Internal Revenue Bulletin 2015-45 (PDF rendition): IRS Revenue Procedures

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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
REG–140379 – 02; REG–142599 – 02, page 653.
This document withdraws a portion of the notice of proposed
rulemaking published in the Federal Register on September 26,
2006 (71 FR 56072). The withdrawn portion relates to certain
general definitions for purposes of section 141 of the Internal
Revenue Code and the treatment of partnerships for purposes
of section 145(a) because these concepts either are unneces-
sary or are otherwise addressed as a result of other revisions
to the remaining portions of the Proposed Regulations that are
adopted as final regulations published elsewhere in the IRB.
Rev. Proc. 2015–52, page 638.
The loss payment patterns and discount factors are set forth
for the 2015 accident year. These factors will be used for
computing discounted unpaid losses under § 846 of the Code.
Rev. Proc. 2015–54, page 648.
The salvage discount factors are set forth for the 2015 acci-
dent year. These factors will be used for computing discounted
estimated salvage recoverable under § 832 of the Code.
T.D. 9741, page 628.
This document contains final regulations on allocation and
accounting, and certain remedial actions, for purposes of the
private activity bond restrictions under section 141 of the
Internal Revenue Code that apply to tax-exempt bonds issued
by State and local governments. The final regulations provide
State and local governmental issuers of tax-exempt bonds with
guidance for applying the private activity bond restrictions.
ADMINISTRATIVE
REG–148998 –13, page 653.
These proposed regulations define terms in the Internal Reve-
nue Code relating to the marital status of taxpayers.
Finding Lists begin on page ii.
Bulletin No. 2015– 45
November 9, 2015

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all
substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of internal
management are not published; however, statements of inter-
nal practices and procedures that affect the rights and duties
of taxpayers are published.
Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
revenue ruling. In those based on positions taken in rulings to
taxpayers or technical advice to Service field offices, identify-
ing details and information of a confidential nature are deleted
to prevent unwarranted invasions of privacy and to comply with
statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions of
the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A, Tax
Conventions and Other Related Items, and Subpart B, Legisla-
tion and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Sec-
retary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index for
the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
November 9, 2015Bulletin No. 2015– 45

Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
26 CFR 1.141– 0; 26 CFR 1.141–1; 26 CFR 1.141–3;
26 CFR 1.141– 6; 26 CFR 1.141–12; 26 CFR
1.141–13; 26 CFR 1.141–15; 26 CFR 1.145–2;
26 CFR 1.150 –5
T.D. 9741
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
General Allocation and
Accounting Regulations
Under Section 141;
Remedial Actions for Tax-
Exempt Bonds
AGENCY:Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
SUMMARY:This document contains final
regulations on allocation and accounting,
and certain remedial actions, for purposes of
the private activity bond restrictions under
section 141 of the Internal Revenue Code
that apply to tax-exempt bonds issued by
State and local governments. The final reg-
ulations provide State and local governmen-
tal issuers of tax-exempt bonds with guid-
ance for applying the private activity bond
restrictions.
DATES:Effective Date: These regula-
tions are effective on October 27, 2015.
Applicability Date: For dates of appli-
cability, see § 1.141–15.
FOR FURTHER INFORMATION
CONTACT: Johanna Som de Cerff or
Zoran Stojanovic, (202) 317-6980 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information con-
tained in these regulations has been re-
viewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under control
number 1545–1451. The collection of in-
formation in these final regulations is in
§ 1.141–12(d)(3), which requires an issuer
to make a declaration of official intent to
remediate bonds. This collection of infor-
mation is necessary for an issuer’s re-
demption or defeasance of bonds to be
treated as a remedial action under
§ 1.141–12 to preserve the tax-exempt
status of the bonds. This collection of
information is an increase in the total an-
nual burden under control number 1545–
1451. The respondents are State and local
government issuers of tax-exempt bonds.
Estimated total annual reporting burden is
30,250 hours.
Estimated average annual burden per re-
spondent is 3 hours.
Estimated number of respondents is
10,100.
An agency may not conduct or spon-
sor, and a person is not required to re-
spond to, a collection of information un-
less it displays a valid control number
assigned by the Office of Management
and Budget. Books or records relating to a
collection of information must be retained
as long as their contents may become ma-
terial in the administration of any internal
revenue law. Generally tax returns and tax
return information are confidential, as re-
quired by section 6103.
Background
In general, interest on State and local
governmental bonds is excludable from
gross income under section 103 upon sat-
isfaction of certain requirements. Interest
on a private activity bond, other than a
qualified private activity bond within the
meaning of section 141, is not excludable
under section 103. Section 141 provides
certain tests that are used to determine
whether a State or local bond is a private
activity bond. These tests include the pri-
vate business use test and the private se-
curity or payment test in section 141(b),
and the private loan financing test in sec-
tion 141(c). Section 145 provides similar
tests that apply in modified form to qual-
ified 501(c)(3) bonds.
Final regulations (TD 8712) under sec-
tion 141 were published in theFederal
Registeron January 16, 1997 (62 FR
2275) (the 1997 Final Regulations), to
provide comprehensive guidance on most
aspects of the private activity bond restric-
tions. The 1997 Final Regulations, how-
ever, reserved most of the general alloca-
tion and accounting rules for purposes of
section 141. An advance notice of pro-
posed rulemaking (REG–142599–02)
was published in theFederal Registeron
September 23, 2002 (67 FR 59767), re-
garding allocation and accounting rules
for tax-exempt bond proceeds used to fi-
nance mixed-use output facilities. A no-
tice of proposed rulemaking and notice of
public hearing (REG–140379–02; REG–
142599–02) was published in theFederal
Registeron September 26, 2006 (71 FR
56072), regarding allocation and account-
ing rules for tax-exempt bond proceeds,
including special rules for mixed-use proj-
ects, and rules regarding the treatment of
partnerships for purposes of section 141
(the Proposed Allocation Regulations).
The Proposed Allocation Regulations also
included amendments to regulations under
section 145 on related matters that apply
to qualified 501(c)(3) bonds. A public
hearing was held on January 11, 2007.
This document amends the Income Tax
Regulations under sections 141 and 145
by adopting final rules on these topics.
Certain provisions of the Proposed Allo-
cation Regulations are not being finalized
and are withdrawn. A partial withdrawal
of notice of proposed rulemaking is pub-
lished elsewhere in this edition of theIn-
ternal Revenue Bulletin.
A notice of proposed rulemaking and
notice of public hearing (REG–132483–
03) was published in theFederal Regis-
teron July 21, 2003 (68 FR 43059), re-
garding the amount and allocation of
nonqualified bonds for purposes of certain
remedial actions under sections 141 and
142 (the Proposed Remedial Action Reg-
ulations). The public hearing was can-
celled because no requests to speak were
received. Final regulations (TD 9150)
were published in theFederal Register
on August 13, 2004 (69 FR 50065), adopt-
ing the portions of the Proposed Remedial
Action Regulations relating to section
November 9, 2015Bulletin No. 2015– 45
628

142. Because of the interrelationship be-
tween the remedial action provisions un-
der section 141 and the allocation and
accounting rules, the portions relating to
section 141 were not finalized at that time.
This document adopts final rules regard-
ing the amount and allocation of nonquali-
fied bonds for purposes of the remedial
action provisions under section 141. We
refer to the Proposed Remedial Action
Regulations and the Proposed Allocation
Regulations collectively as the Proposed
Regulations.
Explanation and Summary
of Comments
I.Introduction
After consideration of the public com-
ments, the Treasury Department and the
IRS adopt the Proposed Regulations, with
revisions, as final regulations (the Final
Regulations). This section discusses sig-
nificant aspects of the public comments
and the revisions made in the Final Reg-
ulations.
II.General Allocation Rules
The Proposed Regulations provided
several allocation rules. Among these
were rules regarding the allocation of pro-
ceeds of an issue of bonds that are obli-
gations of a state or political subdivision
under section 103(c)(1) (see § 1.150–
1(b)) (proceeds) and all other sources of
funds (other funds) to expenditures, to the
project, and to the uses of the project (that
is, governmental use or private business
use). The Proposed Regulations provided
that proceeds and other funds generally
may be allocated to expenditures using
any reasonable, consistently applied ac-
counting method, and that the allocation
of proceeds and other funds to expendi-
tures must be consistent with the alloca-
tion of proceeds and other funds for pur-
poses of the arbitrage investment
restrictions under section 148.
Commenters expressed concern that
the consistency requirement was in con-
flict with the allowance of more than one
method for allocating proceeds and other
funds to projects. Commenters further
questioned whether allocations of pro-
ceeds to expenditures were necessary
other than for purposes of the arbitrage
investment restrictions. The Final Regula-
tions clarify that the issuer’s allocation of
proceeds to expenditures for purposes of
the arbitrage investment restrictions also
apply to expenditures for purposes of the
private activity bond tests.
The Proposed Regulations provided
generally that proceeds and other funds
allocated to capital expenditures for a cap-
ital project are treated as allocated ratably
throughout the project in proportion to the
relative amounts of proceeds and other
funds spent on that project. The Proposed
Regulations further provided that gener-
ally proceeds and other funds are allo-
cated to both governmental use and pri-
vate business use of the project in
proportion to the relative amounts of each
source of funding spent on the project.
The Final Regulations adopt these general
pro rata allocation rules as proposed.
The Proposed Regulations defined a
project to include functionally related or
integrated facilities located on the same
site, or on geographically proximate sites,
that are reasonably expected to be placed
in service within the same 12-month pe-
riod. The Proposed Regulations provided
certain special rules for the treatment of
subsequent improvements to, and replace-
ments of, a project. These proposed spe-
cial rules treated subsequent improve-
ments and replacements made more than
12 months after the original project was
placed in service as part of the same proj-
ect if the improvements and replacements
were within the size, function, and usable
space or the original design of the project.
Commenters expressed various con-
cerns about the definition of project in the
Proposed Regulations. Some commenters
were concerned that the narrow definition
of project, which includes only geograph-
ically proximate facilities placed in ser-
vice within a short period, is inconsistent
with the private activity bond tests gener-
ally, which apply to all facilities financed
by the proceeds of a single issue of bonds.
Commenters also questioned how the def-
inition of project would apply in the con-
text of a capital improvement program
financed by the proceeds of a single issue
of bonds that involves multiple facilities
in different locations (for example, differ-
ent school buildings within a district)
placed in service over more than 12
months. Conversely, other commenters
expressed concern that the definition of
project is so broad that it would allow
properties that have different owners,
types of ownership interests, or types of
financing (that is, are financed from dif-
ferent sources) to be considered a single
project.
Commenters inferred that the treatment
of subsequent improvements meant that
the funds, which could include proceeds
and equity, for the original project and the
subsequent improvements would be allo-
cated throughout the original project and
the subsequent improvements, possibly
subjecting assets financed solely with eq-
uity to the private activity bond restric-
tions. They expressed concerns that the
special allocation rules for mixed-use
projects (discussed in section III. in this
preamble) would be unavailable for these
improvements due to the timing require-
ment applicable to the election.
The Final Regulations simplify the def-
inition of project to cover all facilities or
capital projects financed in whole or in
part with proceeds of a single issue of
bonds. This definition permits an issuer in
its bond documents to identify as a single
project all of the properties to be financed
by proceeds of a single bond issue. Under
this rule, issuers may identify specific
properties or portions of properties re-
gardless of the properties’ locations or
placed-in-service dates. This approach to
the definition of project comports with the
application of the private activity bond
tests generally, which apply at the issue
level. The Final Regulations also clarify
through the examples that improvements
financed with a later issue are a separate
project.
Commenters requested clarification
that, consistent with longstanding prac-
tice, each undivided ownership interest in
an output facility be treated separately for
purposes of applying the allocation rules.
The Final Regulations provide this clari-
fication.
Commenters also recommended ex-
tending the separate facility treatment for
output facilities under the Proposed Reg-
ulations to other types of facilities. The
Final Regulations do not adopt this rec-
ommendation because the use of output
facilities is measured differently from the
use of other facilities. The use of an output
facility generally is measured in the
Bulletin No. 2015– 45November 9, 2015
629

