Internal Revenue Bulletin 2010-47 (PDF rendition): IRS Revenue Procedures

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

Bulletin No. 201
0-47
November 22, 201
0
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
T.D. 9504, page 670.
Final regulations under section 6045 of the Code provide rules
for stockbrokers regarding changes in the law that require them
to report for certain sales the adjusted basis of the stock being
sold and whether any gain or loss with respect to the sale is
long-term or short-term. Final regulations under section 1012
of the Code address changes in the law that alter how investors
compute basis when averaging the basis of shares acquired
at different prices and that expand the ability of investors to
compute basis by averaging. Final regulations under sections
6045A, 6045B, 6721, and 6722 of the Code address new re-
porting requirements imposed on issuers of securities for cor-
porate actions that affect the securities basis and on brokers
(including custodians and issuers of securities) for transfers of
securities. Rev. Rul. 67–436 obsoleted. Rev. Proc. 2008–52
modified.
Rev. Proc. 2010–42, page 715.
Specifications are set forth for the private printing of red-ink
and black-and-white paper substitutes for the 2010 revisions
of Form W-2,Wage and Tax Statement,andFormW-3,Tr a n s -
mittal of Wage and Tax Statements. Rev. Proc. 2008–33
superseded.
Rev. Proc. 2010–43, page 738.
Specifications are set forth for the private printing of red-ink
and black-and-white paper substitutes for the February 2009
revision of Form W-2c,Corrected Wage and Tax Statement,and
the April 2010 revision of Form W-3c,Tr a n s m i t t a l o f C o r re c t e d
Wage and Tax Statements. Rev. Proc. 2009–48 superseded.
Announcement 2010–88, page 753.
This announcement extends from December 31, 2010,
to June 30, 2011, the deadline to issue tribal economic
development bonds (TEDBs) pursuant to the volume cap
allocated by the IRS in the first allocation tranche to Indian
tribal government under Notice 2009–51, 2009–28 I.R.B.
128. This announcement also provides for an additional 6
month extension to December 31, 2011, for such issuers to
issue TEDBs, upon issuer’s written request submitted to, and
approved by, the IRS.
EMPLOYEE PLANS
Notice 2010–76, page 712.
Weighted average interest rate update; corporate bond
indices; 30–year Treasury securities; segment rates.
This notice contains updates for the corporate bond weighted
average interest rate for plan years beginning in November
2010; the 24–month average segment rates; the funding
transitional segment rates applicable for November 2010;
and the minimum present value transitional rates for October
2010.
EMPLOYMENT TAX
Rev. Proc. 2010–42, page 715.
Specifications are set forth for the private printing of red-ink
and black-and-white paper substitutes for the 2010 revisions
of Form W-2,Wage and Tax Statement,andFormW-3,Tr a n s -
mittal of Wage and Tax Statements. Rev. Proc. 2008–33
superseded.
(Continued on the next page)
Actions Relating to Court Decisions is on the page following the Introduction.
Finding Lists begin on page ii.

Rev. Proc. 2010–43, page 738.
Specifications are set forth for the private printing of red-ink
and black-and-white paper substitutes for the February 2009
revision of Form W-2c,Corrected Wage and Tax Statement,and
the April 2010 revision of Form W-3c,Tr a n s m i t t a l o f C o r re c t e d
Wage and Tax Statements. Rev. Proc. 2009–48 superseded.
ADMINISTRATIVE
T.D. 9503, page 706.
Final regulations under 26 CFR 300 establishes a user fee to
apply for or renew a preparer tax identification number.
T.D. 9504, page 670.
Final regulations under section 6045 of the Code provide rules
for stockbrokers regarding changes in the law that require them
to report for certain sales the adjusted basis of the stock being
sold and whether any gain or loss with respect to the sale is
long-term or short-term. Final regulations under section 1012
of the Code address changes in the law that alter how investors
compute basis when averaging the basis of shares acquired
at different prices and that expand the ability of investors to
compute basis by averaging. Final regulations under sections
6045A, 6045B, 6721, and 6722 of the Code address new re-
porting requirements imposed on issuers of securities for cor-
porate actions that affect the securities basis and on brokers
(including custodians and issuers of securities) for transfers of
securities. Rev. Rul. 67–436 obsoleted. Rev. Proc. 2008–52
modified.
November 22, 20102010–47 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
2010–47 I.R.B.November 22, 2010

Actions Relati
ng to Decisions of the Tax Court
It is the policy
of the Internal Rev-
enue Service t
o announce at an early date
whether it wil
l follow the holdings in cer-
tain cases. An
Action on Decision is the
document maki
ng such an announcement.
An Action on De
cision will be issued at
the discreti
on of the Service only on unap-
pealed issue
s decided adverse to the gov-
ernment. Gen
erally, an Action on Decision
is issued whe
re its guidance would be help-
ful to Servi
ce personnel working with the
same or simi
lar issues. Unlike a Treasury
Regulation
or a Revenue Ruling, an Action
on Decision
is not an affirmative statement
of Service
position. It is not intended to
serve as pu
blic guidance and may not be
cited as pr
ecedent.
Actions on
Decisions shall be relied
upon withi
n the Service only as conclu-
sions appl
ying the law to the facts in the
particul
ar case at the time the Action on
Decision
was issued. Caution should be
exercise
d in extending the recommenda-
tion of th
e Action on Decision to similar
cases whe
re the facts are different. More-
over, th
e recommendation in the Action on
Decisio
n may be superseded by new legis-
lation,
regulations, rulings, cases, or Ac-
tions on
Decisions.
Prior to 1991, t
he Service published
acquiescence
or nonacquiescence only in
certain regul
ar Tax Court opinions. The
Service has ex
panded its acquiescence
program to inc
lude other civil tax cases
where guidanc
e is determined to be help-
ful. Accordi
ngly, the Service now may
acquiesce or
nonacquiesce in the holdings
of memorandu
m Tax Court opinions, as
well as those
of the United States District
Courts, Cla
ims Court, and Circuit Courts
of Appeal. R
egardless of the court decid-
ing the case
, the recommendation of any
ActiononDe
cision will be published in
the Intern
al Revenue Bulletin.
The recomme
ndation in every Action
on Decisio
n will be summarized as ac-
quiescenc
e, acquiescence in result only,
or nonacqu
iescence. Both “acquiescence”
and “acqui
escence in result only” mean
that the S
ervice accepts the holding of
the court
in a case and that the Service
will foll
ow it in disposing of cases with
thesamec
ontrolling facts. However, “ac-
quiescen
ce” indicates neither approval
nor disa
pproval of the reasons assigned
by the co
urt for its conclusions; whereas,
“acquie
scence in result only” indicates
disagre
ement or concern with some or all
of those reason
s. “Nonacquiescence” sig-
nifies that, a
lthough no further review was
sought, the Se
rvice does not agree with
the holding of
the court and, generally,
will not follo
w the decision in disposing
of cases invol
ving other taxpayers. In
reference to
an opinion of a circuit court
of appeals, a
“nonacquiescence” indicates
that the Serv
ice will not follow the hold-
ingonanatio
nwide basis. However, the
Service wil
l recognize the precedential
impact of th
e opinion on cases arising
within the v
enue of the deciding circuit.
The Actions
on Decisions published in
the weekly I
nternal Revenue Bulletin are
consolidat
ed semiannually and appear in
the first B
ulletin for July and the Cumula-
tive Bulle
tin for the first half of the year. A
semiannua
l consolidation also appears in
the first B
ulletin for the following January
andinthe
Cumulative Bulletin for the last
half of th
e year.
The Commi
ssioner acquiesces in the
followin
g decision:
Shoukri
Osman Saleh Abdel-Fattah
v. Commi
ssioner,
1
134 T.C.
No. 10 (April 27, 2010)
1
Acquiesces in the holding that the State Department certification required under IRC § 893(b) is not a prerequisite for the tax exemption provided forin I.R.C. § 893(a).
November 22, 20102010–47 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 1012.
—Basis of
Property–Cos
t
26 CFR 1.1012–
1: Basis of property.
Rules are prov
ided for determining the basis of
stock, includ
ing computing basis by averaging the ba-
sis of shares
acquired at different prices. See T.D.
9504, page 67
0
.
Section 6045.—Returns
of Brokers
26 CFR 1.6045–1: Returns of information of brokers
and barter exchanges.
T.D. 9504
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Parts 1, 31, 301, and
602
Basis Reporting by
Securities Brokers and
Basis Determination for Stock
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains fi-
nal regulations on broker reporting of sales
of securities and on the basis of securi-
ties. These final regulations reflect amend-
ments under the Energy Improvement and
Extension Act of 2008 that require bro-
kers to report a customer’s adjusted ba-
sis in sold securities and classify gain or
loss as long-term or short-term, and that al-
low taxpayers to compute the basis of cer-
tain stock by averaging. The regulations
affect brokers and custodians that make
sales or transfer securities on behalf of cus-
tomers, issuers of securities, and taxpayers
that purchase or sell securities. The regula-
tions also reflect amendments that provide
brokers and others until February 15 to fur-
nish certain information statements to cus-
tomers.
DATES:Effective Date:These regulations
are effective on October 18, 2010.
Applicabilit
yDate:For dates of
applicabilit
y,see§§1.1012–1(c)(10),
1.1012–1(e)(
12), 1.6045A–1(d), and
1.6045B–1(g
).
FOR FURTHER INFORMATION
CONTACT: Concerning the regulations
under sections 408, 6039, 6042, 6044,
6045, 6045A, 6045B, 6049, 6051, 6721,
and 6722, Stephen Schaeffer of the Office
of Associate Chief Counsel (Procedure
and Administration) at (202) 622–4910;
concerning the regulations under section
1012, Edward C. Schwartz of the Office
of Associate Chief Counsel (Income Tax
and Accounting) at (202) 622–4960 (not
toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained
in these final regulations related to the
furnishing of information in connection
with the transfer of securities has been
reviewed and approved by the Office of
Management and Budget (OMB) in accor-
dance with the Paperwork Reduction Act
of 1995 (44 U.S.C. 3507(d)) under control
number 1545–2186. The collection of
information in these final regulations in
§§1.6045–1(c)(3)(xi)(C) and 1.6045A–1
is required to comply with the provisions
of section 403 of the Energy Improvement
and Extension Act of 2008, Division B
of Public Law 110–343 (122 Stat. 3765,
3854 (2008)).
An agency may not conduct or sponsor,
and a person is not required to respond to, a
collection of information unless it displays
a valid control number assigned by the Of-
fice of Management and Budget.
Books or records relating to a collection
of information must be retained as long as
their contents may become material in the
administration of any internal revenue law.
Background
This document contains amend-
ments to the Income Tax Regulations
(26 CFR part 1), the Regulations on
Employment Tax and Collection of
Income Tax at t
he Source (26 CFR part
31), and the Re
gulations on Procedure and
Administrati
on (26 CFR part 301).
On December 17
, 2009, the Treasury
Department an
d the IRS published in the
Federal Regi
ster(74 FR 67010) proposed
regulations
(REG–101896–09, 2010–5
I.R.B. 347) r
elating to information report-
ingbybroker
s, transferors, and issuers
of securiti
es under sections 6045, 6045A,
and 6045B of
the Internal Revenue Code
(Code), and
the computation of basis un-
der section
1012. Written and electronic
comments r
esponding to the notice of pro-
posed rule
making were received, and a
public hea
ring was held on February 17,
2010.
After cons
idering the comments, the
proposed r
egulations are adopted as
amended b
y this Treasury decision. The
comments
and revisions are discussed in
the pream
ble.
Summary of Comments and
Explanation of Revisions
1.Effective Date
Commentatorsrequestedadelayinthe
effective date of the reporting require-
ments to allow adequate time to adminis-
tratively implement the rules. The final
regulations do not adopt this request as
inconsistent with the statutorily mandated
effective dates. However, in order to pro-
mote industry readiness to comply with the
reporting requirements beginning in 2011,
a separate notice is being issued with these
final regulations to provide transitional
relief from the transfer reporting require-
ments under section 6045A (discussed in
more detail later in this preamble).See
Notice 2010–67. The notice provides that
the IRS will not assert penalties under
section 6722 for a failure to furnish a
transfer statement for any transfer of stock
in 2011 that is not incidental to the stock’s
purchase or sale. Further, a receiving bro-
ker may treat this stock as a noncovered
security.See§601.601(d)(2). Addition-
ally, the IRS will continue to work closely
with stakeholders to ensure the smooth
implementation of the provisions in these
regulations, including the mitigation of
2010–47 I.R.B.670November 22, 2010

penalties in the early stages of implemen-
tation for all but particularly egregious
cases.
2.Basis Determination—Average Basis
Method
a. Definition of Dividend Reinvestment
Plan
i. Acquisition of Stock
Consistent with section 1012(d)(4)(B),
the proposed regulations provided that
stockisacquiredinconnectionwitha
dividend reinvestment plan (DRP) if the
stock is acquired under the DRP or if the
dividends paid on the stock are subject to
the DRP. A commentator stated that DRP
classification under the proposed regu-
lations is highly factual and brokers will
have difficulty determining if stock is in
a DRP. The commentator recommended
that the final regulations provide that a
broker should be required to treat stock
as DRP stock only if the broker receives
documentation that a plan is a DRP and
knows or has reason to know that the stock
is subject to the plan. The final regula-
tions do not adopt this recommendation as
unduly restrictive.
ii. Dividend Reinvestment
Section 1012(d)(4)(A) defines adivi-
dend reinvestment planas an arrangement
under which dividends are reinvested in
identical stock. The proposed regulations
provided that a plan qualifies as a DRP if
the written plan documents require that at
least 10 percent of every dividend paid on
any share of stock is reinvested in identical
stock.
Several commentators recommended
eliminating the 10 percent rule because it
will require many existing plans to amend
their plan documents at considerable ex-
pense. The commentators suggested that
a plan should qualify as a DRP if the plan
documents merely allow the reinvestment
of dividends.
The final regulations do not adopt this
comment, which is inconsistent with the
legislative intent that basis averaging is ap-
propriate when dividends actually are rein-
vested. If a stock pays dividends, a plan
should be required to reinvest a minimum
percentage of dividends to qualify as a
DRP. Ten percent is a reasonable minimum
percentage.
iii. Definition of Dividend
The proposed regulations did not de-
fine the term dividend. Commentators rec-
ommended that the final regulations de-
fine dividend broadly to include any dis-
tribution on stock, including ordinary divi-
dends, capital gains distributions, non-tax-
able returns of capital, and cash in lieu of
fractional shares.
The final regulations do not define div-
idend. They provide that only dividends
within the meaning of section 316 are sub-
ject to the 10 percent reinvestment require-
ment. The final regulations also clarify
that a DRP may average the basis of stock
acquired by reinvesting distributions that
are not dividends under section 316.
b. Definition of Regulated Investment
Company
The proposed regulations did not
address the definition of a regulated
investment company (RIC). Under
§1.1012–1(e)(5)(ii), a unit investment
trust (UIT) is treated as a RIC for basis
averaging purposes only if the UIT meets
certain requirements. A commentator sug-
gested that the regulations should delete
this provision and allow all UITs that elect
to be treated as RICs to use the average
basis method.
The proposed regulations did not ad-
dress this issue. Therefore, the final reg-
ulations do not adopt this suggestion. The
treatment of UITs as RICs for purposes of
allowing basis averaging may be consid-
ered for future guidance.
c. Definition of Identical Stock
The proposed regulations provided that
stock is identical if it has the same Com-
mittee on Uniform Security Identification
Procedures (CUSIP) number, except that
stock in a DRP is not identical to stock not
in a DRP. The proposed regulations also
provided that stock acquired in connection
with a DRP includes transfers of identical
stock into a DRP. A commentator noted
that, if stock in a DRP is not identical to
stock not in a DRP, then a taxpayer could
not transfer identical stock into a DRP.
To address this comment, the final reg-
ulations delete from the definition of iden-
tical stock the rule that stock in a DRP is
not identical to stock not in a DRP. Because
this rule served to limit the average basis
method to stock in a DRP, the final regu-
lations provide that, for purposes of com-
puting the average basis of identical stock,
stock in a DRP is not identical to stock with
the same CUSIP number that is not in a
DRP.
d. Time and Manner of Making the
Average Basis Method Election
i. Requirement for Affirmative Election
A commentator requested clarification
on whether a taxpayer is treated as elect-
ing the average basis method if the tax-
payer fails to affirmatively elect a basis de-
termination method and the average basis
method is the broker’s default method. In
response to this comment, the final regula-
tions clarify that a taxpayer’s failure to no-
tify a broker that the taxpayer elects a basis
determination method is not an election of
a method. Thus, a taxpayer that fails to af-
firmatively elect the average basis method
has not made an election that the taxpayer
may revoke. If the average basis method is
the broker’s default method, the taxpayer
may change from that method prospec-
tively.
ii. Scope of Average Basis Method
Election
The proposed regulations required a
taxpayer to elect the average basis method
separately for each account holding stock
that is a covered security for which the
method is permissible. A commentator
suggested that the final regulations per-
mit one average basis method election to
encompass all eligible accounts with a
custodian or agent, as well as future ac-
counts with that custodian or agent. The
final regulations adopt this comment. The
final regulations also clarify that the av-
erage basis method election must identify
each account and the stock in the account
to which the election applies.
iii. Written Average Basis Method
Election
The proposed regulations provided that
a taxpayer must notify a custodian or agent
of the average basis method election in
writing. A commentator stated that this
November 22, 20106712010–47 I.R.B.

