Internal Revenue Bulletin 2023-49 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 2023–49
December 4, 2023
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE
Rev. Rul. 2023-22, page 1301.
Interest rates: underpayments and overpayments. The rates
for interest determined under Section 6621 of the code for
the calendar quarter beginning January 1, 2024, will be 8
percent for overpayments (7 percent in the case of a cor-
poration), 8 percent for underpayments, and 10 percent for
large corporate underpayments. The rate of interest paid on
the portion of a corporate overpayment exceeding $10,000
will be 5.5 percent.
EMPLOYEE PLANS
Notice 2023-76, page 1320.
This notice sets forth updates on the corporate bond
monthly yield curve, the corresponding spot segment rates
for November 2023 used under § 417(e)(3)(D), the 24-month
average segment rates applicable for November 2023, and
the 30-year Treasury rates, as reflected by the application of
§ 430(h)(2)(C)(iv).
EXCISE TAX, EXEMPT
ORGANIZATIONS
REG-142338-07, page 1363.
This document contains proposed regulations regarding
excise taxes on taxable distributions made by a sponsoring
organization from a donor advised fund (DAF), and on the
agreement of certain fund managers to the making of such
distributions. The proposed regulations provide guidance
regarding DAFs and taxable distributions. The proposed reg-
ulations generally apply to certain organizations, including
community foundations and other charitable organizations,
that maintain one or more DAFs, and to other persons
involved with the DAFs, including donors, donor-advisors,
related persons, and certain fund managers.
EXEMPT ORGANIZATIONS
Announcement 2023-34, page 1385.
Revocation of IRC 501(c)(3) Organizations for failure to meet
the code section requirements. Contributions made to the
organizations by individual donors are no longer deductible
under IRC 170(b)(1)(A).
EMPLOYEE PLANS
REG-112916-23, page 1323.
This document contains proposed regulations concerning
the statutory disallowance rule enacted by the SECURE 2.0
Act of 2022 to disallow a Federal income tax deduction for
a qualified conservation contribution made by a partnership
or an S corporation after December 29, 2022, if the amount
of the contribution exceeds 2.5 times the sum of each part-
ner’s or S corporation shareholder’s relevant basis. The
proposed regulations would provide guidance regarding this
statutory disallowance rule, including definitions, appropri-
ate methods to calculate the relevant basis of a partner or
an S corporation shareholder, the three statutory exceptions
to the statutory disallowance rule, and related reporting
requirements. In addition, the proposed regulations would
provide reporting requirements for partners and S corpo-
ration shareholders that receive a distributive share or pro
rata share of any noncash charitable contribution made by
a partnership or S corporation, regardless of whether the
contribution is a qualified conservation contribution (and
regardless of whether the contribution is of real property or
other noncash property)
Finding Lists begin on page ii.

REG-128276-12, page 1362.
The Department of the Treasury and the IRS are reopen-
ing the comment period for REG-128276-12, published in
the Federal Register on December 8, 2016, relating to the
determination and recognition of taxable income or loss and
foreign currency gain or loss with respect to a qualified busi-
ness unit.
Rev. Rul. 2023-21, page 1299.
Federal rates; adjusted federal rates; adjusted federal
long-term rate, and the long-term tax exempt rate. For pur-
poses of sections 382, 1274, 1288, 7872 and other sec-
tions of the Code, tables set forth the rates for December
2023.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce 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 offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
December 4, 2023 Bulletin No. 2023–49

Part I
Section 1274.—
Determination of Issue
Price in the Case of Certain
Debt Instruments Issued for
Property
Rev. Rul. 2023-21
This revenue ruling provides various
prescribed rates for federal income tax
purposes for December 2023 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month for
purposes of section 1274(d) of the Internal
Revenue Code. Table 2 contains the short-
term, mid-term, and long-term adjusted
applicable federal rates (adjusted AFR) for
the current month for purposes of section
1288(b). Table 3 sets forth the adjusted
federal long-term rate and the long-term
tax-exempt rate described in section
382(f). Table 4 contains the appropriate
percentages for determining the low-in-
come housing credit described in section
42(b)(1) for buildings placed in service
during the current month. However, under
section 42(b)(2), the applicable percent-
age for non-federally subsidized new
buildings placed in service after July 30,
2008, shall not be less than 9%. Finally,
Table 5 contains the federal rate for deter-
mining the present value of an annuity, an
interest for life or for a term of years, or
a remainder or a reversionary interest for
purposes of section 7520.
REV. RUL. 2023-21 TABLE 1
Applicable Federal Rates (AFR) for December 2023
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR5.26%5.19%5.16%5.13%
110% AFR5.79%5.71%5.67%5.64%
120% AFR6.33%6.23%6.18%6.15%
130% AFR6.86%6.75%6.69%6.66%
Mid-term
AFR4.82%4.76%4.73%4.71%
110% AFR5.31%5.24%5.21%5.18%
120% AFR5.79%5.71%5.67%5.64%
130% AFR6.29%6.19%6.14%6.11%
150% AFR7.27%7.14%7.08%7.04%
175% AFR8.50%8.33%8.25%8.19%
Long-term
AFR5.03%4.97%4.94%4.92%
110% AFR5.54%5.47%5.43%5.41%
120% AFR6.05%5.96%5.92%5.89%
130% AFR6.56%6.46%6.41%6.37%
REV. RUL. 2023-21 TABLE 2
Adjusted AFR for December 2023
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted AFR3.98%3.94%3.92%3.91%
Mid-term adjusted AFR3.64%3.61%3.59%3.58%
Long-term adjusted AFR3.81%3.77%3.75%3.74%
Bulletin No. 2023–49 1299 December 4, 2023

REV. RUL. 2023-21 TABLE 3
Rates Under Section 382 for December 2023
Adjusted federal long-term rate for the current month3.81%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal
long-term rates for the current month and the prior two months.)
3.81%
REV. RUL. 2023-21 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for December 2023
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after
July 30, 2008, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit8.15%
Appropriate percentage for the 30% present value low-income housing credit 3.49%
REV. RUL. 2023-21 TABLE 5
Rate Under Section 7520 for December 2023
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a
remainder or reversionary interest
5.80%
Section 42.—Low-Income
Housing Credit
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month
of December 2023. See Rev. Rul. 2023-21,
page 1299.
Section 280G.—Golden
Parachute Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2023. See Rev. Rul. 2023-21, page 1299.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and
Certain Built-In Losses
Following Ownership
Change
The adjusted applicable federal long-term rate
is set forth for the month of December 2023. See
Rev. Rul. 2023-21, page 1299.
Section 467.—Certain
Payments for the Use of
Property or Services
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2023. See Rev. Rul. 2023-21, page 1299.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The applicable federal short-term rates are set
forth for the month of December 2023. See Rev.
Rul. 2023-21, page 1299.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2023. See Rev. Rul. 2023-21, page 1299.
Section 483.—Interest on
Certain Deferred Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2023. See Rev. Rul. 2023-21, page 1299.
Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month of
December 2023. See Rev. Rul. 2023-21, page 1299.
Section 7520.—Valuation
Tables
The applicable federal mid-term rates are set
forth for the month of December 2023. See Rev.
Rul. 2023-21, page 1299.
Section 7872.—Treatment
of Loans With Below-
Market Interest Rates
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2023. See Rev. Rul. 2023-21, page 1299.

December 4, 2023 1300 Bulletin No. 2023–49

Bulletin No. 2023–49 1301 December 4, 2023
Section 6621.—
Determination of Rate of
Interest
26 CFR 301.6621-1: Interest rate.
Rev. Rul. 2023-22
Section 6621 of the Internal Revenue
Code establishes the interest rates on
overpayments and underpayments of
tax. Under section 6621(a)(1), the over-
payment rate is the sum of the federal
short-term rate plus 3 percentage points
(2 percentage points in the case of a cor-
poration), except the rate for the portion of
a corporate overpayment of tax exceeding
$10,000 for a taxable period is the sum
of the federal short-term rate plus 0.5 of
a percentage point. Under section 6621(a)
(2), the underpayment rate is the sum of
the federal short-term rate plus 3 percent-
age points.
Section 6621(c) provides that for
purposes of interest payable under
section 6601 on any large corporate
underpayment, the underpayment rate
under section 6621(a)(2) is determined
by substituting “5 percentage points”
for “3 percentage points.” See sec-
tion 6621(c) and section 301.6621-3
of the Regulations on Procedure and
Administration for the definition of a
large corporate underpayment and for
the rules for determining the applica-
ble date. Section 6621(c) and section
301.6621-3 are generally effective for
periods after December 31, 1990.
Section 6621(b)(1) provides that the
Secretary will determine the federal
short-term rate for the first month in each
calendar quarter. Section 6621(b)(2)(A)
provides that the federal short-term rate
determined under section 6621(b)(1) for
any month applies during the first calen-
dar quarter beginning after that month.
Section 6621(b)(3) provides that the fed-
eral short-term rate for any month is the
federal short-term rate determined during
that month by the Secretary in accordance
with section 1274(d), rounded to the near-
est full percent (or, if a multiple of 1/2 of
1 percent, the rate is increased to the next
highest full percent).
Notice 88-59, 1988-1 C.B. 546,
announced that in determining the quar-
terly interest rates to be used for over-
payments and underpayments of tax
under section 6621, the Internal Revenue
Service will use the federal short-term rate
based on daily compounding because that
rate is most consistent with section 6621
which, pursuant to section 6622, is subject
to daily compounding.
The federal short-term rate determined
in accordance with section 1274(d) during
October 2023 is the rate published in
Revenue Ruling 2023-20, 2023-45 IRB
1221, to take effect beginning November
1, 2023. The federal short-term rate,
rounded to the nearest full percent, based
on daily compounding determined during
the month of October 2023 is 5 percent.
Accordingly, an overpayment rate of 8
percent (7 percent in the case of a cor-
poration) and an underpayment rate of 8
percent are established for the calendar
quarter beginning January 1, 2024. The
overpayment rate for the portion of a cor-
porate overpayment exceeding $10,000
for the calendar quarter beginning January
1, 2024, is 5.5 percent. The underpayment
rate for large corporate underpayments for
the calendar quarter beginning January 1,
2024, is 10 percent. These rates apply to
amounts bearing interest during that cal-
endar quarter.
Sections 6654(a)(1) and 6655(a)(1)
provide that the underpayment rate estab-
lished under section 6621 applies in deter-
mining the addition to tax under sections
6654 and 6655 for failure to pay esti-
mated tax for any taxable year. Thus, the
8 percent rate also applies to estimated tax
underpayments for the first calendar quar-
ter beginning January 1, 2024. Pursuant
to section 6621(b)(2)(B), in determining
the addition to tax under section 6654 for
any taxable year for an individual, the
federal short-term rate that applies during
the third month following the taxable year
also applies during the first 15 days of the
fourth month following the taxable year.
In addition, pursuant to section 6603(d)
(4), the rate of interest on section 6603
deposits is 5 percent for the first calendar
quarter in 2024.
Interest factors for daily compound
interest for annual rates of 5.5 percent, 7
percent, 8 percent and 10 percent are pub-
lished in Tables 64, 67, 69 and 73 of Rev.
Proc. 95-17, 1995-1 C.B. 618, 621, 623,
and 627.
Annual interest rates to be compounded
daily pursuant to section 6622 that apply
for prior periods are set forth in the tables
accompanying this revenue ruling.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Casey R. Conrad of the Office of
the Associate Chief Counsel (Procedure
and Administration). For further informa-
tion regarding this revenue ruling, contact
Mr. Conrad at (202) 317-6844 (not a toll-
free number).

December 4, 2023 1302 Bulletin No. 2023–49
APPENDIX A
365 Day Year
0.5% Compound Rate 184 Days
DaysFactorDaysFactorDaysFactor
10.000013699630.0008633801250.001713784
20.000027397640.0008770911260.001727506
30.000041096650.0008908011270.001741228
40.000054796660.0009045121280.001754951
50.000068495670.0009182231290.001768673
60.000082195680.0009319341300.001782396
70.000095894690.0009456461310.001796119
80.000109594700.0009593571320.001809843
90.000123294710.0009730691330.001823566
100.000136995720.0009867811340.001837290
110.000150695730.0010004931350.001851013
120.000164396740.0010142061360.001864737
130.000178097750.0010279181370.001878462
140.000191798760.0010416311380.001892186
150.000205499770.0010553441390.001905910
160.000219201780.0010690571400.001919635
170.000232902790.0010827701410.001933360
180.000246604800.0010964841420.001947085
190.000260306810.0011101971430.001960811
200.000274008820.0011239111440.001974536
210.000287711830.0011376251450.001988262
220.000301413840.0011513391460.002001988
230.000315116850.0011650541470.002015714
240.000328819860.0011787681480.002029440
250.000342522870.0011924831490.002043166
260.000356225880.0012061981500.002056893
270.000369929890.0012199131510.002070620
280.000383633900.0012336291520.002084347
290.000397336910.0012473441530.002098074
300.000411041920.0012610601540.002111801
310.000424745930.0012747761550.002125529
320.000438449940.0012884921560.002139257
330.000452154950.0013022081570.002152985
340.000465859960.0013159251580.002166713
350.000479564970.0013296411590.002180441
360.000493269980.0013433581600.002194169
370.000506974990.0013570751610.002207898
380.0005206801000.0013707921620.002221627
390.0005343861010.0013845101630.002235356
400.0005480921020.0013982271640.002249085
410.0005617981030.0014119451650.002262815

Bulletin No. 2023–49 1303 December 4, 2023
420.0005755041040.0014256631660.002276544
430.0005892111050.0014393811670.002290274
440.0006029171060.0014531001680.002304004
450.0006166241070.0014668181690.002317734
460.0006303311080.0014805371700.002331465
470.0006440391090.0014942561710.002345195
480.0006577461100.0015079751720.002358926
490.0006714541110.0015216941730.002372657
500.0006851611120.0015354141740.002386388
510.0006988691130.0015491331750.002400120
520.0007125781140.0015628531760.002413851
530.0007262861150.0015765731770.002427583
540.0007399951160.0015902931780.002441315
550.0007537031170.0016040141790.002455047
560.0007674121180.0016177341800.002468779
570.0007811211190.0016314551810.002482511
580.0007948311200.0016451761820.002496244
590.0008085401210.0016588971830.002509977
600.0008222501220.0016726191840.002523710
610.0008359601230.001686340
620.0008496701240.001700062

December 4, 2023 1304 Bulletin No. 2023–49
366 Day Year
0.5% Compound Rate 184 Days
DaysFactorDaysFactorDaysFactor
10.000013661630.0008610201250.001709097
20.000027323640.0008746931260.001722782
30.000040984650.0008883661270.001736467
40.000054646660.0009020401280.001750152
50.000068308670.0009157131290.001763837
60.000081970680.0009293871300.001777522
70.000095632690.0009430611310.001791208
80.000109295700.0009567351320.001804893
90.000122958710.0009704091330.001818579
100.000136620720.0009840841340.001832265
110.000150283730.0009977581350.001845951
120.000163947740.0010114331360.001859638
130.000177610750.0010251081370.001873324
140.000191274760.0010387831380.001887011
150.000204938770.0010524591390.001900698
160.000218602780.0010661341400.001914385
170.000232266790.0010798101410.001928073
180.000245930800.0010934861420.001941760
190.000259595810.0011071621430.001955448
200.000273260820.0011208391440.001969136
210.000286924830.0011345151450.001982824
220.000300590840.0011481921460.001996512
230.000314255850.0011618691470.002010201
240.000327920860.0011755461480.002023889
250.000341586870.0011892231490.002037578
260.000355252880.0012029001500.002051267
270.000368918890.0012165781510.002064957
280.000382584900.0012302561520.002078646
290.000396251910.0012439341530.002092336
300.000409917920.0012576121540.002106025
310.000423584930.0012712911550.002119715
320.000437251940.0012849691560.002133405
330.000450918950.0012986481570.002147096
340.000464586960.0013123271580.002160786
350.000478253970.0013260061590.002174477
360.000491921980.0013396851600.002188168
370.000505589990.0013533651610.002201859
380.0005192571000.0013670441620.002215550
390.0005329251010.0013807241630.002229242
400.0005465941020.0013944041640.002242933
410.0005602621030.0014080851650.002256625
420.0005739311040.0014217651660.002270317

Bulletin No. 2023–49 1305 December 4, 2023
430.0005876001050.0014354461670.002284010
440.0006012691060.0014491271680.002297702
450.0006149391070.0014628081690.002311395
460.0006286081080.0014764891700.002325087
470.0006422781090.0014901701710.002338780
480.0006559481100.0015038521720.002352473
490.0006696181110.0015175331730.002366167
500.0006832891120.0015312151740.002379860
510.0006969591130.0015448971750.002393554
520.0007106301140.0015585801760.002407248
530.0007243011150.0015722621770.002420942
540.0007379721160.0015859451780.002434636
550.0007516431170.0015996281790.002448331
560.0007653151180.0016133111800.002462025
570.0007789861190.0016269941810.002475720
580.0007926581200.0016406781820.002489415
590.0008063301210.0016543611830.002503110
600.0008200031220.0016680451840.002516806
610.0008336751230.001681729
620.0008473481240.001695413

December 4, 2023 1306 Bulletin No. 2023–49
TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986
OVERPAYMENTS AND UNDERPAYMENTS
PERIODRATEIn 1995-1 C.B.
DAILY RATE TABLE
Before Jul. 1, 19756%Table2,pg.557
Jul. 1, 1975–Jan. 31, 19769%Table4,pg.559
Feb. 1, 1976–Jan. 31, 19787%Table3,pg.558
Feb. 1, 1978–Jan. 31, 19806%Table2,pg.557
Feb. 1, 1980–Jan. 31, 198212%Table5,pg.560
Feb. 1, 1982–Dec. 31, 198220%Table6,pg.560
Jan. 1, 1983–Jun. 30, 198316%Table37,pg.591
Jul. 1, 1983–Dec. 31, 198311%Table27,pg.581
Jan. 1, 1984–Jun. 30, 198411%Table75,pg.629
Jul. 1, 1984–Dec. 31, 198411%Table75,pg.629
Jan. 1, 1985–Dec. 31, 198513%Table31,pg.585
Jul. 1, 1985–Dec. 31, 198511%Table27,pg.581
Jan. 1, 1986–Jun. 30, 198610%Table25,pg.579
Jul. 1, 1986–Dec. 31, 19869%Table23,pg.577
TABLE OF INTEREST RATES
FROM JAN. 1, 1987 – Dec. 31, 1998
OVERPAYMENTSUNDERPAYMENTS
1995-1 C.B.1995-1 C.B. RATE
RATETABLEPGRATETABLEPG
Jan. 1, 1987–Mar. 31, 19878%215759%23577
Apr. 1, 1987–Jun. 30, 19878%215759%23577
Jul. 1, 1987–Sep. 30, 19878%215759%23577
Oct. 1, 1987–Dec. 31, 19879%2357710%25579
Jan. 1, 1988–Mar. 31, 198810%7362711%75629
Apr. 1, 1988–Jun. 30, 19889%7162510%73627
Jul. 1, 1988–Sep. 30, 19889%7162510%73627
Oct. 1, 1988–Dec. 31, 198810%7362711%75629
Jan. 1, 1989–Mar. 31, 198910%2557911%27581
Apr. 1, 1989–Jun. 30, 198911%2758112%29583
Jul. 1, 1989–Sep. 30, 198911%2758112%29583
Oct. 1, 1989–Dec. 31, 198910%2557911%27581
Jan. 1, 1990–Mar. 31, 199010%2557911%27581
Apr. 1, 1990–Jun. 30, 199010%2557911%27581
Jul. 1, 1990–Sep. 30, 199010%2557911%27581
Oct. 1, 1990–Dec. 31, 199010%2557911%27581
Jan. 1, 1991–Mar. 31, 199110%2557911%27581
Apr. 1, 1991–Jun. 30, 19919%2357710%
25579
Jul. 1, 1991–Sep. 30, 19919%2357710%25579

Bulletin No. 2023–49 1307 December 4, 2023
Oct. 1, 1991–Dec. 31, 19919%2357710%25579
Jan. 1, 1992–Mar. 31, 19928%696239%71625
Apr. 1, 1992–Jun. 30, 19927%676218%69623
Jul. 1, 1992–Sep. 30, 19927%676218%69623
Oct. 1, 1992–Dec. 31, 19926%656197%67621
Jan. 1, 1993–Mar. 31, 19936%175717%19573
Apr. 1, 1993–Jun. 30, 19936%175717%19573
Jul. 1, 1993–Sep. 30, 19936%175717%19573
Oct. 1, 1993–Dec. 31, 19936%175717%19573
Jan. 1, 1994–Mar. 31, 19946%175717%19573
Apr. 1, 1994–Jun. 30, 19946%175717%19573
Jul. 1, 1994–Sep. 30, 19947%195738%21575
Oct. 1, 1994–Dec. 31, 19948%215759%23577
Jan. 1, 1995–Mar. 31, 19958%215759%23577
Apr. 1, 1995–Jun. 30, 19959%2357710%25579
Jul. 1, 1995–Sep. 30, 19958%215759%23577
Oct. 1, 1995–Dec. 31, 19958%215759%23577
Jan. 1, 1996–Mar. 31, 19968%696239%71625
Apr. 1, 1996–Jun. 30, 19967%676218%69623
Jul. 1, 1996–Sep. 30, 1996
8%696239%71625
Oct. 1, 1996–Dec. 31, 19968%696239%71625
Jan. 1, 1997–Mar. 31, 19978%215759%23577
Apr. 1, 1997–Jun. 30, 19978%215759%23577
Jul. 1, 1997–Sep. 30, 19978%215759%23577
Oct. 1, 1997–Dec. 31, 19978%215759%23577
Jan. 1, 1998–Mar. 31, 19988%215759%23577
Apr. 1, 1998–Jun. 30, 19987%195738%21575
Jul. 1, 1998–Sep. 30, 19987%195738%21575
Oct. 1, 1998–Dec. 31, 19987%195738%21575

December 4, 2023 1308 Bulletin No. 2023–49
TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 - PRESENT
NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS
1995-1 C.B.
RATETABLEPAGE
Jan. 1, 1999–Mar. 31, 19997%19573
Apr. 1, 1999–Jun. 30, 19998%21575
Jul. 1, 1999–Sep. 30, 19998%21575
Oct. 1, 1999–Dec. 31, 19998%21575
Jan. 1, 2000–Mar. 31, 20008%69623
Apr. 1, 2000–Jun. 30, 20009%71625
Jul. 1, 2000–Sep. 30, 20009%71625
Oct. 1, 2000–Dec. 31, 20009%71625
Jan. 1, 2001–Mar. 31, 20019%23577
Apr. 1, 2001–Jun. 30, 20018%21575
Jul. 1, 2001–Sep. 30, 20017%19573
Oct. 1, 2001–Dec. 31, 20017%19573
Jan. 1, 2002–Mar. 31, 20026%17571
Apr. 1, 2002–Jun. 30, 20026%17571
Jul. 1, 2002–Sep. 30, 20026%17571
Oct. 1, 2002–Dec. 31, 20026%17571
Jan. 1, 2003–Mar. 31, 20035%15569
Apr. 1, 2003–Jun. 30, 20035%15569
Jul. 1, 2003–Sep. 30, 20035%15569
Oct. 1, 2003–Dec. 31, 20034%13567
Jan. 1, 2004–Mar. 31, 20044%61615
Apr. 1, 2004–Jun. 30, 20045%63617
Jul. 1, 2004–Sep. 30, 20044%61615
Oct. 1, 2004–Dec. 31, 20045%63617
Jan. 1, 2005–Mar. 31, 20055%15569
Apr. 1, 2005–Jun. 30, 20056%17571
Jul. 1, 2005–Sep. 30, 20056%17571
Oct. 1, 2005–Dec. 31, 20057%19573
Jan. 1, 2006–Mar. 31, 20067%19573
Apr. 1, 2006–Jun. 30, 20067%19573
Jul. 1, 2006–Sep. 30, 20068%21575
Oct. 1, 2006–Dec. 31, 20068%21575
Jan. 1, 2007–Mar. 31, 20078%
21575
Apr. 1, 2007–Jun. 30, 20078%21575
Jul. 1, 2007–Sep. 30, 20078%21575
Oct. 1, 2007–Dec. 31, 20078%21575
Jan. 1, 2008–Mar. 31, 20087%67621
Apr. 1, 2008–Jun. 30, 20086%65619
Jul. 1, 2008–Sep. 30, 20085%63617
Oct. 1, 2008–Dec. 31, 20086%65619
Jan. 1, 2009–Mar. 31, 20095%15569

Bulletin No. 2023–49 1309 December 4, 2023
Apr. 1, 2009–Jun. 30, 20094%13567
Jul. 1, 2009–Sep. 30, 20094%13567
Oct. 1, 2009–Dec. 31, 20094%13567
Jan. 1, 2010–Mar. 31, 20104%13567
Apr. 1, 2010–Jun. 30, 20104%13567
Jul. 1, 2010–Sep. 30, 20104%13567
Oct. 1, 2010–Dec. 31, 20104%13567
Jan. 1, 2011–Mar. 31, 20113%11565
Apr. 1, 2011–Jun. 30, 20114%13567
Jul. 1, 2011–Sep. 30, 20114%13567
Oct. 1, 2011–Dec. 31, 20113%11565
Jan. 1, 2012–Mar. 31, 20123%59613
Apr. 1, 2012–Jun. 30, 20123%59613
Jul. 1, 2012–Sep. 30, 20123%59613
Oct. 1, 2012–Dec. 31, 20123%59613
Jan. 1, 2013–Mar. 31, 20133%11565
Apr. 1, 2013–Jun. 30, 20133%11565
Jul. 1, 2013–Sep. 30, 20133%11565
Oct. 1, 2013–Dec. 31, 20133%11565
Jan. 1, 2014–Mar. 31, 20143%11565
Apr. 1, 2014–Jun. 30, 20143%11565
Jul. 1, 2014–Sep. 30, 20143%11565
Oct. 1, 2014–Dec. 31, 20143%11565
Jan. 1, 2015–Mar. 31, 20153%11565
Apr. 1, 2015–Jun. 30, 20153%11565
Jul. 1, 2015–Sep. 30, 20153%11565
Oct. 1, 2015–Dec. 31, 20153%11565
Jan. 1, 2016–Mar. 31, 20163%59613
Apr. 1, 2016–Jun. 30, 20164%61615
Jul. 1, 2016–Sep. 30, 20164%61615
Oct. 1, 2016–Dec. 31, 20164%61615
Jan. 1, 2017–Mar. 31, 20174%13567
Apr. 1, 2017–Jun. 30, 20174%13567
Jul. 1, 2017–Sep. 30, 20174%
13567
Oct. 1, 2017–Dec. 31, 20174%13567
Jan. 1, 2018–Mar. 31, 20184%13567
Apr. 1, 2018–Jun. 30, 20185%15569
Jul. 1, 2018–Sep. 30, 20185%15569
Oct. 1, 2018–Dec. 31, 20185%15569
Jan. 1, 2019–Mar. 31, 20196%17571
Apr. 1, 2019–Jun. 30, 20196%17571
Jul. 1, 2019–Sep. 30, 20195%15569
Oct. 1, 2019–Dec. 31, 20195%15569
Jan. 1, 2020–Mar. 31, 20205%63617
Apr. 1, 2020–Jun. 30, 20205%63617

December 4, 2023 1310 Bulletin No. 2023–49
Jul. 1, 2020–Sep. 30, 20203%59613
Oct. 1, 2020–Dec. 31, 20203%59613
Jan. 1, 2021–Mar. 31, 20213%11565
Apr. 1, 2021–Jun. 30, 20213%11565
Jul. 1, 2021–Sep. 30, 20213%11565
Oct. 1, 2021–Dec. 31, 20213%11565
Jan. 1, 2022–Mar. 31, 20223%11565
Apr. 1, 2022–Jun. 30, 20224%13567
Jul. 1, 2022–Sep. 30, 20225%15569
Oct. 1, 2022–Dec. 31, 20226%17571
Jan. 1, 2023–Mar. 31, 20237%19573
Apr. 1, 2023–Jun. 30, 20237%19573
Jul. 1, 2023–Sep. 30, 2023 7%19573
Oct. 1, 2023–Dec. 31, 20238%21575
Jan. 1, 2024–Mar. 31, 20248%69623

Bulletin No. 2023–49 1311 December 4, 2023
TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 - PRESENT
CORPORATE OVERPAYMENTS AND UNDERPAYMENTS
OVERPAYMENTSUNDERPAYMENTS
1995-1 C.B.1995-1 C.B.
RATETABLEPGRATETABLEPG
Jan. 1, 1999–Mar. 31, 19996%175717%19573
Apr. 1, 1999–Jun. 30, 19997%195738%21575
Jul. 1, 1999–Sep. 30, 19997%195738%21575
Oct. 1, 1999–Dec. 31, 19997%195738%21575
Jan. 1, 2000–Mar. 30, 20007%676218%69623
Apr. 1, 2000–Jun. 30, 20008%696239%71625
Jul. 1, 2000–Sep. 30, 20008%696239%71625
Oct. 1, 2000–Dec. 31, 20008%696239%71625
Jan. 1, 2001–Mar. 31, 20018%215759%23577
Apr. 1, 2001–Jun. 30, 20017%195738%21575
Jul. 1, 2001–Sep. 30, 20016%175717%19573
Oct. 1, 2001–Dec. 31, 20016%175717%19573
Jan. 1, 2002–Mar. 31, 20025%155696%17571
Apr. 1, 2002–Jun. 30, 20025%155696%17571
Jul. 1, 2002–Sep. 30, 20025%155696%17571
Oct. 1, 2002–Dec. 31, 20025%155696%17571
Jan. 1, 2003–Mar. 31, 20034%135675%15569
Apr. 1, 2003–Jun. 30, 20034%135675%
15569
Jul. 1, 2003–Sep. 30, 20034%135675%15569
Oct. 1, 2003–Dec. 31, 20033%115654%13567
Jan. 1, 2004–Mar. 31, 20043%596134%61615
Apr. 1, 2004–Jun. 30, 20044%616155%63617
Jul. 1, 2004–Sep. 30, 20043%596134%61615
Oct. 1, 2004–Dec. 31, 20044%616155%63617
Jan. 1, 2005–Mar. 31, 20054%135675%15569
Apr. 1, 2005–Jun. 30, 20055%155696%17571
Jul. 1, 2005–Sep. 30, 20055%155696%17571
Oct. 1, 2005–Dec. 31, 20056%175717%19573
Jan. 1, 2006–Mar. 31, 20066%175717%19573
Apr. 1, 2006–Jun. 30, 20066%175717%19573
Jul. 1, 2006–Sep. 30, 20067%195738%21575
Oct. 1, 2006–Dec. 31, 20067%195738%21575
Jan. 1, 2007–Mar. 31, 20077%195738%21575
Apr. 1, 2007–Jun. 30, 20077%195738%21575
Jul. 1, 2007–Sep. 30, 20077%195738%21575
Oct. 1, 2007–Dec. 31, 20077%195738%21575
Jan. 1, 2008–Mar. 31, 20086%656197%67
621
Apr. 1, 2008–Jun. 30, 20085%636176%65619
Jul. 1, 2008–Sep. 30, 20084%616155%63617
Oct. 1, 2008–Dec. 31, 20085%636176%65619

December 4, 2023 1312 Bulletin No. 2023–49
Jan. 1, 2009–Mar. 31, 20094%135675%15569
Apr. 1, 2009–Jun. 30, 20093%115654%13567
Jul. 1, 2009–Sep. 30, 20093%115654%13567
Oct. 1, 2009–Dec. 31, 20093%115654%13567
Jan. 1, 2010–Mar. 31, 20103%115654%13567
Apr. 1, 2010–Jun. 30, 20103%115654%13567
Jul. 1, 2010–Sep. 30, 20103%115654%13567
Oct. 1, 2010–Dec. 31, 20103%115654%13567
Jan. 1, 2011–Mar. 31, 20112%95633%11565
Apr. 1, 2011–Jun. 30, 20113%115654%13567
Jul. 1, 2011–Sep. 30, 20113%115654%13567
Oct. 1, 2011–Dec. 31, 20112%95633%11565
Jan. 1, 2012–Mar. 31, 20122%576113%59613
Apr. 1, 2012–Jun. 30, 20122%576113%59613
Jul. 1, 2012–Sep. 30, 20122%576113%59613
Oct. 1, 2012–Dec. 31, 20122%576113%59613
Jan. 1, 2013–Mar. 31, 20132%95633%11565
Apr. 1, 2013–Jun. 30, 20132%95633%11565
Jul. 1, 2013–Sep. 30, 20132%95633%11565
Oct. 1, 2013–Dec. 31, 2013
2%95633%11565
Jan. 1, 2014–Mar. 31, 20142%95633%11565
Apr. 1, 2014–Jun. 30, 20142%95633%11565
Jul. 1, 2014–Sep. 30, 20142%95633%11565
Oct. 1, 2014–Dec. 31, 20142%95633%11565
Jan. 1, 2015–Mar. 31, 20152%95633%11565
Apr. 1, 2015–Jun. 30, 20152%95633%11565
Jul. 1, 2015–Sep. 30, 20152%95633%11565
Oct. 1, 2015–Dec. 31, 20152%95633%11565
Jan. 1, 2016–Mar. 31, 20162%576113%59613
Apr. 1, 2016–Jun. 30, 20163%596134%61615
Jul. 1, 2016–Sep. 30, 20163%596134%61615
Oct. 1, 2016–Dec. 31, 20163%596134%61615
Jan. 1, 2017–Mar. 31, 20173%115654%13567
Apr. 1, 2017–Jun. 30, 20173%115654%13567
Jul. 1, 2017–Sep. 30, 20173%115654%13567
Oct. 1, 2017–Dec. 31, 20173%115654%13567
Jan. 1, 2018–Mar. 31, 20183%115654%13567
Apr. 1, 2018–Jun. 30, 20184%135675%15569
Jul. 1, 2018–Sep. 30, 20184%
135675%15569
Oct. 1, 2018–Dec. 31, 20184%135675%15569
Jan. 1, 2019–Mar. 31, 20195%155696%17571
Apr. 1, 2019–Jun. 30, 20195%155696%17571
Jul. 1, 2019–Sep. 30, 20194%135675%15569
Oct. 1, 2019–Dec. 31, 20194%135675%15569
Jan. 1, 2020–Mar. 31, 20204%616155%63617

Bulletin No. 2023–49 1313 December 4, 2023
Apr. 1, 2020–Jun. 30, 20204%616155%63617
Jul. 1, 2020–Sep. 30, 20202%576113%59613
Oct. 1, 2020–Dec. 31, 20202%576113%59613
Jan. 1, 2021–Mar. 31, 20212%95633%11565
Apr. 1, 2021–Jun. 30, 20212%95633%11565
Jul. 1, 2021–Sep. 30, 20212%95633%11565
Oct. 1, 2021–Dec. 31, 20212%95633%11565
Jan. 1, 2022–Mar. 31, 20222%95633%11565
Apr. 1, 2022–Jun. 30, 20223%115654%13567
Jul. 1, 2022–Sep. 30, 20224%135675%15569
Oct. 1, 2022–Dec. 31, 20225%155696%17571
Jan. 1, 2023–Mar. 31, 20236%175717%19573
Apr. 1, 2023–Jun. 30, 20236%175717%19573
Jul. 1, 2023–Sep. 30, 20236%175717%19573
Oct. 1, 2023–Dec. 31, 20237%195738%21575
Jan. 1, 2024–Mar. 31, 20247%676218%69623

December 4, 2023 1314 Bulletin No. 2023–49
TABLE OF INTEREST RATES
FOR LARGE CORPORATE UNDERPAYMENTS
FROM JANUARY 1, 1991 - PRESENT
1995-1 C.B.
RATETABLEPG
Jan. 1, 1991–Mar. 31, 199113%31585
Apr. 1, 1991–Jun. 30, 199112%29583
Jul. 1, 1991–Sep. 30, 199112%29583
Oct. 1, 1991–Dec. 31, 199112%29583
Jan. 1, 1992–Mar. 31, 199211%75629
Apr. 1, 1992–Jun. 30, 199210%73627
Jul. 1, 1992–Sep. 30, 199210%73627
Oct. 1, 1992–Dec. 31, 19929%71625
Jan. 1, 1993–Mar. 31, 19939%23577
Apr. 1, 1993–Jun. 30, 19939%23577
Jul. 1, 1993–Sep. 30, 19939%23577
Oct. 1, 1993–Dec. 31, 19939%23577
Jan. 1, 1994–Mar. 31, 19949%23577
Apr. 1, 1994–Jun. 30, 19949%23577
Jul. 1, 1994–Sep. 30, 199410%25579
Oct. 1, 1994–Dec. 31, 199411%27581
Jan. 1, 1995–Jun. 30, 199511%27581
Apr. 1, 1995–Jun. 30, 199512%29583
Jul. 1, 1995–Sep. 30, 199511%27581
Oct. 1, 1995–Dec. 31, 199511%27581
Jan. 1, 1996–Mar. 31, 199611%75629
Apr. 1, 1996–Jun. 30, 199610%73627
Jul. 1, 1996–Sep. 30, 199611%75629
Oct. 1, 1996–Dec. 31, 199611%75629
Jan. 1, 1997–Mar. 31, 199711%27581
Apr. 1, 1997–Jun. 30, 199711%27581
Jul. 1, 1997–Sep. 30, 199711%27581
Oct. 1, 1997–Dec. 31, 199711%27581
Jan. 1, 1998–Mar. 31, 199811%27581
Apr. 1, 1998–Jun. 30, 199810%25579
Jul. 1, 1998–Sep. 30, 199810%25579
Oct. 1, 1998–Dec. 31, 199810%25579
Jan. 1, 1999–Mar. 31, 19999%
23577
Apr. 1, 1999–Jun. 30, 199910%25579
Jul. 1, 1999–Sep. 30, 199910%25579
Oct. 1, 1999–Dec. 31, 199910%25579
Jan. 1, 2000–Mar. 31, 200010%73627
Apr. 1, 2000–Jun. 30, 200011%75629
Jul. 1, 2000–Sep. 30, 200011%75629
Oct. 1, 2000–Dec. 31, 200011%75629
Jan. 1, 2001–Mar. 31, 200111%27581

Bulletin No. 2023–49 1315 December 4, 2023
Apr. 1, 2001–Jun. 30, 200110%25579
Jul. 1, 2001–Sep. 30, 20019%23577
Oct. 1, 2001–Dec. 31, 20019%23577
Jan. 1, 2002–Mar. 31, 20028%21575
Apr. 1, 2002–Sep. 30, 20028%21575
Jul. 1, 2002–Sep. 30, 20028%21575
Oct. 1, 2002–Dec. 31, 20028%21575
Jan. 1, 2003–Mar. 31, 20037%19573
Apr. 1, 2003–Jun. 30, 20037%19573
Jul. 1, 2003–Sep. 30, 20037%19573
Oct. 1, 2003–Dec. 31, 20036%17571
Jan. 1, 2004–Mar. 31, 20046%65619
Apr. 1, 2004–Jun. 30, 20047%67621
Jul. 1, 2004–Sep. 30, 20046%65619
Oct. 1, 2004–Dec. 31, 20047%67621
Jan. 1, 2005–Mar. 31, 20057%19573
Apr. 1, 2005–Jun. 30, 20058%21575
Jul. 1, 2005–Sep. 30, 20058%21575
Oct. 1, 2005–Dec. 31, 20059%23577
Jan. 1, 2006–Mar. 31, 20069%23577
Apr. 1, 2006–Jun. 30, 20069%23577
Jul. 1, 2006–Sep. 30, 200610%25579
Oct. 1, 2006–Dec. 31, 200610%25579
Jan. 1, 2007–Mar. 31, 200710%25579
Apr. 1, 2007–Jun. 30, 200710%25579
Jul. 1, 2007–Sep. 30, 200710%25579
Oct. 1, 2007–Dec. 31, 200710%25579
Jan. 1, 2008–Mar. 31, 20089%71625
Apr. 1, 2008–Sep. 30, 20088%69623
Jul. 1, 2008–Sep. 30, 20087%67621
Oct. 1, 2008–Dec. 31, 20088%69623
Jan. 1, 2009–Mar. 31, 20097%19573
Apr. 1, 2009–Jun. 30, 20096%17571
Jul. 1, 2009–Sep. 30, 20096%
17571
Oct. 1, 2009–Dec. 31, 20096%17571
Jan. 1, 2010–Mar. 31, 20106%17571
Apr. 1, 2010–Jun. 30, 20106%17571
Jul. 1, 2010–Sep. 30, 20106%17571
Oct. 1, 2010–Dec. 31, 20106%17571
Jan. 1, 2011-Mar. 31, 20115%15569
Apr. 1, 2011–Jun. 30, 20116%17571
Jul. 1, 2011–Sep. 30, 20116%17571
Oct. 1, 2011–Dec. 31, 20115%15569
Jan. 1, 2012–Mar. 31, 20125%63617
Apr. 1, 2012–Jun. 30, 20125%63617
Jul. 1, 2012–Sep. 30, 20125%63617

December 4, 2023 1316 Bulletin No. 2023–49
Oct. 1, 2012–Dec. 31, 20125%63617
Jan. 1, 2013–Mar. 31, 20135%15569
Apr. 1, 2013–Jun. 30, 20135%15569
Jul. 1, 2013–Sep. 30, 20135%15569
Oct. 1, 2013–Dec. 31, 20135%15569
Jan. 1, 2014–Mar. 31, 20145%15569
Apr. 1, 2014–Jun. 30, 20145%15569
Jul. 1, 2014–Sep. 30, 20145%15569
Oct. 1, 2014–Dec. 31, 20145%15569
Jan. 1, 2015–Mar. 31, 20155%15569
Apr. 1, 2015–Jun. 30, 20155%15569
Jul. 1, 2015–Sep. 30, 20155%15569
Oct. 1, 2015–Dec. 31, 20155%15569
Jan. 1, 2016–Mar. 31, 20165%63617
Apr. 1, 2016–Jun. 30, 20166%65619
Jul. 1, 2016–Sep. 30, 20166%65619
Oct. 1, 2016–Dec. 31, 20166%65619
Jan. 1, 2017–Mar. 31, 20176%17571
Apr. 1, 2017–Jun. 30, 20176%17571
Jul. 1, 2017–Sep. 30, 20176%17571
Oct. 1, 2017–Dec. 31, 20176%17571
Jan. 1, 2018–Mar. 31, 20186%17571
Apr. 1, 2018–Jun. 30, 20187%19573
Jul. 1, 2018–Sep. 30, 20187%19573
Oct. 1, 2018–Dec. 31, 20187%19573
Jan. 1, 2019–Mar. 31, 20198%21575
Apr. 1, 2019–Jun. 30, 20198%21575
Jul. 1, 2019–Sep. 30, 20197%19573
Oct. 1, 2019–Dec. 31, 20197%19573
Jan. 1, 2020–Mar. 31, 20207%67621
Apr. 1, 2020–Jun. 30, 20207%67621
Jul. 1, 2020–Sep. 30, 20205%63617
Oct. 1, 2020–Dec. 31, 20205%63617
Jan. 1, 2021–Mar. 31, 20215%
15569
Apr. 1, 2021–Jun. 30, 20215%15569
Jul. 1, 2021–Sep. 30, 20215%15569
Oct. 1, 2021–Dec. 31, 20215%15569
Jan. 1, 2022–Mar. 31, 20225%15569
Apr. 1, 2022–Jun. 30, 20226%17571
Jul. 1, 2022–Sep. 30, 20227%19573
Oct. 1, 2022–Dec. 31, 20228%21575
Jan. 1, 2023–Mar. 31, 20239%23577
Apr. 1, 2023-Jun. 30, 20239%23577
Jul. 1, 2023–Sep. 30, 20239%23577
Oct. 1, 2023–Dec. 31, 202310%25579
Jan. 1, 2024–Mar. 31, 202410%73627

Bulletin No. 2023–49 1317 December 4, 2023
TABLE OF INTEREST RATES FOR CORPORATE
OVERPAYMENTS EXCEEDING $10,000
FROM JANUARY 1, 1995 – PRESENT
1995-1 C.B.
RATETABLEPG
Jan. 1, 1995–Mar. 31, 19956.5%18572
Apr. 1, 1995–Jun. 30, 19957.5%20574
Jul. 1, 1995–Sep. 30, 19956.5%18572
Oct. 1, 1995–Dec. 31, 19956.5%18572
Jan. 1, 1996–Mar. 31, 19966.5%66620
Apr. 1, 1996–Jun. 30, 19965.5%64618
Jul. 1, 1996–Sep. 30, 19966.5%66620
Oct. 1, 1996–Dec. 31, 19966.5%66620
Jan. 1, 1997–Mar. 31, 19976.5%18572
Apr. 1, 1997–Jun. 30, 19976.5%18572
Jul. 1, 1997–Sep. 30, 19976.5%18572
Oct. 1, 1997–Dec. 31, 19976.5%18572
Jan. 1, 1998–Mar. 31, 19986.5%18572
Apr. 1, 1998–Jun. 30, 19985.5%16570
Jul. 1, 1998–Sep. 30, 19985.5%16570
Oct. 1, 1998–Dec. 31, 19985.5%16570
Jan. 1, 1999–Mar. 31, 19994.5%14568
Apr. 1, 1999–Sep. 30, 19995.5%16570
Jul. 1, 1999–Sep. 30, 19995.5%16570
Oct. 1, 1999–Dec. 31, 19995.5%16570
Jan. 1, 2000–Mar. 31, 20005.5%64618
Apr. 1, 2000–Jun. 30, 20006.5%66620
Jul. 1, 2000–Sep. 30, 20006.5%66620
Oct. 1, 2000–Dec. 31, 20006.5%66620
Jan. 1, 2001–Mar. 31, 20016.5%18572
Apr. 1, 2001–Jun. 30, 20015.5%16570
Jul. 1, 2001–Sep. 30, 20014.5%14568
Oct. 1, 2001–Dec. 31, 20014.5%14568
Jan. 1, 2002–Mar. 31, 20023.5%12566
Apr. 1, 2002–Jun. 30, 20023.5%12566
Jul. 1, 2002–Sep. 30, 20023.5%12566
Oct. 1, 2002–Dec. 31, 20023.5%12566
Jan. 1, 2003–Mar. 31, 20032.5%
10564
Apr. 1, 2003–Jun. 30, 20032.5%10564
Jul. 1, 2003–Sep. 30, 20032.5%10564
Oct. 1, 2003–Dec. 31, 20031.5%8562
Jan. 1, 2004–Mar. 31, 20041.5%56610
Apr. 1, 2004–Jun. 30, 20042.5%58612

December 4, 2023 1318 Bulletin No. 2023–49
Jul. 1, 2004–Sep. 30, 20041.5%56610
Oct. 1, 2004–Dec. 31, 20042.5%58612
Jan. 1, 2005–Mar. 31, 20052.5%10564
Apr. 1, 2005–Jun. 30, 20053.5%12566
Jul. 1, 2005–Sep. 30, 20053.5%12566
Oct. 1, 2005–Dec. 31, 20054.5%14568
Jan. 1, 2006–Mar. 31, 20064.5%14568
Apr. 1, 2006–Jun. 30, 20064.5%14568
Jul. 1, 2006–Sep. 30, 20065.5%16570
Oct. 1, 2006–Dec. 31, 20065.5%16570
Jan. 1, 2007–Mar. 31, 20075.5%16570
Apr. 1, 2007–Jun. 30, 20075.5%16570
Jul. 1, 2007–Sep. 30, 20075.5%16570
Oct. 1, 2007–Dec. 31, 20075.5%16570
Jan. 1, 2008–Mar. 31, 20084.5%62616
Apr. 1, 2008–Jun. 30, 20083.5%60614
Jul. 1, 2008–Sep. 30, 20082.5%58612
Oct. 1, 2008–Dec. 31, 20083.5%60614
Jan. 1, 2009–Mar. 31, 20092.5%10564
Apr. 1, 2009–Jun. 30, 20091.5%8562
Jul. 1, 2009–Sep. 30, 20091.5%8562
Oct. 1, 2009–Dec. 31, 20091.5%8562
Jan. 1, 2010–Mar. 31, 20101.5%8562
Apr. 1, 2010–Jun. 30, 20101.5%8562
Jul. 1, 2010–Sep. 30, 20101.5%8562
Oct. 1, 2010–Dec. 31, 20101.5%8562
Jan. 1, 2011–Mar. 31, 20110.5%*
Apr. 1, 2011–Jun. 30, 20111.5%8562
Jul. 1, 2011–Sep. 30, 20111.5%8562
Oct. 1, 2011–Dec. 31, 20110.5%*
Jan. 1, 2012–Mar. 31, 20120.5%*
Apr. 1, 2012–Jun. 30, 20120.5%*
Jul. 1, 2012–Sep. 30, 20120.5%*
Oct. 1, 2012–Dec. 31, 20120.5%*
Jan. 1, 2013–Mar. 31, 20130.5%*
Apr. 1, 2013–Jun. 30, 20130.5%*
Jul. 1, 2013–Sep. 30, 20130.5%*
Oct. 1, 2013–Dec. 31, 20130.5%*
Jan. 1, 2014–Mar. 31, 20140.5%*
Apr. 1, 2014–Jun. 30, 20140.5%*
Jul. 1, 2014–Sep. 30, 20140.5%*
Oct. 1, 2014–Dec. 31, 20140.5%*

Bulletin No. 2023–49 1319 December 4, 2023
Jan. 1, 2015–Mar. 31, 20150.5%*
Apr. 1, 2015–Jun. 30, 20150.5%*
Jul. 1, 2015–Sep. 30, 20150.5%*
Oct. 1, 2015–Dec. 31, 20150.5%*
Jan. 1, 2016–Mar. 31, 20160.5%*
Apr. 1, 2016–Jun. 30, 20161.5%56610
Jul. 1, 2016–Sep. 30, 20161.5%56610
Oct. 1, 2016–Dec. 31, 20161.5%56610
Jan. 1, 2017–Mar. 31, 20171.5%8562
Apr. 1, 2017–Jun. 30, 20171.5%8562
Jul. 1, 2017–Sep. 30, 20171.5%8562
Oct. 1, 2017–Dec. 31, 20171.5%8562
Jan. 1, 2018–Mar. 31, 20181.5%8562
Apr. 1, 2018–Jun. 30, 20182.5%10564
Jul. 1, 2018–Sep. 30, 20182.5%10564
Oct. 1, 2018–Dec. 31, 20182.5%10564
Jan. 1, 2019–Mar. 31, 20193.5%12566
Apr. 1, 2019–Jun. 30, 20193.5%12566
Jul. 1, 2019–Sep. 30, 20192.5%10564
Oct. 1, 2019–Dec. 31, 20192.5%10564
Jan. 1, 2020–Mar. 31, 20202.5%58612
Apr. 1, 2020–Jun. 30, 20202.5%58612
Jul. 1, 2020–Sep. 30, 20200.5%*
Oct. 1, 2020–Dec. 31, 20200.5%*
Jan. 1, 2021–Mar. 31, 20210.5%*
Apr. 1, 2021–Jun. 30, 20210.5%*
Jul. 1, 2021–Sep. 30, 20210.5%*
Oct. 1, 2021–Dec. 31, 20210.5%*
Jan. 1, 2022–Mar. 31, 20220.5%*
Apr. 1, 2022–Jun. 30, 20221.5%8562
Jul. 1, 2022–Sep. 30, 20222.5%10564
Oct. 1, 2022–Dec. 31, 20223.5%12566
Jan. 1, 2023–Mar. 31, 20234.5%14568
Apr. 1, 2023–Jun. 30, 20234.5%14568
Jul. 1, 2023–Sep. 30, 2023 4.5%14568
Oct. 1, 2023–Dec. 31, 20235.5%16570
Jan. 1, 2024–Mar. 31, 2024 5.5%64618
* The asterisk reflects the interest factors for daily compound interest for annual rates of 0.5 percent published in Appendix A of
this Revenue Ruling.

