Internal Revenue Bulletin 2011-45 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 201
1-45
November 7, 2011
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2011–25, page 695.
Federal rates; adjusted federal rates; adjusted federal
long-termrateandthelong-termexemptrate.For pur-
poses of sections 382, 642, 1274, 1288, and other sections
of the Code, tables set forth the rates for November 2011.
REG–125949–10, page 712.
Proposed regulations under section 471 of the Code provide
rules relating to the retail inventory method of accounting. The
regulations clarify the computation of ending inventory values
under the retail inventory method and provide special rules for
sales-based vendor allowances and for margin protection pay-
ments and similar vendor allowances.
Notice 2011–87, page 699.
This notice provides for the suspension of certain requirements
under section 42 of the Code for low-income housing credit
projects in order to provide emergency housing relief needed
as a result of the devastation in the State of New York caused
by either Hurricane Irene during the period of August 26, 2011,
to September 5, 2011, or the remnants of Tropical Storm Lee
during the period of September 7, 2011, to September 11,
2011.
Rev. Proc. 2011–52, page 701.
Cost-of-living adjustments for 2012.This procedure sets
forth the 2012 cost-of-living adjustments to certain items due
to inflation as required under various provisions of the Code
and Service guidance.
EMPLOYEE PLANS
Notice 2011–86, page 698.
This notice provides guidance on section 7528(b)(2) of the
Code. Section 7528(b)(2) provides for exemption from the
requirement to pay a user fee for certain applications to the
Service for determination letters on the qualified status of pen-
sion, profit-sharing, stock bonus, annuity, and employee stock
ownership (ESOP) plans. This notice explains how to deter-
mine, for purposes of eligibility for exemption from the user
fee requirement, if such an application has been filed within a
remedial amendment period with respect to the plan beginning
within the plan’s first five plan years. The guidance in this no-
tice generally pertains to such applications that are filed with
the Service after January 31, 2011. Notice 2002–1 amplified.
EXEMPT ORGANIZATIONS
Announcement 2011–70, page 715.
The IRS has revoked its determination that Carib News Founda-
tion of New York, NY; Caring and Sharing, Inc., of Kansas City,
MO; Center for AIDS Prevention of Beverly Hills, CA; Ezer Ak-
eres Habais, Inc., of Brooklyn, NY; National Carbon Offset Coali-
tion of Butte, MT; Nazarene Ministry of Help of Portland, OR;
Thumpers Therapeutic Center ofMilwaukee, OR; Tradewinds
Foundation, Inc., of New Hartford, NY; Texas Team Sports
of San Antonio, TX; and United Homeless Organization, Inc.,
of Bronx, PA, qualify as organizations described in sections
501(c)(3) and 170(c)(2) of the Code.
(Continued on the next page)
Finding Lists begin on page ii.

ESTATE TAX
Rev. Proc. 2011–52, page 701.
Cost-of-living adjustments for 2012.This procedure sets
forth the 2012 cost-of-living adjustments to certain items due
to inflation as required under various provisions of the Code
and Service guidance.
GIFT TAX
Rev. Proc. 2011–52, page 701.
Cost-of-living adjustments for 2012.This procedure sets
forth the 2012 cost-of-living adjustments to certain items due
to inflation as required under various provisions of the Code
and Service guidance.
EXCISE TAX
Rev. Proc. 2011–52, page 701.
Cost-of-living adjustments for 2012.This procedure sets
forth the 2012 cost-of-living adjustments to certain items due
to inflation as required under various provisions of the Code
and Service guidance.
ADMINISTRATIVE
REG–140280–09, page 709.
Proposed regulations under section 6695 of the Code would
modify existing regulations related to the tax return preparer
penalties. A public hearing is scheduled for November 7,
2011.
Rev. Proc. 2011–52, page 701.
Cost-of-living adjustments for 2012.This procedure sets
forth the 2012 cost-of-living adjustments to certain items due
to inflation as required under various provisions of the Code
and Service guidance.
November 7, 20112011–45 I.R.B.

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.
2011–45 I.R.B.November 7, 2011

November 7, 20112011–45 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 1.—Tax Imposed
The Service provides inflation adjustments to the
tax rate tables for individuals, trusts, and estates for
taxable years beginning in 2012. See Rev. Proc.
2011-52, page 701.
Section 23.—Adoption
Expenses
The Service provides inflation adjustments to the
adoption credit allowed for the adoption of a child for
taxable years beginning in 2012. The Service also
provides inflation adjustments to the value used in
calculating the modified adjusted gross income lim-
itations used to determine the amount of adoption
credit that is allowed in taxable years beginning in
2012. See Rev. Proc. 2011-52, page 701.
S
ection 24.—Child Tax
C
redit
T
he Service provides an inflation adjustment for
t
he value used in determining the amount of credit
t
hat may be refundable for taxable years beginning in
2
012. See Rev. Proc. 2011-52, page 701.
Section 25A.—Hope and
Lifetime Learning Credits
The Service provides an inflation adjustment for
the amount of qualified tuition and related expenses
that are taken into account in determining the amount
of the Hope Scholarship Credit for taxable years be-
ginning in 2012. Also for taxable years beginning in
2012, the Service provides an inflation adjustment for
the amount of a taxpayer’s modified adjusted gross
income that is taken into account in determining the
reduction in the amount of the Hope Scholarship and
Lifetime Learning Credits otherwise available. See
Rev. Proc. 2011-52, page 701.
Section 32.—Earned
Income
The Service provides inflation adjustments to the
limitations on the earned income credit for taxable
years beginning in 2012. See Rev. Proc. 2011-52,
page 701.
Section 42.—Low-Income
Housing Credit
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2011. See Rev. Rul. 2011-25, page
695.
The Service provides inflation adjustments to the
amounts used to calculate the State housing credit
ceiling used in determining the low-income housing
credit, and the per low-income unit qualified basis
amount, for calendar year 2012. See Rev. Proc.
2011-52, page 701.
Section 59.—Other
Definitions and Special
Rules for the Alternative
Minimum Tax
The Service provides an inflation adjustment to the
exemption amount used in computing the alternative
minimum tax for a minor child subject to the “kiddie
tax” for taxable years beginning in 2012. See Rev.
Proc. 2011-52, page 701.
Section 62.—Adjusted
Gross Income Defined
The Service provides inflation adjustments to the
amounts an eligible employer may pay in calendar
year 2012 to certain welders and heavy equipment
mechanics for rig-related expenses that are deemed
substantiated under an accountable plan if paid in ac-
cordance with Rev. Proc. 2002–41, 2002–1 C.B.
1098. See Rev. Proc. 2011-52, page 701.
Section 63.—Taxable
Income Defined
The Service provides inflation adjustments to the
standard deduction amounts (including the limitation
in the case of certain dependents, and the additional
standard deduction for the aged or blind) for taxable
years beginning in 2012. See Rev. Proc. 2011-52,
page 701.
Section 132.—Certain
Fringe Benefits
The Service provides inflation adjustments to the
limitations on the exclusion of income for a qualifed
transportation fringe benefit for taxable years begin-
ning in 2012. See Rev. Proc. 2011-52, page 701.
Section 135.—Income
from United States Savings
Bonds Used to Pay Higher
Education Tuition and Fees
The Service provides inflation adjustments to the
limitations on the exclusion of income from United
States savings bonds for taxpayers who pay qualified
higher education expenses for taxable years begin-
ning in 2012. See Rev. Proc. 2011-52, page 701.
Section 137.—Adoption
Assistance Programs
The Service provides inflation adjustments to the
maximum amount that can be excluded from an em-
ployee’s gross income in connection with a qualified
adoption assistance programfor taxable years begin-
ning in 2012. The Service also provides inflation ad-
justments to the amount used to calculate the modi-
fied adjusted gross income limitations used to deter-
mine the amount that can be excluded from an em-
ployee’s gross income for taxable years beginning in
2012. See Rev. Proc. 2011-52, page 701.
Section 146.—Volume Cap
The Service provides inflation adjustments to the
amount used to determine the State ceiling for the
volume cap of private activity bonds for calendar year
2012. See Rev. Proc. 2011-52, page 701.
Section 147.—Other
Requirements Applicable to
Certain Private Activity
Bonds
The Service provides an inflation adjustment to the
loan limit amount on agricultural bonds for first-time
farmers for calendar year 2012. See Rev. Proc. 2011-
52, page 701.
Section 148.—Arbitrage
26 CFR 1.148–5: Yield and valuation of investments.
The Service provides inflation adjustments for de-
termining in the calendar year 2012 whether a bro-
ker’s commission or similar fee with respect to the
acquisition of a guaranteed investment contract or in-
vestments purchased for a yield restricted defeasance
escrow is reasonable. The Service provides an infla-
tion adjustment to the computation credit determined
under permission to rely on section 1.148–3(d)(4) of
the proposed Income Tax Regulations for bond years
ending in 2012. See Rev. Proc. 2011-52, page 701.
Section 151.—Allowance
of Deductions for Personal
Exemptions
The Service provides an inflation adjustment to the
personal exemption amount for taxable years begin-
ning in 2012. See Rev. Proc. 2011-52, page 701.
2011–45 I.R.B.693November 7, 2011

Section 179.—Election
to Expense Certain
Depreciable Assets
The Service provides an inflation adjustment for
the cost of section 179 property a taxpayer elects
to treat as an expense for taxable years beginning
in 2012. Also for taxable years beginning in 2012,
the Service provides an inflation adjustment for the
amount used in calculating the phase-out of the sec-
tion 179 deduction. See Rev. Proc. 2011-52, page
701.
Section 213.—Medical,
Dental, etc., Expenses
The Service provides inflation adjustments to the
limitations on the amount of eligible long-term care
premiums includible in the term “medical care” for
taxable years beginning in 2012. See Rev. Proc.
2011-52, page 701.
Section 220.—Archer MSAs
The Service provides inflation adjustments to the
amounts used to determine whether a health plan is
a “high deductible health plan” for purposes of de-
termining whether an individual is eligible for a de-
duction for cash paid to a medical savings account
for taxable years beginning in 2012. See Rev. Proc.
2011-52, page 701.
Section 221.—Interest on
Education Loans
The Service provides inflation adjustments to the
income limitations used to determine the allowable
deductions for interest on education loans for taxable
years beginning in 2012. See Rev. Proc. 2011-52,
page 701.
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term rates
are set forth for the month of November 2011. See
Rev. Rul. 2011-25, page 695.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and Certain
Built-In Losses Following
Ownership Change
The adjusted applicable federal long-term rate is
set forth for the month of November 2011. See Rev.
Rul. 2011-25, page 695.
Section 412.—Minimum
Funding Standards
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2011. See Rev. Rul. 2011-25, page
695.
Section 467.—Certain
Payments for the Use of
Property or Services
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2011. See Rev. Rul. 2011-25, page
695.
Section 468.—Special
Rules for Mi
ning and Solid
Waste Reclamation and
Closing Costs
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2011. See Rev. Rul. 2011-25, page
695.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
Federal short-term, mid-term, and long-term rates
are set forth for the month of November 2011. See
Rev. Rul. 2011-25, page 695.
Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2011. See Rev. Rul. 2011-25, page
695.
Section 512.—Unrelated
Business Taxable Income
The Service provides an inflation adjustment to the
maximum amount of annual dues that can be paid
to certain agricultural or horticultural organizations
without any portion being treated as unrelated trade
or business income by reason of any benefits or priv-
ileges available to members for taxable years begin-
ning in 2012. See Rev. Proc. 2011-52, page 701.
Section 513.—Unrelated
Trade or Business
The Service provides an inflation adjustment to
the maximum cost of a “low cost article” for tax-
able years beginning in 2012. Funds raised through
a charity’s distribution of “low cost articles” will not
be treated as unrelated business income to the charity.
See Rev. Proc. 2011-52, page 701.
Section 642.—Special
Rules for Credits and
Deductions
Federal short-term, mid-term, and long-term rates
are set forth for the month of November 2011. See
Rev. Rul. 2011-25, page 695.
Section 807.—Rules for
Certain Reserves
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2011. See Rev. Rul. 2011-25, page
695.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2011. See Rev. Rul. 2011-25, page
695.
Section 877.—Expatriation
to Avoid Tax
The Service provides an inflation adjustment to
the amount used for calendar year 2012 to determine
whether an individual’s loss of United States citizen-
ship had the avoidance of United States tax as one of
its principal purposes. See Rev. Proc. 2011-52, page
701.
Section 877A.—Tax
Responsibilities of
Expatriation
The Service provides an inflation adjustment to the
amount that reduces the amount that would be in-
cludible in the gross income of a covered expatriate
for taxable years beginning in 2012. See Rev. Proc.
2011-52, page 701.
Section 911.—Citizens or
Residents of the United
States Living Abroad
The Service provides an inflation adjustment to
the amount of foreign earned income that may be ex-
cluded from gross income for taxable years beginning
in 2012. See Rev. Proc. 2011-52, page 701.
November 7, 20116942011–45 I.R.B.