requirement should be eliminated because
it is difficult to implement and confus-
ing to taxpayers who use the average ba-
sis method for RIC stock acquired before
2012. The commentator opined that the
writing requirement will prevent brokers
from using the average basis method as
their default method.
The final regulations do not adopt this
comment. The writing requirement en-
sures that both taxpayers and brokers have
a record of the fact and scope of the elec-
tion. The requirement applies to a tax-
payer’s election to use average basis and
does not prevent a broker from selecting
average basis as a default method.
Commentators requested that the final
regulations clarify that a taxpayer may
make a written average basis election elec-
tronically. The final regulations adopt this
comment.
iv. Transition Rule From Double-Category
Method
The proposed regulations provided a
transition rule effective on the publication
date of the final regulations for stock for
which a taxpayer uses the double-category
method of determining average basis. A
commentator requestedthat the final regu-
lations delay the effective date of the tran-
sition rule to allow time for programming
and accounting system changes. The final
regulations adopt this comment and pro-
vide an April 1, 2011, effective date for the
transition rule.
e. Change in Method of Accounting
The proposed regulations stated that a
change in basis determination method is a
change in method of accounting requiring
the consent of the Commissioner. A com-
mentator opined that a change to or from
the average basis method is not a change
in method of accounting that requires the
consent of the Commissioner. Another
commentator requested that a change to
or from the average basis method be al-
lowed without the Commissioner’s con-
sent or that the process be simplified. The
commentator suggested that the final reg-
ulations require taxpayers to notify their
custodians or agents of the change.
The final regulations provide rules gov-
erning the time and manner of electing or
changing from the average basis method,
determining the basis of stock following a
change between the average basis method
and a cost basis method, and identifying
stock sold. The regulations permit taxpay-
ers to elect or change from the average ba-
sis method at any time during a taxable
year and to choose amethod to identify
stock sold on a sale-by-sale basis. These
rules do not involve the elements of consis-
tency and regularity inherent in methods of
tax accounting, which generally apply on
the basis of a taxable year. Therefore, the
final regulations provide that a basis deter-
mination method for stock is not a method
of accounting and a change in a method of
determining basis for stock is not a change
in method of accounting to which sections
446 and 481 apply.
f. Account by Account Rules
The proposed regulations provided that
DRP or RIC stock acquired before Jan-
uary 1, 2012, is treated as held in a sep-
arate account from DRP or RIC stock ac-
quired on or after that date. The proposed
regulations also provided that covered and
noncovered securities are treated as held in
separate accounts.
The purpose of the separate account
rule is to ensure that covered securities and
noncovered securities are treated as held in
separate accounts. DRP and RIC stock ac-
quired before January 1, 2012, are noncov-
ered securities. Therefore, the two sepa-
rate account rules are duplicative. The fi-
nal regulations eliminate the separate ac-
count rule for DRP and RIC stock based
on the date the stock is acquired and retain
the separate account rule for covered and
noncovered securities because this rule is
more precise.
g. Single-Account Election
i. Identity of Account Ownership
A commentator requested clarification
on whether a single-account election may
apply to an account owned by a taxpayer
singly and an account a taxpayer owns
jointly with another party. In response to
this comment, the final regulations clarify
that a single-account election applies only
to accounts with the same ownership.
ii. Effect on the Single-Account Election
of Revoking or Changing From the
Average Basis Method
The proposed regulations provided that
a RIC, DRP, or broker may make an irrev-
ocable election to treat as held in a single
account identical RIC stock or DRP stock
held or treated as held in separate accounts
for which the taxpayer has elected to use
the average basis method. The proposed
regulations also allowed a taxpayer to re-
voke an average basis method election by
the earlier of one year from the date of the
election or the first disposition of the stock.
The basis of stock to which a revocation
applies is its basis before averaging. After
the revocation period expires, a taxpayer
may change from the average basis method
to another method prospectively. The ba-
sis of stock to which a change applies is the
basis immediately before the change.
Commentators asked how a taxpayer’s
revocation of or change from the average
basis method affects a single-account elec-
tion. In response to this comment, the final
regulations provide that a taxpayer’s revo-
cation of an average basis method election
for a particular stock voids the single-ac-
count election for that stock. Thus, tax-
payers and brokers must retain pre-elec-
tion basis information for averaged shares
for as long as the taxpayer may revoke the
average basis method election. Stock that
becomes a covered security only as a result
of a single-account election no longer is
a covered security after the single-account
election is voided.
After a taxpayer changes from, rather
than revokes, the average basis method,
the shares that were treated as held in a sin-
gle account before the change continue to
be covered securities and treated as held
in a single account, and the basis of each
share of stock remains the same as the ba-
sis immediately before the change.
iii. Accurate Basis Information
Requirement
Under the proposed regulations, a RIC,
DRP, or broker may make a single-account
election only for stock for which it has ac-
curate basis information, which is informa-
tion that the RIC, DRP, or broker neither
knows nor has reason to know is inaccu-
rate.
2010–47 I.R.B.672November 22, 2010

Commentators suggested eliminating
the accuracy requirement for the single-ac-
count election becauseit is subjective
and increases uncertainty. A commenta-
tor noted that the accuracy requirement
may deter RICs from making a single-ac-
count election because of uncertainty over
whether basis determination practices in
earlier years satisfy the standard. A com-
mentator suggested permitting the use
of any data that has been maintained to
determine the basis of noncovered stock
included in the single-account election. A
commentator recommended that brokers
be permitted to use taxpayer-provided
information to determine the basis of
noncovered stock in making the single-ac-
count election. A commentator requested
penalty relief if a broker lacks actual
knowledge that information is inaccurate.
The final regulations retain the accu-
racy requirement and the “neither knows
nor has reason to know” standard as strik-
ing an appropriate balance between the
need for accuracy and flexibility. The “nei-
ther knows nor has reason to know” test
is consistent with existing standards famil-
iar to brokers for demonstrating reasonable
cause for penalty relief under section 6724.
3.Other Basis Determination Issues
a. Use of Agent To Select Basis
Determination Method
Commentators suggested that the final
regulations explicitly allow a taxpayer’s
agent, such as an asset manager, invest-
ment advisor, or introducing broker, to se-
lect a basis determinationmethodforatax-
payer. The final regulations do not adopt
this comment. However, a taxpayer may
authorize an agent to select a basis de-
termination method under general agency
principles.
b. Cost Basis of Multiple Lots Purchased
on One Day
Commentators suggested that the final
regulations allow brokers to average the
basis of identical stock purchased or sold
on the same day. In response to this com-
ment, the final regulations provide that a
taxpayer must determine the basis of iden-
tical stock by averaging the basis of each
share if the stock is purchased at separate
times on the same calendar day in execut-
ing a single trade order and the broker ex-
ecuting the trade provides a single confir-
mation that reports an aggregate total cost
or an average cost per share. However, a
taxpayer may determine the basis of the
stock by the actual cost per share if the tax-
payer notifies the broker in writing of this
intent. The taxpayer must notify the bro-
ker by the earlier of the date of the sale
of any of the stock for which the taxpayer
received the confirmation or one year af-
ter the date of the confirmation. A bro-
ker may extend the one-year period but the
taxpayer must notify the broker no later
than the date of sale of any of the stock.
c. Identification of Securities Sold
i. Standing Orders
The proposed regulations stated that a
standing order for the specific identifica-
tion of stock is treated as an adequate iden-
tification. A commentator suggested that
the final regulations clarify that brokers are
not required to accept standing orders. The
proposed regulations allowed standing or-
ders to serve as an adequate identification
but did not require taxpayers or brokers to
use or accept them. Therefore, the final
regulations do not adopt this comment.
ii. Confirmation of Sales
The proposed regulations retained the
rule that brokers or other agents must sup-
ply written confirmation of a taxpayer’s
specific identification following a sale
or transfer. A commentator stated that
the final regulations should eliminate this
requirement and opined that the Form
1099-B,“Proceeds From Broker and
Barter Exchange Transactions,”provides
a sufficient confirmation of the trans-
action. Alternatively, the commentator
suggested eliminating the confirmation
requirement if the stock was identified
by standing order. Another commentator
suggested that a periodic customer ac-
count statement shouldqualify as a written
confirmation.
The final regulations retain the re-
quirement for written confirmation of all
sales and transfers of specifically identi-
fied stock as a reasonable safeguard that
specific identification orders are properly
executed. However, in response to these
comments, the final regulations provide
that account statements or other docu-
ments a broker or agent periodically pro-
vides to a taxpayer may serve as written
confirmation if provided to the taxpayer
within a reasonable time after the sale or
transfer.
iii. Application of FIFO Rule Account by
Account
The proposed regulations provided that
if a taxpayer sells or transfers stock and
does not adequately identify the stock sold
or transferred, the shares of stock deemed
sold or transferred are the earliest acquired
shares (FIFO rule). A commentator sug-
gested that the final regulations clarify that
the FIFO rule applies on an account by ac-
count basis.
The account by account rule in section
1012(c)(1) relates to stock eligible for the
average basis method. This rule overrides
the earlier requirementthattaxpayersmust
apply the average basis method across ac-
counts and does not mandate similar treat-
ment for cost basis stock. Incorporating
an account by account requirement into the
FIFO rule creates unnecessary complex-
ity. Therefore, the final regulations do not
adopt this comment.
4.Returns of Brokers
a. Form and Manner of Broker Reporting
Requirements
The proposed regulations provided
that brokers must report on Form 1099-B
adjusted basis and whether any gain or
loss is long-term or short-term for a cov-
ered security. A commentator suggested
that the final regulations allow long-term
and short-term sales to be reported on
the same return to improve reconcilia-
tion between the broker’s Form 1099-B
and the customer’s Schedule D, “Capital
Gains and Losses.” The final regulations
do not adopt the suggestion. As noted
by another commentator, brokers that use
substitute statements may already segre-
gate long-term sales from short-term sales
on the same statement in the same man-
ner as on Schedule D, which segregates
long-term transactions from short-term
transactions.
Consistent with the rule for aggregating
the cost basis of multiple lots purchased
on one day (discussed earlier in this pre-
amble), the final regulations provide that a
November 22, 20106732010–47 I.R.B.

broker must report the basis of purchased
stock and the gross proceeds of sold stock
by averaging the basis or proceeds of each
share if the stock is purchased or sold at
separate times on the same calendar day in
executing a single trade order and the bro-
ker executing the trade provides a single
confirmation to the taxpayer that reports an
aggregate total price or an average price
per share. However, the final regulations
do not permit a brokerto average the basis
or proceeds of stock if the customer timely
notifies the broker in writing of an intent
to determine the basis or proceeds by the
actual cost or proceeds per share. A notifi-
cation of an intent to determine the basis by
the actual cost per share is timely if made
in accordance with §1.1012–1(c)(1)(ii). A
notification of an intent to determine the
proceeds by the actual proceeds per share
is timely if the broker receives the notifica-
tion by January 15 of the calendar year fol-
lowing the year of the sale. A broker may
extend the January 15 deadline but not be-
yond the due date for filing Form 1099-B.
The proposed regulations moved the
modifier “for cash” in the definition of
sale to clarify that Form 1099-B reporting
is required under section 6045 for a sale
only when and to the extent cash proceeds
are paid to the seller. Commentators sug-
gested further clarifying that this limitation
applied to all disposition events listed in
the definition. The final regulations adopt
this request.
Currently, sales of fractional shares of
less than $20 are exempted from broker
reporting. Commentators recommended
expanding this exception to sales of frac-
tional shares of less than $100. The final
regulations do not adopt this request.
b. Identification of a Security as Stock
Under section 6045(g)(3)(C), the re-
porting requirements before 2013 apply
only to stock. The proposed regulations
provided that, for basis reporting purposes,
any security an issuer classifies solely as
stock is treated as stock. If an issuer has
not classified the security, the security
is not treated as stock unless the broker
knows, or has reason to know, that the
security reasonably isclassified as stock
under general tax principles.
Commentators suggested that issuers
should be required to classify securities
and that a security should be classified
as stock only if the issuer has classified
it as stock. The final regulations do not
adopt these suggestions. It is appropriate
to require a broker to report basis if the
broker knows the security is stock for Fed-
eral tax purposes even if the issuer has not
classified the security.
Commentators suggested that the IRS
create and maintain a list of every security
classified as stock. The final regulations
do not adopt this comment.
Commentators requested that brokers
only treat securities as stock if they know
that the security is reasonably classified as
stock under general tax principles instead
of when they have reason to know. The fi-
nal regulations adopt this comment.
Commentators requested guidance ad-
dressing when an issuer fails to classify a
security and brokers disagree whether the
security is stock for Federal tax purposes.
The final regulations clarify that a broker
is not bound by another broker’s classifi-
cation. As long as the issuer has not clas-
sified the security as stock, a broker is not
required to treat a security as stock despite
another broker’s classification unless the
broker knows that the security is stock for
Federal tax purposes.
The proposed regulations treated any
share of stock in a corporation described
in §301.7701–2(b) as stock for basis re-
porting purposes. Commentators asked
whether interests in a real estate invest-
ment trust (REIT) or exchange-traded fund
(ETF) are treated as stock under that def-
inition. The final regulations clarify that
any share of stock or any interest treated as
stock in an entity organized as, or treated
for Federal tax purposes as, a corpora-
tion (foreign or domestic) is stock for ba-
sis reporting purposes. Therefore, inter-
ests treated as stock in REITs and ETFs
are treated as stock for basis reporting pur-
posesiftheissuersaretaxableascorpora-
tions under the Code.
Commentators also asked whether a
depositary receipt representing shares of
stock in a foreign corporation (an ADR)
is treated as stock. The final regulations
clarify that an ADR is stock for basis re-
porting purposes.
c. Covered Securities
The proposed regulations defined cov-
ered security to include a specified security
acquired through a sale transaction. Com-
mentators asked whether stock acquired
through a stock split, the exercise of rights
distributed by an issuer, the grant of re-
stricted stock by an employer, and other
scenarios constituted acquisitions through
sale transactions. In response to these
comments, the final regulations eliminate
the sale-transaction rule and define cov-
ered security to include a specified secu-
rity acquired for cash. Therefore, stock ac-
quired through the exercise of rights dis-
tributed by an issuer is a covered security
while restricted stock granted by an em-
ployer is not a covered security because
the former is acquired for cash and the
latter is not. The final regulations also
treat a security acquired due to a stock
dividend, stock split,reorganization, re-
demption, stock conversion, recapitaliza-
tion, corporate division, or other similar
action as if it were acquired for cash and,
therefore, as a covered security if the basis
of the new security is determined from the
basis of a covered security.
The proposed regulations treated all
stock acquired in 2011 as covered secu-
rities except RIC stock and DRP stock,
which are not covered securities unless
acquiredin2012orlater. Commentators
suggested that stock acquired in 2011 no
longer be a covered security if placed into
a DRP. In response to this comment, the fi-
nal regulations provide that stock acquired
in 2011 no longer is a covered security if
transferred to a DRP in 2011, but remains
a covered security if transferred to a DRP
after 2011.
The final regulations also clarify that a
security acquired by a foreign person that
§1.6045–1(g)(1)(i) exempts from Form
1099-B reporting at the time of acquisition
is not a covered security even if the cus-
tomer later loses this exemption, unless
the broker knows or should have known
(including by reason of information that
the broker is required to collect under sec-
tion 1471 or 1472) that the customer is
notaforeignpersonwhenthesecurityis
acquired.
A commentator requested that a broker
selling stock owned by a domestic part-
nership be exempted from basis reporting
if the broker also prepared the customer’s
Form 1065, “U.S. Return of Partnership
Income,” because the partnership return
also reports the basis of securities sold
by the partnership. The final regulations
do not adopt this request. The commen-
2010–47 I.R.B.674November 22, 2010

