frozen
fund merely because of the allocation of
employer securities that are released as
matching contributions from the plan’s
suspense account that holds employer
securities acquired with an exempt loan
under section 4975(d)(3). This transitional
rule only applies to employer securities
that were acquired in a plan year beginning
before January 1, 2007, with the proceeds
of an exempt loan within the meaning
of section 4975(d)(3) which is not refi-
nanced after the end of the last plan year
beginning before January 1, 2007. This
transitional rule was added because these
leveraged ESOPs cannot cease allocations
of employer securities acquired with an
exempt loan that are held in a suspense
account without significant effect on the
company’s debt arrangements.
Commentators suggested that the spe-
cial rule for a stable value or similar fund
be expanded to allow transfers out of a sta-
ble value fund or similar fund more fre-
quently than other funds. In response to
comments, the final regulations provide
that a plan is generally permitted to allow
transfers to be made into or out of a sta-
ble value fund more frequently than a fund
invested in employer securities. Thus, a
plan that includes a broad range of invest-
ment alternatives as described in section
401(a)(35)(D)(i), including a stable value
or similar fund, does not impose an im-
permissible restriction merely because it
permits transfers into and out of the stable
value or similar fund more frequently than
the other funds (taking into account any re-
strictions or conditions imposed with re-
spect to the other investment options under
the plan).
Commentators requested clarification
as to the meaning of a stable value or
similar fund. The final regulations pro-
vide that a stable value or similar fund
means an investment product or fund de-
signed to preserve or guarantee principal
and provide a reasonable rate of return,
while providing liquidity for benefit dis-
tributions or transfers to other investment
alternatives (such as a product or fund
described in Department of Labor Regula-
tion section 2550.404c–5(e)(4)(iv)(A) or
(v)(A)).
One commentator noted that the De-
partment of Labor regulations for qualified
default investment alternatives (QDIAs)
require QDIAs to be restriction-free for
90 days. The commentator requested clar-
ification that the restriction-free 90-day
period does not cause a plan to violate
the prohibition on imposing a restriction
or condition with respect to employer
securities that is not imposed on other
investments. However, the commenta-
tor further stated that service providers
will have difficulty administering restric-
tions only after 90 days and therefore
requested that the final regulations permit
restriction-free transfers for QDIAs per-
manently. The final regulations expand
the list of permitted indirect restrictions to
provide that a plan may provide for trans-
fers out of a QDIA (within the meaning of
Department of Labor Regulation section
2550.404c–5(e)) more frequently than a
fund invested in employer securities.
A commentator requested clarification
concerning plans being permitted to re-
strict reinvestments in only one employer
stock fund when the plan allows invest-
ment in another employer stock fund, pro-
vided that the stock contained in each fund
has the same characteristics except for dif-
ferences in the tax cost basis of the trust.
The final regulations provide that any ap-
plicable tax consequences are disregarded
in determining whether a plan imposes an
2010–24 I.R.B.750June 14, 2010

indirect restriction or condition on an in-
dividual’s right to divest an investment
in employer securities. Accordingly, a
plan is permitted to provide that an indi-
vidual may not reinvest divested amounts
in the same employer securities account
but is permitted to invest such divested
amounts in another employer securities ac-
count where the only relevant difference
between the separate accounts is the sec-
tion 402(e)(4) cost (or other basis) of the
trust in the shares held in each account.
Several commentators requested clar-
ification regarding the 7-day rule in the
proposed regulations. The preamble to
the proposed regulations explained that the
7-day rule was an example and not the ex-
clusive method to limit trading frequency.
The permitted restriction for trading fre-
quency provides that a plan is permitted to
impose reasonable restrictions that are de-
signed to limit short-term trading in em-
ployer securities. Thus, the 7-day rule,
which was mentioned in the preamble to
the proposed regulations, is an example
and other short-term trading restrictions
(such as a restriction based on multiple
trades within a specified period) are allow-
able if they meet the reasonably designed
standard.
Miscellaneous
Commentators requested clarification
with respect to an ESOP that has been
satisfying the diversification requirements
under section 401(a)(28) by distributing
the portion of the participant’s account
coveredbyanelectionwithin90days
after the period during which the election
may be made, but which is now subject
to the diversification requirements under
section 401(a)(35). Such a distribution
option does not satisfy the diversification
requirements under section 401(a)(35).
These commentators were concerned that
an amendment which eliminates this dis-
tribution option would be a violation of the
anti-cutback rules undersection 411(d)(6).
Section 1107 of PPA ’06 provides that any
amendment which is made pursuant to a
provision of PPA ’06 will not fail to meet
the requirements of section 411(d)(6) un-
less otherwise provided by the Secretary
of the Treasury.
3
Thus, an amendment
to an ESOP which is now subject to the
diversification requirements under section
401(a)(35) that eliminates the distribution
option available for ESOPs subject to the
diversification requirements under section
401(a)(28), as permitted under section
1107 of PPA ’06, would not violate the
anti-cutback rules under section 411(d)(6).
In addition, it is expected that guid-
ance will be issued in the near future ex-
ercising the authority under §1.411(d)–4,
A–2(d)(4), to permit elimination of such
a distribution option with respect to an
ESOP that is subject to section 401(a)(35)
after the end of the limited period to which
section 1107 of PPA ’06 applies. The guid-
ance will permit elimination of such a dis-
tribution option during the extended reme-
dial amendment period permitted with re-
spect to section 401(a)(35) under Notice
2009–97, that is, to the last day of the first
plan year that begins on or after January 1,
2010.
Effective/Applicability Date
The final regulations are effective and
applicable for plan years beginning on or
after January 1, 2011.
For the period after the statutory effec-
tive date and before the regulatory effec-
tive date set forth in the preceding sen-
tence, a plan must comply with section
401(a)(35). During this period, a plan is
permitted to rely on Notice 2006–107, the
proposed regulations, or these final regula-
tions for purposes of satisfying the require-
ments of section 401(a)(35).
Special Analyses
It has been determined that these fi-
nal regulations are not a significant regu-
latory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It also has been determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply to these regulations, and, be-
cause §1.401(a)(35)–1 would not impose a
collection of information on small entities,
the Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Pursuant to sec-
tion 7805(f) of the Code, the notice of pro-
posed rulemaking preceding this regula-
tion was submitted to the Chief Counsel
for Advocacy of the Small Business Ad-
ministration for comments on its impact on
small business.
Drafting Information
The principal authors of these regu-
lations are Dana A. Barry, formerly of
the Office of Division Counsel/Associate
Chief Counsel (Tax Exempt and Govern-
ment Entities), and R. Lisa Mojiri-Azad,
Office of DivisionCounsel/Associate
Chief Counsel (Tax Exempt and Govern-
ment Entities). However, other personnel
from the IRS and the Treasury Department
participated in the development of these
regulations.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
Part 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding an entry in
numerical order to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.401(a)(35)–1 is also issued
under 26 U.S.C. 401(a)(35). * * *
Par. 2. Section 1.401(a)(35)–1 is added
to read as follows:
§1.401(a)(35)–1 Diversification
Requirements for Certain Defined
Contribution Plans.
(a)General rule—(1)Diversification
requirements. Section 401(a)(35) imposes
diversification requirements on applicable
defined contribution plans. A trust that is
part of an applicable defined contribution
plan is not a qualified trust under section
401(a) unless the plan—
(i) Satisfies the diversification election
requirements for elective deferrals and em-
ployee contributions set forth in paragraph
(b)ofthissection;
(ii) Satisfies the diversification election
requirements for employer nonelective
contributions set forth in paragraph (c) of
this section;
(iii) Satisfies the investment option re-
quirement set forth in paragraph (d) of this
section; and
3
See also section 411(d)(6)(C)(ii).
June 14, 20107512010–24 I.R.B.