December 4, 2023 1320 Bulletin No. 2023–49
Part III
Update for Weighted
Average Interest Rates,
Yield Curves, and Segment
Rates
Notice 2023-76
This notice provides guidance on the
corporate bond monthly yield curve, the
corresponding spot segment rates used
under § 417(e)(3), and the 24-month aver-
age segment rates under § 430(h)(2) of the
Internal Revenue Code. In addition, this
notice provides guidance as to the inter-
est rate on 30-year Treasury securities
under § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008 and the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I).
YIELD CURVE AND SEGMENT
RATES
Section 430 specifies the minimum
funding requirements that apply to sin-
gle-employer plans (except for CSEC plans
under § 414(y)) pursuant to § 412. Section
430(h)(2) specifies the interest rates that
must be used to determine a plan’s target
normal cost and funding target. Under
this provision, present value is generally
determined using three 24-month average
interest rates (“segment rates”), each of
which applies to cash flows during speci-
fied periods. To the extent provided under
§ 430(h)(2)(C)(iv), these segment rates
are adjusted by the applicable percentage
of the 25-year average segment rates for
the period ending September 30 of the
year preceding the calendar year in which
the plan year begins.
1
However, an elec-
tion may be made under § 430(h)(2)(D)
(ii) to use the monthly yield curve in place
of the segment rates.
Notice 2007-81, 2007-44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond seg-
ment rates used to compute the target nor-
mal cost and the funding target. Consistent
with the methodology specified in Notice
2007-81, the monthly corporate bond yield
curve derived from October 2023 data is
in Table 2023-10 at the end of this notice.
The spot first, second, and third segment
rates for the month of October 2023 are,
respectively, 5.77, 6.14, and 6.19.
The 24-month average segment rates
determined under § 430(h)(2)(C)(i) through
(iii) must be adjusted pursuant to § 430(h)
(2)(C)(iv) to be within the applicable mini-
mum and maximum percentages of the cor-
responding 25-year average segment rates.
For this purpose, any 25-year average seg-
ment rate that is less than 5% is deemed to
be 5%. The 25-year average segment rates
for plan years beginning in 2022, 2023 and
2024 were published in Notice 2021-54,
2021-41 I.R.B. 457, Notice 2022-40, 2022-
40 I.R.B. 266, and Notice 2023-66, 2023-
40 I.R.B. 992, respectively. The applicable
minimum and maximum percentages are
95% and 105% for plan years beginning in
2022, 2023 and 2024.
24-MONTH AVERAGE CORPORATE
BOND SEGMENT RATES
The three 24-month average corporate
bond segment rates applicable for November
2023 without adjustment for the 25-year
average segment rate limits are as follows:
24-Month Average Segment Rates Without 25-Year Average Adjustment
Applicable Month First Segment Second Segment Third Segment
November 2023 4.02 4.73 4.75
The adjusted 24-month average segment
rates set forth in the chart below reflect §
430(h)(2)(C)(iv) of the Code. The 24-month
averages applicable for November 2023,
adjusted to be within the applicable min-
imum and maximum percentages of the
corresponding 25-year average segment
rates in accordance with § 430(h)(2)(C)(iv)
of the Code, are as follows:
Adjusted 24-Month Average Segment Rates
For Plan Years
Beginning InApplicable MonthFirst SegmentSecond SegmentThird Segment
2022November 20234.755.185.92
2023November 20234.755.005.74
2024November 20234.754.875.59
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 431 specifies the minimum
funding requirements that apply to
multiemployer plans pursuant to § 412.
Section 431(c)(6)(B) specifies a mini-
mum amount for the full-funding limita-
tion described in § 431(c)(6)(A), based on
the plan’s current liability. Section 431(c)
(6)(E)(ii)(I) provides that the interest rate
used to calculate current liability for this
purpose must be no more than 5 percent
above and no more than 10 percent below
the weighted average of the rates of interest
1
Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount
of the full funding limitation under § 433(c)(7)(C)).

Bulletin No. 2023–49 1321 December 4, 2023
on 30-year Treasury securities during the
four-year period ending on the last day
before the beginning of the plan year.
Notice 88-73, 1988-2 C.B. 383, provides
guidelines for determining the weighted
average interest rate. The rate of interest
on 30-year Treasury securities for October
2023 is 4.94 percent. The Service deter-
mined this rate as the average of the daily
determinations of yield on the 30-year
Treasury bond maturing in August 2053.
For plan years beginning in November
2023, the weighted average of the rates
of interest on 30-year Treasury securities
and the permissible range of rates used to
calculate current liability are as follows:
Treasury Weighted Average Rates
For Plan Years Beginning In30-Year Treasury Weighted AveragePermissible Range 90% to 105%
November 20233.002.70 to 3.15
MINIMUM PRESENT VALUE
SEGMENT RATES
In general, the applicable interest rates
under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month
average. Notice 2007-81 provides guide-
lines for determining the minimum
present value segment rates. Pursuant to
that notice, the minimum present value
segment rates determined for October
2023 are as follows:
Minimum Present Value Segment Rates
Month First Segment Second Segment Third Segment
October 2023 5.77 6.14 6.19
DRAFTING INFORMATION
The principal author of this notice is
Tom Morgan of the Office of Associate
Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the IRS participated in the development
of this guidance. For further information
regarding this notice, contact Mr. Morgan
at 202-317-6700 or Tony Montanaro at
626-927-1475 (not toll-free numbers).

December 4, 2023 1322 Bulletin No. 2023–49
Table 2023-10
Monthly Yield Curve for October 2023
Derived from September 2023 Data
MaturityYieldMaturityYieldMaturityYieldMaturityYieldMaturityYield
0.55.8620.56.2440.56.1860.56.1680.56.16
1.05.8321.06.2441.06.1861.06.1681.06.16
1.55.8021.56.2341.56.1861.56.1681.56.16
2.05.7822.06.2342.06.1862.06.1682.06.16
2.55.7522.56.2342.56.1862.56.1682.56.16
3.05.7423.06.2243.06.1863.06.1683.06.16
3.55.7323.56.2243.56.1863.56.1683.56.16
4.05.7324.06.2244.06.1864.06.1684.06.16
4.55.7424.56.2144.56.1864.56.1684.56.16
5.05.7625.06.2145.06.1765.06.1685.06.15
5.55.7825.56.2145.56.1765.56.1685.56.15
6.05.8126.06.2146.06.1766.06.1686.06.15
6.5
5.8526.56.2146.56.1766.56.1686.56.15
7.05.8927.06.2047.06.1767.06.1687.06.15
7.55.9327.56.2047.56.1767.56.1687.56.15
8.05.9728.06.2048.06.1768.06.1688.06.15
8.56.0128.56.2048.56.1768.56.1688.56.15
9.06.0529.06.2049.06.1769.06.1689.06.15
9.56.0829.56.2049.56.1769.56.1689.56.15
10.06.1130.06.2050.06.1770.06.1690.06.15
10.56.1430.56.1950.56.1770.56.1690.56.15
11.06.1631.06.1951.06.1771.06.1691.06.15
11.56.1931.56.1951.56.1771.56.1691.56.15
12.06.2032.06.1952.06.1772.06.1692.06.15
12.56.2232.56.1952.56.1772.56.1692.56.15
13.06.2333.06.1953.0
6.1773.06.1693.06.15
13.56.2433.56.1953.56.1773.56.1693.56.15
14.06.2534.06.1954.06.1774.06.1694.06.15
14.56.2634.56.1954.56.1774.56.1694.56.15
15.06.2635.06.1955.06.1775.06.1695.06.15
15.56.2635.56.1955.56.1775.56.1695.56.15
16.06.2636.06.1956.06.1776.06.1696.06.15
16.56.2636.56.1856.56.1776.56.1696.56.15
17.06.2637.06.1857.06.1777.06.1697.06.15
17.56.2637.56.1857.56.1777.56.1697.56.15
18.06.2638.06.1858.06.1778.06.1698.06.15
18.56.2538.56.1858.56.1778.56.1698.56.15
19.06.2539.06.1859.06.1679.06.1699.06.15
19.56.2539.56.1859.56.1679.56.1699.5
6.15
20.06.2440.06.1860.06.1680.06.16100.06.15

Bulletin No. 2023–49 1323 December 4, 2023
Part IV
Notice of Proposed
Rulemaking
Statutory Disallowance
of Deductions for Certain
Qualified Conservation
Contributions Made
by Partnerships and S
Corporations
REG-112916-23
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing and notice of public hearing.
SUMMARY: This document contains
proposed regulations concerning the stat-
utory disallowance rule enacted by the
SECURE 2.0 Act of 2022 to disallow a
Federal income tax deduction for a qual-
ified conservation contribution made by
a partnership or an S corporation after
December 29, 2022, if the amount of the
contribution exceeds 2.5 times the sum of
each partner’s or S corporation sharehold-
er’s relevant basis. The proposed regula-
tions would provide guidance regarding
this statutory disallowance rule, including
definitions, appropriate methods to cal-
culate the relevant basis of a partner or
an S corporation shareholder, the three
statutory exceptions to the statutory dis-
allowance rule, and related reporting
requirements. In addition, the proposed
regulations would provide reporting
requirements for partners and S corpo-
ration shareholders that receive a dis-
tributive share or pro rata share of any
noncash charitable contribution made by
a partnership or S corporation, regardless
of whether the contribution is a qualified
conservation contribution (and regard-
less of whether the contribution is of
real property or other noncash property).
These proposed regulations would affect
partnerships and S corporations that claim
qualified conservation contributions, and
partners and S corporation shareholders
that receive a distributive share or pro rata
share, as applicable, of a noncash charita-
ble contribution. This document also pro-
vides a notice of public hearing on these
proposed regulations.
DATES: Written or electronic comments
must be received by December 20, 2023.
The public hearing on these proposed reg-
ulations is scheduled to be held on January
3, 2024, at 10 a.m. ET. Requests to speak
and outlines of topics to be discussed at
the public hearing must be received by
December 20, 2023. If no outlines are
received by December 20, 2023, the pub-
lic hearing will be cancelled. Requests to
attend the public hearing must be received
by 5 p.m. on December 29, 2023. The
public hearing will be made accessible to
people with disabilities. Requests for spe-
cial assistance during the hearing must be
received by 5 p.m. on December 28, 2023.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submis-
sions via the Federal eRulemaking Portal
at https://www.regulations.gov (indicate
IRS and REG-112916-23) by following
the online instructions for submitting
comments. Once submitted to the Federal
eRulemaking Portal, comments cannot be
edited or withdrawn. The Department of
Treasury (Treasury Department) and the
IRS will publish for public availability
any comments submitted, whether elec-
tronically or on paper, to the IRS’s pub-
lic docket. Requests for a public hearing
must be submitted as prescribed in the
“Comments and Public Hearing” section.
Send paper submissions to: CC:PA:01:PR
(REG-112916-23), Room 5203, Internal
Revenue Service, P.O. Box 7604, Ben
Franklin Station, Washington DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations under §§1.170A-14, 1.706-3,
and 1.706-4, contact Benjamin Weaver
at (202) 317-6850 (not a toll-free num-
ber); concerning the proposed regulations
under §1.170A-16 and issues regarding
section 170 other than section 170(h)(7),
contact Elizabeth Boone at (202) 317-
5100 and Hannah Kim at (202) 317-7003
(not toll-free numbers); and concerning
submissions of comments and requests for
a public hearing, contact Vivian Hayes at
(202) 317-6901 (not a toll-free number)
or by email to publichearings@irs.gov
(preferred).
SUPPLEMENTARY INFORMATION:
Background
I. Overview
This document contains proposed reg-
ulations that would amend the Income Tax
Regulations (26 CFR part 1) under sec-
tions 170 and 706 of the Internal Revenue
Code (Code) to implement the provisions
of section 605(a) and (b) of the SECURE
2.0 Act of 2022 (SECURE 2.0 Act),
enacted as Division T of the Consolidated
Appropriations Act, 2023, Public Law
117-328, 136 Stat. 4459, 5393 (December
29, 2022), which apply to contributions of
property made after December 29, 2022.
II. Charitable Contribution Deductions
Section 170(a) provides, subject to cer-
tain limitations and requirements, a deduc-
tion for any charitable contribution, as
defined in section 170(c), of cash or other
property the payment of which is made
within the taxable year. Section 170(f) dis-
allows charitable contribution deductions
in certain cases and provides special rules.
Section 170(f)(3)(A) provides that, in
the case of a contribution (not made by a
transfer in trust) of an interest in property
that consists of less than the taxpayer’s
entire interest in such property, a deduc-
tion will be allowed only to the extent that
the value of the interest contributed would
be allowable as a deduction under section
170 if such interest had been transferred
in trust. Section 170(f)(3)(B)(iii) provides
that section 170(f)(3)(A) does not apply
to a qualified conservation contribution
(discussed in part III of this Background
section).
Section 170(f)(11) requires a qualified
appraisal and other documentation for a

December 4, 2023 1324 Bulletin No. 2023–49
charitable contribution deduction to be
allowed with respect to certain contribu-
tions of property. Section 170(f)(11) also
includes special rules for contributions of
property other than cash (noncash chari-
table contributions) of more than $5,000
and for noncash charitable contributions
of more than $500,000. In addition, sec-
tion 170(f)(11)(H) provides that the
Secretary of the Treasury or her delegate
(Secretary) may prescribe such regula-
tions as may be necessary or appropriate
to carry out the purposes of section 170(f)
(11). Section 6001 provides that every
person liable for any tax imposed by title
26, United States Code (title 26) must
keep such records, render such statements,
make such returns, and comply with such
rules and regulations as the Secretary may
from time to time prescribe. In addition,
section 6011 provides, in part, that, when-
ever required by regulations prescribed
by the Secretary, any person made liable
for any tax imposed by title 26 must make
a return or statement according to the
forms and regulations prescribed by the
Secretary and include therein the informa-
tion required by such forms or regulations.
Under the authority of sections 170(f)(11)
(H), 6001, and 6011, existing regulations
under §1.170A-16 provide substantiation
and reporting requirements that must be
satisfied for a deduction to be allowed
under section 170 with respect to noncash
charitable contributions.
III. Qualified Conservation Contributions
Section 170(h)(1) provides that, in
general, for purposes of section 170(f)(3)
(B)(iii), the term “qualified conservation
contribution” means a contribution (1) of
a qualified real property interest, (2) to a
qualified organization, (3) exclusively for
conservation purposes. Section 170(h)
(2) defines the term “qualified real prop-
erty interest,” section 170(h)(3) defines
the term “qualified organization,” section
170(h)(4) defines the term “conservation
purpose,” and section 170(h)(5) defines
the term “exclusively for conservation
purposes.” In general, a qualified conser-
vation contribution may include a contri-
bution of a conservation easement.
The existing regulations under
§1.170A-14 provide rules for qualified
conservation contributions described in
section 170(h). Consistent with section
170(f)(3), §1.170A-14(a) provides that a
deduction under section 170 generally is
not allowed for a charitable contribution
of any interest in property that consists
of less than the donor’s entire interest in
the property other than certain transfers in
trust. However, by reason of section 170(f)
(3)(B)(iii), a deduction may be allowed for
the value of a qualified conservation con-
tribution if the requirements of §1.170A-
14 are met. To be eligible for a deduction
under §1.170A-14, the conservation pur-
pose of the contribution must be protected
in perpetuity. See §1.170A-14(a) and (g).
IV. Syndicated Conservation Easement
Transactions
On December 23, 2016, the Treasury
Department and the IRS released Notice
2017-10, 2017-4 I.R.B. 544, which iden-
tified transactions that are the same as
or substantially similar to certain syndi-
cated conservation easement transactions
as “listed transactions” under §1.6011-4
subject to certain disclosure and list main-
tenance requirements. Notice 2017-10
explains that the Treasury Department
and the IRS are aware that some promot-
ers are syndicating conservation easement
transactions that purport to give investors
the opportunity to obtain charitable con-
tribution deductions in amounts that sig-
nificantly exceed the amounts invested. In
addition, Notice 2017-10 provides that a
transaction is a listed transaction if (1) an
investor receives promotional materials
that offer a prospective investor in a pass-
through entity the possibility of a charita-
ble contribution deduction that equals or
exceeds an amount that is 2.5 times the
amount of the investor’s investment, (2)
the investor purchases an interest directly
or indirectly (through one or more tiers of
pass-through entities) in the pass-through
entity that holds real property, (3) the
pass-through entity contributes a conser-
vation easement and allocates, directly or
through one or more tiers of pass-through
entities, a charitable contribution to the
investor, and (4) the investor reports on
the investor’s Federal income tax return
a charitable contribution deduction with
respect to the conservation easement.
Congress continued to be concerned
about abusive syndicated conservation
easement transactions even after Notice
2017-10 was issued, and the transactions
were the subject of an investigation by
the U.S. Senate Committee on Finance,
which issued a report on August 25,
2020. S. Committee on Finance, Comm.
Print 116-44, Syndicated Conservation-
Easement Transactions, 116th Cong., 2nd
Sess. (2020) (Committee Report). The
Committee Report found that the syndi-
cated conservation easement transactions
examined were nothing more than retail
tax shelters allowing taxpayers to buy
tax deductions at the end of any given
tax year. Id. at 3. The Committee Report
further stated that these tax deductions
could be purchased with no economic
risk. Id. As such, the Finance Committee
concluded that further action was neces-
sary to preserve the integrity of the con-
servation easement tax deduction despite
ongoing efforts to combat this abuse such
as the issuance of Notice 2017-10 and IRS
enforcement action. Id. at 4.
In a separate report accompanying
an earlier proposal for amending sec-
tion 170(h), in legislation proposed as
the “Enhancing American Retirement
Now Act,” the Committee on Finance
recognized charitable deductions for the
donation of conservation easements as
an important tool and incentive to protect
the environment and historic structures.
S. Rep. No. 117-142 on S. 4808, at 218,
117th Cong., 2nd Sess. (2022). Citing its
findings from the 2020 Committee Report,
the Committee noted, however, that abu-
sive tax shelter transactions put the con-
servation easement tax deduction at risk.
The Committee ultimately found it appro-
priate to take legislative action to protect
the integrity of the conservation easement
tax deduction for easement donations with
a legitimate conservation purpose. Id.
On December 8, 2022, the Treasury
Department and the IRS published in the
Federal Register (87 FR 75185) a notice
of proposed rulemaking (REG-106134-
22) identifying syndicated conservation
easement transactions and substantially
similar transactions as listed transactions
(listing NPRM). The definition of a syn-
dicated conservation easement trans-
action in proposed §1.6011-9 of the
listing NPRM is similar to the definition
in Notice 2017-10. The purpose of the list-
ing NPRM was to eliminate any confusion

Bulletin No. 2023–49 1325 December 4, 2023
and ensure consistent enforcement of
Federal tax laws throughout the nation in
light of certain judicial decisions holding
that, under the Administrative Procedure
Act, 5 U.S.C. chapter 5, subchapter II,
listed transactions may be identified only
after following notice and comment pro-
cedures. See, e.g., Mann Construction,
Inc. v. United States, 27 F.4th 1138 (6th
Cir. 2022), and Green Valley Investors,
LLC, et al. v. Commissioner, 159 T.C. No.
5 (2022). The Treasury Department and
the IRS are in the process of considering
the comments received and finalizing the
listing NPRM.
V. Section 605 of the SECURE 2.0 Act
Section 170(h)(7) was added to the
Code by section 605(a)(1) of the SECURE
2.0 Act. Section 170(h)(7)(A) states that
a contribution by a partnership (whether
directly or as a distributive share of a con-
tribution of another partnership) is not
treated as a qualified conservation contri-
bution for purposes of section 170 if the
amount of such contribution exceeds 2.5
times the sum of each partner’s relevant
basis in such partnership (Disallowance
Rule). Thus, a contribution of a quali-
fied real property interest to a qualified
organization exclusively for conservation
purposes is not a qualified conservation
contribution if the Disallowance Rule
applies. Section 170(h)(7)(F) provides
that the rules of section 170(h)(7) “apply
to S corporations and other pass-through
entities in the same manner as such rules
apply to partnerships” except as the
Secretary may otherwise provide.
Section 170(h)(7)(B) defines the terms
“relevant basis” and “modified basis,”
section 170(h)(7)(C), (D), and (E) pro-
vide three exceptions to the Disallowance
Rule, and section 170(h)(7)(G) provides
a specific grant of regulatory authority to
the Secretary to issue regulations or other
guidance as the Secretary determines
are necessary or appropriate to carry out
the purposes of the Disallowance Rule,
including reporting requirements and
rules to prevent the avoidance of the
Disallowance Rule.
Section 605(a)(2) of the SECURE 2.0
Act modifies certain penalty provisions in
sections 6662, 6664, and 6751 of the Code
to provide special rules for charitable
contribution deductions disallowed by
section 170(h)(7). Section 605(a)(3) of
the SECURE 2.0 Act provides that any
charitable contribution for which a deduc-
tion was disallowed under section 170(h)
(7) is treated, for purposes of the period of
limitations on assessment and collection
of tax in section 6501 of the Code and the
period of limitations on making adjust-
ments in section 6235 of the Code, as a
transaction specifically identified by the
Secretary as a tax-avoidance transaction.
Section 605(b) of the SECURE 2.0
Act added section 170(f)(19) to the
Code, which provides that, in the case
of a partnership or S corporation claim-
ing a qualified conservation contribution
for the preservation of a building that is
a certified historic structure (as defined in
section 170(h)(4)(C)) in an amount that
exceeds 2.5 times the sum of each part-
ner’s or S corporation shareholder’s rel-
evant basis (as defined in section 170(h)
(7)), no deduction under section 170 is
allowed unless, as provided in section
170(f)(19)(A)(i) and (ii), the partnership
or S corporation includes on its return for
the taxable year a statement that such con-
tribution was made and any other infor-
mation as the Secretary may require. A
contribution to preserve a certified historic
structure is one of the three exceptions to
the Disallowance Rule.
Section 605(c) of the SECURE 2.0 Act
provides that the amendments made by
section 605 of the SECURE 2.0 Act apply
to contributions made after December 29,
2022, and that no inference is intended as
to the appropriate treatment of contribu-
tions made in taxable years ending on or
before that date, or as to any contribution
for which a deduction is not disallowed by
reason of section 170(h)(7).
VI. Overview of the Disallowance Rule
The Disallowance Rule provides that
a contribution by a partnership (whether
directly or as a distributive share of a con-
tribution of another partnership) is not
treated as a qualified conservation contri-
bution for purposes of section 170 if the
amount of such contribution exceeds 2.5
times the sum of each partner’s relevant
basis in such partnership. If such a contri-
bution is not treated as a qualified conser-
vation contribution, then the general rule
under section 170(f)(3)(A) disallowing a
charitable contribution deduction under
section 170 for a contribution of a partial
interest in property applies. Thus, if the
Disallowance Rule applies, any amount of
deduction under section 170 for a qualified
conservation contribution is disallowed.
Section 170(h)(7)(B)(i) provides that,
for purposes of section 170(h)(7), the term
“relevant basis” means, with respect to
any partner, the portion of such partner’s
modified basis in the partnership that is
allocable (under rules similar to the rules
of section 755 of the Code for allocating
certain special basis adjustments to part-
nership property) to the portion of the
real property with respect to which the
contribution described in section 170(h)
(7)(A) is made. Section 170(h)(7)(B)
(ii) provides that, for purposes of sec-
tion 170(h)(7), the term “modified basis”
means, with respect to any partner, such
partner’s adjusted basis in the partnership
as determined (1) immediately before the
contribution described in section 170(h)
(7)(A), (2) without regard to the treatment
of partnership liabilities in section 752,
and (3) by the partnership after taking into
account these first two adjustments and
such other adjustments as the Secretary
may provide.
Section 170(h)(7) contains three excep-
tions to the Disallowance Rule. First,
section 170(h)(7)(C) provides that the
Disallowance Rule does not apply to any
contribution made at least three years after
the latest of (1) the last date on which the
partnership that made such contribution
acquired any portion of the real property
with respect to which such contribution
is made, (2) the last date on which any
partner in the partnership that made such
contribution acquired any interest in such
partnership, and (3) if the interest in the
partnership that made such contribution is
held through one or more partnerships, the
last date on which any such partnership
acquired any interest in any other such
partnership, and the last date on which any
partner in any such partnership acquired
any interest in such partnership.
Second, section 170(h)(7)(D)(i) pro-
vides that the Disallowance Rule does not
apply to any contribution made by any part-
nership if substantially all of the partner-
ship interests in such partnership are held,
directly or indirectly, by an individual and

December 4, 2023 1326 Bulletin No. 2023–49
members of the family of such individual.
Section 170(h)(7)(D)(ii) provides that, for
purposes of section 170(h)(7)(D), the term
“members of the family” means, with
respect to any individual (I) the spouse of
such individual, and (II) any individual
who bears a relationship to such individ-
ual that is described in section 152(d)(2)
(A) through (G) of the Code for purposes
of determining whether an individual is a
qualifying relative.
Third, section 170(h)(7)(E) provides
that the Disallowance Rule does not apply
to any qualified conservation contribution
the conservation purpose of which is the
preservation of any building that is a cer-
tified historic structure (as defined in sec-
tion 170(h)(4)(C)).
Section 170(h)(7)(F) provides that,
except as may be otherwise provided by
the Secretary, the rules of section 170(h)
(7) apply to S corporations and other pass-
through entities in the same manner as
such rules apply to partnerships.
Section 170(h)(7)(G) authorizes the
Secretary to prescribe such regulations
or other guidance as may be necessary or
appropriate to carry out the purposes of
section 170(h)(7), including regulations
or other guidance (1) to require reporting,
including reporting related to tiered part-
nerships and the modified basis of part-
ners, and (2) to prevent the avoidance of
the purposes of section 170(h)(7).
Explanation of Provisions
I. Overview
These proposed regulations would
address several requirements added by
section 605 of the SECURE 2.0 Act and
make several related clarifying changes
to the existing regulations applicable to
qualified charitable contributions. First,
these proposed regulations would make
changes to existing §1.170A-14, includ-
ing modifying paragraph (a) to reference
the Disallowance Rule and adding new
paragraphs (j) through (n) to §1.170A-14
to provide guidance on the application
of the Disallowance Rule to partnerships
and S corporations, the computation of
relevant basis and modified basis, includ-
ing in tiered structures, and the three
statutory exceptions to the Disallowance
Rule.
These proposed regulations would pro-
vide specific rules for partnerships and
S corporations, but do not specifically
address other types of pass-through enti-
ties. The Treasury Department and the
IRS continue to study whether specific
rules are needed for other types of pass-
through entities and request comments
on the application of section 170(f)(19)
and (h)(7) to pass-through entities other
than partnerships and S corporations. The
Treasury Department and the IRS intend
to issue future guidance on other issues
relating to section 605 of SECURE 2.0
Act, including additional guidance relat-
ing to the three statutory exceptions to the
Disallowance Rule.
Second, these proposed regulations
would make changes to the reporting
requirements in §1.170A-16 to address
substantiation of charitable contribu-
tion deductions as well as to implement
section 170(f)(19)(A)(i). The Treasury
Department and the IRS intend to issue
future guidance addressing section 170(f)
(19)(A)(ii).
Finally, these proposed regulations
propose new language in §§1.706-3 and
1.706-4 to facilitate the operation of the
Disallowance Rule in the case of a qual-
ified conservation contribution made by a
partnership.
II. Clarifying Change to §1.170A-14(a)
The second sentence of existing
§1.170A-14(a) provides that a deduc-
tion may be allowed under section 170(f)
(3)(B)(iii) for the value of a qualified
conservation contribution if the require-
ments of §1.170A-14 are met. Because
the Disallowance Rule provided in sec-
tion 170(h)(7) is proposed to be contained
in §1.170A-14(j) through (n), proposed
§1.170A-14(a) would amend this sentence
to provide that a deduction may be allowed
under section 170(f)(3)(B)(iii) for the value
of a qualified conservation contribution if
the requirements of §1.170A-14 are met
and the contribution is not a disallowed
qualified conservation contribution within
the meaning of proposed §1.170A-14(j).
III. Disallowance Rule and Its Exceptions
Proposed §1.170A-14(j) would provide
guidance on the general applicability of
the Disallowance Rule to partnerships and
S corporations. Proposed §1.170A-14(j)
(3) would provide definitions. Consistent
with section 170(h)(7)(B), proposed
§1.170A-14(k) would provide that the
term “relevant basis” means, with respect
to any ultimate member (as defined in
proposed §1.170A-14(j)(3)(x)), the por-
tion of such ultimate member’s modi-
fied basis (as determined under proposed
§1.170A-14(l)) that is allocable (under
the rules of proposed §1.170A-14(m))
to the portion of the real property with
respect to which the qualified conser-
vation contribution is made. Proposed
§1.170A-14(l) would provide guidance
on the determination of modified basis.
Proposed §1.170A-14(m) would provide
guidance on the allocation of modified
basis to the portion of the real property
with respect to which the qualified conser-
vation contribution was made. Proposed
§1.170A-14(m)(6) would impose record-
keeping requirements for substantiating
the computation of each ultimate mem-
ber’s adjusted basis, modified basis, and
relevant basis by the due date, including
extensions, of the partnership’s or S cor-
poration’s Federal income tax return.
Proposed §1.170A-14(n) would provide
guidance on the three statutory exceptions
to the Disallowance Rule.
A. General Disallowance Rule for
Partnerships and S Corporations
Consistent with section 170(h)(7)(A),
proposed §1.170A-14(j)(1) would provide
that proposed §1.170A-14(j) applies the
rules of section 170(h)(7), which disallow
a deduction under the Code and §1.170A-
14 for certain qualified conservation con-
tributions, as defined in section 170(h)(1)
and §1.170A-14, made by, or allocated
to, partnerships or S corporations if the
amount of the qualified conservation con-
tribution exceeds 2.5 times the sum of the
relevant bases, as determined by proposed
§1.170A-14(j) through (m). Proposed
§1.170A-14(j)(3)(vii) would define a con-
tribution for which a deduction is disal-
lowed by §1.170A-14(j) as a “disallowed
qualified conservation contribution.”
Proposed §1.170A-14(j)(2)(i) would pro-
vide that, except as provided in proposed
§1.170A-14(n), a qualified conservation
contribution by a contributing partnership

Bulletin No. 2023–49 1327 December 4, 2023
or a contributing S corporation is a disal-
lowed qualified conservation contribution
if the amount of the qualified conservation
contribution exceeds 2.5 times the sum of
each of the contributing partnership’s or
contributing S corporation’s ultimate mem-
ber’s relevant basis as determined under
proposed §1.170A-14(j) through (m).
Proposed §1.170A-14(j)(2)(ii) would
provide that, except as provided in pro-
posed §1.170A-14(n), an allocated portion
of a contribution received by an upper-tier
partnership or upper-tier S corporation
is a disallowed qualified conservation
contribution if either the contribution is
a disallowed qualified conservation con-
tribution with respect to the partnership
that allocated the allocated portion to the
upper-tier partnership or upper-tier S cor-
poration, or such allocated portion exceeds
2.5 times the sum of each of that upper-
tier partnership’s or upper-tier S corpora-
tion’s ultimate member’s relevant basis as
determined under proposed §1.170A-14(j)
through (m). Thus, if a contribution is a
disallowed qualified conservation contri-
bution with respect to a partnership, then
the contribution is a disallowed qualified
conservation contribution with respect to
any upper-tier partnership or upper-tier
S corporation owning a direct or indirect
interest in that partnership. On the other
hand, if a contribution is not a disallowed
qualified conservation contribution with
respect to a partnership, then the rules of
proposed §1.170A-14(j) through (m) must
be applied to the next tier of upper-tier
partnerships and upper-tier S corporations
(which own a direct interest in the part-
nership) to determine if the Disallowance
Rule applies to those upper-tier partner-
ships and upper-tier S corporations. In
other words, the test of §1.170A-14(j)
through (m) must be applied at each tier
unless and until the test is failed at one
tier, in which case that portion of the con-
tribution will be a disallowed qualified
conservation contribution to that tier and
any subsequent tiers.
B. Definitions
Proposed §1.170A-14(j)(3) would
contain definitions, including definitions
of terms, including “contributing part-
nership,” “contributing S corporation,”
“ultimate member,” “allocated portion,”
“upper-tier partnership,” and “upper-tier S
corporation.”
1. Allocated portion
Proposed §1.170A-14(j)(3)(i) would
provide that, in the case of an upper-tier
partnership or upper-tier S corporation that
receives, directly or indirectly, a distributive
share of a qualified conservation contribu-
tion, the phrase “allocated portion” means
the amount of such distributive share.
2. Amount of qualified conservation
contribution
Proposed §1.170A-14(j)(3)(ii) would
provide that the amount of a contributing
partnership’s or contributing S corpora-
tion’s qualified conservation contribution
is the amount claimed as a qualified con-
servation contribution on the return of the
contributing partnership or contributing S
corporation for the taxable year in which
the contribution is made. It would also
provide that, if the contributing partner-
ship or contributing S corporation files an
amended return or administrative adjust-
ment request under section 6227 of the
Code claiming a different amount with
respect to the qualified conservation con-
tribution, the rules of §1.170A-14 must be
re-applied with respect to such different
amount to determine the application of
section 170(h)(7) and §1.170A-14.
3. Contributing partnership
The Disallowance Rule applies to a
partnership or S corporation that makes
a qualified conservation contribution,
as well as a partnership or S corporation
that is allocated a distributive share of a
qualified conservation contribution of
another partnership. For clarity, proposed
§1.170A-14(j)(3)(iii) would provide that
the term “contributing partnership” means
a partnership that makes a qualified con-
servation contribution.
4. Contributing S corporation
Proposed §1.170A-14(j)(3)(iv)
would provide that the term “contribut-
ing S corporation” means an S corpora-
tion that makes a qualified conservation
contribution.
5. Direct interest
Proposed §1.170A-14(j)(3)(v) would
provide that the term “direct interest” refers
to an ownership interest in a contributing
partnership, upper-tier partnership, con-
tributing S corporation, or upper-tier S
corporation that is held directly, or through
an entity disregarded as separate from its
owner for Federal income tax purposes,
a qualified subchapter S subsidiary as
defined in section 1361(b)(3) of the Code,
or through a grantor trust (under subpart
E of part 1 of subchapter J of chapter 1 of
the Code). In the case of a partner that is
a C corporation, non-grantor trust, or an
estate, or an S corporation shareholder that
is a non-grantor trust or an estate, the direct
interest in the partnership or S corpora-
tion, as applicable, would be considered to
be held by the C corporation, non-grantor
trust, or estate; the C corporation’s share-
holders, trust beneficiaries, and estate ben-
eficiaries would not be considered to hold
any interest in the partnership or S corpo-
ration, as applicable, for purposes of pro-
posed §1.170A-14(j) through (n).
6. Directly
Proposed §1.170A-14(j)(3)(vi) would
provide that an ownership interest is held
“directly” if it is not held through one or
more upper-tier partnerships or upper-tier
S corporations. Similarly, a distributive
share or pro rata share of a qualified con-
servation contribution would be received
“directly” if it does not pass through one
or more upper-tier partnerships or upper-
tier S corporations.
7. Disallowed qualified conservation
contribution
Proposed §1.170A-14(j)(3)(vii) would
provide that the term “disallowed qual-
ified conservation contribution” means
a qualified conservation contribution or
allocated portion for which no deduction
is allowed pursuant to section 170(h)(7)
and proposed §1.170A-14(j).
8. Indirect interest
Proposed §1.170A-14(j)(3)(viii) would
provide that the term “indirect inter-
est” refers to an ownership interest in a

December 4, 2023 1328 Bulletin No. 2023–49
contributing partnership, contributing S
corporation, upper-tier partnership, or
upper-tier S corporation held through an
upper-tier S corporation or one or more
upper-tier partnerships.
9. Indirectly
Proposed §1.170A-14(j)(3)(ix) would
provide that an ownership interest is held
“indirectly” if it is held through one or
more upper-tier partnerships or upper-tier
S corporations. Similarly, a distributive
share or pro rata share of a qualified con-
servation contribution would be received
“indirectly” if it passes through one or
more upper-tier partnerships or upper-tier
S corporations.
10. Ultimate Member
Proposed §1.170A-14(j)(3)(x) would
provide that the term “ultimate member”
means, with respect to any partnership or
S corporation, any partner (that is not itself
a partnership or S corporation) or S cor-
poration shareholder that receives a dis-
tributive share or pro rata share, directly
or indirectly, of a qualified conservation
contribution. Thus, ultimate members
would either be partners holding a direct
interest in a partnership, which may be
the contributing partnership or an upper-
tier partnership, or shareholders holding a
direct interest in an S corporation, which
may be the contributing S corporation
or an upper-tier S corporation. Proposed
§1.170A-14(j)(3)(x) would provide that
upper-tier S corporations and upper-tier
partnerships themselves are not consid-
ered ultimate members.
Several considerations played a role in
the decision of the Treasury Department
and the IRS to propose this rule that
looks to the relevant basis of the ultimate
members for determining whether a qual-
ified conservation contribution will be
disallowed. Although section 170(h)(7)
(A) provides that the Disallowance Rule
applies in tiered structures, the statu-
tory language does not explicitly explain
whether the determination of relevant
basis is made with respect to partners
(who may themselves be pass-through
entities) and S corporation shareholders
holding a direct interest in the contributing
partnership or contributing S corporation,
or whether the determination of relevant
basis is made with respect to the ulti-
mate members. The Disallowance Rule is
meant to compare the amount of a claimed
qualified conservation contribution with
the equity investment made by those per-
sons expected to claim a deduction with
respect to such contribution. Because it is
the ultimate members, such as individuals,
estates, and C corporations (that is, non-
pass-through entities), who ultimately
claim a deduction for a qualified conser-
vation contribution, the proposed regula-
tions would require that the determination
of relevant basis be made with respect to
those ultimate partners and S corporation
shareholders. For example, assume a con-
tributing partnership has two partners: (1)
an upper-tier S corporation, which has
two individual shareholders, and (2) an
upper-tier partnership, which has three
partners—a C corporation, an estate, and
an individual. Under these proposed reg-
ulations, relevant basis would be com-
puted with respect to the three individuals,
C corporation, and estate, and not with
respect to the upper-tier S corporation or
upper-tier partnership. The proposed regu-
lations would refer to these persons as the
“ultimate members.” In the case of a tiered
arrangement, the use of the term “partner”
to refer to such ultimate members might
be confusing or inaccurate because such
persons may not be partners of the con-
tributing partnership, and in fact, may not
be partners at all, if they are shareholders
of an upper-tier S corporation that is itself
a partner in the contributing partnership.
As such, the proposed regulations use the
term “member.”
The Treasury Department and the IRS
considered alternatives to the ultimate
member rule. One possible approach
would be to determine the application of
the Disallowance Rule with respect to the
contributing partnership by looking only
to the relevant bases of the contributing
partnership’s direct partners. In the exam-
ple in which a contributing partnership has
two partners, an upper-tier S corporation
and an upper-tier partnership, the direct
partners would be the upper-tier S corpo-
ration and the upper-tier partnership. The
modified basis (and thus, relevant basis)
of the upper-tier S corporation or upper-
tier partnership could include basis attrib-
utable to shareholders or partners of the
upper-tier entity that will not be expected
to claim the deduction. For example, this
might be the case because the contributing
partnership allocates all of the qualified
conservation contribution to the upper-tier
S corporation. Because the Disallowance
Rule is meant to compare the amount of
a claimed qualified conservation contribu-
tion with the equity investment made by
those persons expected to claim a deduc-
tion with respect to such contribution, it is
more consistent with the purposes of the
Disallowance Rule to compute relevant
basis only using the basis of those persons
who are expected to claim a deduction
with respect to the contribution.
Additionally, in the example earlier,
if the contributing partnership’s qualified
conservation contribution was not dis-
allowed by the Disallowance Rule, the
upper-tier S corporation and the upper-
tier partnership would each be required
to determine the application of the
Disallowance Rule by looking to their
direct owners. Because section 170(h)
(7)(B)(i) requires that relevant basis be
traced to the portion of the real property
with respect to which the contribution is
made, the upper-tier S corporation’s and
upper-tier partnership’s determinations
would necessarily involve computations
by both the upper-tier entity and the
contributing partnership. Thus, in many
cases, computing relevant basis only with
respect to direct partners would not sim-
plify the computations required to apply
the Disallowance Rule, because it would
still be necessary to carry the computa-
tions through each tier.
These proposed regulations would
provide numerous examples to determine
who is an ultimate member. Comments
are requested on the definition of ultimate
member, and whether additional examples
for specific situations would be helpful.
11. Upper-tier partnership
Proposed §1.170A-14(j)(3)(xi) would
provide that the term “upper-tier partner-
ship” means a partnership that receives an
allocated portion.
Where appropriate, the proposed reg-
ulations would provide separate rules for
contributing partnerships, contributing S
corporations, upper-tier partnerships, and
upper-tier S corporations. The Treasury

Bulletin No. 2023–49 1329 December 4, 2023
Department and the IRS are aware that
sometimes different naming conventions
are used to refer to tiered partnership
arrangements. For example, some may
refer to the contributing partnership as
the “property partnership” or “top-tier
partnership,” and in fact the IRS has used
that naming convention in some corre-
spondence. That naming convention is
not inherently wrong, as different practi-
tioners refer to the “bottom” and “top” of
a tiered structure differently. However, the
regulations under subchapter K of chapter
1 of the Code generally would refer to the
contributing partnership as the lower-tier
partnership, and to a partnership that owns
an interest in the contributing partnership
(either directly or indirectly) as an upper-
tier partnership. Accordingly, in a tiered
partnership ownership structure, these
proposed regulations reflect a naming
convention under which the contribut-
ing partnership would be the “lower-tier
partnership,” and a partnership receiving
a distributive share of a qualified conser-
vation contribution from the contribut-
ing partnership would be an “upper-tier
partnership.”
12. Upper-Tier S Corporation
Proposed §1.170A-14(j)(3)(xii) would
provide that the term “upper-tier S cor-
poration” means an S corporation that
receives an allocated portion.
C. Effect of the Disallowance Rule
As noted previously, section 170(h)(7)
(A) applies the Disallowance Rule to both
contributing partnerships and upper-tier
partnerships. Section 170(h)(7) does not
explicitly address what effect the appli-
cation of the Disallowance Rule to one
partnership or S corporation in a tiered
structure has on the other partnerships
or S corporations in the tiered structure.
These proposed regulations would pro-
vide that if the Disallowance Rule applies
to a partnership or S corporation, then the
qualified conservation contribution is a
disallowed qualified conservation contri-
bution to that entity as well as to any per-
son receiving a distributive share or pro
rata share, directly or indirectly, of that
entity’s disallowed qualified conservation
contribution; however, the disallowance
would not affect the qualified conser-
vation contribution with respect to any
lower-tier entities. In other words, if the
application of the Disallowance Rule with
respect to an upper-tier partnership or
upper-tier S corporation results in a dis-
allowed qualified conservation contribu-
tion, that would affect Federal income tax
consequences up the chain of tiers, but not
down the chain of tiers, so, for example,
the contributing partnership would not be
affected.
The Treasury Department and the IRS
considered other approaches, such as
always re-testing the application of the
Disallowance Rule to an upper-tier part-
nership’s or upper-tier S corporation’s
allocated portion, even when the contribu-
tion is a disallowed qualified conservation
contribution with respect to the low-
er-tier partnership. Under this approach,
if the allocated portion does not exceed
2.5 times the sum of each of the upper-
tier partnership’s or upper-tier S corpora-
tion’s ultimate member’s relevant basis,
the allocated portion would be a quali-
fied conservation contribution and not
disallowed to the upper-tier partnership’s
non-pass-through partners or the upper-
tier S corporation’s shareholders, even
though the contribution was a disallowed
qualified conservation contribution to the
non-pass-through partners of the low-
er-tier partnership. Allowing re-testing of
contributions that have already failed the
Disallowance Rule would be inconsistent
with the purposes of the Disallowance
Rule because it would inappropriately
encourage the creation of tiered structures
to allow some ultimate members to avoid
the Disallowance Rule. These proposed
regulations are intended to prevent avoid-
ance of the purposes of section 170(h)
(7) and ensure disallowance of deduc-
tions attributable to disallowed qualified
conservation contributions. The Treasury
Department and the IRS request comments
on the application of the Disallowance
Rule in tiered structures.
Under the authority of section 170(h)
(7)(G)(ii) to issue regulations or other
guidance to prevent the avoidance of the
purposes of section 170(h)(7), proposed
§1.170A-14(j)(4)(i) would provide that,
if a contributing partnership’s or con-
tributing S corporation’s qualified con-
servation contribution is a disallowed
qualified conservation contribution, then:
(1) any upper-tier partnership’s or upper-
tier S corporation’s allocated portion of
such contribution is a disallowed qualified
conservation contribution, regardless of
whether such allocated portion exceeds
2.5 times the sum of each of the upper-
tier partnership’s or upper-tier S corpora-
tion’s ultimate member’s relevant basis;
and (2) no person (whether holding a
direct or indirect interest in such contrib-
uting partnership or contributing S cor-
poration) may claim a deduction under
any provision of the Code with respect to
any amount of such disallowed qualified
conservation contribution, regardless of
whether that person’s distributive share
or pro rata share of the disallowed quali-
fied conservation contribution exceeds 2.5
times its relevant basis. The reference to
“any provision of the Code” is necessary
to prevent taxpayer attempts to avoid the
Disallowance Rule by claiming a deduc-
tion with respect to any amount of a qual-
ified conservation contribution under a
provision of the Code other than section
170 in cases in which no deduction is
allowable under section 170 by reason of
section 170(h)(7). For example, this pro-
posed rule would disallow a deduction
under section 642(c) of the Code for a
trust that is a partner in a partnership with
respect to a distributive share of a disal-
lowed qualified conservation contribution
from the partnership.
Proposed §1.170A-14(j)(4)(ii) would
provide that if a contributing partnership’s
or contributing S corporation’s qualified
conservation contribution is not a disal-
lowed qualified conservation contribu-
tion, then: (1) the distributive share or pro
rata share of any ultimate member holding
a direct interest in the contributing part-
nership or contributing S corporation is
not a disallowed qualified conservation
contribution; and (2) any upper-tier part-
nership or upper-tier S corporation that
receives an allocated portion of such qual-
ified conservation contribution must sep-
arately apply the rules of section 170(h)
(7) and proposed §1.170A-14(j) through
(m) to determine whether that upper-tier
partnership’s or upper-tier S corporation’s
allocated portion is a disallowed qualified
conservation contribution.
Proposed §1.170A-14(j)(4)(iii) would
provide that, if an upper-tier partnership’s

December 4, 2023 1330 Bulletin No. 2023–49
or upper-tier S corporation’s allocated
portion is a disallowed qualified conserva-
tion contribution, then: (1) any subsequent
upper-tier partnership’s or upper-tier
S corporation’s allocated portion of such
allocated portion would be a disallowed
qualified conservation contribution,
regardless of whether the subsequent
upper-tier partnership’s or upper-tier
S corporation’s allocated portion exceeds
2.5 times the sum of each of the subse-
quent upper-tier partnership’s or upper-
tier S corporation’s ultimate member’s
relevant basis; and (2) no person (whether
holding a direct or indirect interest in that
upper-tier partnership or upper-tier S cor-
poration) would be able to claim a deduc-
tion under any provision of the Code with
respect to any amount of that upper-tier
partnership’s or upper-tier S corporation’s
allocated portion, regardless of whether
that person’s distributive share or pro rata
share of the allocated portion exceeds
2.5 times its relevant basis. Similar to
proposed §1.170A-14(j)(4)(i), proposed
§1.170A-14(j)(4)(iii) would be issued
under the authority of section 170(h)
(7)(G)(ii) to issue regulations or other
guidance to prevent the avoidance of the
purposes of section 170(h)(7). However,
this proposed rule would not affect the
application of proposed §1.170A-14(j)
through (m) to another partner of the con-
tributing partnership; for example, if the
qualified conservation contribution is not
a disallowed qualified conservation con-
tribution with respect to the contributing
partnership, then the distributive share of
such contribution of an ultimate mem-
ber holding a direct interest in the con-
tributing partnership is not a disallowed
qualified conservation contribution, not-
withstanding that the qualified conserva-
tion contribution is a disallowed qualified
conservation contribution with respect
to one or more upper-tier partnerships or
upper-tier S corporations.
Proposed §1.170A-14(j)(4)(iv) would
provide that, if an upper-tier partnership’s
or upper-tier S corporation’s allocated
portion is not a disallowed qualified con-
servation contribution, then: (1) the dis-
tributive share or pro rata share of such
allocated portion of any ultimate member
holding a direct interest in the upper-tier
partnership or upper-tier S corporation is
not a disallowed qualified conservation
contribution; and (2) any subsequent
upper-tier partnership or upper-tier S cor-
poration that receives an allocated portion
of such allocated portion must separately
apply the rules of section 170(h)(7) and
proposed §1.170A-14(j) through (m)
to determine whether that subsequent
upper-tier partnership’s or upper-tier S
corporation’s allocated portion is treated
as a disallowed qualified conservation
contribution.
The proposed regulations contain
examples illustrating the rules with
respect to tiers of entities. The Treasury
Department and the IRS request com-
ments on whether additional examples
would be helpful.
D. No inference
The Treasury Department and the IRS
are aware that, even though section 605(c)
(2) of the SECURE 2.0 Act plainly states
that no inference is intended as to any
contribution for which a deduction is not
disallowed by reason of section 170(h)(7),
some practitioners have taken the position
that section 170(h)(7) operates as a “safe
harbor.” According to these practitioners,
a qualified conservation contribution that
is not disallowed by the Disallowance
Rule is somehow immune to a challenge
on other grounds, including failure to
comply with other rules under section
170 and overvaluation of the contribution.
Such a position is baseless and contra-
dicted by the statutory language.
To clarify this issue, proposed
§1.170A-14(j)(5) would provide that
there is no presumption that a qualified
conservation contribution that is not a
disallowed qualified conservation contri-
bution is compliant with section 170, any
other section of the Code, the regulations,
or any other guidance thereunder. It would
also provide that compliance with section
170(h)(7) and proposed §1.170A-14(j)
through (n) is not a safe harbor for purposes
of any other provision of law, including
the other requirements of section 170 and
the value of the contribution. Such trans-
actions are subject to adjustment or disal-
lowance for any other reason, including
failure to satisfy the requirements of sec-
tion 170 and the overvaluation of the con-
tribution; for example, failure to properly
execute Form 8283, Noncash Charitable
Contributions, violation of the partnership
anti-abuse rule of §1.701-2, lack of eco-
nomic substance, or other rules or judi-
cial doctrines. In addition, compliance
with proposed §1.170A-14(j) through (n)
would not preclude the application of any
penalty, including penalties for valua-
tion misstatement, negligence, and fraud.
Proposed §1.170A-14(j)(5) would also
provide that taxpayers who engage in such
transactions may be required to disclose
under §1.6011-4 the transactions as listed
transactions.
E. Determination of Relevant Basis
Consistent with section 170(h)(7)(B)
(i), proposed §1.170A-14(k) would pro-
vide that, for purposes of §1.170A-14, the
term “relevant basis” means, with respect
to any ultimate member, the portion of
such ultimate member’s modified basis
(as defined in proposed §1.170A-14(l))
that is allocable (under the rules of pro-
posed §1.170A-14(m)) to the portion of
the real property with respect to which
the qualified conservation contribution is
made.
1. Modified Basis
Proposed §1.170A-14(l)(1) would
provide that, in the case of an ultimate
member holding a direct interest in a part-
nership, the ultimate member’s modified
basis is determined by such partnership
immediately before the qualified conser-
vation contribution is made in the manner
described in §1.170A-14(l)(2). In the case
of an ultimate member holding a direct
interest in an S corporation, the ultimate
member’s modified basis would be deter-
mined by such S corporation in the man-
ner described in §1.170A-14(l)(3).
a. Modified basis of ultimate members
that are partners
Consistent with section 170(h)(7)(B)
(ii), the proposed regulations would pro-
vide rules that are designed to determine a
partner’s modified basis immediately prior
to the qualified conservation contribution.
Without additional guidance under section
706, there may be situations in which the
contribution is allocated to partners that
did not hold an interest at the time of the