tator also requested that a broker selling
stock owned by a foreign partnership be
exempted from basis reporting when re-
porting the sale directly to U.S. partners
under §1.6049–5(d)(3)(ii) because any
cost basis information reported by the
broker would be erroneous. The final reg-
ulations adopt this request.
d. Foreign Intermediaries
The proposed regulations included in
the definition of broker non-U.S. payors
and non-U.S. middlemen to the extent
provided in a withholding agreement de-
scribed in §1.1441–1(e)(5)(iii) between
a qualified intermediary and the IRS.
Commentators requested that the regula-
tions instead exempt all foreign qualified
intermediaries from basis reporting. In
response to these comments, the final
regulations do not adopt the proposed
changes to the definition of broker. Thus,
a qualified intermediary that is not a U.S.
payor or U.S. middleman as described in
§1.6049–5(c)(5) will not be treated as a
broker with respect to sales effected at
an office outside the United States. The
Treasury Department and the IRS also
note that the recently enacted provisions
of chapter 4 of Subtitle A of the Code
will impose certain information reporting
requirements on foreign financial institu-
tions that enter intoan agreement with the
IRS under section 1471(b). The Treasury
Department and the IRS intend to issue
future guidance coordinating the report-
ing requirements under section 6045 with
the reporting requirements under section
1471. In addition, section 1471 allows a
person who has entered into an agreement
under section 1471(b) to elect to report
certain information required under sec-
tions 6041, 6042, 6045, and 6049. The
Treasury Department and IRS anticipate
that, if a foreign financial institution that
has entered into an agreement under sec-
tion 1471(b) makes such an election, the
agreement would specify the extent of
such person’s reporting obligations with
respect to information required to be re-
ported under section 6045.
Commentators requested that the reg-
ulations also exempt nonqualified inter-
mediaries from basis reporting, even if
the nonqualified intermediary is treated
as a broker under §1.6045–1 (for exam-
ple, where the nonqualified intermediary
effects the sale within the United States).
The regulations do not adopt this request
as contrary to the purposes of the statute.
e. Treatment of Foreign Securities
Commentators requested that a secu-
rity issued by a non-U.S. issuer be ex-
cluded from the definition of a covered
security. The commentators questioned
whether foreign issuers will comply with
section 6045B and report the U.S. tax con-
sequences of their corporate actions. The
final regulations do not adopt this com-
ment because section 6045 does not distin-
guish between U.S. and non-U.S. issuers
of securities. The regulations permit but
do not require a broker to adjust basis for
unreported corporate actions.
f. Determination of Basis and Whether
Gain or Loss on the Sale Is Long-Term or
Short-Term
The proposed regulations required bro-
kers to adjust the reported basis to reflect
information received on a transfer state-
ment or issuer return (discussed in more
detail later in this preamble) but otherwise
do not require brokers to consider transac-
tions, elections, or events occurring out-
side the account. Commentators asked
whether brokers must apply certain Code
provisions in determining reported basis.
i. Regulated Investment Companies and
Real Estate Investment Trusts
Under sections 852(b)(4)(A) and
857(b)(8), a loss on the sale of RIC or
REIT shares held 6 months or less is
long-term to the extent of capital gain
dividends (distributed and undistributed)
on the shares. One commentator asked
whether brokers are required to adjust
the character of the loss for the effects of
sections 852(b)(4)(A) or 857(b)(8). Under
section 852(b)(4)(B), if a shareholder in
a RIC sells shares at a loss and held the
shares for six months or less, the loss is
disallowed to the extent the shareholder
received a tax-exempt dividend. One
commentator asked whether brokers are
required to adjust the amount of the loss
for the effects of section 852(b)(4)(B). The
final regulations clarify that adjustments
under sections 852(b)(4)(A), 857(b)(8),
and 852(b)(4)(B) are not required because
the payment of tax-exempt dividends and
the existence of capital gain dividends
(distributed and undistributed) may or may
not occur in the same account as the sale.
Further, requiring adjustments would also
necessitate requiring brokers to include
information on transfer statements about
whether and when these types of dividends
have been received or reported.
A commentator requested the IRS
to exercise its authority under section
852(b)(4)(E) to shorten the holding period
under section 852(b)(4) to 31 days. This
request is outside the scope of the current
project and may be considered for future
guidance.
A commentator requested limiting the
application of section 852(f), relating to
load charges on the purchase of RIC stock,
to reinvestments in securities with the
same CUSIP consistent with proposed leg-
islation that would limit section 852(f) to
reinvestments by January 31st of the year
following the disposition of the load-pay-
ing shares. The final regulations do not
adopt this suggestion.
ii. Straddles and Hedging Transactions
Several commentators asked whether
brokers are required to adjust their deter-
mination of holding period for securities
in a single account ifthe securities are
part of a hedging transaction, as defined in
§1.1221–2(b), or a straddle, as defined in
section 1092. They also asked whether the
provisions of section 1233(b) must be ap-
pliedtoadjusttheholdingperiodorchar-
acter of gain of a security when a customer
has, in a single account, sold short some se-
curities and holds or later acquires substan-
tially identical securities. The fact patterns
that fall under sections 1092 and 1233(b)
and §1.1221–2(b) include situations when
the CUSIPs of the positions may not be
identical as well as situations when the
CUSIPs of the positions are identical. Re-
gardless, under the final regulations, bro-
kers are not required to adjust the holding
period or character of gain under sections
1092 and 1233(b) and §1.1221–2(b).
iii. Events Occurring Outside the Account
The proposed regulations required a
broker to take into account in determining
basis any corporate action reported by an
issuer of the security. Commentators re-
quested clarification on how to determine
basis after a corporate action that results in
November 22, 20106752010–47 I.R.B.

different treatment for minority sharehold-
ers than for a majority shareholder. The
final regulations permit a broker to treat
all customers after a corporate action as
minority shareholders of the corporation
unless the broker knows that the customer
is a majority shareholder and the issuer
reports the action’s effect on the basis of
majority shareholders.
The proposed regulations did not per-
mit brokers to apply section 1259 (regard-
ing constructive sales) and section 475 (re-
garding the mark-to-market method of ac-
counting) when reporting adjusted basis
and whether any gain or loss on the sale
of a security is long-term or short-term. A
commentator requested that reporting ad-
justments be permitted under these sec-
tions even if not required. The final reg-
ulations adopt this request. Another com-
mentator asked whether brokers must ap-
ply section 1296 (regarding mark-to-mar-
ket accounting for marketable stock in a
passive foreign investment company). The
final regulations provide that these adjust-
ments are not required. A broker should
inform customers of any non-required ad-
justments so that customers will not dupli-
cate these adjustments.
iv. Basis Determination Method
The proposed regulations required
brokers to report basis using the basis
determination method a customer elects.
Commentators requested that brokers be
permitted to offer limited basis reporting
methods even if this practice would force
a customer that wanted a different method
to move his or her account to a broker that
offered reporting under that method. The
final regulations do not adopt this request
because section 1012 permits customers
to report basis by a different permissible
method than the default method selected
by the broker and section 6045 requires
brokers to follow instructions from cus-
tomers regarding this selection.
v. Long-Term or Short-Term Gain or Loss
Section 1222 defines long-term or
short-term gain or loss by reference to
whether a taxpayer has held a capital asset
for more than one year. A commentator
noted that accounting standards may de-
fine a year in different ways and requested
that the final regulations adopt a uniform
definition of a year for reporting purposes,
such as 360 or 365 days. The final reg-
ulations do not adopt this comment. The
rules for determining whether a taxpayer
has held an asset for more than one year
are well established. No good justification
exists for adopting a different rule solely
for broker reporting purposes.
vi. Commissions and Options Proceeds
The proposed regulations required bro-
kers to adjust basis for commissions and
transfer taxes incurred from a purchase
and, if not subtracted from gross proceeds,
commissions charged for a sale and trans-
fer taxes incurred on a sale. Commentators
requested that the final regulations expand
the definition of gross proceeds to explic-
itly permit adjustments for transfer taxes
incurred on sale. The final regulations in-
corporate this suggestion.
The proposed regulations did not alter
the current rule under which some brokers
report proceeds reduced by sales commis-
sions and inform customers of this fact
throughaflaginBox2onForm1099-B.
Instead, in requiring brokers to account
for sales commissions, the proposed regu-
lations permitted brokers to either reduce
the reported proceeds or increase the re-
ported basis by the amount of the sales
commissions. Commentators requested
that all brokers be required to reduce the
reported proceeds for commissions and
transfer taxes from the sale. This sugges-
tion is not adopted but may be considered
in future guidance.
Commentators requested that brokers
be permitted to adjust basis for option pre-
miums when an option is exercised in pur-
chasing or selling a security even though
this reporting is not mandatory until 2013.
The proposed regulations permitted this
treatment, which is also permitted under
the final regulations.
vii. Employee Compensation-Related
Issues
Section 6045(h) requires certain basis
reporting adjustments to account for in-
come recognized on options granted or
acquired beginning in 2013. Because the
option reporting requirements do not take
effect until 2013, the proposed regulations
provided that, for stock acquired in 2011
and2012inconnectionwithemployee
stock purchase plans and incentive stock
options, brokers did not need to adjust
basis to account for the income recog-
nized by the purchaser. Commentators
suggested that this stock be excluded
from basis reporting until 2013 because
purchasersmayimproperlyrelyonthe
reported basis. The final regulations do
not adopt this suggestion. Purchasers will
be assisted by IRS forms and publica-
tions, including Form 3921,“Exercise of
an Incentive Stock Option Under Section
422(b)”(in development), and Form 3922,
“Transfer of Stock Acquired Through an
Employee Stock Purchase Plan Under
Section 423(c)”(in development), in de-
termining basis for stock acquired in 2011
and 2012.
Commentators also requested that the
final regulations not require basis report-
ingforstockacquiredthroughanem-
ployee stock purchase plan because Form
3922 will report the exercise price per
share and the fair market value of the stock
on both the grant date and the exercise
date. The final regulations do not adopt
this comment because Form 3922 must be
filed when a purchaser first transfers legal
title to the stock, not necessarily when the
purchaser sells the stock, and these events
may occur many years apart. Further,
Form 3922 will not identify which shares
are sold and will not reflect stock splits or
other corporate actions between the date
of reporting on Form 3922 and the date of
sale.
viii. Payments in a Foreign Currency
The proposed regulations provided that
brokers receiving payments made in for-
eign currency should report the amounts
paid by converting each payment to a U.S.
dollar amount using a spot rate or spot
rate convention determined at the time the
broker receives the payment. Commenta-
tors expressed the concern that determin-
ing the spot rate on the payment receipt
date treats all sales as if the customer had
elected under section 988 to incorporate
the amount of gain or loss on the currency
into the gain or loss on the sale of the se-
curity. However, the section 988(d) elec-
tion is only relevant in the context of cer-
tain hedges. In the non-hedging context,
long-standing rules provide that investors
must always compute gain or loss by de-
termining adjusted basis using the spot rate
as of the payment receipt date.SeeRev.
Rul. 54–105, 1954–1 C.B. 12. Even in the
2010–47 I.R.B.676November 22, 2010

hedging context, investors must compute
gain or loss under these same rules unless
they make the election under section 988.
The final regulations therefore adopt the
proposed rule.See§601.601(d)(2).
Commentators asked whether the pay-
ment receipt date is the date the broker
receives payment from the customer or
the settlement date of the purchase. The
final regulations continue to treat the pay-
ment receipt date as the date the broker
receives payment but clarify that, for
securities traded on an established secu-
rities market, the payment receipt date is
the settlement date of the purchase.See
§1.988–2(a)(2)(iv). The final regulations
also clarify that the same foreign currency
reporting rules apply to transfer state-
ments.
g. Customer Identification of Securities
The proposed regulations required bro-
kers to report the sales of securities on a
first-in, first-out basis within an account
unless the customer notified the broker by
means of making an adequate and timely
identification of the securities to be sold.
Commentators asked that, for reporting
purposes, brokers be permitted to rely on
customers’ standing orders or instructions
for the sale or transfer of shares of stock.
The proposed rule by cross reference to
§1.1012–1(c) already permitted standing
orders to serve as an adequate identifica-
tion for both sales and transfers of stock.
Therefore, the final regulations adopt the
proposed rule.
Commentators asked how to apply
the first-in, first-out reporting rule when
the broker does not know the acquisition
date of some shares of the security within
the account. The final regulations clar-
ify that brokers must report the sale of
any shares or units of a security in the
account with unknownacquisition dates
first. Customers are expected to report
basis consistently with broker reporting.
h. Reporting of Wash Sales
Section 6045(g)(2)(B)(ii) requires that,
except as otherwise provided by the Sec-
retary, a broker must apply the wash sale
rules of section 1091 when reporting the
adjusted basis of a covered security if the
purchase and sale transactions resulting in
a wash sale occur in the same account and
are for identical securities (rather than sub-
stantially identical securities). A commen-
tator objected to limiting broker reporting
of wash sales to instances in which the pur-
chase and sale transactions occur in the
same account and are for identical securi-
ties. The final regulations retain these two
statutory limitations but do not prohibit
brokers from reporting wash sales across
accounts or for substantially identical se-
curities.
A commentator asked whether brokers
must report wash sales when the purchase
and sale transactionsare initiated in dif-
ferent accounts but the purchased shares
are later transferred into the account of the
sold shares. The final regulations clarify
that brokers need not report wash sales in
these circumstances because the purchase
and sale transactions do not occur in the
same account.
Another commentator asked whether
brokers must report wash sales when the
purchase and sale transactions occur in the
same account but the purchased security
is transferred out of the account prior to
the wash sale. The commentator opposed
applying the wash sale reporting rules in
this scenario because the rules would re-
quire a broker to adjust basis for a security
no longer in the broker’s custody. The
final regulations clarify that brokers do not
need to report a wash sale if the purchased
security is transferred to another account
before the wash sale.
Commentators asked whether brokers
must report wash sales when stock is
treated as held in a separate account under
the basis method determination rules of
§1.1012–1. The final regulations clarify
that the account limitation for wash sale
reporting applies to stock treated as held
in separate accounts. Thus, a broker is not
required to report a wash sale involving a
covered security and anoncovered secu-
rity unless a single-account election is in
effect. Similarly, a broker is not required
to report a wash sale involving stock in a
DRP and identical stock that is not in a
DRP.
Commentators requested exclusions
from broker reporting of wash sales for
de minimisamounts, sales of fractional
shares, automatic dividend reinvestments,
or compensation-related acquisitions. The
final regulations do not adopt these pro-
posals because, as other commentators
noted, the substantive wash sale rules
under section 1091 do not exclude these
items. Creating additional exclusions
solely for broker reporting purposes would
introduce further discrepancies between
broker reporting and customer reporting
of wash sales.
Commentators requested an exclusion
from broker reporting of wash sales for
customers that have made valid and timely
mark-to-market accounting method elec-
tions under section 475 or, in the alter-
native, for customers that execute 10,000
trades in a single year. Other commenta-
tors stated that excluding these customers
may be more burdensome than reporting
wash sales for these accounts. The final
regulations permit brokers to exclude from
wash sales reporting a customer that has
informed the broker in writing that the cus-
tomer has made an election under section
475(f)(1). The exclusion only applies to
the accounts identified by the customer as
solely containing securities subject to the
election. The final regulations also clar-
ify that a taxpayer that is not a trader in
securities within the meaning of section
475(f)(1) does not become a trader in se-
curities, or create an inference that it is a
trader in securities, by notifying a broker
that it has made a valid and timely election
under section 475(f)(1).
Commentators asked that Form 1099-B
and the transfer statement indicate whether
the holding period of a security has been
adjusted to reflect a wash sale. The final
regulations do not adopt this suggestion.
The rules require the holding period re-
ported on Form 1099-B and transfer state-
ments to reflect any wash sale adjustments.
Commentators asked how the holding
period rules such as section 1223(3) ap-
ply to wash sales. One commentator asked
about the proper treatment of a wash sale
when the sale and purchase transactions
occur over a period of time and a corporate
event occurs during that period that causes
one pre-event share to not be economically
equivalent to one post-event share. These
and other comments requesting guidance
on how the wash sale reporting rule applies
to various types of activity within an ac-
count relate to the substantive rules under
section 1091 and are outside the scope of
these regulations.
November 22, 20106772010–47 I.R.B.