(iv) Does not apply any restrictions or
conditions on investments in employer se-
curities that violate the requirements of
paragraph (e) of this section.
(2)Definitions, effective dates, and
transition rules. The definitions of appli-
cable defined contribution plan, employer
security, parent corporation, and publicly
traded are set forth in paragraph (f) of this
section. Applicability dates and transition
rules are set forth in paragraph (g) of this
section.
(b)Diversification requirements for
elective deferrals and employee contribu-
tions invested in employer securities—(1)
General rule. With respect to any in-
dividual described in paragraph (b)(2)
of this section, if any portion of the in-
dividual’s account under an applicable
defined contribution plan attributable to
elective deferrals (as described in section
402(g)(3)(A)), employee contributions, or
rollover contributions is invested in em-
ployer securities, then the plan satisfies
the requirements of this paragraph (b) if
the individual may elect to divest those
employer securities and reinvest an equiv-
alent amount in other investment options.
The plan may limit the time for divestment
and reinvestment to periodic, reasonable
opportunities occurringnolessfrequently
than quarterly.
(2)Applicable individual with respect
to elective deferrals and employee contri-
butions. An individual is described in this
paragraph (b)(2) if the individual is—
(i) A participant;
(ii) An alternate payee who has an ac-
count under the plan; or
(iii) A beneficiary of a deceased partic-
ipant.
(c)Diversification requirements for em-
ployer nonelective contributions invested
in employer securities—(1)General rule.
With respect to any individual described in
paragraph (c)(2) of this section, if a portion
of the individual’s account under an ap-
plicable defined contribution plan attribut-
able to employer nonelective contributions
is invested in employer securities, then the
plan satisfies the requirements of this para-
graph (c) if the individual may elect to di-
vest those employer securities and reinvest
an equivalent amount in other investment
options. The plan may limit the time for
divestment and reinvestment to periodic,
reasonable opportunities occurring no less
frequently than quarterly.
(2)Applicable individual with respect
to employer nonelective contributions.An
individual is described in this paragraph
(c)(2) if the individual is—
(i) A participant who has completed at
least three years of service;
(ii) An alternate payee who has an ac-
count under the plan with respect to a par-
ticipant who has completed at least three
years of service; or
(iii) A beneficiary of a deceased partic-
ipant.
(3)Completion of three years of ser-
vice. For purposes of paragraph (c)(2) of
this section, a participant completes three
years of service on the last day of the vest-
ing computation period provided for un-
der the plan that constitutes the completion
of the third year of service under section
411(a)(5). However, for a plan that uses
the elapsed time method of crediting ser-
vice for vesting purposes (or a plan that
provides for immediate vesting without us-
ing a vesting computation period or the
elapsed time method of determining vest-
ing), a participant completes three years of
service on the day immediately preceding
the third anniversary of the participant’s
date of hire.
(d)Investment options. An applicable
defined contribution plan must offer not
less than three investment options, other
than employer securities, to which an in-
dividual who has the right to divest under
paragraph (b)(1) or (c)(1) of this section
may direct the proceeds from the divest-
ment of employer securities. Each of the
three investment options must be diversi-
fied and have materially different risk and
return characteristics. For this purpose, in-
vestment options that constitute a broad
range of investment alternatives within the
meaning of Department of Labor Regula-
tion section 2550.404c–1(b)(3) are treated
as being diversified and having materially
different risk and return characteristics.
(e)Restrictions or conditions on in-
vestments in employer securities—(1)Im-
permissible restrictions or conditions—(i)
General rule. Except as provided in para-
graph (e)(2) of this section, an applicable
defined contribution plan violates the re-
quirements of this paragraph (e) if the
plan imposes restrictions or conditions
with respect to the investment of employer
securities that are not imposed on the in-
vestment of other assets of the plan. A
restriction or condition with respect to
employer securities means—
(A) A restriction on an individual’s
right to divest an investment in employer
securities that is not imposed on an invest-
ment that is not employer securities; or
(B) A benefit that is conditioned on in-
vestment in employer securities.
(ii)Indirect restrictions or condi-
tions—(A) Except as provided in para-
graph (e)(3) of this section, a plan violates
the requirements of this paragraph (e) if
the plan imposes a restriction or condition
described in paragraph (e)(1)(i)(A) or (B)
of this section either directly or indirectly.
(B) A plan imposes an indirect restric-
tion on an individual’s right to divest an
investment in employer securities if, for
example, the plan provides that a partici-
pant who divests his or her account balance
with respect to the investment in employer
securities is not permitted for a period of
time thereafter to reinvest in employer se-
curities.
(C) A plan does not impose an indirect
restriction or condition merely because
there are tax consequences that result from
an individual’s divestment of an invest-
ment in employer securities. Thus, the
loss of the special treatment for net unre-
alized appreciation provided under section
402(e)(4) with respect to employer securi-
ties is disregarded. Similarly, a plan does
not impose an impermissible restriction or
condition merely because it provides that
an individual may not reinvest divested
amounts in the same employer securities
account but is permitted to invest such
divested amounts in another employer se-
curities account where the only relevant
difference between the separate accounts
is the section 402(e)(4) cost (or other ba-
sis) of the trust in the shares held in each
account. (See §1.402(a)–1(b) for rules
regarding section 402(e)(4).)
(2)Permitted restrictions or condi-
tions—(i)In general. An applicable de-
fined contribution plan does not violate
the requirements of this paragraph (e)
merely because it imposes a restriction or
a condition set forth in paragraph (e)(2)(ii)
or (e)(2)(iii) of this section.
(ii)Securities laws. A plan is permit-
ted to impose a restriction or condition on
the divestiture of employer securities that
is either required in order to ensure com-
pliance with applicable securities laws or
is reasonably designed to ensure compli-
2010–24 I.R.B.752June 14, 2010

ance with applicable securities laws. For
example, it is permissible for a plan to
limit divestiture rights for participants who
are subject to section 16(b) of the Secu-
rities Exchange Act of 1934 (15 U.S.C.
78f) to a reasonable period (such as 3 to
12 days) following publication of the em-
ployer’s quarterly earnings statements be-
cause it is reasonably designed to ensure
compliance with Rule 10b–5 of the Secu-
rities and Exchange Commission.
(iii)Deferred application of the diver-
sification requirements—(A)Becoming
an applicable defined contribution plan.
An applicable defined contribution plan
is permitted to restrict the application of
the diversification requirements of section
401(a)(35) and this section for up to 90
days after the plan becomes an applicable
defined contribution plan (for example,
a plan becoming an applicable defined
contribution plan because the employer
securities held under the plan become
publicly traded).
(B)Loss of exception for indirect invest-
ments. In the case where an investment
fund described in paragraph (f)(3)(ii)(A)
of this section no longer meets the require-
ment in paragraph (f)(3)(ii)(B) of this sec-
tion that the investment must be indepen-
dent of the employer (including the sit-
uation where the fund no longer meets
the percentage limitation rule in paragraph
(f)(3)(ii)(C) of this section), the plan does
not fail to satisfy the diversification re-
quirements of section 401(a)(35) and this
section merely because it does not offer
those rights with respect to that investment
fund for up to 90 days after the investment
fund ceases to meet those requirements.
(3)Permitted indirect restrictions or
conditions—(i)In general. An applicable
defined contribution plan does not vio-
late the requirements of this paragraph
(e) merely because it imposes an indirect
restriction or condition set forth in this
paragraph (e)(3).
(ii)Limitation on investment in em-
ployer securities. A plan is permitted to
limit the extent to which an individual’s
account balance can be invested in em-
ployer securities, provided the limitation
applies without regard to a prior exercise
of rights to divest employer securities. For
example, a plan does not impose a restric-
tion that violates this paragraph (e) merely
because the plan prohibits a participant
from investing additional amounts in em-
ployer securities if more than 10 percent
of that participant’s account balance is
invested in employer securities.
(iii)Trading frequency.Aplanisper-
mitted to impose reasonable restrictions
on the timing and number of investment
elections that an individual can make to
invest in employer securities, provided
that the restrictions are designed to limit
short-term trading in the employer secu-
rities. For example, a plan could provide
that a participant may not elect to invest
in employer securities if the employee
has elected to divest employer securities
within a short period of time, such as
seven days, prior to the election to invest
in employer securities.
(iv)Fees. The plan has not provided
an indirect benefit that is conditioned on
investment in employer securities merely
because the plan imposes fees on other in-
vestment options that are not imposed on
the investment in employer securities. In
addition, the plan has not provided a re-
strictionontherighttodivestaninvest-
ment in employer securities merely be-
cause the plan imposes a reasonable fee for
the divestment of employer securities.
(v)Stable value or similar fund.Aplan
is permitted to allow transfers to be made
into or out of a stable value or similar fund
more frequently than a fund invested in
employer securities for purposes of para-
graph (e)(1)(ii) of this section. Thus, a
plan that includes a broad range of in-
vestment alternatives as described in para-
graph (d) of this section, including a stable
value or similar fund, does not impose an
impermissible restriction under paragraph
(e)(1)(ii) of this section merely because it
permits transfers into or out of that fund
more frequently than other funds under the
plan, provided that the plan would other-
wise satisfy this paragraph (e) (taking into
account any restrictions or conditions im-
posed with respect to the other investment
options under the plan). For purposes of
this section, a stable value fund or similar
fund means an investment product or fund
designed to preserve or guarantee princi-
pal and provide a reasonable rate of return,
while providing liquidity for benefit distri-
butions or transfers to other investment al-
ternatives (such as a product or fund de-
scribed in Department of Labor Regula-
tion section 2550.404c–5(e)(4)(iv)(A) or
(v)(A)).
(vi)Transfers out of a qualified de-
fault investment alternative (QDIA).A
plan is permitted to provide for transfers
out of a QDIA within the meaning of
Department of Labor Regulation section
2550.404c–5(e) more frequently than a
fund invested in employer securities.
(vii)Frozen funds—(A)General rule.
Aplanispermittedtoprohibitanyfurther
investment in employer securities. Thus,
a plan is not treated as imposing an indi-
rect restriction merely because it provides
that an employee that divests an invest-
ment in employer securities is not permit-
ted to reinvest in employer securities, but
only if the plan does not permit additional
contributions or other investments to be in-
vested in employer securities. For this pur-
pose, a plan does not provide for further
investment in employer securities merely
because dividends paid on employer secu-
rities under the plan are reinvested in em-
ployer securities.
(B)Transitional relief for certain lever-
aged employee stock ownership plans
(ESOPs). An employer stock fund does
not fail to be a frozen fund under this para-
graph (e)(3)(vii) merely because of the
allocation of employer securities that are
released as matching contributions from
the plan’s suspense account that holds
employer securities acquired with an ex-
empt loan under section 4975(d)(3). This
paragraph (e)(3)(vii)(B) only applies to
employer securities that were acquired in
a plan year beginning before January 1,
2007, with the proceeds of an exempt loan
within the meaning of section 4975(d)(3)
which is not refinanced after the end of the
last plan year beginning before January 1,
2007.
(4)Delegation of authority to Commis-
sioner. The Commissioner may provide
for additional permitted restrictions or
conditions or permitted indirect restric-
tions or conditions in revenue rulings,
notices, or other guidance published in the
Internal Revenue Bulletin.
(f)Definitions—(1)Application of def-
initions. This paragraph (f) contains defi-
nitions that are applicable for purposes of
this section.
(2)Applicable defined contribution
plan—(i)General rule. Except as pro-
vided in this paragraph (f)(2), an applica-
ble defined contribution plan means any
defined contribution plan which holds em-
ployer securities that are publicly traded.
June 14, 20107532010–24 I.R.B.