Bulletin No. 2023–49 1331 December 4, 2023
qualified conservation contribution. Such
partners would not have any bases in their
partnership interests immediately before
the contribution, and thus, without addi-
tional rules, their modified bases and rel-
evant bases would be zero. As discussed
later in this preamble, these proposed reg-
ulations would contain rules under section
706 that would treat a qualified conserva-
tion contribution as an extraordinary item
under §1.706-4(e) that must be allocated
only to partners holding an interest in the
partnership at the time of the contribution.
Proposed rules under §1.706-3 would
ensure that only partners holding an inter-
est in an upper-tier partnership at the
time of the contribution would receive a
distributive share of an allocated portion.
Thus, all ultimate members who are part-
ners would be partners at the time of day
the contribution is made. In other words,
for a partner to be an ultimate member,
the partner must have been a partner at the
time of day the contribution is made and
must have been allocated a distributive
share of that contribution. These proposed
rules are intended to facilitate the com-
putation of modified basis immediately
before the contribution, consistent with
section 170(h)(7)(B)(ii)(I).
The proposed regulations would pro-
vide a process for determining a partner’s
modified basis. Proposed §1.170A-14(l)
(2)(i) would provide that, for purposes
of §1.170A-14, the term “modified
basis” means, with respect to any ulti-
mate member that is a direct partner in
either a contributing partnership or an
upper-tier partnership, such ultimate
member’s adjusted basis in its interest
in the partnership in which the ultimate
member holds a direct interest as of the
beginning of the first day of the partner-
ship’s taxable year in which the qualified
conservation contribution is made with
adjustments as determined under pro-
posed §1.170A-14(l)(2)(ii) through (v).
However, if the ultimate member was not
a partner as of the beginning of the first
day of the partnership’s taxable year, then
the term “modified basis” would mean
such ultimate member’s adjusted basis
in its interest in the partnership immedi-
ately after the transaction that resulted in
the ultimate member becoming a partner
with adjustments as determined under
proposed §1.170A-14(l)(2)(ii) through
(v). The Treasury Department and the
IRS considered alternatives to this rule,
including simply requiring that “adjusted
basis” be computed immediately prior to
the contribution. However, adjusted basis
is typically computed as of the beginning
of a taxable year, and it may be unclear
to taxpayers how to compute adjusted
basis as of another time during the year.
Current regulations generally do not
require partners to compute their adjusted
bases in their partnership interests as of
the time events, such as the making of
a qualified conservation contribution,
occur. Accordingly, these proposed reg-
ulations would start with a calculation of
adjusted basis that partners are familiar
with computing, and then make adjust-
ments to arrive at an amount that reflects
the partner’s modified basis immediately
before the contribution.
Proposed §1.170A-14(l)(2)(ii) through
(v) would provide four adjustments that
must be made to a partner’s adjusted basis
to arrive at modified basis. These adjust-
ments would be required to be made in
the order in which they are listed. First,
proposed §1.170A-14(l)(2)(ii) would
provide that the computation of mod-
ified basis must start with the ultimate
member’s adjusted basis under proposed
§1.170A-14(l)(2)(i) and then reflect an
increase for any contributions made by the
ultimate member to the partnership during
the portion of the year commencing with
the beginning of the taxable year of the
partnership and ending immediately prior
to the time of day at which the qualified
conservation contribution is made as pro-
vided in section 722 of the Code.
Second, proposed §1.170A-14(l)(2)
(iii) would provide that the amount deter-
mined under proposed §1.170A-14(l)
(2)(ii) must be adjusted, as provided in
section 705 of the Code, by the ultimate
member’s hypothetical distributive share
of partnership items attributable to the
portion of the year commencing with
the beginning of the taxable year of the
partnership and ending immediately prior
to the time of day at which the qualified
conservation contribution is made. For
example, if a calendar-year partnership
makes a qualified conservation contribu-
tion at 9:17 a.m. on November 19 of Year
1, then the hypothetical distributive share
would be required to be made based on
the partnership items attributable to the
period between the beginning of the
day on January 1 Year 1 and 9:16 a.m.
on November 19 Year 1. In making this
determination, the partnership would be
required to apply the rules of §1.706-4
and apply a hypothetical interim closing
method to allocate the partnership’s items
attributable to the portion of the year com-
mencing with the beginning of the taxable
year of the partnership and ending imme-
diately prior to the time of day at which
the qualified conservation contribution
is made. Proposed §1.170A-14(l)(2)(iii)
would provide that the partnership can-
not apply any convention in §1.706-4(c)
to the hypothetical determination of the
partners’ distributive shares, but rather
must perform the calculation as though
the determination occurred immediately
prior to the time of day at which the qual-
ified conservation contribution is made.
Proposed §1.170A-14(l)(2)(iii) would
clarify that this hypothetical determina-
tion of the partners’ distributive shares
is only for purposes of calculating mod-
ified basis. Proposed §1.170A-14(l)(2)
(iii) would also make clear that proposed
§1.170A-14(l) does not require the part-
nership to use the interim closing method
with respect to the determination of its
partners’ actual distributive shares for
the taxable year in which the qualified
conservation contribution is made or oth-
erwise. See section 706(d) and the reg-
ulations thereunder for the permissible
methods that may be used in the determi-
nation of the partners’ distributive shares
for a partnership taxable year in which
there is a variation in a partner’s interest
in the partnership. As described later this
preamble, proposed §§1.706-3(a) and
1.706-4(e)(2)(ix) would provide special
rules for the allocation of qualified con-
servation contributions.
The Treasury Department and the IRS
considered using the partners’ actual
distributive shares, determined as of the
time of the contribution. In the case of a
partnership using the proration method,
however, such an approach would result
in the partners’ modified bases reflect-
ing a portion of partnership items earned
or incurred by the partnership after the
time of the contribution, and thus would
be inconsistent with the requirement in
section 170(h)(7)(B)(ii)(I) that partners’

December 4, 2023 1332 Bulletin No. 2023–49
modified bases be determined imme-
diately before the contribution. The
Treasury Department and the IRS request
comments on the approach taken in the
proposed regulations to determine the
partners’ distributive shares of partner-
ship items attributable to the portion of
the year commencing with the beginning
of the taxable year of the partnership and
ending immediately prior to the time of
day at which the qualified conservation
contribution is made.
Third, proposed §1.170A-14(l)(2)(iv)
would provide that the amount determined
under proposed §1.170A-14(l)(2)(iii)
must be reduced (but not below zero) by
any distributions made by the partnership
to the ultimate member during the portion
of the year commencing with the begin-
ning of the taxable year of the partnership
and ending immediately prior to the time
of day at which the qualified conservation
contribution is made as provided in sec-
tion 733 of the Code.
Fourth, consistent with section 170(h)
(7)(B)(ii)(II), proposed §1.170A-14(l)(2)
(v) would provide that the amount deter-
mined under proposed §1.170A-14(l)(2)
(iv) must be reduced by the full amount of
the ultimate member’s share of §1.752-1
liabilities of any partnership (including
a lower-tier partnership). The remaining
amount would be such ultimate member’s
modified basis. Thus, under the proposed
regulations, an ultimate member’s mod-
ified basis may be less than zero. Under
the formulas for the determination of rele-
vant basis discussed later in this preamble,
a negative modified basis will result in a
negative relevant basis. Because the appli-
cation of the Disallowance Rule is based
on the sum of each ultimate member’s
relevant basis, if one ultimate member’s
relevant basis is negative, it will be added
to all other ultimate members’ relevant
bases, and the sum may be a positive or
negative number.
b. Modified basis of ultimate members
that are shareholders in an S corporation
Unlike the rules for partnerships dis-
cussed previously, S corporations do
not have extraordinary items that must
be allocated only to shareholders as of
the time of day the item occurs. Instead,
section 1377 of the Code and existing
§1.1377-1 generally require pro rata allo-
cations. Section 1.1377-1(a) provides
that each shareholder’s pro rata share of
any S corporation item described in sec-
tion 1366(a) of the Code for any taxable
year is the sum of the amounts deter-
mined with respect to the shareholder by
assigning an equal portion of the item
to each day of the S corporation’s tax-
able year, and then dividing that portion
pro rata among the shares outstanding
on that day. If a shareholder disposes
of its entire interest in an S corporation,
§1.1377-1(b) allows the S corporation
to make a terminating election, under
which the S corporation will determine
the terminating shareholder’s share as
though the S corporation’s taxable year
closed on the day of the termination.
However, there is no extraordinary item
rule for S corporations similar to §1.706-
4(e). As such, it may be the case that an S
corporation allocates a portion of a qual-
ified conservation contribution to some-
one that was not a shareholder at the
time of the contribution, but that share-
holder would still be treated as an ulti-
mate member because the shareholder
received a pro rata share of the qualified
conservation contribution.
As described previously, the rules for
determining a partner’s modified basis
start with the partner’s adjusted basis at
the start of the partnership’s taxable year
and work forward to determine modified
basis immediately before the contribu-
tion. However, the Treasury Department
and the IRS are concerned that such an
approach is not appropriate for S corpo-
ration shareholders, as it could be unnec-
essarily burdensome and, in some cases,
impossible to determine each sharehold-
er’s modified basis immediately prior to
the qualified conservation contribution
(because some ultimate members may
not be shareholders at the time of the con-
tribution). To provide an administrable
standard consistent with the purposes of
section 170(h)(7), these proposed regu-
lations would require the computation of
an S corporation shareholder’s modified
basis under an approach that is similar in
purpose to the approach for partners but
different in application.
Proposed §1.170A-14(l)(3)(i) would
provide that, for purposes of §1.170A-
14, the term “modified basis” means,
with respect to any ultimate member that
is a shareholder of either a contributing
S corporation or an upper-tier S corpo-
ration, such ultimate member’s adjusted
basis in its shares in the S corporation as
of the end of the S corporation’s taxable
year in which the qualified conservation
contribution is made with adjustments as
determined under proposed §1.170A-14(l)
(3)(ii) and (iii). However, if the ultimate
member was not a shareholder at the end
of the S corporation’s taxable year in
which the qualified conservation contri-
bution is made, then the term “modified
basis” would mean such ultimate mem-
ber’s adjusted basis in its shares in the
S corporation immediately prior to the
transaction that terminated its interest
in the S corporation with adjustments as
determined under proposed §1.170A-14(l)
(3)(ii) and (iii).
The Treasury Department and the IRS
considered several alternatives to this
rule. One method would be to require a
determination of a portion of modified
basis for every day during the S corpo-
ration’s taxable year, because S corpora-
tions generally allocate the contribution
on a pro rata basis among the share-
holders on each day of the taxable year.
These proposed regulations do not take
that approach because the Treasury
Department and the IRS are concerned
that such an approach, although techni-
cally accurate and consistent with the
purposes of section 170(h)(7), would
be too burdensome for taxpayers and
difficult for the IRS to administer. The
Treasury Department and the IRS also
considered using the shareholders’
adjusted bases as of the beginning of
the S corporation’s taxable year (rather
than as of the end of the year). However,
because qualified conservation contribu-
tions are typically made in the second
half of the year, especially in syndicated
transactions, the Treasury Department
and the IRS determined that such an
approach would be less accurate than
using the shareholders’ adjusted bases as
of the end of the year (or a shareholder’s
adjusted basis immediately prior to the
transaction that terminated their interest
in the S corporation).
Proposed §1.170A-14(l)(3)(i) would
also clarify that modified basis does not
include the ultimate member’s adjusted

Bulletin No. 2023–49 1333 December 4, 2023
basis of any indebtedness of the S corpo-
ration to the ultimate member.
1

Proposed §1.170A-14(l)(3)(ii) and
(iii) would provide two adjustments that
must be made to arrive at modified basis.
These adjustments would be required to
be made in the order in which they are
listed. First, proposed §1.170A-14(l)(3)
(ii) would provide that the computation
of modified basis must start with the ulti-
mate member’s adjusted basis under pro-
posed §1.170A-14(l)(3)(i) and then must
reflect an increase for the extent to which
the adjusted basis reflects a reduction as
a result of the qualified conservation con-
tribution. Thus, the ultimate member’s
modified basis with respect to a qual-
ified conservation contribution would
not reflect any reduction for the ultimate
member’s pro rata share of the S corpo-
ration’s basis in the conservation ease-
ment or other property contributed in the
qualified conservation contribution. This
adjustment in proposed §1.170A-14(l)(3)
(ii) would be made because it would not
be appropriate or consistent with section
170(h)(7)(B)(ii)(I) for modified basis, and
thus relevant basis, to reflect a reduction
for the very contribution that is being
analyzed under the Disallowance Rule as
such an approach might result in deduc-
tions being inappropriately disallowed by
the Disallowance Rule.
Second, proposed §1.170A-14(l)(3)
(iii) would provide that the amount deter-
mined under proposed §1.170A-14(l)(3)
(ii) must be multiplied by the number of
days during the S corporation’s taxable
year in which the ultimate member was
a shareholder and divided by the total
number of days during the S corpora-
tion’s taxable year. The resulting amount
would be such ultimate member’s modi-
fied basis. Inappropriate double counting
of relevant basis might occur unless the
proposed regulations provide this rule.
For example, assume individual A owns
a portion of the outstanding shares of an
S corporation. In early July, A sells all
its shares to B. In December, the S cor-
poration makes a qualified conservation
contribution. Absent a terminating elec-
tion under §1.1377-1(b), the S corpora-
tion would allocate some of the qualified
conservation contribution to each of A and
B. Unless A’s and B’s modified bases (and
thus, their relevant bases) are adjusted
to reflect that each was a shareholder for
approximately half of the year, the S cor-
poration’s computation of the sum of each
of its ultimate member’s relevant basis
would be inappropriately overstated. The
Treasury Department and the IRS request
comments on whether there are certain sit-
uations in which the divisor should be less
than the full number of days in the S cor-
poration’s taxable year. In particular, the
Treasury Department and the IRS request
comments on whether, and how, elections
under §§1.1368-1(g)(2) and 1.1377-1(b)
should result in the divisor being less than
the full number of days in the S corpora-
tion’s taxable year. It would be particularly
helpful for commenters to address situa-
tions in which elections under §§1.1368-
1(g)(2) and 1.1377-1(b) affect some, but
not all, of the shareholders.
Section 170(h)(7)(B)(ii)(III) provides
authority for the Secretary to provide for
other adjustments in the computation of
modified basis. The Treasury Department
and the IRS request comments on whether
any additional adjustments to arrive at
modified basis would be appropriate.
The proposed regulations also contain
examples illustrating the determination of
modified basis. Comments are requested
on whether it would be helpful to add
examples with other factual scenarios.
2. Allocation of Modified Basis and
Determination of Relevant Basis
Proposed §1.170A-14(m) would pro-
vide rules for determining the portion of
an ultimate member’s modified basis that
is allocable to the portion of the real prop-
erty with respect to which the contribu-
tion is made, which is the final step in the
determination of relevant basis. Section
170(h)(7)(B)(i) provides that the allo-
cation is made under rules similar to the
rules of section 755. Section 755 provides
rules for allocating special basis adjust-
ments to partnership property resulting
from partnership distributions or transfers
of partnership interests, such as adjust-
ments under section 734(b) of the Code
and adjustments under section 743(b) of
the Code.
Section 755(a) generally provides that
any increase or decrease in the adjusted
basis of partnership property under section
734(b) (relating to the optional adjustment
to the basis of undistributed partnership
property) or section 743(b) (relating to the
optional adjustment to the basis of part-
nership property in the case of a transfer
of an interest in a partnership) is allocated
(1) in a manner that reduces the difference
between the fair market value and the
adjusted basis of partnership properties,
or (2) in any other manner permitted by
regulations. The regulations under section
755 provide rules for performing these
allocations. Those rules can be complex
and involve several different methods for
allocating basis adjustments among the
partnership’s properties, including:
(1) Allocating in a manner that reduces
the difference between the fair market
value and the adjusted basis of partnership
properties. See §1.755-1(b)(2)(i) and (b)
(3).
(2) Allocating in proportion to the
transferee’s share of the amount that
would be realized by the partnership upon
the hypothetical sale of each property. See
§1.755-1(b)(5)(iii)(A).
(3) Allocating in proportion to the fair
market values of the partnership’s proper-
ties. See §1.755-1(c)(2)(i).
(4) Allocating in proportion to the part-
nership’s adjusted bases in its properties.
See §1.755-1(c)(2)(ii).
(5) Allocating in proportion to the part-
ner’s share of the adjusted bases in the
partnership’s properties. See §1.755-1(b)
(5)(iii)(B).
In considering which of these alloca-
tion rules would be most appropriate to
determine relevant basis, the Treasury
Department and the IRS considered the
1
As described previously, section 170(h)(7)(B)(ii)(II) provides that the determination of modified basis is to be made without regard to section 752. However, the Code does not contain a rule
substantially similar to section 752 for S corporations. Unlike a partner’s basis in the partner’s interest in the partnership, an S corporation shareholder’s basis in stock of the S corporation
does not include any share of the S corporation’s liabilities. Under section 1367(b)(2)(A) of the Code and §1.1367-2(b), if an S corporation shareholder’s pro rata share of the S corporation’s
losses, deductions, noncapital, nondeductible expenses, and certain oil and gas depletion deductions exceed the shareholder’s stock basis, then these items may reduce the shareholder’s basis
in indebtedness owed to them by the S corporation (but not below zero). Under section 1367(b)(2)(B) and §1.1367-2(c), if the basis in indebtedness has been so reduced, then any future net
increase must be applied to restore such reduction in indebtedness basis before any of it may be used to increase the shareholder’s basis in its stock of the S corporation.

December 4, 2023 1334 Bulletin No. 2023–49
special basis adjustment and loss limita-
tion rules for charitable contributions.
Those rules look to a partner’s or share-
holder’s share of the partnership’s or S
corporation’s basis in the contributed
property.
Generally, section 705(a)(2) provides
that the adjusted basis of a partner’s inter-
est in a partnership is decreased (but not
below zero) by distributions by the part-
nership and by the sum of the partner’s
distributive share for the taxable year
and prior taxable years of (1) losses of
the partnership, and (2) expenditures of
the partnership not deductible in comput-
ing its taxable income and not properly
chargeable to capital account. Generally,
when a partnership makes a charitable
contribution, the partners are not required
to reduce their adjusted bases in their part-
nership interests by the fair market value
of the contribution. Instead, Revenue
Ruling 96-11, 1996-1 C.B. 140, provides
that after a partnership makes a charita-
ble contribution of property, the basis of
each partner’s interest in the partnership
is decreased (but not below zero) by the
partner’s share of the partnership’s basis in
the property contributed. Revenue Ruling
96-11 explains that reducing the partners’
bases in their partnership interests by
their respective shares of the permanent
decrease in the partnership’s basis in its
properties preserves the intended bene-
fit of providing a deduction (in circum-
stances not under section 170(e)) for the
fair market value of appreciated property
without recognition of the appreciation.
In contrast, reducing the partners’ bases
in their partnership interests by the fair
market value of the contributed property
would subsequently cause the partners
to recognize gain (or a reduced loss), for
example, upon a disposition of their part-
nership interests, attributable to the unrec-
ognized appreciation in the contributed
property at the time of the contribution.
The partnership loss limitation rules
in section 704(d) of the Code have a
similar rule for charitable contributions.
Generally, section 704(d)(1) provides that
a partner’s distributive share of partner-
ship loss is allowed only to the extent such
partner’s adjusted basis in its partnership
interest at the end of the partnership year in
which such loss occurred. Section 704(d)
(3)(A) provides, in part, that in determin-
ing the amount of any loss under section
704(d)(1), the partner’s distributive share
of charitable contributions as defined in
section 170(c) must be taken into account.
However, section 704(d)(3)(B) provides
that, in the case of a charitable contribu-
tion of property whose fair market value
exceeds its adjusted basis, section 704(d)
(3)(A) does not apply to the extent of the
partner’s distributive share of such excess.
The rules for S corporations also look
to the shareholder’s share of the S corpo-
ration’s basis in the contributed property.
Section 1367(a)(2)(B) of the Code pro-
vides that the basis of each shareholder’s
stock is reduced by the items of loss and
deduction described in section 1366(a)
(1)(A). However, the second sentence
of section 1367(a)(2) provides that the
decrease in basis under section 1367(a)(2)
(B) by reason of a charitable contribution
(as defined in section 170(c)) of property
is the amount equal to the shareholder’s
pro rata share of the adjusted basis of such
property.
2
Generally, section 1366(d)(1) pro-
vides that the aggregate amount of losses
and deductions taken into account by a
shareholder under section 1366(a) for
any taxable year cannot exceed the sum
of (1) the adjusted basis of the sharehold-
er’s stock in the S corporation, and (2)
the shareholder’s adjusted basis of any
indebtedness of the S corporation to the
shareholder. However, section 1366(d)
(4) provides that, in the case of any char-
itable contribution of property to which
the second sentence of section 1367(a)
(2) applies, section 1366(d)(1) does not
apply to the extent of the excess (if any)
of (1) the shareholder’s pro rata share of
such contribution, over (2) the sharehold-
er’s pro rata share of the adjusted basis of
such property. See also Rev. Rul. 2008-16,
2008-1 C.B. 585.
Therefore, generally partnerships and
S corporations making charitable con-
tributions are already required to track
each partner’s and shareholder’s share of
the entity’s basis in the contributed prop-
erty. And as noted previously, in certain
circumstances the rules under section
755 also look to the partner’s share of
the partnership’s basis in its properties.
Accordingly, as described in this section
of the preamble, these proposed regula-
tions would require the allocation of an
ultimate member’s modified basis to the
portion of the real property with respect
to which the qualified conservation contri-
bution is made to be based on the ultimate
member’s share of the entity’s bases in its
properties. This provides an administrable
standard consistent with the purposes of
section 170(h)(7).
The Treasury Department and the IRS
considered alternatives to this rule. In par-
ticular, the Treasury Department and the
IRS considered simply cross-referencing
the rules under section 755. Under that
alternative approach, the amount of each
partner’s modified basis would be treated
for purposes of the computation of rele-
vant basis as a special basis adjustment
under section 734(b) or section 743(b);
relevant basis would be the portion of
modified basis that would be allocated
under the rules of section 755 to the por-
tion of the real property with respect to
which the contribution was made. Such
an approach would be less consistent with
the purposes of the Disallowance Rule. As
noted previously, basis allocations under
section 755 are sometimes made in a way
to reduce or eliminate built-in gain or
loss in partnership property. The relevant
basis rule of section 170(h)(7) is designed
to determine the portion of a partner’s
modified basis that is allocable to the por-
tion of the real property with respect to
which the contribution is made, which is
a broader and, generally, different concept
than determining the partner’s share of
built-in gain or loss in that property. The
approach in the proposed regulations is
similar to the rules of section 755 and con-
sistent with the rule of section 170(h)(7)
(B)(i). The Treasury Department and the
IRS request comments on whether another
acceptable allocation approach would be
easier or more administrable.
Proposed §1.170A-14(m)(1) would
provide that the allocation of an ultimate
member’s modified basis to the portion
of the real property with respect to which
2
Whether a qualified conservation contribution is a disallowed qualified conservation contribution has no effect on the application of sections 705 and 1367 to the contribution. These basis
reductions remain required regardless of whether a qualified conservation contribution is a disallowed qualified conservation contribution.

Bulletin No. 2023–49 1335 December 4, 2023
the qualified conservation contribution is
made must be made in accordance with
proposed §1.170A-14(m). Rules for allo-
cating an ultimate member’s modified
basis in a contributing partnership would
be provided in proposed §1.170A-14(m)
(2). Rules for allocating an ultimate mem-
ber’s modified basis in a contributing S
corporation would be provided in pro-
posed §1.170A-14(m)(3). Rules for allo-
cating an ultimate member’s modified
basis in an upper-tier partnership would
be provided in proposed §1.170A-14(m)
(4). Rules for allocating an ultimate
member’s modified basis in an upper-tier
S corporation would be provided in pro-
posed §1.170A-14(m)(5). Records would
be required to be kept in accordance with
proposed §1.170A-14(m)(6).
a. Determination of relevant basis for an
ultimate member holding a direct interest
in a contributing partnership
Proposed §1.170A-14(m)(2)(i) through
(iii) would provide a narrative rule appli-
cable in the case of an ultimate member
holding a direct interest in a contributing
partnership and would provide that a con-
tributing partnership must determine each
such ultimate member’s relevant basis as
provided therein. Relevant basis would
equal each ultimate member’s modi-
fied basis as determined under proposed
§1.170A-14(l)(2) multiplied by a fraction
(1) the numerator of which is the ultimate
member’s share of the contributing part-
nership’s adjusted basis in the portion of
the real property with respect to which
the qualified conservation contribution
is made as determined under proposed
§1.170A-14(m)(2)(ii); and (2) the denom-
inator of which is the ultimate member’s
portion of the adjusted basis in all the con-
tributing partnership’s properties as deter-
mined under proposed §1.170A-14(m)(2)
(iii).
The Treasury Department and the IRS
note that this numerator determines the
ultimate member’s share of the contrib-
uting partnership’s adjusted basis in the
portion of the real property with respect to
which the qualified conservation contribu-
tion is made, which is what is required by
the statute, but may be different than the
ultimate member’s share of the contrib-
uting partnership’s adjusted basis in the
contributed property. As noted previously,
section 704(d) and Revenue Ruling 96-11
require a partner’s basis in its interest in the
partnership to be decreased (but not below
zero) by the partner’s share of the partner-
ship’s basis in the contributed property.
For example, assume a partnership owns
100 acres of real property, and grants a
conservation easement that is a qualified
conservation contribution on 60 of those
acres. Assume the partnership’s adjusted
basis in the 100 acres is $100,000, its
adjusted basis in the 60 acres is $60,000,
and its adjusted basis in the conservation
easement itself is $45,000. Section 705(a)
(2)(B) and Revenue Ruling 96-11 would
require each partner’s basis in its interest
in the partnership to be decreased (but not
below zero) by the partner’s share of the
partnership’s $45,000 basis in the ease-
ment. On the other hand, the computation
of each ultimate member’s relevant basis
would look to the ultimate member’s
share of the partnership’s $60,000 basis
in the 60 acres (the portion of the real
property with respect to which the quali-
fied conservation contribution was made).
As described in the following paragraphs,
these proposed regulations would provide
computational rules for determining an
ultimate member’s share of the contrib-
uting partnership’s adjusted basis in the
portion of the real property with respect
to which the qualified conservation contri-
bution is made. The Treasury Department
and the IRS request comments on whether
these computations generally align with
the methods used by partnerships to deter-
mine each partner’s share of the partner-
ship’s basis in the contributed property for
purposes of sections 704(d) and 705(a)(2)
(B) and Revenue Ruling 96-11. In terms
of the example in this paragraph, the
Treasury Department and the IRS request
comments on whether the rules in the pro-
posed regulations for determining each
ultimate member’s share of the partner-
ship’s $60,000 basis in the 60 acres align
with the way in which the partnership
would determine each partner’s share of
the partnership’s $45,000 basis in the con-
servation easement for purposes of apply-
ing sections 704(d) and 705(a)(2)(B) and
Revenue Ruling 96-11.
Proposed §1.170A-14(m)(2)(ii) would
provide that, for purposes of proposed
§1.170A-14(m), an ultimate member’s
share of the contributing partnership’s
adjusted basis in the portion of the real
property with respect to which the qual-
ified conservation contribution is made
equals the contributing partnership’s
adjusted basis in the portion of the real
property with respect to which the qual-
ified conservation contribution is made
multiplied by a fraction (1) the numerator
of which is the ultimate member’s distrib-
utive share of the qualified conservation
contribution; and (2) the denominator of
which is the total amount of the contrib-
uting partnership’s qualified conservation
contribution.
The Treasury Department and the IRS
considered several alternatives to this
rule, including determining the ultimate
member’s share of the contributing part-
nership’s adjusted basis in the property
based on the ultimate member’s share of
gain, loss, and cash distributions attribut-
able to the property. However, there may
be situations in which the allocation of a
qualified conservation contribution does
not match the partners’ shares of gain,
loss, or cash distributions with respect to
the property. Accordingly, the Treasury
Department and the IRS determined that
such an approach would be less accurate.
In addition, the proposed rule would be
less burdensome for taxpayers and more
easily administrable for the IRS because it
would be based on the partnership’s actual
allocation of the contribution, rather than
on a hypothetical sale of the property.
Proposed §1.170A-14(m)(2)(iii)
would provide that, for purposes of pro-
posed §1.170A-14(m), an ultimate mem-
ber’s portion of the adjusted basis in all
the contributing partnership’s properties
is equal to the sum of: (1) the ultimate
member’s share of the contributing part-
nership’s adjusted basis in the portion of
the real property with respect to which
the qualified conservation contribution
is made as determined under proposed
§1.170A-14(m)(2)(ii), plus (2) the ulti-
mate member’s portion of the adjusted
basis in all the contributing partnership’s
properties other than the portion of the
real property with respect to which the
qualified conservation contribution is
made. Proposed §1.170A-14(m)(2)(iii)
would provide that, to determine the
ultimate member’s share of the adjusted
basis in all the contributing partnership’s

December 4, 2023 1336 Bulletin No. 2023–49
properties, the contributing partnership
must apportion among its partners in
accordance with their interests in the part-
nership under section 704(b) its adjusted
basis in each of its properties (except the
portion of the real property with respect
to which the qualified conservation contri-
bution is made), using the adjusted bases
immediately before the qualified conser-
vation contribution, without duplication
or omission of any property, and by treat-
ing the adjusted basis in each property as
not less than zero.
The Treasury Department and the
IRS considered alternatives to this rule,
including determining the ultimate mem-
ber’s portion of the partnership’s adjusted
basis in all its properties in accordance
with §1.743-1(d), which provides for the
determination of a transferee partner’s
share of the partnership’s adjusted basis
of its property for purposes of computing
special basis adjustments under section
743(b). The Treasury Department and
the IRS also considered determining the
ultimate member’s portion of the partner-
ship’s adjusted basis in all its properties
in proportion to the ultimate member’s
share of the built-in gain in each of the
partnership’s properties. The Treasury
Department and the IRS determined that
these approaches would be more com-
plex and could reach results that are less
accurate for purposes of the Disallowance
Rule. In particular, as previously men-
tioned, the partnership’s allocation of
the qualified conservation contribution
might differ from the way that the part-
nership would allocate gain and loss and
make cash distributions with respect
to the contributed property. Moreover,
these approaches would require the part-
nership to obtain a valuation of each of
its properties at the time of the qualified
conservation contribution. The Treasury
Department and the IRS also considered
an approach under which each ultimate
member’s portion of the partnership’s
adjusted basis in all its properties would
be determined in proportion to the ulti-
mate member’s share of the qualified
conservation contribution. Although
such an approach would be simpler than
using the partners’ interests in the part-
nership, it would be less accurate. The
Treasury Department and the IRS also
considered an approach based on section
704(b) capital accounts. However, not
all partnerships use the section 704(b)
capital account safe harbor, and such an
approach would also require a revalu-
ation of partnership properties as of the
time of the contribution. The Treasury
Department and the IRS also considered a
rule based on how the partnership would
allocate depreciation from the properties,
similar to the rule in §1.199A-2(a)(3)(ii).
However, such a rule would not address
property that is not depreciable. The
Treasury Department and the IRS request
comments on these proposed rules and
alternatives.
Proposed §1.170A-14(m)(2)(iv) would
provide a formulaic version of the narra-
tive rules in proposed §1.170A-14(m)(2)
(i) through (iii).
b. Determination of relevant basis for an
ultimate member holding a direct interest
in a contributing S corporation
Proposed §1.170A-14(m)(3)(i) would
provide a narrative rule for the determi-
nation of relevant basis for an ultimate
member holding a direct interest in a
contributing S corporation. It would pro-
vide that a contributing S corporation
must determine each such ultimate mem-
ber’s relevant basis as provided therein.
Relevant basis would equal each ultimate
member’s modified basis as determined
under proposed §1.170A-14(l)(3) multi-
plied by a fraction (1) the numerator of
which is the ultimate member’s pro rata
portion of the contributing S corporation’s
adjusted basis in the portion of the real
property with respect to which the qual-
ified conservation contribution is made;
and (2) the denominator of which is the
ultimate member’s pro rata portion of
the adjusted basis in all the contributing
S corporation’s properties (including the
portion of the real property with respect
to which the qualified conservation contri-
bution is made). The Treasury Department
and the IRS request comments on whether
this rule is sufficiently clear, and whether
additional rules are needed regarding the
time at which the pro rata portions of
bases are determined. For example, the
regulations could provide that these deter-
minations are made as of the time of the
qualified conservation contribution; how-
ever, in the event that an ultimate member
is not a shareholder at that time, it would
be unclear when the determination is to be
made.
Proposed §1.170A-14(m)(3)(ii) would
provide a formulaic version of the narra-
tive rules in proposed §1.170A-14(m)(3)
(i).
c. Determination of relevant basis for an
ultimate member holding a direct interest
in an upper-tier partnership
Proposed §1.170A-14(m)(4) would
provide rules for determining the relevant
basis of an ultimate member holding a
direct interest in an upper-tier partnership.
Proposed §1.170A-14(m)(4)(i) would
provide that each such ultimate member’s
modified basis must be traced through
all upper-tier partnerships to the contrib-
uting partnership, and the contributing
partnership must determine the relevant
basis. This would involve a multi-step
process under which, beginning with the
upper-tier partnership in which the ulti-
mate member holds a direct interest, each
upper-tier partnership would be required
to perform calculations, and then finally
the contributing partnership would be
required to use those calculations to com-
pute the ultimate member’s relevant basis.
For simplicity, proposed §1.170A-14(m)
(4) would describe a situation in which
there are two tiers of partnerships—a
contributing partnership and an upper-
tier partnership. Proposed §1.170A-14(m)
(4)(i) would provide that, in a situation
involving more tiers, each partnership
must apply the rules and principles of
proposed §1.170A-14(m)(4) iteratively
to determine relevant basis. In a tiered
structure, the determination of relevant
basis should reflect the basis of the ulti-
mate members that intend to claim a por-
tion of the deduction and thus, cannot be
done without computations at the level of
each entity. The Treasury Department and
the IRS request comments on whether,
and how, these rules can be simplified,
and whether any additional rules are nec-
essary to prevent the avoidance of the
Disallowance Rule in tiered structures.
Proposed §1.170A-14(m)(4)(ii)(A)
would provide a narrative rule for the
upper-tier partnership. It would pro-
vide that the upper-tier partnership must
determine the portion of each ultimate

Bulletin No. 2023–49 1337 December 4, 2023
member’s modified basis that is allocable
to the upper-tier partnership’s interest in
the partnership in which it holds a direct
interest (in a situation involving only two
tiers of partnerships, that would be the
contributing partnership). This proposed
regulation would require this determina-
tion to be made in accordance with the
principles of proposed §1.170A-14(m)
(2), and the formula provided in pro-
posed §1.170A-14(m)(4)(ii)(B). In other
words, the formula provided in pro-
posed §1.170A-14(m)(4)(ii)(B) would
be similar to the formula provided in
proposed §1.170A-14(m)(2)(iv), except
that, instead of determining the portion
of modified basis that is allocable to the
portion of the real property with respect
to which the qualified conservation con-
tribution is made, the formula in proposed
§1.170A-14(m)(4)(ii)(B) would deter-
mine the portion of modified basis that is
allocable to the upper-tier partnership’s
interest in the next lower-tier partnership.
As explained in proposed §1.170A-14(m)
(4)(iii), the contributing partnership then
would be required to use the amount deter-
mined as the result of the formula in pro-
posed §1.170A-14(m)(4)(ii)(B) in another
set of computations that would determine
the portion of modified basis that is alloca-
ble to the portion of the real property with
respect to which the qualified conserva-
tion contribution is made.
Proposed §1.170A-14(m)(4)(ii)(B)
would provide that the rule of proposed
§1.170A-14(m)(4)(ii) is also expressed in
the following formula:
3
G = M × (U ÷ (J + U))

Where:
G = The portion of the ultimate mem-
ber’s modified basis that is allocable to
the upper-tier partnership’s interest in the
contributing partnership.
M = Modified basis as determined
under proposed §1.170A-14(l).
J = Ultimate member’s portion of the
adjusted basis in all the upper-tier partner-
ship’s properties (other than the upper-tier
partnership’s interest in the contributing
partnership), determined by apportioning
among the partners of the upper-tier part-
nership in accordance with their interests
in the partnership under section 704(b)
its adjusted basis in each of its properties
(other than the upper-tier partnership’s
interest in the contributing partnership),
using the adjusted bases immediately
before the qualified conservation contri-
bution, without duplication or omission of
any property, and by treating the adjusted
basis in each property as not less than zero.
U = Ultimate member’s share of the
upper-tier partnership’s adjusted basis in
its interest in the contributing partnership,
determined according to the following
formula: H × (B ÷ K).
H = Upper-tier partnership’s adjusted
basis in its interest in the contributing
partnership.
B = Ultimate member’s distribu-
tive share of the qualified conservation
contribution.
K = Upper-tier partnership’s allocated
portion of the qualified conservation
contribution.
After this formula is computed, then
the contributing partnership must perform
computations using the amount deter-
mined for item “G” to determine relevant
basis. Proposed §1.170A-14(m)(4)(iii)
(A) would provide a narrative rule for the
contributing partnership to complete this
second step. It would provide that the con-
tributing partnership must determine the
portion of the amount determined under
proposed §1.170A-14(m)(4)(ii) with
respect to each ultimate member that is
allocable to the portion of the real property
with respect to which the qualified conser-
vation contribution is made. The proposed
regulations would require this determi-
nation to be made in accordance with the
principles of proposed §1.170A-14(m)
(2), and the formula provided in proposed
§1.170A-14(m)(4)(iii)(B).
Proposed §1.170A-14(m)(4)(iii)(B)
would provide that the rule of proposed
§1.170A-14(m)(4)(iii) is also expressed in
the following formula:
R = G × (V ÷ (L + V))
Where:
R = Relevant basis.
G = Amount determined with respect
to item G as described previously under
proposed §1.170A-14(m)(4)(ii)(B).
L = Upper-tier partnership’s portion
of adjusted basis in all the contributing
partnership’s properties (other than the
portion of the real property with respect
to which the qualified conservation contri-
bution is made), determined by apportion-
ing among the partners of the contributing
partnership in accordance with their inter-
ests in the partnership under section 704(b)
its adjusted basis in each of its properties
(except the portion of the real property
with respect to which the qualified con-
servation contribution is made), using the
adjusted bases immediately before the
qualified conservation contribution, with-
out duplication or omission of any prop-
erty, and by treating the adjusted basis in
each property as not less than zero.
V = Upper-tier partnership’s share of
the contributing partnership’s adjusted
basis in the portion of the real property
with respect to which the qualified conser-
vation contribution is made, determined
according to the following formula: A ×
(K ÷ C).
A = Contributing partnership’s adjusted
basis in the portion of the real property
with respect to which the qualified conser-
vation contribution is made.
K = Upper-tier partnership’s allocated
portion of the qualified conservation
contribution.
C = Total amount of the contribut-
ing partnership’s qualified conservation
contribution.
d. Determination of relevant basis for an
ultimate member holding a direct interest
in an upper-tier S corporation
Proposed §1.170A-14(m)(5) would
provide rules for determining relevant
basis for an ultimate member holding a
direct interest in an upper-tier S corpo-
ration. Proposed §1.170A-14(m)(5)(i)
would provide that each such ultimate
member’s modified basis must be traced
through the upper-tier S corporation and
any upper-tier partnerships to the contrib-
uting partnership, and the contributing
partnership must determine the relevant
basis. This would involve a multi-step
process under which, beginning with
the upper-tier S corporation, the upper-
tier S corporation and any upper-tier
3
Under the order of operations for mathematical computations, operations contained in parenthesis (such as the addition of J and U) are performed before the rest of the equation.

December 4, 2023 1338 Bulletin No. 2023–49
partnerships would be required to perform
calculations, and then finally the con-
tributing partnership would be required
to use those calculations to compute the
ultimate member’s relevant basis. For
simplicity, proposed §1.170A-14(m)(5)
would describe a situation in which there
are two tiers – a contributing partnership
and an upper-tier S corporation. Proposed
§1.170A-14(m)(5)(i) would provide that,
in a situation involving more tiers, each
partnership and the upper-tier S corpora-
tion must apply the rules and principles
of proposed §1.170A-14(m) iteratively to
determine relevant basis.
Proposed §1.170A-14(m)(5)(ii)(A)
would provide a narrative rule for the
upper-tier S corporation. It would provide
that the upper-tier S corporation must
determine the portion of each ultimate
member’s modified basis that is allocable
to the upper-tier S corporation’s inter-
est in the partnership in which it holds
a direct interest (in a situation involv-
ing only two tiers, that would be the
contributing partnership). The proposed
regulations would require this determina-
tion to be made in accordance with the
principles of proposed §1.170A-14(m)
(3), and the formula provided in pro-
posed §1.170A-14(m)(5)(ii)(B). In other
words, the formula provided in pro-
posed §1.170A-14(m)(5)(ii)(B) would
be similar to the formula provided in
proposed §1.170A-14(m)(3)(ii), except
that, instead of determining the portion
of modified basis that is allocable to the
portion of the real property with respect
to which the qualified conservation con-
tribution is made, the formula in pro-
posed §1.170A-14(m)(5)(ii)(B) would
determine the portion of modified basis
that is allocable to the upper-tier S cor-
poration’s interest in the next lower-tier
partnership. As explained in proposed
§1.170A-14(m)(5)(iii), the contributing
partnership then would be required to use
the amount determined as the result of
the formula in proposed §1.170A-14(m)
(5)(ii)(B) in another set of computations
that would determine the portion of mod-
ified basis that is allocable to the portion
of the real property with respect to which
the qualified conservation contribution is
made.
Proposed §1.170A-14(m)(5)(ii)(B)
would provide that the rule of proposed
§1.170A-14(m)(5)(ii) is also expressed in
the following formula:
N = M × (P ÷ Q)
Where:
N = Portion of the ultimate member’s
modified basis that is allocable to the
upper-tier S corporation’s interest in the
contributing partnership.
M = Modified basis as determined
under proposed §1.170A-14(l).
P = Ultimate member’s pro rata portion
of the upper-tier S corporation’s adjusted
basis in its interest in the contributing
partnership.
Q = Ultimate member’s pro rata por-
tion of the adjusted basis in all the upper-
tier S corporation’s properties (including
the upper-tier S corporation’s interest in
the contributing partnership).
After this formula is computed, then
the contributing partnership must perform
computations using the amount deter-
mined for item “N” to determine relevant
basis. Proposed §1.170A-14(m)(5)(iii)
(A) would provide a narrative rule for the
contributing partnership to compute this
second step. It would provide that the con-
tributing partnership must determine the
portion of the amount determined under
proposed §1.170A-14(m)(5)(ii) with
respect to each ultimate member that is
allocable to the portion of the real property
with respect to which the qualified conser-
vation contribution is made. The proposed
regulations would require this determi-
nation to be made in accordance with the
principles of proposed §1.170A-14(m)
(2), and the formula provided in proposed
§1.170A-14(m)(5)(iii)(B).
Proposed §1.170A-14(m)(5)(iii)(B)
would provide that the rule of proposed
§1.170A-14(m)(5)(iii) is also expressed in
the following formula:
R = N × (W ÷ (S + W))
Where:
R = Relevant basis.
N = Amount determined with respect
to item N as described previously under
proposed §1.170A-14(m)(5)(ii)(B).
S = Upper-tier S corporation’s portion
of the adjusted basis in all the contribut-
ing partnership’s properties (other than the
portion of the real property with respect
to which the qualified conservation contri-
bution is made), determined by apportion-
ing among the partners of the contributing
partnership in accordance with their inter-
ests in the partnership under section 704(b)
its adjusted basis in each of its properties
(other than the portion of the real prop-
erty with respect to which the qualified
conservation contribution is made), using
the adjusted bases immediately before the
qualified conservation contribution, with-
out duplication or omission of any prop-
erty, and by treating the adjusted basis in
each property as not less than zero.
W = Upper-tier S corporation’s share
of the contributing partnership’s adjusted
basis in the portion of the real property
with respect to which the qualified conser-
vation contribution is made, determined
according to the following formula: A ×
(Y ÷ C).
A = Contributing partnership’s adjusted
basis in the portion of the real property
with respect to which the qualified conser-
vation contribution is made.
Y = Upper-tier S corporation’s distrib-
utive share of the qualified conservation
contribution.
C = Total amount of the contribut-
ing partnership’s qualified conservation
contribution.
The proposed regulations would pro-
vide examples illustrating these rules. The
Treasury Department and the IRS request
comments on the determination of rele-
vant basis.
3. Recordkeeping Requirements
Proposed §1.170A-14(m)(6) would
provide that contributing partnerships,
contributing S corporations, upper-tier
partnerships, and upper-tier S corpora-
tions must each maintain dated, written
statements in their books and records,
by the due date, including extensions,
of their Federal income tax returns, sub-
stantiating the computation of each ulti-
mate member’s adjusted basis, modified
basis, and relevant basis. It would also
provide that these statements need not
be maintained (nor does modified basis
or relevant basis need to be computed)
with respect to contributions that meet an
exception in proposed §1.170A-14(n)(2)
(contributions outside a three-year hold-
ing period) or (n)(3) (family pass-through

Bulletin No. 2023–49 1339 December 4, 2023
entities). However, these statements must
be maintained with respect to contribu-
tions that meet the exception in proposed
§1.170A-14(n)(4) for certified historic
structures because section 170(f)(19)
imposes special reporting requirements
for such contributions if they exceed 2.5
times the sum of relevant basis.
F. Exceptions to the Disallowance Rule
Consistent with section 170(h)(7)
(C), (D), and (E), the rules in proposed
§1.170A-14(n) would provide defini-
tions and additional guidance relating to
the three exceptions to the Disallowance
Rule. It would also provide that there is no
presumption that such a contribution oth-
erwise is compliant with section 170, any
other section of the Code, or the regulations
or any other guidance thereunder; being
described in proposed §1.170A-14(n)
is not a safe harbor for purposes of any
other provision of law or with respect to
the value of the contribution; such trans-
actions are subject to adjustment or dis-
allowance for any other reason, including
failure to satisfy the other requirements of
section 170 and overvaluation of the con-
tribution; and taxpayers who engage in
such transactions may be required to dis-
close under §1.6011-4 the transactions as
listed transactions.
1. Exception for Contributions Outside
Three-Year Holding Period
Consistent with section 170(h)(7)(C),
proposed §1.170A-14(n)(2)(i) would pro-
vide that §1.170A-14(j) does not apply to
any qualified conservation contribution by
a contributing partnership or contributing
S corporation that is made at least three
years after the latest of (1) the last date
on which the contributing partnership or
contributing S corporation acquired any
portion of the real property with respect to
which such qualified conservation contri-
bution is made, (2) the last date on which
any partner in the contributing partner-
ship or shareholder in the contributing S
corporation acquired any interest in such
partnership or S corporation, and (3) if the
interest in the contributing partnership is
held through one or more upper-tier part-
nerships or upper-tier S corporations (A)
the last date on which any such upper-tier
partnership or upper-tier S corporation
acquired any interest in the contribut-
ing partnership or any other such upper-
tier partnership, and (B) the last date on
which any partner or shareholder in any
such upper-tier partnership or upper-tier
S corporation acquired any interest in
such upper-tier partnership or upper-tier S
corporation.
Neither section 605 of SECURE 2.0
Act nor section 170 defines the phrase
“acquired any interest.” An acquisition
of an interest in a partnership can occur
in several ways, including by inheritance,
purchase from an existing partner, in a sec-
tion 721 exchange with the partnership, in
exchange for the provision of services,
or as a distribution from an upper-tier
partnership. An existing partner can also
acquire additional interests in the partner-
ship. In addition, one partner’s complete
or partial disposition of an interest in the
partnership can be economically similar to
the acquisition of an interest in the part-
nership by the remaining partners. For
example, if a partnership makes a distribu-
tion that reduces one partner’s interest in
the profits or losses of the partnership, the
remaining partners’ interests, in the aggre-
gate, may increase in the same manner as
if they had acquired additional interests in
the partnership.
The rules under section 706(c) and
(d) address partnership allocations in sit-
uations involving variations in partners’
interests attributable to acquisitions and
dispositions. Section 1.706-4(a)(1) pro-
vides rules for determining the partners’
distributive shares of partnership items
when a partner’s interest in a partnership
varies during the taxable year as a result
of the disposition of a partial or entire
interest in a partnership as described in
§1.706-1(c)(2) and (3),
4
or with respect to
a partner whose interest in a partnership
is reduced as described in §1.706-1(c)(3),
including by the entry of a new partner,
collectively referred to as a “variation.”
Generally, a variation includes any acqui-
sition, partial disposition, or complete dis-
position of an interest in the partnership.
However, §1.706-4(b)(1) provides that
the rules in §1.706-4(a)(3) do not preclude
changes in the allocations of the distrib-
utive share of items described in section
702(a) among contemporaneous partners,
provided that any variation in a partner’s
interest is not attributable to a contribu-
tion of money or property by a partner to
the partnership or a distribution of money
or property by the partnership to a part-
ner, and the allocations resulting from the
modification satisfy the requirements in
section 704(b) and the regulations there-
under. Generally, partnerships are famil-
iar with the rules under §1.706-4 because
they must apply such rules in computing
allocations whenever there is an acquisi-
tion or disposition of a partner’s interest
during the taxable year.
The definition of “variation” in
§1.706-4 would provide an administrable
standard consistent with the purposes of
section 170(h)(7)(C). Accordingly, pro-
posed §1.170A-14(n)(2)(ii) would pro-
vide that, for purposes of §1.170A-14(n)
(2), an acquisition of any interest in a
partnership is any “variation” within the
meaning of that term in §1.706-4(a)(1);
however, a variation would not include
a change in allocations that satisfies the
requirements of §1.706-4(b)(1). The
Treasury Department and the IRS con-
sidered alternatives to this rule, including
defining acquisition as any acquisition by
purchase, contribution, or gift. However,
because certain other transactions such
as redemptions and abandonments may
reach results that are substantively similar
to an acquisition by purchase, contribu-
tion, or gift, the Treasury Department and
the IRS determined that the variation rules
of §1.706-4 would be more appropriate in
this context.
Proposed §1.170A-14(n)(2)(iii) would
define an acquisition of any interest in an
S corporation as any transfer, issuance,
redemption, or other disposition of stock
in the S corporation; however, an acqui-
sition would not include any issuance or
redemption involving all shareholders that
does not affect the proportionate owner-
ship of any shareholder (for example, a
stock split). The Treasury Department
and the IRS considered alternatives to
4
Section 1.706-1(c)(2) provides in part that a partnership taxable year closes with respect to a partner who sells or exchanges the partner’s entire interest in the partnership, with respect to a
partner whose entire interest in the partnership is liquidated, and with respect to a partner who dies. Section 1.706-1(c)(3) provides that if a partner sells or exchanges a part of the partner’s
interest in a partnership, or if the interest of a partner is reduced, the partnership taxable year continues to its normal end.