i. Reporting of Short Sales
Beginning in 2011, section 6045(g)(5)
requires gross proceeds and basis report-
ing for short sales for the year in which
the short sale is closed rather than, as un-
der the present law rule for gross proceeds
reporting, the year in which the short sale
is opened. The proposed regulations in-
cluded a transition rule requiring brokers
to report all short sales opened on or after
January 1, 2010, for the year in which the
short sale is closed. Commentators asked
that this transition rule be modified to per-
mit 2010 reporting of all short sales opened
in 2010 even if the short sale remained
open at the end of 2010. The final regu-
lations adopt this request.
Commentators requested that, for short
sales opened before 2011 and closed in
2011 or later years, the regulations permit
brokers to report the short sale for both the
year the short sale is opened and the year
the short sale is closed. The final regula-
tions do not adopt this suggestion because
no penalty is imposed for filing a nonre-
quired return.
Reportable payments on securities
sales under section 6045 are subject to
backup withholding as provided in section
3406(b)(3)(C). When backup withholding
applies to a short sale, current regulations
at §31.3406(b)(3)–2(b)(4) require backup
withholding when the short sale is opened
but permit a broker to delay withhold-
ing until the short sale is closed if, at the
time the short sale is opened, the broker
expects that the amount of gain realized
upon the closing of the short sale will be
determinable from the broker’s records.
The proposed regulations required backup
withholding only when the short sale was
closed and the short sale became subject to
reporting under section 6045(g)(5). Com-
mentators asked that backup withholding
on short sales continue to be permitted
when the short sale is opened because the
broker has cash proceeds from the sale on
which to withhold. The final regulations
adopt this comment and leave in place the
current rule permitting a broker to per-
form backup withholding when the short
sale is opened or closed. The proposed
amendment to §31.3406(b)(3)–2(b)(4) is
therefore not adopted.
As a result of retaining the current
backup withholding rule, a broker may
perform backup withholding in a year
before the short sale is closed. Current
regulations at §31.6051–4 require the bro-
ker to report the withholding on a Form
1099-B for the year of the withholding
in addition to reporting the sale for the
year the short sale is closed. The final
regulations amend §31.6051–4 to permit
the IRS to determine whether to require
gross proceeds to be reported only when
the short sale is closed.
j. Reporting of Sales by S Corporations
Currently, no broker reporting on Form
1099-B is required for customers that are
corporations, including S corporations.
Section 6045(g)(4) requires brokers to
begin Form 1099-B reporting for S corpo-
rations (other than a financial institution)
for sales of covered securities acquired on
or after January 1, 2012. The proposed
regulations accordingly removed corpora-
tions for which an election under section
1362(a) is in effect from the list of ex-
empt Form 1099-B recipients for sales of
covered securities acquired beginning in
2012. Commentators requested that the
regulations instead refer to the definition
of S corporation at section 1361(a). The
final regulations adopt this comment for
all references to an S corporation.
Also, for sales of covered securities ac-
quired beginning in 2012, the proposed
regulations eliminated the so-called “eye-
ball test” allowing brokers to rely solely
on the name of the customer to determine
whether the customer is a corporation ex-
empt from reporting. The proposed regu-
lations retained theactual knowledge rule
so that a broker does not need to obtain an
exemption certificate for a customer that
the broker knows is exempt. Commen-
tators asked that the final regulations re-
tain the eyeball test because brokers oth-
erwise may be required to seek a certifi-
cation from all corporate customers. The
regulations do not adopt this comment be-
cause brokers generally cannot determine
from a customer’s name alone whether the
customer is taxed as an S corporation or
C corporation. The final regulations retain
a limited eyeball test for insurance com-
panies and foreign corporations, however,
because insurance companies and foreign
corporations are ineligible to be S corpo-
rations.
Commentators requested that the final
regulations retain current rules that allow
brokers to determine that a customer is a
foreign corporation by relying upon the
name of the customer or upon a certi-
ficationonaFormW–8suchasForm
W–8BEN,“Certificate of Foreign Status
of Beneficial Owner for United States Tax
Withholding.”These current rules were
not retained in the proposed regulations.
The final regulations adopt the suggestion
to retain these current rules.
A commentator requested that brokers
be permitted to rely on Form 8832,“Entity
Classification Election,”to determine that
a customer is a C corporation if the cus-
tomer has elected on Form 8832 to be clas-
sified as an association taxable as a cor-
poration. According to the commentator,
reliance on Form 8832 is appropriate be-
cause the form’s instructions provide that
an entity that is separately filing an elec-
tion to be classified as an S corporation
need not file Form 8832. The final regula-
tions do not adopt the suggestion because
an S corporation may still file Form 8832
or may have filed Form 8832 before elect-
ingtobeclassifiedasanScorporation.
Commentators requested that accounts
opened by S corporations before 2012 be
excepted from reporting. The regulations
do not adopt this request as contrary to the
statute.
k. Reporting to Trust Interest Holders in
aWHFIT
The proposed regulations provided that,
with respect to a widely held fixed invest-
ment trust (WHFIT), the requirements of
section 6045(g), to the extent applicable,
are met by compliance with the WHFIT re-
porting rules in §1.671–5. One commen-
tator noted that §1.671–5(d)(2)(ii)(H) re-
quires that a trustee or middleman filing
a Form 1099 for an interest in a WHFIT
provide, in addition to the items listed in
§1.671–5(d)(2)(ii), any other information
required by the Form 1099. The commen-
tator noted that this requirement could cre-
ate confusion for reporting basis informa-
tion to the extent the Form 1099-B is mod-
ified to require basis information. In re-
sponse, the final regulations continue to
provide that the requirements of section
6045(g) are met by compliance with the
WHFIT rules. The IRS intends to address
the commentator’s concern in the instruc-
tions to the Form 1099-B.
2010–47 I.R.B.678November 22, 2010

l. DueDateforPayeeStatements
Furnished in a Consolidated Reporting
Statement
Section 6045(b) extended the due date
to furnish payee statements to customers
from January 31 to February 15, effective
for statements required to be furnished
after December 31, 2008. Section 6045(b)
also provides that this February 15 due
date applies to any other statement re-
quired to be furnished on or before January
31 of the same year if furnished in a
consolidated reporting statement with a
statement required under section 6045.
The proposed regulations definedcon-
solidated reporting statementas a group-
ing of statements that includes a required
section 6045 statement and is furnished to
the same customer or group of customers
on the same date. The proposed regula-
tions also permitted a broker to treat any
customer as receivinga required section
6045 statement if the customer had an ac-
count for which section 6045 would re-
quire a statement if a sale occurred during
the year. In response to a request from a
commentator, the final regulations clarify
that a customer may be treated as receiv-
ing a required section 6045 statement un-
der this rule even if the customer’s account
holds only cash or shares of money market
funds.
Commentators requested that the defi-
nition of consolidated reporting statement
include all statements a broker sends to
a customer, whether or not the broker in-
cludes a required section 6045 statement to
that customer, if the broker includes a re-
quired section 6045 statement to one of its
customers. Other commentators supported
the rule in the proposed regulations requir-
ing brokers to continue to furnish in Jan-
uary pension statements and other state-
ments to customers that hold only nontax-
able accounts. The final regulations do
not adopt the suggestion to broaden the
definition of consolidated reporting state-
ment. The suggested definition is incon-
sistent with statutory intent to limit the ex-
tended due date to statements that are or
can be provided with other required sec-
tion 6045 reporting.
A commentator also requested that the
rules for consolidated reporting by bro-
kers refer to “reporting entities” instead of
“brokers” because custodians for individ-
ual retirement accounts (IRAs) may not
stand ready to effect sales to be made by
others and, therefore, may not be consid-
ered brokers under section 6045. The fi-
nal regulations do not adopt this comment
because an entity that is not considered a
broker under section 6045 may not furnish
a consolidated reporting statement.
5.Reporting Required in Connection With
Transfers of Securities
a.ScopeofTransferReporting
The proposed regulations identified
brokers, persons actingascustodiansof
securities in the ordinary course of a trade
or business, issuers of securities, and their
agents as applicable persons required to
furnish a transfer statement. Commenta-
tors asked whether agents of an issuer such
as a transfer agent or administrator of an
employee stock purchase plan are applica-
ble persons. The final regulations clarify
that agents of an issuer are applicable
persons required to furnish transfer state-
ments and provide additional examples to
illustrate these agency arrangements.
A commentator requested that stock
transfer agents that do not file Form
1099-B be excluded from transfer report-
ing. The final regulations do not adopt this
comment as inconsistent with the statutory
purpose of transfer reporting. A broker
selling a transferred security is only able
to report basis if informed of the basis.
The regulations properly place the duty to
furnish the transfer statement to the selling
broker on the person transferring custody
of the security.
Commentators requested an exclusion
for transfers excepted from all section
6045 reporting (including gross proceeds
reporting) at the time of the transfer. The
final regulations adopt this suggestion.
Commentators also requested exclusions
for transfers to or from a nontaxable ac-
count. Sales of securities in nontaxable
accounts are always excepted from all
reporting under section 6045. The final
regulations accordingly provide an exclu-
sion for transfers to trustees and custodians
of individual retirement plans. However,
the exclusion does not apply to transfers
from these accounts to a customer subject
to reporting under section 6045(a).
Commentators requested that transfer
statements for securities distributed from
a nontaxable account to an owner or an
heir report the new owner’s basis as the fair
market value of the security as of the date
of distribution or date of death, whichever
applies. The final regulations do not adopt
this comment because securities held in
individual retirement plans generally are
treated as noncovered securities. Transfer-
ors of securities from nontaxable accounts
need not report basisalthough they may
choose to do so.
Commentators requested that all
trustees or fiduciariesofatrustorestate
be required to furnish transfer statements
when assets are distributed to the benefi-
ciaries or heirs. Thefinal regulations do
not adopt this suggestion. A trustee or
fiduciary must furnish a transfer statement
if the trustee is also the broker effecting
the transfer. If a trustee merely distributes
securities in a transfer effected by a sepa-
rate broker, then the broker must furnish
the transfer statement.
Commentators requested an exclusion
for securities transferred in connection
with a loan or under a repurchase agree-
ment or securities collateral agreement
because the lender’s basis in the securities
is not relevant to the borrower. The final
regulations adopt this request only to the
extent that the transferor lends or borrows
securities as a principal (for example,
when a customer opens or closes a short
sale). When a transferor otherwise lends
or borrows securities for a customer whose
transfers are not otherwise exempt from
transfer reporting, transfer statements will
ensure that securities returned to the lender
or collateral provider remain covered se-
curities even if the securities are returned
to a different account. Further, the broker
fortheborrowerorsecuredpartymaynot
know that the securities it receives are
exempted from reporting under the pro-
posed exclusion and would be compelled
to ask for a transfer statement if none were
provided.
Commentators requested an exclusion
for money market funds because brokers
do not currently report their sales on Form
1099-B. The final regulations adopt this
comment and also exempt money market
funds from issuer reporting under section
6045B.
November 22, 20106792010–47 I.R.B.

b. Information Furnished on a Transfer
Statement
The proposed regulations required
transfer statementsto include informa-
tion regarding the “beneficial owner” of
securities. Commentators suggested that
“beneficial owner” is not an appropriate
term because securities are often trans-
ferred for accounts titled in the name of
someone other than a beneficial owner,
such as an agent of an undisclosed prin-
cipal. Accordingly, the final regulations
use the designation“customer” instead of
“beneficial owner.”
Commentators asked whether separate
transfer statements must be furnished to
identify noncovered securities at the lot
level. The final regulations clarify that the
transfer statement need not identify non-
covered securities at the lot level and that
a single transfer statement may report the
transfer of multiple noncovered securities.
Commentators requested that transfer
statements exclude sensitive customer
information due to privacy concerns.
Commentators also suggested that transfer
statements not include the security symbol
and lot number of the transferred security
or the date of any previous transfer state-
ment for the same transfer. In response
to these comments, the final regulations
provide that a transfer statement need
not include the taxpayer identification
number, address, or phone number of the
customer; the security symbol or lot num-
ber of the transferred security; or the date
of any previous transfer statement. Al-
though the transfer statement must include
the customer’s name and account number,
this information may be reported in coded
format.
Commentators requested that transfer
statements not include the transferor’s
classification of the security (for example,
as stock or debt) because the receiving bro-
ker might classify the security differently.
The final regulations do not adopt this
suggestion. The receiving broker need not
accept the transferor’s classification unless
it is the same as the issuer’s classification.
Nonetheless, the transferor’s classification
may clarify how the transferor computed
adjustments to the security’s basis.
Commentators asked whether the par-
ties to a transfer statement could agree
to substitute a security identifier for the
CUSIP. The final regulations clarify that
the parties may use codes to substitute
for other information, including a security
symbol or other identification number or
scheme to substitute for the CUSIP.
Section 1012(c)(2)(B)(ii) provides that
all stock for which a broker or fund has
made a single-account election shall be
treated as covered securities regardless of
the date of the acquisition of the stock.
Commentators asked whether pre-effec-
tive date stock for which a broker or fund
has made the single-account election re-
mains a covered security when transferred
to another broker. Because stock subject to
the single-account election must be treated
as a covered security and reported as a
covered security on the transfer statement,
it remains a covered security after the
transfer under section 6045(g)(3)(A)(ii),
provided the receiving broker receives a
transfer statement.
c. Reporting of Transfers of Gifted and
Inherited Securities
Under the proposed regulations, gifted
and inherited securities that were cov-
ered securities in the account of the donor
or decedent remained covered securities
when transferred to the recipient’s account
and accompanied by a transfer statement.
Commentators recommended that trans-
fers of gifted and inherited securities be
excluded from the transfer statement re-
quirement because these transfers are
outside the scope of the statute. Section
6045(g)(3)(A)(ii) provides that the term
“covered security” includes all transferred
securities that are covered securities in the
account from which transferred, provided
the receiving broker receives a transfer
statement. Therefore,the final regulations
do not adopt this recommendation.
The proposed regulations required that
a transfer statement for gifted securities in-
dicate that the transfer consists of gifted se-
curities and state the adjusted basis of the
securities in the hands of the donor (carry-
over basis) and the donor’s original acqui-
sition date of the securities. The proposed
regulations also required that the transfer
statement report the date of the gift (if
known when furnishing the statement) and
the fair market value of the gift on that date
(if known or readily ascertainable). The
proposed regulations required that, upon
the subsequent sale or other disposition of
these securities, the selling broker apply
the relevant basis rules for gifts, such as
rules disallowing loss on the sale of gifted
securities to the extent of built-in loss at the
time of the gift.
Commentators requested simplified
conventions for reporting the basis of
gifted securities. They asked that the rules
require reporting of carryover basis with-
out regard to rules disallowing loss to the
extent of built-in loss at the time of the
gift. They stated that gifts of depreciated
securities were rare and did not justify the
burden of obtaining the fair market value
of the securities as of the date of the gift.
They suggested instead that a subsequent
sale be identified as a sale of gifted secu-
rities on Form 1099-B to alert the seller
that the reported basis may not be correct.
The final regulations do not adopt these
suggestions. The burden on brokers to
determine fair market value in applying
the gift basis rules is not excessive. If fair
market value as of the date of the gift is
not readily ascertainable, a broker may
substitute gross proceeds on a subsequent
sale for this amount in determining the
initial basis and the gain or loss on the
subsequent sale.
Commentators also requested simpli-
fied conventions for reporting the basis of
inherited securities. The proposed regu-
lations required that basis be reported on
the transfer statement in accordance with
the instructions and valuations furnished
by an authorized representative of the es-
tate, which the transferor must request be-
fore reporting. Commentators asked that
the rules require only reporting of basis
equal to the fair market value of the secu-
rity on the date of death and eliminate the
requirement to request instructions from
the estate representative. This suggestion
was adopted. The final regulations provide
that the transferor must report adjusted ba-
sis equal to the fair market value of the se-
curity on the date of death unless the bro-
ker receives different instructions from the
estate representative. If the transferor nei-
ther knows nor can readily ascertain the
fair market value of a security on the date
of death, the final regulations provide that
the transferor may treat the security as non-
covered. If the transferor cannot identify
which securities in a joint account have
been transferred from the decedent, the
final regulations require the transferor to
treat each security in the account as if it
were a noncovered security.
2010–47 I.R.B.680November 22, 2010