See paragraph (f)(2)(iv) of this section
for a special rule that treats certain plans
that hold employer securities that are not
publicly traded as applicable defined con-
tribution plans and paragraph (f)(3)(ii) of
this section for a special rule that treats
certain plans as not holding publicly traded
employer securities for purposes of this
section.
(ii)Exception for certain ESOPs.An
employee stock ownership plan (ESOP),
as defined in section 4975(e)(7), is not
an applicable defined contribution plan if
the plan is a separate plan for purposes
of section 414(l) with respect to any other
defined benefit plan or defined contribu-
tion plan maintained by the same employer
or employers and holds no contributions
(or earnings thereunder) that are (or were
ever) subject to section 401(k) or 401(m).
Thus, an ESOP is an applicable defined
contribution plan if the ESOP is a portion
of a larger plan (whether or not that larger
plan includes contributions that are sub-
ject to section 401(k) or 401(m)). For pur-
poses of this paragraph (f)(2)(ii), a plan is
not considered to hold amounts ever sub-
ject to section 401(k)or401(m)merely
because the plan holdsamounts attribut-
able to rollover amounts in a separate ac-
count that were previously subject to sec-
tion 401(k) or 401(m).
(iii)Exception for one-participant
plans. A one-participant plan, as defined
in section 401(a)(35)(E)(iv), is not an ap-
plicable defined contribution plan.
(iv)Certain defined contribution plans
treated as holding publicly traded em-
ployer securities—(A)General rule.Ade-
fined contribution plan holding employer
securities that are not publicly traded is
treated as an applicable defined contri-
bution plan if any employer maintaining
the plan or any member of a controlled
group of corporations that includes such
employer has issued a class of stock which
is publicly traded. For purposes of this
paragraph (f)(2)(iv), a controlled group of
corporations has the meaning given such
term by section 1563(a), except that “50
percent” is substituted for “80 percent”
each place it appears.
(B)Exception for certain plans. Para-
graph (f)(2)(iv)(A) of this section does not
applytoaplanif—
(1) No employer maintaining the plan
(or a parent corporation with respect to
such employer) has issued stock that is
publicly traded; and
(2)Noemployermaintainingtheplan
(or parent corporation with respect to such
employer) has issued any special class of
stock which grants to the holder or issuer
particular rights, or bears particular risks
for the holder or issuer, with respect to
any employer maintaining the plan (or any
member of a controlled group of corpora-
tions that includes such employer) which
has issued any stock that is publicly traded.
(3)Employer security—(i)General
rule. Employer security has the meaning
given such term by section 407(d)(1) of
the Employee Retirement Income Security
Act of 1974, as amended (ERISA).
(ii)Certain defined contribution plans
or investment funds not treated as holding
employer securities—(A)Exception for
certain indirect investments. Subject to
paragraphs (f)(3)(ii)(B) and (C) of this
section, a plan (and an investment option
described in paragraph (d) of this section)
is not treated as holding employer secu-
rities for purposes of this section to the
extent the employer securities are held in-
directly as part of a broader fund that is—
(1) A regulated investment company
describedinsection851(a);
(2) A common or collective trust fund
or pooled investment fund maintained by
a bank or trust company supervised by a
State or a Federal agency;
(3) A pooled investment fund of an in-
surance company that is qualified to do
business in a State;
(4) An investment fund managed by an
investment manager within the meaning
of section 3(38) of ERISA for a multiem-
ployer plan; or
(5) Any other investment fund desig-
nated by the Commissioner in revenue rul-
ings, notices, or other guidance published
in the Internal Revenue Bulletin.
(B)Investment must be independent.
The exception set forth in paragraph
(f)(3)(ii)(A) of this section applies only if
the investment in the employer securities
is held in a fund under which—
(1) There are stated investment objec-
tives of the fund; and
(2) The investment is independent of
the employer (or employers) and any affil-
iate thereof.
(C)Percentage limitation rule. For pur-
poses of paragraph (f)(3)(ii)(B)(2)ofthis
section, an investment in employer secu-
rities in a fund is not considered to be in-
dependent of the employer (or employers)
and any affiliate thereof if the aggregate
value of the employer securities held in the
fund is in excess of 10 percent of the to-
tal value of all of the fund’s investments
for the plan year. The determination of
whether the value of employer securities
exceeds 10 percent of the total value of
the fund’s investments for the plan year is
made as of the end of the preceding plan
year. The determination can be based on
the information in the latest disclosure of
the fund’s portfolio holdings that was filed
with the Securities and Exchange Com-
mission (SEC) in that preceding plan year.
(4)
Parent corporation. Parent corpora-
tion has the meaning given such term by
section 424(e).
(5)Publicly traded—(i)In general.A
security is publicly traded if it is readily
tradable on an established securities mar-
ket.
(ii)Readily tradable on an established
securities market. For purposes of this
paragraph (f)(5), except as provided by the
Commissioner in revenue rulings, notices,
or other guidance published in the Inter-
nal Revenue Bulletin,a security is readily
tradable on an established securities mar-
ket if—
(A) The security is traded on a national
securities exchange that is registered under
section 6 of the Securities Exchange Act of
1934 (15 U.S.C. 78f); or
(B) The security is traded on a for-
eign national securities exchange that is of-
ficially recognized, sanctioned, or super-
vised by a governmental authority and the
security is deemed by the SEC as having
a “ready market” under SEC Rule 15c3–1
(17 CFR 240.15c3–1).
(g)Applicability date and transition
rules—(1)Statutory effective date—(i)
General rule. Except as otherwise pro-
vided in this paragraph (g) and section
901(c)(3)(A) and (B) of the Pension Pro-
tection Act of 2006, Public Law 109–280
(120 Stat. 780 (2006)) (PPA ’06), section
401(a)(35) is effective for plan years be-
ginning after December 31, 2006.
(ii)Collectively bargained plans—(A)
Delayed statutory effective date.Inthe
case of a plan maintained pursuant to one
or more collective bargaining agreements
between employee representatives and one
or more employers ratified on or before
August 17, 2006, section 401(a)(35) is ef-
2010–24 I.R.B.754June 14, 2010

fective for plan years beginning after the
earlier of—
(1) The later of—
(i) December 31, 2007; or
(ii) The date on which the last such col-
lective bargaining agreement terminates
(determined without regard to any exten-
sion thereof); or
(2) December 31, 2008.
(B)Treatment of plans with both collec-
tively bargained and non-collectively bar-
gained employees. If a collective bargain-
ing agreement applies to some, but not
all, of the plan participants, the defini-
tion of whether the plan is considered a
collectively bargained plan for purposes
of this paragraph (g)(1)(ii) is made in the
same manner as the definition of whether
a plan is collectively bargained under sec-
tion 436(f)(3).
(2)Regulatory effective/applicability
date. This section is effective and appli-
cable for plan years beginning on or after
January 1, 2011.
(3)Statutory transition rules—(i)
General rule.Pursuant to section
401(a)(35)(H), in the case of the portion
of an account to which paragraph (c) of
this section applies and that consists of
employer securities acquired in a plan year
beginning before January 1, 2007, the re-
quirements of paragraph (c) of this section
only apply to the applicable percentage of
such securities.
(ii)Applicable percentage—(A)
Phase-in percentage. For purposes of this
paragraph (g)(3), the applicable percent-
age is determined as follows—
Plan year to which paragraph (c) of this section applies:The applicable percentage is:
1st...................................................... 33
2nd..................................................... 66
3rdandfollowing ........................................ 100
(B)Special rule. For a plan for which
the special effective date under section
901(c)(3) of PPA ’06 applies, the appli-
cable percentage under this paragraph
(g)(3)(ii) is determined without regard
to the delayed effective date in section
901(c)(3)(A) and (B) of PPA ’06.
(iii)Nonapplication for participants
age 55 with three years of service. Para-
graph (g)(3)(i) of this section does not
apply to an individual who is a participant
who attained age 55 and had completed at
least three years of service (as defined in
paragraph (c)(3) of this section) before the
first day of the first plan year beginning
after December 31, 2005.
(iv)Separate application by class of se-
curities. This paragraph (g)(3) applies sep-
arately with respect to each class of secu-
rities.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved May 5, 2010.
Michael F. Mundaca,
Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on May 18, 2010,
8:45 a.m., and published in the issue of the Federal Register
for May 19, 2010, 75 F.R. 27927)
June 14, 20107552010–24 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Request for Comments
Regarding Additional
Requirements for Tax-Exempt
Hospitals
Notice 2010–39
Section 1. PURPOSE AND
BACKGROUND
This notice solicits comments regarding
the application of certain requirements im-
posedbynewsection501(r),addedtothe
Internal Revenue Code (Code) by section
9007(a) of the Patient Protection and Af-
fordable Care Act (Affordable Care Act),
enacted March 23, 2010, Pub. L. No.
111-148.
1
Section 501(r) affects hospital
organizations that are currently described
in section 501(c)(3) of the Code as exempt
from Federal income taxation.
New section 501(r)(1) imposes four ad-
ditional requirements, described in Sec-
tions 2, 3, 4, and 5 of this notice, that or-
ganizations described in section 501(r)(2)
(“hospital organizations”) must satisfy to
be described in section 501(c)(3). The Af-
fordable Care Act did not otherwise affect
the substantive standards for tax exemp-
tion that hospitals are required to meet un-
der section 501(c)(3).
Section 501(r)(2) provides that the ad-
ditional requirements of section 501(r)
apply to: (1) an organization that operates
afacilityrequiredbyaStatetobeli-
censed, registered, or similarly recognized
as a hospital; and (2) any other organiza-
tion that the Secretary determines has the
provision of hospital care as its principal
function or purpose constituting the basis
for its exemption under section 501(c)(3).
Section 501(r) applies to hospital orga-
nizations on a facility-by-facility basis.
Accordingly, if a hospital organization
operates more than one hospital facility,
the organization is required to meet the
additional requirements of section 501(r)
separately with respect to each facility.
The Affordable Care Act also added
new section 4959, which imposes an ex-
cise tax for failures to meet certain of
the new section 501(r) requirements, and
added reporting requirements under sec-
tion 6033(b) related to sections 501(r) and
4959.
Section 2. COMMUNITY HEALTH
NEEDS ASSESSMENT
Section 501(r)(3) requires a hospital or-
ganization to conduct a community health
needs assessment (CHNA) every three
years and adopt an implementation strat-
egy to meet the community health needs
identified through such assessment. The
CHNA must (1) take into account input
from persons who represent the broad
interests of the community served by the
hospital facility, including those with spe-
cial knowledge of or expertise in public
health and (2) be made widely available to
the public. Section 501(r)(3)(B).
The Joint Committee on Taxation’s
Technical Explanation of the Affordable
Care Act (Technical Explanation) states
that the CHNA “may be based on cur-
rent information collected by a public
health agency or non-profit organizations
and may be conducted together with one
or more organizations, including related
organizations.” Joint Committee on Taxa-
tion,Technical Explanation of the Revenue
Provisions of the “Reconciliation Act of
2010,” as amended, in combination with
the “Patient Protection and Affordable
Care Act”(JCX–18–10), at 81, March 21,
2010.
Section 6033(b)(15)(A) requires hos-
pital organizations to include in their
annual information return (i.e., Form 990)
a description of how the organization is
addressing the needs identified in each
CHNA conducted under section 501(r)(3)
and a description of any needs that are not
being addressed, along with the reasons
why the needs are not being addressed.
Section 4959 imposes a $50,000 excise
taxonahospitalorganizationthatfails
to meet the CHNA requirements of sec-
tion 501(r)(3). Section 6033(b)(10), as
amended, requires hospital organizations
to report the amount of the excise tax im-
posed on the organization under section
4959.
Section 3. FINANCIAL ASSISTANCE
POLICY
Section 501(r)(4) requires a hospital or-
ganization to establish a financial assis-
tance policy and a policy relating to emer-
gency medical care.
Specifically, section 501(r)(4)(A) re-
quires a hospital organization to have a
written financial assistance policy that
includes the following:
i. eligibility criteriafor financial assis-
tance, and whether such assistance in-
cludes free or discounted care;
ii. the basis for calculating amounts
charged to patients;
iii. the method for applying for financial
assistance;
iv. in the case of an organization which
does not have a separate billing and
collections policy, the actions the or-
ganization may take in the event of
nonpayment, including collections ac-
tion and reporting to credit agencies;
and
v. measures to widely publicize the pol-
icy within the community to be served
by the organization.
Section 501(r)(4)(B) requires a hospital
organization to have a written policy re-
quiring the organization to provide, with-
out discrimination, care for emergency
medical conditions (within the meaning
of section 1867 of the Social Security
Act (42 U.S.C. 1395dd)) to individuals
regardless of their eligibility under the
financial assistance policy described in
section 501(r)(4)(A). The Technical Ex-
planation states that “[t]he policy must
prevent discrimination in the provision of
emergency medical treatment, including
denial of service, against those eligible
for financial assistance under the facility’s
financial assistance policy or those eligi-
ble for government assistance.” Technical
Explanation at 82.
Section 4. LIMITATION ON CHARGES
Section 501(r)(5) requires a hospital or-
ganization to limit amounts charged for
emergency or other medically necessary
1
A related bill, the Health Care Education Affordability Reconciliation Act of 2010 (H.R. 4872) (the “Reconciliation Act”), was signed into law on March 30, 2010 (Pub. L. No. 111–152).
The Reconciliation Act amends the Affordable Care Act and related laws.
2010–24 I.R.B.756June 14, 2010