Section 1274.—Determi-
nation of Issue Price in the
Case of Certain Debt Instru-
ments Issued for Property
(Also Sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872.)
Federal rates; adjusted federal rates;
adjusted federal long-term rate and the
long-term exempt rate.For purposes of
sections 382, 642, 1274, 1288, and other
sections of the Code, tables set forth the
rates for November 2011.
Rev. Rul. 2011–25
This revenue ruling provides various
prescribed rates for federal income tax
purposes for November 2011 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month
for purposes of section 1274(d) of the
Internal Revenue Code. Table 2 contains
the short-term, mid-term, and long-term
adjusted applicable federal rates (ad-
justed AFR) for the current month for
purposes of section 1288(b). Table 3 sets
forth the adjusted federal long-term rate
and the long-term tax-exempt rate de-
scribed in section 382(f). Table 4 contains
the appropriate percentages for deter-
mining the low-income housing credit
described in section 42(b)(1) for build-
ings placed in service during the current
month. However, under section 42(b)(2),
the applicable percentage for non-feder-
ally subsidized new buildings placed in
service after July 30, 2008, and before
December 31, 2013, shall not be less than
9%. Finally, Table 5 contains the federal
rate for determining the present value of
an annuity, an interest for life or for a term
of years, or a remainder or a reversionary
interest for purposes of section 7520.
REV. RUL. 2011–25 TABLE 1
Applicable Federal Rates (AFR) fo
r November 2011
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR.19%.19%19%.19%
110% AFR.21%.21%.21%.21%
120% AFR.23%.23%.23%.23%
130% AFR
.25%.25%.25%.25%
Mid-term
AFR1.20%1.20%1.20%1.20%
110% AFR1.32%1.32%1.32%1.32%
120% AFR
1.45%
1.44%1.44%1.44%
130% AFR
1.57%1.56%1.56%1.55%
150% AFR
1.81%1.80%1.80%1.79%
175% AFR
2.11%2.10%2.09%2.09%
Long-term
AFR2.67%
2.65%
2.64%2.64%
110% AFR2.94%2.92%2.91%2.90%
120% AFR3.21%3.18%3.17%3.16%
130% AFR3.48%
3.45%
3.44%3.43%
REV. RUL. 2011–25 TABLE 2
Adjusted AFR for November 2011
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted
AFR
.41%.41%.41%41%
Mid-term adjusted AFR1.38%1.38%1.38%1.38%
Long-term adjusted
AFR
3.41%3.38%3.37%3.36%
2011–45 I.R.B.695November 7, 2011

REV. RUL. 2011–25 TABLE 3
Rates Under Section 382 for November 2011
Adjusted federal long-term rate for the current month3.41%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted
federal long-term rates for the current month and the prior two months.)3.77%
REV. RUL. 2011–25 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for November 2011
Note: Under Section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after
July 30, 2008, and before December 31, 2013, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit7.44%
Appropriate percentage for the 30% present value low-income housing credit3.19%
REV. RUL. 2011–25 TABLE 5
Rate Under Sec
tion 7520 for November 2011
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,
or a remainder or reversionary interest1.4%
Section 1288.
—Treatment
of Original I
ssue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2011. See Rev. Rul. 2011-25, page
695.
Section 2010.—Unified
Credit Against Estate Tax
The Service provides an inflation adjustment to the
amount of the unified credit against estate tax for the
estate of a decedent dying in calendar year 2012. See
Rev. Proc. 2011-52, page 701.
Section 203
2A.—Valuation
of Certain F
arm, etc.,
Real Property
The Service provides an inflation adjustment to the
maximum amount by which the value of certain farm
and other qualified real property included in a dece-
dent’s gross estate may be decreased for purposes of
valuing the estate of a decedent dying in calendar year
2012. See Rev. Proc. 2011-52, page 701.
Section 2503.—Taxable
Gifts
The Service provides an inflation adjustment to the
amount of gifts that may be made to a person in a
calendar year without including the amount in taxable
gifts for calendar year 2012. See Rev. Proc. 2011-52,
page 701.
Section 2523.—Gift to
Spouse
The Service provides an inflation adjustment to the
amount of gifts that may be made in a calendar year
to a spouse who is not a citizen of the United States
without including the amount in taxable gifts for cal-
endar year 2012. See Rev. Proc. 2011-52, page 701.
Section 4161.—Imposition
of Tax
The Service provides an inflation adjustment to the
amount of excise tax imposed for calendar year 2012
on the first sale by a manufacturer, producer, or im-
porter of any shaft of a type used in the manufacture
of certain arrows. See Rev. Proc. 2011-52, page 701.
Section 4261.—Imposition
of Tax
The Service provides inflation adjustments for ex-
cise taxes on domestic and international passenger air
transportation for calendar year 2012. See Rev. Proc.
2011-52, page 701.
Section 6033.
—Returns by
Exempt Organizations
The Service provides an inflation adjustment to
the amount of dues certain exempt organizations with
nondeductible lobbying expenditures can charge and
still be excepted from reporting requirements for tax-
able years beginning in 2012. See Rev. Proc. 2011-
52, page 701.
Section 603
9F.—Notice of
Large Gifts
Received From
Foreign Persons
The Service provides an inflation adjustment to the
amount of gifts received in a taxable year from for-
eign persons that triggers a reporting requirement for
a United States person for taxable years beginning in
2012. See Rev. Proc. 2011-52, page 701.
Section 6323.—Validity
and Prior
ity Against
Certain Persons
The Service provides inflation adjustments for cal-
endar year 2012 to (1) the maximum amount of a ca-
sual sale of personal property below which a federal
tax lien will not be valid against a purchaser of the
property, and (2) the maximum amount of a contract
for the repair or improvement of certain residential
November 7, 20116962011–45 I.R.B.

property at or below which a federal tax lien will not
be valid against a mechanic’s lienor. See Rev. Proc.
2011-52, page 701.
Section 6334.—Property
Exempt From Levy
The Service provides inflation adjustments to the
value of certain property exempt from levy (fuel, pro-
visions, furniture, household personal effects, arms
for personal use, livestock, poultry, and books and
tools of a trade, business, or profession) for calendar
year 2012. See Rev. Proc. 2011-52, page 701.
Section 6601.
—Interest
on Underpaym
ent,
Nonpayment, or Extension
of Time for P
ayment, of Tax
The Service
provides an inflation adjustment to
the amount u
sed to determine the amount of interest
charged on
a certain portion of the estate tax payable
in installments for the estate of a decedent dying in
calendar year 2012. See Rev. Proc. 2011-52, page
701.
Section 7430.—Awarding
of Costs and Certain Fees
The Service provides an inflation adjustment to the
hourly limit on attorney fees incurred in calendar year
2012 that my be awarded in a judgment or settlement
of an administrative or judicial proceeding concern-
ing the determination, collection, or refund of tax, in-
terest, or penalty. See Rev. Proc. 2011-52, page 701.
Section 7520.—Valuation
Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2011. See Rev. Rul. 2011-25, page
695.
Section 7702B.—Treatment
of Qualified Long-Term
Care Insurance
The Service provides an inflation adjustment to the
stated dollar amount for calendar year 2012 of the
per diemlimitation regarding periodic payments re-
ceived under qualified long-term care insurance con-
tract or periodic payments received under a life insur-
ance contract that are treated as paid by reason of the
death of a chronically ill individual. See Rev. Proc.
2011-52, page 701.
Section 7872
.—Treatment
of Loans Wit
hBelow-Market
Interest Ra
tes
The adjuste
d applicable federal short-term, mid-
term, and lo
ng-term rates are set forth for the month
of November
2011. See Rev. Rul. 2011-25, page
695.
2011–45 I.R.B.697November 7, 2011

Part III. Administrative, Procedural, and Miscellaneous
Eligibility for Exemption from
User Fee Requirement
for Employee Plans
Determination Letter
Applications Filed After
January 31, 2011
Notice 2011–86
I. Purpose
This notice provides guidance on
§ 7528(b)(2) of the Internal Revenue
Code. Section 7528(b)(2) provides for
exemption from the requirement to pay
a user fee for certain applications to the
Service for determination letters on the
qualified status of pension, profit-sharing,
stock bonus, annuity, and employee stock
ownership (ESOP) plans. The guidance
in this notice generally pertains to such
applications that are filed with the Service
after January 31, 2011. This notice ampli-
fies Notice 2002–1, 2002–1 C.B. 283, by
explaining how to determine, for purposes
of eligibility for exemption from the user
feerequirement,ifsuchanapplicationhas
been filed within a remedial amendment
period with respect to the plan beginning
within the plan’s first five plan years.
II. Background
Section 7528 directs the Secretary of
the Treasury to establish a program requir-
ing the payment of a user fee for requests
to the Service for ruling letters, opinion let-
ters, determination letters, and other simi-
lar requests. Rev. Proc. 2011–8, 2011–1
I.R.B. 237, as corrected by Announcement
2011–8, 2011–5 I.R.B. 446, contains the
procedures under the Service’s user fee
program with respect to requests involving
employee plans and exempt organizations.
Section 7528(b)(2)(A) provides that the
Secretary shall provide for such exemp-
tions from the user fee requirement (and
reduced fees) as the Secretary deems ap-
propriate. Section7528(b)(2)(B) and (C)
provides that an application for a determi-
nation letter on the qualified status of a
pension, profit-sharing, stock bonus, an-
nuity, or ESOP plan or the exempt status
of any trust which is part of the plan shall
be exempt from the user fee requirement
if the plan is maintained solely by one or
more eligible employers (within the mean-
ing of § 7528(b)(2)(C)(ii)) and the applica-
tion is filed by the later of the last day of
the fifth plan year the plan is in existence
or the last day of any remedial amendment
period with respect to the plan beginning
within the first five plan years.
Section 7528 was added to the Code
in 2003, effective for requests made after
October 1, 2003. Provisions identical to
§ 7528(b)(2)(B) and (C) were set forth in
section 620 of the Economic Growth and
Tax Relief Reconciliation Act of 2001,
Pub. L. 107–16 (EGTRRA), and applied
to requests made after December 31, 2001
and before the effective date of § 7528.
Notice 2002–1, as amplified by Notice
2003–49, 2003–2 C.B. 294, provides
guidance on section 620 of EGTRRA,
including guidance on who is an eligible
employer, when a plan is in existence, the
types of determination letter applications
that are eligible forexemption from the
user fee requirement, and when a plan’s
EGTRRA remedial amendment period
begins for purposes of determining if a
determination letter application is eligible
for exemption from the user fee require-
ment. The guidance in Notice 2002–1,
as amplified by Notice 2003–49, applies
to § 7528(b)(2)(B) and (C), as well as to
section 620 of EGTRRA, and continues to
be effective, as further amplified by this
notice.
Rev. Proc. 2007–44, 2007–2 C.B. 54,
provides for a system of cyclical remedial
amendment periods and staggered submis-
sion periods for determination letter ap-
plications for employee plans. Under the
system set forth in Rev. Proc. 2007–44,
applications for determination letters for a
plan are generally not submitted more fre-
quently than once every five or six years,
depending on whether the plan is (1) indi-
vidually designed and subject to a 5-year
remedial amendment cycle or (2) pre-ap-
proved and subject to a 6-year cycle. Any
remedial amendment period with respect
to a plan that would otherwise expire be-
fore the end of the plan’s current 5- or
6-year cycle (and after the end of the plan’s
preceding cycle) is extended to the end of
the plan’s current cycle.
For example, the current 5-year reme-
dial amendment cycle for an individually
designed Cycle A plan (as defined in
section 9 of Rev. Proc. 2007–44) ends
on January 31, 2012, and the one-year
determination letter submission period for
the plan under the current cycle runs from
February 1, 2011 to January 31, 2012.
Any remedial amendment period with
respect to the plan that would otherwise
expire after January 31, 2007 and
before January 31, 2012 is extended
to January 31, 2012. The current
5-year remedial amendment cycles for
individually designed Cycle B, C, D, and
E plans end on January 31, 2013, 2014,
2015, and 2016, respectively. Similar
remedial amendment cycle rules apply to
pre-approved plans, except that the cycles
are six years in length and are based on
whether a plan is a defined contribution or
a defined benefit plan.
III. Remedial Amendment Period
Beginning Within First Five Plan Years
An application for a determination
letter does not meet the requirements in
§ 7528(b)(2)(B) and (C) for exemption
from the user fee requirement if the appli-
cation is not submitted to the Service by
the later of the last day of the fifth plan
year the plan is in existence or the last day
of any remedial amendment period with
respect to the plan beginning within the
first five plan years. Ascertaining whether
a particular application satisfies this re-
quirement would require consideration of
the effective dates with respect to the plan
of changes in law and published guidance,
the adoption and effective dates of the
plan and amendments to the plan, and the
plan’s current remedial amendment cycle.
A separate analysis could be required for
every application that is otherwise eligible
for exemption from the user fee require-
ment.
In order to simplify the process for es-
tablishing whether a user fee is required
to be paid with a determination letter
application for a plan, for purposes of
§ 7528(b)(2), the Service will treat an
application as having been filed by the
last day of a remedial amendment pe-
riod with respect to the plan beginning
within the first fiveplan years if both of
November 7, 20116982011–45 I.R.B.

the following conditions are met: (1) the
application is filed with the Service by
the last day of the submission period for
the plan’s current remedial amendment
cycle, and (2) the plan is first in exis-
tence no earlier than January 1 of the tenth
calendar year immediately preceding the
year in which the submission period for
the plan’s current remedial amendment
cycle begins. For example, for purposes
of § 7528(b)(2), the Service will treat an
application for a determination letter for a
Cycle A plan as filed by the last day of a
remedial amendment period with respect
to the plan beginning within the first five
plan years if the application is filed with
the Service by January 31, 2012 (i.e.,the
last day of the submission period for the
plan’s current remedial amendment cycle)
and the plan is first in existence no earlier
than January 1, 2001 (i.e., January 1 of the
tenth calendar year immediately preceding
2011, the year in which the submission
period for the plan’s current remedial
amendment cycle begins). An application
for a determination letter for a Cycle B
plan will be treated as filed by the last
day of a remedial amendment period with
respect to the plan beginning within the
first five plan years if the application is
filed with the Service by January 31, 2013,
and the plan is first in existence no earlier
than January 1, 2002.
There may be certain situations in
whichanapplicationthatisfiledbythe
last day of a remedial amendment period
with respect to the plan beginning within
the first five plan years would neverthe-
less not be treated as such under the rule
described in the preceding paragraph (i.e.,
where a remedial amendment period be-
ginning within the first five plan years
ends on the last day of a submission period
that begins more than ten years after the
year in which the plan is first in existence).
In such cases, where the other require-
ments for exemption from user fees are
also met, the applicant should not include
payment of a user fee with the application
but should explain in a cover letter how
the application meets the requirements for
exemption. If the Service determines that
the application is not exempt, the applicant
willbeaskedtosubmittherequireduser
fee.
The preceding rules apply to all
applications for determination letters
that are filed with the Service after
January 31, 2011, other than applications
filed by April 30, 2012 for EGTRRA
determination letters for defined benefit
plans that are eligible for the 6-year
EGTRRA remedial amendment cycle
ending on April 30, 2012. Notice 2003–49
explains how to determine eligibility for
exemption from the user fee requirement
for a determination letter application
filed within a plan’s EGTRRA remedial
amendment period. Notice 2003–49
applies to applications for determination
letters for defined benefit plans that
are eligible for the 6-year EGTRRA
remedial amendment cycle ending on
April 30, 2012, regardless of whether
such an application is filed on Form
5307,Application for Determination
forAdoptersofMasterorPrototype
or Volume Submitter Plans,orForm
5300,Application for Determination for
Employee Benefit Plan.
IV. Effect on Other Documents
Notice 2002–1 is amplified.
V. Effective Date
This notice is effective with respect to
applications for determination letters on
the qualified status of employee plans that
are filed with the Service after January 31,
2011.
DRAFTING INFORMATION
The principal drafter of this notice
is James Flannery of the Employee
Plans, Tax Exempt and Government
Entities Division. For further information
regarding this notice, please contact the
Employee Plans’ taxpayer assistance
telephone service at 1–877–829–5500
(a toll-free number) or Mr. Flannery at
RetirementPlanQuestions@irs.gov.
State of New York Low-Income
Housing Credit Disaster Relief
Notice 2011–87
The Internal Revenue Service is sus-
pending certain requirements under § 42
of the Internal Revenue Code for low-in-
come housing credit projects to provide
emergency housing relief needed as a re-
sult of the devastation in the State of New
York caused by either Hurricane Irene
during the period of August 26, 2011 to
September 5, 2011, or the remnants of
Tropical Storm Lee during the period of
September 7, 2011 to September 11, 2011.
This relief is being granted pursuant to
the Service’s authority under § 42(n)
and § 1.42–13(a) of the Income Tax
Regulations.
BACKGROUND
On August 31, 2011, and
September 13, 2011, the President
declared major disasters for the State of
New York. The declarations were made
under the Robert T. Stafford Disaster
Relief and Emergency Assistance Act,
42 U.S.C. 5121et seq.Subsequently,
the Federal Emergency Management
Agency (FEMA) designated jurisdictions
for Individual Assistance. The State of
New York has requested that the Service
allow owners of low-income housing
credit projects to provide temporary
housing in vacant units to individuals
who resided in jurisdictions designated
for Individual Assistance in the State of
New York and who have been displaced
because their residences were destroyed
or damaged as a result of the devastation
caused by Hurricane Irene or the remnants
of Tropical Storm Lee. Based upon this
request and because of the widespread
damage to housing caused by Hurricane
Irene and the remnants of Tropical
Storm Lee, the Service has determined
that the New York State Homes and
Community Renewal Agency (Agency)
may provide approval to project owners to
provide temporary emergency housing for
displaced individuals in accordance with
this notice.
I. SUSPENSION OF INCOME
LIMITATIONS
The Service has determined that it is
appropriate to temporarily suspend certain
income limitation requirements under § 42
for certain qualified low-income housing
projects. The suspension will apply to
low-income housing projects approved
by the Agency, in which vacant units
are rented to displaced individuals. The
Agency will determine the appropriate pe-
riod of temporary housing for each project,
not to extend beyond October 31, 2012
(temporary housing period).
2011–45 I.R.B.699November 7, 2011