amount of output purchased as a percent-
age of the facility’s total available output.
The amount of use by each user reflects
the proportionate benefit of the available
output to such user. Uses of other types of
facilities are measured in various ways
depending on how that use occurs (for
example, in different discrete portions, at
different times, or simultaneously) and
may reflect simultaneous use by more
than one user on a different, rather than
proportionate, basis. Even without sepa-
rate facility treatment, however, issuers
may use proceeds to finance the govern-
mental use portion of an eligible mixed-
use project.
III.Special Allocation Rules for Eligible
Mixed-Use Projects
A.In general
The Proposed Regulations provided
special elective allocation rules for mixed-
use projects. In general, these special rules
gave effect to congressional intent to per-
mit funding of mixed-use projects in part
with tax-exempt bonds and in part with
other funds using reasonable, proportion-
ate allocation methods that reflect propor-
tionate benefits to the various users.See
H.R. Rep. No. 99–426, at 538 (1985).
The Proposed Regulations defined a
mixed-use project as a project that is rea-
sonably expected to be used for more than
the de minimis amount (generally 10 per-
cent) of private business use permitted
under the private activity bond tests (de
minimis permitted private business use).
The Proposed Regulations provided two
alternative elective allocation methods for
a mixed-use project, the discrete physical
portion allocation method (discrete por-
tion method) and the undivided portion
allocation method. The Proposed Regula-
tions required the issuer to make a timely,
written election, including preliminary
and final allocations of proceeds and other
funds, to use one of these alternative
methods.
The discrete portion method allowed
for dividing a mixed-use project into
physically discrete portions and allocating
the different sources of funds to the vari-
ous discrete portions using a reasonable,
consistently applied method that reflects
the proportionate benefit to be derived by
the various users of the project. The dis-
crete portion method had a number of
limitations, including the physical con-
straints of a discrete portion under the
proposed project definition, limitations on
measurement of a discrete portion, limita-
tions associated with the fair market value
of a discrete portion, and comparability
conditions on reallocations of discrete
portions within a project.
Under the undivided portion allocation
method, projects were divided into gov-
ernmental use and private business use
portions on a notional, rather than physi-
cal, basis with tax-exempt proceeds allo-
cated to the governmental use portion and
the other funds allocated to the private
business use portion. The availability of
the proposed undivided portion allocation
method was limited to circumstances in
which the issuer reasonably expected that
governmental use and private business use
of the project would occur simultaneously
on the same basis, or at different times.
Commenters criticized the complexity
of the Proposed Regulations’ two special
allocation methods and the administrative
burdens associated with the election re-
quirement for mixed-use allocations.
Commenters also criticized the discrete
portion method’s overly rigid treatment of
reallocations or “floating” allocations. To
simplify these rules, commenters recom-
mended expanding the availability of the
undivided portion allocation method to in-
clude all measureable use, adopting the
undivided portion allocation method as
the general rule for allocating proceeds
and other sources to the uses of a mixed-
use project, and eliminating the discrete
portion method.
The Final Regulations adopt the rec-
ommendation to expand the availability of
the undivided portion allocation method
to include all measureable use and to
make the undivided portion allocation
method the exclusive allocation method
for eligible mixed-use projects. Consistent
with this change, the Final Regulations
eliminate the discrete portion method and
the election requirement. The Treasury
Department and the IRS believe that the
expanded version of the undivided portion
allocation method in the Final Regulations
generally will be simpler and more admin-
istrable than the two proposed allocation
methods and will cover all circumstances
otherwise covered by the discrete portion
method under the Proposed Regulations.
For example, unlike the proposed discrete
portion method, which had significant
constraints on “floating” allocations for
administrability reasons, the undivided
portion allocation method in the Final
Regulations inherently allows floating al-
locations without further action or special
tracking in that it involves allocations for
an entire mixed-use project. Section III.B.
in this preamble further discusses the un-
divided portion allocation method under
the Final Regulations.
Under the Final Regulations, the undi-
vided portion allocation method is avail-
able for “eligible mixed use projects.” The
Final Regulations define an “eligible
mixed-use project” as a project that is
financed with proceeds of bonds that pur-
port to be governmental bonds when is-
sued and qualified equity (discussed under
Definition of qualified equityin section
III.C. in this preamble) pursuant to the
same plan of financing (discussed under
Same plan of financingin section III.D. in
this preamble). Further, to qualify, the
project must be wholly owned by one or
more governmental persons or by a part-
nership in which at least one governmen-
tal person is a partner. (See discussion
underPartnershipsin section IV. in this
preamble.)
B.Allocations to uses of a project
Under the Proposed Regulations, the
undivided portion allocation method lim-
ited the targeting of qualified equity to
private business use of the project to that
percentage of the private business use
equal to the percentage of capital expen-
ditures of the project financed by the qual-
ified equity, and similarly limited the tar-
geting of proceeds to government use of
the project to that percentage of the gov-
ernment use equal to the percentage of
capital expenditures of the project fi-
nanced by the proceeds. For projects other
than output facilities, these limits applied
to each one-year period of the measure-
ment period. Commenters requested that
unused qualified equity be carried over
from one year to another or, in lieu of a
carryover provision, revising the limit
from an annual limit to one spanning the
entire measurement period.
November 9, 2015Bulletin No. 2015– 45
630

The Final Regulations do not adopt
these recommendations. The general pri-
vate business measurement rules, in con-
trast to those for use arising from output
contracts, require a determination of the
private business use of the proceeds on an
annual basis as a preliminary step to de-
termining the average private business use
of the proceeds during the measurement
period. When the amount of private busi-
ness use of the project in any one-year
period is less than the percentage of qual-
ified equity, that qualified equity is not
unused but, as the Final Regulations clar-
ify, is allocated to governmental use of the
project that is in excess of the percentage
of proceeds. To allow carryover of private
business use of the proceeds or in an
amount determined solely over the mea-
surement period would require revision of
the measurement rules plus additional
rules to prevent potentially abusive situa-
tions, thereby increasing complexity. The
Final Regulations do, however, clarify
that the annual limit only applies to use
measured under the general measurement
rules and not to use arising from output
contracts.
C.Definition of qualified equity
The Proposed Regulations defined
qualified equity to mean proceeds of tax-
able bonds and funds not derived from a
borrowing that are spent on the same proj-
ect as proceeds of the purported govern-
mental bonds to which the private activity
bond tests will be applied (the applicable
bonds). The Proposed Regulations further
provided that qualified equity does not
include equity interests in real property or
tangible personal property. Commenters
suggested expanding the definition of
qualified equity to include the value of
contributed property not purchased with
proceeds of tax-advantaged bonds, argu-
ing that this contribution should be treated
as the equivalent of cash. Commenters
also suggested that qualified equity in-
clude funds used to redeem bonds.
The Final Regulations adopt the pro-
posed definition of qualified equity, with
modifications. In recognition of the advent
of expanded types of bonds that provide a
Federal tax benefit (a tax-advantaged
bond), which include, for example, a qual-
ified tax credit bond under section 54A on
which the interest on the bond is taxable,
the Final Regulations clarify that “taxable
bonds” that give rise to qualified equity
exclude any tax-advantaged bond. The Fi-
nal Regulations do not adopt the sugges-
tion to include contributions of existing
property as qualified equity for a project
because that treatment would raise diffi-
cult issues of valuation and administrabil-
ity and would be inconsistent with the
rules governing allocations of proceeds of
reimbursement bonds.
The Final Regulations do not adopt the
comment recommending that amounts
(other than proceeds) used to redeem
bonds be treated as qualified equity be-
cause permitting increased private busi-
ness use for the redemption of bonds in
the ordinary course would be inconsistent
with the private activity bond restrictions
on the issue of bonds being redeemed. The
1997 Final Regulations already address
the use of funds to redeem bonds under
certain conditions in which bond redemp-
tions serve as a remedial action to cure
violations of the private business use re-
strictions. Further, as discussed underAn-
ticipatory redemptionsin section V.A. in
this preamble, the Final Regulations add a
new remedial action provision permitting
early redemption in anticipation of in-
creased private business use.
D.Same plan of financing
The definition of “project” in the Pro-
posed Regulations required spending the
proceeds and other sources on the proper-
ties pursuant to the same plan of financ-
ing. Commenters requested clarification
of the meaning of the same plan of financ-
ing. The Final Regulations clarify that
“same plan of financing” has the same
meaning as in § 1.150–1(c)(1)(ii) and that
qualified equity is spent under the same
plan of financing as proceeds of the appli-
cable bonds if the qualified equity is spent
on capital expenditures of the project no
earlier than the earliest date on which the
expenditure would be eligible for reim-
bursement were the bonds from which the
proceeds are derived issued as reimburse-
ment bonds and no later than the date that
is the beginning of the measurement pe-
riod for the project (other than amounts
retained for reasonable purposes relating
to the project as defined under the arbi-
trage investment restrictions).
E.Allocation of proceeds of multiple
issues.
The Proposed Regulations provided
that if proceeds of more than one issue are
allocated to capital expenditures of a
mixed-use project to which the issuer
elects to apply the discrete physical por-
tion or undivided portion allocation
method, then proceeds of those issues are
allocated ratably to a discrete portion or
undivided portion to which any proceeds
are allocated in proportion to their relative
shares of the total proceeds of such issues
used for the project (the multiple issue
rule). Commenters suggested eliminating
this rule to permit issuers to allocate pro-
ceeds of the different issues financing a
project to take maximum advantage of the
overall private business use permitted,
such as disproportionately allocating pro-
ceeds of a larger issue or a general obli-
gation issue (that is, one paid from gener-
ally applicable taxes, for which private
business use may be 100 percent because
the private security or payment test will
not be met) to private business use.
The Treasury Department and the IRS
are concerned that a non-pro rata method
of allocating proceeds of more than one
issue to the uses of a project could not
only lead to more private business use
than when proceeds of a single issue are
allocated, but would also be difficult to
administer. Furthermore, this approach
also would be inconsistent with the gen-
eral allocation rule that allocates proceeds
of two issues on a proportionate basis to
the uses of a project that is not an eligible
mixed-use project.
Commenters also suggested that the
proposed multiple issue rule would create
a barrier to tax-exempt financing of proj-
ects, such as airports, that traditionally
have been financed with a combination of
tax-exempt governmental bonds and qual-
ified private activity bonds to reflect the
governmental and qualified private busi-
ness use occurring, respectively, in differ-
ent discrete portions of a project, as nei-
ther type of bond would meet the criteria
for tax-exempt status if the proceeds of
both types were allocated to the same por-
tions. The Treasury Department and the
Bulletin No. 2015– 45November 9, 2015
631

IRS recognize that certain projects contain
portions that, if treated as separate facili-
ties, would be eligible for financing with
different types of tax-exempt bonds. The
Final Regulations remove this barrier to
tax-exempt financing of projects through
the definition of “project,” which allows
each issuer to identify the different proj-
ects financed by its separate issues of gov-
ernmental bonds and qualified private ac-
tivity bonds.
IV.Partnerships
The Proposed Regulations generally
treated a partnership as an entity that is a
nongovernmental person for purposes of
the private activity bond tests. However, if
all of the partners in a partnership were
governmental persons, the Proposed Reg-
ulations provided a limited exception that
would treat the partnership as an aggre-
gate of its partners (that is, as governmen-
tal persons) for these purposes. The pre-
amble to the Proposed Regulations
specifically requested comments on the
usefulness of aggregate treatment for a
partnership of governmental persons (or
501(c)(3) organizations for qualified
501(c)(3) bonds) and private businesses.
The preamble to the Proposed Regulations
further indicated that the Treasury Depart-
ment and the IRS were considering aggre-
gate treatment in at least the limited cir-
cumstance of partnerships involving a
constant percentage (“straight up”) alloca-
tion of all partnership items. Commenters
were in favor of aggregate treatment for
such partnerships.
In recognition of the development of
various financing and management struc-
tures for government (or 501(c)(3) orga-
nization) facilities that involve the partic-
ipation of private businesses, to provide
flexibility to accommodate public-private
partnerships, and to remove barriers to
tax-exempt financing of the government’s
(or 501(c)(3) organization’s) portion of
the benefit of property used in joint ven-
tures, the Final Regulations provide ag-
gregate treatment for all partnerships. The
Final Regulations further provide a rule
for measuring the private business use of
financed property resulting from the use
of the property by a partnership that in-
cludes a partner that is a nongovernmental
person. The amount of such use is the
nongovernmental partner’s share of the
amount of the use of the property by the
partnership, with such share defined as
the nongovernmental partner’s greatest
percentage share of any of the specified
partnership items attributable to the time
during the measurement period that the
partnership uses the property. The Final
Regulations also provide that an issuer
may determine the nongovernmental
partner’s share under guidance pub-
lished in the Internal Revenue Bulletin.
The definition of qualified 501(c)(3)
bonds under section 145(a) includes the
private activity bond tests (with certain
modifications) and an ownership test un-
der which the property financed with qual-
ified 501(c)(3) bonds must be owned by a
501(c)(3) organization or a governmental
unit. In applying the private activity bond
tests for purposes of qualified 501(c)(3)
bonds, the Proposed Regulations treated a
partnership as an aggregate if each of the
partners was either a governmental person
or a 501(c)(3) organization. The Proposed
Regulations, however, did not apply such
aggregate treatment for purposes of the
ownership test. Commenters recom-
mended applying aggregate treatment to
partnerships for purposes of the owner-
ship test, seeing no reason to distinguish
between ownership for purposes of the
ownership test and for purposes of the
private activity bond tests, which also
look to ownership of the financed prop-
erty. The Final Regulations adopt this
comment.
V.Remedial Actions
A.Anticipatory redemptions
The Proposed Allocation Regulations
permitted proceeds of taxable bonds and
funds not derived from borrowing that are
used to retire tax-exempt governmental
bonds to be treated as qualified equity
under certain circumstances. This allows
targeting of funds other than tax-exempt
bond proceeds to finance portions of proj-
ects that are expected to be used for pri-
vate business use in the future. The intent
of this proposed rule is to encourage re-
tirement of tax-exempt bonds before the
occurrence of nonqualified use. The Pro-
posed Allocation Regulations addressed
when the bond must be retired, the issu-
er’s reasonable expectations regarding use
of the project, actual use of the project
prior to the redemption, and the length of
the term of the issue of which the bond to
be retired is a part. Specifically, the bond
to be redeemed was required to be retired
at least five years before its otherwise-
scheduled maturity date and within a pe-
riod that starts one year before the delib-
erate act and ends 91 days before the
deliberate act. Further, the issuer must not
have expected that the project would be a
mixed-use project. Thus, under the Pro-
posed Allocation Regulations, an issuer
could not use this anticipatory redemption
for a project for which it had elected the
special mixed-use allocation rules.
Most commenters stated that the pro-
posed provision would be of limited use
and that the eligibility requirements are
contrary to the policy of encouraging re-
demption of tax-exempt bonds earlier
rather than later. Commenters recom-
mended that the conditions for anticipa-
tory redemption not be stricter than those
under the existing remedial action regime
for private business use, which permits a
curative redemption or defeasance of non-
qualified bonds within 90 days of the de-
liberate action causing the private activity
bonds tests to be met. Commenters further
suggested adding a provision to the reme-
dial action rules permitting an issuer to
redeem or defease bonds at any time in
advance of a deliberate action that would
cause the private business tests to be met.
The suggested provision would require
the issuer to declare its intent to redeem or
defease the bonds that potentially could
become the nonqualified bonds and iden-
tify the financed property. To encourage
early redemption of tax-exempt bonds
without imposing another set of rules for
projects with unanticipated private busi-
ness use, the Final Regulations adopt this
recommendation to expand the remedial
action rules to address this point.
B.Nonqualified bonds
The Proposed Remedial Action Regu-
lations included amendments relating to
the amount and allocation of nonqualified
bonds to be remediated as a result of a
deliberate action causing the private busi-
ness tests or the private loan financing test
to be met. The Proposed Remedial Action
November 9, 2015Bulletin No. 2015– 45
632