care that is provided to individuals eligible
for assistance under the organization’s fi-
nancial assistance policy to not more than
the amounts generally billed to individu-
als who have insurance covering such care.
Section 501(r)(5) also prohibits the use of
gross charges.
The Technical Explanation states that
“[i]t is intended that amounts billed to
those who qualify for financial assis-
tance may be based on either the best,
or an average of the three best, negoti-
ated commercial rates, or Medicare rates.”
Technical Explanation at 82.
Section 5. BILLING AND
COLLECTION
Section 501(r)(6) requires a hospital or-
ganizationtoforegoextraordinary collec-
tion actions against an individual before
the organization has made reasonable ef-
forts to determine whether the individual
is eligible for assistance under the hospital
organization’s financial assistance policy.
The Technical Explanation states that
“extraordinary collections include law-
suits, liens on residences, arrests, body
attachments, or other similar collection
processes.” Technical Explanation at 82.
The Technical Explanation also states that
“[i]t is intended that for this purpose, ‘rea-
sonable efforts’ includes notification by
the hospital of its financial assistance pol-
icyuponadmissionandinwrittenandoral
communications with the patient regarding
the patient’s bill, including invoices and
telephone calls, before collection action or
reporting to credit agencies is initiated.”
Technical Explanation at 82.
Section 6. EFFECTIVE DATES
Section 501(r) (except for section
501(r)(3)), section 6033(b)(10), and sec-
tion 6033(b)(15) apply to taxable years
beginning after March 23, 2010, the date
of enactment of the Affordable Care
Act. The CHNA requirements of section
501(r)(3) are effective for taxable years
beginning after March 23, 2012. The sec-
tion 4959 excise tax for failure to satisfy
section 501(r)(3) is effective for failures
occurring after the date of enactment.
Section 7. REQUEST FOR COMMENTS
The IRS and the Department of Trea-
sury request comments regarding the re-
quirements for hospital organizations de-
scribed in this notice, including in particu-
lar the need, if any, for guidance regarding
such requirements. Comments are specif-
ically requested regarding appropriate re-
quirements for a CHNA, and what consti-
tutes “reasonable efforts” to determine eli-
gibility for assistance under a financial as-
sistance policy for purposes of the billing
and collection requirements under section
501(r)(6). In addition, comments are re-
quested regarding section 501(r)(2)(B)(ii),
whichprovidesthatanorganizationthat
operates more than one hospital facility
“shall not be treated as described in [sec-
tion 501(c)(3)] with respect to any such fa-
cility for which such requirements are not
separately met,” including the tax conse-
quences of a failure with respect to some,
but not all, facilities and the proper tax
treatment in future periods in such a case.
Comments should refer to Notice
2010–39 and be submitted by July 22,
2010, to:
Internal Revenue Service
CC:PA:LPD:PR (Notice 2010–39)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
Submissions may be hand delivered
Monday through Friday between the hours
of 8 a.m. and 4 p.m. to:
Courier’s Desk
Internal Revenue Service
1111 Constitution Ave., N.W.
Washington, DC 20224
Attn: CC:PA:LPD:PR
(Notice 2010–39)
Alternatively,taxpayersmay
submit comments electronically to
notice.comments@irscounsel.treas.gov.
Please include “Notice 2010–39”
in the subject line of any electronic
communications.
All comments will be available for pub-
lic inspection and copying.
Section 8. DRAFTING INFORMATION
The principal author of this notice
is Garrett Gluth of the Exempt Organi-
zations, Tax Exempt and Government
Entities Division. For further information
regarding this notice, contact Mr. Gluth at
(202) 283–9485 (not a toll-free call).
Prevention of
Over-Withholding and U.S. Tax
Avoidance With Respect to
Certain Substitute Dividend
Payments
Notice 2010–46
I. SUMMARY AND MODIFICATION
AND WITHDRAWAL OF NOTICE
97–66
A. Background
On October 14, 1997, final regulations
were published in the Federal Regis-
ter (T.D. 8735, 1997–2 C.B. 72, 62 FR
53498 (1997)) (the “final regulations”)
that source substitute interest and substi-
tute dividend payments made pursuant to
a securities lending transaction described
in § 1058 of the Internal Revenue Code
(“Code”) or a substantially similar trans-
action or a sale-repurchase transaction
(a “Securities Lending Transaction”) by
reference to the income that would be
earned with respect to the underlying
transferred debt security or stock. The
final regulations also provide that substi-
tute interest and dividend payments that
are from sources within the United States
under the regulations are characterized
as interest and dividends for purposes of
determining the fixed or determinable an-
nual or periodical income of nonresident
alien individuals and foreign corpora-
tions subject to tax under §§ 871(a), 881,
4948(a) and Chapter 3 of the Code and
for purposes of granting tax treaty benefits
with respect to interest and dividends. As
promulgated, the final regulations were
made applicable in all respects for sub-
stitute interest payments (as defined in
§ 1.861–2(a)(7)) and substitute dividend
payments (as defined in § 1.861–3(a)(6))
made after November 13, 1997.
Some taxpayers expressed concern that
the total U.S. gross-basis tax paid with
respect to a series of Securities Lending
Transactions (that is, a chain of related Se-
curities Lending Transactions with respect
to identical securities) could be excessive
under the final regulations. For example, a
June 14, 20107572010–24 I.R.B.