II. STATUS OF UNITS
A. Units in the first year of the credit
period
A displaced individual temporarily
occupying a unit during the first year of
the credit period under § 42(f)(1) will be
deemed a qualified low-income tenant
for purposes of determining the project’s
qualified basis under § 42(c)(1), and for
meeting the project’s 20–50 test or 40–60
test as elected by the project owner under
§ 42(g)(1). After the end of the temporary
housingperiodestablished by the Agency
(not to extend beyond October 31, 2012),
a displaced individual will no longer be
deemed a qualified low-income tenant.
B. Vacant units after the first year of the
credit period
During the temporary housing period
established by the Agency, the status of a
vacant unit (that is, market-rate or low-in-
come for purposes of § 42 or never previ-
ously occupied) after the first year of the
credit period that becomes temporarily oc-
cupied by a displaced individual remains
the same as the unit’s status before the
displaced individual moves in. Displaced
individuals temporarily occupying vacant
units will not be treated as low-income
tenants under § 42(i)(3)(A)(ii). However,
even if it houses a displaced individual, a
low-income or market rate unit that was
vacant before the effective date of this no-
tice will continue to be treated as a va-
cant low-income or market rate unit. Sim-
ilarly, a unit that was never previously oc-
cupied before the effective date of this no-
tice will continue to be treated as a unit
that has never been previously occupied
even if it houses a displaced individual.
Thus, the fact that a vacant unit becomes
occupied by a displaced individual will
not affect the building’s applicable frac-
tion under § 42(c)(1)(B) for purposes of
determining the building’s qualified basis,
nor will it affect the 20–50 test or 40–60
test of § 42(g)(1). If the income of oc-
cupants in low-income units exceeds 140
percent of the applicable income limita-
tion, the temporary occupancy of a unit by
a displaced individualwill not cause ap-
plication of the available unit rule under
§ 42(g)(2)(D)(ii). In addition, the project
owner is not required during the temporary
housingperiodtomakeattemptstorent
to low-income individuals the low-income
units that house displaced individuals.
III. SUSPENSION OF
NON-TRANSIENT REQUIREMENTS
The non-transient use requirement of
§ 42(i)(3)(B)(i) shall not apply to any
unit providing temporary housing to a
displaced individual during the temporary
housing period determined by the Agency
in accordance with section I of this notice.
IV. OTHER REQUIREMENTS
All other rules and requirements of
§ 42 will continue to apply during the
temporary housing period established
by the Agency. After the end of the
temporary housing period, the appli-
cable income limitations contained in
§ 42(g)(1), the available unit rule un-
der § 42(g)(2)(D)(ii), the nontransient
requirement of § 42(i)(3)(B)(i), and the
requirement to make reasonable attempts
to rent vacant units to low-income individ-
uals shall resume. If a project owner offers
to rent a unit to a displaced individual after
the end of the temporary housing period,
the displaced individual must be certified
under the requirements of § 42(i)(3)(A)(ii)
and § 1.42–5(b) and (c) to be a qualified
low-income tenant. To qualify for the re-
lief in this notice, the project owner must
additionally meet all of the following re-
quirements:
(1) Major Disaster Area
In the case of an individual displaced by
the devastation caused by Hurricane Irene,
the displaced individual must have resided
in a New York jurisdiction designated for
Individual Assistance by FEMA as a result
of the devastation in the State of New York
caused by Hurricane Irene during the pe-
riod of August 26, 2011 to September 5,
2011.
In the case of an individual displaced by
the devastation caused by the remnants of
Tropical Storm Lee, the displaced individ-
ual must have resided in a New York ju-
risdiction designated for Individual Assis-
tance by FEMA as a result of the devas-
tation in the State of New York caused by
the remnants of Tropical Storm Lee dur-
ing the period of September 7, 2011 to
September 11, 2011.
(2) Approval of the Agency
The project owner must obtain approval
from the Agency for the relief described
in this notice. The Agency will determine
the appropriate period of temporary hous-
ing for each project, not to extend beyond
October 31, 2012.
(3) Certifications and Recordkeeping
To comply with the requirements of
§ 1.42–5, project owners are required to
maintain and certify certain information
concerning each displaced individual tem-
porarily housed in the project, specifically
the following: name,address of damaged
residence, social security number, and a
statement signed under penalties of perjury
by the displaced individual that, because
of damage to the individual’s residence
in a New York jurisdiction designated for
Individual Assistance by FEMA as a re-
sult of the devastation caused in the State
of New York by either Hurricane Irene
during the period of August 26, 2011 to
September 5, 2011, or the remnants of
Tropical Storm Lee during the period of
September 7, 2011 to September 11, 2011,
as applicable, the individual requires tem-
porary housing. The owner must notify
the Agency that vacant units are available
for rent to displaced individuals.
The owner must also certify the date the
displaced individual began temporary oc-
cupancy and the date the project will dis-
continue providing temporary housing as
established by the Agency. The certifica-
tions and recordkeeping for displaced in-
dividuals must be maintained as part of
the annual compliancemonitoring process
with the Agency.
(4) Rent Restrictions
Rents for the low-income units that
house displaced individuals must not ex-
ceed the existing rent-restricted rates for
the low-income units established under
§ 42(g)(2).
(5) Protection of Existing Tenants
Existing tenants in occupied low-in-
come units cannot be evicted or have their
tenancy terminated as a result of efforts to
provide temporary housing for displaced
individuals.
EFFECTIVE DATES
This notice is effective August 31, 2011
(the date of the President’s major disas-
ter declaration) for devastation caused by
Hurricane Irene in the State of New York
during the period of August 26, 2011 to
November 7, 20117002011–45 I.R.B.

September 5, 2011. This notice is effective
September 13, 2011 (the date of the Presi-
dent’s major disaster declaration) for dev-
astation caused by the remnants of Trop-
ical Storm Lee in the State of New York
during the period of September 7, 2011 to
September 11, 2011.
PAPERWORK REDUCTION ACT
The collection of information contained
in this notice has been reviewed and ap-
proved by the Office of Management and
Budget in accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under
control number 1545–2220.
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
OMB control number.
The collection of information in this no-
tice is in the section titled “OTHER RE-
QUIREMENTS” under “(3) Certifications
and Recordkeeping.” This information is
required to enable the Service to verify
whether individuals are displaced as a re-
sult of the devastation caused in the State
of New York by either Hurricane Irene
during the period of August 26, 2011 to
September 5, 2011, or the remnants of
Tropical Storm Lee during the period of
September 7, 2011 to September 11, 2011,
and thus warrant temporary housing in va-
cant low-income housing units. The col-
lection of information is required to obtain
a benefit. The likely respondents are indi-
viduals and businesses.
The estimated total annual recordkeep-
ing burden is 300 hours.
The estimated annual burden per
recordkeeper is approximately 15 minutes.
The estimated number of recordkeepers is
1200.
Books or records relating to a collection
of information must be retained as long
as their contents may become material to
the administration of the internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
DRAFTING INFORMATION
The principal author of this notice is
David Selig of the Office of Associate
Chief Counsel (Passthroughs & Special
Industries). For further information re-
garding this notice, contact Mr. Selig at
(202) 622–3040 (not a toll-free call).
26 CFR 601.602: Tax forms and instructions.
(Also Part I, §§ 1, 23, 24, 25A, 32, 42, 59, 62, 63, 132,
135, 137, 146, 147, 148, 151, 179, 213, 220, 221, 512,
513, 877, 877A, 911, 2010, 2032A, 2503, 2523, 4161,
4261, 6033, 6039F, 6323, 6334, 6601, 7430, 7702B;
1.148–5.)
Rev. Proc. 2011–52
Table of Contents
SECTION 1. PURPOSE
SECTION 2. CHANGES
SECTION 3. 2012 ADJUSTED ITEMS
C
odeSection
.01 Tax Rate Tables1(a)–(e)
.02 Unearned Income of Minor Children Taxed as if Parent’s Income (“Kiddie Tax”)1(g)
.03 Adoption Credit23
.04 Child Tax Credit24
.05 Hope Scholarship, American Opportunity, and Lifetime Learning Credits25A
.06EarnedIncomeCredit32
.07 Rehabilitation Expenditures Treated as Separate New Building42(e)
.08 Low-Income Housing Credit42(h)
.09 Alternative Minimum Tax Exemption for a Child Subject to the “Kiddie Tax”
59(j)
.10 Transportation Mainline Pipeline ConstructionIndustry Optional Expense Substantiation Rules for
Payments to Employees under Accountable Plans
62(c)
.11 Standard Deduction63
.12 Qualified Transportation Fringe Benefit132(f)
.13 Income from United States Savings Bonds for Taxpayers Who Pay Qualified Higher Education
Expenses
135
.14 Adoption Assistance Programs137
.15 Private Activity Bonds Volume Cap
146(d)
.16 Loan Limits on Agricultural Bonds147(c)(2)
2011–45 I.R.B.701November 7, 2011

.17 General Arbitrage Rebate Rules148(f)
.18 Safe Harbor Rules for Broker Commissions on Guaranteed Investment Contracts or Investments
Purchased for a Yield Restricted Defeasance Escrow
148
.19 Personal Exemption
151
.20ElectiontoExpenseCertain Depreciable Assets179
.21 Eligible Long-Term Care Premiums213(d)(10)
.22 Medical Savings Accounts220
.23 Interest on Education Loans221
.24 Treatment of Dues Paid to Agricultural or Horticultural Organizations
512(d)
.25 Insubstantial Benefit Limitations for Contributions Associated with Charitable Fund-Raising
Campaigns
513(h)
.26 Expatriation to Avoid Tax877
.27 Tax Responsibilities of Expatriation877A
.28 Foreign Earned Income Exclusion911
.29 Unified Credit Against Estate Tax2010
.30 Valuation of Qualified Real Property in Decedent’s Gross Estate2032A
.31 Annual Exclusion for Gifts
2503; 2523
.32 Tax on Arrow Shafts4161
.33 Passenger Air Transportation Excise Tax4261
.34 Reporting Exception for Certain Exempt Organizations with Nondeductible Lobbying Expenditures 6033(e)(3)
.35 Notice of Large Gifts Received from Foreign Persons
6039F
.36 Persons Against Whom a Federal Tax Lien Is Not Valid6323
.37 Property Exempt from Levy6334
.38 Interest on a Certain Portion of the Estate Tax Payable in Installments6601(j)
.39 Attorney Fee Awards7430
.40 Periodic Payments Received under Qualified Long-Term Care Insurance Contracts or under Certain
Life Insurance Contracts
7702B(d)
SECTION 4. EFFECTIVE DATE
SECTION 5. DRAFTING INFORMATION
S
ECTION 1. PURPOSE
This revenue procedure sets forth infla-
tion adjusted items for 2012.
SECTION 2. CHANGES
.01 Sections 10909(a)(1) and (b) of the
Patient Protection and Affordable Care
Act of 2010, Pub. L. No. 111–148, 124
Stat. 119 (PPACA)), and § 101(a) of
the Tax Relief, Unemployment Insurance
Reauthorization, and Job Creation Act of
2010, H.R. 4853, Pub. L. No. 111–312,
124 Stat. 3296 (TRUIRJCA), temporarily
designated § 23 of the Code as § 36C.
As designated, § 36C provides a tempo-
rary refundable adoption credit, and an
i
ncrease in the maximum adoption credit
from $10,000 (as adjusted for inflation un-
der former § 23(h)) to $13,170, for taxable
years beginning after December 31, 2009,
and before January 1, 2012. For taxable
years beginning after December 31, 2011,
these temporary changes no longer apply.
Accordingly, for taxable years beginning
after December 31, 2011, the credit is
redesignated as § 23 and is no longer
refundable. In addition, the maximum
adoption credit is $10,000, as adjusted for
inflation. (See section 3.03 of this revenue
procedure.)
.02 Section 1151 of the American
Recovery and Reinvestment Tax Act
of 2009, Tit. I of Div. B of Pub. L.
N
o. 111–5, 123 Stat. 115, and § 727(a)
of TRUIRJCA amended § 132(f)(2) of
the Code to temporarily increase the
amount excludable from gross income for
certain employer-provided transportation
fringe benefits. For months beginning
after February 17, 2009, and before
January 1, 2012, the monthly limitation
under § 132(f)(2)(A) for transportation
in a commuter highway vehicle and
any transit pass is the same as the
amount in effect under § 132(f)(2)(B)
for qualified parking.For months
beginning after December 31, 2011, the
temporary increase no longer applies.
Accordingly, the monthly limitation under
§ 132(f)(2)(A) is $100, as adjusted for
November 7, 20117022011–45 I.R.B.