Regulations provided that the amount of
the nonqualified bonds is that portion of
the outstanding bonds in an amount that, if
the remaining bonds were issued on the
date on which the deliberate action occurs,
the remaining bonds would not meet the
private business use test or private loan
financing test, as applicable. For this pur-
pose, the amount of private business use is
the greatest percentage of private business
use in any one-year period commencing
with the one-year period in which the de-
liberate action occurs.
Commenters requested that the amount
of nonqualified bonds be determined us-
ing the average amount of private busi-
ness use over the entire measurement pe-
riod rather than the highest private
business use in any one-year period. The
Final Regulations do not adopt this rec-
ommendation because this request is in-
consistent with the limitations on annual
allocations of proceeds and qualified eq-
uity to the uses of the project. The Final
Regulations adopt the amendment to the
provision regarding the amount of non-
qualified bonds as proposed.
Commenters generally agreed with the
proposed change that allows any bonds of
any issue to be treated as the nonqualified
bonds provided that the redemption or de-
feasance does not have the effect of ex-
tending the weighted average maturity
(WAM) of the issue. Commenters, how-
ever, stated that some bond indentures
require optional redemptions of a portion
of a term bond to be used first to reduce
the earliest mandatory sinking fund pay-
ments on the bond. In this case, the re-
demption or defeasance of the longest
bonds would result in the extension of the
WAM. Commenters recommended that
the regulations permit bonds with longer
maturities to be treated as the nonqualified
bonds, as is permitted under the existing
regulations. The Final Regulations adopt
the rule as proposed, but provide a transi-
tion rule for outstanding bonds similar to
that provided with respect to outstanding
exempt facility bonds.
The Final Regulations reduce the
amount of nonqualified bonds. An issuer
who chooses to redeem or defease the
nonqualified bonds need only redeem or
defease sufficient bonds such that the re-
maining bonds would not meet the private
business use or private loan financing test.
Thus, unlike under the previous definition
of nonqualified bonds, not all of the pri-
vate business use or private loan, as cal-
culated under the remedial action rules,
necessarily will be remediated. To take
into account any such remaining unreme-
diated private business use or loan should
a subsequent deliberate action occur, a
conforming change is needed pertaining
to continuing compliance. The Final Reg-
ulations include this change.
VII.Effective/applicability dates
The Final Regulations generally apply to
bonds sold on or after January 25, 2016. The
rules regarding remedial actions, however,
apply to deliberate actions that occur on or
after January 25, 2016. The Final Regula-
tions allow permissive application of (1) the
partnership provisions, the allocation and
accounting rules, and certain corresponding
rules for qualified 501(c)(3) bonds in whole,
but not in part, to bonds to which the 1997
Final Regulations apply; and (2) the multi-
purpose rule to bonds to which the refund-
ing rules apply.
Special Analyses
Certain IRS regulations, including this
one, are exempt from the requirements of
Executive Order 12866, as supplemented
and reaffirmed by Executive Order 13563.
Therefore, a regulatory impact assessment
is not required. It has also been deter-
mined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to these regulations. It is
hereby certified that the collection of in-
formation in these regulations will not
have a significant economic impact on a
substantial number of small governmental
jurisdictions. This certification is based
upon the fact that few small governmental
issuers are expected to take an anticipa-
tory remedial action and that the amount
of time required to meet the recordkeep-
ing requirement is not significant. There-
fore, a regulatory flexibility analysis under
the Regulatory Flexibility Act (5 U.S.C.
chapter 6) is not required. Pursuant to
section 7805(f) of the Internal Revenue
Code, the notices of proposed rulemaking
preceding these regulations were submit-
ted to the Chief Counsel for Advocacy of
the Small Business Administration for
comment on their impact on small gov-
ernmental jurisdictions. No comments
were received.
Drafting Information
The principal author of these regulations
is Johanna Som de Cerff, Office of Associ-
ate Chief Counsel (Financial Institutions &
Products), IRS. However, other personnel
from the IRS and the Treasury Department
participated in their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is
amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805***
Par. 2. Section 1.141–0 is amended by
adding an entry for § 1.141–1(e), revising
entries for § 1.141–6 and § 1.141–
12(d)(3) through (5), adding an entry for
§ 1.141–12(d)(6), revising the heading for
§ 1.141–15, and adding entries for
§ 1.141–15(b)(4), (e)(1), (e)(2), (l) and
(m) to read as follows:
§ 1.141– 0 Table of contents.
*****
§ 1.141–1 Definitions and rules of
general application.
*****
(e) Partnerships.
*****
§ 1.141– 6 Allocation and accounting
rules.
(a) Allocation of proceeds to expendi-
tures, projects, and uses in general.
(1) Allocations to expenditures.
(2) Allocations of sources to a project
and its uses.
(3) Definition of project.
(b) Special allocation rules for eligible
mixed-use projects.
(1) In general.
(2) Definition of eligible mixed-use
project.
(3) Definition of qualified equity.
Bulletin No. 2015– 45November 9, 2015
633

(4) Same plan of financing.
(c) Allocations of private payments.
(d) Allocations of proceeds to common
costs of an issue.
(e) Allocations of proceeds to bonds.
(f) Examples.
*****
§ 1.141–12 Remedial actions.
*****
(d)***
(3) Anticipatory remedial action.
(4) Notice of defeasance.
(5) Special limitation.
(6) Defeasance escrow defined.
*****
§ 1.141–15 Effective/applicability dates.
*****
(b)***
(4) Certain remedial actions.
*****
(e)***
(1) In general.
(2) Transition rule for pre-effective
date bonds.
*****
(l) Applicability date for certain regu-
lations related to allocation and account-
ing.
(1) In general.
(2) Permissive application.
(m) Permissive retroactive application
of certain regulations.
*****
Par. 3. Section 1.141–1 is amended by
adding paragraph (e) to read as follows:
§ 1.141–1 Definitions and rules of
general application.
*****
(e)Partnerships. A partnership (as de-
fined in section 7701(a)(2)) is treated as
an aggregate of its partners, rather than as
an entity.
Par. 4. Section 1.141–3 is amended by
redesignating paragraph (g)(2)(v) as para-
graph (g)(2)(vi) and adding new para-
graph (g)(2)(v) to read as follows:
§ 1.141–3 Definition of private business
use.
*****
(g)***
(2)***
(v)Special rule for partners that are
nongovernmentalpersons—(A) The
amount of private business use by a non-
governmental person resulting from the
use of property by a partnership in which
that nongovernmental person is a partner
is that nongovernmental partner’s share of
the amount of use of the property by the
partnership. For this purpose, except as
otherwise provided in paragraph
(g)(2)(v)(B) of this section, a nongovern-
mental partner’s share of the partnership’s
use of the property is the nongovernmen-
tal partner’s greatest percentage share un-
der section 704(b) of any partnership item
of income, gain, loss, deduction, or credit
attributable to the period that the partner-
ship uses the property during the measure-
ment period. For example, if a partnership
has a nongovernmental partner and that
partner’s share of partnership items varies,
with the greatest share being 25 percent,
then that nongovernmental partner’s share
of the partnership’s use of property is 25
percent.
(B) An issuer may determine a non-
governmental partner’s share of the part-
nership’s use of the property under guid-
ance published in the Internal Revenue
Bulletin (see § 601.601(d)(2)(ii)(b) of this
chapter).
*****
Par. 5. Section 1.141–6 is revised to
read as follows:
§ 1.141– 6 Allocation and accounting
rules.
(a)Allocations of proceeds to expendi-
tures, projects, and uses in general—(1)
Allocations to expenditures. The alloca-
tions of proceeds and other sources of
funds to expenditures under § 1.148–6(d)
apply for purposes of §§ 1.141–1 through
1.141–15.
(2)Allocations of sources to a project
and its uses. Except as provided in para-
graph (b) of this section (regarding an
eligible mixed-use project), if two or more
sources of funding (including two or more
tax-exempt issues) are allocated to capital
expenditures (as defined in § 1.150–1(b))
for a project (as defined in paragraph
(a)(3) of this section), those sources are
allocated throughout that project to the
governmental use and private business use
of the project in proportion to the relative
amounts of those sources of funding spent
on the project.
(3)Definition of project—(i)In gen-
eral. For purposes of this section,project
means one or more facilities or capital
projects, including land, buildings, equip-
ment, or other property, financed in whole
or in part with proceeds of the issue.
(ii)Output facilities. If an output facil-
ity has multiple undivided ownership in-
terests (respectively owned by govern-
mental persons or by both governmental
and nongovernmental persons), each own-
er’s interest in the facility is treated as a
separate facility for purposes of this sec-
tion, provided that all owners of the undi-
vided ownership interests share the own-
ership and output in proportion to their
contributions to the capital costs of the
output facility.
(b)Special allocation rules for eligible
mixed-use projects—(1)In general. The
sources of funding allocated to capital ex-
penditures for an eligible mixed-use proj-
ect (as defined in paragraph (b)(2) of this
section) are allocated to undivided por-
tions of the eligible mixed-use project and
the governmental use and private business
use of the eligible mixed-use project in
accordance with this paragraph (b). Qual-
ified equity (as defined in paragraph (b)(3)
of this section) is allocated first to the
private business use of the eligible mixed-
use project and then to governmental use,
and proceeds are allocated first to the gov-
ernmental use and then to private business
use, using the percentages of the eligible
mixed-use project financed with the re-
spective sources and the percentages of
the respective uses. Thus, if the percent-
age of the eligible mixed-use project fi-
nanced with qualified equity is less than
the percentage of private business use of
the project, all of the qualified equity is
allocated to the private business use. Pro-
ceeds are allocated to the balance of the
private business use of the project. Simi-
larly, if the percentage of the eligible
mixed-use project financed with proceeds
is less than the percentage of governmen-
tal use of the project, all of the proceeds
are allocated to the governmental use, and
qualified equity is allocated to the balance
of the governmental use of the project.
Further, if proceeds of more than one is-
sue finance the eligible mixed-use project,
November 9, 2015Bulletin No. 2015– 45
634