series of Securities Lending Transactions
could give rise to multiple substitute pay-
ments, each of which would be treated as
equivalent to a dividend under the final
regulations. If a dividend distribution on
the transferred security were U.S.-source
income, each substitute dividend payment
in the series would be treated as U.S.-
source income and potentially subject to
gross-basis taxation under §§ 871 and 881
and withholding of tax under §§ 1441 and
1442. Thus, a series of Securities Lend-
ing Transactions could result in “cascad-
ing” taxation that might, in the aggregate,
exceed 30 percent of the amount of the div-
idend distribution on the underlying trans-
ferred security.
To allow relief for taxpayers unable to
structure transactions to avoid excessive or
cascading taxation, the Treasury Depart-
ment and the Service issued Notice 97–66,
1997–2 C.B. 328 (1997), on November
12, 1997. Notice 97–66 provides guid-
ance that generallylimits the aggregate
U.S. gross-basis tax on a series of Securi-
ties Lending Transactions to no more than
30 percent of the amount equivalent to
the dividend distribution on the underly-
ing transferred security. To implement this
limitation, Notice 97–66 provides a for-
mulary method to calculate the amount of
U.S. tax to be imposed on a foreign-to-for-
eign substitute dividend payment. Under
this method,
the amount of U.S. withholding tax to
be imposed under §§ 1.871–7(b)(2) and
1.881–2(b)(2) with respect to a foreign-
to-foreign payment will be the amount
of the underlying dividend multiplied
by a rate equal to the excess of the
rate of U.S. withholding tax that would
be applicable to U.S. source dividends
paid by a U.S. person directly to the re-
cipient of the substitute payment over
the rate of U.S. withholding tax that
would be applicable to U.S. source div-
idends paid by a U.S. person directly to
the payor of the substitute payment.
The following example demonstrates
the operation of this rule. If a borrower
that is eligible under an income tax treaty
for a reduced rate of tax equal to 15 percent
on U.S.-source dividends makes a substi-
tute dividend payment to a lender that is
resident in a non-treaty jurisdiction sub-
ject to a tax of 30 percent on U.S.-source
dividends, the amount of tax imposed
on the substitute dividend payment un-
der §§ 1.871–7(b)(2) and 1.881–2(b)(2)
generallywouldbelimitedto15percent
(i.e., the payee’s tax rate of 30 percent less
the payor’s rate of 15 percent). Notice
97–66 also provides in an example that
if the securities lender’s tax liability has
already been reflectedin prior withhold-
ing within a series of Securities Lending
Transactions, the borrower, as a with-
holding agent, is permitted to reduce the
lender’s liability by such amount.
It has been widely reported that some
taxpayers have relied on Notice 97–66 to
avoid U.S. gross-basis taxation of foreign
lenders of U.S. dividend-paying stocks in
transactions undertaken primarily to en-
hance the after-tax yield of U.S. dividend-
paying stocks held by foreign persons.
1
On March 18, 2010, the Hiring Incen-
tives to Restore Employment Act, Pub.
L. No. 111–147, 124 Stat. 71 (2010)
(“HIRE Act”) was enacted. Section 541
of the HIRE Act added new § 871(l) to
the Code, which provides that certain div-
idend equivalent payments are treated as
U.S.-source dividends, effective for pay-
ments made on or after the date that is
180 days after the date of enactment. The
term “dividend equivalent” is defined for
this purpose to include “any substitute div-
idend made pursuant to a securities lend-
ing or sale-repurchase transaction that (di-
rectly or indirectly) is contingent upon, or
determined by reference to, the payment of
a dividend from sources within the United
States.” § 871(l)(2)(A). Section 871(l)(6)
authorizes the Secretary to reduce tax with
respect to a chain of dividend equivalents
“but only to the extent that the taxpayer can
establish that such tax has been paid with
respect to another dividend equivalent in
such chain, or is not otherwise due, or as
the Secretary determines is appropriate to
address the role of financial intermediaries
in such chain.”
B. Modification and Withdrawal of Notice
97–66
Notice 97–66 is withdrawn effec-
tive for payments made on or after
September 14, 2010 (the effective date
of § 871(l)). Prior to September 14,
2010, taxpayers may continue to rely on
Notice 97–66, except that Notice 97–66
is modified as follows: a withholding
agent or foreign lender may not rely
on Notice 97–66 when the withholding
agent or foreign lender knows or has
reason to know that a Securities Lending
Transaction, or series of such transactions,
has a principal purpose of reducing or
eliminating the amount of gross-basis tax
that would have been due in the absence
of such transaction or transactions. For
example, a person may not rely on Notice
97–66 to reduce or eliminate the amount
of U.S. tax on the substitute dividend
it is obligated to pay the foreign lender
when it structures or participates in an
arrangement whereby it: (1) borrows
shares of a domestic corporation from a
foreign person in a transaction described
in § 1058 after a dividend declaration; (2)
sells that stock to a related U.S. person
before the ex-dividend date; and (3) enters
into a total return swapagreement with that
related person in order to hedge its risk.
No inference is intended as to whether any
transaction entered into prior to May 20,
2010, is eligible for the relief described
in Notice 97–66, and the Service may
challenge transactions under existing law,
including by applying existing judicial
doctrines, as appropriate.
II. PROPOSED WITHHOLDING AND
REPORTING FRAMEWORK
The Treasury Department and the Ser-
vice intend to issue regulations exercising
the authority described in § 871(l)(6).
These regulations will coordinate the
tax imposed on substitute payments un-
der § 871(l) and §§ 1.871–7(b)(2) and
1.881–2(b)(2) with the withholding and re-
porting requirements under §§ 1441, 1442
and 1461 and the regulations thereunder to
ensure that the appropriate amount of tax
is paid and reported. Generally, the regu-
lations, as described below, are expected
to replace the formulary approach pre-
viously adopted by Notice 97–66 with a
documentation-based system under which
withholding agents will be able to reduce
withholding to the extent that withholding
is shown to have been made on another
substitute payment or dividend with re-
spect to identical securities. Additionally,
1
SeeSTAFF OF S. PERMANENT SUBCOMM. ON INVESTIGATIONS, 110TH CONG., REPORT ON DIVIDEND TAX ABUSE: HOW OFFSHORE ENTITIES DODGE TAXES ON
U.S. STOCK DIVIDENDS (COMM. PRINT 2008).
2010–24 I.R.B.758June 14, 2010

to reduce instances of potential exces-
sive or cascading taxation and to properly
account for the role of financial intermedi-
aries in Securities Lending Transactions,
this proposed system is expected to exempt
certain financial institutions from being
subject to withholding at source on receipt
of substitute dividend payments provided
that they assume responsibility and lia-
bility for properly withholding, reporting,
depositing, and paying U.S. tax with re-
spect to substitute dividend payments.
This system will also permit the Service
to administer compliance by market par-
ticipants more effectively by disqualifying
noncompliant taxpayers from eligibility
for the relief provided in this notice in
appropriate cases.
A. Substitute Dividend Payments to a
“Qualified Securities Lender”
Treatment of Withholding Agent.The
regulations are expected to provide that
a withholding agent making a substitute
dividend payment to a financial institution
that meets the regulatory definition of a
Qualified Securities Lender will not be re-
quired to withhold U.S. tax with respect
to such payment. Part 2.A.ii describes
the certifications required to be made by a
Qualified SecuritiesLender to a withhold-
ing agent in order to relieve a withholding
agent of its obligation to withhold on a sub-
stitute dividend.
Treatment of Qualified Securities
Lender.The regulations will coordinate
the obligation of a Qualified Securities
Lender to withhold on substitute dividend
payments that it makes, pay and deposit
tax on substitute dividends it receives, and
report on substitute dividends it makes
(onbehalfofitselforanyotherperson).
The regulations are expected to define
these obligations in terms of two distinct
categories of substitute dividends that
Qualified Securities Lenders pay or re-
ceive.
In circumstances where a Qualified
Securities Lender receives a substitute
dividend payment (the “first substitute
dividend payment”) and is obligated to
make an offsetting substitute dividend
payment with respect to identical secu-
rities (the “second substitute dividend
payment”), the regulations are expected to
provide that a Qualified Securities Lender:
(A) will not be liable for U.S. gross-basis
tax on the first substitute dividend pay-
ment under § 871(a) or 881(a); and (B)
must properly withhold under §§ 1441 and
1442 and report with respect to the second
substitute dividend payment.
In circumstances where a Qualified Se-
curities Lender receives a substitute divi-
dend payment for which it has no obliga-
tion to make an offsetting substitute divi-
dend payment with respect to identical se-
curities, the Qualified Securities Lender
remains liable for tax under § 871(a) or
881(a) by virtue of the receipt of such sub-
stitute dividend payment.
The Service intends to monitor Qual-
ified Securities Lenders for compliance
with all applicable rules described in this
notice and may revoke an institution’s
status as a Qualified Securities Lender
for noncompliance. Such noncompliance
may include, for example, circumstances
in which an institution structures or par-
ticipates in arrangements designed to
facilitate the avoidance of U.S. gross-ba-
sis taxation by foreign persons that hold
or held U.S. equities, as well as circum-
stances in which an institution does not
withhold and deposit tax at the proper rate
when it acts as a custodian on behalf of
both a borrower and lender in the same
Securities Lending Transaction.
i. Definition of Qualified Securities
Lender
For purposes of the relief described
above, the regulations are expected to
provide that a foreign financial institution
is a Qualified Securities Lender only if it
satisfies all of the following conditions:
•it is a bank, custodian, broker-dealer,
or clearing organization that is sub-
ject to regulatory supervision by a gov-
ernmental authority in the jurisdiction
in which it was created or organized,
and is regularly engaged in a trade or
business that includes the borrowing
of securities of domestic corporations
(as defined in § 7701(a)(4)) from, and
lending of securities of domestic cor-
porations to, its unrelated customers;
•it is subject to audit by the Service un-
der § 7602 or, in the case of a Qual-
ified Intermediary (QI) that appropri-
ately amends its QI agreement with the
Service, by an external auditor. Further
guidance will specify the requirements
of such an amendment to the QI agree-
ment. In general, however, the amend-
ment will require the QI to report, with-
hold, deposit, and pay U.S. tax as de-
scribed in Parts II.A and D of this no-
tice; and
•it files an annual statement on a form
prescribed by the Service certifying
that it satisfies the conditions nec-
essary to be a Qualified Securities
Lender.
ii.Certifications by a Qualified Securities
Lender
As noted above, the regulations are ex-
pected to relieve a withholding agent of its
liability to withhold U.S. tax with respect
to any substitute dividend paid to a Qual-
ified Securities Lender only if the with-
holding agent receives a written certifica-
tion from the Qualified Securities Lender,
either on a form prescribed by the Ser-
vice or as otherwise provided by regu-
lation. This certification must include a
statement that the recipient of a substitute
dividend is a Qualified Securities Lender
and that, with respect to any substitute
dividend it receives from the withholding
agent, it will withhold and remit or pay
the proper amount of U.S. gross-basis tax
with respect to substitute dividend pay-
ments that it receives or makes.
B. Credit Forward of Prior Withholding
The Treasury Department and the Ser-
vice believe that the vast majority of in-
stances of excessive orcascading taxation
will be relieved through the Qualified Se-
curities Lender rules described above. To
address remaining instances of excessive
or cascading taxation not addressed by the
Qualified Securities Lender rules, the reg-
ulations are expected to provide a credit
forward system, as described below.
i.Availability of credit for prior
withholding
The regulations are expected to provide
that withholding agents may limit the ag-
gregate U.S. gross-basis tax within a se-
ries of Securities Lending Transactions to
the amount of U.S. gross-basis tax, if any,
applicable to the foreign taxpayer (other
than in the case of a Qualified Securities
Lender that is obligated to make an offset-
ting substitute dividend payment) bearing
June 14, 20107592010–24 I.R.B.