inflation. (See section 3.12 of this revenue
procedure.)
.03 Section 10909(a)(2) of PPACA
and § 101(a) of TRUIRJCA amended
§ 137(a)(2) and (b)(1) of the Code to tem-
porarily increase the maximum adoption
assistance exclusion from $10,000 (as ad-
justed for inflation) to $13,170, for taxable
years beginning after December 31, 2009,
and before January 1, 2012. Accordingly,
for taxable years beginning after Decem-
ber 31, 2011, the maximum exclusion is
$10,000, as adjusted for inflation. (See
section 3.14 of this revenue procedure.)
.04 Section 402 of TRUIRJCA
amended § 179(b)(1) and (2) of the Code
to provide that the dollar limitation for the
aggregate cost of § 179 property that a
taxpayer may elect to expense is $125,000,
and that dollar amount is reduced by the
amount the cost of all § 179 property
placed into service during the taxable
year exceeds $500,000.For taxable years
beginning in 2012, these amounts are ad-
justed for inflation. Accordingly, these
amounts are included in this revenue pro-
cedure. (See section 3.20 of this revenue
procedure.)
.05 Section 303 of TRUIRJCA
amended § 2010(c) of the Code to pro-
vide that the basic exclusion amount for
determining the amount of the unified
credit against estate tax for estates of dece-
dents dying after December 31, 2009, is
$5,000,000. For taxable years beginning
after December 31, 2011, this $5,000,000
amount is adjusted for inflation. Ac-
cordingly, this amount is included in this
revenue procedure. (See section 3.29 of
this revenue procedure.)
.06 Section 202(b)(1) of the Surface
and Air Transportation Programs Exten-
sion Act of 2011, Pub. L. No. 112–30,
125 Stat. 342, amended § 4261(j)(1)(A)(ii)
of the Code (which governs the period of
applicability of § 4261(b)(1), (c)(1), and
(c)(3)). The effect of that amendment is to
temporarily extend the passenger air trans-
portation excise taxes of $3.00 for domes-
tic travel, $12.00 for international travel,
and $6.00 for departures beginning or end-
ing in Alaska or Hawaii. These excise
taxes apply to transportation taken through
January 31, 2012. In addition, these ex-
cise taxes apply to amounts paid on or be-
fore January 31, 2012, for transportation
taken after that date. The $3.00, $12.00,
and $6.00 amounts are adjusted for infla-
tion. Accordingly, these amounts are in-
cluded in this revenue procedure. (See sec-
tion 3.33 of this revenue procedure.)
SECTION3.2012ADJUSTEDITEMS
.01Tax Rate Tables. For taxable years
beginning in 2012, the tax rate tables under
§1areasfollows:
TABLE 1 — Section 1(a) — Married IndividualsFiling Joint Returns and Surviving Spouses
I
fTaxableIncomeIs:TheTaxIs:
Not over $17,400
10% of the taxable income
Over $17,400 but
not over $70,700
$1,740 plus 15% of
the excess over $17,400
Over $70,700 but
not over $142,700
$9,735 plus 25% of
the excess over $70,700
Over $142,700 but
not over $217,450
$27,735 plus 28% of
the excess over $142,700
Over $217,450 but
not over $388,350
$48,665 plus 33% of
the excess over $217,450
Over $388,350$105,062 plus 35% of
the excess over $388,350
TABLE 2 — Section 1(b) — Heads of Households
I
fTaxableIncomeIs:TheTaxIs:
Not over $12,400
10% of the taxable income
Over $12,400 but
not over $47,350
$1,240 plus 15% of
the excess over $12,400
Over $47,350 but
not over $122,300
$6,482.50 plus 25% of
the excess over $47,350
Over $122,300 but
not over $198,050
$25,220 plus 28% of
the excess over $122,300
2011–45 I.R.B.703November 7, 2011

Over $198,050 but
not over $388,350
$46,430 plus 33% of
the excess over $198,050
Over $388,350$109,229 plus 35% of
the excess over $388,350
TABLE 3 — Section 1(c) — Unmarried Individuals (other than Surviving Spouses and Heads of Households)
I
fTaxableIncomeIs:TheTaxIs:
Not over $8,700
10% of the taxable income
Over $8,700 but
not over $35,350
$870 plus 15% of
the excess over $8,700
Over $35,350 but
not over $85,650
$4,867.50 plus 25% of
the excess over $35,350
Over $85,650 but
not over $178,650
$17,442.50 plus 28% of
the excess over $85,650
Over $178,650 but
not over $388,350
$43,482.50 plus 33% of
the excess over $178,650
Over $388,350$112,683.50 plus 35% of
the excess over $388,350
TABLE 4 — Section 1(d) — Married Individuals Filing Separate Returns
I
fTaxableIncomeIs:TheTaxIs:
Not over $8,700
10% of the taxable income
Over $8,700 but
not over $35,350
$870 plus 15% of
the excess over $8,700
Over $35,350 but
not over $71,350
$4,867.50 plus 25% of
the excess over $35,350
Over $71,350 but
not over $108,725
$13,867.50 plus 28% of
the excess over $71,350
Over $108,725 but
not over $194,175
$24,332.50 plus 33% of
the excess over $108,725
Over $194,175$52,531 plus 35% of
the excess over $194,175
TABLE 5 — Section 1(e) — Estates and Trusts
I
fTaxableIncomeIs:TheTaxIs:
Not over $2,400
15% of the taxab
le income
Over $2,400 bu
t
not over $5,60
0
$360 plus 25% o
f
the excess ove
r $2,400
Over $5,600 but
not over $8,500
$1,160 plus 28% of
the excess over $5,600
Over $8,500 but
not over $11,650
$1,972 plus 33% of
the excess over $8,500
Over $11,650$3,011.50 plu
s 35% of
the excess ove
r$11,650
November 7, 20117042011–45 I.R.B.

.02Unearned Income of Minor
Children Taxed as if Parent’s Income
(the “Kiddie Tax”). For taxable years
beginning in 2012, the amount in
§ 1(g)(4)(A)(ii)(I), which is used to reduce
the net unearned income reported on the
child’s return that is subject to the “kiddie
tax,” is $950. This amount is the same
as the $950 standard deduction amount
provided in section 3.11(2) of this rev-
enue procedure. The same $950 amount
is used for purposes of § 1(g)(7) (that is,
to determine whether a parent may elect
to include a child’s gross income in the
parent’s gross income and to calculate the
“kiddie tax”). For example, one of the re-
quirements for the parental election is that
a child’s gross income is more than the
amount referenced in § 1(g)(4)(A)(ii)(I)
but less than 10 times that amount; thus,
a child’s gross income for 2012 must be
more than $950 but less than $9,500.
.03Adoption Credit. For taxable years
beginning in 2012, under § 23(a)(3) the
credit allowed for an adoption of a child
with special needs is $12,650. For taxable
years beginning in 2012, under § 23(b)(1)
the maximum credit allowed for other
adoptions is the amount of qualified adop-
tion expenses up to $12,650. The available
adoption credit begins to phase out under
§ 23(b)(2)(A) for taxpayers with modi-
fied adjusted gross income in excess of
$189,710 and is completely phased out for
taxpayers with modified adjusted gross
income of $229,710 or more. (See section
3.14 of this revenue procedure for the ad-
justed items relating to adoption assistance
programs.)
.04Child Tax Credit. For taxable
years beginning in 2012, the value used in
§ 24(d)(1)(B)(i) to determine the amount
of credit under § 24 that may be refundable
is $3,000.
.05Hope Scholarship, American Op-
portunity, and Lifetime Learning Credits.
(1) For taxable years beginning in
2012, the Hope Scholarship Credit under
§ 25A(b)(1), as increased under § 25A(i)
(the American Opportunity Tax Credit), is
an amount equal to 100 percent of qual-
ified tuition and related expenses not in
excess of $2,000, plus 25 percent of those
expenses in excess of $2,000, but not in
excess of $4,000. Accordingly, the maxi-
mum Hope Scholarship Credit allowable
under § 25A(b)(1) for taxable years begin-
ning in 2012 is $2,500.
(2) For taxable years beginning in 2012,
a taxpayer’s modified adjusted gross in-
come in excess of $80,000 ($160,000 for a
joint return) is used to determine the reduc-
tion under § 25A(d)(2) in the amount of the
Hope Scholarship Credit otherwise allow-
able under § 25A(a)(1). For taxable years
beginning in 2012, a taxpayer’s modified
adjusted gross income in excess of $52,000
($104,000 for a joint return) is used to de-
termine the reduction under § 25A(d)(2) in
the amount of the Lifetime Learning Credit
otherwise allowable under § 25A(a)(2).
.06Earned Income Credit.
(1)In general. For taxable years be-
ginning in 2012, the following amounts
are used to determine the earned income
credit under § 32(b). The “earned in-
come amount” is the amount of earned
income at or above which the maximum
amount of the earned income credit is al-
lowed. The “threshold phaseout amount”
is the amount of adjusted gross income
(or, if greater, earned income) above which
the maximum amount of the credit begins
to phase out. The “completed phaseout
amount” is the amount of adjusted gross
income (or, if greater, earned income) at
or above which no credit is allowed. The
threshold phaseout amounts and the com-
pleted phaseout amounts shown in the ta-
ble below for married taxpayers filing a
joint return include the increase provided
in § 32(b)(3)(B)(i), asadjusted for infla-
tion for taxable years beginning in 2012.
N
umberofQualifyingChildren
ItemOneTwoThreeorMoreNone
Earned Income Amount
$ 9,320$13,090$13,090$ 6,210
Maximum Amount of
Credit
$ 3,169$ 5,236$ 5,891$ 475
Threshold Phaseout
Amount (Single,
Surviving Spouse,
or Head of Household)
$17,090$17,090$17,090$ 7,770
Completed Phaseout
Amount (Single,
Surviving Spouse,
or Head of Household)
$36,920$41,952$45,060$13,980
Threshold Phaseout
Amount (Married Filing
Jointly)
$22,300$22,300$22,300$12,980
Completed Phaseout
Amount (Married Filing
Jointly)
$42,130$47,162$50,270$19,190
The instructions for the Form 1040 se-
ries provide tables showing the amount of
the earned income credit for each type of
taxpayer.
(2)Excessive investment income.For
taxable years beginning in 2012, the
2011–45 I.R.B.705November 7, 2011

earned income tax credit is not allowed
under § 32(i) if the aggregate amount
of certain investment income exceeds
$3,200.
.07Rehabilitation Expenditures
Treated as Separate New Building.For
calendar year 2012, the per low-in-
come unit qualified basis amount under
§ 42(e)(3)(A)(ii)(II) is $6,200.
.08Low-Income Housing Credit.For
calendar year 2012, the amount used un-
der § 42(h)(3)(C)(ii) to calculate the State
housing credit ceiling for the low-income
housing credit is the greater of (1) $2.20
multiplied by the State population, or (2)
$2,525,000.
.09Alternative Minimum Tax Exemp-
tion for a Child Subject to the “Kiddie
Tax.”For taxable years beginning in 2012,
for a child to whom the § 1(g) “kiddie tax”
applies, the exemption amount under §§ 55
and 59(j) for purposes of the alternative
minimum tax under § 55 may not exceed
the sum of (1) the child’s earned income
for the taxable year, plus (2) $6,950.
.10Transportation Mainline Pipeline
Construction Industry Optional Expense
Substantiation Rules for Payments to Em-
ployees under Accountable Plans.For
calendar year 2012, an eligible employer
may pay certain welders and heavy equip-
mentmechanicsanamountofupto$16
per hour for rig-related expenses that is
deemed substantiated under an account-
able plan if paid in accordance with Rev.
Proc. 2002–41, 2002–1 C.B. 1098. If the
employer provides fuel or otherwise reim-
burses fuel expenses, up to $10 per hour
is deemed substantiated if paid under Rev.
Proc. 2002–41.
.11Standard Deduction.
(1)In general. For taxable years be-
ginning in 2012, the standard deduction
amounts under § 63(c)(2) are as follows:
F
ilingStatusStandardDeduction
Married Individuals Filing Joint Returns and Surviving Spouses (§ 1(a))
$11,900
Heads of Households (§ 1(b))
$8,700
Unmarried Individuals (other than Surviving Spouses and Heads of Households) (§ 1(c))
$5,950
Married Individuals Filing Separate Returns (§ 1(d))
$5,950
(2)Dependent. For taxable years be-
ginning in 2012, the standard deduction
amount under § 63(c)(5) for an individual
who may be claimed as a dependent by an-
other taxpayer cannot exceed the greater of
(1) $950, or (2) the sum of $300 and the in-
dividual’s earned income.
(3)Aged or blind. For taxable years
beginning in 2012, the additional standard
deduction amount under § 63(f) for the
aged or the blind is $1,150. These amounts
are increased to $1,450 if the individual is
also unmarried and not a surviving spouse.
.12Qualified Transportation Fringe
Benefit. For taxable years beginning
in 2012, the monthly limitation under
§ 132(f)(2)(A), regarding the aggregate
fringe benefit exclusion amount for trans-
portation in a commuter highway vehicle
and any transit pass, is $125. The monthly
limitation under § 132(f)(2)(B), regarding
the fringe benefit exclusion amount for
qualified parking, is $240.
.13Income from United States Savings
Bonds for Taxpayers Who Pay Qualified
Higher Education Expenses. For taxable
years beginning in 2012, the exclusion un-
der § 135, regarding income from United
States savings bonds for taxpayers who
pay qualified higher education expenses,
begins to phase out for modified adjusted
gross income above $109,250 for joint
returns and $72,850 for other returns.
The exclusion is completely phased out
for modified adjusted gross income of
$139,250 or more for joint returns and
$87,850 or more for other returns.
.14Adoption Assistance Programs.For
taxable years beginning in 2012, under
§ 137(a)(2) the amount that can be ex-
cluded from an employee’s gross income
for the adoption of a child with special
needs is $12,650. For taxable years be-
ginning in 2012, under § 137(b)(1) the
maximum amount that can be excluded
from an employee’s gross income for the
amounts paid or expenses incurred by an
employer for qualified adoption expenses
furnished pursuant to an adoption assis-
tance program for other adoptions by the
employee is $12,650. The amount exclud-
able from an employee’s gross income be-
gins to phase out under § 137(b)(2)(A) for
taxpayers with modified adjusted gross in-
come in excess of $189,710 and is com-
pletely phased out for taxpayers with mod-
ified adjusted gross income of $229,710 or
more. (See section 3.03 of this revenue
procedure for the adjusted items relating to
the adoption credit.)
.15Private Activity Bonds Volume Cap.
For calendar year 2012, the amounts used
under § 146(d)(1) to calculate the State
ceiling for the volume cap for private
activity bonds is the greater of (1) $95
multiplied by the State population, or (2)
$284,560,000.
.16Loan Limits on Agricultural Bonds.
For calendar year 2012, the loan limit
amount on agricultural bonds under
§ 147(c)(2)(A) for first-time farmers is
$488,600.
.17General Arbitrage Rebate Rules.
Forbondyearsendingin2012,theamount
of the computation credit determined un-
der permission to rely on § 1.148–3(d)(4)
of the proposed Income Tax Regulations
is $1,550.
.18Safe Harbor Rules for Broker
Commissions on Guaranteed Invest-
ment Contracts or Investments Purchased
for a Yield Restricted Defeasance Es-
crow. For calendar year 2012, under
§ 1.148–5(e)(2)(iii)(B)(1), a broker’s com-
mission or similar feefor the acquisition
of a guaranteed investment contract or in-
vestments purchased for a yield restricted
defeasance escrow is reasonable if (1) the
amount of the fee that the issuer treats as
a qualified administrative cost does not
exceed the lesser of (A) $37,000, and (B)
0.2 percent of the computational base (as
defined in § 1.148–5(e)(2)(iii)(B)(2)) or,
if more, $4,000; and (2) the issuer does
not treat more than $103,000 in brokers’
commissions or similar fees as qualified
administrative costs for all guaranteed
investment contracts and investments for
November 7, 20117062011–45 I.R.B.