A commentator requested that the trans-
fer statement for a subsequent transfer of
an inherited security include the informa-
tion necessary to apply section 1223(9),
relating to the holding period of property
acquired from a decedent that is sold or
otherwise disposed of within one year af-
ter the decedent’s death. This suggestion
was adopted. The final regulations require
transfer statements for both initial and sub-
sequent transfers of an inherited security to
indicate that the security is inherited.
d. Other Transfer Reporting Issues
The proposed regulations permitted
combined transfer reporting of a security
acquired on different dates or at different
prices when the security’s basis is deter-
mined using an average basis method and
the security has been held for more than
five years. Commentators requested that
combined transfer reporting be permitted
for averaged securities held for more than
one year consistent with the two cate-
gories of capital gain (long term and short
term). The final regulations do not adopt
this comment. In 2011, absent a statutory
change, lower income tax rates will apply
to securities held more than five years.
Commentators asked how a broker de-
termines if a transfer statement is com-
plete. The final regulations clarify that a
statement is complete if, in the view of the
receiving broker, it provides sufficient in-
formation to report the sale of the trans-
ferred security as a covered security (or
states that the security is a noncovered se-
curity). For example, if the transfer state-
ment fails to specify whether the security
is stock, the receiving broker may treat the
transfer statement as complete if the re-
ceiving broker otherwise has sufficient in-
formation to report the sale of the security
as a covered security (or the transfer state-
ment states that the security is a noncov-
ered security).
Commentators asked how transfer re-
porting applies to purchases and sales of
securities involving multiple brokers or to
a cash-on-delivery account. The final reg-
ulations clarify that, for a transfer in con-
nection with a sale, a custodian or other
transferor that transfers custody of a secu-
rity to a broker in order to effect a sale must
furnish a transfer statement only to the bro-
ker that effects the sale. However, no
transfer statement is required if the trans-
feror itself either effects the sale or is re-
quired to report the sale on Form 1099-B.
The final regulations also provide that, for
a transfer in connection with a purchase,
a broker that effects a purchase but does
not receive custody of the purchased secu-
rity must furnish a transfer statement to the
broker that receives custody. However, no
transfer statement is required if the broker
effects a purchase solely at the instruction
of the broker receiving custody.
The proposed regulations proposed to
exclude “any person acting solely as a
clearing organization with respect to the
transfer” from the transfer reporting re-
quirements. Commentators asked that the
final regulations clarify what it means to
act “solely as a clearing organization.” The
final regulations clarify that the exception
applies to an organization that holds and
transfers obligations among its members
as a service to its members.
Commentators requested a requirement
that all transfer statements for covered
securities reflect the quantitative effect
of any organizational actions on basis
reported by issuers under section 6045B
while the transferor holds custody instead
of identifying which corporate action
statements are reflected on the transfer
statement. The final regulations adopt this
comment.
Commentators requested a default rule
requiring transferors to furnish the transfer
statement electronically unless the parties
agree to a different method. The final reg-
ulations do not adopt this suggestion. A
consent requirement ensures that both par-
ties have the ability to submit and receive
transfer statements electronically.
6.Reporting by Issuers of Actions
Affecting Basis of Securities
Under section 6045B, if an organiza-
tional action (such as a stock split or a
merger or acquisition) by an issuer affects
the basis of a specified security, the issuer
must file a return with the IRS and furnish
an information statement to each certifi-
cate holder or nominee reporting the quan-
titative effect on basis. The proposed reg-
ulations required the issuer to assign a se-
quential number determined separately by
security for each organizational action re-
ported. Several commentators requested
that the final regulations delete the sequen-
tial number requirement. Another com-
mentator requested that the rules create a
standardized number system.
The purpose of the sequential number
requirement was to indicate which basis
adjustments for organizational actions are
reflected on the transfer statement. The fi-
nal regulations require transfer statements
to reflect all organizational actions that
occur while the transferor holds custody.
Therefore, the final regulations eliminate
the sequential number requirement.
A commentator asked that a RIC be
deemed to comply with issuer reporting
of an organizational action if it follows
existing industry procedures for transmit-
ting information to brokers. The com-
mentator asserted that reporting under sec-
tion 6045B would be duplicative and un-
necessary. The final regulations do not
adopt this comment as inconsistent with
the statutory reporting requirement.
A commentator asked whether a RIC
or REIT must file an issuer return under
section 6045B for undistributed capital
gains reported under section 852(b)(3)(D)
or 857(b)(3)(D) on Form 2438,“Undis-
tributed Capital Gain Tax Return,”and
Form 2439,“Notice to Shareholder of
Undistributed Long-Term Capital Gains.”
Because these forms report the informa-
tion required under §1.6045B–1, the final
regulations provide that an issuer that
files and furnishes both forms is deemed
to meet the requirements under section
6045B for undistributed capital gains
affecting the basis of its stock reported
on the forms. The final regulations also
provide that RICs, REITs, and brokers
holding custody of RIC and REIT stock
must adjust basis in accordance with the
information reported on the forms.
Commentators asked whether an ADR
is subject to issuer reporting under section
6045B. Because an ADR is a specified se-
curity, a foreign corporation that takes an
organizational action that affects the basis
of an ADR that represents stock in the for-
eign corporation must file an issuer return.
The final regulations clarify that an issuer
may use an agent, including a depositary,
to satisfy the requirements of this section.
Nonetheless, the issuer remains liable for
penalty for any failure to comply unless,
as under current law, the failure is due to
reasonable cause and not willful neglect.
The proposed regulations permitted
issuers to make reasonable assumptions
about facts having a quantitative effect on
November 22, 20106812010–47 I.R.B.

basis that could not be determined before
the reporting due date and required cor-
rected reporting within forty-five days of
determining the necessary facts. A com-
mentator asked to what extent an issuer is
required to amend a return with additional
facts that may affect taxability once the
facts are known. The final regulations
clarify that corrected reporting is required
whenever an issuer determines additional
facts that result in a different quantitative
effect on basis from what the issuer previ-
ously reported.
Commentators requested that issuer
reporting under section 6045B be coordi-
nated with reporting under section 6043(c)
for certain changes in corporate control
and capital structure. One commentator
requested relief from duplicate reporting
of a corporate action under section 6043(c)
when reporting the action under section
6045B. This request was not adopted.
Reporting on Form 1099-CAP,“Changes
in Corporate Control and Capital Struc-
ture,”is specific to each shareholder and
includes each shareholder’s name and ag-
gregate value of cash and other property
received by each shareholder. Similarly,
reporting on Form 8806,“Information
Return for Acquisition of Control or Sub-
stantial Change in Capital Structure,”
while not shareholder-specific, includes
information not required under section
6045B and permits the issuer to consent to
IRS disclosure of some of the contents of
the return.
Section 6045B(e) waives the require-
ments to file issuer returns and furnish is-
suer statements if the issuer makes the in-
formation about the organizational action
publicly available in the form and man-
ner determined by the Secretary. The pro-
posed regulations provided that an issuer
may publicly report by posting a statement
with the required information in a readily
accessible format in an area of its primary
public Web site dedicated to this purpose
by the same due date for reporting the orga-
nizational action to the IRS and keeps the
form accessible to the public.
Some commentators objected to the
public reporting method in the proposed
regulations on the ground that it would be
too burdensome for brokers to monitor is-
suer Web sites. Commentators suggested
that the IRS permit issuers to consent to
public disclosure by the IRS and that the
IRS establish a central repository on its
Web site for posting information state-
ments from issuers that wish to report
publicly. Commentators also suggested
that the IRS formally recognize a clearing
facility to serve as a central repository.
Other commentators suggested that the fi-
nal regulations require issuers to send their
public reports or copies of their returns to
clearing organizations, which will dissem-
inate the information to brokers, holders,
and their nominees. Commentators also
suggested that issuers should be required
to furnish a copy of their public report or
issuer return to any entity that requests it.
Other commentators supported the public
reporting method in the proposed regu-
lations. The final regulations adopt the
public reporting method in the proposed
regulations and do not adopt any of the
suggested changes.
Commentators requested that the regu-
lations limit the time period for which is-
suers must keep the public report posted on
their Web site. The final regulations limit
therequiredperiodto10years.
7.Penalty Provisions
The proposed regulations generally re-
quired brokers to adjust basis of covered
securities reportedon Form 1099-B to re-
flect information from any transfer state-
ment received as well as any issuer report-
ing through the date of sale. The proposed
regulations provided that any failure to re-
port correct information that arises solely
from reliance on transfer statements and
issuer reporting is deemed to be due to
reasonable cause for purposes of penalties
under sections 6721 and 6722. The pro-
posed regulations permitted, but did not
require, a broker to further adjust the re-
ported basis for information not reflected
on one of these sources, including any in-
formation the broker has about securities
held by the same customer in other ac-
counts with the broker. The proposed reg-
ulations further provided that a broker that
takes into account additional information
received from a customer or third party
is deemed to have relied upon this infor-
mation in good faith in accordance with
current rules in §301.6724–1(c)(6) for pur-
poses of penalty relief under sections 6721
and 6722 if the broker neither knows nor
has reason to know that the information is
incorrect.
Commentators expressed concern that a
“know or reason to know” standard would
require an excessive level of due diligence
and asked that brokers be subject to penal-
ties only if they have actual knowledge that
the information is incorrect, the same stan-
dard for reliance on transfer statements and
issuer statements. The final regulations do
not adopt this suggestion. A “know or rea-
son to know” standard is consistent with
the existing standard for penalty relief and
better ensures the integrity of the informa-
tion reported on the return.
The proposed regulations provided
that brokers and transferors must correct
their Form 1099-B or transfer statement to
account for late or corrected transfer state-
ments or issuer reports. Commentators
requested time limits on the correction re-
quirement. This suggestion was adopted.
The final regulations require corrected
reporting only when brokers receive cor-
rected information within 3 years after
issuing a Form 1099-B or 18 months
after issuing a transfer statement. Com-
mentators also suggested that corrected
Forms 1099-B or transfer statements not
be required forde minimischanges or for
closed accounts. The final regulations do
not adopt this suggestion.
A commentator also asked about the
interaction of the basis reporting rules with
the requirements for tax return preparers
under section 6694. The commentator
expressed concern that a duly diligent
preparer could be subject to penalties un-
der section 6694 for preparing a return
or claim for refund that reports (1) infor-
mation that the preparer believes to be
accurate after exercising due diligence
but that differs from the information re-
ported on Form 1099-B or (2) inaccurate
information from Form 1099-B that the
preparer does not know (or have reason to
know) is incorrect.
In many cases, basis reported on Form
1099-B may not reflect the taxpayer’s cor-
rect basis. For example, brokers need not
adjust basis for wash sales unless the trans-
actions that trigger the wash sale occur in
the same account with respect to identical
securities. Additionally, brokers are per-
mitted, but not required, to report basis for
noncovered securities. Taxpayers are ex-
pected to report the correct basis on Sched-
ule D regardless of the amount reported
on Form 1099-B. The IRS is currently re-
vising Schedule D and the related instruc-
2010–47 I.R.B.682November 22, 2010

tions and publications to facilitate recon-
ciliation.
With respect to tax return preparer
penalties under section 6694, these regu-
lations do not alter current rules governing
preparer reliance on client information.
Generally, §1.6694–1(e)(1) permits tax
return preparers to rely in good faith upon
information furnished by a client taxpayer
or another party so long as the preparer
does not ignore other information fur-
nished to or actually known by the preparer
and makes reasonable inquiries if the fur-
nished information appears to be incorrect
or incomplete. This same standard applies
to information furnished on Form 1099-B.
Effective/ Applicability Dates
The regulations on broker basis re-
porting under section 6045(g) apply to:
(1) Any share of stock or any interest
treated as stock in an entity organized as,
or treated for Federal tax purposes as, a
corporation (foreign or domestic) acquired
on or after January 1, 2011, other than
RIC stock or DRP stock; and (2) any share
of RIC stock or DRP stock acquired on
or after January 1, 2012. The regulations
regarding the timing for reporting short
sales of securities under section 6045
applytoshortsalesopenedonorafter
January 1, 2011.
These regulations regarding the de-
termination of basis under section 1012
apply for taxable years beginning after
October 18, 2010. However, the rules in
§1.1012–1(e)(1)(i), in part, apply to stock
acquired on or after January 1, 2011; the
rules in §1.1012–1(e)(2) apply to stock
acquired on or after January 1, 2012; the
rules in §1.1012–1(e)(7)(iii) apply to stock
acquired before and sold, exchanged, or
disposed of on or after April 1, 2011;
and the rules in §1.1012–1(e)(7)(i), in
part, §1.1012–1(e)(9), in part, and in
§1.1012–1(e)(10), in part, apply to sales,
exchanges, or other dispositions of stock
on or after January 1, 2012.
The regulations regarding transfer
statement reporting under section 6045A
apply to: (1) Transfers of stock other than
RIC stock on or after January 1, 2011; and
(2) transfers of RIC stock on or after Jan-
uary 1, 2012. The regulations regarding
issuer reporting under section 6045B ap-
ply to: (1) Organizational actions affecting
basis of stock in an entity organized as, or
treated for Federal tax purposes as, a cor-
poration (foreign or domestic) other than
RIC stock on or after January 1, 2011; and
(2) organizational actions affecting basis
of RIC stock on or after January 1, 2012.
Effect on Other Documents
As of October 18, 2010, Rev. Rul.
67–436, 1967–2 C.B 266, is obsoleted and
Rev. Proc. 2008–52, 2008–2 C.B. 587, as
modified, amplified, and clarified by Rev.
Proc. 2009–39, 2009–38 I.R.B. 371, is
modifiedbydeletingSection30oftheAp-
pendix.See§601.601(d)(2).
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It also has been determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply.
Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), it is hereby cer-
tified that these regulations will not have a
significant economic impact on a substan-
tial number of small entities. Any effect
on small entities by these regulations flows
from section 403 of the Energy Improve-
ment and Extension Act of 2008, Division
B of Public Law 110–343 (122 Stat. 3765,
3854 (2008)) (the Act).
Section 403(a) of the Act requires that
brokers reporting the sale of a covered
security report the adjusted basis of the
security and whether any gain or loss is
long-term or short-term. It is anticipated
that this statutory requirement will affect
only financial services firms with annual
receipts greater than $7 million that, there-
fore, are not small entities. Further, the
regulations under this section impose no
reporting requirements not found in the
Act.
Section 403(c) of the Act requires ap-
plicable persons to furnish a transfer state-
ment in connection with the transfer of
custody of a covered security. The regu-
lations define applicable person to include
brokers, professionalcustodians of securi-
ties, issuers of securities, and trustee and
custodians of individual retirement plans.
This definition effectuates the Act by giv-
ing the broker that receives the transfer
statement the information necessary to ac-
curately report the sale of the security re-
gardless of how the owner previously held
its custody. The regulations limit the im-
pact on small entities by limiting reporting
to necessary entities and information.
Section 403(d) of the Act requires re-
porting by all issuers of specified securities
regardless of size or whether the securities
are publicly traded. The regulations limit
the reporting burden by requiring only nec-
essary information and by permitting is-
suers to report actions publicly instead of
by furnishing a statement to each nominee
or holder. The regulations therefore miti-
gate the statutory impact on small entities.
Therefore, because this regulation will
not have a significant economic impact
on a substantial number of small entities,
a regulatory flexibility analysis is not re-
quired. Pursuant to section 7805(f) of the
Code, the notice of proposed rulemaking
preceding this regulation has been submit-
ted to the Chief Counsel for Advocacy
of the Small Business Administration for
comment on its impact on small business.
Drafting Information
The principal authors of these proposed
regulations are Edward C. Schwartz,
Amy J. Pfalzgraf, and William L. Candler,
Office of Associate Chief Counsel
(Income Tax and Accounting),
and Stephen Schaeffer, Office of
Associate Chief Counsel (Procedure
and Administration). However, other
personnel from the IRS and the Treasury
Department participated in their
development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1, 31, 301,
and 602 are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding entries in nu-
merical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.6045A–1 also issued under
26 U.S.C. 6045A(a), (b), (c).
Section 1.6045B–1also issued under
26 U.S.C. 6045B(a), (c), (e). * * *
November 22, 20106832010–47 I.R.B.