the highest rate of U.S. gross-basis tax on
either a substitute or actual dividend with
respect to the underlying security trans-
ferred in the series. As a result, the aggre-
gate taxes paid in such transactions should
not exceed the 30 percent statutory rate ap-
plicable to U.S.-source dividends paid to
foreign persons. The regulations are ex-
pected to provide that withholding agents
may relieve excessive tax on substitute
dividends by reducing withholding on a
substitute dividend payment that the with-
holding agent is obligated to make by an
amount not to exceed the amount that has
been previously withheld within the same
series of Securities Lending Transactions,
but only to the extent that there is suffi-
cient evidence that tax was actually with-
held on a prior dividend and/or substitute
dividend paid to the withholding agent or
a prior withholding agent within the same
such series. No payee in a series of Se-
curities Lending Transactions may claim a
refund (or claim a credit against any other
liability) solely because a prior payee in
the same series was subjected to a higher
rate of gross-basis U.S. tax. Moreover, no
taxpayer or withholding agent in a series
of Securities Lending Transactions may
credit any tax withheld with respect to a
substitute dividend payment in such series
against any tax imposed with respect to a
substitute dividend payment in a different
series of Securities Lending Transactions.
ii. Substantiation of Prior Withholding
The regulations are expected to provide
that sufficient evidence of prior withhold-
ing will be deemed to exist where there
is written documentation that identifies
amounts previously withheld by another
withholding agent with respect to actual
dividend distributions or substitute div-
idends in the same series of Securities
Lending Transactions or as otherwise pre-
scribed by the Service in future guidance.
For example, the regulations are expected
to provide that a withholding agent may
presume that tax has been withheld by
a prior withholding agent in a series of
Securities Lending Transactions if that
agent: (1) receives a substitute dividend
net of U.S. withholding taxes; (2) receives
a written statement from the immediately
prior withholding agent setting out the
amount of such taxes; (3) identifies the
person who withheld such tax and the re-
cipient of the payment against which such
tax was withheld; and (4) does not know
or have reason to know that the written
statement is unreliable. For these determi-
nations, a withholding agent may not rely
upon evidence of a sale of the underlying
security as a basis to determine that tax
has been paid or withheld.
C. Anti-Abuse
Finally, the regulations are expected
to provide that a withholding agent or a
Qualified Securities Lender may not rely
on any of the foregoing rules (including
any certifications provided by a Qualified
Securities Lender) when the withhold-
ing agent or Qualified Securities Lender
knows or has reason to know that a Se-
curities Lending Transaction, or series of
such transactions, has a principal purpose
of reducing or eliminating the amount of
U.S. gross-basis tax that would have been
due in the absence of such transaction or
transactions. In such a case, a withhold-
ing agent or Qualified Securities Lender
must withhold, and the recipient of such
payment is subject to U.S. gross-basis tax,
at 30 percent (subject to reduction under
an applicable income tax treaty) on each
substitute dividend payment with respect
to such transaction.
D. Other Considerations—Information
Reporting of Substitute Payments
In cases in which a withholding agent
(including a Qualified Securities Lender)
makes a substitute dividend payment and,
in reliance on the regulations, (1) reduces
the withholding or (2) is exempted from
withholding, the withholding agent should
include on Form 1042 and Form 1042–S:
(a) the gross amount of the substitute div-
idend to which the recipient would have
otherwise been entitled before considera-
tion of any withholding tax obligations;
and (b) the amount of tax withheld by the
withholding agent and shown to have been
withheld by other withholding agents in
the series of Securities Lending Transac-
tions based on the documentation and in-
formation as described above. In addition,
a withholding agent (including a Qualified
Securities Lender) that makes a substitute
dividend payment to a United States per-
son as defined in § 7701(a)(30) will be re-
quired to report and withhold to the extent
required under Chapter 61 and § 3406.
III. TRANSITION RULE
A.Summary and General Transition Rule
The Treasury Department and the Ser-
vice anticipate that the regulatory frame-
work outlined in Part II of this notice will
be effective for transactions entered into on
or after January 1, 2012. Until such regu-
lations are issued, and after September 14,
2010 (the “transition period”), § 871(l) will
apply with the potential for U.S. tax due
on a series of Securities Lending Transac-
tions that exceeds 30 percent in the aggre-
gate. In order to avoid excessive or cas-
cading tax in these situations, withholding
agents may rely on thetransition rules de-
scribedinthisPart.
Generally, the transition rules described
in this Part III provide that the maximum
aggregate U.S. gross-basis tax due, if any,
with respect to a series of Securities Lend-
ing Transactions and any related dividend
payment is the amount determined by the
taxratepaidbytheforeigntaxpayer(other
than in the case of a Qualified Securities
Lender that is obligated to make an off-
setting substitute dividend payment) bear-
ing the highest rate of U.S. gross-basis
tax in the series. Accordingly, the aggre-
gate U.S. gross-basis taxes paid in such
transactions generally should not exceed
the 30 percent statutory rate applicable to
U.S.-source dividends paid to foreign per-
sons.
B.Receipt of Net Payments
A withholding agent that is obligated to
make a substitute dividend payment pur-
suant to a SecuritiesLending Transaction
may presume that U.S. tax has been paid
in an amount equal to the amount implied
by the net payment if all of the following
are satisfied:
•The withholding agent receives a sub-
stitute dividend or dividend payment
with respect to identical securities that
reflects a reduction for withholding of
U.S. gross-basis tax;
•The withholding agent does not know
or have reason to know that tax was not
withheld and deposited or paid. For
this purpose, a withholding agent has a
reason to know that tax was not with-
held if, for example, the amount of
any lending fee or similar fee is in-
creased directly or indirectly, in whole
2010–24 I.R.B.760June 14, 2010

or in part, by the difference between
the gross amount of the substitute divi-
dend and the net amount received; and
•The withholding agent is a person sub-
ject to audit under § 7602, or in the case
of a QI, by an external auditor.
No payee in a series of Securities Lend-
ingTransactionsmayclaimarefund(or
claim a credit against any other liability)
solely because a prior payee in the same se-
ries was subjected to a higher rate of gross-
basis U.S. tax. Moreover, no taxpayer or
withholding agent in a series of Securities
Lending Transactions may credit any tax
withheld with respect to a substitute div-
idend payment in such series against any
tax imposed with respect to a substitute
dividend payment in a different series of
Securities Lending Transactions.
C.Application of Qualified Securities
Lender Rules
During the transition period, with-
holding agents may adopt a system that
reasonably implements the principles of
the Qualified Securities Lender system
described in Part II of this notice. In
particular, during the transition period, a
withholding agent is not required to with-
hold on a substitute dividend payment
made to a Qualified Securities Lender if
the withholding agent receives, at least
annually, a statement from its counter-
party that substantially complies with the
certification requirement described in Part
II.A.ii of this notice.A financial institu-
tion may make such acertification only
if it reasonably determines that it meets
the requirements to qualify as a Quali-
fied Securities Lender described in Part
II.A.i of this notice (without regard to
the requirement that a Qualified Securi-
ties Lender file an annual statement with
the Service). It is anticipated that future
guidance will provide that all Qualified
Securities Lenders taking advantage of
the transition relief described in this Part
may be required to identify themselves to
the Service (in a manner to be specified)
before the end of calendar year 2010. A
QI that provides such a certification will
be deemed to have agreed to amend its QI
agreement for these purposes as necessary
to report, withhold, deposit, and pay U.S.
tax as described in Part II.A of this notice.
D.Anti-Abuse
Withholding agents may not rely on the
transition relief described in Part III of this
notice with respect to a Securities Lending
Transaction or series of such transactions
that are entered into with a principal pur-
pose of reducing or eliminating the aggre-
gate amount of U.S. tax that would have
been due in the absence of such transac-
tion or series of transactions. A financial
institutionthatisdeterminedtohavestruc-
tured or engaged in one or more transac-
tions described in the preceding sentence
on or after May 20, 2010, will not qualify
as a Qualified Securities Lender for a pe-
riod of 5 years from the date of such deter-
mination.
E.Other Considerations
A Qualified Securities Lender may use
any reasonable method, consistently ap-
plied, to determine which securities within
a pool of fungible securities available to
borrow have actually been borrowed and
lent.
Withholding agents will be required to
perform information reporting as specified
in Part II.D above.
F.Extensions
The Treasury Department and the Ser-
vice believe that administrative relief is ap-
propriate to ensure that withholding agents
have sufficient time to make the opera-
tional changes necessary to comply with
§ 541 of the HIRE Act and the provisions
of this notice. Therefore, to the extent
that § 871(l) applies to any substitute div-
idend payments in respect of any transac-
tion described in § 871(l)(2)(A), withhold-
ing agents are hereby granted an automatic
six-month extension of time to file infor-
mation returns pursuant to § 1.1461–1(c)
with respect to the calendar year 2010.
However, the time for filing information
returns pursuant to § 1.1461–1(c) shall not
be extended beyond the date on which the
withholding agent provides a copy of the
return to the recipient. In addition, with-
holding agents are hereby granted an au-
tomatic extension for making deposits of
withheld tax from such substitute dividend
payments until January 31, 2011, for the
calendar year 2010. The Treasury Depart-
ment and the Service believe that the ad-
ministrative relief provided by this notice
is in the best interests of sound tax admin-
istration.
IV. EFFECTIVE DATES
The modification of Notice 97–66 de-
scribed in Part I is effective for amounts
paid on or after May 20, 2010 and be-
fore September 14, 2010. The transition
rules described in Part III are effective for
amounts paid on or after September 14,
2010.
V. PAPERWORK REDUCTION ACT
The collections of information con-
tained in this notice have been reviewed
and approved by the Office of Manage-
ment and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C.
3507) under control number 1545–1566.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
control number.
The collection of information contained
in this notice is in Part III. The informa-
tion is required to prevent excessive tax-
ation under §871(l) during the transition
period. The information will be used for
the same purpose described in the preced-
ing sentence. The collections of informa-
tion are required to obtain a benefit. The
likely respondents are businesses or other
for-profit institutions.
The estimated total annual reporting
and/or recordkeeping burden is 1,000
hours.
The estimated annual burden per re-
spondent/recordkeeper varies from 1
minute to 15 minutes, depending on indi-
vidual circumstances, with an estimated
average of 10 minutes. The estimated
number of respondents and/or recordkeep-
ersis6,000.
The estimated frequency of responses
(used for reporting requirements only) is
once.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
June 14, 20107612010–24 I.R.B.