proceeds of each issue are allocated rat-
ably to the uses to which proceeds are
allocated in proportion to the relative
amounts of the proceeds of such issues
allocated to the eligible mixed-use project.
For private business use measured under
§ 1.141–3(g), qualified equity and pro-
ceeds are allocated to the uses of the eli-
gible mixed-use project in each one-year
period under § 1.141–3(g)(4).See Exam-
ple 1of paragraph (f) of this section.
(2)Definition of eligible mixed-use
project.Eligible mixed-use projectmeans
a project (as defined in paragraph (a)(3) of
this section) that is financed with proceeds
of bonds that, when issued, purported to
be governmental bonds (as defined in
§ 1.150–1(b)) (the applicable bonds) and
with qualified equity pursuant to the same
plan of financing (within the meaning of
§ 1.150–1(c)(1)(ii)). An eligible mixed-
use project must be wholly owned by one
or more governmental persons or by a
partnership in which at least one govern-
mental person is a partner.
(3)Definition of qualified equity. For
purposes of this section,qualified equity
means proceeds of bonds that are not tax-
advantaged bonds and funds that are not
derived from proceeds of a borrowing that
are spent on the same eligible mixed-use
project as the proceeds of the applicable
bonds. Qualified equity does not include
equity interests in real property or tangible
personal property. Further, qualified eq-
uity does not include funds used to re-
deem or repay governmental bonds.See
§§ 1.141–2(d)(2)(ii) and 1.141–12(i) (re-
garding the effects of certain redemptions
as remedial actions).
(4)Same plan of financing. Qualified
equity finances a project under the same
plan of financing that includes the appli-
cable bonds if the qualified equity pays for
capital expenditures of the project on a
date that is no earlier than a date on which
such expenditures would be eligible for
reimbursement by proceeds of the appli-
cable bonds under § 1.150–2(d)(2) (re-
gardless of whether the applicable bonds
are reimbursement bonds) and, except for
a reasonable retainage (within the mean-
ing of § 1.148–7(h)), no later than the date
on which the measurement period begins.
(c)Allocations of private payments.
Except as provided in this paragraph (c),
private payments for a project are allo-
cated in accordance with § 1.141–4. Pay-
ments under an output contract that result
in private business use of an eligible
mixed-use project are allocated to the
same source of funding (notwithstanding
§ 1.141–4(c)(3)(v) (regarding certain al-
locations of private payments to equity))
allocated to the private business use from
such contract under paragraph (b) of this
section.
(d)Allocations of proceeds to common
costs of an issue. Proceeds used for ex-
penditures for common costs (for exam-
ple, issuance costs, qualified guarantee
fees, or reasonably required reserve or
replacement funds) are allocated in accor-
dance with § 1.141–3(g)(6). Proceeds, as
allocated under § 1.141–3(g)(6) to an eli-
gible mixed-use project, are allocated to
the uses of the project in the same propor-
tions as the proceeds allocated to the uses
under paragraph (b) of this section.
(e)Allocations of proceeds to bonds.In
general, proceeds are allocated to bonds in
accordance with the rules for allocations
of proceeds to bonds for separate purposes
of multipurpose issues in § 1.141–13(d).
For an issue that is not a multipurpose
issue (or is a multipurpose issue for which
the issuer has not made a multipurpose
allocation), proceeds are allocated to
bonds ratably in a manner similar to the
allocation of proceeds to projects under
paragraph (a)(2) of this section.
(f)Examples. The following examples
illustrate the application of this section:
Example 1.Mixed-use project. City A issues
$70x of bonds (the Bonds) and finances the construc-
tion of a 10-story office building costing $100x (the
Project) with proceeds of the Bonds and $30x of
qualified equity (the Qualified Equity). To the extent
that the private business use of the Project does not
exceed 30 percent in any particular year, the Quali-
fied Equity is allocated to the private business use. If
private business use of the Project were, for exam-
ple, 44 percent in a year, the Qualified Equity would
be allocated to 30 percent ($30x) private business
use and proceeds of the Bonds would be allocated to
the excess (that is, 14 percent or $14x), resulting in
private business use of the Bonds in that year of 20
percent ($14x/$70x). Conversely, if private business
use of the Project were 20 percent, Qualified Equity
would be allocated to that 20 percent. The remaining
Qualified Equity (that is, 10 percent or $10x) would
be allocated to the governmental use in excess of the
70 percent to which the proceeds of the Bonds would
be allocated.
Example 2.Mixed-use output facility. Authority
A is a governmental person that owns and operates
an electric transmission facility. Several years ago,
Authority A used its equity to pay capital expendi-
tures of $1000x for the facility. Authority A wants to
make capital improvements to the facility in the
amount of $100x (the Project). Authority A reason-
ably expects that, after completion of the Project, it
will sell 46 percent of the available output of the
facility, as determined under § 1.141–7, under output
contracts that result in private business use and it
will sell 54 percent of the available output of the
facility for governmental use. On January 1, 2017,
Authority A issues $60x of bonds (the Bonds) and
uses the proceeds of the Bonds and $40x of qualified
equity (the Qualified Equity) to finance the Project.
The Qualified Equity is allocated to 40 of the 46
percent private business use resulting from the out-
put contracts. Proceeds of the Bonds are allocated to
the 54 percent governmental use and thereafter to the
remaining 6 percent private business use.
Example 3.Subsequent improvements and re-
placements. County A owns a hospital, which
opened in 2001, that it financed entirely with pro-
ceeds of bonds it issued in 1998 (the 1998 Bonds). In
2017, County A finances the cost of an addition to
the hospital with proceeds of bonds (the 2017
Bonds) and qualified equity (the 2017 Qualified Eq-
uity). The original hospital is a project (the 1998
Project) and the addition is a project (the 2017 Proj-
ect). Proceeds of the 2017 Bonds and the 2017
Qualified Equity are allocated to the 2017 Project.
The 2017 Qualified Equity is allocated first to the
private business use of the 2017 Project and then to
the governmental use of the 2017 Project. Proceeds
of the 2017 Bonds are allocated first to the govern-
mental use of the 2017 Project and then to the private
business use of that project. Neither proceeds of the
2017 Bonds nor 2017 Qualified Equity is allocated to
the uses of the 1998 Project. Proceeds of the 1998
Bonds are not allocated to uses of the 2017 Project.
Par 6. Section 1.141–12 is amended
by:
a. Revising the last sentence of para-
graph (d)(1).
b. Redesignating paragraphs (d)(3)
through (d)(5) as (d)(4) through (d)(6).
c. Adding new paragraph (d)(3).
d. Revising paragraph (i)(1).
e. Redesignating paragraph (i)(2) as
(i)(3).
f. Adding new paragraph (i)(2).
g. Revising paragraphs (j), and (k),Ex-
ample 8.
The revisions and additions read as fol-
lows:
§ 1.141–12 Remedial actions.
*****
(d)***(1)***Except as provided
in paragraph (d)(3) of this section, if the
bonds are not redeemed within 90 days of
the date of the deliberate action, a defea-
sance escrow must be established for
those bonds within 90 days of the delib-
erate action.
Bulletin No. 2015– 45November 9, 2015
635

*****
(3)Anticipatory remedial action. The
requirements of paragraphs (d)(1) and (2)
of this section for redemption or defea-
sance of the nonqualified bonds within 90
days of the deliberate action are met if the
issuer declares its official intent to redeem
or defease all of the bonds that would
become nonqualified bonds in the event of
a subsequent deliberate action that would
cause the private business tests or the pri-
vate loan financing test to be met and
redeems or defeases such bonds prior to
that deliberate action. The issuer must de-
clare its official intent on or before the
date on which it redeems or defeases such
bonds, and the declaration of intent must
identify the financed property or loan with
respect to which the anticipatory remedial
action is being taken and describe the de-
liberate action that potentially may result
in the private business tests being met (for
example, sale of financed property that the
buyer may then lease to a nongovernmen-
tal person). Rules similar to those in
§ 1.150–2(e) (regarding official intent for
reimbursement bonds) apply to declara-
tions of intent under this paragraph (d)(3),
including deviations in the descriptions of
the project or loan and deliberate action
and the reasonableness of the official in-
tent.
*****
(i)***
(1) If a remedial action is taken under
paragraph (d) of this section, the amount
of private business use or private loans
resulting from the deliberate action that is
taken into account for purposes of deter-
mining whether the bonds are private ac-
tivity bonds is that portion of the remain-
ing bonds that is used for private business
use or private loans (as calculated under
paragraph (j) of this section);
(2) If a remedial action is taken under
paragraph (e) or (f) of this section, the
amount of private business use or private
loans resulting from the deliberate action
is not taken into account for purposes of
determining whether the bonds are private
activity bonds; and
*****
(j)Nonqualified bonds—(1)Amount of
nonqualified bonds.The nonqualified
bonds are a portion of the outstanding
bonds in an amount that, if the remaining
bonds were issued on the date on which
the deliberate action occurs, the remaining
bonds would not meet the private business
use test or private loan financing test, as
applicable. For this purpose, the amount
of private business use is the greatest per-
centage of private business use in any
one-year period commencing with the
one-year period in which the deliberate
action occurs.
(2)Allocation of nonqualified bonds.
Allocations of nonqualified bonds must be
made on a pro rata basis, except that, for
purposes of paragraph (d) of this section
(relating to redemption or defeasance), an
issuer may treat any bonds of an issue as
the nonqualified bonds so long as—
(i) The remaining weighted average
maturity of the issue, determined as of the
date on which the nonqualified bonds are
redeemed or defeased (determination
date), and excluding from the determina-
tion the nonqualified bonds redeemed or
defeased by the issuer in accordance with
this section, is not greater than
(ii) The remaining weighted average
maturity of the issue, determined as of the
determination date, but without regard to
the redemption or defeasance of any
bonds (including the nonqualified bonds)
occurring on the determination date.
(k)***
Example 8.Compliance after remedial action.In
2007, City G issues bonds with proceeds of $10
million to finance a courthouse. The bonds have a
weighted average maturity that does not exceed 120
percent of the reasonably expected economic life of
the courthouse. City G enters into contracts with
nongovernmental persons that result in private busi-
ness use of 10 percent of the courthouse per year.
More than 10 percent of the debt service on the issue
is secured by private security or payments. In 2019,
in a bona fide and arm’s length arrangement, City G
enters into a management contract with a nongov-
ernmental person that results in private business use
of an additional 40 percent of the courthouse per
year during the remaining term of the bonds. City G
immediately redeems the nonqualified bonds, or
44.44 percent of the outstanding bonds. This is the
portion of the outstanding bonds that, if the remain-
ing bonds were issued on the date on which the
deliberate action occurs, the remaining bonds would
not meet the private business use test, treating the
amount of private business use as the greatest per-
centage of private business use in any one-year pe-
riod commencing with the one-year period in which
the deliberate action occurs (50 percent). This per-
centage is computed by dividing the percentage of
the facility used for a government use (50 percent)
by the minimum amount of government use required
(90 percent), and subtracting the resulting percentage
(55.56 percent) from 100 percent (44.44 percent).
For purposes of subsequently applying section 141
to the issue, City G may continue to use all of the
proceeds of the outstanding bonds in the same man-
ner (that is, for the courthouse and the private busi-
ness use) without causing the issue to meet the
private business use test. The issue continues to meet
the private security or payment test. The result would
be the same if City G, instead of redeeming the
bonds, established a defeasance escrow for those
bonds, provided that the requirement of paragraph
(d)(5) of this section is met. If City G takes a sub-
sequent deliberate action that results in further pri-
vate business use, it must take into account 10 per-
cent of private business use in addition to that caused
by the second deliberate act.
Par 7. Section 1.141–13 is amended by
revising paragraph (d)(1) and paragraph
(g),Example 5,to read as follows:
§ 1.141–13 Refunding issues.
*****
(d)Multipurpose issue allocations—
(1)In general. For purposes of section
141, unless the context clearly requires
otherwise, § 1.148–9(h) applies to alloca-
tions of multipurpose issues (as defined in
§ 1.148–1(b)), including allocations in-
volving the refunding purposes of the is-
sue. An allocation under this paragraph
(d) may be made at any time, but once
made, may not be changed. An allocation
is not reasonable under this paragraph (d)
if it achieves more favorable results under
section 141 than could be achieved with
actual separate issues. Each of the sepa-
rate issues under the allocation must con-
sist of one or more tax-exempt bonds.
Allocations made under this paragraph (d)
and § 1.148–9(h) must be consistent for
purposes of sections 141 and 148.
*****
(g)***
Example 5.Multipurpose issue. (i) In 2017, State
D issues bonds to finance the construction of two
office buildings, Building 1 and Building 2. D ex-
pends an equal amount of the proceeds on each
building. D enters into arrangements that result in
private business use of 8 percent of Building 1 and
12 percent of Building 2 during the measurement
period under § 1.141–3(g) and private payments of 4
percent of the 2017 bonds in respect of Building 1
and 6 percent of the 2017 bonds in respect of Build-
ing 2. These arrangements result in a total of 10
percent of the proceeds of the 2017 bonds being used
for a private business use and total private payments
of 10 percent. In 2022, D purports to make a multi-
purpose issue allocation under paragraph (d) of this
section of the outstanding 2017 bonds, allocating the
issue into two separate issues of equal amounts with
one issue allocable to Building 1 and the second
allocable to Building 2. An allocation is unreason-
able under paragraph (d) of this section if it achieves
more favorable results under section 141 than could
November 9, 2015Bulletin No. 2015– 45
636

be achieved with actual separate issues. D’s alloca-
tion is unreasonable because, if permitted, it would
allow more favorable results under section 141 for
the 2017 bonds (that is, private business use and
private payments that exceed 10 percent for the 2017
bonds allocable to Building 2) than could be
achieved with actual separate issues. In addition, if
D’s purported allocation was intended to result in
two separate issues of tax-exempt governmental
bonds (versus tax-exempt private activity bonds), the
allocation would violate paragraph (d) of this section
in the first instance because the allocation to the
separate issue for Building 2 would fail to qualify
separately as an issue of tax-exempt governmental
bonds as a result of its 12 percent of private business
use and private payments.
(ii) The facts are the same as in paragraph (i) of
thisExample 5, except that D enters into arrange-
ments only for Building 1, and it expects no private
business use of Building 2. In 2022, D allocates an
equal amount of the outstanding 2017 bonds to
Building 1 and Building 2. D selects particular bonds
for each separate issue such that the allocation does
not achieve a more favorable result than could have
been achieved by issuing actual separate issues. D
uses the same allocation for purposes of both sec-
tions 141 and 148. D’s allocation is reasonable.
(iii) The facts are the same as in paragraph (ii) of
thisExample 5, except that as part of the same issue,
D issues bonds for a privately used airport. The
airport bonds, if issued as a separate issue, would be
qualified private activity bonds. The remaining
bonds, if issued separately from the airport bonds,
would be governmental bonds. Treated as one issue,
however, the bonds are taxable private activity
bonds. Therefore, D makes its allocation of the
bonds under paragraph (d) of this section and
§ 1.150–1(c)(3) into 3 separate issues on or before
the issue date. Assuming all other applicable require-
ments are met, the bonds of the respective issues will
be tax-exempt qualified private activity bonds or
governmental bonds.
*****
Par. 8. Section 1.141–15 is amended
by:
a. Revising the heading and paragraph
(a).
b. Adding paragraph (b)(4),
c. Revising paragraphs (e) and (i).
d. Adding paragraphs (l) and (m).
The revisions and additions read as fol-
lows:
§ 1.141–15 Effective/applicability dates.
(a)Scope. The effective dates of this
section apply for purposes of §§ 1.141–1
through 1.141–14, 1.145–1 through 1.145–2,
and 1.150–1(a)(3) and the definition of
bond documents contained in § 1.150–1(b).
(b)***
(4)Certain remedial actions—(i)Gen-
eral rule. For bonds subject to § 1.141–12,
the provisions of § 1.141–12(d)(3), (i), (j),
and (k),Example 8,apply to deliberate
actions that occur on or after January 25,
2016.
(ii)Special rule for allocations of non-
qualified bonds. For purposes of § 1.141–
12(j)(2), in addition to the allocation
methods permitted in § 1.141–12(j)(2), an
issuer may treat bonds with the longest
maturities (determined on a bond-by-bond
basis) as the nonqualified bonds, but only
for bonds sold before January 25, 2016.
*****
(e)Permissive application of certain
sections—(1)In general. The following
sections may each be applied by issuers to
any bonds:
(i) Section 1.141–3(b)(4);
(ii) Section 1.141–3(b)(6); and
(iii) Section 1.141–12.
(2)Transition rule for pre-effective
date bonds.For purposes of paragraphs
(e)(1) and (h) of this section, issuers may
apply § 1.141–12 to bonds issued before
May 16, 1997, without regard to para-
graph (d)(5) thereof with respect to delib-
erate actions that occur on or after April
21, 2003.
*****
(i)Permissive application of certain
regulations relating to output facilities.
Issuers may apply each of the following
sections to any bonds used to finance out-
put facilities:
(1) Section 1.141–6;
(2) Section 1.141–7(f)(3); and
(3) Section 1.141–7(g).
*****
(l)Applicability date for certain regu-
lations relating to allocation and account-
ing—(1)In general. Except as otherwise
provided in this section, §§ 1.141–1(e),
1.141–3(g)(2)(v), 1.141–6, 1.141–13(d),
and 1.145–2(b)(4), (b)(5), and (c)(2) apply
to bonds that are sold on or after January
25, 2016, and to which the 1997 regula-
tions (as defined in paragraph (b)(1) of
this section) apply.
(2)Permissive application. Issuers may
apply §§ 1.141–1(e), 1.141–3(g)(2)(v),
1.141–6, and 1.145–2(b)(4), (b)(5), and
(c)(2), in whole but not in part, to bonds to
which the 1997 regulations apply.
(m)Permissive retroactive application
of certain regulations. Issuers may apply
§ 1.141–13(d) to bonds to which
§ 1.141–13 applies.
Par. 9. Section 1.145–2 is amended by
adding paragraphs (b)(4) and (b)(5) and
revising the first sentence of paragraph
(c)(2) to read as follows:
§ 1.145–2 Application of private activity
bond regulations.
*****
(b)***
(4) References togovernmental bonds
in § 1.141–6 mean qualified 501(c)(3)
bonds.
(5) References toownership by gov-
ernmental personsin § 1.141–6 mean
ownership by governmental persons or
501(c)(3) organizations.
(c)***
(2)Costs of issuance. Sections 1.141–
3(g)(6) and 1.141–6(d) do not apply to the
extent costs of issuance are allocated
among the other purposes for which the
proceeds are used or to portions of a proj-
ect.***
*****
Par. 10. Section 1.150–5 is amended
by revising paragraph (a)(1) to read as
follows:
§ 1.150 –5 Filing notices and elections.
(a)***
(1) Section 1.141–12(d)(4);
*****
John Dalrymple
Deputy Commissioner for
Services and Enforcement.
Approved: October 6, 2015
Mark J. Mazur
Assistant Secretary of
the Treasury (Tax Policy).
(Filed by the Office of the Federal Register on October 26,
2015, 8:45 a.m., and published in the issue of the Federal
Register for October 27, 2015, 80 F.R. 65637)
Bulletin No. 2015– 45November 9, 2015
637