December 4, 2023 1340 Bulletin No. 2023–49
this rule, including defining acquisition
as any acquisition by purchase, contri-
bution, or gift. However, because certain
other transactions such as redemptions
and abandonments may reach results that
are substantively similar to an acquisi-
tion by purchase, contribution, or gift, the
Treasury Department and the IRS deter-
mined that the proposed rule would be
more appropriate in this context.
Proposed §1.170A-14(n)(2)(iv) would
provide that, if the contributing part-
nership or contributing S corporation
does not satisfy the requirements of pro-
posed §1.170A-14(n)(2), then proposed
§1.170A-14(n)(2) would not apply to any
person who receives a distributive share
or pro rata share of the qualified conserva-
tion contribution (including an upper-tier
partnership or upper-tier S corporation),
regardless of whether the person receiving
such distributive share or pro rata share
would have satisfied the requirements of
proposed §1.170A-14(n)(2) if the person
had been the one to make the qualified
conservation contribution. The Treasury
Department and the IRS considered
alternatives to this rule, such as allow-
ing upper-tier partnerships and upper-tier
S corporations to apply the three-year-
holding-period exception even if the con-
tributing partnership failed to satisfy the
exception. Such an approach, however,
would be inconsistent with section 170(h)
(7)(C), which explicitly applies the hold-
ing period requirements to the contribut-
ing partnership.
The proposed regulations contain two
examples illustrating these rules. The
Treasury Department and the IRS request
comments on whether any additional rules
or examples should be provided for the
three-year holding period exception.
2. Exception for Family Pass-Through
Entities
As mentioned earlier, section 170(h)
(7)(D)(i) provides the Disallowance Rule
does not apply to any contribution made
by any partnership if substantially all of
the partnership interests in such partner-
ship are held, directly or indirectly, by an
individual and members of the family of
such individual. The Treasury Department
and the IRS are aware that the meaning
of the term “substantially all” in section
170(h)(7)(D)(i) may not be clear and that
such ambiguity could impair taxpayers’
ability to determine whether they qualify
for the family pass-through entity excep-
tion. For purposes of applying different
provisions of the Code that also use that
term, various Income Tax Regulations
define the term “substantially all” as com-
prising different percentages, including:
70 percent (§1.1400Z2(d)-2(d)(4)); 80
percent (§§1.41-2(d)(2), 1.41-4(a)(6));
85 percent (§§1.45D-1(c)(5), 1.72(e)-1T,
Q&A 3; 1.528-4(b) and (c)); 90 percent
(§§1.103-8(a)(1)(i), 1.103-16(c), 1.731-
2(c)(3)(i); 1.1400Z2(d)-2(d)(3)); and 95
percent (§§1.448-1T(e)(4)(i) and (e)(5)(i),
1.460-6(d)(4)(i)(D)(1)). It is appropriate
to select a percentage at the higher end
of this range to carry out the purpose of
section 170(h)(7) of preventing abusive
syndications of qualified conservation
contributions. Accordingly, the Treasury
Department and the IRS propose to define
“substantially all” for purposes of sec-
tion 170(h)(7)(D)(i) and §1.170A-14(n)
(3)(i) as 90 percent of the interests in the
contributing partnership or contributing S
corporation that meets the requirements of
proposed §1.170A-14(n)(3).
Thus, proposed §1.170A-14(n)(3)(i)
would provide that §1.170A-14(j) does
not apply with respect to any qualified
conservation contribution made by a con-
tributing partnership or contributing S
corporation if at least 90 percent of the
interests in the contributing partnership
or contributing S corporation are held by
an individual and members of the family
of such individual, and the contributing
partnership or contributing S corpora-
tion meets the requirements of proposed
§1.170A-14(n)(3).
The Treasury Department and the
IRS are also aware that it may be unclear
what “interests” in the contributing part-
nership or contributing S corporation are
to be taken into account for purposes of
the family pass-through entity exception.
Generally, the Code characterizes interests
in a partnership as comprising the “cap-
ital interests” in the partnership and the
“profits interests” in the partnership. See,
for example, section 707(b) of the Code.
The Treasury Department and the IRS
propose limiting the family pass-through
entity exception to situations in which
an individual and the family members of
such individual own at least 90 percent of
both the capital and profits interests in the
contributing partnership. Doing so would
help to ensure that the family pass-through
entity exception does not apply in situa-
tions in which persons outside an individ-
ual’s family own a substantial economic
interest in the partnership. Accordingly,
proposed §1.170A-14(n)(3)(ii)(A) would
provide that, in the case of a contribut-
ing partnership, at least 90 percent of the
interests in the contributing partnership
are held by an individual and members of
the family of such individual if, at the time
of the qualified conservation contribution,
at least 90 percent of the interests in capi-
tal and profits in such partnership are held,
directly or indirectly, by an individual and
members of the family of such individual.
A similar rule is proposed for S corpo-
rations. Section 1361(b)(1)(D) requires
that an S corporation have only one class
of stock. However, section 1361(c)(4)
provides that differences in voting rights
alone do not create a second class of stock.
The Treasury Department and the IRS
propose limiting the family pass-through
entity exception in the case of S corpora-
tions to situations in which the individual
and the family of such individual own
stock in the contributing S corporation
possessing at least 90 percent of the total
voting power and at least 90 percent of
the total value of the outstanding stock
of the contributing S corporation. Doing
so would help to ensure that the family
pass-through exception does not apply
in situations in which persons outside
an individual’s family own a substantial
economic interest in the S corporation.
Accordingly, proposed §1.170A-14(n)(3)
(ii)(B) would provide that, in the case of
a contributing S corporation, at least 90
percent of the interests in the contributing
S corporation are held by an individual
and members of the family of such indi-
vidual if, at the time of the qualified con-
servation contribution, at least 90 percent
of the total value and at least 90 percent of
the total voting power of the outstanding
stock in such S corporation are held by an
individual and members of the family of
such individual.
The Treasury Department and the IRS
request comments on whether these defi-
nitions of “substantially all of the inter-
ests” in the contributing partnership or

Bulletin No. 2023–49 1341 December 4, 2023
contributing S corporation are appropriate
and sufficient to ensure the intended appli-
cation of the family pass-through entity
exception.
Consistent with section 170(h)(7)
(D)(ii), proposed §1.170A-14(n)(3)
(iii) would provide that, for purposes of
§1.170A-14(n)(3), the term “members of
the family” means, with respect to any
individual (1) the spouse of such indi-
vidual, and (2) any individual who bears
a relationship to such individual that is
described in section 152(d)(2)(A) through
(G). Under these proposed regulations,
members of the family would be limited
to individuals. The Treasury Department
and the IRS request comments on whether
certain estates or trusts should be treated
as members of the family for purposes of
this rule. The Treasury Department and
the IRS note that, under existing §1.1361-
1(e)(3)(ii), certain estates and trusts of
deceased members of the family are
treated as members of the family for pur-
poses of the limitation on the number of
shareholders in an S corporation.
As described earlier in this preamble,
the Disallowance Rule and its exceptions
in section 170(h)(7) are generally mechan-
ical. However, Congress recognized that
additional guidance may be needed to
prevent situations in which those mechan-
ical rules are used to avoid the purposes
of the Disallowance Rule. As mentioned
previously, section 170(h)(7)(G)(ii) pro-
vides the Secretary with authority to issue
regulations or other guidance to prevent
the avoidance of the purposes of section
170(h)(7). Accordingly, these proposed
regulations would provide two anti-abuse
rules designed to ensure that the family
pass-through entity exception in proposed
§1.170A-14(n)(3) is not used inappro-
priately to circumvent the Disallowance
Rule.
First, the Treasury Department and
the IRS propose to limit the family pass-
through entity exception to situations in
which an individual and members of that
individual’s family have held the requisite
ownership interest in the property for at
least one year prior to the contribution.
The need for such a rule is the concern
that, in the absence of a requirement that
the members of the family hold the con-
tributed property for a certain period of
time before the contribution, promoters
could structure transactions to inappro-
priately take advantage of tacked holding
periods under section 1223 of the Code
together with the family pass-through
entity exception. Due to the operation of
section 170(e), most contributions that
exceed 2.5 times the sum of relevant basis
would be expected to be of long-term
capital gain property because, in those
situations, the amount of the contribu-
tion would not be limited to the donor’s
basis. Transactions in which a family is
relying on a tacked-holding period under
section 1223 from another owner out-
side the family to claim a contribution
in excess of 2.5 times the sum of rele-
vant basis raise serious concerns that the
family pass-through entity exception is
being used inappropriately to circumvent
the Disallowance Rule. Accordingly, pro-
posed §1.170A-14(n)(3)(iv)(A) would
provide that the exception in proposed
§1.170A-14(n)(3) does not apply unless
at least 90 percent of the interests in the
property with respect to which the quali-
fied conservation contribution was made
were owned, directly or indirectly, by one
individual and members of the family of
that individual for at least one year prior to
the date of the contribution. The proposed
rules would clarify that the members of
the family during that year need not be the
same members of the family that own an
interest at the time of the qualified conser-
vation contribution; however, at least one
individual must own an interest for the
entire year, and at least 90 percent of the
interests in the property must be owned,
directly or indirectly, during that year by
that individual and members of the fam-
ily with respect to that individual. The
proposed regulations contain an example
illustrating the application of this rule.
Second, proposed §1.170A-14(n)(3)
(iv)(B) would provide that the exception
in proposed §1.170A-14(n)(3) does not
apply unless at least 90 percent of the
qualified conservation contribution is
allocated to the individual and all mem-
bers of the individual’s family who own at
least 90 percent of all the interests in the
contributing partnership or contributing
S corporation. The Treasury Department
and the IRS are concerned that, without
such a rule, contributing partnerships
or contributing S corporations might be
structured to meet the family pass-through
exception, but the qualified conservation
contribution would be allocated dispro-
portionately to persons that are not mem-
bers of the family.
Proposed §1.170A-14(n)(3)(v) would
provide that, in the case of tiered pass-
through entities, the family pass-through
exception is available only if the con-
tributing partnership or contributing S
corporation satisfies the requirements
of §1.170A-14(n)(3). If the contributing
partnership or contributing S corporation
satisfies the requirements of proposed
§1.170A-14(n)(3), then any upper-tier
partnership or upper-tier S corporation
need not apply §1.170A-14(j) through
(n) to its allocated portion of such con-
tribution. If the contributing partner-
ship or contributing S corporation does
not satisfy the requirements of proposed
§1.170A-14(n)(3), then the exception in
§1.170A-14(n)(3) would not apply to any
person who receives a distributive share
or pro rata share of the qualified conserva-
tion contribution (including an upper-tier
partnership or upper-tier S corporation),
regardless of whether the person receiving
such distributive share or pro rata share
would have satisfied the requirements of
proposed §1.170A-14(n)(3) if the person
had been the one to make the contribu-
tion. The Treasury Department and the
IRS considered alternatives to this rule,
such as allowing upper-tier partnerships
and upper-tier S corporations to apply the
family pass-through entity exception even
if the contributing partnership failed to
satisfy the exception. Such an approach,
however, would be inconsistent with
section 170(h)(7)(D), which explicitly
applies the substantially-all requirement
to the contributing partnership or contrib-
uting S corporation.
3. Exception for Contributions to
Preserve Certified Historic Structures
Consistent with section 170(h)(7)(E),
proposed §1.170A-14(n)(4) would pro-
vide that proposed §1.170A-14(j) does
not apply to any qualified conservation
contribution the conservation purpose of
which is the preservation of any build-
ing that is a certified historic structure (as
defined in section 170(h)(4)(C)). Proposed
§1.170A-14(n)(4) would also contain a
cross-reference to the special reporting

December 4, 2023 1342 Bulletin No. 2023–49
requirements in proposed §1.170A-16(f)
(6) for a contribution that meets the certi-
fied historic structure exception.
IV. Reporting Requirements
Existing §1.170A-16 imposes sub-
stantiation and reporting requirements
for noncash charitable contributions.
Subject to certain exceptions, §1.170A-
16 requires the donor to file Form 8283,
Noncash Charitable Contributions, in
the case of a noncash charitable contribu-
tion exceeding $500. Specifically, exist-
ing §1.170A-16(c) generally requires the
donor to complete Form 8283 (Section A)
in the case of a noncash charitable contri-
bution of more than $500 but not more than
$5,000. Existing §1.170A-16(d) generally
requires the donor to complete Form 8283
(Section A or Section B, or both, as appli-
cable) in the case of a noncash charitable
contribution of more than $5,000. Existing
§1.170A-16(e) applies to noncash charita-
ble contributions of more than $500,000
and generally requires the donor to com-
plete Form 8283 (Section A or Section B,
or both, as applicable). Consistent with
section 170(f)(11)(D), §1.170A-16(e)
requires a donor of a noncash contribu-
tion of more than $500,000 to attach an
appraisal to the return on which the deduc-
tion is claimed. Existing §1.170A-16(f)
provides additional substantiation rules,
including rules for donors that are partner-
ships or S corporations.
A. Requirement that Numbers be Entered
in Sections A and B of Form 8283
Existing §1.170A-16(c)(3) and (d)(3)
define a completed Form 8283 (Section
A) and Form 8283 (Section B), respec-
tively. To further clarify reporting require-
ments for donated property, proposed
§1.170A-16(c)(3)(v) and (d)(3)(ix) would
add a requirement that, if a box in Section
A or Section B of the Form 8283 (respec-
tively) requests insertion of a number, the
taxpayer must include the number in the
box or attach a statement explaining why
the taxpayer cannot include the number
in the box. Taxpayers that do not include
numbers where required or engage in a
practice to obfuscate or otherwise defeat
the requirement to include a number in
the box, could be subject to heightened
scrutiny and a denial of the deduction for
failure to provide the requested informa-
tion on the Form 8283.
The Treasury Department and the IRS
believe that this rule regarding specific
reporting of numerical amounts is rea-
sonable and necessary because the IRS
has observed a pronounced increase in
taxpayers filing a Form 8283 that does
not contain any numbers and instead
refers the IRS to an attachment. Often, the
attachment includes nonresponsive infor-
mation, such as “available upon request,”
is entirely blank, or otherwise does not
provide the information required by
Form 8283. Other times, the attachment
includes multiple numbers for different
boxes, leaving the IRS to surmise which
of the included numbers is appropriate for
a particular box. These actions are to the
detriment of fair and effective tax admin-
istration. Accordingly, the proposed regu-
lations state that Sections A and B of Form
8283, including any attachments thereto,
may not include nonresponsive informa-
tion, such as “available upon request,”
“provided upon request,” or any other
nonresponsive information other than the
information requested. Including any non-
responsive language may result in a pre-
sumption that Form 8283 is incomplete.
While many taxpayers understandably
want to attach a statement to the Form
8283 to verify their calculations and pro-
vide appropriate supplemental informa-
tion, having the numerical information in
the appropriate box on Sections A and B
of Form 8283 is critical to the IRS’s abil-
ity to ensure the integrity of each filing, as
IRS systems are programmed to match a
partner’s or shareholder’s information to
the appropriate contributing partnership’s
or contributing S corporation’s informa-
tion. Moreover, information requested on
Sections A and B of Form 8283 is infor-
mation that the partnership or S corpora-
tion should already have and is already
required to provide to the partner or share-
holder, as appropriate.
See §1.170A-16(f)
(4).
B. Clarification of Reporting of Certain
Qualified Conservation Contributions
made by a Partnership or S Corporation
Existing §1.170A-16(d)(3) defines a
completed Form 8283 (Section B) required
to substantiate charitable contributions of
more than $5,000. To ensure that taxpay-
ers claiming qualified conservation con-
tributions properly comply with section
170(f)(19) and (h)(7), which require a
partnership or S corporation to calculate
the sum of the relevant basis of the part-
nership’s or S corporation’s partners or
shareholders, the IRS must have relevant
basis reporting from both the contributing
partnership or contributing S corporation
and each partner or shareholder receiving
an allocation of the contribution (which
will be ultimate members, upper-tier part-
nerships, or upper-tier S corporations).
Accordingly, these proposed regulations
would insert a new paragraph, proposed
§1.170A-16(d)(3)(viii).
5

The new paragraph would provide that,
for certain qualified conservation contri-
butions made by a partnership or S corpo-
ration, the sum of each ultimate member’s
relevant bases, computed in accordance
with §1.170A-14(j) through (m), must be
reported on the Form 8283 (Section B) in
order for the Form 8283 (Section B) to be
considered complete.
This new requirement applies to con-
tributions described in section 170(h)
(7)(E) and §1.170A-14(n)(4) (for con-
tributions to preserve certified historic
structures), regardless of whether they
are also described in section 170(h)(7)
(C) and §1.170A-14(n)(2) (for contri-
butions made outside of the three-year
holding period) and/or section 170(h)(7)
(D) and §1.170A-14(n)(3) (for contribu-
tions made by certain family partnerships
or S corporations). While contributions
by partnerships or S corporations to pre-
serve historic structures are excepted from
the Disallowance Rule of section 170(h)
(7), they are potentially subject to sec-
tion 170(f)(19), which applies when the
amount of the contribution exceeds 2.5
times of the relevant bases. The Treasury
Department and the IRS request comments
on whether any adjustments to relevant
basis are warranted in the case of a con-
tribution to preserve a historic structure.
This new requirement also would
apply for any other qualified conserva-
tion contribution by a partnership or S
corporation, provided that the contribu-
tion is not described in section 170(h)
(7)(C) and §1.170A-14(n)(2) (for con-
tributions made outside of the three-year

Bulletin No. 2023–49 1343 December 4, 2023
holding period) and/or section 170(h)(7)
(D) and §1.170A-14(n)(3) (for contribu-
tions made by certain family partnerships
or S corporations). If the contribution is
disallowed by section 170(h)(7) and pro-
posed §1.170A-14(j), then the Treasury
Department and the IRS expect that the
contribution will not be reported to the
IRS on Form 8283 because no deduction
can be taken.
C. Clarification of Reporting of Noncash
Charitable Contributions over $500
made by a Partnership or S Corporation
Existing §1.170A-16(d)(6) refers to
existing §1.170A-16(f) for additional sub-
stantiation rules. Existing §1.170A-16(f)
(4) provides special substantiation rules
for partner and S corporation shareholders.
Existing §1.170A-16(f)(4)(i) provides
that, if the donor is a partnership or S cor-
poration, the donor must provide a copy of
the completed Form 8283 to every partner
or shareholder who receives an allocation
of a charitable contribution under section
170 for the property described in the Form
8283. Similarly, existing §1.170A-16(f)
(4)(i) provides that a recipient partner or
shareholder that is a partnership or S cor-
poration must provide a copy of the com-
pleted Form 8283 to each of its partners
or shareholders who receives an allocation
of a charitable contribution under section
170 for the property described in Form
8283.
Existing §1.170A-16(f)(4)(ii) provides
that a partner of a partnership or share-
holder of an S corporation who receives
an allocation of a charitable contribution
under section 170 for property to which
§1.170A-16(c), (d), or (e) applies
5
must
attach a copy of the partnership’s or S
corporation’s completed Form 8283 to the
return on which the deduction is claimed.
In pass-through and tiered entity struc-
tures, the IRS regularly observes partners
and shareholders providing incomplete
information to substantiate their charitable
contribution deductions. For example, an
ultimate member might complete a Form
8283 that contains the necessary informa-
tion from the Form K-1 received from the
contributing partnership, contributing S
corporation, or an upper-tier partnership
or upper-tier S corporation. However,
often, the ultimate member fails to pro-
vide a copy of the appropriate partner-
ship’s or S corporation’s Form 8283 and
the Form K-1. In accordance with the
authority granted by section 170(h)(7)
(G) to “prescribe such regulations or other
guidance as may be necessary or appro-
priate to carry out the purposes of this
paragraph, including regulations or other
guidance ... to require reporting, includ-
ing reporting related to tiered partnerships
and the modified basis of partners,” these
proposed regulations would revise para-
graph §1.170A-16(f)(4).
Proposed §1.170A-16(f)(4)(i) would
retain the requirement that a donor that
is a partnership or S corporation provide
a copy of the completed Form 8283 to
every partner or shareholder who receives
an allocation. That paragraph also would
retain the requirement that a partnership
or corporation that receives an allocation
of a charitable contribution under section
170 must provide a copy of the donor’s
Form 8283 to its partners or shareholders
who receive an allocation of the deduc-
tion, but would clarify that this reporting
is required through any additional tiers.
Proposed §1.170A-16(f)(4)(ii) would
retain the rule that a partner of a partner-
ship or shareholder of an S corporation
who receives an allocation of a charita-
ble contribution to which §1.170A-16(c),
(d), or (e) applies must attach the donor
partnership’s or S corporation’s Form
8283 to the return on which the deduction
is claimed. A clarifying requirement is
added that the partner or shareholder must
also attach a copy of any additional Forms
8283 that they must receive as provided in
proposed §1.170A-16(f)(4)(iii)(A).
Proposed §1.170A-16(f)(4)(iii)(A)
would provide that a partner of a partner-
ship or shareholder of an S corporation that
receives an allocation of a charitable con-
tribution under section 170 for property to
which §1.170A-16(c), (d), or (e) applies
must complete their own Form 8283
with any information required by Form
8283 and the instructions to Form 8283.
In addition, a partner that is itself a part-
nership or S corporation must complete
its own Form 8283 and provide a copy of
that Form 8283 to every partner or share-
holder who receives an allocation of the
charitable contribution, and so on through
any additional tiers. The partner or share-
holder must attach its separate Form 8283
to the return on which the contribution is
claimed in addition to the copy of donor’s
Form 8283 as well as other Forms 8283
that the partner or shareholder received.
This new requirement would apply to
all noncash charitable contributions over
$500 made by a partnership or S corpo-
ration, not just those for conservation
easements.
Proposed §1.170A-16(f)(4)(iii)(B)
would provide that, if the contribution
was a qualified conservation contribution,
an ultimate member’s separate Form 8283
must include the ultimate member’s own
relevant basis. An upper-tier partnership’s
or upper-tier S corporation’s separate
Form 8283 must include the sum of each
of its ultimate member’s relevant bases.
However, the requirements that an ulti-
mate member provide their own relevant
basis and that an upper-tier partnership or
upper-tier S corporation include the sum
of its ultimate member’s relevant bases
do not apply to contributions described in
section 170(h)(7)(C) and §1.170A-14(n)
(2) (for contributions made outside of
the three-year holding period) or section
170(h)(7)(D) and §1.170A-14(n)(3) (for
contributions made by certain family
partnerships or S corporations), provided
that they are not also described in section
170(h)(7)(E) and §1.170A-14(n)(4) (for
contributions to preserve certified his-
toric structures), in which case proposed
paragraph §1.170A-16(f)(4)(iii)(B) does
apply. The Form 8283 instructions will be
revised accordingly.
D. Additional Reporting Required by
Section 170(f)(19)
To ensure proper reporting under sec-
tion 170(f)(19), the proposed regula-
tions would add new §1.170A-16(f)(6).
Specifically, proposed §1.170A-16(f)(6)
(i) would provide that, in the case of any
contribution described in section 170(h)
(4)(C) and proposed §1.170A-16(f)(6)
5
In other words, a charitable contribution of more than $500 but not more than $5,000, §1.170A-16(c), a charitable contribution of more than $5,000, §1.170A-16(d), or noncash charitable
contributions of more than $500,000, §1.170A-16(e).

December 4, 2023 1344 Bulletin No. 2023–49
(ii) (relating to the preservation of certi-
fied historic structures), pursuant to sec-
tion 170(f)(19), no deduction is allowed
under section 170 or any other provision
of the Code under which deductions are
allowable to pass-through entities with
respect to such contribution unless each
partnership or S corporation (1) includes
on its return for the taxable year in which
the contribution is made a statement that it
made such a contribution or received such
allocated portion and (2) provides such
information about the contribution as the
Secretary may require in guidance, forms,
or instructions. The reference to “any
other provision of the Code under which
deductions are allowable to pass-through
entities” is included under the authority of
section 170(f)(19)(C) to apply these rules
to S corporations and other pass-through
entities in the same manner as such rules
apply to partnerships and their partners,
and is necessary to prevent such pass-
through entities and their owners from
claiming a deduction under a different
provision of the Code other than section
170, such as section 642(c), unless the
statutory and regulatory requirements of
section 170(f)(19) are met.
Proposed §1.170A-16(f)(6)(ii)
describes (using terms defined in proposed
§1.170A-14(j)(3)) the contributions to
which proposed §1.170A-16(f)(6) would
apply, namely any qualified conservation
contribution (as defined in section 170(h)
(1) and proposed §1.170A-14) for which:
(1) the conservation purpose of which is
preservation of a building that is a certi-
fied historic structure (as defined in sec-
tion 170(h)(4)(C)); (2) that is either made
by a contributing partnership or contrib-
uting S corporation, or that is an allo-
cated portion of an upper-tier partnership
or upper-tier S corporation; and (3) the
amount of such contribution or such allo-
cated portion exceeds 2.5 times the sum
of each ultimate member’s relevant basis
(as defined in proposed §1.170A-14(j)
through (m)).
Proposed §1.170A-16(f)(6)(iii) would
provide that a partnership or S corporation
satisfies the requirement to have made a
statement that it made such a contribution
or received such allocated portion and to
provide such information about the con-
tribution as the Secretary may require by
filing Form 8283 (including information
about relevant basis) in accordance with
section 170, the regulations under sec-
tion 170 (including those proposed in this
notice of proposed rulemaking), and the
instructions to Form 8283.
V. Section 706 Regulations
The general mechanism of section
170(h)(7) with respect to partnerships is to
compare the amount of the partnership’s
contribution (or its distributive share of a
contribution made by another partnership)
to 2.5 times the sum of each of its partner’s
relevant basis. Relevant basis is based
on modified basis, which is based on the
partner’s adjusted basis in its partnership
interest immediately before the contribu-
tion. Without additional rules, there may
be situations in which the contribution is
allocated to partners that did not hold an
interest at the time of the qualified conser-
vation contribution. Such partners would
not have any adjusted basis in their part-
nership interests immediately before the
contribution, and thus, without additional
rules, their relevant basis would be zero.
Therefore, rules are needed to align the
computation of relevant basis (which is
generally required to be computed imme-
diately before the computation) with the
allocation of the contribution among the
partners.
Generally, section 706 and §1.706-4 of
the existing regulations provide rules for
determining a partner’s distributive share
of partnership items when a partner’s
interest in the partnership varies during
the taxable year. For example, assume a
partner holding a 25 percent interest in a
calendar-year partnership sells its 25 per-
cent interest on July 1. Under section 706
and §1.706-4, the partnership would not
allocate the selling partner 25 percent of
all items of income for the year because
the selling partner had no interest in the
partnership for the final half of the year.
Instead, the partnership would follow the
rules of §1.706-4 to ensure that the allo-
cations properly reflect the sale of the
partner’s interest. Generally, the rules of
§1.706-4 allow partnerships to use either
a proration method or an interim clos-
ing of the books method (interim closing
method).
6
In the example, a partnership
using the proration method generally
would allocate the selling partner 12.5
percent (reflecting the fact that the selling
partner held a 25 percent interest in the
partnership for half of the year) of every
item of the partnership for the full year,
regardless of whether the partnership
incurred the item in the first or second half
of the year. Alternatively, a partnership
using the interim closing method gener-
ally would allocate the selling partner 25
percent of every item occurring in the first
half of the year.
Section 1.706-4 provides an exception
to these rules for certain “extraordinary
items,” which must be allocated in accor-
dance with the partners’ interests in the
item at the time of day the extraordinary
item occurred. Section 1.706-4(e)(2) pro-
vides a list of these extraordinary items. In
particular, §1.706-4(e)(2)(i) and (ii) pro-
vide that an extraordinary item includes
any item from the disposition or abandon-
ment (other than in the ordinary course
of business) of a capital asset as defined
in section 1221 of the Code (determined
without the application of any other rules
of law) and any item from the disposition
or abandonment (other than in the ordi-
nary course of business) of property used
in a trade or business as defined in section
1231(b) of the Code (determined with-
out the application of any holding period
requirement). Section 1.706-4(e)(3) pro-
vides a “small item exception” under
which certain items in the list in §1.706-
4(e)(2) nevertheless are not extraordinary
items if they fall below certain thresholds.
Proposed §1.706-4(e)(2)(ix) would
provide that an extraordinary item
includes any qualified conservation con-
tribution (without regard to whether such
contribution is a disallowed qualified con-
servation contribution within the meaning
of §1.170A-14(j)(3)(vii)). The proposed
amendments to existing §1.706-4(e)(3)
contained in these proposed regulations
would provide that the small item excep-
tion does not apply to any qualified con-
servation contribution. These rules are
6
The rules of §1.706-4 also require the use of conventions to determine the date on which variations are deemed to occur. Discussion of these conventions is beyond the scope of this preamble.

Bulletin No. 2023–49 1345 December 4, 2023
designed to ensure that modified basis
can be computed immediately before the
contribution, as directed in section 170(h)
(7). The Treasury Department and the
IRS considered alternatives to this rule.
However, many, and perhaps most, quali-
fied conservation contributions are already
considered extraordinary items under
existing §1.706-4(e)(2)(i) or (ii). The
proposed rule, however, provides clarity
and uniformity regarding the application
of the extraordinary item rule to qualified
conservation contributions and facilitates
the computation of a partner’s modified
basis immediately before the contribution
as directed by the statute.
Section 706(d)(3) provides rules for an
upper-tier partnership’s allocation of items
to its partners attributable to an interest in
a lower-tier partnership. It provides that
if, during any taxable year of the upper-
tier partnership there is a change in any
partner’s interest in the upper-tier partner-
ship, then (except to the extent provided
in regulations) each partner’s distributive
share of any item of the upper-tier part-
nership attributable to the lower-tier part-
nership must be determined by assigning
the appropriate portion (determined by
applying principles similar to the princi-
ples of section 706(d)(2)(C) and (D)) of
each such item to the appropriate days
during which the upper-tier partnership
is a partner in the lower-tier partnership
and by allocating the portion assigned to
any such day among the partners in pro-
portion to their interests in the upper-tier
partnership at the close of such day. The
Treasury Department and the IRS are
concerned that, even if a lower-tier part-
nership’s qualified conservation contri-
bution is treated as an extraordinary item
with respect to the lower-tier partnership,
an upper-tier partnership might never-
theless attempt to rely on section 706(d)
(3) and allocate its share of the contri-
bution to partners that were not partners
on the date of contribution. To facilitate
the computation of a partner’s relevant
basis immediately before the contribu-
tion, proposed §1.706-3(a) would pro-
vide that, for purposes of section 706(d)
(3), in the case of a qualified conservation
contribution (without regard to whether
such contribution is a disallowed quali-
fied conservation contribution within the
meaning of §1.170A-14(j)(3)(vii)) by a
partnership that is allocated to an upper-
tier partnership, the upper-tier partnership
must allocate the contribution among its
partners in proportion to their interests in
the upper-tier partnership at the time of
day at which the contribution was made,
regardless of the method (interim closing
or proration) and convention (daily, semi-
monthly, or monthly) otherwise used by
the upper-tier partnership under §1.706-
4. The Treasury Department and the IRS
request comments on whether these rules
are necessary and sufficient to ensure the
appropriate operation of the Disallowance
Rule.
Proposed Applicability Dates
Section 605(c) of the SECURE 2.0 Act
provides that the amendments made by
section 605 of the SECURE 2.0 Act apply
to contributions made after December
29, 2022. Pursuant to section 7805(b)
(2) of the Code, regulations issued under
section 170(f)(19) and (h)(7) within 18
months of the December 29, 2022, date of
enactment of section 605 of the SECURE
2.0 Act are permitted to apply to periods
ending before the dates provided under
section 7805(b)(1). Accordingly, the pro-
posed regulations under §§1.170A-14(j)
through (n), 1.706-3, and 1.706-4 are pro-
posed to apply to contributions made after
December 29, 2022.
To align the reporting requirements
under §1.170A-16 with the publication of
the revised Form 8283 and its instructions,
the proposed regulations under §1.170A-
16 are proposed to apply to contributions
made in taxable years ending on or after
November 20, 2023.
Special Analyses
I. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3520) generally requires
that a Federal agency obtain the approval
of the Office of Management and Budget
(OMB) before collecting information
from the public, whether such collection
of information is mandatory, voluntary,
or required to obtain or retain a benefit.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
control number.
The collection of information con-
tained in these proposed regulations is
reflected in the collection of information
for Form 8283 and Schedule K-1 for
Forms 1065, U.S. Return of Partnership
Income, and 1120-S, U.S. Income Tax
Return for an S corporation, that have
been reviewed and approved by the Office
of Management and Budget in accordance
with the Paperwork Reduction Act (44
U.S.C. 3507(c)) under control numbers
1545-0074 and 1545-0123. The estimated
burden for taxpayers filing Form 8283
under OMB control number 1545-0074 is
nineteen minutes for recordkeeping, twen-
ty-nine minutes for learning about the law
or the form, one hour and four minutes for
preparing the form, and thirty-four min-
utes for copying, assembling, and sending
the form to the IRS.
To the extent there is a change in burden
as a result of these regulations, the change
in burden will be reflected in the updated
burden estimates for the Form 8283 and
Schedule K-1 for Forms 1065 and 1120-
S. The requirement to maintain records
to substantiate information on Form 8283
and Schedule K-1 for Forms 1065 and
1120-S is already contained in the burden
associated with the control number for the
forms and remains unchanged.
II. Regulatory Flexibility Act
The Secretary of the Treasury hereby
certifies that the proposed regulations will
not have a significant economic impact on
a substantial number of small entities pur-
suant to the Regulatory Flexibility Act (5
U.S.C. chapter 6). This rule would affect
partnerships and S corporations that claim
qualified conservation contributions, and
partners and S corporation shareholders
that receive a distributive share or pro rata
share of a noncash charitable contribu-
tion. Although data is not readily available
about the number of small entities that are
potentially affected by this rule, it is pos-
sible that a substantial number of small
entities may be affected.
The impact of these proposed regula-
tions can be described in the following
four categories.
First, proposed §1.170A-14(j) through
(n) would provide guidance in applying

December 4, 2023 1346 Bulletin No. 2023–49
section 170(h)(7), including providing
definitions, formulas for the required cal-
culations, and examples to help ensure the
effective application of section 170(h)(7),
and proposed §§1.706-3 and 1.706-4(e)
(2)(ix) would provide special rules for
allocating qualified conservation contri-
butions. Even assuming that these provi-
sions affect a substantial number of small
entities, they will not have a significant
economic impact. Section 170(h)(7) is
self-executing and imposes the burden
of calculating relevant basis and apply-
ing the Disallowance Rule. Because these
proposed regulations are focused on pro-
viding definitional and computational
guidance related to section 170(h)(7),
their economic impact is expected to be
minimal.
Second, proposed §1.170A-16(d)(3)
(viii) would require the Form 8283 filed
by contributing partnerships and contrib-
uting S corporations to include the sum
of each ultimate member’s relevant basis.
The existing regulations under §1.170A-
16 already requires these entities to file
Form 8283. Even assuming that this pro-
vision affects a substantial number of
small entities, it will not have a signifi-
cant economic impact because it simply
requires contributing partnerships and
contributing S corporations to put a small
amount of additional information, which
section 170(h)(7) and (f)(19) requires
them to determine, on a form they are
already required to file.
Third, proposed §1.170A-16(f)(6)
would require a partnership or S corpora-
tion to file a completed Form 8283 to be
considered to satisfy the requirements of
section 170(f)(19)(A)(i). Even assuming
that this provision affects a substantial
number of small entities, it will not have
a significant economic impact because it
simply requires contributing partnerships
and contributing S corporations to put a
small amount of additional information on
a form they are already required to file.
Fourth, proposed §1.170A-16(f)(4)
(iii) would require all partners and share-
holders of S corporations who receive an
allocation of a noncash charitable contri-
bution to file a separate Form 8283. Many
of these partners and shareholders will be
individuals, not small entities. However,
even assuming that this provision affects a
substantial number of small entities, it will
not have a significant economic impact.
The partnership or S corporation will pro-
vide the partner or shareholder with all,
or substantially all, of the information to
be reported on the separate Form 8283;
this information will be contained either
on the partnership’s or S corporation’s
Form 8283 or the Schedule K-1 issued to
the partner or shareholder. Accordingly,
in most cases partners and shareholders
will simply be transcribing information
provided to them onto the separate Form
8283.
For the reasons stated, a regulatory
flexibility analysis under the Regulatory
Flexibility Act is not required. The
Treasury Department and the IRS invite
comments on the impact of the proposed
regulations on small entities.
Pursuant to section 7805(f), this
notice of proposed rulemaking has been
submitted to the Chief Counsel for the
Office of Advocacy of the Small Business
Administration for comment on its impact
on small business.
III. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandate
Reform Act of 1995 (UMRA) requires
that agencies assess anticipated costs and
benefits and take certain other actions
before issuing a final rule that includes any
Federal mandate that may result in expen-
ditures in any one year by a State, local,
or Tribal government, in the aggregate,
or by the private sector, of $100 million
(updated annually for inflation). These
proposed regulations do not include any
Federal mandate that may result in expen-
ditures by State, local, or Tribal govern-
ments or by the private sector in excess of
that threshold.
IV. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on State and local gov-
ernments, and is not required by statute,
or preempts State law, unless the agency
meets the consultation and funding
requirements of section 6 of the Executive
order. These proposed regulations do not
have federalism implications and do not
impose substantial, direct compliance
costs on State and local governments or
preempt State law within the meaning of
the Executive order.
V. Executive Order 13175: Consultation
and Coordination With Indian Tribal
Governments
Executive Order 13175 (Consultation
and Coordination With Indian Tribal
Governments) prohibits an agency from
publishing any rule that has Tribal impli-
cations if the rule either imposes substan-
tial, direct compliance costs on Indian
Tribal governments, and is not required by
statute, or preempts Tribal law, unless the
agency meets the consultation and funding
requirements of section 5 of the Executive
order. This proposed rule does not have
substantial direct effects on one or more
federally recognized Indian tribes and
does not impose substantial direct compli-
ance costs on Indian Tribal governments
within the meaning of the Executive order.
VI. Regulatory Planning and Review
Pursuant to the Memorandum
of Agreement, Review of Treasury
Regulations under Executive Order 12866
(June 9, 2023), tax regulatory actions
issued by the IRS are not subject to the
requirements of section 6 of Executive
Order 12866, as amended. Therefore,
a regulatory impact assessment is not
required.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to comments that are sub-
mitted timely to the IRS as prescribed in
the preamble under the ADDRESSES
section. The Treasury Department and the
IRS request comments on all aspects of
the proposed regulations. Any electronic
comments submitted, and any paper com-
ments submitted, will be made available
at https://www.regulations.gov or upon
request. Once submitted to the Federal
eRulemaking Portal, comments cannot be
edited or withdrawn.
Announcement 2023-16, 2023-20
I.R.B. 854 (May 15, 2023), provides
that public hearings will be conducted in

Bulletin No. 2023–49 1347 December 4, 2023
person, although the IRS will continue to
provide a telephonic option for individu-
als who wish to attend or testify at a hear-
ing by telephone. Any telephonic hearing
will be made accessible to people with
disabilities.
A public hearing has been scheduled for
January 3, 2024, beginning at 10 a.m. ET,
in the Auditorium at the Internal Revenue
Building, 1111 Constitution Avenue, NW.,
Washington, DC, unless no outlines are
received by December 20, 2023. Due to
building security procedures, visitors must
enter at the Constitution Avenue entrance.
In addition, all visitors must present
photo identification to enter the building.
Because of access restrictions, visitors
will not be admitted beyond the imme-
diate entrance area more than 30 minutes
before the hearing starts. Participants may
alternatively attend the public hearing by
telephone.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing. Persons who wish to
comment by telephone at the hearing must
submit written or electronic comments
and an outline of the topics to be discussed
as well as the time to be devoted to each
topic by December 20, 2023, as prescribed
in the preamble under the ADDRESSES
section.
A period of ten minutes will be allo-
cated to each person for making com-
ments. After the deadline for receiving
outlines has passed, the IRS will prepare
an agenda containing the schedule of
speakers. If no outline of the topics to be
discussed at the hearing is received by
December 20, 2023, the public hearing
will be cancelled. If the public hearing is
cancelled, a notice of cancellation of the
public hearing will be published in the
Federal Register. Copies of the agenda
will be available free of charge at the
hearing, and via the Federal eRulemak-
ing Portal (https://www.regulations.gov)
under the title of Supporting & Related
Material. Copies of the agenda will also
be available by emailing a request to pub-
lichearings@irs.gov . Please put “REG-
112916-23 Agenda Request” in the subject
line of the email.
Individuals who want to testify in
person at the public hearing must send
an email to publichearings@irs.gov to
have your name added to the building
access list. The subject line of the email
must contain the regulation number REG-
112916-23 and the language “TESTIFY
In Person.” For example, the subject line
may say: Request to TESTIFY In Person
at Hearing for REG-112916-23.
Individuals who want to testify by
telephone at the public hearing must send
an email to publichearings@irs.gov to
receive the telephone number and access
code for the hearing. The subject line
of the email must contain the regulation
number REG-112916-23 and the language
“TESTIFY Telephonically.” For exam-
ple, the subject line may say: Request to
TESTIFY Telephonically at Hearing for
REG-112916-23.
Individuals who want to attend the
public hearing in person without testify-
ing must also send an email to publichear-
ings@irs.gov to have your name added to
the building access list. The subject line
of the email must contain the regulation
number REG-112916-23 and the language
“ATTEND In Person.” For example, the
subject line may say: Request to ATTEND
Hearing In Person for REG-112916-23.
Individuals who want to attend the public
hearing by telephone without testifying
must also send an email to publichear-
ings@irs.gov to receive the telephone
number and access code for the hearing.
The subject line of the email must con-
tain the regulation number REG-112916-
23 and the language “ATTEND Hearing
Telephonically.” For example, the sub-
ject line may say: Request to ATTEND
Hearing Telephonically for REG-112916-
23. Requests to attend the public hear-
ing must be received by 5 p.m. ET on
December 29, 2023.
Hearings will be made accessible to
people with disabilities. To request spe-
cial assistance during a hearing please
contact the Publications and Regulations
Branch of the Office of Associate Chief
Counsel (Procedure and Administration)
by sending an email to publichearings@
irs.gov (preferred) or by telephone at
(202) 317-6901 (not a toll-free number)
by December 28, 2023.
Statement of Availability of IRS
Documents
IRS notices and other guidance cited in
this preamble are published in the Internal
Revenue Bulletin (or Cumulative Bulletin)
and are available from the Superintendent
of Documents, U.S. Government
Publishing Office, Washington, DC
20402, or by visiting the IRS website at
https://www.irs.gov.
Drafting Information
The principal authors of these proposed
are Elizabeth Boone and Hannah Kim,
Office of the Associate Chief Counsel
(Income Tax & Accounting), IRS, and
Benjamin Weaver, Office of the Associate
Chief Counsel (Passthroughs & Special
Industries), IRS. However, other person-
nel from the Treasury Department and the
IRS participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
part 1 as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by:
1. Adding an entry for §1.170A-14 in
numerical order;
2. Revising the entry for §1.170A-16;
3. Adding an entry for §1.706-3 in
numerical order; and
4. Revising the entry for § 1.706-4.
The additions and revisions read as
follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
Section 1.170A-14 also issued under
26 U.S.C. 170(f)(11) and 170(h)(7).
* * * * *
Section 1.170A-16 also issued under
26 U.S.C. 170(f)(11), 170(f)(19), 170(h)
(7)(G), 6001, and 6011.
* * * * *
Section 1.706-3 also issued under 26
U.S.C. 170(h)(7)(G).
* * * * *
Section 1.706-4 also issued under 26
U.S.C. 170(h)(7)(G).
* * * * *

December 4, 2023 1348 Bulletin No. 2023–49
Par. 2. Section 1.170A-14 is amended
by:
1. Revising paragraph (a);
2. Redesignating paragraph (j) as para-
graph (o) and adding new paragraph (j);
3. Adding paragraphs (k) through (n);
and
4. Revising newly designated para-
graph (o).
The additions and revisions read as
follows:
§1.170A-14 Qualified conservation
contributions.
(a) Qualified conservation contribu-
tions. A deduction under section 170 of the
Internal Revenue Code (Code) is generally
not allowed for a charitable contribution
of any interest in property that consists
of less than the donor’s entire interest in
the property other than certain transfers in
trust (see §1.170A–6 relating to charita-
ble contributions in trust and §1.170A–7
relating to contributions not in trust of
partial interests in property). However,
a deduction may be allowed under sec-
tion 170(f)(3)(B)(iii) for the value of a
qualified conservation contribution if the
requirements of this section are met and
the contribution is not a disallowed qual-
ified conservation contribution within the
meaning of paragraph (j) of this section.
A qualified conservation contribution is
the contribution of a qualified real prop-
erty interest to a qualified organization
exclusively for conservation purposes. To
be eligible for a deduction under section
170(h) and this section, the conservation
purpose must be protected in perpetuity.
* * * * *
(j) Disallowance of certain deductions
for contributions by partnerships and
S corporations that exceed 2.5 times the
sum of relevant bases—(1) In general.
This paragraph (j) applies the rules of sec-
tion 170(h)(7), which disallow a deduc-
tion for certain qualified conservation
contributions, as defined in section 170(h)
(1) and this section, made by, or allocated
to, partnerships or S corporations (as
defined in section 1361(a)(1) of the Code)
if the amount of the qualified conservation
contribution exceeds 2.5 times the sum of
the relevant bases, as determined by this
paragraph (j) and paragraphs (k) through
(m) of this section (Disallowance Rule).
See paragraph (n) of this section for cer-
tain exceptions. See paragraph (j)(3) of
this section for definitions of terms used
in this paragraph (j) and paragraphs (k)
through (n) of this section.
(2) Application—(i) Contributing part-
nerships and contributing S corporations.
Except as provided in paragraph (n) of
this section, a qualified conservation con-
tribution by a contributing partnership or
a contributing S corporation is a disal-
lowed qualified conservation contribution
if the amount of the qualified conservation
contribution exceeds 2.5 times the sum
of each of the contributing partnership’s
or contributing S corporation’s ultimate
member’s relevant basis as determined
under this paragraph (j) and paragraphs
(k) through (m) of this section.
(ii) Upper-tier partnerships and upper-
tier S corporations. Except as provided in
paragraph (n) of this section, an allocated
portion received by an upper-tier partner-
ship or upper-tier S corporation is a disal-
lowed qualified conservation contribution
if either the contribution is a disallowed
qualified conservation contribution with
respect to the partnership that allocated
the allocated portion to the upper-tier
partnership or upper-tier S corporation, or
such allocated portion exceeds 2.5 times
the sum of each of that upper-tier part-
nership’s or upper-tier S corporation’s
ultimate member’s relevant basis as deter-
mined under this paragraph (j) and para-
graphs (k) through (m) of this section.
(3) Definitions. The following defini-
tions apply for purposes of this paragraph
(j) and paragraphs (k) through (n) of this
section:
(i) Allocated portion. In the case of an
upper-tier partnership or upper-tier S cor-
poration that receives, directly or indi-
rectly, a distributive share of a qualified
conservation contribution, the phrase allo-
cated portion means the amount of such
distributive share.
(ii) Amount of qualified conservation
contribution. The amount of a contributing
partnership’s or contributing S corpora-
tion’s qualified conservation contribution
is the amount claimed as a qualified con-
servation contribution on the return of
the contributing partnership or contrib-
uting S corporation for the taxable year
in which the contribution is made. If the
contributing partnership or contributing
S corporation files an amended return or
administrative adjustment request under
section 6227 of the Code claiming a dif-
ferent amount with respect to the qualified
conservation contribution, the rules of this
section must be re-applied with respect
to such different amount to determine the
application of section 170(h)(7) and this
section.
(iii) Contributing partnership. The
term contributing partnership means a
partnership that makes a qualified conser-
vation contribution.
(iv) Contributing S corporation. The
term contributing S corporation means an
S corporation that makes a qualified con-
servation contribution.
(v) Direct interest. The term direct
interest refers to an ownership interest in a
contributing partnership, upper-tier partner-
ship, contributing S corporation, or upper-
tier S corporation that is held directly, or
through an entity disregarded as separate
from its owner for Federal income tax pur-
poses, a qualified subchapter S subsidiary
as defined in section 1361(b)(3), or through
a grantor trust (under subpart E of part 1
of subchapter J of chapter 1 of the Code).
In the case of a partner that is a C corpo-
ration (as defined in section 1361(a)(2)),
non-grantor trust, or an estate, or an S cor-
poration shareholder that is a non-grantor
trust or an estate, the direct interest in the
partnership or S corporation, as applicable,
is held by the C corporation, non-grantor
trust, or estate; the C corporation’s share-
holders, trust beneficiaries, and estate ben-
eficiaries are not considered to hold any
interest in the partnership or S corporation,
as applicable, for purposes of this para-
graph (j) and paragraphs (k) through (n) of
this section.
(vi) Directly. An ownership interest is
held directly if it is not held through one
or more upper-tier partnerships or upper-
tier S corporations. A distributive share or
pro rata share of a qualified conservation
contribution is received directly if it does
not pass through one or more upper-tier
partnerships or upper-tier S corporations.
(vii) Disallowed qualified conservation
contribution. The term disallowed qual-
ified conservation contribution means
a qualified conservation contribution or
allocated portion for which no deduction
is allowed pursuant to section 170(h)(7)
and this paragraph (j).