yield restricted defeasance escrows pur-
chased with gross proceeds of the issue.
.19Personal Exemption. For taxable
years beginning in 2012, the personal ex-
emption amount under § 151(d) is $3,800.
.20Election to Expense Certain Depre-
ciable Assets. For taxable years beginning
in 2012, under § 179(b)(1)(C) the aggre-
gate cost of any § 179 property a taxpayer
may elect to treat as an expense cannot ex-
ceed $139,000. Under § 179(b)(2)(C), the
$139,000 limitation is reduced (but not be-
low zero) by the amount the cost of § 179
property placed in service during the 2012
taxable year exceeds $560,000.
.21Eligible Long-Term Care Premi-
ums. For taxable years beginning in 2012,
the limitations under § 213(d)(10), re-
garding eligible long-term care premiums
includible in the term “medical care,” are
as follows:
A
ttainedAgeBeforetheCloseoftheTaxableYearLimitationon
Premiums
40 or less
$ 350
More than 40 but not more than 50
$ 660
More than 50 but not more than 60
$1,310
More than 60 but not more than 70
$3,500
More than 70
$4,370
.22Medical Savings Accounts.
(1)Self-only coverage. For taxable
years beginning in 2012, the term “high
deductible health plan” as defined in
§ 220(c)(2)(A) means,for self-only cov-
erage, a health plan that has an annual
deductible that is not less than $2,100 and
not more than $3,150, and under which the
annual out-of-pocket expenses required
to be paid (other than for premiums) for
covered benefits do not exceed $4,200.
(2)Family coverage. For taxable years
beginning in 2012, the term “high de-
ductible health plan” means, for family
coverage, a health plan that has an annual
deductible that is not less than $4,200 and
not more than $6,300, and under which the
annual out-of-pocket expenses required
to be paid (other than for premiums) for
covered benefits do not exceed $7,650.
.23Interest on Education Loans.For
taxable years beginning in 2012, the
$2,500 maximum deduction for inter-
est paid on qualified education loans
under § 221 begins to phase out under
§ 221(b)(2)(B) for taxpayers with mod-
ified adjusted gross income in excess of
$60,000 ($125,000 for joint returns), and
is completely phased out for taxpayers
with modified adjusted gross income of
$75,000 or more ($155,000 or more for
joint returns).
.24Treatment of Dues Paid to Agricul-
tural or Horticultural Organizations.For
taxable years beginning in 2012, the limi-
tation under § 512(d)(1), regarding the ex-
emption of annual dues required to be paid
by a member to an agricultural or horticul-
tural organization, is $151.
.25Insubstantial Benefit Limitations
for Contributions Associated with Chari-
table Fund-Raising Campaigns.
(1)Low cost article. For taxable years
beginning in 2012, the unrelated business
income of certain exempt organizations
under § 513(h)(2) does not include a “low
cost article” of $9.90 or less.
(2)Other insubstantial benefits.For
taxable years beginning in 2012, the $5,
$25, and $50 guidelines in section 3 of
Rev. Proc. 90–12, 1990–1 C.B. 471 (as
amplified by Rev. Proc. 92–49, 1992–1
C.B. 987, and modified by Rev. Proc.
92–102, 1992–2 C.B. 579), for disregard-
ing the value of insubstantial benefits
received by a donor in return for a fully
deductible charitable contribution under
§ 170, are $9.90, $49.50, and $99, respec-
tively.
.26Expatriation to Avoid Tax.For
calendar year 2012, an individual with
“average annual netincome tax” of more
than $151,000 for the five taxable years
ending before the date of the loss of United
States citizenship under § 877(a)(2)(A)
is a covered expatriate for purposes of
§ 877A(g)(1).
.27Tax Responsibilities of Expatria-
tion. For taxable years beginning in 2012,
the amount that would be includible in the
gross income of a covered expatriate by
reason of § 877A(a)(1) is reduced (but not
below zero) by $651,000.
.28Foreign Earned Income Exclusion.
For taxable years beginning in 2012, the
foreign earned income exclusion amount
under § 911(b)(2)(D)(i) is $95,100.
.29Unified Credit Against Estate Tax.
For an estate of any decedent dying dur-
ing calendar year 2012,the basic exclusion
amount is $5,120,000 for determining the
amount of the unified credit against estate
tax under § 2010.
.30Valuation of Qualified Real Prop-
erty in Decedent’s Gross Estate.Foran
estate of a decedent dying in calendar year
2012, if the executor elects to use the spe-
cial use valuation method under § 2032A
for qualified real property, the aggregate
decrease in the value of qualified real prop-
erty resulting from electing to use § 2032A
for purposes of the estate tax cannot ex-
ceed $1,040,000.
.31Annual Exclusion for Gifts.
(1) For calendar year 2012, the first
$13,000 of gifts to any person (other than
gifts of future interests in property) are
not included in the total amount of taxable
gifts under § 2503 made during that year.
(2) For calendar year 2012, the first
$139,000 of gifts to a spouse who is not
a citizen of the United States (other than
gifts of future interests in property) are
not included in the total amount of taxable
gifts under §§ 2503 and 2523(i)(2) made
during that year.
.32Tax on Arrow Shafts. For calen-
dar year 2012, the tax imposed under
§ 4161(b)(2)(A) on the first sale by the
manufacturer, producer, or importer of any
shaft of a type used in the manufacture of
certain arrows is $0.46 per shaft.
2011–45 I.R.B.707November 7, 2011

.33Passenger Air Transportation Ex-
cise Tax. For calendar year 2012, the tax
under § 4261(b)(1) on the amount paid
for each domestic segment of taxable air
transportation is $3.80. For calendar year
2012, the tax under § 4261(c)(1) on any
amount paid (whether within or without
the United States) for any air transporta-
tion, if the transportation begins or ends
in the United States, generally is $16.70.
However, for a domestic segment begin-
ning or ending in Alaska or Hawaii as de-
scribed in § 4261(c)(3), the tax applies
only to departures and the rate is $8.40.
.34Reporting Exception for Certain
Exempt Organizations with Nondeductible
Lobbying Expenditures. For taxable years
beginning in 2012, the annual per per-
son, family, or entity dues limitation to
qualify for the reporting exception under
§ 6033(e)(3) (and section 5.05 of Rev.
Proc. 98–19, 1998–1 C.B. 547), regarding
certain exempt organizations with nonde-
ductible lobbying expenditures, is $105 or
less.
.35Notice of Large Gifts Received from
Foreign Persons. For taxable years begin-
ning in 2012, recipients of gifts from cer-
tain foreign persons may be required to re-
port these gifts under § 6039F if the ag-
gregate value of gifts received in a taxable
year exceeds $14,723.
.36Persons Against Whom a Federal
Tax Lien Is Not Valid. For calendar year
2012, a federal tax lien is not valid against
(1) certain purchasers under § 6323(b)(4)
who purchased personal property in a
casual sale for less than $1,430, or (2)
a mechanic’s lienor under § 6323(b)(7)
who repaired or improved certain residen-
tial property if the contract price with the
owner is not more than $7,160.
.37Property Exempt from Levy.For
calendar year 2012, the value of property
exempt from levy under § 6334(a)(2) (fuel,
provisions, furniture, and other household
personal effects, as well as arms for per-
sonal use, livestock, and poultry) cannot
exceed $8,570. The value of property ex-
empt from levy under § 6334(a)(3) (books
and tools necessary for the trade, business,
or profession of the taxpayer) cannot ex-
ceed $4,290.
.38Interest on a Certain Portion of the
Estate Tax Payable in Installments.Foran
estate of a decedent dying in calendar year
2012, the dollar amount used to determine
the “2-percent portion” (for purposes of
calculating interest under § 6601(j)) of the
estate tax extended as provided in § 6166
is $1,390,000.
.39Attorney Fee Awards. For fees
incurred in calendar year 2012, the
attorney fee award limitation under
§ 7430(c)(1)(B)(iii) is $180 per hour.
.40Periodic Payments Received un-
der Qualified Long-Term Care Insurance
Contracts or under Certain Life Insur-
ance Contracts. For calendar year 2012,
the stated dollar amount of theper diem
limitation under § 7702B(d)(4), regarding
periodic payments received under a qual-
ified long-term care insurance contract or
periodic payments received under a life
insurance contract that are treated as paid
by reason of the death of a chronically ill
individual, is $310.
SECTION 4. EFFECTIVE DATE
.01General Rule. Except as provided
in section 4.02, this revenue procedure ap-
plies to taxable years beginning in 2012.
.02Calendar Year Rule.Thisrev-
enue procedure applies to transactions or
events occurring in calendar year 2012
for purposes of sections 3.07 (rehabil-
itation expenditures treated as separate
new building), 3.08 (low-income hous-
ing credit), 3.10 (transportation mainline
pipeline construction industry optional
expense substantiation rules for payments
to employees under accountable plans),
3.15 (private activity bonds volume cap),
3.16 (loan limits on agricultural bonds),
3.17 (general arbitrage rebate rules), 3.18
(safe harbor rules for broker commissions
on guaranteed investment contracts or in-
vestments purchased for a yield restricted
defeasance escrow), 3.26 (expatriation to
avoid tax), 3.29 (unified credit against es-
tate tax), 3.30 (valuation of qualified real
property in decedent’s gross estate), 3.31
(annual exclusion for gifts), 3.32 (tax on
arrow shafts), 3.33 (passenger air trans-
portation excise tax), 3.36 (persons against
whom a federal tax lien is not valid), 3.37
(property exempt from levy), 3.38 (inter-
est on a certain portion of the estate tax
payable in installments), 3.39 (attorney
fee awards), and 3.40 (periodic payments
received under qualified long-term care
insurance contracts or under certain life
insurance contracts).
SECTION 5. DRAFTING
INFORMATION
The principal author of this revenue
procedure is William Ruane of the Office
of Associate Chief Counsel (Income Tax
& Accounting). For further information
regarding this revenue procedure, con-
tact Mr. Ruane at (202) 622–4920 (not a
toll-free call).
November 7, 20117082011–45 I.R.B.

Part IV. Items o
fGeneralInterest
Notice of Prop
osed
Rulemaking an
dNoticeof
Public Hearin
g
Tax Return Pre
parer Penalties
Under Sectio
n6695
REG–140280–
09
AGENCY: Inte
rnal Revenue Service
(IRS), Treas
ury.
ACTION: Noti
ce of proposed rulemaking
and notice o
f public hearing.
SUMMARY: Th
is document contains pro-
posed regul
ations that would modify exist-
ing regulat
ionsrelatedtothetaxreturnpre-
parer penal
ties under section 6695 of the
Internal Re
venue Code (Code). These pro-
posed regu
lations are necessary to monitor
and to impr
ove compliance with the tax re-
turn prepa
rer due diligence requirements
of section
6695(g). The proposed regu-
lations a
ffect tax return preparers. This
document
also provides notice of a public
hearing o
n these proposed regulations.
DATES: Wr
itten or electronic comments
must be re
ceived by November 10, 2011.
Outlines
of topics to be discussed at the
public h
earing scheduled for November 7,
2011, mu
st be received by November 1,
2011.
ADDRESS
ES: Send submissions to:
CC:PA:L
PD:PR (REG–140280–09), room
5205, In
ternal Revenue Service, PO Box
7604, B
en Franklin Station, Washing-
ton, DC
20044. Submissions may be
hand de
livered Monday through Friday
betwee
n the hours of 8 a.m. and 4 p.m.
to CC:P
A:LPD:PR (REG–140280–09),
Couri
er’s Desk, Internal Revenue Ser-
vice,
1111 Constitution Avenue, N.W.,
Washi
ngton, DC, or sent electroni-
cally
via the Federal eRulemaking Por-
tal at
http://www.regulations.gov/(IRS
REG–
140280–09). The public hearing
will
be held in the IRS Auditorium, Inter-
nal R
evenue Building, 1111 Constitution
Aven
ue, N.W., Washington, DC.
FOR F
URTHER INFORMATION
CONT
ACT: Concerning the proposed
regu
lations, Spence Hanemann, (202)
622–4940; con
cerning submissions
of comments, t
he hearing, or to be
placed on the b
uilding access list to at-
tend the heari
ng, Richard Hurst, (202)
622–7180 (not
toll-free numbers) or
Richard.A.H
urst@irscounsel.treas.gov.
SUPPLEMENTA
RY INFORMATION:
Paperwork Re
duction Act
The collecti
on of information contained
in these prop
osed regulations was previ-
ously review
ed and approved by the Office
of Manageme
nt and Budget in accordance
with the Pap
erwork Reduction Act of 1995
(44 U.S.C. 3
507(d)) under control num-
ber 1545–15
70. Comments on the collec-
tion of info
rmation should be sent to the
Office of M
anagement and Budget, Attn:
Desk Offic
er for the Department of the
Treasury,
Office of Information and Reg-
ulatory Af
fairs, Washington, D.C. 20503,
with copie
s to the Internal Revenue Ser-
vice, Att
n: IRS Reports Clearance Officer,
SE:W:CAR
:MP:T:T:SP, Washington, D.C.
20224. Co
mments on the collection of in-
formatio
n should be received by Novem-
ber 10, 2
011. Comments are specifically
request
ed concerning:
Whether
the proposed collection of in-
formati
on is necessary for the proper per-
formanc
e of the IRS, including whether the
informa
tion will have practical utility;
The accu
racy of the estimated burden
associa
ted with the proper collection of in-
formati
on;
How the q
uality, utility, and clarity of
the info
rmation to be collected may be en-
hanced
;and
How the
burden of complying with the
propos
ed collection of information may be
minimi
zed, including through the applica-
tion of
automated collection techniques or
other f
orms of information technology.
The col
lection of information is in
§1.669
5–2(b)(1) and (b)(4) of these pro-
posed
regulations, and is an increase in the
total
annual burden from the burden in the
curre
nt regulations. The collection of this
infor
mation will improve the IRS’ ability
to enf
orce compliance with the due dili-
gence
requirements under section 6695(g)
with
respect to determining eligibility for,
or th
e amount of, the earned income credit
(EIC
) under section 32.
Currently, th
eIRSestimatesthatthere
are 550,000 pe
rsonswhoaretaxreturnpre-
parers with re
spect to determining the eli-
gibility for,
or the amount of, EIC.
This collecti
on of information is
mandatory. Th
e likely respondents are
individuals a
nd businesses.
Estimated to
tal annual recordkeeping
and reportin
g burden is 3,025,000 hours.
Estimated an
nual burden per tax return
preparer var
ies from 30 minutes to 10
hours, depen
ding on individual circum-
stances, wit
h an estimated average of 5
hours and 30
minutes.
Estimated nu
mber of affected practi-
tioners is 5
50,000.
Estimated an
nual frequency of re-
sponses is o
ne time per tax return or claim
for refund o
n which EIC is reported.
An agency ma
y not conduct or sponsor,
and a person
is not required to respond to, a
collection
of information unless it displays
a valid cont
rol number.
Books or rec
ords relating to a collection
of informat
ion must be retained as long as
their cont
ents may become material in the
administr
ation of any internal revenue law.
Backgroun
d
This docum
ent contains proposed
amendment
s to the Income Tax Regula-
tions (26 C
FR part 1) under section 6695
of the Cod
e.
The Treasu
ry Department and the
IRS publi
shed final regulations in the
Federal R
egisteron December 22,
2008, as T
.D. 9436, 2009–3 I.R.B.
268, 73 FR
78430 (the December 2008
final reg
ulations). The December 2008
final re
gulations were a product of a
compreh
ensive review and overhaul
of the re
gulations related to tax return
prepare
r penalties, including those under
section
6695. These proposed regulations
introdu
ce additional measures intended to
improv
e compliance with the tax return
prepar
er EIC due diligence requirements
of sect
ion 6695(g).
Explan
ation of Provisions
The fol
lowing is a summary of the pro-
posed c
hanges to the existing regulations
affect
ing tax return preparers.
2011–45 I.R.B.709November 7, 2011