Par. 2. Section 1.408–7 is amended
by adding two new sentences at the end of
paragraph (d)(2) to read as follows:
§1.408–7 Reports on distributions from
individual retirement plans.
*****
(d) * * *
(2)***However,foradistribu-
tion after December 31, 2008, the Feb-
ruary15duedateundersection6045
applies to the statement if the state-
ment is furnished in a consolidated re-
porting statement under section 6045.
See§§1.6045–1(k)(3), 1.6045–2(d)(2),
1.6045–3(e)(2), 1.6045–4(m)(3), and
1.6045–5(a)(3)(ii).
*****
Par. 3. Section 1.1012–1 is amended
by:
1. Revising paragraphs (c)(1), (c)(4),
(c)(6), (c)(7)(ii), (c)(7)(iii) introductory
text, and (c)(7)(iii)(a).
2. Adding new paragraphs (c)(8),
(c)(9), (c)(10), and (c)(11).
3. Revising the heading of paragraphs
(e) and (e)(5).
4. Revising paragraphs (e)(1), (e)(2),
(e)(3), (e)(4), (e)(6), and (e)(7).
5. Adding new paragraphs (e)(8),
(e)(9), (e)(10), (e)(11), and (e)(12).
The additions and revisions read as fol-
lows:
§1.1012–1 Basis of property.
*****
(c)Sale of stock—(1)In general.(i)
Except as provided in paragraph (e)(2) of
this section (dealing with stock for which
the average basis method is permitted),
if a taxpayer sells or transfers shares of
stock in a corporation that the taxpayer
purchased or acquired on different dates or
at different prices and the taxpayer does
not adequately identify the lot from which
the stock is sold or transferred, the stock
sold or transferred is charged against the
earliest lot the taxpayer purchased or ac-
quired to determine the basis and holding
period of the stock. If the earliest lot pur-
chased or acquired is held in a stock certifi-
cate that represents multiple lots of stock,
and the taxpayer does not adequately iden-
tify the lot from which the stock is sold
or transferred, the stock sold or transferred
is charged against the earliest lot included
in the certificate. See paragraphs (c)(2),
(c)(3), and (c)(4) of this section for rules
on what constitutes an adequate identifica-
tion.
(ii) A taxpayer must determine the ba-
sis of identical stock (within the meaning
of paragraph (e)(4) of this section) by av-
eraging the cost of each share if the stock
is purchased at separate times on the same
calendar day in executing a single trade or-
der and the broker executing the trade pro-
vides a single confirmation that reports an
aggregate total cost or an average cost per
share. However, the taxpayer may deter-
mine the basis of the stock by the actual
cost per share if the taxpayer notifies the
broker in writing of this intent. The tax-
payer must notify the broker by the ear-
lier of the date of the sale of any of the
stock for which the taxpayer received the
confirmation or one year after the date of
the confirmation. A broker may extend the
one-year period but the taxpayer must no-
tify the broker no later than the date of sale
of any of the stock.
*****
(4)Stock held by a trustee, executor, or
administrator. (i) A trustee or executor
or administrator of an estate holding stock
(not left in the custody of a broker) makes
an adequate identification if the trustee, ex-
ecutor, or administrator—
(a) Specifies in writing in the books and
records of the trust or estate the particular
stock to be sold, transferred, or distributed;
(b) In the case of a distribution, fur-
nishes the distributee with a written doc-
ument identifying the particular stock dis-
tributed; and
(c) In the case of a sale or transfer
through a broker or other agent, specifies
to the broker or agent the particular stock
to be sold or transferred, and within a rea-
sonable time thereafter the broker or agent
confirms the specificationinawrittendoc-
ument.
(ii) The stock the trust or estate identi-
fies under paragraph (c)(4)(i) of this sec-
tion is the stock treated as sold, transferred,
or distributed, even ifthe trustee, executor,
or administrator delivers stock certificates
from a different lot.
*****
(6)Bonds. Paragraphs (1) through (5),
(8), and (9) of this section apply to the sale
or transfer of bonds.
(7) * * *
(ii) In applying paragraph (c)(3)(i)(b)
of this section to a sale or transfer of a
book-entry security pursuant to a tax-
payer’s written instruction, a confirmation
is made by furnishing to the taxpayer a
written advice of transaction from the Re-
serve Bank or other person through whom
the taxpayer sells or transfers the secu-
rities. The confirmation document must
describe the securities and specify the date
of the transaction and amount of securities
sold or transferred.
(iii) For purposes of this paragraph
(c)(7):
(a)Thetermbook-entry securitymeans
a transferable Treasury bond, note, certifi-
cate of indebtedness, or bill issued under
the Second Liberty Bond Act (31 U.S.C.
774(2)), as amended, or other security of
the United States (as defined in paragraph
(c)(7)(iii)(b) of this section) in the form of
an entry made as prescribed in 31 CFR Part
306, or other comparable Federal regula-
tions, on the records of a Reserve Bank.
*****
(8)Time for making identification.For
purposes of this paragraph (c), an adequate
identification of stock is made at the time
of sale, transfer, delivery, or distribution if
the identification is made no later than the
earlier of the settlement date or the time
for settlement required by Rule 15c6–1 un-
der the Securities Exchange Act of 1934,
17 CFR 240.15c6–1 (or its successor). A
standing order or instruction for the spe-
cific identification of stock is treated as an
adequate identification made at the time of
sale, transfer, delivery, or distribution.
(9)Method of writing. (i) A written
confirmation, record, document, instruc-
tion, notification, or advice includes a writ-
inginelectronicformat.
(ii) A broker or agent may include the
written confirmation required under this
paragraph (c) in an account statement or
other document the broker or agent peri-
odically provides to the taxpayer if the bro-
ker or agent provides the statement or other
document within a reasonable time after
the sale or transfer.
(10)Method for determining basis of
stock. A method of determining the basis
of stock, including a method of identifying
stock sold under this paragraph (c) and the
average basis method described in para-
graph (e) of this section, is not a method
of accounting. Therefore, a change in a
2010–47 I.R.B.684November 22, 2010

method of determining the basis of stock
is not a change in method of accounting to
which sections 446 and 481 apply.
(11)Effective/applicability date. Para-
graphs (c)(1), (c)(4), (c)(6), (c)(7)(ii),
(c)(7)(iii)(a), (c)(8), (c)(9), and (c)(10) of
this section apply for taxable years begin-
ning after October 18, 2010.
*****
(e)Election to use average basis
method—(1)In general. Notwithstanding
paragraph (c) of this section, and except
as provided in paragraph (e)(8) of this sec-
tion, a taxpayer may use the average basis
method described in paragraph (e)(7) of
this section to determine the cost or other
basis of identical shares of stock if—
(i) The taxpayer leaves shares of stock
in a regulated investment company (as de-
fined in paragraph (e)(5) of this section)
or shares of stock acquired after Decem-
ber 31, 2010, in connection with a dividend
reinvestment plan (as defined in paragraph
(e)(6) of this section) with a custodian or
agent in an account maintained for the ac-
quisition or redemption, sale, or other dis-
position of shares of the stock; and
(ii) The taxpayer acquires identical
shares of stock at different prices or bases
in the account.
(2)Determination of method.(i)Ifa
taxpayer places shares of stock described
in paragraph (e)(1)(i) of this section ac-
quired on or after January 1, 2012, in the
custody of a broker (as defined by section
6045(c)(1)), including by transfer from
an account with another broker, the basis
of the shares is determined in accordance
with the broker’s default method, unless
the taxpayer notifies the broker that the
taxpayer elects another permitted method.
The taxpayer must report gain or loss us-
ing the method the taxpayer elects or, if
the taxpayer fails to make an election, the
broker’s default method.Seeparagraphs
(e)(9)(i) and (e)(9)(v),Example 2,ofthis
section.
(ii) The provisions of this paragraph
(e)(2) are illustratedby the following ex-
ample:
Example. (i) In connection with a dividend rein-
vestment plan, Taxpayer B acquires 100 shares of G
Company in 2012 and 100 shares of G Company in
2013, in an account B maintains with R Broker. B
notifies R in writing that B elects to use the average
basis method to compute the basis of the shares of G
Company. In 2014, B transfers the shares of G Com-
pany to an account with S Broker. B does not notify
S of the basis determination method B chooses to use
for the shares of G Company, and S’s default method
is first-in, first-out. In 2015, B purchases 200 shares
of G Company in the account with S. In 2016, B in-
structs S to sell 150 shares of G Company.
(ii) Because B does not notify S of a basis deter-
mination method for the shares of G Company, under
paragraph (e)(2)(i) of this section, the basis of the 150
shares of G Company S sells for B in 2016 must be de-
termined under S’s default method, first-in, first-out.
(3)Shares of stock. For purposes of
this paragraph (e), securities issued by unit
investment trusts described in paragraph
(e)(5) of this section are treated as shares of
stock and the termshareorsharesincludes
fractions of a share.
(4)Identical stock. For purposes of this
paragraph (e),identical shares of stock
means stock with the same Committee
on Uniform Security Identification Proce-
dures (CUSIP) number or other security
identifier number as permitted in pub-
lished guidance of general applicability,
see§601.601(d)(2) of this chapter.
(5)Regulated investment company.
***
(6)Dividend reinvestment plan—(i)In
general. For purposes of this paragraph
(e), the termdividend reinvestment plan
means any written plan, arrangement, or
program under which at least 10 percent
of every dividend (within the meaning of
section 316) on any share of stock is rein-
vested in stock identical to the stock on
which the dividend is paid. A plan is a
dividend reinvestment plan if the plan doc-
uments require that at least 10 percent of
any dividend paid is reinvested in identi-
cal stock even if the plan includes stock
on which no dividends have ever been de-
clared or paid or on which an issuer ceases
paying dividends. A plan that holds one
or more different stocks may permit a tax-
payer to reinvest a different percentage of
dividends in the stocks held. A dividend
reinvestment plan may reinvest other dis-
tributions on stock, such as capital gain
distributions, non-taxable returns of capi-
tal, and cash in lieu of fractional shares.
The term dividend reinvestment plan in-
cludes both issuer administered dividend
reinvestment plans and non-issuer admin-
istered dividend reinvestment plans.
(ii)Acquisition of stock. Stock is ac-
quired in connection with a dividend rein-
vestment plan if the stock is acquired under
that plan, arrangement, or program, or if
the dividends and other distributions paid
on the stock are subject to that plan, ar-
rangement, or program. Shares of stock
acquired in connection with a dividend
reinvestment plan include the initial pur-
chase of stock in the dividend reinvestment
plan, transfers of identical stock into the
dividend reinvestment plan, additional pe-
riodic purchases of identical stock in the
dividend reinvestment plan, and identical
stock acquired through reinvestment of the
dividends or other distributions paid on the
stockheldintheplan.
(iii)Dividends and other distributions
paid after reorganization. For purposes of
this paragraph (e)(6), dividends and other
distributions declared or announced before
or pending a corporate action (such as a
merger, consolidation, acquisition, split-
off, or spin-off) involving the issuer and
subsequently paid and reinvested in shares
of stock in the successor entity or entities
are treated as reinvested in shares of stock
identical to the shares of stock of the issuer.
(iv)Withdrawal from or termination of
plan. If a taxpayer withdraws stock from
a dividend reinvestment plan or the plan
administrator terminates the dividend rein-
vestment plan, the shares of identical stock
the taxpayer acquires after the withdrawal
or termination are not acquired in con-
nection with a dividend reinvestment plan.
The taxpayer may not use the average ba-
sis method after the withdrawal or termina-
tion but may use any other permissible ba-
sis determination method. See paragraph
(e)(7)(v) of this section for the basis of the
shares after withdrawal or termination.
(7)Computation of average basis—(i)
In general. Average basis is determined by
averaging the basis of all shares of identi-
cal stock in an account regardless of hold-
ing period. However, for this purpose,
shares of stock in a dividend reinvestment
plan are not identical to shares of stock
with the same CUSIP number that are not
in a dividend reinvestment plan. The ba-
sis of each share of identical stock in the
account is the aggregate basis of all shares
of that stock in the account divided by the
aggregate number of shares. Unless a sin-
gle-account election is in effect, see para-
graph (e)(11) of this section, a taxpayer
may not average together the basis of iden-
tical stock held in separate accounts that
the taxpayer sells, exchanges, or otherwise
disposes of on or after January 1, 2012.
(ii)Order of disposition of shares sold
or transferred. In the case of the sale or
transfer of shares of stock to which the av-
erage basis method election applies, shares
November 22, 20106852010–47 I.R.B.

sold or transferred are deemed to be the
shares first acquired. Thus, the first shares
sold or transferred are those with a hold-
ing period of more than 1 year (long-term
shares) to the extent that the account con-
tains long-term shares. If the number of
shares sold or transferred exceeds the num-
ber of long-term shares in the account,
the excess shares sold or transferred are
deemed to be shares with a holding pe-
riod of 1 year or less (short-term shares).
Any gain or loss attributable to shares held
for more than 1 year constitutes long-term
gain or loss, and any gain or loss attribut-
able to shares held for 1 year or less con-
stitutes short-term gain or loss. For exam-
ple, if a taxpayer sells 50 shares from an
account containing 100 long-term shares
and 100 short-term shares, the shares sold
or transferred are all long-term shares. If,
however, the account contains 40 long-
term shares and 100 short-term shares, the
taxpayer has sold 40 long-term shares and
10 short-term shares.
(iii)Transition rule from double-cat-
egory method. This paragraph (e)(7)(iii)
applies to stock for which a taxpayer
uses the double-category method under
§1.1012–1(e)(3) (April 1, 2010), that the
taxpayer acquired before April 1, 2011,
and that the taxpayer sells, exchanges, or
otherwise disposes of on or after that date.
The taxpayer must calculate the average
basis of this stock by averaging together
all identical shares of stock in the account
on April 1, 2011, regardless of holding
period.
(iv)Wash sales. A taxpayer must ap-
ply section 1091 and the associated regula-
tions (dealing with wash sales of substan-
tially identical securities) in computing av-
erage basis regardless of whether the stock
or security sold or otherwise disposed of
and the stock acquired are in the same ac-
count or in different accounts.
(v)Basisafterchangefromaverage
basis method. Unless a taxpayer revokes
an average basis method election under
paragraph (e)(9)(iii) of this section, if a
taxpayer changes from the average basis
method to another basis determination
method (including a change resulting from
a withdrawal from or termination of a
dividend reinvestment plan), the basis
of each share of stock immediately af-
ter the change is the same as the basis
immediately before the change.Seepara-
graph (e)(9)(iv) of this section for rules for
changing from the average basis method.
(vi) The provisions of this paragraph
(e)(7) are illustrated by the following ex-
amples:
Example 1. (i) In 2011, Taxpayer C acquires 100
shares of H Company and enrolls them in a dividend
reinvestment plan administered by T Custodian. C
elects to use the average basis method for the shares
of H Company enrolled in the dividend reinvestment
plan. T also acquires for C’s account 50 shares of
H Company and does not enroll these shares in the
dividend reinvestment plan.
(ii) Under paragraph (e)(7)(i) of this section, the
50 shares of H Company not in the dividend rein-
vestment plan are not identical to the 100 shares of H
Company enrolled in the dividend reinvestment plan,
even if they have the same CUSIP number. Accord-
ingly, under paragraphs (e)(1) and (e)(7)(i) of this sec-
tion, C may not average the basis of the 50 shares of H
Company with the basis of the 100 shares of H Com-
pany. Under paragraph (e)(1)(i) of this section, C may
not use the average basis method for the 50 shares of
H Company because the shares are not acquired in
connection with a dividend reinvestment plan.
Example 2. (i) Taxpayer D enters into an agree-
ment with W Custodian establishing an account for
the periodic acquisition of shares of L Company, a
regulated investment company. W acquires for D’s
account shares of L Company stock on the following
dates and amounts:
Date
Number of shares
Cost
January 8, 2010
25
$200
February 8, 201024200
March 8, 201020200
April 8, 201020200
(ii) At D’s direction, W sells 40 shares from the
a
ccount on January 15, 2011, for $10 per share or a to-
tal of $400. D elects to use the average basis method
for the shares of L Company. The average basis for
t
he shares sold on January 15, 2011, is $8.99 (total
cost of shares, $800, divided by the total number of
shares, 89).
(
iii) Under paragraph (e)(7)(ii) of this section, the
shares sold are the shares first acquired. Thus, D
realizes $25.25 ($1.01 * 25) long-term capital gain
for the 25 shares acquired on January 8, 2010, and
$15.15 ($1.01 * 15) short-term capital gain for 15 of
the shares acquired on February 8, 2010.
Example 3. (i) The facts are the same as inExam-
ple 2, except that on February 8, 2011, D changes to
the first-in, first-out basis determination method. W
purchases 25 shares of L Company for D on March 8,
2011, at $12 per share. D sells 40 shares on May 8,
2011,and34sharesonJuly8,2012.
(ii) Because D uses the first-in, first-out method,
the 40 shares sold on May 8, 2011 are 9 shares pur-
chased on February 8, 2010, 20 shares purchased on
March 8, 2010, and 11 shares purchased on April 8,
2010. Because, under paragraph (e)(7)(v) of this sec-
tion, the basis of the shares D owns when D changes
from the average basis method remains the same, the
basis of the shares sold on May 8, 2011, is $8.99
per share, not the original cost of $8.33 per share
f
or the shares purchased on February 8, 2010, or $10
per share for the shares purchased on March 8, 2010,
and April 8, 2010. The basis of the shares sold on
J
uly 8, 2012, is $8.99 per share for 9 shares purchased
on April 8, 2010, and $12 per share for 25 shares
purchased on March 8, 2011.
E
xample 4. (i) The facts are the same as inExam-
ple 2, except that D uses the first-in, first-out method
for the 40 shares sold on January 15, 2011. W pur-
chases 25 shares of L Company for D on March 8,
2011, at $12 per share. D sells 40 shares on May 8,
2011, and elects the average basis method.
(ii) Because D uses the first-in, first-out method
for the sale on January 15, 2011, the 40 shares sold are
the 25 shares acquired on January 8, 2010, for $200
(basis $8 per share) and 15 of the 24 shares purchased
on February 8, 2010, for $200 (basis $8.33 per share).
(iii) Under paragraph (e)(7)(i) of this section,
under the average basis method, the basis of all
of the shares of identical stock in D’s account is
averaged. Thus, the basis of each share D sells on
May 8, 2011, after electing the average basis method,
is $10.47. This figure is the total cost of the shares
in D’s account ($74.97 for the 9 shares acquired on
February 8, 2010, $200 for the 20 shares acquired on
March 8, 2010, $200 for the 20 shares acquired on
April 8, 2010, and $300 for the 25 shares acquired
o
n March 8, 2011) divided by 74, the total number of
shares ($774.97/74).
(8)Limitation on use of average basis
method for certain gift shares. (i) Except
as provided in paragraph (e)(8)(ii) of this
section, a taxpayer may not use the aver-
age basis method for shares of stock a tax-
payer acquires by gift after December 31,
1920, if the basis of the shares (adjusted
for the period before the date of the gift as
provided in section 1016) in the hands of
the donor or the last preceding owner by
whom the shares were not acquired by gift
was greater than the fair market value of
the shares at the time of the gift. This para-
graph (e)(8)(i) does not apply to shares the
taxpayer acquires as a result of a taxable
dividend or capital gain distribution on the
gift shares.
(ii) Notwithstanding paragraph (e)(8)(i)
of this section, a taxpayer may use the av-
erage basis method if the taxpayer states
2010–47 I.R.B.686November 22, 2010

