rp-17-22.pdf

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Rev. Proc. 2017-22
SECTION 1. PURPOSE
This revenue procedure clarifies that the safe harbor provided in Rev. Proc.
2010-46, 2010-49 I.R.B. 814, applies to any Transportation Investment Generating
Economic Recovery grants (TIGER Discretionary Grants) for capital investments in
surface transportation infrastructure made by the Department of Transportation (DOT)
pursuant to legislative authorizations of these grants made after the publication of Rev.
Proc. 2010-46.
SECTION 2. BACKGROUND
Section 118(a) of the Internal Revenue Code provides that in the case of a
corporation, gross income does not include a contribution to the capital of the taxpayer.
Section 1.118-1 of the Income Tax Regulations provides that § 118 applies to
contributions to capital made by a person other than a shareholder, for example,
contributions of property to a corporation by a governmental unit for the purpose of
enabling the corporation to expand its operating facilities.
Section 362(c)(2) requires a basis reduction in a corporation's property when the
corporation receives money from a nonshareholder as a contribution to its capital.
Rev. Proc. 2010-46, in part, provides a safe harbor under § 118(a) for certain
grant amounts received by corporate taxpayers engaged in a transportation trade or
business for capital investments in surface transportation infrastructure under (1) the
Supplemental Discretionary Grants for Capital Investments in Surface Transportation
Infrastructure (TIGER I Discretionary Grants) program as authorized by Title XII,

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Division A of ARRA; or (2) the National Infrastructure Investments (TIGER II
Discretionary Grants) program as authorized by the Transportation, Housing and Urban
Development, and Related Agencies Appropriations Act for 2010 (Title I, Division A of
the Consolidated Appropriations Act, 2010 (Pub. L. 111-117)).
In 2009, the Office of the Secretary of Transportation issued a Notice of Funding
Availability (NOFA), 74 FR 28755, that provides guidance on TIGER I Discretionary
Grants. The grants must be for capital investments in surface transportation
infrastructure. In 2010, the Office of the Secretary of Transportation issued a NOFA, 75
FR 30460, that provides guidance on TIGER II Discretionary Grants. The grants must
be for capital investments in surface transportation infrastructure. The 2010 NOFA
contemplates that some funds may be used to fund the planning, preparation, or design
of projects (TIGER II Planning Grants). DOT has issued additional NOFAs and Notices
of Funding Opportunity (NOFOs) as legislation enacted subsequent to the publication of
Rev. Proc. 2010-46 has provided further appropriations for TIGER Discretionary Grants
awarded by DOT.
SECTION 3. SCOPE
This revenue procedure clarifies that the safe harbor of Rev. Proc. 2010-46
applies to corporate taxpayers engaged in a transportation trade or business that
receive grant amounts for the costs of capital investments in surface transportation
infrastructure under any TIGER Discretionary Grants, including those authorized in each
year following those described in Rev. Proc. 2010-46 as well as any to be authorized in
the future. In no case will this revenue procedure apply to amounts received to pay the
subsidy and administrative costs of the Transportation Infrastructure Finance and

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Innovation Act of 1998 or to amounts received for any TIGER planning grants.
Further, this revenue procedure does not apply to noncorporate taxpayers.
SECTION 4. PROCEDURE
The Internal Revenue Service will not challenge a corporate taxpayer’s treatment
of grant amounts received by the corporation under any TIGER Discretionary Grants for
capital investments in surface transportation infrastructure as a nonshareholder
contribution to the capital of the corporation under § 118(a) if the corporation properly
reduces the basis of its property under §
362(c)(2) and the regulations thereunder. For
purposes of this revenue procedure, TIGER Discretionary Grants include those TIGER
Discretionary Grants authorized in each year following those described in Rev. Proc.
2010-46 as well as any to be authorized in the future.
SECTION 5. EFFECT ON OTHER DOCUMENTS
Rev. Proc. 2010-46, 2010-49 I.R.B. 814, is clarified.
SECTION 6. DRAFTING INFORMATION
The principal author of this revenue procedure is David McDonnell of the Office
of Associate Chief Counsel (Passthroughs & Special Industries). For further information
regarding this revenue procedure, contact Mr. McDonnell at (202) 317-4137 (not a toll
free call).