Tax Return Preparers Subject to Due
Diligence Requirements
Section 301.7701–15(a) of the Proce-
dure and Administration regulations de-
fines a “tax return preparer” as “any person
who prepares for compensation, or who
employs one or more persons to prepare
for compensation, all or a substantial por-
tion of any return of tax or any claim for re-
fundoftax....”Proposed§1.6695–2(a)
changes “signing tax return preparer” to
“tax return preparer.” Consequently, under
the proposed regulations, all tax return pre-
parers (whether an individual or firm) who
determine eligibility for, or amount of, EIC
under section 32 of the Code and who fail
to satisfy the due diligence requirements
of paragraph (b) of these proposed regula-
tions are subject to the penalty under sec-
tion 6695(g). Under the proposed regula-
tions, a firm that employs a person to pre-
pare for compensation a tax return or claim
for refund may be subject to the penalty for
its employee’s failure to comply with the
due diligence requirements.
Because a firm might not have direct
knowledge of an employee’s failure to
comply with the due diligence require-
ments, however, proposed §1.6695–2(c)
provides additional requirements that must
be met before the penalty will be imposed
on a firm. Proposed §1.6695–2(c)(1) pro-
vides that a firm will be subject to the
penalty if a member of its principal man-
agement or the principal management of a
branch office participated in or knew of the
failure to comply with the due diligence
requirements. Proposed §1.6695–2(c)(2)
also provides that a firm will be subject to
the penalty if it failed to establish reason-
able and appropriate procedures to ensure
compliance with the due diligence require-
ments. Finally, proposed §1.6695–2(c)(3)
provides that, even if a firm has established
reasonable and appropriate compliance
procedures, it will be subject to the penalty
if it disregarded its compliance procedures
through willfulness, recklessness, or gross
indifference in the preparation of the tax
return or claim for refund for which the
penalty is imposed. A firm has demon-
strated gross indifference if it ignores facts
that would lead a person of reasonable
prudence and competence to investigate or
ascertain whether an employee is comply-
ing with the due diligence requirements.
Submission of Form 8867
Current §1.6695–2(b)(1) requires a tax
return preparer to complete Form 8867,
“Paid Preparer’s Earned Income Credit
Checklist,”or otherwise record the infor-
mation required by Form 8867 in the tax
return preparer’s files. In response to con-
cerns over improper payments of EIC de-
termined by tax return preparers, the De-
partment of the Treasury and the IRS are
proposing to require tax return preparers to
submit the Form 8867 with the tax return
or claim for refund claiming the EIC.
Proposed §1.6695–2(b)(1)(i), there-
fore, requires that the Form 8867 be sub-
mitted to the IRS in the manner required
by forms, instructions, or other appropri-
ate guidance. Comments are specifically
requested regarding the best way for the
Department of Treasury and the IRS to
implement this submission requirement.
Comments are also requested regarding
how Form 8867 and Schedule EIC might
be revised to reduce payments of improper
EIC claims and to improve the IRS’ ability
to detect these claims.
A tax return preparer has satisfied the
due diligence requirements of current
§1.6695–2(b)(1) if the tax return preparer
records, in paper or electronic files, the
information necessary to complete Form
8867. Under proposed §1.6695–2(b)(1),
the due diligence requirements of para-
graph (b)(1) can only be satisfied by
completion and submission of the Form
8867 (or its successor form) and, there-
fore, cannot be satisfied by submission of
any other form or document.
Computation of Credit
The amendments in proposed
§1.6695–2(b)(2) are not substantive. The
term “tax return preparer” has been sub-
stituted for the term “preparer.” Under the
proposed regulations, tax return prepar-
ers would continue to complete the EIC
Worksheet in the Form 1040 Instructions
or any other form prescribed by the IRS,
or otherwise record in paper or electronic
files their EIC computation, including the
methodandinformationusedtomakethe
computation. To improve clarity, how-
ever, the defined terms “Computation
Worksheet” and “Alternative Computation
Record” have been replaced throughout
the proposed regulation with descriptive
language.
Retention of Records
Under proposed §1.6695–2(b)(4)(i)(C),
tax return preparers must still retain a
record of how and when the informa-
tion used to complete Form 8867 and the
EIC Worksheet (or other record of the
tax return preparer’s EIC computation
permitted under §1.6695–2(b)(2)(i)(B))
was obtained. Additionally, a tax return
preparer must also retain a copy of any
document that was provided by the tax-
payer and on which the tax return preparer
relied to complete Form 8867 or the EIC
Worksheet (or other record of the tax re-
turn preparer’s EIC computation permitted
under §1.6695–2(b)(2)(i)(B)).
Proposed §1.6695–2(b)(4)(ii) makes
two changes. It substitutes “paragraph
(b)(4)(i)” for “paragraph (b)(4)” in or-
der to account for prior restructuring of
paragraph (b)(4). It also changes the date
through which tax return preparers must
retain the records required by this section.
The current retention date is three years
after the June 30th following the date the
return or claim for refund was presented to
the taxpayer for signature. The proposed
retention date is three years from the later
of the due date of the return (determined
without regard to any extension of time
for filing) or the date the return or claim
for refund was filed. This revision to the
retention date will simplify the determina-
tion of the retention date for both the IRS
and tax return preparers.
Exception to the Penalty Under Section
6695(g)
Proposed §1.6695–2(d) retains the
existing exception to the penalty, but ex-
cludes from the exception a firm that is
subject to the penalty under the special
rules for firms in proposed §1.6695–2(c).
Thus,innocasecouldafirmthatis
subject to the penalty under proposed
§1.6695–2(c) satisfy the facts and cir-
cumstances test provided in proposed
§1.6695–2(d).
Proposed Effective and Applicability
Dates
Proposed §1.6695–2(e) provides that
the rules in this notice of proposed rule-
November 7, 20117102011–45 I.R.B.

making will apply to tax returns and claims
for refund for tax years ending on or after
December 31, 2011 that are filed after the
date the final regulations are published in
theFederal Register.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866, as supplemented by Execu-
tive Order 13563. Therefore, a regulatory
assessment is not required. It also has been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply to these regulations.
When an agency issues a rulemaking
proposal, the Regulatory Flexibility Act
(RFA) (5 U.S.C. chapter 6), requires the
agency to “prepare and make available for
public comment an initial regulatory flex-
ibility analysis” that will “describe the im-
pact of the proposed rule on small enti-
ties.” (5 U.S.C. 603(a)). Section 605 of
the RFA provides an exception to this re-
quirement if the agency certifies that the
proposed rulemaking will not have a sig-
nificant economic impact on a substantial
number of small entities.
The proposed rules affect tax return pre-
parers who determine the eligibility for, or
the amount of, EIC. The NAICS code that
relates to tax preparation services (NAICS
code 541213) is the appropriate code for
tax return preparers subject to this notice of
proposed rulemaking. Entities identified
as tax preparation services are considered
small under the Small Business Adminis-
tration size standards (13 CFR 121.201) if
their annual revenue is less than $7 million.
The IRS estimates that approximately 75
to 85 percent of the 550,000 persons who
work at firms or are self-employed tax
return preparers are operating as or em-
ployed by small entities. The IRS has
determined that these proposed rules will
have an impact on a substantial number of
small entities.
The IRS has determined, however, that
the impact on entities affected by the pro-
posed rule will not be significant. The cur-
rent regulations under section 6695(g) al-
ready require tax return preparers to com-
plete the Form 8867 or otherwise record
in their files the information necessary to
complete the form. Tax return preparers
also must currently maintain records of the
checklists and EIC computations, as well
as a record of how and when the informa-
tion used to compute the EIC was obtained
by the tax return preparer. The amount
of time necessary to submit, record, and
retain the additional information required
in these proposed regulations, therefore,
should be minimal for these tax return pre-
parers.
Based on these facts, the IRS hereby
certifies that the collection of information
contained in this notice of proposed rule-
making will not have a significant eco-
nomic impact on a substantial number of
small entities. Accordingly, a Regulatory
Flexibility Analysis is not required.
Pursuant to section 7805(f) of the In-
ternal Revenue Code, this notice of pro-
posed rulemaking has been submitted to
the Chief Counsel for Advocacy of the
Small Business Administration for com-
ment on the impact on small business.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written (a signed origi-
nal and eight (8) copies) or electronic com-
ments that are submitted timely to the IRS.
The Treasury Department and the IRS re-
quest comments on the clarity of the pro-
posed regulations and how they can be
made easier to understand. All comments
will be available for public inspection and
copying atwww.regulations.govor upon
request.
A public hearing has been scheduled for
November 7, 2011, at 10:00 A.M. in the
IRS Auditorium, Internal Revenue Build-
ing, 1111 Constitution Avenue, NW, Wash-
ington, DC. Due to building security pro-
cedures, visitors must enter at the Consti-
tution Avenue entrance. In addition, all
visitors must presentphoto identification
to enter the building. Because of access
restrictions, visitors will not be admitted
beyond the immediate entrance area more
than 30 minutes before the hearing starts.
For information about having your name
placed on the building access list to attend
the hearing, see the “FOR FURTHER
INFORMATION CONTACT” section of
this preamble.
The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing. Persons who wish to
present oral comments at the hearing must
submit written or electronic comments and
an outline of the topics to be discussed
and the time to be devoted to each topic
(a signed original and eight (8) copies) by
November 1, 2011. A period of 10 minutes
will be allotted to each person for making
comments. An agenda showing the sched-
uling of the speakers will be prepared af-
ter the deadline for receiving outlines has
passed. Copies of the agenda will be avail-
able free of charge at the hearing.
Drafting Information
The principal author of these proposed
regulations is Spence Hanemann, Office
of the Associate Chief Counsel (Procedure
and Administration).
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section1.6695–2alsoissuedunder
26 U.S.C. 6695(g). * * *
Par. 2. In §1.6695–2, paragraphs (a),
(b)(1), (b)(2), (b)(4), (c), and (d) are re-
vised and new paragraph (e) is added to
read as follows:
§1.6695–2 Tax return preparer due
diligence requirements for determining
earned income credit eligibility.
(a)Penalty for failure to meet due dili-
gence requirements.Apersonwhoisatax
return preparer of a tax return or claim for
refund under the Internal Revenue Code
with respect to determining the eligibility
for, or the amount of, the earned income
credit (EIC) under section 32 and who fails
to satisfy the due diligence requirements of
paragraph (b) of this section will be subject
to a penalty of $100 for each such failure.
(b) * * *
(1)Completion and submission of Form
8867—(i) The tax return preparer must
complete Form 8867,“Paid Preparer’s
Earned Income Credit Checklist,”or such
other form and such other information as
maybeprescribedbytheInternalRevenue
Service (IRS), and submit it in the manner
2011–45 I.R.B.711November 7, 2011