Part III. Administrative, Procedural, and Miscellaneous
26 CFR 601.201: Rulings and determination letters.
(Also: Part I, Sections 846; 1.846 –1.)
Rev. Proc. 2015–52
SECTION 1. PURPOSE
This revenue procedure prescribes the
loss payment patterns and discount factors
for the 2015 accident year. These factors
will be used to compute discounted un-
paid losses under § 846 of the Internal
Revenue Code.SeeRev. Proc. 2012–44,
2012–49 I.R.B. 645, for background con-
cerning the loss payment patterns and ap-
plication of the discount factors.
SECTION 2. SCOPE
This revenue procedure applies to any
taxpayer that is required to discount un-
paid losses under § 846 for a line of busi-
ness using the discount factors published
by the Secretary.
SECTION 3. TABLES OF
DISCOUNT FACTORS
.01 The following tables present sepa-
rately for each line of business the dis-
count factors under § 846 for accident
year 2015. All the discount factors pre-
sented in this section were determined us-
ing the applicable interest rate under
§ 846(c) for 2015, which is 1.68 percent,
and by assuming all loss payments occur
in the middle of the calendar year.
.02 If the groupings of individual lines of
business on the annual statement change,
taxpayers must discount unpaid losses on
the resulting line of business in accordance
with the discounting patterns that would
have applied to those unpaid losses based on
their classification on the 2010 annual state-
ment.SeeRev. Proc. 2012–44, 2012–49
I.R.B. 645, section 2, for additional back-
ground on discounting under § 846 and the
use of the Secretary’s tables.
.03 Section V of Notice 88–100,
1988–2 C.B. 439, sets forth a composite
method for computing discounted unpaid
losses for accident years that are not sep-
arately reported on the annual statement.
The tables separately provide discount
factors for taxpayers who elect to use the
composite method of section V of Notice
88–100.SeeRev. Proc. 2002–74, 2002–2
C.B. 980.
.04 Tables.
Accident and Health (Other Than
Disability Income or Credit Disability
Insurance)
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
99.1704 percent to discount unpaid losses
incurred in this line of business in the
2015 accident year and that are outstand-
ing at the end of the 2015 and later taxable
years.
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount all unpaid
losses in this line of business that are
outstanding at the end of the 2015 taxable
year.
Auto Physical Damage
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201590.265790.26579.73439.647499.1071
201699.74789.48220.25220.248098.3512
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
2017 and later years0.12610.12610.125099.1704
Taxpayers that use the composite method of Notice 88–100 should use 99.1704 percent to discount unpaid losses incurred in
this line of business in 2015 and prior years and that are outstanding at the end of the 2017 taxable year.
November 9, 2015Bulletin No. 2015– 45
638

Commercial Auto/Truck Liability/Medical
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201525.703425.703474.296671.654796.4441
201648.266422.562951.733650.106896.8554
201767.883419.617132.116631.167497.0447
201882.063014.179517.937017.392996.9664
201990.41618.35329.58399.262196.6421
202094.62934.21325.37075.169396.2490
202197.02032.39102.97972.845195.4824
202298.22831.20811.77171.674894.5294
202398.66530.43701.33471.262394.5726
202498.86350.19821.13651.083695.3460
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
20250.19820.93820.901996.1261
20260.19820.74000.717196.9117
20270.19820.54170.529397.6994
20280.19820.34350.338398.4775
2029 and later years0.19820.14530.144199.1704
Taxpayers that use the composite method of Notice 88–100 should use 96.6667 percent to discount unpaid losses incurred in
this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
Composite
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201539.528139.528160.471957.626995.2953
201662.026722.498637.973335.908294.5617
201773.701711.675026.298324.738894.0699
201880.08466.383019.915418.718193.9881
201985.78185.697114.218213.287893.4557
202090.28094.49929.71918.974292.3358
202191.95881.67788.04127.433192.4370
202292.97221.01347.02786.536093.0027
202394.08351.11135.91655.525293.3872
202494.74690.66345.25314.949294.2135
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
20250.66344.58984.363495.0678
20260.66343.92643.767895.9602
20270.66343.26313.162296.9087
20280.66342.59972.546497.9500
2029 and later years0.66341.93641.920399.1704
Taxpayers that use the composite method of Notice 88–100 should use 95.7290 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
Bulletin No. 2015– 45November 9, 2015
639

Fidelity/Surety
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201522.844922.844977.155175.436297.7720
201655.858533.013744.141543.413798.3512
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
2017 and later years22.070722.070721.887799.1704
Taxpayers that use the composite method of Notice 88–100 should use 99.1704 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2017 taxable year.
Financial Guaranty/Mortgage Guaranty
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
20156.25156.251593.748591.577997.6847
201643.015436.763956.984656.045098.3512
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
2017 and later years28.492328.492328.255999.1704
Taxpayers that use the composite method of Notice 88–100 should use 99.1704 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2017 taxable year.
International (Composite)
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201539.528139.528160.471957.626995.2953
201662.026722.498637.973335.908294.5617
201773.701711.675026.298324.738894.0699
201880.08466.383019.915418.718193.9881
201985.78185.697114.218213.287893.4557
202090.28094.49929.71918.974292.3358
202191.95881.67788.04127.433192.4370
202292.97221.01347.02786.536093.0027
202394.08351.11135.91655.525293.3872
202494.74690.66345.25314.949294.2135
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
20250.66344.58984.363495.0678
20260.66343.92643.767895.9602
20270.66343.26313.162296.9087
20280.66342.59972.546497.9500
2029 and later years0.66341.93641.920399.1704
Taxpayers that use the composite method of Notice 88–100 should use 95.7290 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
November 9, 2015Bulletin No. 2015– 45
640

Medical Professional Liability — Claims-Made
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
20156.34626.346293.653888.824494.8434
201623.095816.749676.904273.427095.4785
201741.682718.586858.317355.918295.8861
201856.526714.844043.473341.889596.3568
201971.288214.761528.711827.708396.5047
202082.302311.014117.697717.067596.4390
202186.51434.212013.485713.107097.1918
202291.14224.62798.85788.660697.7734
202394.86643.72425.13365.050798.3855
202497.54082.67452.45922.438899.1704
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
2025 and later years2.4592––99.1704
Taxpayers that use the composite method of Notice 88–100 should use 99.1704 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
Medical Professional Liability — Occurrence
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
20151.20441.204498.795691.150692.2618
20164.33763.133295.662489.522593.5817
201711.81617.478588.183983.485494.6719
201824.708812.892875.291271.887495.4792
201942.386317.677457.613755.269895.9316
202057.160014.773842.840041.301096.4076
202168.979711.819631.020330.076396.9568
202282.424713.445017.575317.024196.8638
202386.70844.283713.291612.990697.7352
202491.67014.96178.32998.205698.5079
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
2025 and later years4.96173.36833.340399.1704
Taxpayers that use the composite method of Notice 88–100 should use 98.5586 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
Bulletin No. 2015– 45November 9, 2015
641

Miscellaneous Casualty
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201569.073169.073130.926930.316398.0258
201685.516916.443814.483114.244398.3512
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
2017 and later years7.24157.24157.181599.1704
Taxpayers that use the composite method of Notice 88–100 should use 99.1704 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2017 taxable year.
Multiple Peril Lines (Homeowners/Farmowners, Commercial Multiple Peril, and Special Liability (Ocean Marine,
Aircraft (All Perils), Boiler and Machinery))
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201560.971960.971939.028137.817796.8985
201682.905921.934117.094116.335595.5623
201789.27836.372410.721710.184294.9872
201891.56052.28228.43958.054095.4327
201994.42552.86495.57455.300495.0828
202096.58992.16443.41013.206994.0420
202197.60231.01242.39772.239993.4201
202298.00340.40111.99661.873193.8151
202398.34100.33761.65901.564294.2830
202498.57270.23171.42731.356895.0605
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
20250.23171.19571.146095.8478
20260.23170.96400.931796.6463
20270.23170.73240.713897.4581
20280.23170.50070.492298.2899
2029 and later years0.23170.26910.266899.1704
Taxpayers that use the composite method of Notice 88–100 should use 96.3945 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
Other (Including Credit)
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201554.658954.658945.341144.579598.3204
201684.231429.572515.768615.508698.3512
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
2017 and later years7.88437.88437.818999.1704
Taxpayers that use the composite method of Notice 88–100 should use 99.1704 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2017 taxable year.
November 9, 2015Bulletin No. 2015– 45
642

Other Liability — Claims-Made
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
20157.42707.427092.573087.480094.4984
201625.280817.853874.719270.946694.9508
201744.210818.930155.789253.050095.0902
201856.495612.284843.504441.553895.5162
201969.283812.788330.716229.356695.5739
202077.66628.382322.333821.397495.8070
202183.15725.491016.842816.219996.3016
202288.17775.020511.822311.429996.6807
202393.13154.95396.86856.626696.4791
202492.9490–0.18267.05106.922198.1708
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
20253.26393.78713.747198.9441
2026 and later years3.26390.52320.518999.1704
Taxpayers that use the composite method of Notice 88–100 should use 98.9650 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
Other Liability — Occurrence
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201510.072110.072189.927983.642593.0106
201624.399514.327475.600570.600493.3861
201737.336612.937262.663458.741193.7408
201852.414215.077647.585844.524293.5663
201964.343711.929535.656333.243093.2318
202073.79509.451226.205024.271292.6202
202179.77565.980720.224418.648292.2067
202284.09634.320615.903714.604791.8321
202285.68781.591514.312213.245292.5451
202486.92241.234613.077612.222993.4639
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
20251.234611.843111.183394.4293
20261.234610.608510.126395.4547
20271.23469.37409.051696.5607
20281.23468.13947.958797.7804
2029 and later years1.23466.90486.847699.1704
Taxpayers that use the composite method of Notice 88–100 should use 95.2710 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
Bulletin No. 2015– 45November 9, 2015
643

Private Passenger Auto Liability/Medical
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201542.988142.988157.011955.580297.4887
201671.993129.005128.006927.266297.3556
201784.825012.831815.175014.785197.4308
201892.35007.52517.65007.445597.3277
201996.26653.91653.73353.621396.9973
202097.98801.72142.01201.946396.7363
202198.79580.80781.20421.164596.7011
202299.24450.44870.75550.731596.8343
202399.45430.20970.54570.532497.5483
202499.63700.18270.36300.357098.3568
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
2025 and later years0.18270.18030.178899.1704
Taxpayers that use the composite method of Notice 88–100 should use 99.1704 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
Products Liability — Claims-Made
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
20154.52704.527095.473088.340792.5295
201616.013411.486583.986678.242393.1605
201745.131329.117954.868750.195391.4826
201839.2459–5.885460.754156.973393.7768
201944.83575.589855.164352.293894.7965
202072.161527.325827.838525.618092.0236
202180.44488.283419.555217.695790.4915
202273.2957–7.149126.704325.201994.3742
202387.482414.186612.517611.320090.4327
202487.75000.267712.250011.240391.7579
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
20250.267711.982311.159393.1310
20260.267711.714711.076894.5553
20270.267711.447010.993096.0341
20280.267711.179310.907897.5711
2029 and later years0.267710.911710.821199.1704
Taxpayers that use the composite method of Notice 88–100 should use 95.1288 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
November 9, 2015Bulletin No. 2015– 45
644