Bulletin No. 2023–49 1349 December 4, 2023
(viii) Indirect interest. The term indi-
rect interest refers to an ownership interest
in a contributing partnership, contributing
S corporation, upper-tier partnership, or
upper-tier S corporation held through an
upper-tier S corporation or one or more
upper-tier partnerships.
(ix) Indirectly. An ownership interest is
held indirectly if it is held through one or
more upper-tier partnerships or upper-tier
S corporations. A distributive share or pro
rata share of a qualified conservation con-
tribution is received indirectly if it passes
through one or more upper-tier partner-
ships or upper-tier S corporations.
(x) Ultimate member. The term ulti-
mate member means, with respect to any
partnership or S corporation, any partner
(that is not itself a partnership or S corpo-
ration) or S corporation shareholder that
receives a distributive share or pro rata
share, directly or indirectly, of a qualified
conservation contribution. Thus, ultimate
members will either be partners holding
a direct interest in a partnership, which
may be the contributing partnership or
an upper-tier partnership, or shareholders
holding a direct interest in an S corpo-
ration, which may be the contributing S
corporation or an upper-tier S corporation.
Upper-tier S corporations and upper-tier
partnerships themselves are not consid-
ered ultimate members.
(xi) Upper-tier partnership. The term
upper-tier partnership means a partner-
ship that receives an allocated portion.
(xii) Upper-tier S corporation. The
term upper-tier S corporation means an
S corporation that receives an allocated
portion.
(4) Effect of Disallowance Rule—(i)
If the Disallowance Rule applies to a
contributing partnership or contributing
S corporation. If a contributing partner-
ship’s or contributing S corporation’s
qualified conservation contribution is a
disallowed qualified conservation contri-
bution under this paragraph (j), then:
(A) Any upper-tier partnership’s or
upper-tier S corporation’s allocated por-
tion of such contribution is a disallowed
qualified conservation contribution,
regardless of whether such allocated por-
tion exceeds 2.5 times the sum of each of
the upper-tier partnership’s or upper-tier
S corporation’s ultimate member’s rele-
vant basis; and
(B) No person (whether holding a
direct or indirect interest in such contrib-
uting partnership or contributing S cor-
poration) may claim a deduction under
any provision of the Code with respect to
any amount of such disallowed qualified
conservation contribution, regardless of
whether that person’s distributive share
or pro rata share of the disallowed quali-
fied conservation contribution exceeds 2.5
times its relevant basis.
(ii) If the Disallowance Rule does
not apply to a contributing partnership
or contributing S corporation. If a con-
tributing partnership’s or contributing
S corporation’s qualified conservation
contribution is not a disallowed qualified
conservation contribution under this para-
graph (j), then:
(A) The distributive share or pro rata
share of any ultimate member holding a
direct interest in the contributing partner-
ship or contributing S corporation is not a
disallowed qualified conservation contri-
bution; and
(B) Any upper-tier partnership or
upper-tier S corporation that receives an
allocated portion of such qualified conser-
vation contribution must separately apply
the rules of section 170(h)(7) and this
paragraph (j) and paragraphs (k) through
(m) of this section to determine whether
that upper-tier partnership’s or upper-tier
S corporation’s allocated portion is a disal-
lowed qualified conservation contribution.
(iii) If the Disallowance Rule applies
to an upper-tier partnership or an upper-
tier S corporation. If an upper-tier part-
nership’s or upper-tier S corporation’s
allocated portion is a disallowed qualified
conservation contribution under this para-
graph (j), then:
(A) Any subsequent upper-tier part-
nership’s or upper-tier S corporation’s
allocated portion of such allocated por-
tion is a disallowed qualified conserva-
tion contribution, regardless of whether
the subsequent upper-tier partnership’s or
upper-tier S corporation’s allocated por-
tion exceeds 2.5 times the sum of each
of subsequent upper-tier partnership’s or
upper-tier S corporation’s ultimate mem-
ber’s relevant basis; and
(B) No person holding a direct or indi-
rect interest in that upper-tier partnership
or upper-tier S corporation may claim a
deduction under any provision of the Code
with respect to any amount of that upper-
tier partnership’s or upper-tier S corpo-
ration’s allocated portion, regardless of
whether that person’s distributive share
or pro rata share of the allocated por-
tion exceeds 2.5 times its relevant basis.
However, this does not affect the applica-
tion of this paragraph (j) and paragraphs
(k) through (m) of this section to another
partner of the contributing partnership;
for example, if the qualified conservation
contribution is not a disallowed qualified
conservation contribution with respect to
the contributing partnership, then the dis-
tributive share of such contribution of an
ultimate member holding a direct interest
in the contributing partnership is not a
disallowed qualified conservation contri-
bution, notwithstanding that the qualified
conservation contribution is a disallowed
qualified conservation contribution with
respect to one or more upper-tier partner-
ships or upper-tier S corporations.
(iv) If the Disallowance Rule does
not apply to an upper-tier partnership or
upper-tier S corporation. If an upper-tier
partnership’s or upper-tier S corporation’s
allocated portion is not a disallowed qual-
ified conservation contribution under this
paragraph (j), then:
(A) The distributive share or pro rata
share of such allocated portion of any
ultimate member holding a direct interest
in the upper-tier partnership or upper-tier
S corporation is not a disallowed qualified
conservation contribution; and
(B) Any subsequent upper-tier part-
nership or upper-tier S corporation that
receives an allocated portion of such allo-
cated portion must separately apply the
rules of section 170(h)(7) and this para-
graph (j) and paragraphs (k) through (m)
of this section to determine whether that
subsequent upper-tier partnership’s or
upper-tier S corporation’s allocated por-
tion is treated as a disallowed qualified
conservation contribution.
(5) No inference. There is no presump-
tion that a qualified conservation contri-
bution that is not a disallowed qualified
conservation contribution as defined in
paragraph (j)(3)(vii) of this section is com-
pliant with section 170, any other section
of the Code, the regulations, or any other
guidance. Compliance with section 170(h)
(7) and this paragraph (j) and paragraphs
(k) through (n) of this section is not a safe

December 4, 2023 1350 Bulletin No. 2023–49
harbor for purposes of any other provi-
sion of law or with respect to the value
of the contribution. Such transactions are
subject to adjustment or disallowance for
any other reason, including failure to sat-
isfy the other requirements of section 170
and overvaluation of the contribution. In
addition, taxpayers who engage in such
transactions may be required to disclose
under §1.6011-4 the transactions as listed
transactions.
(6) Examples. The following examples
illustrate the rules of this paragraph (j).
For these three examples in this paragraph
(j)(6), assume that the partnership alloca-
tions comply with the rules of subchapter
K of chapter 1 of the Code, and that the
exceptions in paragraph (n) of this section
do not apply.
(i) Example 1: Disallowed qualified conser-
vation contribution—(A) Facts. A, an individual,
and B, a C corporation, form AB Partnership, a
partnership for Federal income tax purposes. AB
Partnership acquires real property. Two years later,
AB Partnership makes a qualified conservation con-
tribution with respect to the property and claims a
contribution of $100X on its return. AB Partnership
allocates the contribution equally to A and B. A’s rel-
evant basis is $30X, and B’s relevant basis is $8X.
(B) Analysis. A and B are the ultimate members
of AB Partnership because they each receive a dis-
tributive share of the qualified conservation contribu-
tion and are not partnerships or S corporations. The
claimed amount of AB Partnership’s qualified con-
servation contribution is $100X, which exceeds 2.5
times the sum of A’s and B’s relevant bases, which is
$95X ($95X = 2.5 x (A’s $30X relevant basis + B’s
$8X relevant basis)). Therefore, AB Partnership’s
contribution is a disallowed qualified conservation
contribution. No person may claim any deduction
with respect to this contribution, even though A’s
$50X distributive share of the contribution does not
exceed 2.5 times A’s $30X relevant basis.
(ii) Example 2: Not a disallowed qualified con-
servation contribution—(A) Facts. Individuals C
and D form CD Partnership, a partnership for Federal
income tax purposes. CD Partnership acquires real
property. Two years later, CD Partnership makes a
qualified conservation contribution with respect to
the property and claims a contribution of $100X on
its return. CD Partnership allocates the contribution
$5X to C and $95X to D. C’s relevant basis is $6X,
and D’s relevant basis is $34X.
(B) Analysis. C and D are the ultimate mem-
bers of CD Partnership because they each receive
a distributive share of the qualified conservation
contribution and are not partnerships or S corpo-
rations. The claimed amount of CD Partnership’s
qualified conservation contribution is $100X, which
does not exceed 2.5 times the sum of C’s and D’s
relevant bases, which is also $100X ($100X = 2.5
x (C’s $6X relevant basis + D’s $34X relevant
basis)). Therefore, CD Partnership’s contribution is
not a disallowed qualified conservation contribution
(that is, not disallowed by section 170(h)(7) and this
paragraph (j)) with respect to CD Partnership, C, or
D, even though D’s $95X distributive share of the
contribution exceeds 2.5 times D’s $34X relevant
basis.
(iii) Example 3: Tiered partnerships—(A)
Facts. Individuals E and F form UTP Partnership,
a partnership for Federal income tax purposes.
UTP Partnership and G, a C corporation, form LTP
Partnership, a partnership for Federal income tax
purposes. LTP Partnership acquires real property.
Two years later, LTP Partnership makes a qualified
conservation contribution with respect to the prop-
erty and claims a contribution of $100X on its return.
LTP Partnership allocates the contribution $5X to G
and $95X to UTP Partnership. UTP Partnership allo-
cates its $95X portion of the contribution $45X to E
and $50X to F. G’s relevant basis is $10X, E’s rele-
vant basis is $11X, and F’s relevant basis is $21X.
(B) Analysis for LTP Partnership. The ultimate
members of LTP Partnership are G, E, and F because
they each receive a distributive share of the quali-
fied conservation contribution and are not a partner-
ship or S corporation. Because UTP Partnership is
a partnership, it is not an ultimate member of LTP
Partnership, even though it receives a distributive
share of the qualified conservation contribution. The
amount of LTP Partnership’s qualified conserva-
tion contribution is $100X, which does not exceed
2.5 times the sum of each of the ultimate member’s
relevant basis, which is $105X ($105X = 2.5 x (G’s
$10X relevant basis + E’s $11X relevant basis + F’s
$21X relevant basis)). Therefore, LTP Partnership’s
contribution is not a disallowed qualified conserva-
tion contribution (that is, is not disallowed by section
170(h)(7) and this paragraph (j)) with respect to LTP
Partnership and G.
(C) Analysis for UTP Partnership. Because
UTP Partnership receives an allocated portion, UTP
Partnership must apply this paragraph (j) and para-
graphs (k) through (m) of this section to determine
whether its allocated portion is a disallowed qualified
conservation contribution. The ultimate members
of UTP Partnership are E and F because they each
receive a distributive share of UTP Partnership’s
allocated portion and are not partnerships or S corpo-
rations. The amount of UTP Partnership’s allocated
portion of LTP Partnership’s qualified conservation
contribution is $95X, which exceeds 2.5 times the
sum of E’s and F’s relevant bases, which is $80X
($80X = 2.5 x (E’s $11X relevant basis + F’s $21X
relevant basis)). Therefore, UTP Partnership’s allo-
cated portion of LTP Partnership’s contribution is a
disallowed qualified conservation contribution with
respect to UTP Partnership, E, and F. No partner
of UTP Partnership may claim any deduction with
respect to this contribution, even though F’s $50X
distributive share of the contribution does not exceed
2.5 times F’s $21X relevant basis. This does not
affect the determination that G’s distributive share of
the contribution is not a disallowed qualified conser-
vation contribution.
(k) Determination of relevant basis.
For purposes of this section, the term rele-
vant basis means, with respect to any ulti-
mate member, the portion of such ultimate
member’s modified basis (as determined
under paragraph (l) of this section) that is
allocable (under the rules of paragraph (m)
of this section) to the portion of the real
property with respect to which the quali-
fied conservation contribution is made.
(l) Determination of modified basis—
(1) In general. In the case of an ultimate
member holding a direct interest in a part-
nership, the ultimate member’s modified
basis is determined by such partnership
immediately before the qualified conser-
vation contribution is made in the man-
ner described in paragraph (l)(2) of this
section. In the case of an ultimate mem-
ber holding a direct interest in an S cor-
poration, the ultimate member’s modified
basis is determined by such S corporation
in the manner described in paragraph (l)
(3) of this section.
(2) Partners in partnerships—(i)
Computation. For purposes of this sec-
tion, the term modified basis means, with
respect to any ultimate member that is a
direct partner in either a contributing part-
nership or an upper-tier partnership, such
ultimate member’s adjusted basis in its
interest in the partnership in which the
ultimate member holds a direct interest as
of the beginning of the first day of the part-
nership’s taxable year in which the quali-
fied conservation contribution is made,
with adjustments as determined under
paragraphs (l)(2)(ii) through (v) of this
section. However, if the ultimate member
was not a partner as of the beginning of
the first day of the partnership’s taxable
year in which the qualified conservation
contribution is made, then the term mod-
ified basis means such ultimate member’s
adjusted basis in its interest in the partner-
ship immediately after the transaction that
resulted in the ultimate member becoming
a partner, with adjustments as determined
under paragraphs (l)(2)(ii) through (v) of
this section. The adjustments under para-
graphs (l)(2)(ii) through (v) of this section
must be made in the order in which they
are listed.
(ii) Step 1. First, the computation of
modified basis must start with the ultimate
member’s adjusted basis under paragraph
(l)(2)(i) of this section and then reflect an
increase for any contributions made by the
ultimate member to the partnership during
the portion of the year commencing with
the beginning of the taxable year of the
partnership and ending immediately prior
to the time of day at which the qualified

Bulletin No. 2023–49 1351 December 4, 2023
conservation contribution is made as pro-
vided in section 722 of the Code.
(iii) Step 2. Second, the amount deter-
mined under paragraph (l)(2)(ii) of this
section must be adjusted, as provided in
section 705 of the Code, by the ultimate
member’s hypothetical distributive share
of partnership items attributable to the
portion of the year commencing with the
beginning of the taxable year of the part-
nership and ending immediately prior to
the time of day at which the qualified con-
servation contribution is made. In making
this determination, the partnership must
apply the rules of §1.706-4 and apply a
hypothetical interim closing method to
allocate the partnership’s items attribut-
able to the portion of the year commenc-
ing with the beginning of the taxable year
of the partnership and ending immediately
prior to the time of day at which the qual-
ified conservation contribution is made.
The partnership cannot apply any con-
vention in §1.706-4(c) to the hypothetical
determination of the partners’ distribu-
tive shares, but rather must perform the
calculation as though the determination
occurred immediately prior to the time of
day at which the qualified conservation
contribution is made. This hypothetical
determination of the partners’ distribu-
tive shares is only for purposes of calcu-
lating modified basis. This paragraph (l)
does not require the partnership to use
the interim closing method with respect
to the determination of its partners’ actual
distributive shares of partnership items of
income, gain, loss, deduction, and credit
for the taxable year in which the qualified
conservation contribution is made or oth-
erwise. See §1.706-4 for applicable rules
for the determination of a partner’s dis-
tributive share when a partner’s interest
varies during a partnership taxable year.
(iv) Step 3. Third, the amount deter-
mined under paragraph (l)(2)(iii) of this
section must be reduced (but not below
zero) by any distributions made by the
partnership to the ultimate member during
the portion of the year commencing with
the beginning of the taxable year of the
partnership and ending immediately prior
to the time of day at which the qualified
conservation contribution is made as pro-
vided in section 733 of the Code.
(v) Step 4. Fourth, the amount deter-
mined under paragraph (l)(2)(iv) of
this section must be reduced by the full
amount of the ultimate member’s share
of §1.752-1 liabilities of any partnership
(including a lower-tier partnership). The
remaining amount is such ultimate mem-
ber’s modified basis. Thus, an ultimate
member’s modified basis may be less than
zero.
(3) S corporation shareholder—(i)
Computation. For purposes of this sec-
tion, the term modified basis means, with
respect to any ultimate member that is
a shareholder of either a contributing S
corporation or an upper-tier S corpora-
tion, such ultimate member’s adjusted
basis in its shares in the S corporation as
of the end of the S corporation’s taxable
year in which the qualified conservation
contribution is made, with adjustments as
determined under paragraphs (l)(3)(ii) and
(iii) of this section. However, if the ulti-
mate member was not a shareholder at the
end of the S corporation’s taxable year in
which the qualified conservation contribu-
tion is made, then the term modified basis
means such ultimate member’s adjusted
basis in its shares in the S corporation
immediately prior to the transaction that
terminated its interest in the S corporation,
with adjustments as determined under
paragraphs (l)(3)(ii) and (iii) of this sec-
tion. Modified basis does not include the
ultimate member’s adjusted basis of any
indebtedness of the S corporation to the
ultimate member. The adjustments under
paragraphs (l)(3)(ii) and (iii) of this sec-
tion must be made in the order in which
they are listed.
(ii)
Step 1. First, the computation of
modified basis must start with the ultimate
member’s adjusted basis under paragraph
(l)(3)(i) of this section, and then reflect an
increase for the extent to which the ulti-
mate member’s adjusted basis reflects a
reduction as a result of the qualified con-
servation contribution. Thus, the ultimate
member’s modified basis with respect to
a qualified conservation contribution does
not reflect any reduction for the ultimate
member’s pro rata share of the S corpora-
tion’s basis in the conservation easement
or other property contributed in the quali-
fied conservation contribution.
(iii) Step 2. Second, the amount deter-
mined under paragraph (l)(3)(ii) of this
section must be multiplied by the number
of days during the S corporation’s taxable
year in which the ultimate member was a
shareholder and divided by the total num-
ber of days during the S corporation’s
taxable year. The resulting amount is such
ultimate member’s modified basis.
(4) Examples. The following examples
illustrate the provisions of this paragraph
(l). For the three examples in this para-
graph (l)(4), assume that the exceptions in
paragraph (n) of this section do not apply.
(i) Example 1—(A) Facts. AB Partnership is
a calendar-year partnership for Federal income
tax purposes whose partners are A and B, each of
whom is an individual and has a 50 percent interest
in income, gain, loss, and deduction. Several years
ago, B contributed property to AB Partnership sub-
ject to a §1.752-1 liability. At the beginning of AB
Partnership’s 2024 taxable year (the beginning of the
day on January 1, 2024), A’s adjusted basis in its inter-
est in AB Partnership is $19X, and B’s adjusted basis
in its interest in AB Partnership is $17X. At 10:01
a.m. on August 29, 2024, AB Partnership makes a
qualified conservation contribution. On August 29,
2024, the amount of the §1.752-1 liability is $10X
and is allocated under the rules of section 752 to A.
During 2024, there were no variations in any part-
ner’s interests in AB Partnership within the meaning
of section 706. During 2024, AB Partnership earned
$8X of ordinary income and sustained ($4X) of capi-
tal loss in the ordinary course of its business, both of
which are allocated equally to A and B. Within 2024,
AB Partnership earned $6X of ordinary income, and
sustained ($4X) of capital loss between the begin-
ning of the day on January 1, 2024, and 10:00 a.m.
on August 29, 2024, and AB Partnership earned $2X
of ordinary income, and sustained $0X of capital
loss between 10:01 a.m. on August 29, 2024, and the
end of the day on December 31, 2024. Other than
the qualified conservation contribution, none of AB
Partnership’s items are extraordinary items within
the meaning of §1.706-4(e)(2). In April 2024, AB
Partnership distributed $1X cash to A. In November
2024, B contributed $2X cash to AB Partnership.
(B) Analysis. The ultimate members of AB
Partnership are A and B because they each receive
a distributive share of the qualified conservation
contribution and are not partnerships or S corpo-
rations. To determine A’s and B’s modified bases,
AB Partnership must start with A’s and B’s adjusted
bases in the AB Partnership as of the beginning of
the first day of the taxable year of AB Partnership
and then make the adjustments required under
paragraphs (l)(2)(ii) through (v) of this section.
Accordingly, the computation of A’s beginning mod-
ified basis begins with $19X, and the computation
of B’s modified basis begins with $17X. First, those
amounts must be increased by any contributions
between the beginning of the day on January 1, 2024,
and 10:00 a.m. on August 29, 2024. Because there
were none, after this step, the computation of A’s
modified basis remains at $19X and the computation
of B’s modified basis remains at $17X. Then these
amounts must be adjusted as provided in section 705
by A’s and B’s hypothetical distributive share of AB
Partnership’s items attributable to the portion of the
year between the beginning of the day on January

December 4, 2023 1352 Bulletin No. 2023–49
1, 2024, and 10:00 a.m. on August 29, 2024. Thus,
the computations of A’s and B’s modified bases will
each reflect an increase for their hypothetical $3X
distributive share of the $6X ordinary income that
AB Partnership earned between the beginning of the
day on January 1, 2024, and 10:00 a.m. on August
29, 2024, and a decrease for their hypothetical ($2X)
distributive share of the ($4X) capital loss that AB
Partnership incurred between the beginning of the
day on January 1, 2024, and 10:00 a.m. on August
29, 2024. Therefore, after this step, the computa-
tion of A’s modified basis reflects an increase from
$19X to $20X, and the computation of B’s modified
basis reflects an increase from $17X to $18X. Next,
these amounts must be reduced by any distributions
between the beginning of the day on January 1,
2024, and 10:00 a.m. on August 29, 2024. Thus, the
computation of A’s modified basis reflects a reduc-
tion from $20X to $19X. B did not receive any dis-
tribution, so the computation of B’s modified basis
remains at $18X. Finally, the full amount of A’s and
B’s shares of §1.752-1 liabilities must be subtracted.
Thus, the computation of A’s modified basis reflects
a reduction from $19X to $9X, which is A’s modified
basis. B’s modified basis is $18X.
(ii) Example 2—(A) Facts. CD Partnership, a
partnership for Federal income tax purposes, is a cal-
endar-year partnership using the calendar day con-
vention under §1.706-4 whose partners on January
1, 2024, are C and D, each of whom is an individual
and has a 50 percent interest in income, gain, loss,
and deduction. On March 15, 2024, C sells its inter-
est to E, a C corporation. At 1:15 p.m. on September
15, 2024, CD Partnership makes a qualified con-
servation contribution. On September 21, 2024, D
sells its interest to F, an individual. During 2024,
CD Partnership earned $8X of ordinary income and
sustained ($14X) of ordinary loss. Within 2024, CD
Partnership earned all $8X of ordinary income in
November and December, and sustained all ($14X)
of ordinary loss in April through August. In May
2024, D contributed $6X cash to CD Partnership,
and E contributed property with a fair market value
of $6X and basis of $3X. D and E are equal part-
ners during the period in which they are both part-
ners. CD Partnership made no distributions during
2024. CD Partnership had no §1.752-1 liabilities
during 2024. In accordance with §1.706-4(e)(2)
(ix), CD Partnership treats its qualified conservation
contribution as an extraordinary item allocable only
to D and E, its partners at 1:15 p.m. on September
15, 2024. Other than the qualified conservation
contribution, none of AB Partnership’s items are
extraordinary items within the meaning of §1.706-
4(e)(2). CD Partnership uses the proration method
under §1.706-4 to allocate its items among C, D, E,
and F. Under the proration method, CD Partnership
allocates each C, D, E, and F a distributive share
of a portion of both the $8X ordinary income and
the ($14X) ordinary loss. D’s adjusted basis in its
interest in CD Partnership at the beginning of CD
Partnership’s 2024 taxable year (the beginning of the
day on January 1, 2024), is $8X. E’s adjusted basis
in its interest in CD Partnership immediately after E
acquires C’s interest in CD Partnership is $6X.
(B) Analysis. The ultimate members of CD
Partnership are D and E because they each receive
a distributive share of the qualified conservation
contribution and are not partnerships or S corpo-
rations. To determine D’s and E’s modified bases,
CD Partnership must start with D’s and E’s adjusted
bases in CD Partnership as of the beginning of the
day on January 1, 2024, and then make the adjust-
ments required under paragraphs (l)(2)(ii) through
(v) of this section. However, because E was not a
partner as of the beginning of the day on January 1,
2024, CD Partnership must start with E’s adjusted
basis immediately after E’s purchase of C’s inter-
est in CD Partnership. Accordingly, the computa-
tion of D’s modified basis begins with $8X, and
the computation of E’s modified basis begins with
$6X. Then, these amounts must be increased by any
contributions made by D or E, respectively, to CD
Partnership between the beginning of the day on
January 1, 2024, and 1:14 p.m. on September 15,
2024. Therefore, the computation of D’s modified
basis reflects an increase from $8X to $14X (for D’s
$6X contribution of cash to CD Partnership in May
2024), and the computation of E’s modified basis
reflects an increase from $6X to $9X (for E’s con-
tribution of property to CD Partnership with a basis
of $3X in May 2024). Next, these amounts must be
adjusted as provided in section 705 by D’s and E’s
hypothetical distributive share of CD Partnership’s
items attributable to the portion of the year between
the beginning of the day on January 1, 2024, and
1:14 p.m. on September 15, 2024. CD Partnership
must perform the analysis using an interim closing
method to a hypothetical variation at 1:14 p.m. on
September 15, 2024, immediately prior to the qual-
ified conservation contribution. The computation
of D’s modified basis will reflect an adjustment
for its hypothetical distributive share of all CD
Partnership’s items incurred from the beginning of
the day on January 1, 2024, through 1:14 p.m. on
September 15, 2024. The computation of E’s modi-
fied basis will reflect an adjustment for its hypothet-
ical distributive share of all CD Partnership’s items
incurred from the end of the day on March 15, 2024,
through 1:14 p.m. on September 15, 2024. For pur-
poses of this paragraph (l)(4)(ii)(B) (Example 2), it
does not matter that CD Partnership actually used
the proration method to allocate its 2024 income.
Instead, under this hypothetical calculation of the
distributive share, the computation of D’s and E’s
modified bases will each reflect a reduction for
their 50 percent share of the ($14X) ordinary loss.
Because none of CD Partnership’s $8X of ordinary
income was earned between the beginning of the
day on January 1, 2024, and 1:14 p.m. on September
15, 2024, neither D’s nor E’s modified basis will
reflect an increase for any amount of that income.
Thus, after this step, the computation of D’s mod-
ified basis reflects a reduction from $14X to $7X,
and the computation of E’s modified basis reflects
a reduction from $9X to $2X. Then, these amounts
must be reduced by any distributions between the
beginning of the day on January 1, 2024, and 1:14
p.m. on September 15, 2024. Because there were
none, after this step, the computation of D’s mod-
ified basis remains at $7X, and the computation of
E’s modified basis remains at $2X. Finally, the full
amount of D’s and E’s shares of §1.752-1 liabili-
ties must be subtracted. Because there were none,
D’s modified basis is $7X, and E’s modified basis
is $2X.
(iii) Example 3—(A) Facts. HI Inc. is a cal-
endar-year S corporation whose shareholders on
January 1, 2024, are H and I, each of whom owns
50 percent of the shares. On May 1, 2024, H sells all
of its stock to J. In June 2024, HI Inc. contributes a
conservation easement that is a qualified conserva-
tion contribution on 400 acres of real property. HI
Inc.’s adjusted basis in the conservation easement
is $12X (which is different from HI Inc.’s adjusted
basis in the 400 acres and also may be different from
the value of the conservation easement). On July 1,
2024, I sells all of its stock to K. Under §1.1377-1,
HI Inc. allocates its qualified conservation contribu-
tion 1/6 to H, 1/4 to I, 1/3 to J, and 1/4 to K. Pursuant
to the second sentence of section 1367(a)(2)(B), as
a result of the qualified conservation contribution,
H’s adjusted basis in its shares is reduced by $2X,
I’s adjusted basis in its shares is reduced by $3X, J’s
adjusted basis in its shares is reduced by $4X, and
K’s adjusted basis in its shares is reduced by $3X.
At the end of HI Inc.’s 2024 taxable year (the end of
the day on December 31, 2024), J’s adjusted basis in
its shares is $15X and K’s adjusted basis in its shares
is $11X. Immediately prior to H’s sale to J, H’s
adjusted basis in its shares was $8X. Immediately
prior to I’s sale to K, I’s adjusted basis in its shares
was $7X. Whether H, I, J, or K have adjusted basis
in indebtedness of HI Inc., has no effect on the com-
putation of their modified bases. H is an estate of a
deceased shareholder, and I, J, and K are individuals
that are not nonresident aliens.
(B) Analysis. The ultimate members of HI Inc.
are H, I, J, and K, because they each receive a pro
rata share of the qualified conservation contribution
and are not partnerships or S corporations. To deter-
mine H’s, I’s, J’s, and K’s modified bases, HI Inc.
must begin with each shareholder’s adjusted basis in
its shares as of the end of the day on December 31,
2024 (the end of the S corporation’s taxable year in
which it made the qualified conservation contribu-
tion). However, because H and I were not sharehold-
ers as of the end of the day on December 31, 2024,
HI Inc. must begin with H’s adjusted basis imme-
diately before H’s sale to J, and I’s adjusted basis
immediately before I’s sale to K. Accordingly, the
computation of H’s modified basis begins with $8X,
the computation of I’s modified basis begins with
$7X, the computation of J’s modified basis begins
with $15X, and the computation of K’s modified
basis begins with $11K. Next, HI Inc. must increase
these amounts by the extent the adjusted bases were
reduced as a result of the qualified conservation con-
tribution. Accordingly, the computation of H’s modi-
fied basis reflects an increase from $8X to $10X, the
computation of I’s modified basis reflects an increase
from $7X to $10X, the computation of J’s modified
basis reflects an increase from $15X to $19X, and
the computation of K’s modified basis reflects an
increase from $11X to $14X. Finally, HI Inc. must
multiply each of these amounts by the number of
days during 2024 in which each ultimate member
was a shareholder, and divide by 366 (the total num-
ber of days in HI Inc.’s 2024 taxable year). H was a
shareholder for 122 days. Thus, H’s modified basis
is $3.33X ($10X x 122/366). I was a shareholder for
183 days. Thus, I’s modified basis is $5X ($10X x
183/366). J was a shareholder for 244 days. Thus, J’s
modified basis is $12.67X ($19X x 244/366). K was

Bulletin No. 2023–49 1353 December 4, 2023
a shareholder for 183 days. Thus, K’s is $7X ($14X
x 183/366).
(m) Allocation of modified basis—(1)
In general. An allocation of an ultimate
member’s modified basis to the portion
of the real property with respect to which
the qualified conservation contribution is
made must be made in accordance with
this paragraph (m). Rules for allocating
an ultimate member’s modified basis in
a contributing partnership are provided
in paragraph (m)(2) of this section. Rules
for allocating an ultimate member’s mod-
ified basis in a contributing S corporation
are provided in paragraph (m)(3) of this
section. Rules for allocating an ultimate
member’s modified basis in an upper-tier
partnership are provided in paragraph (m)
(4) of this section. Rules for allocating an
ultimate member’s modified basis in an
upper-tier S corporation are provided in
paragraph (m)(5) of this section. Records
must be kept in accordance with para-
graph (m)(6) of this section.
(2) Determination of relevant basis
for an ultimate member holding a direct
interest in a contributing partnership—
(i) Narrative rule. This paragraph (m)(2)
applies in the case of an ultimate member
holding a direct interest in a contributing
partnership and provides that a contribut-
ing partnership must determine each such
ultimate member’s relevant basis as pro-
vided in this paragraph (m)(2). Relevant
basis equals each ultimate member’s mod-
ified basis as determined under paragraph
(l)(2) of this section multiplied by a frac-
tion –
(A) The numerator of which is the ulti-
mate member’s share of the contributing
partnership’s adjusted basis in the portion
of the real property with respect to which
the qualified conservation contribution is
made as determined under paragraph (m)
(2)(ii) of this section; and
(B) The denominator of which is the
ultimate member’s portion of the adjusted
basis in all the contributing partnership’s
properties as determined under paragraph
(m)(2)(iii) of this section.
(ii) Ultimate member’s share of the
contributing partnership’s adjusted basis
in the portion of the real property with
respect to which the qualified conserva-
tion contribution is made. For purposes
of this paragraph (m)(2), an ultimate
member’s share of the contributing
partnership’s adjusted basis in the por-
tion of the real property with respect to
which the qualified conservation contri-
bution is made equals the contributing
partnership’s adjusted basis in the portion
of the real property with respect to which
the qualified conservation contribution is
made (determined as of the time of day of
the contribution) multiplied by a fraction
–
(A) The numerator of which is the ulti-
mate member’s distributive share of the
qualified conservation contribution; and
(B) The denominator of which is the
total amount of the contributing partner-
ship’s qualified conservation contribution.
(iii) Ultimate member’s portion of the
adjusted basis in all the contributing part-
nership’s properties. For purposes of this
paragraph (m)(2), an ultimate member’s
portion of the adjusted basis in all the con-
tributing partnership’s properties is equal
to the sum of:
(A) The ultimate member’s share of
the contributing partnership’s adjusted
basis in the portion of the real property
with respect to which the qualified conser-
vation contribution is made as determined
under paragraph (m)(2)(ii) of this section;
plus
(B) The ultimate member’s portion of
the adjusted basis in all the contributing
partnership’s properties other than the
portion of the real property with respect
to which the qualified conservation con-
tribution is made. To determine the ulti-
mate member’s portion of the adjusted
basis in all the contributing partnership’s
properties, the contributing partnership
must apportion among its partners in
accordance with their interests in the part-
nership under section 704(b) its adjusted
basis in each of its properties (except the
portion of the real property with respect
to which the qualified conservation contri-
bution is made), using the adjusted bases
immediately before the qualified conser-
vation contribution, without duplication
or omission of any property, and by treat-
ing the adjusted basis in each property as
not less than zero.
(iv) Formulaic rule. The rule of this
paragraph (m)(2) is also expressed in the
following formula:
Figure 1 to Paragraph (m)(2)(iv)
R = M × (T ÷ (D + T))
Where:
R = Relevant basis.
M = Modified basis as determined
under paragraph (l) of this section.
D = Ultimate member’s portion of
the adjusted basis in all the contributing
partnership’s properties (other than the
portion of the real property with respect
to which the qualified conservation contri-
bution is made), determined by apportion-
ing among the partners of the contributing
partnership in accordance with their inter-
ests in the partnership under section 704(b)
its adjusted basis in each of its properties
(other than the portion of the real prop-
erty with respect to which the qualified
conservation contribution is made), using
the adjusted bases immediately before the
qualified conservation contribution, with-
out duplication or omission of any prop-
erty, and by treating the adjusted basis in
each property as not less than zero.
T = Ultimate member’s share of the
contributing partnership’s adjusted basis
in the portion of the real property with
respect to which the qualified conserva-
tion contribution is made, determined
according to the following formula: A ×
(B ÷ C).
A = Contributing partnership’s adjusted
basis in the portion of the real property
with respect to which the qualified conser-
vation contribution is made.
B = Ultimate member’s distribu-
tive share of the qualified conservation
contribution.
C = Total amount of the contribut-
ing partnership’s qualified conservation
contribution.
(3) Determination of relevant basis
for an ultimate member holding a direct
interest in a contributing S corporation—
(i) Narrative rule. This paragraph (m)(3)
applies in the case of an ultimate member
holding a direct interest in a contributing
S corporation and provides that a contrib-
uting S corporation must determine each
such ultimate member’s relevant basis
as provided in this paragraph (m)(3).
Relevant basis equals each ultimate mem-
ber’s modified basis as determined under
paragraph (l)(3) of this section multiplied
by a fraction –
(A) The numerator of which is the
ultimate member’s pro rata portion of
the contributing S corporation’s adjusted
basis in the portion of the real property

December 4, 2023 1354 Bulletin No. 2023–49
with respect to which the qualified conser-
vation contribution is made; and
(B) The denominator of which is the
ultimate member’s pro rata portion of
the adjusted basis in all the contributing
S corporation’s properties (including the
portion of the real property with respect to
which the qualified conservation contribu-
tion is made).
(ii) Formulaic rule. The rule of this
paragraph (m)(3) is also expressed in the
following formula:
Figure 2 to Paragraph (m)(3)(ii)
R = M × (E ÷ F)
Where:
R = Relevant basis.
M = Modified basis as determined
under paragraph (l) of this section.
E = Ultimate member’s pro rata por-
tion of the contributing S corporation’s
adjusted basis in the portion of the real
property with respect to which the quali-
fied conservation contribution is made.
F = Ultimate member’s pro rata portion
of the adjusted basis in all the contributing
S corporation’s properties (including the
portion of the real property with respect to
which the qualified conservation contribu-
tion is made).
(4) Determination of relevant basis
for an ultimate member holding a direct
interest in an upper-tier partnership—(i)
In general. This paragraph (m)(4) applies
in the case of an ultimate member hold-
ing a direct interest in an upper-tier part-
nership. Each such ultimate member’s
modified basis must be traced through all
upper-tier partnerships to the contributing
partnership, and the contributing partner-
ship must determine the relevant basis.
This involves a multi-step process under
which, beginning with the upper-tier part-
nership in which the ultimate member
holds a direct interest, each upper-tier
partnership must perform calculations,
and then finally the contributing part-
nership must use those calculations to
compute the ultimate member’s relevant
basis. For simplicity, this paragraph (m)
(4) describes a situation in which there are
two tiers of partnerships—a contributing
partnership and an upper-tier partnership.
In a situation involving more tiers, each
partnership must apply the rules and prin-
ciples of this paragraph (m)(4) iteratively
to determine relevant basis.
(ii) Upper-tier partnership—(A)
Narrative rule. The upper-tier partner-
ship must determine the portion of each
ultimate member’s modified basis that is
allocable to the upper-tier partnership’s
interest in the partnership in which it holds
a direct interest (in a situation involving
only two tiers of partnerships, that will be
the contributing partnership). This deter-
mination must be done in accordance
with the principles of paragraph (m)(2)
of this section, and the formula provided
in paragraph (m)(4)(ii)(B) of this section.
In other words, the formula provided in
paragraph (m)(4)(ii)(B) is similar to the
formula provided in paragraph (m)(2)
(iv) of this section, except that, instead of
determining the portion of modified basis
that is allocable to the portion of the real
property with respect to which the qual-
ified conservation contribution is made,
the formula in paragraph (m)(4)(ii)(B)
determines the portion of modified basis
that is allocable to the upper-tier partner-
ship’s interest in the next lower-tier part-
nership. As explained in paragraph (m)(4)
(iii) of this section, the contributing part-
nership will then use the amount deter-
mined under the formula in paragraph (m)
(4)(ii)(B) to compute the portion of mod-
ified basis that is allocable to the portion
of the real property with respect to which
the qualified conservation contribution is
made.
(B) Formulaic rule. The rule of this
paragraph (m)(4)(ii) is also expressed in
the following formula:
Figure 3 to Paragraph (m)(4)(ii)(B)
G = M × (U ÷ (J + U))
Where:
G = The portion of the ultimate mem-
ber’s modified basis that is allocable to
the upper-tier partnership’s interest in the
contributing partnership.
M = Modified basis as determined
under paragraph (l) of this section.
J = Ultimate member’s portion of
the adjusted basis in all the upper-tier
partnership’s properties (other than the
upper-tier partnership’s interest in the
contributing partnership), determined by
apportioning among the partners of the
upper-tier partnership in accordance with
their interests in the partnership under
section 704(b) its adjusted basis in each
of its properties (other than the upper-tier
partnership’s interest in the contributing
partnership), using the adjusted bases
immediately before the qualified conser-
vation contribution, without duplication
or omission of any property, and by treat-
ing the adjusted basis in each property as
not less than zero.
U = Ultimate member’s share of the
upper-tier partnership’s adjusted basis in
its interest in the contributing partnership,
determined according to the following
formula: H × (B ÷ K).
H = Upper-tier partnership’s adjusted
basis in its interest in the contributing
partnership.
B = Ultimate member’s distribu-
tive share of the qualified conservation
contribution.
K = Upper-tier partnership’s allocated
portion of the qualified conservation
contribution.
(iii) Contributing partnership—(A)
Narrative rule. After completion of the
computations under paragraph (m)(4)(ii)
of this section, the contributing partner-
ship must determine the portion of the
amount determined under item G (see
paragraph (m)(4)(ii)(B) of this section)
with respect to each ultimate member
that is allocable to the portion of the
real property with respect to which the
qualified conservation contribution is
made. This determination must be done
in accordance with the principles of para-
graph (m)(2) of this section, and the for-
mula provided in paragraph (m)(4)(iii)
(B) of this section.
(B) Formulaic rule. The rule of this
paragraph (m)(4)(iii) is also expressed in
the following formula:
Figure 5 to Paragraph (m)(4)(iii)(B)
R = G × (V ÷ (L + V))
Where:
R = Relevant basis.
G = Amount determined with respect
to item G as described under paragraph
(m)(4)(ii)(B) of this section.
L = Upper-tier partnership’s portion
of adjusted basis in all the contributing
partnership’s properties (other than the
portion of the real property with respect

Bulletin No. 2023–49 1355 December 4, 2023
to which the qualified conservation contri-
bution is made), determined by apportion-
ing among the partners of the contributing
partnership in accordance with their inter-
ests in the partnership under section 704(b)
its adjusted basis in each of its properties
(except the interest in the contributing
partnership), using the adjusted bases
immediately before the qualified conser-
vation contribution, without duplication
or omission of any property, and by treat-
ing the adjusted basis in each property as
not less than zero.
V = Upper-tier partnership’s share of
the contributing partnership’s adjusted
basis in the portion of the real property
with respect to which the qualified conser-
vation contribution is made, determined
according to the following formula: A ×
(K ÷ C).
A = Contributing partnership’s adjusted
basis in the portion of the real property
with respect to which the qualified conser-
vation contribution is made.
K = Upper-tier partnership’s allocated
portion of the qualified conservation
contribution.
C = Total amount of the contribut-
ing partnership’s qualified conservation
contribution.
(5) Determination of relevant basis for
an ultimate member holding a direct inter-
est in an upper-tier S corporation—(i) In
general. This paragraph (m)(5) applies in
the case of an ultimate member holding
a direct interest in an upper-tier S cor-
poration. Each such ultimate member’s
modified basis must be traced through the
upper-tier S corporation and any upper-
tier partnerships to the contributing part-
nership, and the contributing partnership
must determine the relevant basis. This
involves a multi-step process under which,
beginning with the upper-tier S corpora-
tion, the upper-tier S corporation and any
upper-tier partnerships must perform cal-
culations, and then finally the contributing
partnership must use those calculations to
compute the ultimate member’s relevant
basis. For simplicity, this paragraph (m)
(5) describes a situation in which there are
two tiers—a contributing partnership and
an upper-tier S corporation. In a situation
involving more tiers, each partnership and
the upper-tier S corporation must apply
the rules and principles of this paragraph
(m) iteratively to determine relevant basis.
(ii) Upper-tier S corporation—(A)
Narrative rule. The upper-tier S corpora-
tion must determine the portion of each
ultimate member’s modified basis that is
allocable to the upper-tier S corporation’s
interest in the partnership in which it holds
a direct interest (in a situation involving
only two tiers, that will be the contribut-
ing partnership). This determination must
be done in accordance with the principles
of paragraph (m)(3) of this section, and
the formula provided in paragraph (m)(5)
(ii)(B) of this section. In other words, the
formula provided in paragraph (m)(5)(ii)
(B) is similar to the formula provided in
paragraph (m)(3)(ii) of this section, except
that, instead of determining the portion
of modified basis that is allocable to the
portion of the real property with respect
to which the qualified conservation con-
tribution is made, the formula in para-
graph (m)(5)(ii)(B) determines the portion
of modified basis that is allocable to the
upper-tier S corporation’s interest in the
next lower-tier partnership. As explained
in paragraph (m)(5)(iii) of this section, the
contributing partnership will then use the
amount determined under the formula in
paragraph (m)(5)(ii)(B) to compute the
portion of modified basis that is allocable
to the portion of the real property with
respect to which the qualified conserva-
tion contribution is made.
(B) Formulaic rule. The rule of this
paragraph (m)(5)(ii) is also expressed in
the following formula:
Figure 6 to Paragraph (m)(5)(ii)(B)
N = M × (P ÷ Q)
Where:
N = Portion of the ultimate member’s
modified basis that is allocable to the
upper-tier S corporation’s interest in the
contributing partnership.
M = Modified basis as determined
under paragraph (l) of this section.
P = Ultimate member’s pro rata portion
of the upper-tier S corporation’s adjusted
basis in its interest in the contributing
partnership.
Q = Ultimate member’s pro rata por-
tion of the adjusted basis in all the upper-
tier S corporation’s properties (including
the upper-tier S corporation’s adjusted
basis in its interest in the contributing
partnership).
(iii) Contributing partnership—(A)
Narrative rule. After completion of the
computations under paragraph (m)(5)(ii)
of this section, the contributing partner-
ship must determine the portion of the
amount determined under item N (see
paragraph (m)(5)(ii)(B) of this section)
with respect to each ultimate member that
is allocable to the portion of the real prop-
erty with respect to which the qualified
conservation contribution is made. This
determination must be done in accordance
with the principles of paragraph (m)(2) of
this section, and the formula provided in
paragraph (m)(5)(iii)(B) of this section.
(B) Formulaic rule. The rule of this
paragraph (m)(5)(iii) is also expressed in
the following formula:
Figure 7 to Paragraph (m)(5)(iii)(B)
R = N × (W ÷ (S + W))
Where:
R = Relevant basis.
N = Amount determined with respect
to item N as described under paragraph
(m)(5)(ii)(B) of this section.
S = Upper-tier S corporation’s por-
tion of the adjusted basis in all the con-
tributing partnership’s properties (other
than the portion of the real property with
respect to which the qualified conserva-
tion contribution is made), determined by
apportioning among the partners of the
contributing partnership in accordance
with their interests in the partnership
under section 704(b) its adjusted basis in
each of its properties (other than the por-
tion of the real property with respect to
which the qualified conservation contri-
bution is made), using the adjusted bases
immediately before the qualified conser-
vation contribution, without duplication
or omission of any property, and by treat-
ing the adjusted basis in each property as
not less than zero.
W = Upper-tier S corporation’s share
of the contributing partnership’s adjusted
basis in the portion of the real property
with respect to which the qualified conser-
vation contribution is made, determined
according to the following formula: A ×
(Y ÷ C).
A = Contributing partnership’s adjusted
basis in the portion of the real property
with respect to which the qualified conser-
vation contribution is made.

December 4, 2023 1356 Bulletin No. 2023–49
Y = Upper-tier S corporation’s allo-
cated portion of the qualified conservation
contribution.
C = Total amount of the contribut-
ing partnership’s qualified conservation
contribution.
(6) Recordkeeping requirements.
Contributing partnerships, contributing
S corporations, upper-tier partnerships,
and upper-tier S corporations must main-
tain dated, written statements in their
books and records, by the due date, includ-
ing extensions, of their Federal income
tax returns, substantiating the computa-
tion of each ultimate member’s adjusted
basis, modified basis, and relevant basis.
See §1.6001-1. These statements need not
be maintained (nor does modified basis
or relevant basis need to be computed)
with respect to contributions that meet an
exception in paragraph (n)(2) or (3) of this
section.
(7) Examples. The following examples
illustrate the provisions of this paragraph
(m). For the three examples in this para-
graph (m)(7), assume that the partnership
allocations comply with the rules of sub-
chapter K of chapter 1 of the Code and the
exceptions in paragraph (n) of this section
do not apply.
(i) Example 1—(A) Facts. YZ Partnership is a
partnership for Federal income tax purposes whose
partners are individuals Y and Z. YZ Partnership
owns 100 acres of real property with an adjusted basis
of $10X. YZ Partnership makes a qualified conser-
vation contribution on 60 acres of the property. YZ
Partnership claims a contribution of $18X, which it
allocates $12X to Y and $6X to Z. YZ Partnership’s
adjusted basis in the 60 acres is $6X, and its adjusted
basis in all of its other properties (including its $4X
basis in the 40 acres on which a qualified conserva-
tion contribution was not made) is $18X. Y’s mod-
ified basis is $8X. Y’s portion of YZ Partnership’s
adjusted basis in all partnership property (other than
the 60 acres) as determined in accordance with Y’s
interest in YZ Partnership is $4X. Z’s modified basis
is $12X. Z’s portion of YZ Partnership’s adjusted
basis in all partnership property (other than the 60
acres) as determined in accordance with Z’s interest
in YZ Partnership is $14X.
(B) General analysis. Y and Z are the ultimate
members of YZ Partnership because they each
receive a distributive share of the qualified conser-
vation contribution and are not partnerships or S cor-
porations. Their relevant bases must be determined
according to the following formula:
Figure 8 to Paragraph (m)(7)(i)(B)
R = M × (T ÷ (D + T))
Where:
R = Relevant basis.
M = Modified basis as determined under para-
graph (l) of this section.
D = Ultimate member’s portion of the adjusted
basis in all of the contributing partnership’s proper-
ties (other than the portion of the real property with
respect to which the qualified conservation contribu-
tion is made).
T = Ultimate member’s share of the contributing
partnership’s adjusted basis in the portion of the real
property with respect to which the qualified conser-
vation contribution is made, determined according to
the following formula: A × (B ÷ C).
A = Contributing partnership’s adjusted basis in
the portion of the real property with respect to which
the qualified conservation contribution is made.
B = Ultimate member’s distributive share of the
qualified conservation contribution.
C = Total amount of the contributing partner-
ship’s qualified conservation contribution.
(C) Y’s relevant basis. With respect to Y:
(1) M = $8X.
(2) D = $4X.
(3) A = $6X.
(4) B = $12X.
(5) C = $18X.
(6) Thus, T is $4X = $6X × ($12X ÷ $18X).
(7) Accordingly, Y’s relevant basis is $4X = $8X
× ($4X ÷ ($4X + $4X)).
(D) Z’s relevant basis. With respect to Z:
(1) M = $12X.
(2) D = $14X.
(3) A = $6X.
(4) B = $6X.
(5) C = $18X.
(6) Thus, T is $2X = $6X × ($6X ÷ $18X).
(7) Accordingly, Z’s relevant basis is $1.5X =
$12X × ($2X ÷ ($14X + $2X)).
(E) Sum of relevant bases. The amount of YZ
Partnership’s claimed contribution is $18X, which
exceeds 2.5 times the sum of Y’s and Z’s relevant
bases, which is $13.75X ($13.75X = 2.5 x (Y’s rel-
evant basis of $4X + Z’s relevant basis of $1.5X)).
Accordingly, YZ Partnership’s contribution is a
disallowed qualified conservation contribution. No
person may claim any deduction with respect to this
contribution.
(ii) Example 2—(A) Facts. CD Inc. is an S cor-
poration with shareholders C and D, each of whom is
an individual that is not a nonresident alien. C owns
one third of the outstanding stock in CD Inc., and D
owns the remaining two thirds. CD Inc. owns 100
acres of real property with an adjusted basis of $10X.
CD Inc. makes a qualified conservation contribution
on 60 acres of the property. CD Inc. claims a contri-
bution of $9X, which it allocates $3X to C and $6X to
D. CD Inc.’s adjusted basis in the 60 acres is $6X, and
its adjusted basis in all its properties (including its $6X
basis in the 60 acres) is $24X. C’s modified basis in
CD Inc. is $8X. D’s modified basis in CD Inc. is $12X.
(B) General analysis. C and D are the ultimate
members of CD Inc. because they each receive a pro
rata share of the qualified conservation contribution
and are not partnerships or S corporations. Their
relevant bases must be determined according to the
following formula:
Figure 9 to Paragraph (m)(7)(ii)(B)
R = M × (E ÷ F)
Where:
R = Relevant basis.
M = Modified basis as determined under para-
graph (l) of this section.
E = Ultimate member’s pro rata portion of the
contributing S corporation’s adjusted basis in the
portion of the real property with respect to which the
qualified conservation contribution is made.
F = Ultimate member’s pro rata portion of the
adjusted basis in all the contributing S corporation’s
properties (including the portion of the real property
with respect to which the qualified conservation con-
tribution is made).
(C) C’s relevant basis. With respect to C:
(1) M = $8X.
(2) E = $2X (1/3 of $6X).
(3) F = $8X (1/3 of $24X).
(4) Thus, C’s relevant basis is $2X = $8X × ($2X
÷ $8X).
(D) D’s relevant basis. With respect to D:
(1) M = $12X.
(2) E = $4X (2/3 of $6X).
(3) F = $16X (2/3 of $24X).
(4) Thus, D’s relevant basis is $3X = $12X ×
($4X ÷ $16X).
(E) Sum of relevant bases. The amount of CD
Inc.’s claimed qualified conservation contribution is
$9X, which does not exceed 2.5 times the sum of C’s
and D’s relevant bases, which is $12.50 ($12.50X =
2.5 x (C’s relevant basis of $2X + D’s relevant basis
of $3X)). Accordingly, CD Inc.’s contribution is not
a disallowed qualified conservation contribution
(that is, is not disallowed by section 170(h)(7) and
paragraph (j) of this section).
(iii) Example 3—(A) Facts. LTP Partnership is a
partnership for Federal income tax purposes whose
partners are individual E and UTP Partnership, a
partnership for Federal income tax purposes. UTP
Partnership’s partners are C corporations P and Q.
LTP Partnership owns 300 acres of real property.
LTP Partnership makes a qualified conservation con-
tribution on all 300 acres. LTP Partnership claims a
qualified conservation contribution of $22X, which it
allocates $2X to E and $20X to UTP Partnership. UTP
Partnership allocates its $20X share of the qualified
conservation contribution $6X to P and $14X to Q.
LTP Partnership’s basis in the 300 acres is $18X, and
its adjusted basis in all of its other properties is $12X.
E’s modified basis in LTP Partnership is $4X. E’s por-
tion of LTP Partnership’s adjusted basis in all partner-
ship property (other than the 300 acres) as determined
in accordance with E’s interest in LTP Partnership
is $4.36X. UTP Partnership’s portion of LTP
Partnership’s adjusted basis in all partnership property
(other than the 300 acres) as determined in accordance
with UTP Partnership’s interest in LTP Partnership is
$7.64X. UTP Partnership’s adjusted basis in its inter-
est in LTP Partnership is $19, and its adjusted basis in
all other properties is $6X. P’s modified basis in UTP
Partnership is $12X. P’s portion of UTP Partnership’s
adjusted basis in all partnership property (other than
the interest in LTP Partnership) as determined in
accordance with P’s interest in UTP Partnership is
$3.6X. Q’s modified basis in UTP Partnership is $8X.
Q’s portion of UTP Partnership’s adjusted basis of all
partnership property (other than the interest in LTP
Partnership) as determined in accordance with Q’s
interest in UTP Partnership is $2.4X.