required by forms, instructions, or other
appropriate guidance.
(ii) The tax return preparer’s comple-
tion of Form 8867 (or successor form)
must be based on information provided by
the taxpayer to the tax return preparer or
otherwise reasonably obtained by the tax
return preparer.
(2)Computation of credit—(i) The tax
return preparer must either—
(A) Complete the Earned Income Credit
Worksheet in the Form 1040 instructions
or such other form and such other informa-
tion as may be prescribed by the IRS; or
(B) Otherwise record in one or more
documents in the tax return preparer’s
paper or electronic files the tax return
preparer’s EIC computation, including the
method and information used to make the
computation.
(ii) The tax return preparer’s comple-
tion of the Earned Income Credit Work-
sheet (or other record of the tax return pre-
parer’s EIC computation permitted under
paragraph (b)(2)(i)(B) of this section) must
be based on information provided by the
taxpayer to the tax return preparer or oth-
erwise reasonably obtained by the tax re-
turn preparer.
*****
(4)Retention of records—(i) The tax
return preparer must retain—
(A) A copy of the completed Form 8867
(orsuccessorform);
(B) A copy of the completed Earned In-
come Credit Worksheet (or other record of
the tax return preparer’s EIC computation
permitted under paragraph (b)(2)(i)(B) of
this section); and
(C) A record of how and when the in-
formation used to complete Form 8867 (or
successor form) and the Earned Income
Credit Worksheet (or other record of the
tax return preparer’s EIC computation per-
mitted under paragraph (b)(2)(i)(B) of this
section)wasobtainedbythetaxreturnpre-
parer, including the identity of any per-
son furnishing the information, as well as
a copy of any document that was provided
by the taxpayer and on which the tax re-
turn preparer relied to complete Form 8867
(or successor form) or the Earned Income
Credit Worksheet (or other record of the
tax return preparer’s EIC computation per-
mitted under paragraph (b)(2)(i)(B) of this
section).
(ii) The items in paragraph (b)(4)(i) of
this section must be retained for three years
from the due date of the return (determined
without regard to any extension of time for
filing) or the date the return or claim for re-
fund was filed, whichever date is later, and
may be retained on paper or electronically
in the manner prescribed in applicable reg-
ulations, revenue rulings, revenue proce-
dures, or other appropriate guidance (see
§601.601(d)(2) of this chapter).
(c)Special rule for firms.Afirmthat
employs a tax return preparer subject to a
penalty under section 6695(g) is also sub-
jecttopenaltyif,andonlyif—
(1) One or more members of the princi-
pal management (or principal officers) of
the firm or a branch office participated in
or knew of the failure to comply with the
due diligence requirements of this section;
(2) The firm failed to establish reason-
able and appropriate procedures to ensure
compliance with the due diligence require-
ments of this section; or
(3) The firm disregarded its reasonable
and appropriate compliance procedures
through willfulness, recklessness, or gross
indifference (including ignoring facts that
would lead a person of reasonable pru-
dence and competence to investigate or
ascertain) in the preparation of the tax
return or claim for refund with respect to
which the penalty is imposed.
(d)Exception to penalty. The section
6695(g) penalty will not be applied with
respect to a particular tax return or claim
for refund if the tax return preparer can
demonstrate to the satisfaction of the In-
ternal Revenue Service that, considering
all the facts and circumstances, the tax re-
turn preparer’s normal office procedures
are reasonably designed and routinely fol-
lowed to ensure compliance with the due
diligence requirements of paragraph (b) of
this section, and the failure to meet the due
diligence requirements of paragraph (b) of
this section with respect to the particular
return or claim for refund was isolated and
inadvertent. The preceding sentence does
not apply to a firm that is subject to the
penalty as a result of paragraph (c) of this
section.
(e)Effective/applicability date.This
section is effective for tax returns and
claims for refund filed after the date that
these regulations are published as final
regulations in theFederal Register,and
applies to tax returns and claims for re-
fund for tax years ending on or after
December 31, 2011.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on October 6,
2011, 11:15 a.m., and published in the issue of the Federal
Register for October 11, 2011, 76 F.R. 62689)
Notice of Proposed
Rulemaking
Retail Inventory Method
REG–125949–10
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking.
SUMMARY: This document contains pro-
posed regulations relating to the retail in-
ventory method of accounting. The regu-
lations restate and clarify the computation
of ending inventory values under the re-
tail inventory method and provide a special
rule for certain taxpayers that receive mar-
gin protection payments and similar ven-
dor allowances. The regulations affect tax-
payers that are retailers and elect to use a
retail inventory method.
DATES: Written or electronically gener-
ated comments and requests for a public
hearing must be received by January 5,
2012.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–125949–10), room
5203, Internal Revenue Service, PO Box
7604, Ben Franklin Station, Washing-
ton, DC 20044. Submissions may be
hand delivered Monday through Friday
between the hours of 8 am and 4 pm
to: CC:PA:LPD:PR (REG–125949–10),
Courier’s Desk, Internal Revenue Service,
1111 Constitution Avenue, NW, Wash-
ington, DC. Alternatively, taxpayers may
submit comments electronically via the
Federal eRulemaking Portal atwww.regu-
lations.gov(IRS REG–125949–10).
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Natasha M. Mulleneaux,
November 7, 20117122011–45 I.R.B.

(202) 622–3967; concerning submis-
sion of comments and requests for
a public hearing, Richard Hurst at
Richard.A.Hurst@irscounsel.treas.gov.
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed
amendments to 26 CFR part 1 relat-
ingtotheretailinventorymethodunder
§1.471–8 of the Income Tax Regulations.
Section 471 provides that a taxpayer’s
method of accounting for inventories must
clearly reflect income. Section 1.471–2(c)
provides that the bases of inventory val-
uation most commonly used and meeting
the requirements of section 471 are (1) cost
and (2) cost or market, whichever is lower
(LCM). Section 1.471–8 allows retailers to
approximate cost or LCM by using the re-
tail inventory method. A last-in, first out
(LIFO) taxpayer that elects to use the retail
inventory method must approximate cost.
Under the retail inventory method, the
retail selling price of ending inventory is
converted to approximate cost or approxi-
mate LCM using a cost-to-retail ratio, or
cost complement. The numerator of the
cost complement is the value of beginning
inventory plus the cost of purchases during
the taxable year, and the denominator is the
retail selling prices of beginning invento-
ries plus the initial retail selling prices of
purchases. The cost complement is then
multiplied by the retail selling price of end-
ing inventory (multiplicand) to determine
the ending inventory value.
Section 1.471–3 provides that, for in-
ventory valuation purposes, the cost of
purchases during the year generally in-
cludes invoice price less trade or other
discounts. A discount may be based on
a retailer’s sales volume (sales-based
allowance) or on the quantity of merchan-
dise a retailer purchases (volume-based
allowance), or may relate to a retailer’s
reduction in retail selling price (markdown
allowance or margin protection payment).
A vendor may provide a retailer with a
markdown allowance or margin protection
payment when the retailer temporarily
or permanently reduces the retail selling
price of its inventory to sell it. A mark-
down allowance or margin protection
payment differs from other types of dis-
counts because it is intended to maintain
the retailer’s profit margin and therefore
is directly related to the inventory selling
price.
Under proposed §1.471–3(e) (75 FR
78944), the amount of an allowance, dis-
count, or price rebate a taxpayer earns by
selling specific merchandise (a sales-based
vendor allowance) is a reduction in the
cost of the merchandise sold and does not
reduce the inventory cost or value of goods
on hand at the end of the taxable year.
Explanation of Provisions
1.Overview
The proposed regulations restructure
and restate the regulations under §1.471–8
in plain language. The proposed regula-
tions also add rules addressing the treat-
ment of sales-based vendor allowances
and of vendor markdown allowances and
margin protection payments in the retail
inventory method computation.
2.Sales-Based Vendor Allowances
The proposed regulations clarify the in-
teraction of proposed §1.471–3(e) with the
retail inventory method by excluding from
the numerator of the cost complement for-
mula the amount of a sales-based vendor
allowance.
3.Computation of Cost Complement
under the Retail LCM Method
The retail inventory method determines
an ending inventory value by maintaining
proportionality between costs and selling
prices. Under the retail LCM method, a
reduction in retail selling price reduces the
value of ending inventory in the same ratio
as the cost complement.
If a taxpayer earns an allowance, dis-
count, or price rebate, the inventory cost
in the numerator of the cost complement
declines, resulting in a reduction of ending
inventory value computed under the retail
inventory method. If the allowance, dis-
count, or price rebate is related to a perma-
nent markdown of the retail selling price
(as in the case of a markdown allowance or
margin protection payment), ending inven-
tory value is further reduced as a result of
the decrease in ending retail selling prices
(the multiplicand in the formula). This
additional reduction of ending inventory
value caused by reducing both the numer-
ator of the cost complement and the mul-
tiplicand (1) generally results in a lower
ending inventory value for a retail LCM
method taxpayer than for a similarly situ-
ated first-in, first-out (FIFO) taxpayer that
values inventory at LCM, and (2) does not
clearly reflect income.
To address this distortion, the proposed
regulations provide that a retail LCM
method taxpayer may not reduce the nu-
merator of the cost complement for an
allowance, discount, or price rebate that is
related to or intended to compensate for
a permanent markdown of retail selling
prices. Thus, in the case of markdown al-
lowances and margin protection payments,
the value of ending inventory as computed
under the retail LCM method is reduced
solely as a result of the reduction in retail
selling price, avoiding an unwarranted
additional reduction in inventory value for
a single markdown allowance and more
reasonably approximating LCM.
As an alternative to this proposed mod-
ification, the retail inventory method could
achieve the same result by permitting
taxpayers to reduce the numerator of the
cost complement for all non-sales based
allowances, discounts, or price rebates,
including markdown allowances, but re-
quiring a reduction of the denominator
of the cost complement for all perma-
nent markdowns related to markdown
allowances. Comments are specifically
requested on whether the final regulations
should provide this or other alternative
retail LCM methods.
4.Temporary Price Adjustments
The proposed regulations clarify that
under the retail inventory method taxpay-
ers do not adjust the cost complement or
ending retail selling prices for temporary
markdowns and markups.
Effective/Applicability Date
These regulations are proposed to apply
for taxable years beginning after the date
the regulations are published as final regu-
lations in theFederal Register.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
2011–45 I.R.B.713November 7, 2011

Order 12866. Therefore, a regulatory
assessment is not required. It also has
been determined thatsection 553(b) of the
Administrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these regu-
lations, and because these regulations do
not impose a collection of information on
small entities, the Regulatory Flexibility
Act (5 U.S.C. chapter 6) does not apply.
Pursuant to section 7805(f) of the Internal
Revenue Code, this notice of proposed
rulemaking will be submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
their impact on small business.
Comments and Requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written comments
that are submitted timely to the IRS. Com-
ments may be submitted electronically or
via a signed original with eight (8) copies.
Comments are requested on the clarity of
the proposed rules and how they can be
made easier to understand. All comments
will be available for public inspection and
copying.
A public hearing will be scheduled if
requested in writing by any person that
timely submits comments. If a public hear-
ing is scheduled, notice of the date, time,
and place for the hearing will be published
in theFederal Register.
Drafting Information
The principal author of these regula-
tions is Natasha M. Mulleneaux of the Of-
fice of the Associate Chief Counsel (In-
come Tax & Accounting). Other person-
nel from the IRS and Treasury Department
participated in their development.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.471–8 is revised to
read as follows:
§1.471–8 Inventories of retail merchants.
(a)In general. A taxpayer that is a
retail merchant may use the retail inven-
tory method of accounting described in
this section. The retail inventory method
uses a formula to convert the retail selling
price of ending inventory to an approxima-
tion of cost (retail cost method) or an ap-
proximation of lower of cost or market (re-
tail LCM method). A taxpayer may use the
retail inventory method instead of valuing
inventory at cost under §1.471–3 or lower
of cost or market under §1.471–4.
(b)Computation—(1)In general.A
taxpayer computes the value of ending in-
ventory under the retail inventory method
by multiplying a cost complement by the
retail selling prices of the goods on hand
at the end of the taxable year.
(2)Cost complement—(i)In general.
The cost complement is a ratio computed
as follows—
(A) The numerator is the value of begin-
ning inventory plus the cost of goods pur-
chased during the taxable year; and
(B) The denominator is the retail sell-
ing prices of beginning inventory plus the
retail selling prices of goods purchased
during the year (that is, thebona fide
retail selling prices of the items at the
time acquired), adjusted for all perma-
nent markups and markdowns, including
markup and markdown cancellations and
corrections. The denominator is not ad-
justed for temporary markups or mark-
downs.
(ii)Sales-based vendor allowances.A
taxpayer may not reduce the numerator of
the cost complement by the amount of an
allowance, discount, or price rebate a tax-
payer earns by selling specific merchan-
dise.
(iii)Special rules for cost complement
for retail LCM method—(A)Margin pro-
tection payments and similar allowances.
A taxpayer using the retail inventory
method to approximate LCM may not
reduce the numerator of the cost com-
plement by the amount of an allowance,
discount, or price rebate that is related
to or intended to compensate for a per-
manent reduction in the taxpayer’s retail
selling price of inventory (for example, a
margin protection payment or markdown
allowance).
(B)Exclusion of markdowns in denom-
inator. A taxpayer using the retail in-
ventory method to approximate LCM ex-
cludes markdowns (and markdown cancel-
lations or corrections) from the denomina-
tor of the cost complement. Any markups
must be reduced by the markdowns made
to cancel or correct them.
(3)Ending inventory retail selling
prices. A taxpayer must include all per-
manent markups and markdowns but may
not include temporary markups or mark-
downs in determiningthe retail selling
prices of goods on hand at the end of the
taxable year. A taxpayer may not include
a markdown that is not an actual reduction
of retail selling price.
(c)Special rules for LIFO taxpayers.A
taxpayer using the last-in, first-out (LIFO)
inventory method with the retail inventory
method uses the retail inventory method
to approximate cost. See §1.472–1(k) for
additional adjustments for a taxpayer using
the LIFO inventory method with the retail
cost method.
(d)Scope of retail inventory method.
A taxpayer may use the retail inven-
tory method to value ending inventory
for a department, a class of goods, or a
stock-keeping unit. A taxpayer maintain-
ing more than one department or dealing
in classes of goods with different percent-
ages of gross profit must compute cost
complements separately for each depart-
ment or class of goods.
(e)Examples. The following examples
illustrate the rules of this section:
Example 1. (i) R, a retail merchant who uses the
retail method to approximate LCM, has no beginning
inventory in 2010. R purchases 40 tables during 2010
for $60 each for a total of $2,400. R offers the tables
for sale at $100 each for an aggregate retail selling
price of $4,000. R does not sell any tables at a price of
$100, so R permanently marks down the retail selling
price of its tables to $90 each. As a result of the $10
markdown, R’s supplier provides R a $6 per table
margin protection payment. R sells 25 tables during
2010 and has 15 tables in ending inventory at the end
of 2010.
(ii) Under paragraph (b)(2)(i)(A) of this section,
the numerator of the cost complement is the aggregate
cost of the tables. Under paragraph (b)(2)(iii)(A) of
this section, R may not reduce the numerator of the
cost complement by the amount of the margin pro-
tection payment. Under paragraph (b)(2)(i)(B) of this
section, the denominator of the cost complement is
the aggregate of the bona fide retail selling prices of
November 7, 20117142011–45 I.R.B.