Products Liability – Occurrence
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
20157.19367.193692.806485.574992.2080
201616.95559.761983.044577.169092.9249
201728.362411.406971.637666.963193.4748
201839.794511.432160.205556.560493.9455
201954.390614.596145.609442.792493.8236
202060.90606.515439.094036.941494.4937
202167.77606.870032.224030.634595.0674
202275.71197.935924.288123.146995.3014
202379.59663.884720.403419.618696.1535
202483.94304.346416.057015.565496.9385
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
20254.346411.710711.444297.7248
20264.34647.36437.253898.4990
2027 and later years4.34643.01792.992999.1704
Taxpayers that use the composite method of Notice 88–100 should use 98.1163 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
Reinsurance — Nonproportional Assumed Property
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201520.100320.100379.899777.223396.6502
201659.283339.183040.716739.009895.8079
201773.086713.803426.913325.746395.6639
201880.36757.280819.632518.837195.9487
201987.72787.360312.272211.731795.5959
202094.44546.71755.55465.155192.8065
202196.51432.06893.48573.155590.5250
202297.94681.43262.05321.763985.9122
202397.4560–0.49092.54402.288589.9567
202497.0652–0.39082.93482.721092.7154
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
20250.18362.75122.581693.8350
20260.18362.56752.439895.0234
20270.18362.38392.295696.2949
20280.18362.20032.149097.6687
2029 and later years0.18362.01661.999999.1704
Taxpayers that use the composite method of Notice 88–100 should use 94.8999 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
Bulletin No. 2015– 45November 9, 2015
645

Reinsurance — Nonproportional Assumed Liability
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
20153.49873.498796.501389.048292.2767
201623.217019.718376.783070.661092.0268
201743.748320.531356.251751.145090.9217
201838.9131–4.835261.086956.879993.1131
201947.92989.016752.070248.743493.6108
202080.031532.101719.968517.192086.0957
202176.5053–3.529223.494721.036689.5374
202278.17011.664921.829919.711290.2946
202380.07171.901519.928318.124990.9504
202479.8791–0.192620.120918.623692.5584
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
20251.124618.996317.802593.7153
20261.124617.871716.967594.9407
20271.124616.747116.118696.2469
20281.124615.622515.255497.6499
2029 and later years1.124614.497914.377699.1704
Taxpayers that use the composite method of Notice 88–100 should use 94.8307 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
Reinsurance — Nonproportional Assumed Financial Lines
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
20151.54231.542398.457792.634094.0850
201620.927319.385079.072774.643194.3980
201730.47059.543369.529566.274095.3179
201846.304315.833753.695751.421295.7641
201951.84645.542148.153646.696696.9743
202072.786920.940527.213126.365496.8851
202182.09679.309717.903317.420897.3044
202289.26307.166410.737010.487197.6728
202395.36926.10624.63084.506097.3057
202496.79951.43033.20053.139498.0930
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
20251.43031.77021.749998.8558
2026 and later years1.43030.33990.337099.1704
Taxpayers that use the composite method of Notice 88–100 should use 98.8979 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
November 9, 2015Bulletin No. 2015– 45
646

Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Burglary and Theft)
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201555.614555.614544.385543.756598.5830
201689.332833.718210.667210.491398.3512
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
2017 and later years5.33365.33365.289499.1704
Taxpayers that use the composite method of Notice 88–100 should use 99.1704 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2017 taxable year.
Warranty
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201585.410185.410114.589914.457699.0932
201699.538814.12870.46120.453698.3512
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
2017 and later years0.23060.23060.228799.1704
Taxpayers that use the composite method of Notice 88–100 should use 99.1704 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2017 taxable year.
Workers’ Compensation
Estimated
Cumulative
Losses Paid
Estimated
Losses Paid
Each Year
Unpaid
Losses at
Year End
Discounted
Unpaid
Losses at
Year End
Discount
Factors
Tax Year(%)(%)(%)(%)(%)
201521.897321.897378.102772.085392.2956
201643.496221.598956.503851.516891.1741
201756.006112.509943.993939.767790.3938
201863.55447.548236.445632.824490.0641
201968.98805.433731.012027.896889.9549
202073.95674.968726.043323.355289.6784
202176.05802.101323.942021.628790.3379
202277.63651.578522.363520.400491.2217
202380.11942.482819.880618.239591.7448
202481.34561.226218.654417.309492.7898
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid
losses incurred in this line of business in the 2015 accident year and that are outstanding at the end of the tax year shown.
20251.226217.428116.363793.8922
20261.226216.201915.402195.0634
20271.226214.975714.424396.3185
20281.226213.749413.430197.6780
2029 and later years1.226212.523212.419399.1704
Taxpayers that use the composite method of Notice 88–100 should use 95.3961 percent to discount unpaid losses incurred
in this line of business in 2015 and prior years and that are outstanding at the end of the 2025 taxable year.
Bulletin No. 2015– 45November 9, 2015
647

SECTION 4. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Linda K. Boyd of the Office
of Associate Chief Counsel (Financial In-
stitutions & Products). For further infor-
mation regarding this revenue procedure
contact Ms. Boyd at (202) 317-6995 (not
a toll free number).
26 CFR 601.201: Rulings and determination letters.
(Also: Part I, Section 832, 846; 1.832– 4, 1.846 –1.)
Rev. Proc. 2015–54
SECTION 1. PURPOSE
This revenue procedure prescribes the
salvage discount factors for the 2015 ac-
cident year. These factors must be used to
compute discounted estimated salvage re-
coverable under § 832 of the Internal Rev-
enue Code.
SECTION 2. BACKGROUND
Section 832(b)(5)(A) requires that all
estimated salvage recoverable (including
that which cannot be treated as an asset
for state accounting purposes) be taken
into account in computing the deduction
for losses incurred. Under § 832(b)(5)(A),
paid losses are reduced by salvage and
reinsurance recovered during the taxable
year. This amount is adjusted to reflect
changes in discounted unpaid losses on
nonlife insurance contracts and in unpaid
losses on life insurance contracts. An ad-
justment is then made to reflect any changes
in discounted estimated salvage recoverable
and in reinsurance recoverable.
Pursuant to § 832(b), the amount of
estimated salvage is determined on a dis-
counted basis in accordance with proce-
dures established by the Secretary.
SECTION 3. SCOPE
This revenue procedure applies to any
taxpayer that is required to discount esti-
mated salvage recoverable under § 832.
SECTION 4. TABLES OF
DISCOUNT FACTORS
.01 The following tables present sepa-
rately for each line of business the dis-
count factors under § 832 for the 2015
accident year. All the discount factors pre-
sented in this section were determined us-
ing the applicable interest rate under
§ 846(c) for 2015, which is 1.68 percent,
and by assuming all estimated salvage is
recovered in the middle of the calendar
year.
.02 These tables must be used by tax-
payers irrespective of whether they
elected to discount unpaid losses using
their own experience under § 846(e).
.03 Section V of Notice 88–100,
1988–2 C.B. 439, provides a composite
discount factor to be used in determining
the discounted unpaid losses for accident
years that are not separately reported on
the annual statement approved by the Na-
tional Association of Insurance Commis-
sioners. The tables separately provide dis-
count factors for taxpayers who elect to
use the composite method. Rev. Proc.
2002–74, 2002–2 C.B. 980, clarifies that
for certain insurance companies subject to
tax under § 831 the composite method for
discounting unpaid losses set forth in No-
tice 88–100, section V, is permitted but
not required. Rev. Proc. 2002–74 further
provides alternative methods for comput-
ing discounted unpaid losses that are per-
mitted for insurance companies not using
the composite method, and sets forth a
procedure for insurance companies to ob-
tain automatic consent of the Commis-
sioner to change to one of the methods
described therein.
.04 Tables.
Accident and Health (Other Than
Disability Income or Credit Disability
Insurance)
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
99.1704 percent to discount salvage re-
coverable with respect to losses incurred
in this line of business in the 2015 acci-
dent year as of the end of the 2015 and
later taxable years.
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount all salvage
recoverable in this line of business as of
the end of the 2015 taxable year.
Auto Physical Damage
Tax Year
Discount
Factors
(%)
201598.8182
201698.3512
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown withrespect
to losses incurred in this line of business
in the 2015 accident year.
2016 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Commercial Auto/Truck
Liability/Medical
Tax Year
Discount
Factors
(%)
201596.9251
201696.5972
201796.8626
201896.4644
201996.7729
202096.5774
202193.9900
202292.9148
202394.6305
202495.4038
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factors to
discount salvage recoverable as of the
end of the tax year shown withrespect
to losses incurred in this line of business
in the 2015 accident year.
202596.1834
202696.9679
202797.7528
202898.5231
2029 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
96.7254 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
November 9, 2015Bulletin No. 2015– 45
648

Composite
Tax Year
Discount
Factors
(%)
201596.7187
201696.5829
201796.7169
201895.7813
201996.0790
202095.8066
202195.7216
202296.1287
202396.1442
202496.9294
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factors to
discount salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
202597.7161
202698.4916
2027 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
98.1110 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Fidelity/Surety
Tax Year
Discount
Factors
(%)
201597.3600
201698.3512
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
2017 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Financial Guaranty/Mortgage
Guaranty
Tax Year
Discount
Factors
(%)
201597.0578
201698.3512
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
2017 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
International (Composite)
Tax Year
Discount
Factors
(%)
201596.7187
201696.5829
201796.7169
201895.7813
201996.0790
202095.8066
202195.7216
202296.1287
202396.1442
202496.9294
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factors to
discount salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
202597.7161
202698.4916
2027 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
98.1110 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Medical Professional Liability —
Claims-Made
Tax Year
Discount
Factors
(%)
201596.2853
201696.8197
201795.3511
201897.0671
201997.2086
202097.5013
202198.0593
202298.4368
202398.4246
202499.1704
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
2025 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Medical Professional Liability —
Occurrence
Tax Year
Discount
Factors
(%)
201596.6820
201697.9520
201797.6193
201898.3869
201997.7715
202098.6238
202198.2305
202298.2787
202397.1641
202497.9463
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factors to
discount salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
Bulletin No. 2015– 45November 9, 2015
649

Medical Professional Liability —
Occurrence
Tax Year
Discount
Factors
(%)
202598.7026
2026 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
98.7946 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Miscellaneous Casualty
Tax Year
Discount
Factors
(%)
201597.7462
201698.3512
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
2017 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Multiple Peril Lines (Homeown-
ers/Farmowners, Commercial
Multiple Peril, and Special Liabil-
ity (Ocean Marine, Aircraft (All
Perils), Boiler and Machinery))
Tax Year
Discount
Factors
(%)
201597.1583
201697.1289
201797.4482
201896.2697
201997.2414
202097.5378
202197.6302
202297.5696
202397.3653
202499.1704
Multiple Peril Lines (Homeown-
ers/Farmowners, Commercial
Multiple Peril, and Special Liabil-
ity (Ocean Marine, Aircraft (All
Perils), Boiler and Machinery))
Tax Year
Discount
Factors
(%)
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
2025 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage re-
coverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Other (Including Credit)
Tax Year
Discount
Factors
(%)
201598.1918
201698.3512
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
2017 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Other Liability — Claims-Made
Tax Year
Discount
Factors
(%)
201596.1502
201696.3835
201796.4127
201897.1266
201997.1544
Other Liability — Claims-Made
Tax Year
Discount
Factors
(%)
202097.2574
202197.9465
202297.9289
202398.1008
202498.8644
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown withrespect
to losses incurred in this line of business
in the 2015 accident year.
2025 and later years99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Other Liability – Occurrence
Tax Year
Discount
Factors
(%)
201594.1793
201694.8881
201795.6307
201896.0395
201996.5208
202097.1856
202197.2982
202297.2404
202398.3928
202499.1704
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
2025 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
November 9, 2015Bulletin No. 2015– 45
650

Private Passenger Auto Liability/
Medical
Tax Year
Discount
Factors
(%)
201597.7016
201697.6211
201797.6057
201897.2325
201997.2234
202097.3129
202197.1676
202297.3660
202398.1400
202498.9085
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
2025 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Products Liability — Claims-
Made
Tax Year
Discount
Factors
(%)
201593.8701
201694.8470
201793.7313
201897.0350
201995.7792
202098.9292
202197.8379
202291.3409
202398.9724
202499.1704
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
Products Liability — Claims-
Made
Tax Year
Discount
Factors
(%)
2025 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Products Liability — Occurrence
Tax Year
Discount
Factors
(%)
201594.4161
201694.4776
201795.0104
201895.8201
201996.1811
202096.7254
202196.6815
202298.0432
202397.6834
202498.4641
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
2025 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Reinsurance — Nonproportional
Assumed Property
Tax Year
Discount
Factors
(%)
201595.7288
201697.1495
201795.8501
201895.0763
201996.4528
202095.8143
Reinsurance — Nonproportional
Assumed Property
Tax Year
Discount
Factors
(%)
202198.1847
202294.0969
202397.6004
202498.3971
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
2025 and later years99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
98.8352 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Reinsurance — Nonproportional
Assumed Liability
Tax Year
Discount
Factors
(%)
201592.3615
201693.8075
201790.4743
201891.3125
201994.9554
202096.8258
202196.3100
202296.6545
202395.5926
202498.0103
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factors to
discount salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
202598.7674
2026 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
98.8364 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Bulletin No. 2015– 45November 9, 2015
651