in writing that the taxpayer will treat the
basis of the gift shares as the fair market
value of the shares at the time the tax-
payer acquires the shares. The taxpayer
must provide this statement when the tax-
payer makes the election under paragraph
(e)(9) of this section or when transferring
the shares to an account for which the tax-
payer has made this election, whichever
occurs later. The statement must be effec-
tive for any gift shares identical to the gift
shares to which the average basis method
election applies that the taxpayer acquires
at any time and must remain in effect as
long as the election remains in effect.
(iii) The provisions of this paragraph
(e)(8) are illustratedby the following ex-
amples:
Example 1. (i) Taxpayer E owns an account for
the periodic acquisition of shares of M Company, a
regulated investment company. On April 15, 2010, E
acquires identical shares of M Company by gift and
transfers those shares intothe account. These shares
had an adjusted basis in the hands of the donor that
was greater than the fair market value of the shares on
that date. On June 15, 2010, E sells shares from the
account and elects to use the average basis method.
(ii) Under paragraph (e)(8)(ii) of this section, E
may elect to use the average basis method for shares
sold or transferred from the account if E includes a
statement with E’s election that E will treat the basis
of the gift shares in the account as the fair market
value of the shares at the time E acquired them.See
paragraph (e)(9)(ii) of this section.
Example 2. (i) The facts are the same as in
Example 1, except E acquires the gift shares on
April 15, 2012, transfers those shares into the
account, and used the average basis method for sales
of shares of M Company before acquiring the gift
shares. E sells shares of M Company on June 15,
2012.
(ii) Under paragraph (e)(8)(ii) of this section, the
basis of the gift shares may be averaged with the ba-
sis of the other shares of M Company in E’s account
if, when E transfers the gift shares to the account, E
provides a statement to E’s broker that E will treat the
basis of the gift shares in the account as the fair mar-
ket value of the shares at the time E acquired them.
Seeparagraph (e)(9)(i) of this section.
(9)Time and manner for making the av-
erage basis method election—(i)In gen-
eral. A taxpayer makes an election to
use the average basis method for shares
of stock described in paragraph (e)(1)(i)
of this section that are covered securities
(within the meaning of section 6045(g)(3))
by notifying the custodian or agent in writ-
ing by any reasonable means. For pur-
poses of this paragraph (e), a writing may
be in electronic format. A taxpayer has
not made an election within the meaning
of this section if the taxpayer fails to notify
a broker of the taxpayer’s basis determina-
tion method and basis is determined by the
broker’s default method under paragraph
(e)(2) of this section. A taxpayer may
make the average basis method election at
any time, effective for sales or other dis-
positions of stock occurring after the tax-
payer notifies the custodian or agent. The
election must identify each account with
that custodian or agent and each stock in
that account to which the election applies.
The election may specify that it applies
to all accounts with a custodian or agent,
including accounts the taxpayer later es-
tablishes with the custodian or agent. If
the election applies to gift shares, the tax-
payer must provide the statement required
by paragraph (e)(8)(ii) of this section, if
applicable, to the custodian or agent with
the taxpayer’s election.
(ii)Average basis method election for
securities that are noncovered securities.
A taxpayer makes an election to use the
average basis method for shares of stock
described in paragraph (e)(1)(i) of this sec-
tion that are noncovered securities (as de-
scribed in §1.6045–1(a)(16)) on the tax-
payer’s income tax return for the first tax-
able year for which the election applies.
A taxpayer may make the election on an
amended return filed no later than the time
prescribed (including extensions) for filing
the original return for the taxable year for
which the election applies. The taxpayer
must indicate on the return that the tax-
payer used the average basis method in re-
porting gain or loss on the sale or other dis-
position. A taxpayer must attach to the re-
turn the statement described in paragraph
(e)(8)(ii) of this section, if applicable. A
taxpayer making the election must main-
tain records necessary to substantiate the
average basis reported.
(iii)Revocation of election. A taxpayer
may revoke an election under paragraph
(e)(9)(i) of this section by the earlier of one
year after the taxpayer makes the election
or the date of the first sale, transfer, or dis-
position of that stock following the elec-
tion. A custodian or agent may extend the
one-year period but a taxpayer may not re-
voke an election after the first sale, trans-
fer, or disposition of the stock. A revoca-
tion applies to all stock the taxpayer holds
in an account that is identical to the shares
of stock for which the taxpayer revokes the
election. A revocation is effective when
the taxpayer notifies, in writing by any
reasonable means, the custodian or agent
holdingthestocktowhichtherevocation
applies. After revocation, the taxpayer’s
basis in the shares of stock to which the
revocation applies is the basis before aver-
aging.
(iv)Change from average basis method.
A taxpayer may change basis determi-
nation methods from the average basis
method to another method prospectively at
any time. A change from the average basis
method applies to all identical stock the
taxpayer sells or otherwise disposes of be-
fore January 1, 2012, that was held in any
account. A change from the average basis
method applies on an account by account
basis (within the meaning of paragraph
(e)(10) of this section) to all identical stock
the taxpayer sells or otherwise disposes of
on or after January 1, 2012. The taxpayer
must notify, in writing by any reasonable
means, the custodian or agent holding the
stock to which the change applies. Unless
paragraph (e)(9)(iii) of this section applies,
the basis of each share of stock to which
the change applies remains the same as the
basis immediately before the change.See
paragraph (e)(7)(v) of this section.
(v)Examples. The provisions of this
paragraph (e)(9) are illustrated by the fol-
lowing examples:
Example 1. (i) Taxpayer F enters into an agree-
ment with W Custodian establishing an account for
the periodic acquisition of shares of N Company, a
regulated investment company. W acquires for F’s
account shares of N Company on the following dates
and amounts:
Date
Number of shares
Cost
January 8, 2012
25
$200
February 8, 201224200
March 8, 201220200
November 22, 20106872010–47 I.R.B.

(ii) F notifies W that F elects, under paragraph
(e)(9)(i) of this section, to use the average basis
method for the shares of N Company. On May 8,
2012, under paragraph (e)(9)(iii) of this section, F
notifies W that F revokes the average basis method
election. On June 1, 2012, F sells 60 shares of N
Company using the first-in, first-out basis determi-
nation method.
(iii) Under paragraph (e)(9)(iii) of this section, the
basis of the N Company shares upon revocation, and
for purposes of determining gain on the sale, is $8.00
per share for each of the 25 shares purchased on Jan-
uary 8, 2012, $8.34 per share for each of the 24 shares
purchased on February 8, 2012, and $10 per share for
the remaining 11 shares purchased on March 8, 2012.
Example 2. (i) The facts are the same as inExam-
ple 1, except that F does not notify W that F elects a
basis determination method. W’s default basis deter-
mination method is the average basis method and W
maintains an averaged basis for F’s shares of N Com-
pany on W’s books and records.
(ii) F has not elected the average basis method un-
der paragraph (e)(9)(i) of this section. Therefore, F’s
notification to W on May 8, 2012, is not an effective
revocation under paragraph (e)(9)(iii) of this section.
F’s attempted revocation is, instead, notification of
a change from the average basis method under para-
graph (e)(9)(iv) of this section. Accordingly, the ba-
sis of each share of stock F sells on June 1, 2012, is
the basis immediately before the change, $8.70 (total
cost of shares, $600, divided by the total number of
shares, 69).
(10)Application of average basis
method account by account—(i)In gen-
eral. For sales, exchanges, or other dispo-
sitions on or after January 1, 2012, of stock
described in paragraph (e)(1)(i) of this sec-
tion, the average basis method applies on
an account by account basis. A taxpayer
may use the average basis method for
stock in a regulated investment company
orstockacquiredinconnectionwitha
dividend reinvestment plan in one account
but use a different basis determination
method for identical stock in a different
account. If a taxpayer uses the average
basis method for a stock described in para-
graph (e)(1)(i) of this section, the taxpayer
must use the average basis method for all
identical stock within that account. The
taxpayer may use different basis determi-
nation methods for stock within an account
that is not identical. Except as provided
in paragraph (e)(10)(ii) of this section, a
taxpayer must make separate elections to
use the average basis method for stock
held in separate accounts.
(ii)Account rule for stock sold be-
fore 2012. A taxpayer’s election to use
the average basis method for shares of
stock described in paragraph (e)(1)(i)
of this section that a taxpayer sells, ex-
changes, or otherwise disposes of before
January 1, 2012, applies to all identical
shares of stock the taxpayer holds in any
account.
(iii)Separate account. Unless the
single-account election described in para-
graph (e)(11)(i) of this section applies,
stock described in paragraph (e)(1)(i) of
this section that is a covered security
(within the meaning of section 6045(g)(3))
is treated as held in a separate account
from stock that is a noncovered security
(as described in §1.6045–1(a)(16)), re-
gardless of when acquired.
(iv)Examples. The provisions of this
paragraph (e)(10) are illustrated by the fol-
lowing examples:
Example 1. (i) In 2012, Taxpayer G enters into an
agreement with Y Broker establishing three accounts
(G–1, G–2, and G–3) for the periodic acquisition of
shares of P Company, a regulated investment com-
pany. Y makes periodic purchases of P Company for
each of G’s accounts. G elects to use the average ba-
sis method for account G–1. On July 1, 2013, G sells
shares of P Company from account G–1.
(ii) G is not required to use the average basis
method for the shares of P Company that G holds
in accounts G–2 and G–3 because, under paragraph
(e)(10)(i) of this section, the average basis method
electionappliestosharessoldafter2011onanac-
count by account basis.
Example 2. The facts are the same as inExam-
ple 1, except that G also instructs Y to acquire shares
of Q Company, a regulated investment company, for
account G–1. Under paragraph (e)(10)(i) of this sec-
tion, G may use any permissible basis determination
method for the shares of Q Company because, under
paragraph (e)(4) of this section, the shares of Q Com-
pany are not identical to the shares of P Company.
Example 3. (i) The facts are the same as inExam-
ple 1, except that G establishes the accounts in 2011
and Y sells shares of P Company from account G–1
on July 1, 2011.
(ii) For sales before 2012, under paragraph
(e)(10)(ii) of this section, G’s election applies to
all accounts in which G holds identical stock. G
must average together the basis of the shares in all
accounts to determine the basis of the shares sold
from account G–1.
Example 4. (i) In 2011, Taxpayer H acquires
80 shares of R Company and enrolls them in R
Company’s dividend reinvestment plan. In 2012, H
acquires 50 shares of R Company in the dividend
reinvestment plan. H elects to use the average basis
method for the shares of R Company in the dividend
reinvestment plan. R Company does not make the
single-account election under paragraph (e)(11)(i) of
this section.
(ii) Under section 6045(g)(3) and
§1.6045–1(a)(16), the 80 shares acquired in 2011
are noncovered securities and the 50 shares acquired
in 2012 are covered securities. Therefore, under
paragraph (e)(10)(iii) of this section, the 80 shares
are treated as held in a separate account from the
50 shares. H must make a separate average basis
method election for each account and must average
the basis of the shares in each account separately
from the shares in the other account.
Example 5. (i) B Broker maintains an account for
Taxpayer J for the periodic acquisition of shares of S
Company, a regulated investment company. In 2013,
B purchases shares of S Company for J’s account that
are covered securities within the meaning of section
6045(g)(3). On April 15, 2014, J inherits shares of S
Company that are noncovered securities and transfers
the shares into the account with B.
(ii) Under paragraph (e)(10)(iii) of this section,
J must treat the purchased shares and the inherited
shares of S Company as held in separate accounts. J
may elect to apply the average basis method to all the
shares of S Company, but must make a separate elec-
tion for each account, and must average the basis of
the shares in each account separately from the shares
in the other account.
Example 6. (i) In 2010, Taxpayer K purchases
stockinTCompanyinanaccountwithCBroker.
In 2012, K purchases additional T Company stock
and enrolls that stock in a dividend reinvestment plan
maintained by C. K elects the average basis method
for the T Company stock. In 2013, K transfers the T
Company stock purchased in 2010 into the dividend
reinvestment plan.
(ii) Under paragraphs (e)(1)(i) and (e)(6)(ii) of
this section, the stock purchased in 2010 is not stock
acquired after December 31, 2010, in connection with
a dividend reinvestment plan before transfer into the
dividend reinvestment plan. Therefore, the stock is
not eligible for the average basis method at that time.
(iii) Once transferred into the dividend reinvest-
ment plan in 2013, the stock K purchased in 2010
is acquired after December 31, 2010, in connection
with a dividend reinvestment plan within the mean-
ing of paragraph (e)(6)(ii) of this section and is el-
igible for the average basis method. Because stock
purchased in 2010 is a noncovered security under
§1.6045–1(a)(16), under paragraph (e)(10)(iii) of this
section, the 2010 stock and the 2012 stock must be
treated as held in separate accounts. Under paragraph
(e)(7)(i) of this section, the basis of the 2010 shares
may not be averaged with the basis of the 2012 shares.
Example 7. ThefactsarethesameasinEx-
ample 6, except that K purchases the initial T
Company stock in January 2011. Because this stock
is a covered security under section 6045(g)(3) and
§1.6045–1(a)(15)(iv)(A), the 2011 stock and the 2012
stock are not required under paragraph (e)(10)(iii) of
this section to be treated as held in separate accounts.
Under paragraph (e)(7)(i) of this section, the basis of
the 2011 shares must be averaged with the basis of
the 2012 shares.
Example 8. (i) The facts are the same as inExam-
ple 7, except that K purchases the additional T Com-
pany stock and enrolls in the dividend reinvestment
plan in March 2011. In September 2011, K transfers
the T Company stock purchased in January 2011 into
the dividend reinvestment plan. K sells some of the
T Company stock in 2012.
(ii) Under section 6045(g)(3) and
§1.6045–1(a)(16), the stock K purchases in January
2011 is a covered security at the time of purchase
but the stock K purchases and enrolls in the dividend
reinvestment plan in March 2011 is a noncovered
security. However, under §1.6045–1(a)(15)(iv)(A),
the stock purchased in January 2011 becomes a
noncovered security after it is transferred to the
2010–47 I.R.B.688November 22, 2010