Bulletin No. 2023–49 1357 December 4, 2023
(B) Analysis: partner E. (1) The ultimate mem-
bers of LTP Partnership are E, P, and Q because they
each receive a distributive share of the qualified
conservation contribution and are not partnerships
or S corporations. Because E holds a direct interest
in LTP Partnership, E’s relevant basis must be deter-
mined in accordance with the following formula:
Figure 10 to Paragraph (m)(7)(iii)(B)(1)
R = M × (T ÷ (D + T))
Where:
R = Relevant basis.
M = Modified basis as determined under para-
graph (l) of this section.
D = Ultimate member’s portion of the adjusted
basis in all the contributing partnership’s proper-
ties (other than the portion of the real property with
respect to which the qualified conservation contribu-
tion is made).
T = Ultimate member’s share of the contributing
partnership’s adjusted basis in the portion of the real
property with respect to which the qualified conser-
vation contribution is made, determined according to
the following formula: A × (B ÷ C).
A = Contributing partnership’s adjusted basis in
the portion of the real property with respect to which
the qualified conservation contribution is made.
B = Ultimate member’s distributive share of the
qualified conservation contribution.
C = Total amount of the contributing partner-
ship’s qualified conservation contribution.
(2) With respect to E:
(i) M = $4X.
(ii) D = $4.36X.
(iii) A = $18X.
(iv) B = $2X.
(v) C = $22X.
(vi) Thus, T is $1.64X = $18X × ($2X ÷ $22X).
(vii) Accordingly, E’s relevant basis is $1.09X =
$4X × ($1.64X ÷ ($4.36X + $1.64X)).
(C) Analysis: General rule for UTP Partnership.
Because P and Q hold interests in an upper-tier
partnership, UTP Partnership must first determine
the portions of P’s and Q’s modified bases that
are allocable to UTP Partnership’s interest in LTP
Partnership. This is to be done according to the fol-
lowing formula:
Figure 11 to Paragraph (m)(7)(iii)(C)
G = M × (U ÷ (J + U))
Where:
G = The portion of the ultimate member’s mod-
ified basis that is allocable to the upper-tier partner-
ship’s interest in the contributing partnership.
M = Modified basis as determined under para-
graph (l) of this section.
J = Ultimate member’s portion of adjusted basis
in all the upper-tier partnership’s properties (other
than the upper-tier partnership’s interest in the con-
tributing partnership).
U = Ultimate member’s share of the upper-tier
partnership’s adjusted basis in its interest in the con-
tributing partnership, determined according to the
following formula: H × (B ÷ K).
H = Upper-tier partnership’s adjusted basis in its
interest in the contributing partnership.
B = Ultimate member’s distributive share of the
qualified conservation contribution.
K = Upper-tier partnership’s allocated portion of
the qualified conservation contribution.
(D) Analysis: Step 1 for P. With respect to P:
(1) M = $12X.
(2) J = $3.6X.
(3) H = $19X.
(4) B = $6X.
(5) K = $20X.
(6) Thus, U is $5.70X = $19X × ($6X ÷ $20X).
(7) Accordingly, the portion of P’s modified basis
that is allocable to UTP Partnership’s interest in LTP
Partnership is $7.35X = $12X × ($5.70X ÷ ($3.60X
+ $5.70X)).
(E) Analysis: Step 1 for Q. With respect to Q:
(1) M = $8X.
(2) J = $2.4X.
(3) H = $19X.
(4) B = $14X.
(5) K = $20X.
(6) Thus, U is $13.30X = $19X × ($14X ÷ $20X).
(7) Accordingly, the portion of Q’s modified
basis that is allocable to UTP Partnership’s interest
in LTP Partnership is $6.78X = $8X × ($13.30X ÷
($2.40X + $13.30X)).
(F) Analysis: General rule for LTP Partnership.
Next, LTP Partnership must determine P’s and Q’s
relevant bases, which equals the portions of the
amounts determined under paragraphs (m)(7)(iii)(D)
and (E) of this section (Example 3) that are alloca-
ble to the portion of the real property with respect
to which the qualified conservation contribution was
made. This must be done according to the following
formula:
Figure 12 to Paragraph (m)(7)(iii)(F)
R = G × (V ÷ (L + V))
Where:
R = Relevant basis.
G = Amount determined with respect to item G
under paragraph (m)(4)(ii)(B) of this section.
L = Upper-tier partnership’s portion of adjusted
basis in all the contributing partnership’s proper-
ties (other than the portion of the real property with
respect to which the qualified conservation contribu-
tion is made).
V = Upper-tier partnership’s share of the con-
tributing partnership’s adjusted basis in the por-
tion of the real property with respect to which the
qualified conservation contribution is made, deter-
mined according to the following formula: A × (K
÷ C).
A = Contributing partnership’s adjusted basis in
the portion of the real property with respect to which
the qualified conservation contribution is made.
K = Upper-tier partnership’s allocated portion of
the qualified conservation contribution.
C = Total amount of the contributing partner-
ship’s qualified conservation contribution.
(G) Analysis: Step 2 for P. With respect to P:
(1) G = $7.35X.
(2) L = $7.64X.
(3) A = $18X.
(4) K = $20X.
(5) C = $22X.
(6) Thus, V is $16.36X = $18X × ($20X ÷ $22X).
(7) Accordingly, P’s relevant basis is $5.01X =
$7.35X × ($16.36X ÷ ($7.64X + $16.36X)).
(H) Analysis: Step 2 for Q. With respect to Q:
(1) G = $6.78X.
(2) L = $7.64X.
(3) A = $18X.
(4) K = $20X.
(5) C = $22X.
(6) Thus, V is $16.36X = $18X × ($20X ÷ $22X).
(7) Accordingly, Q’s relevant basis is $4.62X =
$6.78X × ($16.36X ÷ ($7.64X + $16.36X)).
(I) Analysis: Computation of 2.5 times
sum of relevant bases. The ultimate mem-
bers of LTP Partnership are E, P, and Q.
The amount of LTP Partnership’s quali-
fied conservation contribution is $22X.
This does not exceed 2.5 times the sum
of each of the ultimate member’s relevant
basis, which totals $26.80 ($26.80 = 2.5
x (E’s relevant basis of 1.09X + P’s rele-
vant basis of $5.01X + Q’s relevant basis
of $4.62X)). Therefore, LTP Partnership’s
contribution is not a disallowed qualified
conservation contribution (that is, is not
disallowed by section 170(h)(7) and para-
graph (j) of this section). Because UTP
Partnership receives an allocated portion,
it must apply paragraphs (j) through (l)
of this section and this paragraph (m) to
determine whether its allocated portion
is a disallowed qualified conservation
contribution. The ultimate members of
UTP Partnership are P and Q. The amount
of UTP Partnership’s allocated portion
of LTP Partnership’s qualified conser-
vation contribution is $20X. This does
not exceed 2.5 times the sum of P’s and
Q’s relevant bases, which is $24.08X
($24.08X = 2.5 x (P’s relevant basis of
$5.01X + Q’s relevant basis of $4.62X)).
Therefore, UTP Partnership’s allocated
portion of LTP Partnership’s contribution
is not a disallowed qualified conservation
contribution (that is, is not disallowed by
section 170(h)(7) and paragraph (j) of this
section).
(n) Exceptions—(1) In general.
Paragraph (j) of this section does not
apply to any qualified conservation con-
tribution that satisfies one or more of the
three exceptions in this paragraph (n).
However, as provided in paragraph (j)
(5) of this section, there is no presump-
tion that such a contribution is compli-
ant with section 170, any other section of
the Code, or the regulations in this part
or any other guidance. Being described
in this paragraph (n) is not a safe har-
bor for purposes of any other provision

December 4, 2023 1358 Bulletin No. 2023–49
of law or with respect to the value of the
contribution. Such transactions are sub-
ject to adjustment or disallowance for
any other reason, including failure to
satisfy other requirements of section 170
and overvaluation of the contribution. In
addition, taxpayers who engage in such
transactions may be required to disclose
under §1.6011-4 the transactions as listed
transactions.
(2) Exception for contributions outside
three-year holding period—(i) In general.
Paragraph (j) of this section does not apply
to any qualified conservation contribution
by a contributing partnership or contribut-
ing S corporation made at least three years
after the latest of—
(A) The last date on which the contrib-
uting partnership or contributing S cor-
poration acquired any portion of the real
property with respect to which such quali-
fied conservation contribution is made;
(B) The last date on which any partner
in the contributing partnership or share-
holder in the contributing S corporation
acquired any interest in such partnership
or S corporation; and
(C) If the interest in the contributing
partnership is held through one or more
upper-tier partnerships or upper-tier S
corporations—
(1) The last date on which any such
upper-tier partnership or upper-tier
S corporation acquired any interest in
the contributing partnership or any other
upper-tier partnership; and
(2) The last date on which any part-
ner or shareholder in any such upper-tier
partnership or upper-tier S corporation
acquired any interest in such upper-tier
partnership or upper-tier S corporation.
(ii) Acquisition of partnership interest.
For purposes of this paragraph (n)(2), an
acquisition of any interest in a partner-
ship is any variation within the meaning
of that term in §1.706-4(a)(1); however,
a variation does not include a change in
allocations that satisfies the requirements
of §1.706-4(b)(1).
(iii) Acquisition of interest in an S cor-
poration. For purposes of this paragraph
(n)(2), an acquisition of any interest in an
S corporation is any transfer, issuance,
redemption, or other disposition of stock
in the S corporation; however, an acqui-
sition does not include any issuance or
redemption involving all shareholders that
does not affect the proportionate owner-
ship of any shareholder.
(iv) Exception is determined at the
level of the contributing partnership or
contributing S corporation. If the con-
tributing partnership or contributing S
corporation does not satisfy the require-
ments of this paragraph (n)(2), then this
paragraph (n)(2) will not apply to any
person who receives a distributive share
or pro rata share of the qualified conserva-
tion contribution (including an upper-tier
partnership or upper-tier S corporation),
regardless of whether the person receiving
such distributive share or pro rata share
would have satisfied the requirements of
this paragraph (n)(2) if the person had
been the one to make the qualified conser-
vation contribution.
(v) Examples. The following examples
illustrate the provisions of this paragraph
(n)(2). For the two examples in this para-
graph (n)(2)(v), assume that the excep-
tions in paragraphs (n)(3) and (4) of this
section do not apply.
(A) Example 1—(1) Facts. ABC Partnership is a
partnership for Federal income tax purposes. Since
2015, ABC Partnership’s partners have been A, an
individual, and BC Inc., an S corporation. Since
2015, BC Inc.’s shareholders have been B and C,
each of whom is an individual that is not a nonresi-
dent alien. On December 27, 2024, ABC partnership
acquires real property. On August 29, 2025, BC Inc.
redeems half of B’s shares in BC Inc. On December
28, 2027, ABC Partnership makes a qualified conser-
vation contribution.
(2) Analysis. Pursuant to paragraph (n)(2)(iii)
of this section, BC Inc.’s redemption of some of
B’s shares is treated as an acquisition of an inter-
est in BC Inc. for purposes of this paragraph (n)
(2). Accordingly, ABC Partnership’s contribution
occurred less than three years after the latest acqui-
sition of an interest in a partnership or S corporation
that held an interest in ABC Partnership, the con-
tributing partnership. Therefore, ABC Partnership’s
contribution fails to satisfy the requirements of this
paragraph (n)(2) and must apply the provisions of
paragraphs (j) through (m) of this section to deter-
mine whether the contribution is a disallowed quali-
fied conservation contribution.
(B) Example 2—(1) Facts. LTP partnership is a
partnership for Federal income tax purposes. Since
2017, LTP Partnership’s partners have been UTP
Partnership, a partnership for Federal income tax
purposes, and FG Inc., an S corporation. Since 2018,
UTP Partnership’s partners have been individuals
D and E, and there has been no variation in their
ownership. Since 2019, FG Inc.’s shareholders have
been F and G, each of whom is an individual that
is not a nonresident alien. On March 15, 2024, LTP
Partnership acquires real property. On September
15, 2026, D dies and D’s interest in UTP Partnership
passes to D’s estate. On March 18, 2027, LTP
Partnership makes a qualified conservation contri-
bution. LTP Partnership allocates all of the qualified
conservation contribution to FG Inc.
(2) Analysis. Pursuant to paragraph (n)(2)(ii)
of this section, the transfer of D’s interest in UTP
Partnership to D’s estate is treated as an acquisi-
tion of an interest in UTP Partnership for purposes
of paragraph (n)(2) of this section. Accordingly,
LTP Partnership’s contribution occurred less than
three years after the latest acquisition of an inter-
est in a partnership or S corporation that held an
interest in LTP Partnership, the contributing part-
nership. Therefore, LTP Partnership’s contribution
fails to satisfy the requirement of this paragraph
(n)(2). Pursuant to paragraph (n)(2)(iv) of this
section, FG Inc. cannot avail itself of this para-
graph (n)(2) with respect to its allocated portion of
LTP Partnership’s contribution. Accordingly, FG
Inc. must apply the provisions of paragraphs (j)
through (m) of this section to determine whether
its allocated portion is a disallowed qualified con-
servation contribution.
(3) Exception for family partnerships
and S corporations—(i) General rule.
Paragraph (j) of this section does not apply
with respect to any qualified conservation
contribution made by a contributing part-
nership or contributing S corporation if
at least 90 percent of the interests in the
contributing partnership or contributing S
corporation are held by an individual and
members of the family of such individual,
and the contributing partnership or con-
tributing S corporation meets the require-
ments of this paragraph (n)(3).
(ii) Ninety percent of the interests—(A)
Family partnerships. In the case of a con-
tributing partnership, at least 90 percent of
the interests in the contributing partnership
are held by an individual and members of
the family of such individual if, at the time
of the qualified conservation contribution,
at least 90 percent of the interests in capi-
tal and profits in such partnership are held,
directly or indirectly, by an individual and
members of the family of such individual.
(B) Family S corporations. In the case
of a contributing S corporation, at least 90
percent of the interests in the contributing
S corporation are held by an individual
and members of the family of such indi-
vidual if, at the time of the qualified con-
servation contribution, at least 90 percent
of the total value and at least 90 percent of
the total voting power of the outstanding
stock in such S corporation are held by an
individual and members of the family of
such individual.
(iii) Members of the family. For pur-
poses of this paragraph (n)(3), the term

Bulletin No. 2023–49 1359 December 4, 2023
members of the family means, with respect
to any individual—
(A) The spouse of such individual; and
(B) Any individual who bears a
relationship to such individual that is
described in section 152(d)(2)(A) through
(G) of the Code.
(iv) Anti-abuse rules—(A) Holding
period. This paragraph (n)(3) does not
apply unless at least 90 percent of the
interests in the property with respect to
which the qualified conservation contri-
bution was made were owned, directly or
indirectly, by one individual and mem-
bers of the family of that individual for
at least one year prior to the date of the
contribution. The members of the family
during that year need not be the same
members of the family that own an inter-
est at the time of the qualified conserva-
tion contribution; however, at least one
individual must own an interest for the
entire year, and at least 90 percent of the
interests in the property must be owned,
directly or indirectly, during that year by
that individual and members of that indi-
vidual’s family.
(B) Allocations. This paragraph (n)(3)
does not apply unless at least 90 percent
of the qualified conservation contribution
is allocated to the individual and all mem-
bers of the family who own at least 90
percent of the interests in the contributing
partnership or contributing S corporation
under paragraph (n)(3)(ii) of this section.
(v) Exception is determined at the level
of the contributing partnership or contrib-
uting S corporation. If the contributing
partnership or contributing S corporation
satisfies the requirements of this para-
graph (n)(3), then any upper-tier partner-
ship or upper-tier S corporation need not
apply paragraphs (j) through (m) of this
section and this paragraph (n) to its allo-
cated portions of such contribution. If the
contributing partnership or contributing
S corporation does not satisfy the require-
ments of this paragraph (n)(3), then the
exception in this paragraph (n)(3) will not
apply to any person who receives a distrib-
utive share or pro rata share of the quali-
fied conservation contribution (including
an upper-tier partnership or upper-tier S
corporation), regardless of whether the
person receiving such distributive share
or pro rata share would have satisfied the
requirements of this paragraph (n)(3) if
the person had been the one to make the
contribution.
(vi) Examples. The following examples
illustrate the provisions of this paragraph
(n)(3). For the two examples in this para-
graph (n)(3)(vi), assume that the excep-
tions in paragraphs (n)(2) and (4) of this
section do not apply.
(A) Example 1—(1) Facts. Individual A and A’s
sibling B acquire real property on July 5, 2024. On
September 14, 2024, B transfers its interest in the
real property to B’s child C. On February 21, 2025,
A and C transfer their interests in the real property
to AC Partnership, a partnership for Federal income
tax purposes whose only partners are A and C. On
March 18, 2025, A’s stepfather D becomes a partner
in AC Partnership in exchange for a capital contri-
bution. On September 15, 2025, AC Partnership
makes a qualified conservation contribution on the
real property. AC Partnership never had any partners
other than A, C, and D.
(2) Analysis. B, C, and D qualify as members of
the family with respect to A. Accordingly, as of the
time of the qualified conservation contribution, at
least 90 percent of the interests in capital and profits
of AC Partnership were owned by an individual and
members of that individual’s family. In addition, at
least 90 percent of the interests in the property with
respect to which the qualified conservation contribu-
tion was made were owned, directly and indirectly,
by A and members of A’s family for at least one year
prior to the date of the contribution. Moreover, at
least 90 percent of the contribution is allocated to A
and members of A’s family. Accordingly, the require-
ments of this paragraph (n)(3) are satisfied, and the
Disallowance Rule in section 170(h)(7)(A) and para-
graph (j) of this section does not apply.
(B) Example 2—(1) Facts. LTP Partnership is a
partnership for Federal income tax purposes whose
partners are EF Inc., an S corporation, and UTP
Partnership, a partnership for Federal income tax
purposes. EF Inc. and UTP Partnership each hold a
50 percent interest in the profits and capital of LTP
Partnership. The shareholders of EF Inc. are E and
E’s sibling F. The partners of UTP Partnership are G
and G’s child H. E and F are not related to G and H.
LTP Partnership has held real property since 2019.
On July 5, 2024, LTP Partnership distributes half
of the acres of its real property to EF Inc., and the
remaining acres to UTP Partnership. On October 21,
2024, EF Inc., makes a qualified conservation con-
tribution on the real property it received from LTP
Partnership.
(2) Analysis. F qualifies as a member of the
family with respect to E. Accordingly, as of the
time of EF Inc.’s qualified conservation contribu-
tion, EF Inc. was owned at least 90 percent by an
individual and members of that individual’s family.
In addition, at least 90 percent of EF Inc’s quali-
fied conservation contribution is allocated to E and
members of E’s family. However, E and members
of E’s family failed to own at least 90 percent of
the property with respect to which the qualified
conservation contribution was made for at least
one year prior to the date of the contribution. In
particular, G and H (who are not members of the
family with respect to E or F) indirectly owned a 50
percent interest in the property until July 5, 2024.
Accordingly, the requirements of this paragraph (n)
(3) are not satisfied. EF Inc. must apply the provi-
sions of paragraphs (j) through (m) of this section to
determine whether the contribution is a disallowed
qualified conservation contribution.
(4) Exception for contributions to
preserve certified historic structures.
Paragraph (j) of this section does not
apply to any qualified conservation contri-
bution the conservation purpose of which
is the preservation of any building that is
a certified historic structure (as defined in
section 170(h)(4)(C)). See §1.170A-16(f)
(6) for special reporting requirements for
a contribution that meets the exception in
this paragraph (n)(4).
(o) Applicability dates—(1) In gen-
eral. Except as provided in paragraphs
(g)(4)(ii), (i), and (o)(2) of this section,
paragraphs (a) through (i) of this section
apply only to contributions made on or
after December 18, 1980. Paragraphs (j)
through (n) of this section apply to con-
tributions made after December 29, 2022.
(2) Exception. Paragraph (h)(4)(ii) of
this section applies on and after June 1,
2023.
Par. 3. Section 1.170A-16 is amended
by:
1. In paragraph (c)(3)(iv)(F), adding
the word “and” at the end of the paragraph;
2. In paragraph (c)(3)(iv)(G), remov-
ing the language “and” at the end of the
paragraph;
3. Redesignating paragraph (c)(3)(v) as
paragraph (c)(3)(vi) and adding new para-
graph (c)(3)(v);
4. In paragraph (d)(3)(vii), remov-
ing the language “and” at the end of the
paragraph;
5. Redesignating paragraph (d)(3)(viii)
as paragraph (d)(3)(x) and adding new
paragraph (d)(3)(viii);
6. Adding paragraph (d)(3)(ix);
7. Revising paragraph (f)(4);
8. Adding paragraph (f)(6);
9. Revising paragraph (g).
The additions and revisions read as
follows:
§1.170A-16 Substantiation and
reporting requirements for noncash
charitable contributions.
* * * * *
(c) * * *
(3) * * *

December 4, 2023 1360 Bulletin No. 2023–49
(v) Where a number can be inserted
into any box on Form 8283 (Section A),
the number inserted in the box on Form
8283 (Section A). Alternatively, taxpay-
ers may attach a statement to the Form
8283 explaining why a number cannot be
inserted. Nothing in this paragraph (c)(3)
(v) precludes a taxpayer from both insert-
ing the number in the appropriate box on
Form 8283 (Section A) and including an
attached statement explaining any addi-
tional information regarding the number.
Taxpayers may not respond to a request
for information on Form 8283 (Section
A) with nonresponsive responses, for
example, by indicating that the requested
information is available upon request or
will be provided upon request. The inclu-
sion of such nonresponsive language in
response to a request for information on
Form 8283 (Section A) may be treated by
the IRS as being an incomplete filing of
Form 8283; and
* * * * *
(d) * * *
(3) * * *
(viii) In the case of a partnership or S
corporation that makes a qualified conser-
vation contribution, the sum of each ulti-
mate member’s relevant bases, computed
in accordance with §1.170A-14(j) through
(m), but only:
(A) For contributions described in
section 170(h)(7)(E) and §1.170A-14(n)
(4) (for contributions to preserve certified
historic structures), regardless of whether
they are also described in section 170(h)
(7)(C) and §1.170A-14(n)(2) (for contri-
butions made outside of the three-year
holding period) and/or section 170(h)(7)
(D) and §1.170A-14(n)(3) (for contribu-
tions made by certain family partnerships
or S corporations); and
(B) For all contributions not described
in section 170(h)(7)(E) and §1.170A-14(n)
(4), provided they are not described in
section 170(h)(7)(C) and §1.170A-14(n)
(2) (for contributions made outside of the
three-year holding period) and/or section
170(h)(7)(D) and §1.170A-14(n)(3) (for
contributions made by certain family part-
nerships or S corporations);
(ix) Where a number can be inserted
into any box on Form 8283 (Section B),
the number inserted in the box on Form
8283 (Section B). Alternatively, taxpay-
ers may attach a statement to the Form
8283 explaining why a number cannot be
inserted. Nothing in this paragraph (d)(3)
(ix) precludes a taxpayer from both insert-
ing the number in the appropriate box on
Form 8283 (Section B) and including an
attached statement explaining any addi-
tional information regarding the number.
Taxpayers may not respond to a request
for information on Form 8283 (Section
B) with nonresponsive responses, for
example, by indicating that the requested
information is available upon request or
will be provided upon request. The inclu-
sion of such nonresponsive language in
response to a request for information on
Form 8283 (Section B) may be treated by
the IRS as being an incomplete filing of
Form 8283; and
* * * * *
(f) * * *
(4) Partners and S corporation share-
holders
—(i) Form 8283 (Section A or
Section B) must be provided to partners
and S corporation shareholders. If the
donor is a partnership or an S corporation,
the donor must provide a copy of its com-
pleted Form 8283 (Section A or Section
B) to every partner or shareholder who
receives an allocation of a charitable con-
tribution under section 170 for the prop-
erty described in Form 8283 (Section A or
Section B). Similarly, a recipient partner
that is a partnership or S corporation must
provide a copy of the donor’s completed
Form 8283 (Section A or Section B) to
each of its partners or shareholders who
receives an allocation of the charitable
contribution, and so on through any addi-
tional tiers.
(ii) Partners and S corporation
shareholders must attach Forms 8283
(Section A or Section B) to return. A
partner of a partnership or shareholder
of an S corporation who receives an
allocation of a charitable contribution
under section 170 for property to which
paragraph (c), (d), or (e) of this sec-
tion applies must attach to the return
on which the contribution is claimed a
copy of each Form 8283 that must be
provided to them under paragraph (f)(4)
(i) or (iii) of this section.
(iii) Partners and S corporation
shareholders must file separate Forms
8283 and provide copies to any part-
ners—(A) In general. Subject to para-
graph (f)(4)(iii)(B) of this section, every
partner of a partnership (including a
partner that is itself a partnership or S
corporation) or shareholder of an S cor-
poration that receives an allocation of
a charitable contribution under section
170 for which paragraph (c), (d), or (e)
of this section applies must complete
a separate Form 8283 with any infor-
mation required by Form 8283 and the
instructions to Form 8283. In the case
of a partner that is itself a partnership
or S corporation, that partnership or
S corporation must provide a copy of its
completed separate Form 8283 to every
partner or shareholder who receives an
allocation of the charitable contribution,
and so on through any additional tiers.
The partner or shareholder must attach
its separate Form 8283 to the return on
which the contribution is claimed, in
addition to the copy of each Form 8283
that the partner or shareholder is required
to attach pursuant to paragraph (f)(4)(ii)
of this section.
(B) Conservation contributions. The
terms defined in §1.170A-14(j)(3) apply
for purposes of this paragraph (f)(4)(iii)
(B). In the case of a qualified conservation
contribution that is made by a partnership
or S corporation, an ultimate member’s
separate Form 8283 must include their
own relevant basis. An upper-tier part-
nership’s or upper-tier S corporation’s
separate Form 8283 must include the
sum of each of its ultimate member’s rel-
evant bases (as computed in accordance
with §1.170A-14(j) through (m)). This
paragraph (f)(4)(iii)(B) does not apply to
contributions described in section 170(h)
(7)(C) and §1.170A-14(n)(2) (for contri-
butions made outside of the three-year
holding period) or section 170(h)(7)(D)
and §1.170A-14(n)(3) (for contributions
made by certain family partnerships or
S corporations), provided that they are
not also described in section 170(h)(7)(E)
and §1.170A-14(n)(4) (for contributions
to preserve certified historic structures),
in which case this paragraph (f)(4)(iii)(B)
does apply.
* * * * *
(6) Conservation contributions by
pass-through entities preserving certified
historic structures—(i) In general. The
terms defined in §1.170A-14(j)(3) apply
for purposes of this paragraph (f)(6). For
any contribution described in paragraph

Bulletin No. 2023–49 1361 December 4, 2023
(f)(6)(ii) of this section, pursuant to sec-
tion 170(f)(19), no deduction is allowed
under section 170 or any other provision
of the Code under which deductions are
allowable to pass-through entities with
respect to such contribution unless the
contributing partnership, the contribut-
ing S corporation, the upper-tier part-
nership, or the upper-tier S corporation,
respectively—
(A) Includes on its return for the tax-
able year in which the contribution is
made a statement that it made such a con-
tribution or received such allocated por-
tion, as described in paragraph (f)(6)(iii)
of this section; and
(B) Provides such information about
the contribution as the Secretary may
require in guidance, forms, or instructions.
(ii) Contributions to which this para-
graph (f)(6) applies. This paragraph (f)(6)
applies to any qualified conservation con-
tribution (as defined in section 170(h)(1)
and §1.170A-14):
(A) The conservation purpose of which
is preservation of a building that is a cer-
tified historic structure (as defined in sec-
tion 170(h)(4)(C));
(B) That is either made by a contrib-
uting partnership or contributing S cor-
poration (as defined in §1.170A-14(j)
(3)(iv)), or that is an allocated por-
tion (as defined in §1.170A-14(j)(3)
(i)) of an upper-tier partnership (as
defined in §1.170A-14(j)(3)(xi)) or
upper-tier S corporation (as defined in
§1.170A-14(j)(3)(xii)); and
(C) The amount of such contribu-
tion (as defined in §1.170A-14(j)(3)(ii))
or such allocated portion (as defined in
§1.170A-14(j)(3)(i)) exceeds 2.5 times the
sum of each ultimate member’s relevant
basis (as defined in §1.170A-14(j) through
(m)).
(iii) Required information. A part-
nership or S corporation satisfies the
requirements of section 170(f)(19)(A) and
paragraph (f)(6)(i) of this section by filing
a completed Form 8283, including infor-
mation about relevant basis, in accordance
with section 170, the regulations under
section 170, and the instructions to Form
8283.
(g) Applicability dates—(1) In general.
Except as provided in paragraph (g)(2) of
this section, this section applies to contri-
butions made after July 30, 2018.
(2) Certain paragraphs. Paragraphs
(c)(3)(vi), (d)(3)(viii) and (x), and (f)(4)
and (6) of this section apply to taxable
years ending on or after November 20,
2023.
Par. 4. Section 1.706-0 is amended by
revising the entry for §1.706-3 to read as
follows:
§1.706-0 Table of contents.
* * * * *
§1.706–3 Items attributable to interest in
lower-tier partnership.
(a) Conservation contributions.
(b) Applicability date.
* * * * *
Par. 5. Section 1.706-3 is revised to
read as follows:
§1.706-3 Items attributable to interest
in lower-tier partnership.
(a) Conservation contributions. For
purposes of section 706(d)(3), in the
case of a qualified conservation contribu-
tion (as defined in section 170(h)(1) and
§1.170A-14(a) without regard to whether
such contribution is a disallowed quali-
fied conservation contribution within the
meaning of §1.170A-14(j)(3)(vii)) by a
partnership that is allocated to an upper-
tier partnership, the upper-tier partnership
must allocate the contribution among its
partners in proportion to their interests in
the upper-tier partnership at the time of
day at which the contribution was made,
regardless of the method (interim clos-
ing or proration) and convention (daily,
semi-monthly, or monthly) otherwise
used by the upper-tier partnership under
§1.706-4.
(b) Applicability date. Paragraph (a) of
this section applies to qualified conserva-
tion contributions made after December
29, 2022.
Par. 6. Section 1.706-4 is amended by:
1. Redesignating paragraphs (e)(2)
(ix) through (xi) as paragraphs (e)(2)(x)
through (xii), respectively, and adding
new paragraph (e)(2)(ix);
2. Adding the word “and” at the end of
newly redesignated paragraph (e)(2)(xi);
and
3. Revising paragraphs (e)(3) and (g).
The addition and revisions read as
follows:
§1.706-4 Determination of distributive
share when a partner’s interest varies.
* * * * *
(e) * * *
(2) * * *
(ix) Any qualified conservation contri-
bution (as defined in section 170(h)(1) and
§1.170A-14(a) without regard to whether
such contribution is a disallowed quali-
fied conservation contribution within the
meaning of §1.170A-14(j)(3)(vii));
* * * * *
(3) Small item exception. A partnership
may treat an item described in paragraph
(e)(2) of this section (except for an item
described in paragraph (e)(2)(ix) of this
section) as other than an extraordinary item
for purposes of this paragraph (e) if, for
the partnership’s taxable year the total of
all items in the particular class of extraor-
dinary items (as enumerated in paragraphs
(e)(2)(i) through (xii) of this section, for
example, all tort or similar liabilities, but
in no event counting an extraordinary item
more than once) is less than five percent of
the partnership’s gross income, including
tax-exempt income described in section
705(a)(1)(B), in the case of income or gain
items, or gross expenses and losses, includ-
ing section 705(a)(2)(B) expenditures,
in the case of losses and expense items;
and the total amount of the extraordinary
items from all classes of extraordinary
items amounting to less than five percent
of the partnership’s gross income, includ-
ing tax-exempt income described in section
705(a)(1)(B), in the case of income or gain
items, or gross expenses and losses, includ-
ing section 705(a)(2)(B) expenditures, in
the case of losses and expense items, does
not exceed $10 million in the taxable year,
determined by treating all such extraordi-
nary items as positive amounts.
* * * * *
(g) Applicability dates—(1) In general.
Except as provided in paragraphs (g)(2)
and (3) of this section, this section applies
for partnership taxable years that begin on
or after August 3, 2015.
(2) Paragraph (c)(3) of this section.
The rules of paragraph (c)(3) of this sec-
tion apply for taxable years of partner-
ships other than existing publicly traded

December 4, 2023 1362 Bulletin No. 2023–49
partnerships that begin on or after August
3, 2015. For purposes of this paragraph
(g)(2), an existing publicly traded part-
nership is a partnership described in
section 7704(b) that was formed prior
to April 14, 2009. For purposes of this
paragraph (g)(2), the termination of a
publicly traded partnership under section
708(b)(1)(B) due to the sale or exchange
of 50 percent or more of the total inter-
ests in partnership capital and profits in
a taxable year beginning on or before
December 31, 2017, is disregarded in
determining whether the publicly traded
partnership is an existing publicly traded
partnership.
(3) Paragraph (e)(2)(ix) of this section.
Paragraph (e)(2)(ix) of this section applies
to qualified conservation contributions
made after December 29, 2022.
Douglas W. O’Donnell,
Deputy Commissioner for Services and
Enforcement.
(Filed by the Office of the Federal Register
November 17, 2023, 8:45 a.m., and published in the
issue of the Federal Register for November 20, 2023,
88 FR 80910)
Notice of Proposed
Rulemaking
Recognition and Deferral
of Section 987 Gain or
Loss; Comment Period
Reopening
REG-128276-12
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing; reopening of comment period.
SUMMARY: The Department of the
Treasury and the IRS are reopening the
comment period for REG-128276-12,
published in the Federal Register on
December 8, 2016, relating to the determi-
nation and recognition of taxable income
or loss and foreign currency gain or loss
with respect to a qualified business unit.
DATES: The comment period for REG-
128276-12 (81 FR 88882, December 8,
2016) (the “2016 proposed regulations”)
is reopened, and additional written or elec-
tronic comments and requests for a public
hearing must be received by February 12,
2024.
ADDRESSES: Commenters are strongly
encouraged to submit additional public
comments electronically via the Federal
eRulemaking Portal at https://www.regula-
tions.gov (indicate IRS and REG-128276-
12) by following the online instructions
for submitting comments. Requests for a
public hearing must be submitted as pre-
scribed in the “Comments and Requests
for a Public Hearing” section. Once sub-
mitted to the Federal eRulemaking Portal,
comments cannot be edited or with-
drawn. The Department of the Treasury
(the “Treasury Department”) and the IRS
will publish for public availability any
comments submitted to the IRS’s pub-
lic docket. Send paper submissions to:
CC:PA:01:PR (REG-128276-12), Room
5203, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washington,
DC 20044.
FOR FURTHER INFORMATION
CONTACT: Jack Zhou at (202) 317-
6938; concerning submissions of com-
ments, requests for a public hearing, or
access to a public hearing, Vivian Hayes
at (202) 317-6901 (not toll-free numbers)
or by e-mail to publichearings@irs.gov
(preferred).
SUPPLEMENTARY INFORMATION:
On December 8, 2016, the Treasury
Department and the IRS published a notice
of proposed rulemaking (REG-128276-
12, 81 FR 88882, December 8, 2016)
(the “2016 proposed regulations”) in the
Federal Register. The 2016 proposed
regulations cross-reference temporary
regulations in Treasury Decision 9795 (81
FR 88854, December 8, 2016) (the “tem-
porary regulations”), which provided rules
under section 987 of the Internal Revenue
Code relating to the determination and
recognition of taxable income or loss and
foreign currency gain or loss with respect
to a qualified business unit. On May 13,
2019, the Treasury Department and the
IRS published Treasury Decision 9857 (84
FR 20790, May 13, 2019), which finalized
parts of the 2016 proposed regulations
and withdrew one section of the tempo-
rary regulations. The temporary regula-
tions that were not finalized or withdrawn
expired on December 6, 2019. A notice
of proposed rulemaking published in this
issue of the Federal Register contains
new proposed regulations under section
987 and withdraws parts of the 2016 pro-
posed regulations. The parts of the 2016
proposed regulations that remain out-
standing include: (1) rules regarding the
treatment of section 988 transactions of a
section 987 QBU (see §§1.987-1, 1.987-3,
and 1.988-1 of the 2016 proposed regula-
tions); (2) rules regarding QBUs with the
U.S. dollar as their functional currency
(see §§1.987-1 and 1.987-6 of the 2016
proposed regulations); (3) rules regarding
the translation of income used to pay cred-
itable foreign income taxes (see §1.987-3
of the 2016 proposed regulations); and
(4) rules requiring the deferral of certain
section 988 loss that arises with respect
to related-party loans (see §1.988-2 of the
2016 proposed regulations).
The Treasury Department and the IRS
are considering finalizing these parts of
the 2016 proposed regulations and, there-
fore, are reopening the comment period
for 90 days. Comments that were previ-
ously submitted in accordance with the
2016 proposed regulations will be consid-
ered and do not need to be resubmitted.
COMMENTS AND REQUESTS FOR
A PUBLIC HEARING: Before the parts
of the 2016 proposed regulations that
remain outstanding are adopted as final
regulations, consideration will be given
to comments that are submitted timely to
the IRS as prescribed in this Notice in the
“Addresses” section. Any comments sub-
mitted will be made available at https://
www.regulations.gov or upon request.
A public hearing will be scheduled
if requested in writing by any person
who timely submits written comments.
Requests for a public hearing are also
encouraged to be made electronically. If a
public hearing is scheduled, notice of the

Bulletin No. 2023–49 1363 December 4, 2023
date and time for the public hearing will
be published in the Federal Register.
Oluwafunmilayo A. Taylor
Section Chief,
Publications and Regulations Section,
Associate Chief Counsel,
(Procedure and Administration).
(Filed by the Office of the Federal Register
November 9, 2023, 4:15 p.m., and published in the
issue of the Federal Register for November 14, 2023,
88 FR 77921)
Notice of Proposed
Rulemaking
Taxes on Taxable
Distributions from Donor
Advised Funds under
Section 4966
REG-142338-07
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
SUMMARY: This document contains
proposed regulations regarding excise
taxes on taxable distributions made by
a sponsoring organization from a donor
advised fund (DAF), and on the agreement
of certain fund managers to the making of
such distributions. The proposed regula-
tions would provide guidance regarding
DAFs and taxable distributions. The pro-
posed regulations generally would apply
to certain organizations, including com-
munity foundations and other charitable
organizations, that maintain one or more
DAFs, and to other persons involved with
the DAFs, including donors, donor-ad-
visors, related persons, and certain fund
managers.
DATES: Written or electronic comments
and requests for a public hearing must be
received by January 16, 2024.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic sub-
missions via the Federal eRulemaking
Portal at https://www.regulations.gov
(indicate IRS and REG–142338-07) by
following the online instructions for sub-
mitting comments. Requests for a public
hearing must be submitted as prescribed
in the “Comments and Requests for a
Public Hearing” section. Once submit-
ted to the Federal eRulemaking Portal,
comments cannot be edited or withdrawn.
The Department of the Treasury (Treasury
Department) and the IRS will publish for
public availability any comment received
to its public docket, whether submit-
ted electronically or in hard copy. Send
paper submissions to: CC:PA:01:PR
(REG–142338-07), Room 5203, Internal
Revenue Service, P.O. Box 7604, Ben
Franklin Station, Washington, DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Ward L. Thomas at (202) 317-
5800 (not a toll-free number); concerning
submission of comments and requests for
a public hearing, contact Vivian Hayes
by email at publichearings@irs.gov (pre-
ferred) or by phone at (202) 317-6901 (not
a toll-free number).
SUPPLEMENTARY INFORMATION
Background
I. Overview
Some charitable organizations (includ-
ing community foundations) establish
accounts to which donors may contribute
and thereafter provide nonbinding advice
or recommendations with regard to distri-
butions from the account or the investment
of assets in the account. Such accounts are
commonly referred to as “donor advised
funds” or “DAFs.” Sections 1231-1235 of
the Pension Protection Act of 2006 (PPA),
Public Law 109-280, 120 Stat. 780, 1094-
1102 (August 17, 2006), enacted various
amendments to the Internal Revenue Code
(Code) regarding DAFs. Among these,
section 1232 of the PPA amended sec-
tion 4958 of the Code to add special rules
relating to excess benefit transactions with
DAFs; section 1231(b) of the PPA added
section 4967 to the Code, which imposes
an excise tax on prohibited benefits result-
ing from distributions from DAFs; and
section 1231(a) of the PPA added section
4966 of the Code, which imposes excise
taxes on taxable distributions made by
sponsoring organizations from a DAF,
and on the agreement of certain fund man-
agers to the making of such distributions.
This notice of proposed rulemaking con-
tains proposed amendments to 26 CFR
Part 53 (Foundation and Similar Excise
Taxes) under section 4966 (proposed
regulations).
II. Statutory Provisions
A. Section 4958
Section 4958 imposes an excise tax
on any “excess benefit transaction,”
which is defined generally under section
4958(c)(1) as any transaction in which
an economic benefit is provided, the
value of which exceeds the value of any
consideration received, by an applicable
tax-exempt organization (including a sec-
tion 501(c)(3) sponsoring organization of
a DAF) directly or indirectly to or for the
use of a disqualified person with respect
to a transaction.
1
This excise tax under
section 4958 is paid by the disqualified
person with respect to the transaction. A
separate excise tax, paid by organization
managers, is imposed on the participation
of any organization manager in the trans-
action, knowing that it is an excess benefit
transaction, unless such participation is
not willful and is due to reasonable cause.
Section 1232 of the PPA amended sec-
tion 4958 to provide that, with respect
to any transaction that involves a DAF,
a disqualified person includes (1) any
donor with respect to the DAF, (2) any
donor-advisor with respect to the DAF,
and (3) any member of the family, or any
35-percent controlled entity of a donor or
donor-advisor or member of their families
with respect to the DAF, each, a “related
1
For this purpose, a disqualified person is defined under section 4958(f) as a person who was, at any time during the five-year period ending on the date of the transaction, in a position to
exercise substantial influence over the affairs of the organization, and certain related persons, with special rules for DAFs and section 509(a)(3) organizations.

December 4, 2023 1364 Bulletin No. 2023–49
person,” and to provide that any grant,
loan, compensation, or other similar
payment from the DAF to such disqual-
ified person is an excess benefit transac-
tion. For purposes of this special rule for
transactions involving DAFs, the excess
benefit includes the entire amount of the
grant, loan, compensation, or other similar
payment. The PPA also amended section
4958 to treat as a disqualified person with
respect to a transaction involving a spon-
soring organization an investment advisor
(or a family member or a 35-percent con-
trolled entity of such person).
B. Section 4966
1. DAFs
Section 4966(d)(2)(A) defines a
“DAF” generally as a fund or account (1)
that is separately identified by reference
to contributions of a donor or donors, (2)
that is owned and controlled by a sponsor-
ing organization, and (3) with respect to
which a donor (or any person appointed
or designated by the donor, namely, a
donor-advisor) has, or reasonably expects
to have, advisory privileges with respect to
the distribution or investment of amounts
held in the fund or account by reason of
the donor’s status as a donor.
Section 4966(d)(2)(B)(i) states that a
DAF does not include a fund or account
that makes distributions only to a single
identified organization or governmental
entity. Section 4966(d)(2)(B)(ii) states
that a DAF does not include a fund or
account with respect to which a donor or
a donor-advisor provides advice regarding
grants to individuals for travel, study, or
similar purposes if (1) the donor’s, or the
donor-advisor’s, advisory privileges are
exercised exclusively in the donor’s or
donor-advisor’s capacity as a member of
a committee all the members of which are
appointed by the sponsoring organization,
(2) no combination of donor(s), donor-ad-
visor(s), or persons related to such per-
sons directly or indirectly control the
committee, and (3) all grants are awarded
on an objective and nondiscriminatory
basis pursuant to a procedure approved in
advance by the sponsoring organization’s
board of directors, and the procedure is
designed to ensure that the grants meet the
requirements of section 4945(g)(1), (2), or
(3).
Section 4966(d)(2)(C) authorizes the
Secretary of the Treasury or her delegate
(Secretary) to exempt a fund or account
from treatment as a DAF if it (1) is advised
by a committee not directly or indirectly
controlled by the donor or any donor-ad-
visor (and any related parties), or (2) ben-
efits a single identified charitable purpose.
2. Sponsoring Organizations
Section 4966(d)(1) defines a “spon-
soring organization” as an organization
described in section 170(c) (including a
foreign organization that otherwise would
be described in section 170(c)(2)), other
than a private foundation (as defined in
section 509(a)) or a governmental entity
(as defined in section 170(c)(1)), that
maintains one or more DAFs.
3. Excise Tax on Taxable Distributions
Section 4966(a)(1) imposes a 20
percent excise tax on each taxable dis-
tribution, payable by the sponsoring orga-
nization with respect to the DAF. Section
4966(c)(1) defines a “taxable distribution”
as including any distribution from a DAF
to any natural person. Section 4966(c)
(1) also defines a taxable distribution as
including a distribution from a DAF to
any other person if (1) the distribution is
for any purpose other than a purpose spec-
ified in section 170(c)(2)(B),
2
or (2) the
sponsoring organization does not exercise
expenditure responsibility with respect to
the distribution in accordance with section
4945(h).
Section 4966(c)(2) provides that a
taxable distribution, however, does not
include a distribution from a DAF to (1)
any organization described in section
170(b)(1)(A) (other than a disqualified
supporting organization), (2) the sponsor-
ing organization of such DAF, or (3) any
other DAF. Section 4966(d)(4) defines a
“disqualified supporting organization” as
(1) a Type III supporting organization that
is not functionally integrated and (2) any
other supporting organization if the donor
or any donor-advisor (and any related
parties) with respect to a DAF directly or
indirectly controls a supported organiza-
tion of the supporting organization.
4. Excise Tax on Agreement of Fund
Manager
Section 4966(a)(2) imposes a five per-
cent excise tax on the agreement of a fund
manager to the making of a taxable dis
-
tribution knowing that it is a taxable dis-
tribution, payable by any fund manager
who agreed to the making of the distribu-
tion. Section 4966(d)(3) defines a “fund
manager” with respect to any sponsoring
organization as (1) an officer, director,
or trustee of such sponsoring organiza-
tion (or an individual having powers or
responsibilities similar to those of officers,
directors, or trustees of the sponsoring
organization), and (2) with respect to any
act (or failure to act), the employees of the
sponsoring organization having authority
or responsibility with respect to each act
(or failure to act).
Section 4966(b) provides that, if more
than one fund manager is liable under sec-
tion 4966(a)(2), then all such persons are
jointly and severally liable with respect to
the distribution; however, the maximum
amount of tax imposed by section 4966(a)
(2) with respect to any one taxable distri-
bution is $10,000.
C. Section 4967
The PPA also added section 4967,
which imposes an excise tax on the advice
that a donor, donor-advisor, or related
person provides regarding a distribution
from a DAF that results in such person or
any other donor, donor-advisor, or related
person receiving, directly or indirectly, a
more than incidental benefit. This excise
tax is paid by any donor, donor-advisor, or
related person who advises the sponsoring
organization as to the distribution or who
receives the prohibited benefit. A separate
excise tax, paid by the fund manager, is
2
Section 170(c)(2)(B) defines charitable contributions to include contributions to certain organizations for the following purposes: religious, charitable, scientific, literary, or educational
purposes, or to foster national or international amateur sports competition (but only if no part of the organization’s activities involve the provision of athletic facilities or equipment), or for
the prevention of cruelty to children or animals.

Bulletin No. 2023–49 1365 December 4, 2023
imposed on the agreement of any fund
manager of the sponsoring organization
to the making of the distribution, know-
ing that it would confer a prohibited ben-
efit. Section 4967(b) provides that, with
respect to any distribution, no tax can be
imposed under section 4967 if a tax has
been imposed under section 4958.
III. Administrative Guidance
In December 2006, the Treasury
Department and the IRS issued Notice
2006-109, 2006-2 C.B. 1121, to provide
interim guidance on certain requirements
enacted by the PPA, including those
that affect DAFs.
3
Notice 2006-109 also
requested comments regarding the notice
and suggestions for future guidance.
In February 2007, the Treasury
Department and the IRS issued Notice
2007-21, 2007-1 C.B. 611, requesting
comments in connection with a study con-
ducted by the Treasury Department and
the IRS on the organization and operation
of DAFs and supporting organizations, as
required by section 1226 of the PPA.
In December 2017, the Treasury
Department and the IRS issued Notice
2017-73, 2017-51 I.R.B. 562, describing
approaches being considered to address
certain issues regarding DAFs and request-
ing comments on those approaches. In
particular, Notice 2017-73 stated, among
other things, that the Treasury Department
and the IRS are considering developing
proposed regulations under section 4967
that would, if finalized, provide that (1)
certain distributions from a DAF that pay
for the purchase of tickets that enable a
donor, donor-advisor, or related person
under section 4958(f)(7) to attend or par-
ticipate in a charity-sponsored event result
in a more than incidental benefit to such
person under section 4967, and (2) certain
distributions from a DAF that the distrib-
utee charity treats as fulfilling a pledge
made by a donor, donor-advisor, or related
person, do not result in a more than inci-
dental benefit under section 4967 if cer-
tain requirements are met.
In response to these three notices, the
Treasury Department and the IRS received
118 comments, 74 of which concerned
DAFs and taxable distributions.
4
After
consideration of the comments received,
the Treasury Department and the IRS are
proposing these regulations regarding
the excise taxes payable by sponsoring
organizations of DAFs and fund manag-
ers on taxable distributions under section
4966. The major areas of comment relat-
ing to section 4966 are discussed in the
Explanation of Provisions.
Explanation of Provisions
1. Definition of Donor Advised Fund
In accordance with section 4966(d)(2)
(A), the proposed regulations would define
a DAF generally as a fund or account (1)
that is separately identified by reference to
contributions of a donor or donors, (2) that
is owned and controlled by a sponsoring
organization, and (3) with respect to which
at least one donor or donor-advisor has, or
reasonably expects to have, advisory priv-
ileges with respect to the distribution or
investment of amounts held in such fund
or account by reason of the donor’s status
as a donor. Unless otherwise excepted, a
fund or account that meets all three prongs
of the definition would be a DAF.
A sponsoring organization is proposed
to be defined in accordance with section
4966(d)(1) as any organization that (1) is
described in section 170(c) (other than a
governmental unit described in section
170(c)(1)), without the requirement under
section 170(c)(2)(A) that it be created or
organized in the United States or in any
possession thereof, or under the law of the
United States, any State, the District of
Columbia, or any possession of the United
States; (2) is not a private foundation; and
(3) maintains one or more DAFs.
A. Separate Identification by Reference to
Contributions of a Donor or Donors
Section 4966(d)(2)(A)(i) states that
a DAF must be separately identified by
reference to contributions of a donor or
donors. In general, the proposed regula-
tions would provide that a fund or account
is separately identified by reference to
contributions of a donor or donors if the
sponsoring organization maintains a for-
mal record of contributions to the fund or
account relating to a donor or donors. A
formal record exists regardless of whether
the sponsoring organization commingles
the assets attributed to the fund or account
with other assets of the sponsoring orga-
nization, as long as the sponsoring orga-
nization tracks contributions of a donor or
donors to the fund or account. A contribu-
tion would be defined as any gift, bequest,
or similar payment or transfer, whether in
cash or in-kind, to or for the use of a spon-
soring organization.
If the sponsoring organization does
not maintain a formal record of contribu-
tions to a fund or account, then whether
a fund or account is separately identi-
fied would be based on all the facts and
circumstances.
The proposed regulations would pro-
vide that facts and circumstances that
are relevant in determining that a fund or
account is separately identified by refer-
ence to contributions of a donor or donors
include: (1) the fund or account balance
reflects items such as contributions, div-
idends, interest, distributions, adminis-
trative expenses, and gains and losses
(realized or unrealized); (2) the fund
or account is named after one or more
donors, donor-advisors, or related persons
(as defined by proposed §53.4966-1(j));
5

3
For example, section 5.01 of Notice 2006-109 excludes from the definition of a DAF an employer-sponsored disaster relief fund that meets certain requirements. To be excluded, the fund
must: (1) serve a single identified charitable purpose, which is to provide relief from one or more qualified disasters within the meaning of section 139(c)(1), (2), or (3); (2) serve a large or
indefinite class, i.e., a charitable class; (3) select recipients of grants based on objective determinations of need; (4) select recipients of grants using either an independent selection committee
or adequate substitute procedures to ensure that any benefit to the employer is incidental and tenuous; (5) make no payment from the fund to or for the benefit of any director, officer, or trustee
of the sponsoring organization of the fund or for the benefit of any member of the fund's selection committee; and (6) maintain adequate records that demonstrate the recipients' needs for the
disaster relief assistance.
4
The Treasury Department and the IRS anticipate that the other comments will be considered in the development of future guidance under other Code sections.
5
Section 53.4966-1(j) of the proposed regulations defines “related person,” by reference to section 4958(f)(7)(B) and (C), as any family member (as defined in section 4958(f)(4)) or any
35-percent controlled entity (as defined in section 4958(f)(3) with appropriate substituted language).

December 4, 2023 1366 Bulletin No. 2023–49
(3) the sponsoring organization refers
to the fund or account as a DAF; (4) the
sponsoring organization has an agree-
ment or understanding with one or more
donors or donor-advisors that such fund or
account is a DAF; (5) one or more donors
or donor-advisors regularly receive a fund
or account statement from the sponsoring
organization; and (6) the sponsoring orga-
nization generally solicits advice from the
donor(s) or donor-advisor(s) before mak-
ing distributions from the fund or account.
The Treasury Department and the IRS
request comments on these and any addi-
tional factors that would be relevant in
determining whether a fund or account is
separately identified by reference to con-
tributions of a donor or donors.
Several commenters asked that funds or
accounts funded by certain types of orga-
nizations, such as public charities, private
foundations, or governmental entities, be
excluded from the definition of a DAF.
The proposed regulations define a donor
generally as any person described in sec-
tion 7701(a)(1) that contributes to a fund
or account of a sponsoring organization.
However, the proposed regulations would
explicitly exclude from the definition of
donor (1) any public charity described in
section 509(a)(1), (2), or (3) (other than a
disqualified supporting organization) and
(2) any governmental unit described in
section 170(c)(1). A fund or account that
is separately identified by reference to
contributions solely from either of these
types of entities would not be treated as
separately identified by reference to con-
tributions from a donor and thus would
not be a DAF.
6
Because private founda-
tions and disqualified supporting organi-
zations could use a DAF to circumvent
the payout and other requirements that
are applicable to those organizations, the
proposed regulations would not exclude
private foundations or disqualified sup-
porting organizations from the definition
of donor.
B. Advisory Privileges
Under section 4966(d)(2)(A)(iii), for a
fund or account to constitute a DAF, (1)
at least one donor or donor-advisor must
have, or reasonably expect to have, advi-
sory privileges with respect to the distribu-
tion or investment of amounts held in such
fund or account, and (2) such advisory
privileges must arise by reason of (in other
words, because of) the donor’s status as a
donor. The proposed regulations generally
would provide that the existence of such
advisory privileges depends on the facts
and circumstances, including the conduct
(and any agreement or understanding) of
both the donor(s) or donor-advisor(s) and
the sponsoring organization. A donor (or
donor-advisor) may have, or reasonably
expect to have, advisory privileges even
in the absence of the actual provision of
advice. Advisory privileges would include
those arising from service on an advisory
committee. The proposed regulations also
would presume that advisory privileges of
a donor or donor-advisor arise by reason
of the donor’s status as a donor, except
where specifically provided otherwise.
Commenters recommended that, for
advisory privileges to exist, advice must
include a specified amount and a named
recipient. Commenters also suggested
that, in the absence of written evidence,
advisory privileges should not be inferred
unless there are at least three separate suc-
cessive occasions where the sponsoring
organization accepts the donor’s advice.
Commenters further requested that a
sponsoring organization’s proposal to dis-
tribute a certain amount to a certain dis-
tributee, subject to the donor’s approval,
be viewed as the donor’s exercise of
the advisory privilege only if the donor
approves the proposal.
The Treasury Department and the IRS
believe that the commenters’ recommen-
dations would define advisory privileges
too narrowly. Instead, the proposed reg-
ulations would provide that the presence
of any of the following four facts is suffi-
cient to establish that a donor or donor-ad-
visor has advisory privileges by reason of
the donor’s status as a donor, regardless
of whether they are exercised: (1) the
sponsoring organization allows a donor
or donor-advisor to provide nonbinding
recommendations regarding distributions
from, or regarding the investment of assets
held in, a fund or account; (2) a written
agreement states that a donor or donor-ad-
visor has advisory privileges; (3) a written
document or any marketing material of
the sponsoring organization made avail
-
able to a donor or donor-advisor indicates
that a donor or donor-advisor may pro-
vide advice to the sponsoring organization
regarding the distribution or investment
of amounts held by a sponsoring orga-
nization (for example, a pre-approved
list of investment options or distributees
that the sponsoring organization provides
to a donor or donor-advisor); or (4) the
sponsoring organization generally solic-
its advice from a donor or donor-advisor
regarding the distribution or investment of
amounts held in a fund or account.
However, the proposed regulations
would also provide four special rules relat-
ing to advisory privileges. First, if at least
one donor or donor-advisor has, or reason-
ably expects to have, advisory privileges
with respect to a fund or account or any
portion of a fund or account, then advi-
sory privileges by reason of the donor’s
status as a donor exist with respect to that
fund or account even if there are multiple
donors to the fund or account.
Second, there would be special rules
for advisory privileges arising from ser-
vice on an advisory committee, as dis-
cussed in section 1.D of this Explanation
of Provisions of this preamble.
Third, advice provided solely in a
person’s capacity as an officer, direc-
tor, employee (or in a similar capacity)
of a sponsoring organization would not
by itself give rise to advisory privileges
by reason of a donor’s status as a donor.
However, if, by reason of the person’s
contribution to a fund or account, an offi-
cer, director, or employee of the sponsor-
ing organization is allowed to advise on
how to distribute or invest amounts in the
fund or account, the person would be con-
sidered to have advisory privileges by rea-
son of the donor’s status as a donor with
respect to that fund or account.
Lastly, unless the special rule for offi-
cers, directors, and employees of a spon-
soring organization applies, if a donor to
6
Because public charities and governmental units are not treated as donors, it also follows that if only they have advisory privileges with respect to a fund, the fund would not be a DAF even
if there are other donors. See §53.4966-3(e)(4) (Example 4) of these proposed regulations.