Reinsurance — Nonproportional
Assumed Financial Lines
Tax Year
Discount
Factors
(%)
201592.9077
201693.9633
201796.1863
201896.2697
201997.1118
202095.9533
202197.1279
202297.0921
202399.0377
202499.1704
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
2025 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Special Property (Fire, Allied
Lines, Inland Marine, Earth-
quake, Burglary and Theft)
Tax Year
Discount
Factors
(%)
201597.8460
201698.3512
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
2017 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Warranty
Tax Year
Discount
Factors
(%)
201597.5593
201698.3512
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factor to dis-
count salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
2017 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
99.1704 percent to discount salvage
recoverable as of the end of the 2017
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
Workers’ Compensation
Tax Year
Discount
Factors
(%)
201594.8444
201695.7991
201796.3073
201895.3961
201995.0278
202094.6138
202194.9915
202295.8699
202396.0405
202496.8288
Taxpayers that do not use the com-
posite method of Notice 88–100
should use the following factors to
discount salvage recoverable as of the
end of the tax year shown with re-
spect to losses incurred in this line of
business in the 2015 accident year.
202597.6221
202698.4143
2027 and later years 99.1704
Taxpayers that use the composite
method of Notice 88–100 should use
98.0545 percent to discount salvage
recoverable as of the end of the 2025
taxable year with respect to losses in-
curred in this line of business in 2015
and prior years.
SECTION 5. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Linda K. Boyd of the Office
of Associate Chief Counsel (Financial In-
stitutions & Products). For further infor-
mation regarding this revenue procedure
contact Ms. Boyd at (202) 317-6995 (not
a toll free number).
Section 832.—Insurance
Company Taxable Income
The composite loss discount factors for Reinsur-
ance (Nonproportional Assumed Property) published
in Rev. Proc. 2015—52, page 638.
Section 846.—Discounted
Unpaid Losses Defined
The composite loss discount factors for Reinsur-
ance (Nonproportional Assumed Property) published
in Rev. Proc. 2015—52, page 638.
Section 832.—Insurance
Company Taxable Income
The salvage discount factors and payment pat-
terns are set forth for 2015. These factors must be
used to compute discounted estimated salvage recov-
erable for purposes of section 832 of the Code. See
Rev. Proc. 2015—54, page 648.
Section 846.—Discounted
Unpaid Losses Defined
The salvage discount factors and payment pat-
terns are set forth for 2015. These factors must be
used to compute discounted estimated salvage recov-
erable for purposes of section 832 of the Code. See
Rev. Proc. 2015—54, page 648.
November 9, 2015Bulletin No. 2015– 45
652

Part IV. Items of General Interest
Notice of Proposed
Rulemaking
General Allocation and
Accounting Regulations
under Section 141
REG–140379 – 02,
REG–142599 – 02
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Partial withdrawal of notice of
proposed rulemaking.
SUMMARY: This document withdraws a
portion of the notice of proposed rulemak-
ing published in theFederal Registeron
September 26, 2006 (71 FR 56072). The
withdrawn portion relates to certain gen-
eral definitions for purposes of section
141 of the Internal Revenue Code and the
treatment of partnerships for purposes of
section 145(a).
DATES: As ofOctober 27, 2015,the notice
of proposed rulemaking published in the
Federal Registeron September 26, 2006
(71 FR 56072) is partially withdrawn.
FOR FURTHER INFORMATION
CONTACT: Zoran Stojanovic, (202)
317-6980 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On September 26, 2006, the Depart-
ment of the Treasury and the IRS pub-
lished in theFederal Registerproposed
regulations (71 FR 56072; REG–140379–02,
REG–142599–02) (the Proposed Regula-
tions) that would amend certain regula-
tions under sections 141 and 145. The
Proposed Regulations include, among
other provisions, certain general defini-
tions for purposes of the private business
tests under section 141 and rules regard-
ing the treatment of certain partnerships
for purposes of the modified private busi-
ness tests and the ownership test under
section 145.This document withdraws
these general definitions and the provision
relating to the treatment of partnerships for
purposes of section 145, because these con-
cepts either are unnecessary or are otherwise
addressed as a result of other revisions to the
remaining portions of the Proposed Regula-
tions that are adopted as final regulations
published elsewhere in this edition of the
Internal Revenue Bulletin.
*****
Partial Withdrawal of a Notice of
Proposed Rulemaking
Accordingly, under the authority of 26
U.S.C. 7805, §§ 1.141–1(b) and 1.145–
2(c)(3) of the notice of proposed rulemak-
ing (REG–140379–02, REG–142599–
02) published in theFederal Registeron
September 26, 2006 (71 FR 56072), are
withdrawn.
John Dalrymple
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on October 26,
2015, 8:45 a.m., and published in the issue of the Federal
Register for October 27, 2015, 80 F.R. 65670)
Notice of Proposed
Rulemaking
Definition of Terms
Relating to Marital Status
REG–148998 –13
AGENCY:Internal Revenue Service (IRS),
Treasury.
ACTION:Notice of proposed rulemaking.
SUMMARY: This document contains
proposed regulations that reflect the hold-
ings ofObergefell v. Hodges, 576 U.S.
___, 135 S. Ct. 2584 (2015),Windsor v.
United States, 570 U.S. ___, 133 S. Ct.
2675 (2013), and Revenue Ruling
2013–17 (2013–38 IRB 201), and that de-
fine terms in the Internal Revenue Code
(Code) describing the marital status of
taxpayers. The proposed regulations pri-
marily affect married couples, employers,
sponsors and administrators of employee
benefit plans, and executors. This docu-
ment invites comments from the public
regarding these proposed regulations.
DATES: Written or electronic comments
and requests for a public hearing must be
received by December 7, 2015.
ADDRESSES: Send submissions to: CC:
PA:LPD:PR (REG–148998–13), room
5205, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be hand-
delivered Monday through Friday be-
tween the hours of 8 a.m. and 4 p.m. to
CC:PA:LPD:PR (REG–148998–13), Couri-
er’sDesk, Internal Revenue Service, 1111
Constitution Avenue, N.W., Washington,
DC; or sent electronically via the Federal
eRulemaking Portal atwww.regulations-
.gov(IRS REG–148998–13).
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
amendments to the regulations, Mark
Shurtliff at (202) 317-3400; concerning
submissions of comments and requests for
a hearing, Regina Johnson at (202) 317-
6901 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background and Explanation
of Provisions
This document contains proposed
amendments to the Income Tax Regula-
tions (26 CFR part 1), the Estate Tax
Regulations (26 CFR part 20), the Gift
Tax Regulations (26 CFR part 25), the
Generation-Skipping Transfer Tax Regu-
lations (26 CFR part 26), the Employment
Tax and Collection of Income Tax at
Source Regulations (26 CFR part 31), and
the Regulations on Procedure and Admin-
istration (26 CFR part 301).
Amendments to Regulations Incorporating
Holdings of Windsor, Obergefell, and
Revenue Ruling 2013–17
On June 26, 2013, the Supreme Court
inUnited States v. Windsor, 570 U.S. ___,
133 S. Ct. 2675 (2013), held that Section
3 of the Defense of Marriage Act, which
generally prohibited the federal govern-
ment from recognizing the marriages of
same-sex couples, is unconstitutional be-
cause it violates the principles of equal
protection and due process. Revenue Rul-
ing 2013–17 provides guidance on the
Bulletin No. 2015– 45November 9, 2015
653

Windsordecision’s effect on the IRS’s
interpretation of Code sections that refer
to taxpayers’ marital status.Cf. Notice
2014–19 (2014–47 IRB 979), amplified
by Notice 2014–37 (2014–24 IRB 1100)
(regarding the application of theWindsor
decision to qualified retirement plans);
Notice 2014–1 (2014–02 IRB 270) (re-
garding elections and reimbursements for
same-sex spouses under cafeteria plans,
flexible spending arrangements, and
health savings accounts following the
Windsor decision); Notice 2013–61
(2013–44 IRB 432) (regarding the appli-
cation of theWindsordecision and Rev.
Rul. 2013–17 to employment taxes and
special administrative procedures for em-
ployers to make adjustments or claims for
refund or credit); and Revenue Procedure
2014–18 (2014–7 IRB 513) (regarding
extensions of time for estates to make a
portability election). On June 26, 2015,
the Supreme Court inObergefell v.
Hodges, 576 U.S. ___ (2015), held that
state laws are “invalid to the extent they
exclude same-sex couples from civil mar-
riage on the same terms and conditions as
opposite-sex couples” and “that there is
no lawful basis for a State to refuse to
recognize a lawful same-sex marriage per-
formed in another State on the ground of
its same-sex character.”Obergefell, 576
U.S. at 23, 28.
In light of the holdings ofWindsorand
Obergefell, the Treasury Department and
the IRS have determined that, for federal
tax purposes, marriages of couples of the
same-sex should be treated the same as
marriages of couples of the opposite-sex
and that, for reasons set forth in Revenue
Ruling 2013–17, terms indicating sex,
such as “husband,” “wife,” and “husband
and wife,” should be interpreted in a neu-
tral way to include same-sex spouses as
well as opposite-sex spouses. Accord-
ingly, these proposed regulations amend
the current regulations under section 7701
of the Internal Revenue Code (Code) to
provide that, for federal tax purposes, the
terms “spouse,” “husband,” and “wife”
mean an individual lawfully married to
another individual, and the term “husband
and wife” means two individuals lawfully
married to each other. These definitions
apply regardless of sex.
In addition, these proposed regulations
provide that a marriage of two individuals
will be recognized for federal tax pur-
poses if that marriage would be recog-
nized by any state, possession, or territory
of the United States. Under this rule,
whether a marriage conducted in a foreign
jurisdiction will be recognized for federal
tax purposes depends on whether that
marriage would be recognized in at least
one state, possession, or territory of the
United States. This comports with the
general principles of comity where coun-
tries recognize actions taken in foreign
jurisdictions, but only to the extent those
actions do not violate their own laws. See
Hilton v. Guyot, 159 U.S. 113, 167 (1895)
(“A judgment affecting the status of per-
sons, such as a decree confirming or dis-
solving a marriage, is recognized as valid
in every country, unless contrary to the
policy of its own law.”).
Although these proposed regulations
define terms relating to marital status for
federal tax purposes, the IRS may provide
additional guidance as needed. For exam-
ple, the IRS has already issued more par-
ticular guidance for employers regarding
the application of Revenue Ruling
2013–17 to qualified retirement plans, and
that guidance remains in effect. See No-
tice 2014–19 (2014–47 IRB 979).
Registered Domestic Partnerships, Civil
Unions, or Other Similar Relationships
Not Denominated as Marriage
For federal tax purposes, the term
“marriage” does not include registered do-
mestic partnerships, civil unions, or other
similar relationships recognized under
state law that are not denominated as a
marriage under that state’s law, and the
terms “spouse,” “husband and wife,”
“husband,” and “wife” do not include in-
dividuals who have entered into such a
relationship.
Except when prohibited by statute, the
IRS has traditionally looked to the states
to define marital status. SeeLoughran v.
Loughran, 292 U.S. 216, 223 (1934)
(“Marriages not polygamous or incestu-
ous, or otherwise declared void by statute,
will, if valid by the law of the state where
entered into, be recognized as valid in
every other jurisdiction.”); see also Reve-
nue Ruling 58–66 (1958–1 CB 60) (if a
state recognizes a common-law marriage
as a valid marriage, the IRS will also
recognize the couple as married for pur-
poses of federal income tax filing status
and personal exemptions). States have
carefully considered the types of relation-
ships that they choose to recognize as a
marriage and the types that they choose to
recognize as something other than a mar-
riage. Although some states extend all of
the rights and responsibilities of marriage
under state law to couples in registered
domestic partnerships, civil unions, or
other similar relationships, those states
have intentionally chosen not to denomi-
nate those relationships as marriages.
Similar rules exist in some foreign juris-
dictions.
Some couples have chosen to enter into
a civil union or registered domestic part-
nership even when they could have mar-
ried, and some couples who are in a civil
union or registered domestic partnership
have chosen not to convert those relation-
ships into a marriage even when they have
had the opportunity to do so. In many
cases, this choice was deliberate, and cou-
ples who enter into civil unions or regis-
tered domestic partnerships may have
done so with the expectation that their
relationship will not be treated as a mar-
riage for purposes of federal law. For
some of these couples, there are benefits
to being in a relationship that provides
some, but not all, of the protections and
responsibilities of marriage. For example,
some individuals who were previously
married and receive Social Security ben-
efits as a result of their previous marriage
may choose to enter into a civil union or
registered domestic partnership (instead
of a marriage) so that they do not lose
their Social Security benefits. More gen-
erally, the rates at which some couples’
income is taxed may increase if they are
considered married and thus required to
file a married-filing-separately or married-
filing-jointly federal income tax return.
Treating couples in civil unions and reg-
istered domestic partnerships the same as
married couples who are in a relationship
denominated as marriage under state law
could undermine the expectations certain
couples have regarding the scope of their
relationship. Further, no provision of the
Code indicates that Congress intended to
recognize as marriages civil unions, reg-
istered domestic partnerships, or similar
relationships. Accordingly, the IRS will
November 9, 2015Bulletin No. 2015– 45
654