VI. EFFECT ON OTHER DOCUMENTS
Notice 97–66 is modified as provided in
Part I.
VII. REQUEST FOR COMMENTS
The Treasury Department and the Ser-
vice invite comments on the guidance de-
scribed in this notice. In particular, com-
ments are requested on the following is-
sues.
1. The definition of a Qualified Securi-
ties Lender.
2. The treatment of substitute dividends
paid to a Qualified Securities Lender
where that entity holds the relevant
position in a proprietary account.
3. Whether additional rules are required
to address abusive Securities Lending
Transactions that avoid U.S. tax in ad-
dition to the anti-abuse regulation de-
scribed above.
4. The treatment of substitute dividends
paid with respect to securities trans-
ferred from a commingled account
containing securities held by a Qual-
ified Securities Lender in its propri-
etary capacity and other securities
held in connection with transactions
for customers.
5. Whether a Qualified Intermediary
with Qualified Securities Lender sta-
tus (a “Lender QI”) should be re-
quired to provide the withholding
rate pool information of its customers
to another Qualified Intermediary (a
“Borrower QI”) that has borrowed
securities in a Securities Lending
Transaction. Whether a Borrower QI
should be required to withhold and
carry out information reporting on a
substitute dividend payment made to
a Lender QI based upon the withhold-
inginformationprovidedbyaLender
QI with respect to its customers.
6. The definition of a series of Securi-
ties Lending Transactions, and how
related securities loans in a series
should be identified, including ap-
propriate methods pursuant to which
a Qualified Securities Lender may
determine which securities within a
pool of fungible securities are attrib-
utable to particular Securities Lending
Transactions.
The principal authors of this notice are
Peter Merkel and John Sweeney of the Of-
fice of Associate Chief Counsel (Interna-
tional). For further information regarding
this notice, contact Peter Merkel or John
Sweeney at (202) 622–3870 (not a toll-free
call).
26 CFR 601.601: Rules and regulations.
(Also Part I, §§ 25, 103, 143; 1.25–4T, 1.103–1,
6a.103A–2.)
Rev. Proc. 2010–23
SECTION 1. PURPOSE
This revenue procedure provides guid-
ance with respect to the United States and
area median gross income figures that are
to be used by issuers of qualified mortgage
bonds, as defined in § 143(a) of the Inter-
nal Revenue Code, and issuers of mortgage
credit certificates, as defined in § 25(c), in
computing the housing cost/income ratio
described in § 143(f)(5).
SECTION 2. BACKGROUND
.01 Section 103(a) provides that, ex-
cept as provided in § 103(b), gross income
does not include interest on any state or
local bond. Section 103(b)(1) provides
that § 103(a) shall not apply to any pri-
vate activity bond that is not a qualified
bond (within the meaning of § 141). Sec-
tion 141(e) provides that the term “qual-
ified bond” includes any private activity
bond that (1) is a qualified mortgage bond,
(2) meets the applicable volume cap re-
quirements under § 146, and (3) meets the
applicable requirements under § 147.
.02 Section 143(a)(1) provides that the
term “qualified mortgage bond” means a
bond that is issued as part of a “qualified
mortgage issue”. Section 143(a)(2)(A)
provides that the term “qualified mort-
gage issue” means an issue of one or more
bonds by a state or political subdivision
thereof, but only if (i) all proceeds of the
issue (exclusive of issuance costs and a
reasonably required reserve) are to be used
to finance owner-occupied residences; (ii)
the issue meets the requirements of sub-
sections (c), (d), (e), (f), (g), (h), (i), and
(m)(7) of § 143; (iii) the issue does not
meet the private business tests of para-
graphs(1)and(2)of§141(b);and(iv)
with respect to amounts received more
than 10 years after the date of issuance,
repayments of $250,000 or more of prin-
cipal on financing provided by the issue
are used not later than the close of the first
semi-annual period beginning after the
date the prepayment (or complete repay-
ment) is received to redeem bonds that are
part of the issue.
.03 Section 143(f) imposes eligibility
requirements concerning the maximum
income of mortgagors for whom financing
may be provided by qualified mortgage
bonds. Section 25(c)(2)(A)(iii)(IV) pro-
vides that recipients of mortgage credit
certificates must meet the income re-
quirements of § 143(f). Generally, under
§§ 143(f)(1) and 25(c)(2)(A)(iii)(IV),
these income requirements are met only
if all owner-financing under a qualified
mortgage bond and all certified indebt-
edness amounts under a mortgage credit
certificate program are provided to mort-
gagors whose family income is 115 percent
or less of the applicable median family
income. Under § 143(f)(6), the income
limitation is reduced to 100 percent of the
applicable median family income if there
are fewer than three individuals in the
family of the mortgagor.
.04 Section 143(f)(4) provides that the
term “applicable median family income”
means the greater of (A) the area median
grossincomefortheareainwhichtheres-
idence is located, or (B) the statewide me-
dian gross income for the state in which the
residence is located.
.05 Section 143(f)(5) provides for an
upward adjustment of the income limita-
tions in certain high housing cost areas.
Under § 143(f)(5)(C), a high housing
cost area is a statistical area for which
the housing cost/income ratio is greater
than 1.2. The housing cost/income ratio
is determined under § 143(f)(5)(D) by
dividing (a) the applicable housing price
ratio by (b) the ratio that the area median
gross income bears to the median gross
income for the United States. The applica-
ble housing price ratio is the new housing
price ratio (new housing average purchase
price for the area divided by the new hous-
ing average purchase price for the United
States) or the existinghousing price ratio
(existing housing average area purchase
price divided by the existing housing aver-
age purchase price for the United States),
whichever results in the housing cost/in-
2010–24 I.R.B.762June 14, 2010

come ratio being closer to 1. This income
adjustment applies only to bonds issued,
and nonissued bond amounts elected, after
December 31, 1988.See§ 4005(h) of the
Technical and Miscellaneous Revenue Act
of 1988, 1988–3 C.B. 1, 311 (1988).
.06 The Department of Housing and
Urban Development (HUD) has com-
puted the median gross income for the
United States, the states, and statisti-
cal areas within the states. The income
information was released to the HUD
regional offices on May 14, 2010, and
maybeobtainedbycallingtheHUD
reference service at 1–800–245–2691.
The income information is also avail-
able at HUD’s World Wide Web site,
http:huduser.org/datasets/il.html,which
provides a menu from which you may
select the year and type of data of interest.
The Internal Revenue Service annually
publishes the median gross income for the
United States.
.07 The most recent nationwide average
purchase prices and average area purchase
price safe harbor limitations were pub-
lished on March 16, 2009, in Rev. Proc.
2009–18, 2009–11 I.R.B. 686.
SECTION 3. APPLICATION
.01 When computing the income re-
quirements of § 143(f), issuers of quali-
fied mortgage bonds and mortgage credit
certificates must use either (1) the me-
dian gross income for the United States,
the states, and statistical areas within the
states, as released to the HUD regional of-
fices on March 19, 2009, or (2) the me-
dian gross income for the United States,
the states, and statistical areas within the
states, as released to the HUD regional of-
fices on May 14, 2010.
.02 If an issuer uses the median gross
income for the United States, the states,
and statistical areas within the states, as
released to the HUD regional offices on
March 19, 2009, to compute the hous-
ing cost/income ratio under § 143(f)(5),
the issuer must use the median gross in-
come for the United States, the states,
and statistical areas within the states, as
released to the HUD regional offices on
March 19, 2009, for all purposes under
§ 143(f). Likewise, if an issuer uses
the median gross income for the United
States, the states, and statistical areas
within the states, as released to the HUD
regional offices on May 14, 2010, to
compute the housing cost/income ratio
under § 143(f)(5), the issuer must use the
median gross income for the United States,
the states, and statistical areas within the
states, as released to the HUD regional
offices on May 14, 2010, for all purposes
under § 143(f).
SECTION 4. EFFECT ON OTHER
REVENUE PROCEDURES
.01 Rev. Proc. 2009–27, 2009–19
I.R.B. 938, is obsolete except as provided
in §§ 3.01, 3.02, or 5.01 of this revenue
procedure.
.02 This revenue procedure does not af-
fect the effective date provisions of Rev.
Rul. 86–124, 1986–2 C.B. 27. Those ef-
fective date provisions will remain opera-
tive at least until the Service publishes a
new revenue ruling that conforms the ap-
proach to effective dates set forth in Rev.
Rul. 86–124 to the general approach taken
in this revenue procedure.
SECTION 5. EFFECTIVE DATES
.01 Issuers must use the United States
and area median gross income figures
specified in § 3.01 of this revenue proce-
dure for commitments to provide financing
that are made, or (if the purchase precedes
the financing commitment) for residences
that are purchased, in the period that be-
gins on May 14, 2010, and ends on the
date when these United States and area
median gross income figures are rendered
obsolete by a new revenue procedure.
DRAFTING INFORMATION
The principal authors of this rev-
enue procedure are David White and
Timothy Jones of the Office of Associate
Chief Counsel (Financial Institutions
& Products). For further information
regarding this revenue procedure, contact
Mr. White or Mr. Jones at (202) 622–3980
(not a toll-free call).
June 14, 20107632010–24 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2010–24 I.R.B.iJune 14, 2010