Bulletin No. 2023–49 1367 December 4, 2023
a fund or account is the sole person with
advisory privileges with respect to a fund
or account, the advisory privileges would
be deemed to be by reason of the donor’s
status as a donor. This bright-line rule
would provide clarity and enhance admin-
istrability. The Treasury Department and
the IRS request comments regarding
whether there are additional circumstances
in which application of the bright-line rule
is not warranted.
Commenters asked that guidance clar-
ify that advisory privileges do not include
certain legally enforceable rights of the
donor with respect to a contribution. If a
restriction is placed on a gift at the time
the gift is made and there is no provision
for subsequent discretion regarding the
restriction, then the restriction should
not give rise to advisory privileges. For
example, a donor’s mere earmarking of
a donation (at the time of donation) for a
particular fund or program of the recipient
charity, without more, does not create an
advisory privilege. Whether the terms of
a gift agreement create a DAF depends on
the restrictions set forth in the agreement.
The Treasury Department and the IRS
request comments on the circumstances in
which a gift agreement or advisory rights
retained by a donor could create a DAF.
C. Donor-Advisor
Consistent with section 4966(d)
(2)(A)(iii), the proposed regulations
would define donor-advisor as a person
appointed or designated by a donor to
have advisory privileges regarding the
distribution or investment of assets held
in a fund or account of a sponsoring orga-
nization. If a donor-advisor delegates any
of the donor-advisor’s advisory privileges
to another person, that person also would
be a donor-advisor. No particular form of
appointment or designation would be nec-
essary under the proposed regulations.
A donor-advisor generally would
include a person suggested or recom-
mended by a donor to have advisory
privileges if the sponsoring organization
provides such privileges. However, this
rule would not apply if (1) the donor
recommends an investment advisor who
is properly viewed as providing ser-
vices to the sponsoring organization as a
whole, rather than providing services to
the DAF, as described in this section 1.C
of this Explanation of Provisions of this
preamble, or (2) the donor recommends
a person to serve on a committee of the
sponsoring organization that advises as to
distributions or investments of amounts
in a fund or account if the recommenda-
tion is based on objective criteria related
to the expertise of the member in the par-
ticular field of interest or purpose of the
fund or account, the committee consists of
three or more individuals and a majority
of the committee is not recommended by
the donor or donor-advisor, and the rec-
ommended person is not a related person
with respect to the recommending donor
or donor-advisor, as discussed in section
1.D of this Explanation of Provisions of
this preamble.
The proposed regulations include three
special rules with respect to donor-advi-
sors. First, a person (other than a person or
governmental unit excepted from status as
a donor) who establishes a fund or account
and advises as to the distribution or invest-
ment of amounts in that fund or account
would be treated as a donor-advisor with
respect to that fund or account, regardless
of whether the person contributes to the
fund or account. For example, if a per-
son establishes a memorial or fundraising
fund to which the person does not contrib-
ute, but does provide advice regarding dis-
tributions from the fund, the person would
be considered a donor-advisor. The donors
to the fund have implicitly designated the
advisor to have advisory privileges.
Second, an investment advisor
described in section 4958(f)(8)(B)
7
that
manages the investment of, or provides
investment advice with respect to, both
assets maintained in a DAF and the per-
sonal assets of a donor to that DAF (per-
sonal investment advisor) would be a
donor-advisor with respect to the DAF
while serving in that dual capacity, regard-
less of whether the donor appointed, des-
ignated, or recommended the personal
investment advisor. However, recognizing
that a personal investment advisor may
more generally advise the sponsoring
organization, the proposed regulations
would provide that a personal investment
advisor will not be considered a donor-ad-
visor if the personal investment advisor is
properly viewed as providing services to
the sponsoring organization as a whole,
rather than providing services to the DAF.
For example, if an investment advisor
contracts with a sponsoring organiza-
tion to provide services to all of its 1,000
DAFs, and the sponsoring organization
reasonably charges the investment advi-
sor’s fees uniformly to all of those DAFs,
the investment advisor would properly be
viewed as providing services to the spon-
soring organization as a whole.
The Treasury Department and the IRS
request comments on additional circum-
stances that would indicate that a personal
investment advisor is properly viewed as
providing services to the sponsoring orga-
nization as a whole, rather than providing
services to the DAF, as well as additional
circumstances in which a personal invest-
ment advisor should not be considered a
donor-advisor.
One commenter suggested that an
investment advisor recommended by
a donor to the sponsoring organization
should not be treated as a donor-advi-
sor if the investment advisor is regulated
by State and Federal agencies, because
agency oversight makes it unlikely that
the investment advisor would manipulate
the assets of the DAF for personal gain.
The commenter stated that an investment
advisor that was considered a donor-advi-
sor could not receive compensation from
a DAF because that would be an excess
benefit transaction under section 4958(c)
(2).
While the commenter believes that
it is unlikely that a regulated investment
advisor would manipulate the assets of
the DAF for personal gain, the Treasury
Department and the IRS view the close
relationship between a donor and his or her
personal investment advisor as giving the
donor influence over investment decisions
with respect to assets held in the DAF
comparable to that of a donor-advisor.
7
Section 4958(f)(8)(B) defines investment advisor, with respect to any sponsoring organization, as any person (other than an employee of such organization) compensated by the organization
for managing the investment of, or providing investment advice with respect to, assets maintained in DAFs owned by the organization.

December 4, 2023 1368 Bulletin No. 2023–49
Moreover, the Treasury Department and
the IRS are concerned about potential con-
flicts of interest. Specifically, sponsoring
organizations may allow the appointment
of a donor’s personal investment advisor
as an advisor regarding the investment of
DAF funds in order to encourage invest-
ment advisors to promote their clients’
giving through a DAF, rather than directly
to a public charity (other than the spon-
soring organization). In fact, a counter-
incentive may be created for both donors
and their personal investment advisors to
not advise distributions out of their DAFs
to operating charities. Another significant
concern is that a more than incidental ben-
efit may occur if the investment advisor
charges the donor a reduced fee for man-
aging the donor’s personal assets because
the investment advisor also manages the
assets the donor contributed to the DAF.
The Treasury Department and the IRS
agree that a personal investment advisor
that is considered a donor-advisor would
be subject to the excess benefit transaction
rules of section 4958(c)(2) if he or she
received a grant, loan, compensation, or
similar payment from the DAF.
Third, advisory committee members
recommended by a donor and appointed
by the sponsoring organization would be
donor-advisors, except as discussed in sec-
tion 1.D of this Explanation of Provisions
of this preamble.
D. Advisory Committees
The Treasury Department and the IRS
generally would regard service on a com-
mittee of a sponsoring organization that
advises as to distributions from or invest-
ments of assets of a fund or account as a
form of advisory privilege with respect
to that fund or account in determining
whether the fund is a DAF, even though
the sponsoring organization controls the
selection of committee members con-
sistent with its ownership and control of
the fund or account in accordance with
section 4966(d)(2)(A)(ii). Recognizing
that a fund or account, including a mul-
tiple-donor fund, as discussed in section
1.E of this Explanation of Provisions of
this preamble, may sometimes be advised
by an advisory committee that includes
one or more donors, donor-advisors,
related persons, or persons recommended
by donors or donor-advisors to serve on
the advisory committee, the proposed reg-
ulations would provide two special rules
relating to advisory privileges arising from
service on an advisory committee. Under
these two special rules, a fund or account
could be advised by a committee that may
include one or more donors, donor-ad-
visors, related persons, or persons rec-
ommended by donors or donor-advisors,
without being a DAF.
First, when a sponsoring organization
appoints a donor, donor-advisor, or related
person to serve on an advisory committee,
the donor, donor-advisor, or related person
generally would have advisory privileges
by reason of the donor’s status as a donor.
However, the proposed regulations would
provide that a sponsoring organization’s
appointment of a donor, donor-advisor, or
related person to be on a committee that
advises as to distributions or investments
of amounts in the fund or account will not
be deemed to result in advisory privileges
by reason of the donor’s status as a donor
if (1) the appointment is based on objec-
tive criteria related to the expertise of the
appointee in the particular field of inter-
est or purpose of the fund or account; (2)
the committee consists of three or more
individuals, not more than one-third of
whom are related persons with respect to
any of the others; and (3) the appointee is
not a significant contributor to the fund
or account, taking into account contribu-
tions by related persons with respect to the
appointee,
8
at the time of appointment. If
an appointee or related person is not a sig-
nificant contributor to a fund or account
at the time of appointment but becomes
one shortly afterwards, the IRS may find
that the person has advisory privileges
based on the facts and circumstances.
The Treasury Department and the IRS
request comments on what constitutes a
significant contributor for purposes of this
exception.
Second, when a donor (or donor-ad-
visor) recommends someone to serve on
an advisory committee advising as to the
distribution or investment of funds in the
fund or account, that person would be
considered a donor-advisor if the spon-
soring organization appoints the recom-
mended person to serve on the advisory
committee. However, the proposed regu-
lations would allow a donor (or donor-ad-
visor) to recommend a person to serve as
a member of an advisory committee of
the sponsoring organization for the fund
or account and not be considered to be a
donor-advisor if (1) the recommendation
is based on objective criteria related to the
expertise of the member in the particular
field of interest or purpose of the fund or
account; (2) the committee consists of
three or more individuals, and a major-
ity of the committee is not recommended
by the donor or donor-advisor; and (3)
the recommended person is not a related
person with respect to the recommending
donor or donor-advisor.
The Treasury Department and the
IRS request comments on the proposed
advisory committee exceptions, includ-
ing additional circumstances in which
advisory privileges arising from advisory
committees should not result in the cre-
ation of a DAF.
E. Multiple-Donor Funds or Accounts
Several commenters suggested except-
ing a fund or account to which multiple
unrelated donors contributed from the
definition of DAF. Commenters expressed
concern that failing to provide an excep-
tion would affect charitable giving prac-
tices encouraged by alumni organizations
or professional associations, as well as
discourage the use of funds or accounts
to incubate potential public charities. One
commenter suggested that imposing var-
ious conditions, including that the fund
or account have at least three unrelated
donors; that the donations be aggregated
into a single consolidated account bal-
ance; that no written or oral understanding
exists that donors have advisory privi-
leges corresponding to the amounts they
donated to the fund or account; and that
no single donor or group of related donors
8
For example, if a donor is a significant contributor, a family member who is appointed to the committee also is considered a significant contributor, regardless of whether the family member
actually contributed to the fund.

Bulletin No. 2023–49 1369 December 4, 2023
gave more than 35 percent of all dona-
tions, would prevent the vast majority of
potential abuses of multiple-donor fund
status while allowing most giving circles
and giving pools maintained at public
charities to avoid DAF status. Other com-
menters suggested that, without various
safeguards, an exception for multiple-do-
nor funds or accounts may permit abuses.
The Treasury Department and the IRS
anticipate that, in most circumstances, a
multiple-donor fund or account would be
separately identified by reference to con-
tributions of a specific donor or donors.
However, even if separately identified, a
multiple-donor fund or account would not
be a DAF if no donor or donor-advisor has,
or reasonably expects to have, advisory
privileges with respect to the distribution
or investment of amounts held in the fund
or account by reason of the donor’s status
as a donor. Furthermore, section 4966(d)
(2)(B) and the proposed regulations
include several special rules that may per-
mit a multiple-donor fund or account to be
excepted from definition as a DAF even if
it doesn’t meet one of the exceptions dis-
cussed in section 2 of this Explanation of
Provisions of this preamble (such as funds
or accounts making distributions only to
a single identified organization or funds
or accounts making certain grants to indi-
viduals for travel, study, or other similar
purposes).
First, as indicated in section 1.A. of
this Explanation of Provisions of this pre-
amble, the proposed regulations would
exclude certain entities from the defi-
nition of “donor.” Specifically, the pro-
posed regulations would define donor to
exclude any public charity described in
section 509(a)(1), (2), or (3) (other than
a disqualified supporting organization)
and (2) any governmental unit described
in section 170(c)(1). If a fund or account
has multiple donors but only a public
charity or governmental unit has the right
to exercise advisory privileges, then no
donor, as defined by the proposed regula-
tions, would have advisory privileges with
respect to the distribution or investment of
amounts held in the fund or account by
reason of the donor’s status as a donor.
Thus, the fund or account would not be a
DAF.
Second, as discussed in section 1.D
of this Explanation of Provisions of this
preamble, the proposed regulations would
provide two special rules relating to
advisory privileges arising from service
on an advisory committee. These two
rules would allow certain multiple-do-
nor funds or accounts to be advised by a
committee that may include one or more
donors, donor-advisors, related persons,
or persons recommended by donors or
donor-advisors, without being a DAF.
The Treasury Department and the IRS
request comments on whether and in what
circumstances additional types of excep-
tions are warranted to allow multiple-do-
nor funds or accounts to be excluded
from the definition of DAF. The Treasury
Department and the IRS are particularly
interested in comments addressing how
any exception for multiple-donor funds or
accounts can be crafted to prevent circum-
vention of the provisions of section 4966
while still being administrable for both
sponsoring organizations and the IRS.
2. Exceptions to the Definition of Donor
Advised Fund
Consistent with section 4966(d)(2)(B),
the proposed regulations generally would
provide that a DAF does not include any
fund or account that makes (1) distribu-
tions only to a single identified organiza-
tion, or (2) certain grants to individuals
for travel, study, or other similar purposes.
These exceptions are discussed in sec-
tions 2.A. and 2.B. of this Explanation of
Provisions of this preamble.
In addition, under section 4966(d)
(2)(C), the Secretary has discretionary
authority to exempt a fund or account
from the definition of DAF if the fund
or account is advised by a committee not
directly or indirectly controlled by the
donor or donor-advisor (and any related
parties
9
) or if the fund or account bene-
fits a single identified charitable purpose.
The proposed regulations would pro-
vide two exceptions to the definition of
DAF under this discretionary authority:
(1) an exception for disaster relief funds
consistent with the exception originally
set forth in Notice 2006-109, with some
modifications, and (2) an exception for
certain scholarship funds whose com-
mittee is nominated by a section 501(c)
(4) organization with a broad-based
membership.
The Treasury Department and the IRS
request comments on whether other funds
should be excepted from the definition of
DAF using the authority under section
4966(d)(2)(C) and what, if any, restric-
tions should apply to ensure that the intent
of section 4966 is achieved.
A. Single Identified Organization
Exception
Section 4966(d)(2)(B)(i) states that a
fund or account that makes distributions
only to a single identified organization or
governmental entity is not a DAF. Several
commenters suggested that a single iden-
tified organization should include an orga-
nization that is not described in section
501(c)(3), including a for-profit business
and an organization described in section
501(c)(4), so long as the distributions to
the organization or business are made for
a charitable purpose described in section
170(c)(2)(B). The proposed regulations
would provide that a fund or account will
not be considered a DAF if, along with
meeting the other requirements discussed
in this section 2.A, it is established to make
(and actually does make) distributions
solely to a single identified organization
that is either: (1) an organization described
in sections 170(c)(2) and 509(a)(1), (2),
or (3) (other than a disqualified support-
ing organization), or (2) a governmental
entity described in section 170(c)(1) if the
distribution is made exclusively for public
purposes. The Treasury Department and
the IRS are concerned that expanding the
exception to include other types of organi-
zations may allow circumvention of other
tax provisions, such as the private foun-
dation and charitable contribution deduc-
tion rules. Thus, the exception would not
apply if the single identified organiza-
tion is a private foundation, disqualified
9
Section 4966 does not define the term “related parties” and otherwise uses the term “persons.” Furthermore, another provision applicable to donor advised funds, section 4958, defines certain
“persons” in connection with a DAF for purposes of excess benefit transactions. For consistency and administrability across the provisions applicable to DAFs, the proposed regulations use
the term “related persons” rather than “related parties” and define “related persons” as those persons described in section 4958(f)(7)(B) and (C).

December 4, 2023 1370 Bulletin No. 2023–49
supporting organization, foreign organiza-
tion, or non-charitable organization.
If the single identified organization
loses its exempt status or ceases operat-
ing, the proposed regulations would pro-
vide rules similar to the rules found in
§1.509(a)-4(d)(4)(i)(a) (allowing a sup-
porting organization to substitute a new
supported organization). A sponsoring
organization would be permitted to substi-
tute another single identified organization
if the substitution is conditioned upon the
occurrence of a loss of exemption, sub-
stantial failure or abandonment of oper-
ations, or a dissolution or reorganization
that results in the named single identi-
fied organization ceasing to exist, and
the event is beyond the direct or indirect
control of donor(s), donor-advisor(s), or
related persons.
Commenters suggested that the excep-
tion for a fund or account that makes distri-
butions to a single identified organization
should encompass distributions made to
support that organization’s activities and
that a fund restricted to a specific charita-
ble project should be considered a fund or
account that makes distributions to a sin-
gle identified organization. Commenters
suggested that a fund should therefore be
able to support the programs or activities
of a single identified organization by mak-
ing distributions to individuals directly
(as long as the distributions are limited
to those within the charitable class served
by that single identified organization),
or by receiving, holding and disbursing
funds for a specific project or program
conducted by the single identified orga-
nization, including making distributions
to third parties for goods, services, and
incidental grant-making limited to a par-
ticular project or program. For example,
commenters suggested that the exception
should apply to a scholarship fund that a
donor establishes at a university and that
provides scholarships and other grants
solely to students at that university whom
the donor has a role in selecting.
Under the proposed regulations, the
sponsoring organization would be per-
mitted to make distributions to the sin-
gle identified organization for the single
identified organization’s activities (and
only activities other than administering
DAFs or grant-making) and, thus, to make
distributions to fund a specific charitable
project (other than administering DAFs
or grant making) of the single identified
organization. However, the sponsoring
organization could not make distributions
directly to third parties on behalf of the
single identified organization, such as by
making distributions to third parties for
goods, services, or incidental grant-mak-
ing for a particular project or program,
because the statute requires that the fund
or account make distributions only to the
single identified organization.
Because a fund or account that falls
within the single identified organization
exception is not subject to the rules appli-
cable to DAFs, the proposed regulations
would provide that distributions to the
single identified organization may not
be used to administer DAFs or to make
grants. In addition, the proposed regula-
tions would provide that a fund or account
will not be treated as making distributions
only to a single identified organization if
(1) a donor, donor-advisor, or related per-
son has or reasonably expects to have, the
ability to advise regarding distributions
from the single identified organization to
other individuals or entities, or (2) a dis-
tribution from the fund or account will
provide, directly or indirectly, a more than
incidental benefit (within the meaning of
section 4967) to a donor, donor-advisor,
or related person with respect to the fund
or account. Thus, for example, if a donor
establishes a fund to make distributions
only to a single public charity, and the
donor is on the Board of the public charity,
then the fund would not be able to meet
this exception because the donor has the
ability to advise some or all of the distri-
butions from the public charity to other
entities.
Recognizing that a sponsoring orga-
nization may lack direct knowledge
regarding the activities of the donor,
donor-advisor, or related person with
regard to the single identified organiza-
tion, however, the proposed regulations
would allow a sponsoring organization to
rely on a certification from the donor that
(1) no donor, donor-advisor, or related per-
son has or reasonably expects to have, the
ability to advise regarding distributions
from the single identified organization to
other individuals or entities, and (2) no
distribution from the fund or account will
provide, directly or indirectly, a more than
incidental benefit (within the meaning of
section 4967) to a donor, donor-advisor, or
related person with respect to the fund or
account, as long as the sponsoring orga-
nization lacks knowledge to the contrary.
The Treasury Department and the IRS
request comments on whether additional
guidance is needed on situations in which
a fund or account is established at a public
charity and the written agreement estab-
lishing the fund or account provides that
the contributed amounts can only be used
to support programs within that public
charity, but the donor retains advisory
privileges with respect to the public chari-
ty’s use or investment of some or all of the
funds. Section 4966(c)(2)(B) excepts from
the definition of “taxable distribution” any
distribution from a DAF to the sponsor-
ing organization of the DAF; accordingly,
any fund or account established at a pub-
lic charity that is used to support operat-
ing programs of the public charity (rather
than to make distributions to third parties)
would not have any taxable distributions,
if the fund or account were a DAF. For
example, a donor who established a fund
or account at a university could advise
that contributions previously made to the
fund or account be distributed to the uni-
versity’s scholarship program. However,
if the donor were to want to have a role
in advising on the selection of scholarship
recipients then, to avoid a taxable distribu-
tion, the donor’s involvement would need
to meet the exception provided in section
4966(d)(2)(B)(ii) (discussed in section
2.B. of this Explanation of Provisions of
this preamble).
B. Statutory Scholarship Exception
Under section 4966(d)(2)(B)(ii) the
term “donor advised fund” does not
include a fund or account that exclu-
sively makes grants for travel, study, or
other similar purposes, provided certain
requirements are met. Consistent with
section 4966(d)(2)(B)(ii), the proposed
regulations would provide that, under this
exception from the definition of a DAF,
a donor or donor-advisor may provide
advice as to which individuals receive
grants for travel, study, or other similar
purposes from a fund or account if (1) the
person provides the advice exclusively in
the person’s capacity as a member of the

Bulletin No. 2023–49 1371 December 4, 2023
selection committee; (2) all the members of
the selection committee are appointed by
the sponsoring organization; (3) no com-
bination of donor(s), donor-advisor(s), or
related persons controls, directly or indi-
rectly, the committee; and (4) all grants
from the fund or account are awarded on
an objective and nondiscriminatory basis
pursuant to a written procedure approved
in advance by the board of directors of the
sponsoring organization and the procedure
is designed to ensure that all grants meet
the requirements of paragraph (1), (2), or
(3) of section 4945(g) and the regulations
thereunder. The requirements in the regu-
lations under section 4945(g) include the
requirements that the group from which
grantees are selected will ordinarily be
sufficiently large to constitute a charita-
ble class; that the members of the selec-
tion committee will not be in a position to
derive a private benefit if certain potential
grantees are selected over others; and that
the sponsoring organization will maintain
adequate records regarding the identifica-
tion and selection of individual grantees.
If a fund or account satisfies the require-
ments of the exception, a sponsoring orga-
nization may award a scholarship from the
fund or account to an individual without
subjecting the sponsoring organization or
its fund managers to excise taxes under
section 4966.
The proposed regulations would
provide that whether a combination of
donor(s), donor-advisor(s), or related
persons controls, directly or indirectly,
the selection committee is determined by
looking to the substance, rather than the
form, of any arrangement. Direct con-
trol would exist if donor(s), donor-advi-
sor(s), or related persons, either alone or
together, (1) can require the committee
to take or refrain from taking any action;
(2) control 50 percent or more of the
total voting power of the committee; or
(3) have the right to exercise veto power
over the committee’s decisions. Whether
indirect control exists is determined by
the facts and circumstances, including the
nature of any relationships among mem-
bers of the selection committee and with
any donor, donor-advisor, or related per-
son. For example, a committee would be
“indirectly controlled” by a combination
of donor(s), donor-advisor(s), or related
persons if a majority of the selection
committee is currently engaged by the
donor, donor-advisor, or any related per-
son in any employment or fiduciary
capacity, whether as an employee or inde-
pendent contractor, or recommended by a
donor or donor-advisor and appointed to
the selection committee based on other
than objective criteria regarding the per-
son’s expertise, or a combination thereof.
One commenter recommended that
a sponsoring organization be permitted
to set reasonable uniform procedures for
appointing members to selection com-
mittees, taking into account the size of
the sponsoring organization, the number
of grants from the scholarship fund, and
other relevant facts and circumstances,
rather than requiring action by the entire
board. The proposed regulations would
provide that, in appointing the members
of the selection committee, a sponsoring
organization may act through its board
of directors, trustees, or other governing
body, a committee appointed by its gov-
erning body, or an appropriate officer of
the sponsoring organization.
The Treasury Department and the
IRS are concerned that some employers
may seek to use this statutory scholar-
ship exception to grant employer-related
scholarships in a manner that would oth-
erwise not be considered a scholarship or
fellowship grant subject to the provisions
of section 117(a), or that would otherwise
be a taxable expenditure under section
4945, by having a sponsoring organi-
zation administer their scholarship pro-
grams. See, e.g., Rev. Proc. 76-47, 1976-2
C.B. 670, and Rev. Proc. 80-39, 1980-2
C.B. 772. The Treasury Department and
the IRS request comments on whether
additional guidance is needed to prevent
avoidance of the employer-related schol-
arship rules or to address any potential pri-
vate benefit arising from employer-related
scholarship programs.
C. Exception for Certain Scholarship
Funds Established by Certain Section
501(c)(4) Organizations
Several commenters asked for guid-
ance relating to a scholarship fund of a
sponsoring organization that receives
contributions from a tax-exempt mem-
bership organization, such as a section
501(c)(4) social welfare organization.
The commenters stated that, for example,
Rotary Club scholarship funds are often
established at community foundations
and that these scholarship funds do not
fit within the statutory scholarship com-
mittee exception provided by section
4966(d)(2)(B)(ii) because members of
the section 501(c)(4) organization who
may be donors to the fund comprise a
majority of the scholarship selection
committee. These commenters asked
that the proposed regulations provide an
additional exception allowing members
of a section 501(c)(4) organization who
are otherwise unrelated to one another
to control the scholarship selection com-
mittee, particularly since it is difficult to
find non-members willing to serve on
the committee. The commenters noted
that requiring Rotary Clubs to form a
section 501(c)(3) organization to make
distributions for Rotary scholarships
would be an inefficient use of charitable
resources and that sponsoring organiza-
tions can provide expertise on objective
and charitable standards for selecting
scholarship recipients.
The proposed regulations would pro-
vide an exception to the definition of
DAF for a fund or account established
by a broad-based membership organiza-
tion described in section 501(c)(4) if six
conditions are met. The conditions would
substantially mirror the conditions in the
statutory scholarship exception, except
that donors may control the committee.
First, the fund or account’s single iden-
tified charitable purpose must be to make
grants to individuals for scholarships
described in section 4945(g)(1).
Second, the selection of recipients of
scholarships from the fund or account
must be made by a selection committee
the members of which are nominated by
the section 501(c)(4) organization and
approved in writing by the sponsoring
organization. This requirement would
allow the section 501(c)(4) organization
to have input on the members of the selec-
tion committee, but would leave the final
decision to the sponsoring organization
that owns and controls the assets of the
fund or account.
Third, the fund or account must serve a
charitable class.
Fourth, like the statutory scholarship
exception, recipients of grants from

December 4, 2023 1372 Bulletin No. 2023–49
the fund or account must be selected
on an objective and nondiscriminatory
basis, pursuant to a written procedure,
approved in advance by the sponsoring
organization’s board of directors, that
is designed to ensure that all the grants
meet the requirements of section 4945(g)
(1) and the regulations under section
4945 (other than advance approval by
the IRS).
Fifth, no distribution may be made
from the fund or account to (1) any direc-
tor, officer, or trustee of the sponsoring
organization of the fund, (2) any member
of the fund’s selection committee, (3) any
member, honorary member, or employee
of the section 501(c)(4) organization, or
(4) any person related to anyone described
in (1), (2), or (3).
Finally, the fund or account must main-
tain adequate records that demonstrate the
recipients were selected on an objective
and nondiscriminatory basis.
The Treasury Department and the
IRS are concerned that not requiring the
section 501(c)(4) organization to have a
broad-based membership could allow a
small group of persons to set up a section
501(c)(4) organization and use a fund or
account at a sponsoring organization to
grant scholarships to their selected recip-
ients with tax-deductible contributions,
circumventing the DAF rules. Given this
concern, the Treasury Department and the
IRS request comments on how to identify
a broad-based membership organization
described in section 501(c)(4), including
factors such as the organization’s number
of members, criteria for selecting mem-
bers, membership rights, and geographic
coverage.
The Treasury Department and the IRS
also request comments on whether and
under what circumstances other organiza-
tions, such as section 501(c)(5) and 501(c)
(6) organizations, use similar types of
committee-advised scholarship funds and
whether the exception should be extended
to those organizations, recognizing
that section 501(c)(4) organizations are
formed to promote social welfare whereas
section 501(c)(5) and section 501(c)(6)
organizations are formed to further differ-
ent purposes.
D. Disaster Relief Exception
Several commenters asked that the pro-
posed regulations provide, consistent with
Notice 2006-109, that an employer-spon-
sored disaster relief fund is not a DAF.
Commenters also recommended that the
exception be extended to disaster relief
funds outside of the employment context
and that the exception be extended to
emergency hardship situations outside of
the disaster relief context.
Since the determination of the exis-
tence of a qualified disaster under section
139 is not controlled by the sponsoring
organization or the fund or account’s advi-
sory committee, the proposed regulations
would exempt a non-employment based
disaster relief fund. Thus, the proposed
regulations would provide that both an
employer-sponsored disaster relief fund
and a disaster relief fund outside of the
employment context are not DAFs, as
long as the requirements of section 139
are met. In contrast, since the determi-
nation of the existence of an emergency
hardship is controlled by the sponsoring
organization or the fund or account’s advi-
sory committee, the proposed regulations
would not extend the exception to emer-
gency hardship funds.
To meet the disaster relief exception in
the proposed regulations, six conditions
must be met. The conditions substantially
mirror the provisions in Notice 2006-109
(and the special rules generally for chari-
table assistance in qualified disasters) and
the provisions of the statutory scholarship
exception and the exception for certain
scholarship funds established by section
501(c)(4) organizations.
First, the fund or account’s single
identified charitable purpose must be to
provide relief from one or more qualified
disasters within the meaning of section
139(c)(1), (2), or (3).
Second, the fund or account must serve
a charitable class.
Third, recipients of grants from the
fund or account must be made by a selec-
tion committee not controlled by donors,
donor-advisors, or related persons and for
which all the members are appointed by
the sponsoring organization. Alternatively,
if the fund or account gives preference
or priority to employees (or their fam-
ily members) of an employer to receive
grants, the majority of the selection com-
mittee must consist of persons who are
not in a position to exercise substantial
influence over the affairs of the employer
(or adequate substitute procedures exist to
ensure that any benefit to the employer is
incidental and tenuous).
Fourth, the selection committee must
select grant recipients based on objective
and nondiscriminatory determinations
of need pursuant to a written procedure
approved in advance by the board of
directors of the sponsoring organization.
Fifth, no distribution from the fund or
account may result in more than an inci-
dental benefit to (1) any director, officer,
or trustee of the sponsoring organization
of the fund or account; (2) any member of
the fund or account’s selection commit-
tee; or (3) any person related to a direc-
tor, officer, or trustee of the sponsoring
organization or a member of the selection
committee.
Lastly, the sponsoring organization
must maintain records that (1) demonstrate
the need of the recipients for the disaster
relief assistance provided, and (2) satisfy
the requirements of section 6033(b)(14).
10

3. Taxable Distributions
Section 4966(c)(1) defines a taxable
distribution as any distribution from a
DAF to (1) any natural person, or (2) any
other person unless the distribution is for a
purpose specified in section 170(c)(2)(B)
and the sponsoring organization exercises
expenditure responsibility with respect to
the distribution in accordance with section
4945(h).
Section 4966(c)(2) excepts from the
term “taxable distribution” any distribu-
tion from a DAF to (1) any organization
described in section 170(b)(1)(A) (other
than a disqualified supporting organi-
zation), (2) the sponsoring organization
of the DAF, or (3) any other DAF. The
Treasury Department and the IRS expect
that most distributions from DAFs are to
organizations described in section 170(b)
(1)(A) (but not to disqualified supporting
10
Section 6033(b)(14), added in 2008, requires every section 501(c)(3) organization required to file an annual information return to furnish annually such information as the Secretary may
require with respect to disaster relief activities.

Bulletin No. 2023–49 1373 December 4, 2023
organizations) and thus are not taxable
distributions.
The proposed regulations incorporate
the statutory definition of taxable distribu-
tion. In addition, the proposed regulations
would set forth an anti-abuse rule provid-
ing that, if a series of distributions through
intermediary distributees undertaken pur-
suant to a plan achieves a result that is
inconsistent with the purposes of section
4966, the distributions are treated as a
single distribution for purposes of section
4966. For example, if a donor advises a
distribution, that the sponsoring organiza-
tion subsequently makes, from a DAF to
Charity X and the donor or the sponsor-
ing organization arranges for Charity X to
use the funds to make distributions to an
individual recommended by the donor, the
distribution would be a taxable distribu-
tion from the sponsoring organization to
an individual.
Several commenters recommended
that the term “distribution” be narrowly
defined to include only a gratuitous trans-
fer. These commenters requested that a
purchase of goods or services by a spon-
soring organization using funds from a
DAF for charitable activity or fundrais-
ing would not be considered a distribu-
tion. One commenter asked that the term
“distribution” be defined the same as the
term “grant” in section 4945 and that it
not include payments from a sponsoring
organization using funds from a DAF to
vendors for goods or services or employee
compensation.
The proposed regulations do not adopt
these suggestions and would construe the
term “distribution” broadly. In particular,
the proposed regulations would provide
that the term “distribution” generally
means any grant, payment, disbursement,
or transfer, whether in cash or in kind,
from a DAF. In addition, the proposed
regulations would provide that any use
of DAF assets that results in a more than
incidental benefit to a donor, donor-ad-
visor, or related person is a deemed
distribution and thus generally would
be a taxable distribution. The Treasury
Department and the IRS note that dis-
tributions resulting in a more than inci-
dental benefit to a donor, donor-advisor,
or related person may also result in tax
under section 4967. See Notice 2017-73,
2017-51 I.R.B. 562.
However, the proposed regulations
would provide that (1) investments and
(2) reasonable investment and grant-re-
lated fees generally are not distributions
under this definition (unless they result
in a more than incidental benefit as noted
above).
Investments generally would not be
treated as distributions under the proposed
regulations because they typically merely
reflect a change from one form of prop-
erty to another. The Treasury Department
and the IRS would consider investments
for this purpose as including both debt and
equity instruments held for the purpose
of obtaining income or funds, including
investments made partly for charitable
purposes as described in Notice 2015-62,
2015-39 I.R.B. 411. However, an invest-
ment would not, for example, include a
zero-interest loan, as there is no purpose
of, or provision for, obtaining income or
funds from the zero-interest loan. The
Treasury Department and the IRS antici-
pate that a zero-interest loan would be a
distribution under the proposed regula-
tions and, unless made to a section 170(b)
(1)(A) organization other than a disqual-
ified supporting organization, would
require expenditure responsibility by the
sponsoring organization in order not to
be a taxable distribution. The Treasury
Department and the IRS request com-
ments on how to further distinguish distri-
butions from investments.
Reasonable investment and grant-re-
lated fees paid from DAF assets generally
would not be considered distributions;
however, an unreasonable grant-related or
investment fee would be a deemed distri-
bution and, thus, would be a taxable distri-
bution. The Treasury Department and the
IRS expect that whether a fee is reasonable
would be determined by all the facts and
circumstances. For example, an expense
charged uniformly or ratably across all
DAFs generally would be considered a
reasonable fee and not a distribution. In
addition, an expense charged solely to a
particular DAF (such as an expense aris-
ing from an expenditure responsibility
grant from the fund) may be reasonable,
depending on the facts and circumstances.
However, the proposed regulations would
provide that an expense charged solely to
a particular DAF that is paid, directly or
indirectly, to a donor, donor-advisor, or
related person with respect to the DAF, is
a deemed distribution subject to sections
4966, 4958, and/or 4967.
A. Distributions to Section 170(b)(1)(A)
Organizations
Section 4966(c)(2)(A) provides that a
distribution to any organization described
in section 170(b)(1)(A) (other than a dis-
qualified supporting organization) is not
a taxable distribution. Similar to existing
guidance under §53.4945-5(a)(4), the
proposed regulations would provide sev-
eral categories of organizations treated as
described in section 170(b)(1)(A) for pur-
poses of section 4966(c)(2)(A).
First, an organization would be con-
sidered an organization described in
section 170(b)(1)(A) if it is described in
both sections 170(b)(1)(A) and 170(c)(2)
(other than a disqualified supporting orga-
nization), without the requirement under
section 170(c)(2)(A) that it be created or
organized in the United States or in any
possession thereof, or under the law of
the United States, any State, the District
of Columbia, or any possession of the
United States. Thus, for example, a tax-
able organization that operates a for-profit
school would not be treated as described
in section 170(b)(1)(A) because the orga-
nization would not be described in section
170(c)(2).
Second, an organization that is a gov-
ernmental unit described in section 170(b)
(1)(A)(v) and 170(c)(1) (or an agency or
instrumentality thereof, including an orga-
nization described in section 511(a)(2)
(B)) would be considered an organization
described in section 170(b)(1)(A), as long
as the distribution to it is made for exclu-
sively public purposes.
Third, a foreign government (or an
agency or instrumentality thereof), or an
international organization designated as
such by Executive Order under 22 U.S.C.
288 would be treated as an organization
described in section 170(b)(1)(A), as long
as the distribution to it is made exclusively
for purposes described in section 170(c)
(2)(B).
One commenter asked that guidance
expressly provide that DAFs may make
grants to foreign organizations based on
the same equivalency determinations
that private foundations use for purposes

December 4, 2023 1374 Bulletin No. 2023–49
of determining whether a foreign orga-
nization is the equivalent of a domestic
public charity. The proposed regulations
would adopt this suggestion. Consistent
with Rev. Proc. 2017-53, 2017–40 I.R.B.
263 (providing guidelines for equivalency
determinations by, among others, sponsor-
ing organizations of DAFs), the proposed
regulations would provide that, prior to
the distribution, a sponsoring organization
may make a good faith determination that
a foreign organization is described in sec-
tions 501(c)(3) and 170(b)(1)(A) (other
than a disqualified supporting organiza-
tion) using procedures similar to those pro-
cedures permitted for private foundation
grantors under §53.4945-5(a)(5). Those
procedures provide that a determination
will ordinarily be a good faith determina-
tion if it is based on current written advice
from a qualified practitioner and the orga-
nization reasonably relied in good faith on
the written advice. If a sponsoring organi-
zation makes a good faith determination
that a foreign organization is described in
sections 501(c)(3) and 170(b)(1)(A) (other
than a disqualified supporting organiza-
tion), the sponsoring organization would
not need to exercise expenditure responsi-
bility with respect to a distribution to that
organization.
B. Disqualified Supporting Organizations
Section 4966(d)(4)(A)(i) defines any
Type III non-functionally integrated sup-
porting organization as a disqualified sup-
porting organization with respect to any
distribution.
11
Section 4966(d)(4)(A)(ii)(I)
disqualifies any other type of supporting
organization if the donor or any donor-ad-
visor (and any related parties)
12
directly
or indirectly controls a supported organi-
zation (as defined in section 509(f)(3)) of
the supporting organization. The Treasury
Department and the IRS request com-
ments on whether other entities should be
included in the definition of disqualified
supporting organization, using the author-
ity under section 4966(d)(4)(A)(ii)(II) to
designate other supporting organizations
as disqualified, because a distribution
to such organization is inappropriate if
expenditure responsibility is not exercised
to ensure the distribution is for a purpose
specified in section 170(c)(2)(B).
C. Distributions to Non-Section 170(b)
(1)(A) Organizations or to Disqualified
Supporting Organizations
Under section 4966(c)(1)(B), a dis-
tribution to any entity not described in
section 170(b)(1)(A), or to a disqualified
supporting organization, will be a taxable
distribution unless (1) the distribution is
for a purpose specified in section 170(c)
(2)(B) (generally, is for a charitable pur-
pose), and (2) the sponsoring organization
exercises expenditure responsibility with
respect to the distribution in accordance
with section 4945(h).
i. Non-Charitable Purposes
The proposed regulations would pro-
vide that purposes described in section
170(c)(2)(B) are treated as such whether
or not carried out by an organization
described in section 170(c). However,
a distribution to be used for an activity
prohibited under section 501(c)(3), or for
an activity that would cause loss of tax
exemption if it were a substantial part of
a section 501(c)(3) organization’s total
activities, is not for a purpose specified in
section 170(c)(2)(B). Thus, a distribution
used for political campaign intervention
activity or attempts to influence legisla-
tion would be considered to be for a pur-
pose not specified in section 170(c)(2)
(B)
13
and, thus, if made directly or to an
entity not described in section 170(b)(1)
(A), or to a disqualified supporting orga-
nization, would be a taxable distribution.
The proposed regulations would also
include a requirement, similar to the
requirement in §53.4945-6(c)(2), that a
grant to an organization (other than one
that is described in section 501(c)(3) and
not in section 509(a)(4)) will not be con-
sidered to be for a purpose specified in
section 170(c)(2)(B) unless the grantee
agrees to separately account for grant
funds (either by separately accounting for
grant funds on its books or by segregating
the grant funds). (Such grant funds must
also be used for charitable purposes,
consistent with the expenditure respon-
sibility rules discussed in section 3.C.ii
of this Explanation of Provisions of this
preamble.)
ii. Expenditure Responsibility
Section 4966(c)(1)(B)(ii) requires
sponsoring organizations to exercise
expenditure responsibility in accordance
with section 4945(h) for certain distri-
butions. Thus, the proposed regulations
cross-reference the section 4945(h) expen-
diture responsibility regulations appli-
cable to private foundations, with one
modification. In lieu of the requirements
found in §53.4945-5(b)(3)(iv)(c) and (b)
(4)(iv)(c) (pertaining to the recipient’s
permitted use of the funds), the distribu-
tee would be required to agree not to: (1)
make a grant to an organization that does
not comply with the expenditure responsi-
bility requirements, (2) make a grant to a
natural person, or (3) make a grant, loan,
compensation, or other similar payment
(as described in section 4958(c)(2)) to a
donor, donor-advisor, or related person
with respect to the DAF from which the
distribution that is the subject of the agree-
ment is made. For purposes of these rules
pertaining to the secondary use of distri-
butions, the definition of “grant” set forth
in §53.4945-4(a)(2) would apply, rather
than the broader definition of “distribu-
tion” found in proposed §53.4966-1(e).
If the definition of “distribution” found in
proposed §53.4966-1(e) applied, distribu-
tees would be required to exercise expen-
diture responsibility in the purchase of
goods and services, which is not intended
under the proposed rule.
The Treasury Department and the IRS
request comments on this modification to
the expenditure responsibility rules and
whether additional guidance is needed.
4. Taxes on Taxable Distributions
Consistent with section 4966(a)(1),
the proposed regulations would provide
that an excise tax equal to 20 percent of
11
In defining a disqualified supporting organization, the proposed regulations use the definitions of supporting organization types under the section 509(a)(3) regulations.
12
See note 7.
13
The Treasury Department and the IRS also note that allowing distributions from a DAF for lobbying or political campaign activity would contravene the charitable contribution deduction
rules and private foundation restrictions.

Bulletin No. 2023–49 1375 December 4, 2023
the amount of the taxable distribution
is imposed on each taxable distribution
from a DAF. This excise tax is paid by the
sponsoring organization of the DAF. The
provisions of proposed §53.4966-2 are
generally similar to those of §53.4958-1
and other chapter 42 excise tax regula-
tions relating to the calculation of the tax
on the organization and its managers.
In addition, consistent with section
4966(a)(2), the proposed regulations
would provide that each fund manager
who knowingly agrees to the making of a
taxable distribution is liable for an excise
tax equal to five percent of the amount of
the taxable distribution, up to a maximum
of $10,000 for any one taxable distribu-
tion. If more than one fund manager is
liable for the excise tax, all such persons
would be jointly and severally liable for
that tax. The proposed regulations, consis-
tent with section 4966(d)(3), would define
a fund manager as (1) an officer, director,
or trustee of the sponsoring organization,
or any individual with authority or respon-
sibility similar to that exercised by an offi-
cer, director, or trustee of an organization,
regardless of title, and (2) with respect to
any act (or failure to act), the employee
having authority or responsibility (either
individually or as a member of a collec-
tive body) for such act (or failure to act).
An example of a failure to act by a fund
manager resulting in a taxable distribution
would be a failure to exercise expenditure
responsibility if required.
The proposed regulations would pro-
vide that the agreement of any fund man-
ager to the making of a taxable distribution
consists of any manifestation of approval
of the distribution that is sufficient to con-
stitute an exercise of the fund manager’s
authority to approve, or authority to exer-
cise discretion in recommending approval
of, the making of the distribution by the
sponsoring organization, whether or not it
is the final or decisive act on behalf of the
sponsoring organization.
A fund manager generally would be
considered to have agreed to the making
of a distribution with knowledge that it is
a taxable distribution only if the manager
(1) is in fact aware that it is a taxable dis-
tribution; or (2) has knowledge of facts
sufficient to determine that, based on those
facts, the distribution would be a taxable
distribution and negligently fails to make
reasonable attempts to ascertain whether
the distribution is a taxable distribution. A
fund manager generally would not be con-
sidered to have negligently failed to make
reasonable attempts to ascertain whether
a distribution is a taxable distribution if
the distribution is made to an organization
listed as an organization described in sec-
tion 170(b)(1)(A) (other than a supporting
organization) on the IRS’s search tool,
Tax Exempt Organization Search (Pub 78
data) (or if, with respect to a supporting
organization, it gathers information to
determine that the organization is not a
disqualified supporting organization).
The Treasury Department and the IRS
request comments on whether guidance is
needed regarding a fund manager’s reli-
ance on professional advice.
Proposed Applicability Date
These regulations are proposed to be
applicable to taxable years ending after the
date of publication of the Treasury deci-
sion adopting these rules as final regula-
tions in the Federal Register. A taxpayer
may rely on these proposed regulations
for taxable years ending before the date
the Treasury decision adopting these regu-
lations as final regulations is published in
the Federal Register.
The guidance these proposed regu-
lations would provide with respect to
disaster relief funds generally would be
consistent with the guidance provided in
section 5.01 of Notice 2006-109. However,
in certain instances these proposed regula-
tions would modify the guidance provided
in Section 5.01 of Notice 2006-109. For
taxable years ending before the date the
Treasury decision adopting these regula-
tions as final regulations is published in
the Federal Register, taxpayers may rely
on the guidance provided in section 5.01
of Notice 2006–109 or, alternatively, on
these proposed regulations, including for
periods prior to November 14, 2023.
Special Analyses
I. Regulatory Planning and Review
Pursuant to the Memorandum
of Agreement, Review of Treasury
Regulations under Executive Order 12866
(June 9, 2023), tax regulatory actions
issued by the IRS are not subject to the
requirements of section 6 of Executive
Order 12866, as amended. Therefore,
a regulatory impact assessment is not
required.
II. Paperwork Reduction Act
The collections of information con-
tained in this notice of proposed rulemak-
ing have been submitted to the Office of
Management and Budget for review in
accordance with the Paperwork Reduction
Act of 1995 (44 U.S.C. 3507(d)).
Comments on the collections of infor-
mation should be sent to the Office of
Management and Budget, Attn: Desk
Officer for the Department of Treasury,
Office of Information and Regulatory
Affairs, Washington, DC 20503, with
copies to the Internal Revenue Service,
Attn: IRS Reports Clearance Officer,
SE:W:CAR:MP:T:T:SP, Washington, DC
20224. Comments on the collection of
information should be received by January
16, 2024.
Comments are specifically requested
concerning:
Whether the proposed collections
of information are necessary for the
proper performance of the functions of
the Internal Revenue Service, including
whether the information will have practi-
cal utility;
The accuracy of the estimated burden
associated with the proposed collections
of information (see below);
How the quality, utility, and clarity of
the information to be collected may be
enhanced;
How the burden of complying with
the proposed collections of information
may be minimized, including through the
application of automated collection tech-
niques or other forms of information tech-
nology; and
Estimates of capital or start-up costs
and costs of operation, maintenance, and
purchase of service to provide information.
The collections of information in
these proposed regulations are as follows.
Section 53.4966-4(a)(4)(ii) allows a spon-
soring organization to rely on a certifica-
tion from the donor that all distributions
satisfy the special rules relating to the
single identified organization exception.
Section 53.4966-4(b), (c), and (d) require

December 4, 2023 1376 Bulletin No. 2023–49
an organization with a fund excepted from
the definition of a DAF to maintain records
regarding recipients and the selection pro-
cess for recipients. Section 53.4966-4(c)
also requires the organization to approve
in writing the selection committee whose
members are nominated by a section
501(c)(4) organization. Section 53.4966-
5(c) allows a sponsoring organization to
avoid a taxable distribution to certain for-
eign organization distributees if it makes
a good faith determination regarding their
tax-exempt status. Section 53.4966-5(a)
(1)(ii)(B) requires a sponsoring organiza-
tion to exercise expenditure responsibility
with respect to certain distributions.
The expected recordkeepers are spon-
soring organizations of DAFs described
in section 4966(d)(1), other organizations
described in section 4966(d)(1)(A) and
(B) that maintain funds excepted from the
definition of a DAF under section 4966(d)
(2)(B) or (C) (and certain donors to funds
described in section 4966(d)(2)(B)(i)),
foreign organization distributees that are
the subject of equivalency determina-
tions by sponsoring organizations, and
recipients of expenditure responsibility
distributions.
Estimated number of recordkeepers:
13,961.
Estimated average annual burden per
recordkeeper: 3 hours, 47 minutes.
Estimated total annual recordkeeping
burden: 52,874 hours.
Estimated annual frequency of
responses: occasional.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless it dis-
plays a valid control number assigned by
the Office of Management and Budget.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by 26 U.S.C. 6103.
III. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), it is hereby cer-
tified that these proposed regulations will
not have a significant economic impact
on a substantial number of small entities.
This certification is based on the fact that
the proposed regulations will not impact
a substantial number of small entities.
Based on IRS Statistics of Income data
for 2019, there are 1,365,744 active non-
profit charitable organizations, of which
1,624 self-identified as sponsoring orga-
nizations of donor advised funds (DAFs).
Another 82 organizations reported no
DAFs but one or more funds similar to
DAFs, for a total of 1,706 organizations
reporting DAFs or funds similar to DAFs.
Any economic impact stems from the col-
lection of information under §§53.4966-
4(a)(4)(ii); 53.4966-4(c)(2), (4), and (6);
53.4966-4(d)(4) and (6); and 53.4966-
5(a)(1)(ii)(B) and (c)(2). The universe of
sponsoring organizations that would be
affected by the collection of information
under §§53.4966-4(a)(4)(ii); 53.4966-
4(c)(2), (4), and (6); 53.4966-4(d)(4) and
(6); and 53.4966-5(a)(1)(ii)(B) and (c)(2)
is a small subset of all sponsoring orga-
nizations, since those provisions apply to
limited exceptions to DAF status, to for-
eign organizations determined to be the
equivalent of a U.S. public charity, or to
organizations receiving distributions for
which expenditure responsibility is exer-
cised. Thus, the number of organizations
that will be affected by the collection of
information under §§53.4966-4(a)(4)(ii);
53.4966-4(c)(2), (4), and (6); 53.4966-
4(d)(4) and (6); and 53.4966-5(a)(1)(ii)
(B) and (c)(2) will not be substantial. In
2019, of the 1,365,744 active nonprofit
charitable organizations, 1,706 organiza-
tions reported 988,718 DAFs and 72,144
non-DAF funds similar to DAFs. We esti-
mate that of the 72,144 non-DAF funds
reported for 2019, 1.5 percent or 1082
will be section 501(c)(4) scholarship
funds subject to the collection of infor-
mation in §53.4966-4(c)(2), (4), and (6),
and that these funds will be maintained by
a significantly small subset of the 1,706
total organizations reporting DAFs or
funds similar to DAFs. In 2019, 0.3 per-
cent of the 1,365,744 active nonprofit
charitable organizations reported disaster
relief preparedness as their primary mis-
sion. Thus, we estimate that 0.3 percent or
five of the 1,706 organizations may spon-
sor disaster relief funds subject to the col-
lection of information in §53.4966-4(d)
(4) and (6). Any costs incurred in meeting
the collections of information applicable
to section 501(c)(4) scholarship funds
and disaster relief funds would be con-
siderably less than the costs incurred in
establishing and running a separate sec-
tion 501(c)(3) organization, which would
be the alternative means of providing the
same benefits through a nonprofit chari-
table organization. In addition, based on
IRS Statistics of Income data for 2019, of
the 1,624 self-identified sponsoring orga-
nizations, an estimated 446 organizations
made grants to foreign organizations pur-
suant to equivalency determinations sub-
ject to the collection in §53.4966-5(c)(2).
An indeterminate number of foreign orga-
nizations receiving grants from the 446
grant-making organizations also would
be subject to the collection of information
in §53.4966-5(c)(2). The provisions of
§53.4966-5(c)(2) relieve both sponsoring
organizations and foreign organizations
of the statutory expenditure responsibil-
ity requirements under section 4966(c)
(1)(B)(ii) that would otherwise apply to
grants to foreign organizations and that
most organizations prefer to avoid. Based
on the 2019 annual returns of private
foundations, we estimate that very few
sponsoring organizations make grants
requiring expenditure responsibility. For
these reasons, pursuant to the Regulatory
Flexibility Act (5 U.S.C. Chapter 6), the
Secretary hereby certifies that this rule
will not have significant economic impact
on a substantial number of small entities.
Notwithstanding this certification, the
Treasury Department and the IRS invite
comments on the impact this rule may
have on small entities.
Pursuant to section 7805(f) of the
Code, this proposed rule has been sub-
mitted to the Chief Counsel for the Office
of Advocacy of the Small Business
Administration for comment on its impact
on small entities.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated
costs and benefits and take certain other
actions before issuing a final rule that
includes any Federal mandate that may
result in expenditures in any one year by
a State, local, or tribal government, in
the aggregate, or by the private sector,

Bulletin No. 2023–49 1377 December 4, 2023
of $100 million in 1995 dollars, updated
annually for inflation. In 2022, that
threshold is approximately $190 million.
The proposed regulations do not propose
any rule that would include any Federal
mandate that may result in expenditures
by State, local, or tribal governments,
or by the private sector in excess of that
threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on State and local gov-
ernments, and is not required by statute,
or preempts State law, unless the agency
meets the consultation and funding
requirements of section 6 of the Executive
Order. The proposed regulations do not
propose rules that would have federalism
implications, impose substantial direct
compliance costs on State and local gov-
ernments, or preempt State law within the
meaning of the Executive Order.
Comments and Requests for a Public
Hearing
Consideration will be given to any
comments that are submitted timely to
the IRS as prescribed in this preamble
under the ADDRESSES heading. The
Treasury Department and the IRS request
comments on all aspects of the proposed
regulations, and specifically request com-
ments on the clarity of the proposed rules
and how they can be made easier to under-
stand, as well as on the proposed transi-
tion relief, including whether and in what
circumstances additional transition guid-
ance or relief may be necessary. All com-
ments submitted will be made available
at https://www.regulations.gov or upon
request.
A public hearing will be scheduled
if requested in writing by any person
that timely submits electronic or written
comments. Requests for a public hear-
ing are encouraged to be made electron-
ically. If a public hearing is scheduled,
notice of the date, time, and place of the
hearing will be published in the Federal
Register. Announcement 2023-16, 2023-
20 I.R.B. 854 (May 15, 2023), provides
that public hearings will be conducted in
person, although the IRS will continue to
provide a telephonic option for individu-
als who wish to attend or testify at a hear-
ing by telephone. Any telephonic hearing
will be made accessible to people with
disabilities.
Statement of Availability of IRS
Documents
Announcement 2023-16, Notices
2006-109, 2007-21, 2015-62, and 2017-
73, and Revenue Procedures 76-47, 80-39,
and 2017-53 are published in the Internal
Revenue Bulletin (or Cumulative Bulletin)
and are available from the Superintendent
of Documents, U.S. Government Printing
Office, Washington, DC 20402, or by vis-
iting the IRS website at http://www.irs.
gov.
Drafting Information
The principal author of these regulations
is Ward L. Thomas, Office of Associate
Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the IRS and the Treasury Department par-
ticipated in their development.
List of Subjects in 26 CFR Part 53
Excise taxes, Foundations, Investments,
Lobbying, Reporting and recordkeeping
requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
part 53 as follows:
PART 53—FOUNDATION AND
SIMILAR EXCISE TAXES
Paragraph 1. The authority citation
for part 53 continues to read, in part, as
follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Sections 53.4966-0 through
53.4966-6 are added to read as follows:
Sec.
* * * * *
53.4966-0 Outline of regulations.
53.4966-1 Definitions.
53.4966-2 Taxes on taxable
distributions.
53.4966-3 Definition of donor advised
fund.
53.4966-4 Exceptions to the definition
of donor advised fund.
53.4966-5 Taxable distributions.
53.4966-6 Applicability date.
* * * * *
§53.4966-0 Outline of regulations.
This section lists the paragraphs in
§§53.4966-1 through 53.4966-6.
§53.4966-1 Definitions.
(a) In general.
(b) Contribution.
(c) Disqualified supporting
organization.
(d) Distributee.
(e) Distribution.
(1) In general.
(2) Deemed distribution.
(f) Donor.
(g) Donor advised fund.
(h) Donor-advisor.
(1) In general.
(2) Person who establishes fund or
account.
(3) Personal investment advisors.
(i) In general.
(ii) Exception.
(4) Donor-recommended advisory
committee member.
(i) Fund manager.
(1) In general.
(2) Delegation of authority.
(j) Related persons.
(k) Section 4966 regulations.
(l) Sponsoring organization.
(m) Taxable distribution.
§53.4966-2 Taxes on taxable
distributions.
(a) In general.
(b) Taxes paid by the sponsoring
organization.
(c) Taxes paid by fund managers.
(1) In general.
(2) Agreement.
(3) Knowledge.
(4) Joint and several liability.
(5) Limit on liability for managers.