not treat civil unions, registered domestic
partnerships, or other similar relationships
as marriages for federal tax purposes.
Effect on Other Documents
These proposed regulations would, as
of the date they are published as final
regulations in theFederal Register, ob-
solete Revenue Ruling 2013–17. Taxpay-
ers may continue to rely on guidance re-
lated to the application of Revenue Ruling
2013–17 to employee benefit plans and
the benefits provided under such plans,
including Notice 2013–61, Notice 2014–
37, Notice 2014–19, and Notice 2014–1.
Proposed Effective/Applicability Date
The regulations, as proposed, would be
applicable as of the date of publication of a
Treasury decision adopting these rules as
final regulations in theFederal Register.
Statement of Availability for IRS
Documents
For copies of recently issued Revenue
Procedures, Revenue Rulings, Notices,
and other guidance published in the Inter-
nal Revenue Bulletin, please visit the IRS
website athttp://www.irs.gov.
Special Analyses
Certain IRS regulations, including this
one, are exempt from the requirements of
Executive Order 12866, as supplemented
and reaffirmed by Executive Order 13563.
Therefore, a regulatory impact assessment
is not required. It has also been deter-
mined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to these regulations. In
addition, because the regulations do not
impose a collection of information on
small entities, the Regulatory Flexibility
Act (5 U.S.C. chapter 6) does not apply.
Accordingly, a regulatory flexibility anal-
ysis is not required under the Regulatory
Flexibility Act (5 U.S.C. chapter 6). Pur-
suant to section 7805(f) of the Code, this
notice of proposed rulemaking will be
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administra-
tion for comment on its impact on small
businesses.
Comments and Requests for Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any comments that are
submitted timely to the IRS as prescribed
in this preamble under the “Addresses”
heading. Treasury and the IRS request
comments on all aspects of the proposed
rules. All comments will be available at
www.regulations.govor upon request. A
public hearing will be scheduled if re-
quested in writing by any person who
timely submits written comments. If a
public hearing is scheduled, notice of the
date, time, and place for the public hearing
will be published in theFederal Register.
Drafting Information
The principal author of these proposed
regulations is Mark Shurtliff of the Office
of the Associate Chief Counsel, Procedure
and Administration.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR parts 1, 20, 25,
26, 31, and 301 are 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 1.7701–1 is added to
read as follows:
§ 1.7701–1 Definitions; spouse, husband
and wife, husband, wife, marriage.
(a)In general. For the definition of the
terms spouse, husband and wife, husband,
wife, and marriage, see § 301.7701–18 of
this chapter.
(b)Effective/applicability date. The
rules of this section apply to taxable years
ending on or after the date of publication
of the Treasury decision adopting these
rules as final regulation in theFederal
Register.
PART 20—ESTATE TAX; ESTATES
OF DECEDENTS DYING AFTER
AUGUST 16, 1954
Par. 3. The authority citation for part
20 continues to read in part as follows:
Authority: 26 U.S.C. 7805 ***
Par. 4. Section 20.7701–2 is added to
read as follows:
§ 20.7701–2 Definitions; spouse,
husband and wife, husband, wife,
marriage.
(a)In general. For the definition of the
terms spouse, husband and wife, husband,
wife, and marriage, see § 301.7701–18 of
this chapter.
(b)Effective/applicability date. The
rules of this section apply to taxable years
ending on or after the date of publication
of the Treasury decision adopting these
rules as final regulation in theFederal
Register.
PART 25—GIFT TAX; GIFTS MADE
AFTER DECEMBER 31, 1954
Par. 5. The authority citation for part
25 continues to read in part as follows:
Authority: 26 U.S.C. 7805 ***
Par. 6. Section 25.7701–2 is added to
read as follows:
§ 25.7701–2 Definitions; spouse,
husband and wife, husband, wife,
marriage.
(a)In general. For the definition of the
terms spouse, husband and wife, husband,
wife, and marriage, see § 301.7701–18 of
this chapter.
(b)Effective/applicability date. The
rules of this section apply to taxable years
ending on or after the date of publication
of the Treasury decision adopting these
rules as final regulation in theFederal
Register.
PART 26—GENERATION-SKIPPING
TRANSFER TAX REGULATIONS
UNDER THE TAX REFORM ACT
OF 1986
Par. 7. The authority citation for part
26 continues to read in part as follows:
Authority: 26 U.S.C. 7805 ***
Par. 8. Section 26.7701–2 is added to
read as follows:
Bulletin No. 2015– 45November 9, 2015
655

§ 26.7701–2 Definitions; spouse,
husband and wife, husband, wife,
marriage.
(a)In general. For the definition of the
terms spouse, husband and wife, husband,
wife, and marriage, see § 301.7701–18 of
this chapter.
(b)Effective/applicability date. The
rules of this section apply to taxable years
ending on or after the date of publication
of the Treasury decision adopting these
rules as final regulation in theFederal
Register.
PART 31—EMPLOYMENT TAXES
AND COLLECTION OF INCOME
TAX AT THE SOURCE
Par. 9. The authority citation for part
31 continues to read in part as follows:
Authority: 26 U.S.C. 7805 ***
Par. 10. Section 31.7701–2 is added to
read as follows:
§ 31.7701–2 Definitions; spouse,
husband and wife, husband, wife,
marriage.
(a)In general. For the definition of the
terms spouse, husband and wife, husband,
wife, and marriage, see § 301.7701–18 of
this chapter.
(b)Effective/applicability date. The
rules of this section apply to taxable years
ending on or after the date of publication
of the Treasury decision adopting these
rules as final regulation in theFederal
Register.
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 11. The authority citation for part
301 continues to read in part as follows:
Authority: 26 U.S.C. 7805 ***
Par. 12. Section 301.7701–18 is added
to read as follows:
§ 301.7701–18 Definitions; spouse,
husband and wife, husband, wife,
marriage.
(a)In general. For federal tax pur-
poses, the termsspouse,husband, and
wifemean an individual lawfully married
to another individual. The termhusband
and wifemeans two individuals lawfully
married to each other.
(b)Persons who are married for fed-
eral tax purposes. A marriage of two in-
dividuals is recognized for federal tax pur-
poses if the marriage would be recognized
by any state, possession, or territory of the
United States.
(c)Persons who are not married for
federal tax purposes. The termsspouse,
husband, andwifedo not include individ-
uals who have entered into a registered
domestic partnership, civil union, or other
similar relationship not denominated as a
marriage under the law of a state, posses-
sion, or territory of the United States. The
termhusband and wifedoes not include
couples who have entered into such a re-
lationship, and the termmarriagedoes not
include such relationships.
(d)Effective/applicability date. The
rules of this section apply to taxable years
ending on or after the date of publication
of the Treasury decision adopting these
rules as final regulation in theFederal
Register.
John M. Dalrymple,
Deputy Commissioner for
Services and Enforcement.
Filed by the Office of the Federal Register on October
21,2015, 4:15 p.m. and published in the issue of the Federal
Register for October 23,2015, 80 F.R. 64378)
November 9, 2015Bulletin No. 2015– 45
656

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarifiedis used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
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
with amplified andclarified, 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
being stated in a new ruling.
Supersededdescribes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the new
ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
supersededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
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
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
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 following abbreviations in current
use and formerly used will appear in ma-
terial published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE
—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Bulletin No. 2015– 45November 9, 2015
i

Numerical Finding List
1
Bulletins 2015–27 through 2015–45
Announcements:
2015-17, 2015-28 I.R.B.67
2015-18, 2015-33 I.R.B.198
2015-19, 2015-32 I.R.B.157
2015-20, 2015-38 I.R.B.355
2015-21, 2015-34 I.R.B.220
2015-22, 2015-35 I.R.B.288
2015-23, 2015-36 I.R.B.311
2015-24, 2015-36 I.R.B.313
2015-25, 2015-39 I.R.B.422
Notices:
2015-43, 2015-29 I.R.B.73
2015-46, 2015-28 I.R.B.64
2015-47, 2015-30 I.R.B.76
2015-48, 2015-30 I.R.B.77
2015-49, 2015-30 I.R.B.79
2015-50, 2015-30 I.R.B.81
2015-51, 2015-31 I.R.B.133
2015-52, 2015-35 I.R.B.227
2015-53, 2015-33 I.R.B.190
2015-54, 2015-34 I.R.B.210
2015-55, 2015-34 I.R.B.217
2015-56, 2015-35 I.R.B.235
2015-57, 2015-36 I.R.B.294
2015-58, 2015-37 I.R.B.322
2015-59, 2015-40 I.R.B.459
2015-60, 2015-43 I.R.B.604
2015-61, 2015-39 I.R.B.408
2015-62, 2015-39 I.R.B.411
2015-63, 2015-40 I.R.B.461
2015-64, 2015-40 I.R.B.464
2015-65, 2015-40 I.R.B.466
2015-66, 2015-41 I.R.B.541
2015-67, 2015-41 I.R.B.546
2015-68, 2015-41 I.R.B.547
2015-69, 2015-41 I.R.B.550
2015-70, 2015-43 I.R.B.604
2015-71, 2015-43 I.R.B.606
2015-72, 2015-44 I.R.B.613
Proposed Regulations:
REG-140379-02, 2015-45 I.R.B.653
REG-136459-09, 2015-37 I.R.B.332
REG-155164-09, 2015-41 I.R.B.560
REG-109370-10, 2015-33 I.R.B.198
REG-112997-10, 2015-39 I.R.B.422
REG-103033-11, 2015-37 I.R.B.325
REG-109813-11, 2015-37 I.R.B.330
REG-138344-13, 2015-41 I.R.B.557
REG-139483-13, 2015-40 I.R.B.475
REG-148998-13, 2015-45 I.R.B.653
REG-115452-14, 2015-32 I.R.B.158
REG-127895-14, 2015-41 I.R.B.556
Proposed Regulations:—Continued
REG-132075-14, 2015-35 I.R.B.288
REG-138526-14, 2015-28 I.R.B.67
REG-143800-14, 2015-37 I.R.B.347
REG-102648-15, 2015-31 I.R.B.134
REG-102837-15, 2015-27 I.R.B.43
REG-123640-15, 2015-37 I.R.B.350
Revenue Procedures:
2015-34, 2015-27 I.R.B.4
2015-36, 2015-27 I.R.B.20
2015-38, 2015-36 I.R.B.295
2015-39, 2015-33 I.R.B.195
2015-40, 2015-35 I.R.B.236
2015-41, 2015-35 I.R.B.263
2015-42, 2015-36 I.R.B.310
2015-43, 2015-40 I.R.B.467
2015-44, 2015-38 I.R.B.354
2015-45, 2015-39 I.R.B.412
2015-46, 2015-39 I.R.B.414
2015-47, 2015-39 I.R.B.419
2015-48, 2015-40 I.R.B.469
2015-49, 2015-41 I.R.B.555
2015-50, 2015-42 I.R.B.583
2015-51, 2015-42 I.R.B.583
2015-52, 2015-45 I.R.B.638
2015-53, 2015-44 I.R.B.615
2015-54, 2015-45 I.R.B.648
Revenue Rulings:
2015-15, 2015-27 I.R.B.1
2015-16, 2015-31 I.R.B.130
2015-17, 2015-39 I.R.B.358
2015-18, 2015-34 I.R.B.209
2015-19, 2015-36 I.R.B.291
2015-20, 2015-38 I.R.B.353
2015-21, 2015-40 I.R.B.447
2015-22, 2015-44 I.R.B.610
Treasury Decisions:
9723, 2015-31 I.R.B.84
9726, 2015-31 I.R.B.98
9727, 2015-32 I.R.B.154
9728, 2015-33 I.R.B.169
9729, 2015-35 I.R.B.221
9730, 2015-35 I.R.B.223
9731, 2015-37 I.R.B.314
9732, 2015-39 I.R.B.371
9733, 2015-41 I.R.B.494
9734, 2015-41 I.R.B.500
9735, 2015-37 I.R.B.316
9736, 2015-39 I.R.B.402
9737, 2015-40 I.R.B.449
9738, 2015-40 I.R.B.453
9739, 2015-41 I.R.B.528
9740, 2015-42 I.R.B.573
9741, 2015-45 I.R.B.628
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2015–01 through 2015–26 is in Internal Revenue Bulletin
2015–26, dated June 29, 2015.
November 9, 2015Bulletin No. 2015– 45
ii

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2015–27 through 2015–45
Notices:
2014-4
Modified by
Notice 2015-51, 2015-31 I.R.B.133
2014-17
Superseded by
Notice 2015-67, 2015-41 I.R.B.546
Proposed Regulations:
2009-57
Obsoleted by
REG-112997-10 2015-39 I.R.B.422
2013-17
Obsoleted by
REG-148998-13 2015-45 I.R.B.653
Revenue Procedures:
1992-75
Clarified by
Rev. Proc. 2015-40, 2015-35 I.R.B.236
2003-40
Modified by
Rev. Proc. 2015-40, 2015-35 I.R.B.236
2003-78
Modified by
Rev. Proc. 2015-46, 2015-39 I.R.B.414
2006-9
Modified by
Rev. Proc. 2015-41, 2015-35 I.R.B.263
2006-9
Superseded by
Rev. Proc. 2015-41, 2015-35 I.R.B.263
2006-54
Modified by
Rev. Proc. 2015-40, 2015-35 I.R.B.236
2006-54
Superseded by
Rev. Proc. 2015-40, 2015-35 I.R.B.236
2008-31
Modified by
Rev. Proc. 2015-41, 2015-35 I.R.B.263
2008-31
Superseded by
Rev. Proc. 2015-41, 2015-35 I.R.B.263
Revenue Procedures:—Continued
2011-49
Modified by
Rev. Proc. 2015-36, 2015-27 I.R.B.20
2011-49
Superseded by
Rev. Proc. 2015-36, 2015-27 I.R.B.20
2015-14
Modified by
Rev. Proc. 2015-39, 2015-33 I.R.B.195
2015-40
Amplified by
Rev. Proc. 2015-41, 2015-35 I.R.B.263
2015-41
Amplified by
Rev. Proc. 2015-40, 2015-35 I.R.B.236
Treasury Decisions:
58-422
Obsoleted by
T.D. 9739 2015-41 I.R.B.528
66-284
Obsoleted by
T.D. 9739 2015-41 I.R.B.528
79-250
Obsoleted by
T.D. 9739 2015-41 I.R.B.528
79-289
Obsoleted by
T.D. 9739 2015-41 I.R.B.528
96-29
Obsoleted by
T.D. 9739 2015-41 I.R.B.528
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2015–01 through 2015–26 is in Internal Revenue Bulletin
2015–26, dated June 29, 2015.
Bulletin No. 2015– 45November 9, 2015
iii

INTERNAL REVENUE BULLETIN
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Bulletins are available atwww.irs.gov/irb/.
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