Numerical Finding List
1
Bulletins 2010–1 through 2010–24
Announcements:
2010-1, 2010-4 I.R.B.333
2010-2, 2010-2 I.R.B.271
2010-3, 2010-4 I.R.B.333
2010-4, 2010-5 I.R.B.384
2010-5, 2010-6 I.R.B.402
2010-6, 2010-6 I.R.B.402
2010-7, 2010-6 I.R.B.403
2010-8, 2010-7 I.R.B.408
2010-9, 2010-7 I.R.B.408
2010-10, 2010-7 I.R.B.410
2010-11, 2010-10 I.R.B.438
2010-12, 2010-7 I.R.B.410
2010-13, 2010-8 I.R.B.426
2010-14, 2010-11 I.R.B.449
2010-15, 2010-10 I.R.B.438
2010-16, 2010-11 I.R.B.450
2010-17, 2010-13 I.R.B.515
2010-18, 2010-12 I.R.B.460
2010-19, 2010-14 I.R.B.529
2010-20, 2010-15 I.R.B.551
2010-21, 2010-15 I.R.B.551
2010-22, 2010-16 I.R.B.602
2010-23, 2010-16 I.R.B.602
2010-24, 2010-15 I.R.B.587
2010-25, 2010-15 I.R.B.588
2010-26, 2010-16 I.R.B.604
2010-27, 2010-18 I.R.B.657
2010-28, 2010-17 I.R.B.616
2010-29, 2010-17 I.R.B.616
2010-30, 2010-19 I.R.B.668
2010-31, 2010-19 I.R.B.681
2010-32, 2010-19 I.R.B.681
2010-33, 2010-18 I.R.B.658
2010-34, 2010-20 I.R.B.685
2010-35, 2010-20 I.R.B.685
2010-36, 2010-21 I.R.B.696
2010-37, 2010-20 I.R.B.685
2010-38, 2010-21 I.R.B.696
2010-39, 2010-22 I.R.B.724
2010-40, 2010-22 I.R.B.725
Notices:
2010-1, 2010-2 I.R.B.251
2010-2, 2010-2 I.R.B.251
2010-3, 2010-2 I.R.B.253
2010-4, 2010-2 I.R.B.253
2010-5, 2010-2 I.R.B.256
2010-6, 2010-3 I.R.B.275
2010-7, 2010-3 I.R.B.296
2010-8, 2010-3 I.R.B.297
2010-9, 2010-3 I.R.B.298
Notices— Continued:
2010-10, 2010-3 I.R.B.299
2010-11, 2010-4 I.R.B.326
2010-12, 2010-4 I.R.B.326
2010-13, 2010-4 I.R.B.327
2010-14, 2010-5 I.R.B.344
2010-15, 2010-6 I.R.B.390
2010-16, 2010-6 I.R.B.396
2010-17, 2010-14 I.R.B.519
2010-18, 2010-14 I.R.B.525
2010-19, 2010-7 I.R.B.404
2010-20, 2010-8 I.R.B.422
2010-21, 2010-12 I.R.B.451
2010-22, 2010-10 I.R.B.435
2010-23, 2010-11 I.R.B.441
2010-24, 2010-12 I.R.B.452
2010-25, 2010-14 I.R.B.527
2010-26, 2010-14 I.R.B.527
2010-27, 2010-15 I.R.B.531
2010-28, 2010-15 I.R.B.541
2010-29, 2010-15 I.R.B.547
2010-30, 2010-18 I.R.B.650
2010-31, 2010-16 I.R.B.594
2010-32, 2010-16 I.R.B.594
2010-33, 2010-17 I.R.B.609
2010-34, 2010-17 I.R.B.612
2010-35, 2010-19 I.R.B.660
2010-36, 2010-17 I.R.B.612
2010-37, 2010-18 I.R.B.654
2010-38, 2010-20 I.R.B.682
2010-39, 2010-24 I.R.B.756
2010-40, 2010-21 I.R.B.693
2010-41, 2010-22 I.R.B.715
2010-42, 2010-23 I.R.B.733
2010-43, 2010-22 I.R.B.716
2010-44, 2010-22 I.R.B.717
2010-45, 2010-23 I.R.B.734
2010-46, 2010-24 I.R.B.757
Proposed Regulations:
REG-132232-08, 2010-6 I.R.B.401
REG-134235-08, 2010-16 I.R.B.596
REG-137036-08, 2010-6 I.R.B.398
REG-101896-09, 2010-5 I.R.B.347
REG-117501-09, 2010-11 I.R.B.442
REG-131028-09, 2010-4 I.R.B.332
REG-148681-09, 2010-11 I.R.B.443
REG-114494-10, 2010-22 I.R.B.723
Revenue Procedures:
2010-1, 2010-1 I.R.B.1
2010-2, 2010-1 I.R.B.90
2010-3, 2010-1 I.R.B.110
2010-4, 2010-1 I.R.B.122
2010-5, 2010-1 I.R.B.165
2010-6, 2010-1 I.R.B.193
Revenue Procedures— Continued:
2010-7, 2010-1 I.R.B.231
2010-8, 2010-1 I.R.B.234
2010-9, 2010-2 I.R.B.258
2010-10, 2010-3 I.R.B.300
2010-11, 2010-2 I.R.B.269
2010-12, 2010-3 I.R.B.302
2010-13, 2010-4 I.R.B.329
2010-14, 2010-12 I.R.B.456
2010-15, 2010-7 I.R.B.404
2010-16, 2010-19 I.R.B.664
2010-17, 2010-8 I.R.B.425
2010-18, 2010-9 I.R.B.427
2010-19, 2010-13 I.R.B.469
2010-20, 2010-14 I.R.B.528
2010-21, 2010-13 I.R.B.473
2010-22, 2010-23 I.R.B.747
2010-23, 2010-24 I.R.B.762
Revenue Rulings:
2010-1, 2010-2 I.R.B.248
2010-2, 2010-3 I.R.B.272
2010-3, 2010-3 I.R.B.272
2010-4, 2010-4 I.R.B.309
2010-5, 2010-4 I.R.B.312
2010-6, 2010-6 I.R.B.387
2010-7, 2010-8 I.R.B.417
2010-8, 2010-10 I.R.B.432
2010-9, 2010-13 I.R.B.461
2010-10, 2010-13 I.R.B.461
2010-11, 2010-14 I.R.B.516
2010-12, 2010-18 I.R.B.617
2010-13, 2010-21 I.R.B.691
2010-15, 2010-23 I.R.B.730
Tax Conventions:
2010-2, 2010-2 I.R.B.271
2010-26, 2010-16 I.R.B.604
2010-27, 2010-18 I.R.B.657
Treasury Decisions:
9474, 2010-4 I.R.B.322
9475, 2010-4 I.R.B.304
9476, 2010-5 I.R.B.336
9477, 2010-6 I.R.B.385
9478, 2010-4 I.R.B.315
9479, 2010-18 I.R.B.618
9480, 2010-11 I.R.B.439
9481, 2010-17 I.R.B.605
9482, 2010-22 I.R.B.698
9483, 2010-23 I.R.B.726
9484, 2010-24 I.R.B.748
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2009–27 through 2009–52 is in Internal Revenue Bulletin
2009–52, dated December 28, 2009.
June 14, 2010ii2010–24 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2010–1 through 2010–24
Announcements:
2009-23
Corrected by
Ann. 2010-29, 2010-17 I.R.B.616
2009-51
Supplemented and superseded by
Ann. 2010-16, 2010-11 I.R.B.450
2010-4
Corrected by
Ann. 2010-10, 2010-7 I.R.B.410
2010-22
Corrected by
Ann. 2010-34, 2010-20 I.R.B.685
Notices:
97-66
Modified by
Notice 2010-46, 2010-24 I.R.B.757
2005-88
Superseded by
Notice 2010-13, 2010-4 I.R.B.327
2006-87
Superseded by
Notice 2010-27, 2010-15 I.R.B.531
2007-25
Superseded by
Notice 2010-27, 2010-15 I.R.B.531
2007-77
Superseded by
Notice 2010-27, 2010-15 I.R.B.531
2008-14
Modified and superseded by
Notice 2010-33, 2010-17 I.R.B.609
2008-41
Modified by
Notice 2010-7, 2010-3 I.R.B.296
2008-55
Modified by
Notice 2010-3, 2010-2 I.R.B.253
2008-88
Modified by
Notice 2010-7, 2010-3 I.R.B.296
2008-107
Superseded by
Notice 2010-27, 2010-15 I.R.B.531
Notices— Continued:
2008-113
Modified by
Notice 2010-6, 2010-3 I.R.B.275
2008-115
Modified by
Notice 2010-6, 2010-3 I.R.B.275
2008-116
Modified and superseded by
Notice 2010-32, 2010-16 I.R.B.594
2009-11
Amplified by
Notice 2010-9, 2010-3 I.R.B.298
2009-13
Obsoleted by
T.D. 9478, 2010-4 I.R.B.315
REG-131028-09, 2010-4 I.R.B.332
2009-35
Supplemented by
Notice 2010-17, 2010-14 I.R.B.519
2009-38
Amplified and superseded by
Notice 2010-2, 2010-2 I.R.B.251
2009-62
Modified and supplemented by
Notice 2010-23, 2010-11 I.R.B.441
Proposed Regulations:
REG-127270-06
Hearing scheduled by
Ann. 2010-6, 2010-6 I.R.B.402
REG-134235-08
Hearing scheduled by
Ann. 2010-33, 2010-18 I.R.B.658
Revenue Procedures:
80-59
Modified and superseded by
Rev. Proc. 2010-11, 2010-2 I.R.B.269
87-35
Obsoleted by
Rev. Proc. 2010-3, 2010-1 I.R.B.110
2001-18
Superseded by
Rev. Proc. 2010-16, 2010-19 I.R.B.664
2008-14
Updated by
Rev. Proc. 2010-15, 2010-7 I.R.B.404
2009-1
Superseded by
Rev. Proc. 2010-1, 2010-1 I.R.B.1
Revenue Procedures— Continued:
2009-2
Superseded by
Rev. Proc. 2010-2, 2010-1 I.R.B.90
2009-3
Superseded by
Rev. Proc. 2010-3, 2010-1 I.R.B.110
2009-4
Superseded by
Rev. Proc. 2010-4, 2010-1 I.R.B.122
2009-5
Superseded by
Rev. Proc. 2010-5, 2010-1 I.R.B.165
2009-6
Superseded by
Rev. Proc. 2010-6, 2010-1 I.R.B.193
2009-7
Superseded by
Rev. Proc. 2010-7, 2010-1 I.R.B.231
2009-8
Superseded by
Rev. Proc. 2010-8, 2010-1 I.R.B.234
2009-9
Superseded by
Rev. Proc. 2010-9, 2010-2 I.R.B.258
2009-15
Amplified and superseded by
Rev. Proc. 2010-12, 2010-3 I.R.B.302
2009-17
Superseded by
Rev. Proc. 2010-21, 2010-13 I.R.B.473
2009-25
Superseded by
Rev. Proc. 2010-3, 2010-1 I.R.B.110
2009-27
Obsoleted by
Rev. Proc. 2010-23, 2010-24 I.R.B.762
2009-55
Corrected by
Ann. 2010-11, 2010-10 I.R.B.438
2010-1
Corrected by
Ann. 2010-5, 2010-6 I.R.B.402
Revenue Rulings:
67-436
Obsoleted by
REG-101896-09, 2010-5 I.R.B.347
92-19
Supplemented in part by
Rev. Rul. 2010-7, 2010-8 I.R.B.417
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2009–27 through 2009–52 is in Internal Revenue Bulletin 2009–52, dated December 28,
2009.
2010–24 I.R.B.iiiJune 14, 2010

Revenue Rulings— Continued:
2008-52
Supplemented and superseded by
Rev. Rul. 2010-2, 2010-3 I.R.B.272
Treasury Decisions:
9350
Corrected by
Ann. 2010-38, 2010-21 I.R.B.696
Ann. 2010-39, 2010-22 I.R.B.724
9424
Corrected by
Ann. 2010-18, 2010-12 I.R.B.460
9443
Corrected by
Ann. 2010-8, 2010-7 I.R.B.408
9458
Corrected by
Ann. 2010-7, 2010-6 I.R.B.403
June 14, 2010iv2010–24 I.R.B.

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