December 4, 2023 1378 Bulletin No. 2023–49
§53.4966-3 Definition of donor advised
fund.
(a) In general.
(b) Separate identification by reference
to contributions of a donor or donors.
(1) In general.
(2) Facts and circumstances tending to
show that a fund or account is separately
identified.
(3) Commingling.
(c) Advisory privileges.
(1) In general.
(i) Facts and circumstances.
(ii) Application to entire fund or
account.
(iii) Donor, donor-advisor, or related
person appointed to an advisory committee.
(A) In general.
(B) Exception.
(iv) Officers, etc. of sponsoring
organization.
(v) Deemed advisory privileges.
(2) Facts sufficient to find advisory
privileges.
(d) Substance over form.
(e) Examples.
§53.4966-4 Exceptions to the definition of
donor advised fund.
(a) Funds or accounts that make dis-
tributions only to a single identified
organization.
(1) In general.
(2) Single identified organization.
(3) Distributions to a single identified
organization.
(4) Special rules.
(i) In general.
(ii) Certifications.
(5) Substitution for specified
organization.
(6) Examples.
(b) Certain funds or accounts that grant
scholarships.
(1) In general.
(2) Control of committee.
(i) In general.
(ii) Direct control.
(iii) Indirect control.
(3) Appointing members of the selec-
tion committee.
(4) Examples.
(c) Certain scholarship funds estab-
lished by certain section 501(c)(4)
organizations.
(d) Certain disaster relief funds.
§53.4966-5 Taxable distributions.
(a) Taxable distributions.
(1) In general.
(2) Non-taxable distributions.
(3) Special rule.
(b) Distribution for purpose not speci-
fied in section 170(c)(2)(B).
(1) In general.
(2) Grants to noncharitable
organizations.
(c) Organizations described in section
170(b)(1)(A).
(1) In general.
(2) Certain foreign organizations.
(d) Expenditure responsibility.
(1) In general.
(2) Special rules.
(i) Non-applicability of certain Code
provisions.
(ii) Substituted terms.
(iii) Additional modifications.
§53.4966-6 Applicability date.
§53.4966-1 Definitions.
(a) In general. The definitions in para-
graphs (b) through (m) of this section
apply for purposes of section 4966 of the
Internal Revenue Code (Code) and the
section 4966 regulations.
(b) Contribution. The term contribu-
tion means any gift, bequest, or similar
payment or transfer, whether in cash or
in-kind, to or for the use of a sponsoring
organization.
(c) Disqualified supporting organiza-
tion. With respect to any distribution, the
term disqualified supporting organization
means—
(1) Any Type III supporting organiza-
tion, as defined in section 4943(f)(5)(A) of
the Code and the regulations under section
509(a)(3) of the Code, that is not a func-
tionally integrated Type III supporting
organization, as defined in section 4943(f)
(5)(B) and the regulations under section
509(a)(3) (see §1.509(a)-4(i) of this chap-
ter); and
(2) Any other supporting organization
described in section 509(a)(3) if a donor
or donor-advisor with respect to the donor
advised fund (either alone or together
with related persons) directly or indirectly
controls a supported organization (as
defined in section 509(f)(3)) of the sup-
porting organization. For purposes of this
paragraph (c), a supported organization
will be considered controlled by a donor
or donor-advisor with respect to the donor
advised fund if that donor or donor-advi-
sor, either alone or by aggregating votes
or positions of authority with related per-
sons, may require the supported organiza-
tion to perform any act that significantly
affects its operations or may prevent the
supported organization from performing
any such act. The supported organization
will be considered to be controlled directly
or indirectly by a donor or donor-advisor
with respect to the donor advised fund,
either alone or together with related per-
sons, if the voting power of such persons
is 50 percent or more of the total voting
power of the governing body of such sup-
ported organization or if one or more of
such persons have the right to exercise
veto power over the actions of the govern-
ing body of the supported organization.
However, all pertinent facts and circum-
stances will be taken into consideration in
determining whether one or more persons
do in fact directly or indirectly control the
supported organization.
(d) Distributee. The term distribu-
tee means any person, governmental
entity, or donor advised fund receiving a
distribution.
(e) Distribution—(1) In general. The
term distribution means any grant, pay-
ment, disbursement, or transfer, whether
in cash or in kind, from a donor advised
fund. Except as provided in paragraph (e)
(2) of this section, investments and rea-
sonable investment or grant-related fees
are not considered distributions.
(2) Deemed distribution. A distribution
includes any use of donor advised fund
assets that results in a more than inciden-
tal benefit (within the meaning of section
4967) to a donor, donor-advisor, or related
person. In addition, a distribution includes
an expense charged solely to a particular
donor advised fund that is paid, directly
or indirectly, to a donor, donor-advisor, or
related person with respect to the donor
advised fund.
(f) Donor. The term donor means
any person described in section 7701(a)
(1) of the Code that makes a contribu-
tion to a fund or account of a sponsoring

Bulletin No. 2023–49 1379 December 4, 2023
organization, other than a contributor that
is a governmental unit described in sec-
tion 170(c)(1) of the Code or an organi-
zation described in section 509(a)(1), (2),
or (3) that is not a disqualified supporting
organization.
(g) Donor advised fund. See §53.4966-3
for the definition of donor advised fund.
See §53.4966-4 for exceptions to the defi-
nition of donor advised fund.
(h) Donor-advisor—(1) In general.
The term donor-advisor means a person
appointed or designated by a donor to
have advisory privileges regarding the
distribution or investment of assets held in
a fund or account of a sponsoring organi-
zation. If a donor-advisor delegates any of
the donor-advisor’s advisory privileges to
another person, or appoints or designates
another donor-advisor, that person is also
a donor-advisor. No particular form of
appointment or designation is necessary.
Except as provided in paragraphs (h)(3)
(ii) and (h)(4) of this section, a donor-ad-
visor includes a person recommended by
a donor or donor-advisor to have advisory
privileges if the sponsoring organization
provides such privileges.
(2) Person who establishes fund or
account. A person (other than a person
or governmental unit excepted from sta-
tus as a donor under paragraph (f) of this
section) who establishes a fund or account
and advises as to the distribution or invest-
ment of amounts in that fund or account
will be treated as a donor-advisor with
respect to that fund or account, regardless
of whether the person contributes to the
fund or account.
(3) Personal investment advisors—(i)
In general. An investment advisor defined
in section 4958(f)(8)(B) of the Code who
manages the investment of, or provides
investment advice with respect to, both the
assets maintained in a donor advised fund
and the personal assets of a donor to that
donor advised fund (personal investment
advisor) will be treated as a donor-advi-
sor with respect to the donor advised fund
while serving in that dual capacity regard-
less of whether the donor appointed, des-
ignated, or recommended the personal
investment advisor.
(ii) Exception. A personal investment
advisor is not considered a donor-advi-
sor if the personal investment advisor is
properly viewed as providing services to
the sponsoring organization as a whole,
rather than providing services to the donor
advised fund.
(4) Donor-recommended advisory
committee member. A person recom-
mended by a donor or donor-advisor and
appointed by the sponsoring organization
to serve as a member of a committee of the
sponsoring organization that advises as to
distributions or investments of amounts
in a fund or account is a donor-advisor
unless—
(i) The recommendation is based on
objective criteria related to the expertise
of the member in the particular field of
interest or purpose of the fund or account;
(ii) The committee consists of three or
more individuals, and a majority of the
committee is not recommended by the
donor or donor-advisor; and
(iii) The recommended person is not a
related person with respect to the recom-
mending donor or donor-advisor.
(i) Fund manager—(1) In general. The
term fund manager means, with respect to
any sponsoring organization—
(i) An officer, director, or trustee of the
sponsoring organization or any person
having authority or responsibility similar
to that exercised by an officer, director, or
trustee of a sponsoring organization; or
(ii) With respect to any act (or failure
to act) resulting in a taxable distribution,
the employee who has final authority or
responsibility (either individually or as a
member of a collective body) for the act
(or failure to act).
(2) Delegation of authority. A person
has authority or responsibility similar
to that exercised by an officer, director,
or trustee of a sponsoring organization
within the meaning of paragraph (i)(1)(i)
of this section if, with respect to an act (or
failure to act) resulting in a taxable distri-
bution, he or she has been delegated final
authority or responsibility with respect to
the act by an officer, director, or trustee of
the sponsoring organization or by the gov-
erning body of the sponsoring organiza-
tion. For example, an investment manager
is a fund manager with respect to a tax-
able distribution if the sponsoring organi-
zation’s governing body delegated to the
investment manager the final authority to
make certain investment decisions and, in
the exercise of that authority, the manager
committed the sponsoring organization to
making a taxable distribution. To be con-
sidered to have authority or responsibil-
ity similar to that exercised by an officer,
director, or trustee of a sponsoring organi-
zation within the meaning of paragraph (i)
(1)(i) of this section, a person need not be
an employee of the sponsoring organiza-
tion. A person does not have authority or
responsibility similar to that exercised by
an officer, director, or trustee of a spon-
soring organization within the meaning
of paragraph (i)(1)(i) of this section if the
person is merely implementing a decision
made by a superior.
(j) Related persons. With respect to
any individual, the term related person
means a family member of the individual
(as defined in section 4958(f)(4)). With
respect to any person or persons, the term
related person also means a 35-percent
controlled entity (as defined in section
4958(f)(3) by substituting such person or
persons or their family members for per-
sons described in subparagraph (A) or (B)
of paragraph (1) in section 4958(f)(3)(A)
(i)). See section 4958(f)(7)(B) and (C).
(k) Section 4966 regulations. The term
section 4966 regulations means this sec-
tion and §§53.4966-2 through 53.4966-6.
(l) Sponsoring organization. The term
sponsoring organization means any orga-
nization that—
(1) Is described in section 170 (other
than a governmental unit described in
section 170(c)(1)), without the require-
ment under section 170(c)(2)(A) that it be
created or organized in the United States
or in any possession thereof, or under the
law of the United States, any State, the
District of Columbia, or any possession of
the United States;
(2) Is not a private foundation (as
defined in section 509(a) and the regula-
tions under section 509(a)); and
(3) Maintains one or more donor
advised funds.
(m) Taxable distribution. See
§53.4966-5 for the definition of taxable
distribution.
§53.4966-2 Taxes on taxable
distributions.
(a) In general. Section 4966 of the
Internal Revenue Code imposes two
excise taxes with respect to taxable dis-
tributions from a donor advised fund.

December 4, 2023 1380 Bulletin No. 2023–49
Paragraph (b) of this section describes
the excise tax under section 4966(a)(1)
imposed on a sponsoring organization of a
donor advised fund. Paragraph (c) of this
section describes the excise tax under sec-
tion 4966(a)(2) imposed on a fund man-
ager who knowingly agrees to a taxable
distribution.
(b) Taxes paid by the sponsoring orga-
nization. For each taxable distribution, the
excise tax imposed by section 4966(a)(1)
is equal to 20 percent of the amount of the
taxable distribution from a donor advised
fund. The tax imposed by section 4966(a)
(1) (20-percent section 4966 tax) is paid
by the sponsoring organization of the
donor advised fund.
(c) Taxes paid by fund managers—(1)
In general. For each taxable distribution
with respect to which section 4966(a)
(1) imposes an excise tax, the excise tax
imposed by section 4966(a)(2) is equal to
five percent of the amount of the taxable
distribution on the agreement of any fund
manager who agreed to the making of the
taxable distribution with knowledge that
it is a taxable distribution as described in
paragraph (c)(3) of this section. The tax
imposed by section 4966(a)(2) (five-per-
cent section 4966 tax) is paid by the fund
manager or managers who agreed to the
making of the taxable distribution.
(2) Agreement. The agreement of any
fund manager to the making of a taxable
distribution consists of any manifesta-
tion of approval of the distribution that is
sufficient to constitute an exercise of the
fund manager’s authority to approve, or
to exercise discretion in recommending
approval of, the making of the distribution
by the sponsoring organization, whether
or not the manifestation of approval is the
final or decisive approval on behalf of the
sponsoring organization.
(3) Knowledge. For purposes of section
4966(a)(2), a fund manager agrees to the
making of a distribution with knowledge
that it is a taxable distribution only if the
manager either—
(i) Is in fact aware that it is a taxable
distribution; or
(ii) Has knowledge of facts sufficient
to determine that, based on those facts,
the distribution would be a taxable distri-
bution and negligently fails to make rea-
sonable attempts to ascertain whether the
distribution is a taxable distribution.
(4) Joint and several liability. In any
case in which more than one fund manager
is liable for the five-percent section 4966
tax, all such fund managers are jointly and
severally liable for the five-percent sec-
tion 4966 taxes imposed with respect to
that distribution.
(5) Limit on liability for managers. The
maximum aggregate amount of five-per-
cent section 4966 tax collectible for any
one taxable distribution is $10,000.
§53.4966-3 Definition of donor advised
fund.
(a) In general. Except as provided in
§53.4966-4, the term donor advised fund
means a fund or account—
(1) That is separately identified by
reference to contributions of a donor or
donors in accordance with paragraph (b)
of this section;
(2) That is owned and controlled by a
sponsoring organization; and
(3) With respect to which at least one
donor or donor-advisor has, or reasonably
expects to have, advisory privileges with
respect to the distribution or investment
of amounts held in the fund or account
by reason of the donor’s status as a donor
in accordance with paragraph (c) of this
section.
(b) Separate identification by ref-
erence to contributions of a donor or
donors
—(1) In general. A fund or account
is separately identified by reference to
contributions of a donor or donors if the
sponsoring organization maintains a for-
mal record of contributions to the fund
or account relating to a donor or donors.
If there is no formal record, whether a
fund or account is separately identified
by reference to contributions of a donor
or donors is based on all the facts and
circumstances.
(2) Facts and circumstances tending to
show that a fund or account is separately
identified. Facts and circumstances that
are relevant in determining that a fund or
account is separately identified by refer-
ence to contributions of a donor or donors
include—
(i) The fund or account balance reflects
items such as contributions, dividends,
interest, distributions, administrative
expenses, and gains and losses (realized
or unrealized);
(ii) The fund or account is named after
one or more donors, donor-advisors, or
related persons;
(iii) The sponsoring organization refers
to the fund or account as a donor advised
fund;
(iv) The sponsoring organization has
an agreement or understanding with one
or more donors or donor-advisors that the
fund or account is a donor advised fund;
(v) One or more donors or donor-ad-
visors regularly receive a fund or account
statement from the sponsoring organiza-
tion; and
(vi) The sponsoring organization gen-
erally solicits advice from the donor(s) or
donor-advisor(s) before it makes distribu-
tions from the fund or account.
(3) Commingling. A fund or account
does not fail to be a donor advised fund
merely because the sponsoring organiza-
tion commingles the assets attributed to
the fund or account with other assets of
the sponsoring organization, as long as the
sponsoring organization treats the fund or
account as attributable to contributions of
a donor or donors.
(c) Advisory privileges—(1) In gen-
eral—(i) Facts and circumstances. Under
section 4966(d)(2)(A)(iii) of the Internal
Revenue Code (Code), at least one donor
or donor-advisor must have, or reasonably
expect to have, advisory privileges by rea-
son of the donor’s status as a donor. A donor
or donor-advisor may have, or reasonably
expect to have, advisory privileges even in
the absence of actual provision of advice.
The existence of advisory privileges, or
the reasonable expectation thereof, is
based on all the facts and circumstances,
which in turn depend on the conduct (and
any agreement or understanding) of both
the donor(s) or donor-advisor(s) and the
sponsoring organization. Advisory priv-
ileges include those arising from service
on an advisory committee. If a donor or
donor-advisor has, or reasonably expects
to have, advisory privileges as defined in
this paragraph (c), then the advisory priv-
ileges are deemed to be by reason of the
donor’s status as a donor except as other-
wise provided in this paragraph (c).
(ii) Application to entire fund or
account. If at least one donor or donor-ad-
visor has, or reasonably expects to have,
advisory privileges with respect to a fund
or account or any portion of a fund or

Bulletin No. 2023–49 1381 December 4, 2023
account, advisory privileges by reason of
the donor’s status as a donor exist with
respect to that fund or account even if
there are multiple donors to the fund or
account.
(iii) Donor, donor-advisor, or related
person appointed to an advisory com-
mittee—(A) In general. A sponsoring
organization’s appointment of a donor,
donor-advisor, or related person to be on
a committee of persons that advises as to
distributions or investments of amounts
in the fund or account will be deemed to
result in advisory privileges by reason
of the donor’s status as a donor unless–
(1) The appointment is based on objec-
tive criteria related to the expertise of the
appointee in the particular field of interest
or purpose of the fund or account;
(2) The committee consists of three or
more individuals, not more than one-third
of whom are related persons with respect
to any member of the committee; and
(3) The appointee is not a significant
contributor to the fund or account, taking
into account contributions by related per-
sons with respect to the appointee, at the
time of appointment.
(B) Exception. An appointee may be
deemed to have advisory privileges by
reason of a donor’s status as a donor based
on the facts and circumstances, such as if
the appointee was not a significant con-
tributor to a fund or account at the time
of appointment but became a significant
contributor shortly thereafter.
(iv) Officers, etc. of sponsoring orga-
nization. Advice provided solely in a
person’s capacity as an officer, director,
employee (or in a similar capacity) of a
sponsoring organization does not by itself
give rise to advisory privileges by reason
of a donor’s status as a donor. However,
if an officer, director, or employee of the
sponsoring organization is allowed to
advise how to distribute or invest amounts
in a fund or account because of such per-
son’s contributions to the fund or account,
such person will be considered to have
advisory privileges by reason of the per-
son’s status as a donor with respect to that
fund or account.
(v) Deemed advisory privileges. Except
as provided in paragraph (c)(1)(iv) of this
section, if a donor is the sole person with
advisory privileges with respect to a fund
or account, the advisory privileges will be
deemed to be by reason of the donor’s sta-
tus as a donor.
(2) Facts sufficient to find advisory
privileges. A donor or donor-advisor
has advisory privileges by reason of the
donor’s status as a donor, regardless of
whether they are exercised, if—
(i) The sponsoring organization allows
a donor or donor-advisor to provide non-
binding recommendations regarding
distributions from, or regarding the invest-
ment of assets held in, a fund or account;
(ii) A written agreement between the
sponsoring organization and a donor or
a donor-advisor states that a donor or
donor-advisor has advisory privileges;
(iii) A written document or any mar-
keting material made available to a donor
or donor-advisor indicates that a donor or
donor-advisor may provide advice to the
sponsoring organization regarding the dis-
tribution or investment of amounts held by
a sponsoring organization (for example, a
pre-approved list of investment options or
distributees that the sponsoring organiza-
tion provides to a donor or donor-advisor);
or
(iv) The sponsoring organization gen-
erally solicits advice from a donor or
donor-advisor regarding the distribution
or investment of amounts held in a fund
or account.
(d) Substance over form. The
Commissioner may look to the substance
of an arrangement, not merely its form, in
determining whether the arrangement is a
donor advised fund.
(e) Examples. The following examples
illustrate the principles of this section (in
each example, assume that the funds or
accounts at issue are owned and controlled
by the sponsoring organization):
(1) Example 1. A, B, and C are unrelated donors
who jointly establish Fund X at sponsoring orga-
nization Y. A, B, and C each make equal contribu-
tions to Fund X and each have advisory privileges
with respect to all of the assets in Fund X. Y sends
A monthly account statements showing Fund X’s
account balance and any transactions in the account.
A shares information about Fund X with B and C
when asked or as needed. Fund X is separately iden-
tified by reference to contributions of donors and is a
donor advised fund.
(2) Example 2. Assume the same facts as para-
graph (e)(1) of this section (Example 1), except that
A makes 70 percent of the contributions, B 20 per-
cent, and C 10 percent, with each having advisory
privileges with respect to all of the assets in Fund
X. Fund X is separately identified by reference to
contributions of donors and is a donor advised fund.
(3) Example 3. In Year 1, X, a governmental
entity described in section 170(c)(1), and Y, a public
charity described in section 509(a)(1) of the Code,
establish and fully fund Fund M at sponsoring orga-
nization A. Fund M is separately identified with
respect to X and Y. However, because neither X nor
Y is a donor, Fund M is not separately identified by
reference to contributions of a donor or donors and is
not a donor advised fund.
(4) Example 4. Assume the same facts as para-
graph (e)(3) of this section (Example 3), except that
in Year 2 individual donors contribute to Fund M.
Only X and Y have advisory privileges with respect
to the distribution or investment of amounts held
in Fund M. Because no donor or donor-advisor has
advisory privileges with respect to Fund M, Fund M
is not a donor advised fund.
(5) Example 5. F, an individual, is a donor to Fund
T, a multiple-donor fund at sponsoring organization
X. F is also a director of X who provides investment
advice that affects all funds at X in his capacity as a
director. F will not be considered to have advisory
privileges with respect to Fund T solely because of
F’s duties as director of X.
(6) Example 6. Assume the same facts as para-
graph (e)(5) of this section (Example 5), except
that by reason of F’s contribution to Fund T, F is
appointed to a committee that advises how to dis-
tribute or invest amounts in Fund T. F has advisory
privileges with respect to Fund T by reason of F’s
status as a donor.
(7) Example 7. Sponsoring organization Y has
established Fund P, which is dedicated to the relief of
poverty in City Z. Fund P is advised by a 5-member
committee selected by Y from residents of City Z,
potentially including donors to Fund P. The committee
is comprised of community leaders and other persons
with special knowledge or experience in the relief of
poverty. Each committee member serves for a term of
three years and cannot serve more than two terms. No
committee member is related to another committee
member and no committee member is (together with
related persons with respect to any committee mem-
ber) a significant contributor to Fund P. Over 100 citi-
zens of City Z have contributed to Fund P. Y maintains
a formal record of donors to Fund P and amounts con-
tributed, and thus Fund P is separately identified by
reference to contributions of donors. However, under
the circumstances, no person who serves on the advi-
sory committee of Fund P is deemed to have advisory
privileges by reason of a donor’s status as a donor.
Fund P is not a donor advised fund.
(8) Example 8. Fifteen unrelated individuals
establish Fund Q at sponsoring organization T. Each
individual contributes to Fund Q, and these individ-
uals constitute a committee appointed by T to advise
on investments and distributions from Fund Q. T
regularly issues a statement to one of the committee
members (who shares the information with the oth-
ers) showing the account balance and any transac-
tions with Fund Q. Fund Q is a donor advised fund.
(9) Example 9. Assume the same facts as in
paragraph (e)(8) of this section (Example 8), except
that the advisory committee consists of three of the
donors, rotated annually. Fund Q is a donor advised
fund.
(10) Example 10. N, an individual, establishes
Fund O at W, a sponsoring organization. Fund O

December 4, 2023 1382 Bulletin No. 2023–49
serves as a memorial to N’s daughter, and receives
many contributions from unrelated individuals. N is
the only person with advisory privileges and thus is a
donor advisor. Fund O is a donor advised fund.
(11) Example 11. F, an individual, establishes
Fund R at T, a sponsoring organization, to provide
scholarship grants for the advancement of science
at local secondary schools. F is the sole donor to
Fund R. Pursuant to F’s recommendation, an advi-
sory committee consisting of five persons is solely
responsible for advising T with respect to the distri-
bution and investment of amounts held in Fund R. F
recommends (and T appoints) two individuals who
are the heads of the science departments of those
schools, neither of whom is related to F. T inde-
pendently appoints the other three committee mem-
bers, none of whom are recommended by donors or
related to donors. The persons recommended by F
for committee membership are not donor-advisors
because F’s recommendations are for individuals
who are not related persons with respect to F, who,
based on objective criteria, have expertise in the field
of interest of Fund R, the committee consists of more
than two individuals, and a majority of the commit-
tee is not recommended by F. Because no donor or
donor-advisor has, or reasonably expects to have,
advisory privileges with respect to the distribution
or investment of amounts held in the fund or account
by reason of the donor’s status as a donor, Fund R is
not a donor advised fund.
§53.4966-4 Exceptions to the definition
of donor advised fund.
(a) Funds or accounts that make dis-
tributions only to a single identified orga-
nization—(1) In general. The term donor
advised fund does not include any fund
or account that is established by written
agreement to make (and that actually does
make) distributions only to a single iden-
tified organization as defined in paragraph
(a)(2) of this section, and that meets the
other requirements of this paragraph (a).
(2) Single identified organization. For
purposes of this paragraph (a), the term
single identified organization means an
organization that is described in sections
170(c)(2) and 509(a)(1), (2), or (3) of the
Internal Revenue Code (Code) (other than
a disqualified supporting organization),
or that is a governmental entity described
in section 170(c)(1) if the distribution is
exclusively for public purposes.
(3) Distributions to a single identified
organization. The sponsoring organiza-
tion must make distributions from the
fund or account only to the single iden-
tified organization for use in the single
identified organization’s activities (other
than the activities of administering donor
advised funds or grant-making), and not to
third parties on behalf of the single identi-
fied organization.
(4) Special rules—(i) In general. A
fund or account will not be treated as mak-
ing distributions only to a single identified
organization if—
(A) A donor, donor-advisor, or related
person has or reasonably expects to have
the ability to advise regarding some or all
of the distributions from the single iden-
tified organization to other individuals or
entities; or
(B) A distribution from the fund or
account provides, directly or indirectly,
a more than incidental benefit (within the
meaning of section 4967 of the Code), to
a donor, donor-advisor, or related person
with respect to the fund.
(ii) Certifications. A sponsoring orga-
nization may rely on a certification from
the donor that no distribution will be
described in paragraph (a)(4)(i) of this
section as long as the sponsoring organi-
zation lacks knowledge to the contrary.
(5) Substitution for specified organi-
zation. A sponsoring organization may
substitute another single identified orga-
nization if the substitution is conditioned
upon the occurrence of a loss of exemp-
tion, substantial failure or abandonment of
operations, or a dissolution or reorganiza-
tion that results in the named single iden-
tified organization ceasing to exist, and
the event is beyond the direct or indirect
control of donor(s), donor-advisor(s), or
related persons.
(6) Examples. The following examples
illustrate the principles of this section:
(i) Example 1. A and B, a married couple, estab-
lish Fund V at X, a sponsoring organization. Fund V
is established by written agreement to make distri-
butions only to Y, a university recognized as exempt
under section 501(c)(3) of the Code and described in
section 170(b)(1)(A)(ii). In the gift instrument, A and
B reserve the right to recommend which university
projects should be supported by Fund V and which
investments to make with fund assets. A and B cer-
tify that A, B, and persons related to A and B do not
benefit from any distributions from Fund V and do
not have, or reasonably expect to have, the ability to
advise regarding some or all of the distributions from
Y to other entities. Fund V is not a donor advised
fund because all distributions are made to a single
identified organization, Y.
(ii) Example 2. Assume the same facts as para-
graph (a)(6)(i) of this section (Example 1), except
that the sponsoring organization uses funds from
Fund V to purchase goods to distribute to the com-
munity on behalf of Y. Fund V does not meet the
exception for a fund or account that makes distribu-
tions only to a single identified organization because
not all distributions from Fund V are made to the sin-
gle identified organization, Y.
(iii) Example 3. Assume the same facts as para-
graph (a)(6)(i) of this section (Example 1), except
that A is on the Board of Y. Because A has the ability
to advise some or all of the distributions from Y to
other entities, Fund V does not meet the exception
for a fund or account that makes distributions only to
a single identified organization.
(b) Certain funds or accounts that
grant scholarships—(1) In general. The
term donor advised fund does not include
any fund or account with respect to which
a donor or donor-advisor advises as to
which individuals receive grants for travel,
study, or other similar purposes, if—
(i) The exclusive purpose of the fund
or account is to make grants to individuals
for travel, study, or other similar purposes;
(ii) The donor or donor-advisor pro-
vides advice exclusively in the person’s
capacity as a member of the selection
committee selecting the individuals who
receive grants;
(iii) All the members of the selection
committee are appointed by the sponsor-
ing organization;
(iv) No combination of donor(s),
donor-advisor(s), or related persons con-
trols, directly or indirectly, the selection
committee;
(v) All grants from the fund or account
are awarded on an objective and nondis-
criminatory basis pursuant to a written
procedure approved in advance by the
board of directors of the sponsoring orga-
nization, and the procedure is designed
to ensure that all the grants adhere to the
principles set forth by section 4945(g)
(1), (2) or (3) of the Code and the regu-
lations under section 4945 (other than the
requirement to get advance approval by
the IRS); and
(vi) The fund or account maintains ade-
quate records as described in §53.4945-
4(c)(6) that demonstrate the recipients
were selected on an objective and nondis-
criminatory basis.
(2) Control of committee—(i) In gen-
eral. For purposes of paragraph (b)(1)
(iv) of this section, whether control of the
committee exists is determined by looking
to the substance, rather than the form, of
any arrangement.
(ii) Direct control. A committee will
be considered controlled if donor(s),
donor-advisor(s), or related persons,
either alone or together—

Bulletin No. 2023–49 1383 December 4, 2023
(A) Can require the committee to take
or refrain from taking any action;
(B) Control 50 percent or more of the
total voting power of the committee; or
(C) Have the right to exercise veto
power over the committee’s decisions.
(iii) Indirect control. Whether a com-
mittee is indirectly controlled by a com-
bination of donor(s), donor-advisor(s), or
related persons is determined by the facts
and circumstances, including the nature
of any relationships among the members
of the selection committee and with any
donor, donor-advisor, or related person.
For example, a committee is indirectly
controlled by a combination of donor(s),
donor-advisor(s), or related persons if a
majority of the selection committee is
currently engaged by the donor, donor-ad-
visor, or any related person in any employ-
ment or fiduciary capacity, whether as an
employee or independent contractor, or
recommended by a donor or donor-advi-
sor and appointed to the selection commit-
tee based on other than objective criteria
regarding the person’s expertise, or a com-
bination thereof.
(3) Appointing members of the selec-
tion committee. In appointing the members
of the selection committee, a sponsoring
organization may act through its board
of directors, trustees, or other governing
body; a committee appointed by the gov-
erning body; or an appropriate officer of
the sponsoring organization.
(4) Examples. The following examples
illustrate the principles of this section:
(i) Example 1. Fund O was established at spon-
soring organization Y to grant scholarships. Fund O
receives contributions from many unrelated donors,
including D, E, and F. Y appointed D, E, and F to
serve on Fund O’s 5-person selection committee by
reason of their status as donors. Because donors con-
trol its selection committee, Fund O does not meet
the exception for certain funds or accounts that grant
scholarships under paragraph (b) of this section.
(ii) Example 2. Assume the same facts as in para-
graph (b)(4)(i) of this section (Example 1), except
that Y appoints G, a donor; H, G’s donor-advisor; and
I, an attorney currently employed by G to serve on
Fund O’s 5-person selection committee. Y appoints
G, H, and I by reason of G’s status as a donor. The
committee is indirectly controlled by G, and thus the
fund does not meet the exception for certain funds or
accounts that grant scholarships under paragraph (b)
of this section.
(iii) Example 3. Assume the same facts as in
paragraph (b)(4)(i) of this section (Example 1),
except that Y appoints D and four officers of Y who
have not contributed to Fund O to serve on the 5-per-
son selection committee. Assuming that the other
requirements of paragraph (b)(1) of this section are
met and that the facts do not indicate that D indirectly
controls the committee, Fund O meets the exception
for certain funds or accounts that grant scholarships
under paragraph (b) of this section.
(c) Certain scholarship funds estab-
lished by certain section 501(c)(4) organi-
zations. The term donor advised fund does
not include a fund or account established
by a broad-based membership organiza-
tion described in section 501(c)(4) that
establishes a committee to advise as to
which individuals receive grants, if—
(1) The fund or account’s single iden-
tified charitable purpose is to make grants
to individuals for scholarships described
in section 4945(g)(1);
(2) The selection of recipients of schol-
arships from the fund or account is made
using a selection committee the members
of which are nominated by the section
501(c)(4) organization and approved in
writing by the sponsoring organization;
(3) The fund or account serves a char-
itable class;
(4) Recipients of grants from the fund
or account are selected on an objective
and nondiscriminatory basis pursuant to
a procedure, approved in advance by the
sponsoring organization’s board of direc-
tors, that is designed to ensure that all the
grants meet the requirements of section
4945(g)(1) and the regulations under sec-
tion 4945 (other than the requirement to
get advance approval by the IRS);
(5) No distribution is made from the
fund or account to, or for the benefit of:
(i) Any director, officer, or trustee of
the sponsoring organization of the fund or
account;
(ii) Any member of the fund or
account’s selection committee;
(iii) Any member, honorary member, or
employee of the section 501(c)(4) organi-
zation; or
(iv) Any related person with respect to
anyone described in paragraph (c)(5)(i),
(ii), or (iii) of this section; and
(6) The fund or account maintains ade-
quate records as described in §53.4945-
4(c)(6) that demonstrate the recipients
were selected on an objective and nondis-
criminatory basis.
(d) Certain disaster relief funds. The
term donor advised fund does not include
a fund or account if—
(1) The fund or account’s single iden-
tified charitable purpose is to provide
relief from one or more qualified disasters
within the meaning of section 139(c)(1),
(2), or (3) of the Code;
(2) The fund or account serves a char-
itable class;
(3) The selection of recipients of grants
from the fund or account is made using a
selection committee—
(i) That is not directly or indirectly
controlled (as defined in paragraph (b)(2)
of this section) by donor(s), donor-advi-
sor(s), or related persons and to which all
the members are appointed by the spon-
soring organization; or
(ii) The majority of which, if the fund
or account gives preference or priority to
employees (or their family members) of
an employer to receive grants, consists of
persons who are not in a position to exer-
cise substantial influence over the affairs
of the employer (or adequate substitute
procedures exist to ensure that any benefit
to the employer is incidental and tenuous);
(4) The selection committee selects
recipients of grants from the fund or
account (and determines the amounts of
such grants) based on objective and non-
discriminatory determinations of need
pursuant to a procedure approved in
advance by the board of directors of the
sponsoring organization;
(5) No distribution is made from the
fund or account that would result in more
than incidental benefit (within the mean-
ing of section 4967 of the Code) to—
(i) Any director, officer, or trustee of
the sponsoring organization of the fund or
account;
(ii) Any member of the fund’s selection
committee; or
(iii) Any related person with respect to
a director, officer, or trustee of the spon-
soring organization or to a member of the
selection committee; and
(6) Records are maintained that demon-
strate the need of the recipients for the
disaster relief assistance provided and that
satisfy section 6033(b)(14) of the Code.
§53.4966-5 Taxable distributions.
(a) Taxable distributions—(1) In gen-
eral. Except as provided in paragraphs (a)
(2) and (3) of this section, the term taxable
distribution means any distribution from a
donor advised fund—
(i) To any natural person; or

December 4, 2023 1384 Bulletin No. 2023–49
(ii) To any other person if—
(A) The distribution is for any purpose
other than one specified in section 170(c)
(2)(B) of the Internal Revenue Code
(Code), as defined in paragraph (b) of this
section; or
(B) The sponsoring organization does
not exercise expenditure responsibility
with respect to the distribution in accor-
dance with paragraph (d) of this section.
(2) Non-taxable distributions. The term
taxable distribution does not include any
distribution from a donor advised fund to—
(i) Any organization described in sec-
tion 170(b)(1)(A) (other than a disquali-
fied supporting organization), as defined
in paragraph (c) of this section;
(ii) The sponsoring organization of the
donor advised fund; or
(iii) Any other donor advised fund.
(3) Special rule. If a series of distri-
butions is undertaken pursuant to a plan
that achieves a result inconsistent with the
purposes of section 4966 of the Code, the
distributions are treated as a single distri-
bution for purposes of section 4966. For
example, if a donor advises a distribution,
that the sponsoring organization subse-
quently makes, from a donor advised fund
to Charity X and the donor or the sponsor-
ing organization arranges for Charity X to
use the funds to make distributions to indi-
viduals recommended by the donor, the dis-
tribution will be a taxable distribution from
the sponsoring organization to individuals.
(b) Distribution for purpose not spec-
ified in section 170(c)(2)(B)—(1) In gen-
eral. For purposes of paragraph (a)(1)
(ii)(A) of this section, a distribution to
be used for an activity that is prohibited
under section 501(c)(3) of the Code or
for an activity that, if it were a substantial
part of a section 501(c)(3) organization’s
total activities, would cause loss of tax
exemption, is not for a purpose specified
in section 170(c)(2)(B). For example, a
distribution used for political campaign
intervention activity or for attempting
to influence legislation is considered
to be for a purpose not specified in sec-
tion 170(c)(2)(B). Purposes described in
section 170(c)(2)(B) are treated as such
whether or not carried out by an organiza-
tion described in section 170(c).
(2) Grants to noncharitable orga-
nizations. If the distribution is a grant
(as defined in §53.4945-4(a)(2)) to any
organization (other than an organization
described in section 501(c)(3) and not in
section 509(a)(4) of the Code), it will not
be considered for a purpose specified in
section 170(c)(2)(B) unless the grantee
agrees either to separately account for the
grant funds on its books or to segregate
the grant funds.
(c) Organizations described in section
170(b)(1)(A)—(1) In general. For pur-
poses of paragraph (a)(2)(i) of this sec-
tion, an organization will be treated as
described in section 170(b)(1)(A) if—
(i) It is described in both sections
170(b)(1)(A) and 170(c)(2), other than a
disqualified supporting organization, and
without regard to section 170(c)(2)(A);
(ii) It is a governmental unit described
in section 170(b)(1)(A)(v) and 170(c)(1)
(or an agency or instrumentality thereof,
including an organization described in
section 511(a)(2)(B) of the Code), as long
as the distribution to it is made for exclu-
sively public purposes; or
(iii) It is a foreign government (or an
agency or instrumentality thereof), or an
international organization designated as
such by Executive Order under 22 U.S.C.
288, as long as the distribution to it is
made exclusively for charitable purposes
as described in section 170(c)(2)(B).
(2) Certain foreign organizations. For
purposes of this section, a foreign orga-
nization distributee that does not have a
ruling or determination letter that it is an
organization described in sections 501(c)
(3) and 170(b)(1)(A) (other than a dis-
qualified supporting organization) will be
treated as described in sections 501(c)(3)
and 170(b)(1)(A) (other than a disquali-
fied supporting organization) if, prior to
the distribution, the sponsoring organi-
zation makes a good faith determination,
using procedures similar to those set forth
in §53.4945-5(a)(5), that the distributee is
described in sections 501(c)(3) and 170(b)
(1)(A) (other than a disqualified support-
ing organization).
(d) Expenditure responsibility—(1) In
general. For purposes of paragraph (a)
(1)(ii)(B) of this section, a sponsoring
organization will be treated as exercising
expenditure responsibility if it follows
the procedures set forth in §53.4945-5(b)
through (e) as modified by paragraph (d)
(2) of this section.
(2) Special rules—(i) Non-applicability
of certain Code provisions. References to
sections 507, 4945(d), and 4948 of the
Code do not apply.
(ii) Substituted terms. In applying
§53.4945-5(b) through (e), substitute
sponsoring organization for private
foundation, granting private foundation,
granting foundation, grantor foundation,
foundation, or grantor (but not for private
foundation grantees in §53.4945-5(c));
substitute distribution for grant or amount
granted; substitute distributee for grantee;
and substitute taxable distribution for tax-
able expenditure each place they appear.
(iii) Additional modifications. In lieu
of §53.4945-5(b)(3)(iv)(c) and (b)(4)(iv)
(c), the distributee must agree not to use
any of the funds to make any grant to an
organization that does not comply with
the expenditure responsibility require-
ments of this paragraph (d), to make
any grant to a natural person, or to make
any grant, loan, compensation, or other
similar payment (as described in sec-
tion 4958(c)(2) of the Code) to a donor,
donor-advisor, or related person with
respect to the donor advised fund from
which the distribution that is the subject
of the agreement is made.
§53.4966-6 Applicability date.
Applicability date. The rules of
§§53.4966-1 through 53.4966-5 apply to
taxable years ending on or after [the date
of publication of the Treasury decision
adopting these rules as final regulations in
the Federal Register].
Douglas W. O’Donnell,
Deputy Commissioner for Services and
Enforcement.
(Filed by the Office of the Federal Register
November 13, 2023, 8:45 a.m., and published in the
issue of the Federal Register for November 14, 2023,
88 FR 77922)

Bulletin No. 2023–49 1385 December 4, 2023
Deletions From Cumulative
List of Organizations,
Contributions to Which are
Deductible Under Section
170 of the Code
Announcement 2023-34
Table of Contents
The Internal Revenue Service has
revoked its determination that the organi-
zations listed below qualify as organiza-
tions described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the IRS will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the IRS is not pre-
cluded from disallowing a deduction for
any contributions made after an organiza-
tion ceases to qualify under section 170(c)
(2) if the organization has not timely filed
a suit for declaratory judgment under sec-
tion 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declar-
atory judgment has been timely filed,
contributions from individuals and orga-
nizations described in section 170(c)(2)
that are otherwise allowable will continue
to be deductible. Protection under sec-
tion 7428(c) would begin on December
04, 2023 and would end on the date the
court first determines the organization is
not described in section 170(c)(2) as more
particularly set for in section 7428(c)(1).
For individual contributors, the maximum
deduction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any indi-
vidual, in whole or in part, for the acts or
omissions of the organization that were
the basis for revocation.
NAME OF ORGANIZATION
Effective Date of
Revocation
LOCATION
BRIGHTER DAY FOUNDATION01/01/2019LOS ANGELES
JAMES C. WILBOURN WASHINGTON AND LEE ENDOWMENT
TRUST C/O CITIZENS NATIONAL BANK
01/01/2020MERIDIANS, MS
JACKSON COUNTY 4-H FOUNDATION07/01/2019SPRINGS , MO
ROBERT SAAH MASSAQUOI FOUNDATION01/01/2021SAN DIEGO, CA

Bulletin No. 2023–49 i December 4, 2023
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion. It
is not used where a position in a prior rul-
ing is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previous-
ly published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations
to show that the previous published rul-
ings 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
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

December 4, 2023 ii Bulletin No. 2023–49
Numerical Finding List
1
Bulletin 2023–49
Announcements:
2023-18, 2023-30 I.R.B. 366
2023-19, 2023-30 I.R.B. 367
2023-20, 2023-30 I.R.B. 368
2023-17, 2023-31 I.R.B. 412
2023-21, 2023-31 I.R.B. 413
2023-22, 2023-32 I.R.B. 429
2023-23, 2023-34 I.R.B. 569
2023-24, 2023-35 I.R.B. 661
2023-25, 2023-37 I.R.B. 821
2023-26, 2023-37 I.R.B. 822
2023-28, 2023-37 I.R.B. 823
2023-29, 2023-41 I.R.B. 1064
2023-30, 2023-45 I.R.B. 1236
2023-31, 2023-46 I.R.B. 1251
2023-32, 2023-47 I.R.B. 1258
2023-33, 2023-47 I.R.B. 1261
2023-24, 2023-49 I.R.B. 1385
Notices:
2023-29, 2023-29 I.R.B. 1
2023-45, 2023-29 I.R.B. 317
2023-47, 2023-29 I.R.B. 318
2023-37, 2023-30 I.R.B. 359
2023-50, 2023-30 I.R.B. 361
2023-51, 2023-30 I.R.B. 362
2023-54, 2023-31 I.R.B. 382
2023-53, 2023-32 I.R.B. 424
2023-55, 2023-32 I.R.B. 427
2023-57, 2023-34 I.R.B. 560
2023-58, 2023-34 I.R.B. 563
2023-59, 2023-34 I.R.B. 564
2023-52, 2023-35 I.R.B. 650
2023-61, 2023-35 I.R.B. 651
2023-62, 2023-37 I.R.B. 817
2023-56, 2023-38 I.R.B. 824
2023-63, 2023-39 I.R.B. 919
2023-64, 2023-40 I.R.B. 974
2023-66, 2023-40 I.R.B. 992
2023-68, 2023-41 I.R.B. 1060
2023-65, 2023-42 I.R.B. 1067
2023-67, 2023-42 I.R.B. 1074
2023-69, 2023-42 I.R.B. 1079
2023-71, 2023-44 I.R.B. 1191
2023-70, 2023-45 I.R.B. 1228
2023-72, 2023-45 I.R.B. 1228
2023-73, 2023-45 I.R.B. 1232
2023-75, 2023-47 I.R.B. 1256
2023-76, 2023-49 I.R.B. 1320
Proposed Regulations:
REG-124123-22, 2023-30 I.R.B. 369
REG-124930-21, 2023-31 I.R.B. 431
Proposed Regulations:—Continued
REG-120730-21, 2023-33 I.R.B. 491
REG-134420-10, 2023-34 I.R.B. 571
REG-109348-22, 2023-35 I.R.B. 662
REG-120727-21, 2023-36 I.R.B. 670
REG-122793-19, 2023-38 I.R.B. 829
REG-100908-23, 2023-39 I.R.B. 931
REG-115559-23, 2023-42 I.R.B. 1082
REG-106203-23, 2023-43 I.R.B. 1143
REG-113064-23, 2023-43 I.R.B. 1144
REG-117614-14, 2023-44 I.R.B. 1193
REG-127391-16, 2023-44 I.R.B. 1214
REG-103525-23, 2023-46 I.R.B. 1252
REG-115762-23, 2023-47 I.R.B. 1262
REG-120727-21, 2023-47 I.R.B. 1285
REG-112916-23, 2023-49 I.R.B. 1323
REG-128276-12, 2023-49 I.R.B.
1362
REG-142338-07, 2023-49 I.R.B. 1363
Revenue Procedures:
2023-31, 2023-25 I.R.B. 386
2023-26, 2023-33 I.R.B. 486
2023-27, 2023-35 I.R.B. 655
2023-17, 2023-37 I.R.B. 819
2023-30, 2023-40 I.R.B. 995
2023-31, 2023-40 I.R.B. 1057
2023-32, 2023-41 I.R.B. 1064
2023-35, 2023-42 I.R.B. 1079
2023-28, 2023-43 I.R.B. 1092
2023-33, 2023-43 I.R.B. 1135
2023-34, 2023-48 I.R.B. 1287
Revenue Rulings:
2023-13, 2023-32 I.R.B. 413
2023-14, 2023-33 I.R.B. 484
2023-15, 2023-34 I.R.B. 559
2023-15, 2023-34 I.R.B. 559
2023-16, 2023-37 I.R.B. 796
2023-17, 2023-37 I.R.B. 798
2023-18, 2023-40 I.R.B. 972
2023-19, 2023-41 I.R.B. 1059
2023-20, 2023-45 I.R.B. 1221
2023-21, 2023-49 I.R.B. 1299
2023-22, 2023-49 I.R.B. 1301
Treasury Decisions:
9976, 2023-30 I.R.B. 354
9977, 2023-31 I.R.B. 375
9978, 2023-32 I.R.B. 415
9979, 2023-35 I.R.B. 602
9980, 2023-43 I.R.B. 1087
9981, 2023-44 I.R.B. 1174
9982, 2023-45 I.R.B. 1223
9983, 2023-46 I.R.B. 1237
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2023–27 through 2023–52 is in Internal Revenue Bulletin
2023–52, dated December 27, 2023.

Bulletin No. 2023–49 iii December 4, 2023
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2023–49
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2023–27 through 2023–52 is in Internal Revenue Bulletin
2023–52, dated December 27, 2023.

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