all the tables at the time acquired. Under paragraph
(b)(2)(iii)(B) of this section, R excludes the mark-
down from the denominator of the cost complement.
Therefore, R’s cost complement is $2,400/$4,000, or
60 percent.
(iii) Under paragraph (b)(3) of this section, R in-
cludes the permanent markdown in determining year-
end retail selling prices. Therefore, the aggregate
retail selling price of R’s ending table inventory is
$1,350 (15 * $90). Approximating LCM under the
retail method, the value of R’s ending table inventory
is $810 (60 percent * $1,350).
Example 2. (i)ThefactsarethesameasinEx-
ample 1,except that R permanently reduces the retail
selling price of all 40 tables to $50 per unit and the 15
tables on hand at the end of the year are marked for
sale at that price. In contrast to the $10 markdown,
the additional $40 markdown is unrelated to a margin
protection payment or other allowance.
(ii) Under paragraph (b)(2)(iii)(B) of this section,
R excludes the markdowns from the denominator of
the cost complement. Therefore, R’s cost comple-
ment is $2,400/$4,000, or 60 percent.
(iii) Under paragraph (b)(3) of this section, R in-
cludes the markdowns in determining year-end retail
selling prices. Therefore, the aggregate retail selling
price of R’s ending inventory is $750 (15 * $50). Ap-
proximating LCM under the retail method, the value
of R’s ending inventory is $450 (60 percent * $750).
Example 3. (i) The facts are the same as inExam-
ple 1, except that R uses the LIFO inventory method.
R must value inventories at cost and, under paragraph
(c) of this section, uses the retail method to approxi-
mate cost.
(ii) Under paragraph (b)(2)(i)(A) of this section,
R reduces the numerator of the cost complement
by the amount of the margin protection payment.
Under paragraph (b)(2)(i)(B) of this section, R in-
cludes the markdown in the denominator of the cost
complement. Therefore, R’s cost complement is
$2,160/$3,600, or 60 percent.
(iii) Under paragraph (b)(3) of this section, R in-
cludes the markdown in determining year-end retail
selling prices. Therefore, the aggregate retail sell-
ing price of R’s ending inventory is $1,350 (15 *
$90). Approximating cost under the retail method,
the value of R’s ending inventory is $810 (60 percent
* $1,350).
(f)Effective/applicability date.This
section applies to taxable years beginning
after the date these regulations are pub-
lished as final regulations in theFederal
Register.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on October 6,
2011, 8:45 a.m., and published in the issue of the Federal
Register for October 7, 2011, 76 F.R. 62327)
Deletions From Cumulative
List of Organizations
Contributions to Which
are Deductible Under Section
170 of the Code
Announcement 2011–70
The Internal Revenue Service has re-
voked its determination that the organi-
zations listed below qualify as organiza-
tions described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the Service will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the Service is not
precluded from disallowing a deduction
for any contributions made after an or-
ganization ceases to qualify under section
170(c)(2) if the organization has not timely
filed a suit for declaratory judgment under
section 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declara-
tory judgment has been timely filed, con-
tributions from individuals and organiza-
tions described in section 170(c)(2) that
are otherwise allowable will continue to
be deductible. Protection under section
7428(c) would begin November 7, 2011,
and would end on the date the court first
determines that the organization is not de-
scribed in section 170(c)(2) as more partic-
ularly set forth in section 7428(c)(1). For
individual contributors, the maximum de-
duction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any indi-
vidual, in whole or in part, for the acts or
omissions of the organization that were the
basis for revocation.
Carib News Foundation
New York, NY
Caring and Sharing, Inc.
Kansas City, MO
Center for AIDS Prevention
Beverly Hills, CA
Ezer Akeres Habais, Inc.
Brooklyn, NY
National Carbon Offset Coalition
Butte, MT
Nazarene Ministry of Help
Portland, OR
Texas Team Sports
San Antonio, TX
Thumpers Therapeutic Center
Milwaukee, OR
Tradewinds Foundation, Inc.
New Hartford, NY
United Homeless Organization, Inc.
Bronx, PA
2011–45 I.R.B.715November 7, 2011

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.
November 7, 2011i2011–45 I.R.B.

Numerical Finding List
1
Bulletins 2011–27 through 2011–45
Announcements:
2011-37, 2011-27 I.R.B.37
2011-38, 2011-28 I.R.B.45
2011-39, 2011-28 I.R.B.46
2011-40, 2011-29 I.R.B.56
2011-41, 2011-28 I.R.B.47
2011-42, 2011-32 I.R.B.138
2011-43, 2011-35 I.R.B.198
2011-44, 2011-33 I.R.B.164
2011-45, 2011-34 I.R.B.178
2011-46, 2011-34 I.R.B.178
2011-47, 2011-34 I.R.B.178
2011-48, 2011-36 I.R.B.227
2011-49, 2011-36 I.R.B.228
2011-50, 2011-38 I.R.B.409
2011-51, 2011-38 I.R.B.409
2011-52, 2011-38 I.R.B.409
2011-53, 2011-38 I.R.B.409
2011-54, 2011-38 I.R.B.409
2011-55, 2011-38 I.R.B.409
2011-56, 2011-38 I.R.B.409
2011-57, 2011-38 I.R.B.409
2011-58, 2011-38 I.R.B.410
2011-59, 2011-37 I.R.B.335
2011-61, 2011-39 I.R.B.453
2011-62, 2011-40 I.R.B.483
2011-63, 2011-41 I.R.B.503
2011-64, 2011-41 I.R.B.503
2011-65, 2011-44 I.R.B.691
2011-66, 2011-44 I.R.B.691
2011-67, 2011-44 I.R.B.691
2011-68, 2011-44 I.R.B.691
2011-69, 2011-44 I.R.B.691
2011-70, 2011-45 I.R.B.715
Notices:
2011-47, 2011-27 I.R.B.34
2011-50, 2011-27 I.R.B.35
2011-51, 2011-27 I.R.B.36
2011-52, 2011-30 I.R.B.60
2011-53, 2011-32 I.R.B.124
2011-54, 2011-29 I.R.B.53
2011-55, 2011-29 I.R.B.53
2011-56, 2011-29 I.R.B.54
2011-57, 2011-31 I.R.B.84
2011-58, 2011-31 I.R.B.85
2011-59, 2011-31 I.R.B.86
2011-60, 2011-31 I.R.B.90
2011-61, 2011-31 I.R.B.91
2011-62, 2011-32 I.R.B.126
2011-63, 2011-34 I.R.B.172
2011-64, 2011-37 I.R.B.231
Notices— Continued:
2011-65, 2011-34 I.R.B.173
2011-66, 2011-35 I.R.B.184
2011-67, 2011-34 I.R.B.174
2011-68, 2011-36 I.R.B.205
2011-69, 2011-39 I.R.B.445
2011-70, 2011-32 I.R.B.135
2011-71, 2011-37 I.R.B.233
2011-72, 2011-38 I.R.B.407
2011-73, 2011-40 I.R.B.474
2011-74, 2011-41 I.R.B.496
2011-75, 2011-40 I.R.B.475
2011-76, 2011-40 I.R.B.479
2011-78, 2011-41 I.R.B.497
2011-79, 2011-41 I.R.B.498
2011-80, 2011-43 I.R.B.591
2011-81, 2011-42 I.R.B.513
2011-82, 2011-42 I.R.B.516
2011-83, 2011-43 I.R.B.593
2011-84, 2011-43 I.R.B.595
2011-85, 2011-44 I.R.B.605
2011-86, 2011-45 I.R.B.698
2011-87, 2011-45 I.R.B.699
Proposed Regulations:
REG-128224-06, 2011-42 I.R.B.533
REG-137128-08, 2011-28 I.R.B.43
REG-140280-09, 2011-45 I.R.B.709
REG-112805-10, 2011-40 I.R.B.482
REG-120391-10, 2011-39 I.R.B.451
REG-125592-10, 2011-32 I.R.B.137
REG-125949-10, 2011-45 I.R.B.712
REG-131491-10, 2011-36 I.R.B.208
REG-140038-10, 2011-42 I.R.B.537
REG-109006-11, 2011-37 I.R.B.334
REG-101352-11, 2011-30 I.R.B.75
REG-111283-11, 2011-42 I.R.B.573
REG-116284-11, 2011-43 I.R.B.598
REG-118809-11, 2011-33 I.R.B.162
REG-122813-11, 2011-35 I.R.B.197
REG-126519-11, 2011-39 I.R.B.452
Revenue Procedures:
2011-38, 2011-30 I.R.B.66
2011-39, 2011-30 I.R.B.68
2011-40, 2011-37 I.R.B.235
2011-41, 2011-35 I.R.B.188
2011-42, 2011-37 I.R.B.318
2011-43, 2011-37 I.R.B.326
2011-44, 2011-39 I.R.B.446
2011-45, 2011-39 I.R.B.449
2011-46, 2011-42 I.R.B.518
2011-47, 2011-42 I.R.B.520
2011-48, 2011-42 I.R.B.527
2011-49, 2011-44 I.R.B.608
2011-50, 2011-44 I.R.B.628
Revenue Procedures— Continued:
2011-51, 2011-44 I.R.B.669
2011-52, 2011-45 I.R.B.701
Revenue Rulings:
2011-14, 2011-27 I.R.B.31
2011-15, 2011-30 I.R.B.57
2011-16, 2011-32 I.R.B.93
2011-17, 2011-33 I.R.B.160
2011-18, 2011-39 I.R.B.428
2011-19, 2011-36 I.R.B.199
2011-20, 2011-36 I.R.B.202
2011-21, 2011-40 I.R.B.458
2011-22, 2011-41 I.R.B.489
2011-23, 2011-43 I.R.B.585
2011-24, 2011-41 I.R.B.485
2011-25, 2011-45 I.R.B.695
Treasury Decisions:
9527, 2011-27 I.R.B.1
9528, 2011-28 I.R.B.38
9529, 2011-30 I.R.B.57
9530, 2011-31 I.R.B.77
9531, 2011-31 I.R.B.79
9532, 2011-32 I.R.B.95
9533, 2011-33 I.R.B.139
9534, 2011-33 I.R.B.144
9535, 2011-39 I.R.B.415
9536, 2011-39 I.R.B.426
9537, 2011-35 I.R.B.181
9538, 2011-37 I.R.B.229
9539, 2011-35 I.R.B.179
9540, 2011-38 I.R.B.341
9541, 2011-39 I.R.B.438
9542, 2011-39 I.R.B.411
9543, 2011-40 I.R.B.470
9544, 2011-40 I.R.B.458
9545, 2011-41 I.R.B.490
9546, 2011-42 I.R.B.505
9547, 2011-43 I.R.B.580
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2011–1 through 2011–26 is in Internal Revenue Bulletin
2011–26, dated June 27, 2011.
2011–45 I.R.B.iiNovember 7, 2011

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2011–27 through 2011–45
Announcements:
2007-47
Updated and superseded by
Ann. 2011-59, 2011-37 I.R.B.335
Notices:
2002-1
Amplified by
Notice 2011-86, 2011-45 I.R.B.698
2006-101
Amplified and superseded by
Notice 2011-64, 2011-37 I.R.B.231
2007-93
Obsoleted by
T.D. 9545, 2011-41 I.R.B.490
2010-23
Modified and supplemented by
Notice 2011-54, 2011-29 I.R.B.53
2010-77
Modified by
Notice 2011-85, 2011-44 I.R.B.605
2010-81
Amended and supplemented by
Notice 2011-63, 2011-34 I.R.B.172
2010-88
Modified by
Ann. 2011-40, 2011-29 I.R.B.56
2010-90
Modified by
Notice 2011-85, 2011-44 I.R.B.605
Proposed Regulations:
REG-118761-09
Hearing scheduled by
Ann. 2011-38, 2011-28 I.R.B.45
REG-151687-10
Hearing scheduled by
Ann. 2011-48, 2011-36 I.R.B.227
Revenue Procedures:
72-36
Amplified and modified by
Rev. Proc. 2011-42, 2011-37 I.R.B.318
2004-29
Amplified and modified by
Rev. Proc. 2011-42, 2011-37 I.R.B.318
2005-16
Modified and superseded by
Rev. Proc. 2011-49, 2011-44 I.R.B.608
Revenue Procedures— Continued:
2006-56
Modified and amplified by
Rev. Proc. 2011-46, 2011-42 I.R.B.607
2007-35
Amplified and modified by
Rev. Proc. 2011-42, 2011-37 I.R.B.318
2008-24
Modified and superseded by
Rev. Proc. 2011-38, 2011-30 I.R.B.66
2008-32
Superseded by
Rev. Proc. 2011-39, 2011-30 I.R.B.68
2010-33
Superseded by
Rev. Proc. 2011-50, 2011-44 I.R.B.628
2010-37
Superseded by
Rev. Proc. 2011-51, 2011-44 I.R.B.669
2010-39
Amplified, modified, and superseded by
Rev. Proc. 2011-47, 2011-42 I.R.B.520
2011-4
Modified by
Rev. Proc. 2011-44, 2011-39 I.R.B.446
2011-6
Modified by
Rev. Proc. 2011-49, 2011-44 I.R.B.608
2011-8
Modified by
Rev. Proc. 2011-49, 2011-44 I.R.B.608
2011-14
Modified by
Rev. Proc. 2011-43, 2011-37 I.R.B.326
2011-35
Amplified and modified by
Rev. Proc. 2011-42, 2011-37 I.R.B.318
Revenue Rulings:
58-225
Obsoleted by
Rev. Rul. 2011-15, 2011-30 I.R.B.57
92-19
Supplemented in part by
Rev. Rul. 2011-23, 2011-43 I.R.B.585
Treasury Decisions:
9527
Corrected by
Ann. 2011-49, 2011-36 I.R.B.228
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2011–1 through 2011–26 is in Internal Revenue Bulletin 2011–26, dated June 27, 2011.
November 7, 2011iii2011–45 I.R.B.

INTERNAL REVENUE BULLETIN
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Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of print
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INTERNAL REVENUE BULLETINS ON CD-ROM
Internal Revenue Bulletins are available annually as part ofPublication 1796 (Tax Products CD-ROM). The CD-ROM can be
purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders (discount for online orders)
or by calling 1-877-233-6767. The first release is available in mid-December and the final release is available in late January.
HOW TO ORDER
Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,
detach entire page, and mail to the Superintendent of Documents, P.O. Box 979050, St. Louis, MO 63197–9000. Please allow two to
six weeks, plus mailing time, for delivery.
WE WELCOME COMMENTS ABOUT THE INTERNAL
REVENUE BULLETIN
If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we
would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page (www.irs.gov)
or write to the IRS Bulletin Unit, SE:W:CAR:MP:T:T:SP, Washington, DC 20224.
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ashington,DC20224
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