dividend reinvestment plan. Because all the shares
in the dividend reinvestment plan in September 2011
are noncovered securities, when K sells stock in
2012, the January 2011 stock and the March 2011
stock are not required under paragraph (e)(10)(iii) of
this section to be treated as held in separate accounts.
Under paragraph (e)(7)(i) of this section, the basis of
the January 2011 shares must be averaged with the
basis of the March 2011 shares.
(11)Single-account election—(i)In
general. Paragraph (e)(10)(iii) of this sec-
tion does not apply if a regulated invest-
ment company or dividend reinvestment
plan elects to treat all identical shares of
stock described in paragraph (e)(1)(i) of
this section as held in a single account (sin-
gle-account election). The single-account
election applies only to stock for which
a taxpayer elects to use the average basis
method that is held in separate accounts
or treated as held in separate accounts
maintained for the taxpayer and only to
accounts with the same ownership. If a
broker (as defined by section 6045(c)(1))
holds the stock as a nominee, the broker,
and not the regulated investment company
or dividend reinvestment plan, makes the
election. The single-account election is
irrevocable, but is void if the taxpayer
revokes the average basis election under
paragraph (e)(9)(iii) of this section.
(ii)Scope of election. A company, plan,
or broker may make a single-account elec-
tion for one or more taxpayers for which it
maintains an account, and for one or more
stocks it holds for a taxpayer. The com-
pany, plan, or broker may make the elec-
tion only for the shares of stock for which
it has accurate basis information. A com-
pany, plan, or broker has accurate basis in-
formation if the company, plan, or broker
neither knows nor has reason to know that
the basis information is inaccurate.See
also section 6724 and the associated regu-
lations regarding standards for relief from
information reporting penalties. Stock for
which accurate basis information is un-
available may not be included in the sin-
gle-account election and must be treated as
held in a separate account.
(iii)Effect of single-account election.If
a company, plan, or broker makes the sin-
gle-account election, the basis of all identi-
cal shares of stock to which the election ap-
plies must be averaged together regardless
of when the taxpayer acquires the shares,
and all the shares are treated as covered
securities. The single-account election ap-
plies to all identical stock a taxpayer later
acquires in the account that is a covered
security (within the meaning of section
6045(g)(3)). A company, plan, or broker
may make another single-account election
if, for example, the broker later acquires
accurate basis information for a stock, or
a taxpayer acquires identical stock in the
account that is a noncovered security (as
described in §1.6045–1(a)(16)) for which
the company, plan, or broker has accurate
basis information.
(iv)Time and manner for making the
single-account election. A company, plan,
or broker makes the single-account elec-
tion by clearly noting it on its books and
records. The books and records must re-
flect the date of the election; the taxpayer’s
name, account number, and taxpayer iden-
tification number; the stock subject to the
election; and the taxpayer’s basis in the
stock. The company, plan, or broker must
provide copies of the books and records re-
garding the election to the taxpayer upon
request. A company, plan, or broker may
make the single-account election at any
time.
(v)Notification to taxpayer.Acom-
pany, plan, or broker making the single-ac-
count election must use reasonable means
to notify the taxpayer of the election. Rea-
sonable means include mailings, circulars,
or electronic mail sent separately to the
taxpayer or included with the taxpayer’s
account statement, or other means reason-
ably calculated to provide actual notice to
the taxpayer. The notice must identify the
securities subject to the election and ad-
vise the taxpayer that the securities will be
treated as covered securities regardless of
when acquired.
(vi)Examples. The provisions of this
paragraph (e)(11) are illustrated by the fol-
lowing examples:
Example 1. (i) E Broker maintains Accounts A
and B for Taxpayer M for the acquisition and dispo-
sition of shares of T Company, a regulated invest-
ment company. In 2011, E purchases 100 shares of
T Company for M’s Account A. E has accurate basis
information for these shares. In 2012, E purchases
150 shares of T Company for M’s Account A and 80
shares of T Company for M’s Account B. M elects
to use the average basis method for all shares of T
Company. E makes a single-account election for M’s
T Company stock.
(ii) The shares of T Company in Accounts A
and B are held in separate accounts. Under section
6045(g)(3) and §1.6045–1(a)(16), of the shares pur-
chased in Account A, the 100 shares purchased in
2011 are noncovered securities and the 150 shares
purchased in 2012 are covered securities. Under
paragraph (e)(10)(iii) of this section, the 100 shares
are treated as held in a separate account from the 150
shares. Under paragraph (e)(11)(i) of this section,
the single-account election applies to all 330 shares
of T Company in Accounts A and B. Thus, under
paragraph (e)(11)(iii) of this section, the basis of the
330 shares of stock is averaged together and all the
shares are treated as covered securities.
Example 2.ThefactsarethesameasinExample
1, except that M owns Account B jointly with Tax-
payer N. E may make a single-account election for
the 250 shares of stock in M’s Account A. However,
under paragraph (e)(11)(i) of this section, E may not
make a single-account election for Accounts A and
B because the accounts do not have the same owner-
ship.
Example 3. (i) C Broker maintains an account
for Taxpayer K for the acquisition and disposition of
shares of T Company, a regulated investment com-
pany, and shares of V Company that K enrolls in C’s
dividend reinvestment plan. In 2011, C purchases for
K’s account 100 shares of T Company in multiple lots
and 80 shares of V Company in multiple lots that are
enrolled in the dividend reinvestment plan. C has ac-
curate basis information for all 100 shares of T Com-
pany and 80 shares of V Company. In 2012, C ac-
quires for K’s account 150 shares of T Company and
160 shares of V Company that are enrolled in the div-
idend reinvestment plan. K elects to use the average
basis method for all the shares of T Company and V
Company.
(ii) Under paragraphs (e)(11)(i) and (ii) of this
section, C may make a single-account election for the
T Company stock or the V Company stock, or both.
After making a single-account election for each stock,
under paragraph (e)(11)(iii) of this section, the basis
of all T Company stock is averaged together and the
basis of all V Company stock is averaged together,
regardless of when acquired, and all the shares of T
Company and V Company are treated as covered se-
curities.
Example 4.ThefactsarethesameasinExample
3, except that K transfers the 100 shares of T Com-
pany acquired in 2011 from an account with another
broker into K’s account with C. C does not have ac-
curate basis information for 30 of the 100 shares of
T Company, which K had acquired in two lots. Un-
der paragraph (e)(11)(ii) of this section, C may make
the single-account election only for the 70 shares of
T Company stock for which C has accurate basis in-
formation. C must treat the 30 shares of T Company
for which C does not have accurate basis information
as held in a separate account. K may use the aver-
age basis method for the 30 shares of T Company,
but must make a separate average basis method elec-
tion for these shares and must average the basis of
these shares separately from the 70 shares subject to
C’s single-account election.
Example 5.ThefactsarethesameasinExample
3, except that C has made the single-account election
and in 2013 K acquires additional shares of T Com-
pany that are covered securities in K’s account with
C. Under paragraph (e)(11)(iii) of this section, these
shares of T Company are subject to C’s single-ac-
count election.
Example 6.ThefactsarethesameasinExample
3, except that C has made the single-account election
and in 2013 K inherits shares of T Company that are
noncovered securities and transfers the shares into the
account with C. C has accurate basis information for
November 22, 20106892010–47 I.R.B.

these shares. Under paragraph (e)(11)(iii) of this sec-
tion, C may make a second single-account election to
include the inherited T Company shares.
Example 7. (i) Between 2002 and 2011, Taxpayer
L acquires 1,500 shares of W Company, a regulated
investment company, in an account with D Broker,
for which L uses the average basis method, and sells
500 shares. On January 5, 2012, based on accurate
basis information, the averaged basis of L’s remain-
ing 1,000 shares of W Company is $24 per share. On
January 5, 2012, L acquires 100 shares of W Com-
pany for $28 per share and makes an average basis
election for those shares under paragraph (e)(9)(i) of
this section.
(ii) On February 1, 2012, D makes a single-ac-
count election that includes all 1,100 of L’s shares in
W Company. Thereafter, the basis of L’s shares of
W Company is $24.36 per share (($24,000 + $2,800)
/ 1,100). On September 12, 2012, under paragraph
(e)(9)(iii) of this section, L revokes the average ba-
sis election for the 100 shares acquired on January 5,
2012.
(iii) Under paragraph (e)(11)(i) of this section,
D’s single-account election is void. Therefore, the
basis of the 1,000 shares of W Company that L ac-
quires before 2012 is $24 per share and the basis of
the 100 shares of W Company that L acquires in 2012
is $28 per share.
(12)Effective/applicability date.Ex-
cept as otherwise provided in paragraphs
(e)(1), (e)(2), (e)(7), (e)(9), and (e)(10) of
this section, this paragraph (e) applies for
taxable years beginning after October 18,
2010.
*****
Par. 4. Section 1.6039–2 is amended
by adding two new sentences at the end of
paragraph (c)(1) to read as follows:
§1.6039–2 Statements to persons with
respect to whom information is reported.
*****
(c) * * *
(1)***However,forastate-
ment required to be furnished after
December 31, 2008, the February 15
due date under section 6045 applies
to the statement if the statement is
furnished in a consolidated reporting
statement under section 6045.See
§§1.6045–1(k)(3),1.6045–2(d)(2),
1.6045–3(e)(2), 1.6045–4(m)(3), and
1.6045–5(a)(3)(ii).
*****
Par. 5. Section 1.6042–4 is amended
by adding two new sentences at the end of
paragraph (e)(1) to read as follows:
§1.6042–4 Statements to recipients of
dividend payments.
*****
(e) * * *
(1) * * * For a statement required to
be furnished after December 31, 2008,
the February 15 due date under sec-
tion 6045 applies to the statement if the
statement is furnished in a consolidated
reporting statement under section 6045.
See§§1.6045–1(k)(3), 1.6045–2(d)(2),
1.6045–3(e)(2), 1.6045–4(m)(3), and
1.6045–5(a)(3)(ii).
*****
Par. 6. Section 1.6044–5 is amended
by adding two new sentences at the end of
paragraph (b) to read as follows:
§1.6044–5 Statements to recipients of
patronage dividends.
*****
(b) * * * For a statement required to
be furnished after December 31, 2008,
the February 15 due date under sec-
tion 6045 applies to the statement if the
statement is furnished in a consolidated
reporting statement under section 6045.
See§§1.6045–1(k)(3), 1.6045–2(d)(2),
1.6045–3(e)(2), 1.6045–4(m)(3), and
1.6045–5(a)(3)(ii).
*****
Par. 7. Section 1.6045–1 is amended
by:
1. Revising paragraph (a)(9) and
adding paragraphs (a)(14), (a)(15), and
(a)(16).
2. AddingExamples 9,10,and11to
paragraph (b).
3.Revising paragraphs (c)(2),
(c)(3)(i)(B)(1), and (c)(3)(i)(C).
4. Removing paragraph (c)(3)(xii)
and redesignating paragraph (c)(3)(xi) as
(c)(3)(xii) and adding a new paragraph
(c)(3)(xi).
5. AddingExamples 7,8,and9to para-
graph (c)(4).
6. Revising paragraphs (d)(1), (d)(2),
and (d)(5).
7. Redesignating paragraphs (d)(6) and
(d)(7) as (d)(8) and (d)(9) respectively and
adding new paragraphs (d)(6) and (d)(7).
8. Revising newly designated para-
graphs (d)(8) and (d)(9).
9. Revising paragraphs (e)(2)(i),
(f)(2)(i), (k)(1), and (k)(2).
10. Redesignating paragraph (k)(3) as
(k)(4) and adding a new paragraph (k)(3).
11. Removing paragraphs (p) and (q)
and redesignating paragraph (r) as (p).
The additions and revisions read as fol-
lows:
§1.6045–1 Returns of information of
brokers and barter exchanges.
(a) * * *
(9) The termsalemeans any disposi-
tion of securities, commodities, regulated
futures contracts, or forward contracts, and
includes redemptions of stock, retirements
of indebtedness, and enterings into short
sales, but only to the extent any of these
actions are conductedfor cash. In the case
of a regulated futures contract or a forward
contract, a sale is any closing transaction.
When a closing transaction in a regulated
futures contract involves making or taking
delivery, the profit or loss on the contract
is a sale and the delivery is a separate sale.
When a closing transaction in a forward
contract involves making or taking deliv-
ery, the delivery is a sale without separat-
ing the profit or loss on the contract from
the profit or loss on the delivery, except
that taking delivery for United States dol-
lars is not a sale. Grants or purchases of
options, exercises of call options, and en-
terings into contracts that require delivery
of personal property or an interest therein
are not sales. For purposes of this sec-
tion only, a constructive sale under section
1259 and a mark to fair market value under
sections 475 or 1296 are not sales.
*****
(14) The termspecified securitymeans
any share of stock (or any interest treated
as stock, including, for example, an Amer-
ican Depositary Receipt) in an entity or-
ganized as, or treated for Federal tax pur-
poses as, a corporation (foreign or domes-
tic). Solely for purposes of this paragraph
(a)(14), a security classified as stock by
the issuer is treated as stock. If the issuer
has not classified the security, the security
is not treated as stock unless the broker
knows that the security is reasonably clas-
sified as stock under general Federal tax
principles.
(15) The termcovered securitymeans
a specified security described in this para-
graph (a)(15).
2010–47 I.R.B.690November 22, 2010

(i)In general. Except as provided in
paragraph (a)(15)(iv) of this section, the
following securities are covered securities:
(A) A specified security acquired
for cash in an account on or after
January 1, 2011, except stock for which
the average basis method is available
under §1.1012–1(e).
(B) Stock for which the average ba-
sis method is available under §1.1012–1(e)
acquired for cash in an account on or after
January 1, 2012.
(C) A specified security transferred to
an account if the broker or other custodian
of the account receives a transfer statement
(as described in §1.6045A–1) reporting the
security as a covered security.
(ii)Acquiredinanaccount. For pur-
poses of this paragraph (a)(15), a security
is considered acquired in a customer’s ac-
count at a broker or custodian if the secu-
rity is acquired by the customer’s broker
or custodian or acquired by another broker
and delivered to the customer’s broker or
custodian.
(iii)Corporate actions and other
events. For purposes of this paragraph
(a)(15), a security acquired due to a stock
dividend, stock split, reorganization, re-
demption, stock conversion, recapitaliza-
tion, corporate division, or other similar
action is considered acquired for cash in
an account.
(iv)Exceptions. Notwithstanding para-
graph (a)(15)(i) of this section, the follow-
ing securities are not covered securities:
(A) Stock acquired in 2011 that is trans-
ferred to a dividend reinvestment plan (as
described in §1.1012–1(e)(6)) in 2011.
However, a covered security acquired
in 2011 that is transferred to a dividend
reinvestment plan after 2011 remains a
covered security.
(B) A security acquired through an
event described in paragraph (a)(15)(iii)
of this section if the basis of the acquired
security is determined from the basis of a
noncovered security.
(C) A security that is excepted at the
time of its acquisition from reporting un-
der paragraph (c)(3) or (g) of this section.
However, a broker cannot treat a security
as acquired by an exempt foreign person
under paragraph (g)(1)(i) of this section at
the time of acquisition if, at that time, the
broker knows or should have known (in-
cluding by reason of information that the
broker is required to collect under section
1471 or 1472) that the customer is not a
foreign person.
(D) A security for which report-
ing under this section is required by
§1.6049–5(d)(3)(ii) (certain securities
owned by a foreign intermediary or
flow-through entity).
(16) The termnoncovered security
means any security that is not a covered
security.
(b) * * *
*****
Example 9. E, an individual not otherwise exempt
from reporting, maintains an account with S, a broker.
On June 1, 2012, E instructs S to purchase stock that
is a specified security for cash. S places an order to
purchase the stock with T, another broker. E does not
maintain an account with T. T executes the purchase.
Custody of the purchased stock is transferred to E’s
account at S. Under paragraph (a)(15)(ii) of this sec-
tion, the stock is considered acquired for cash in E’s
account at S. Because the stock is acquired on or af-
ter January 1, 2012, under paragraph (a)(15)(i) of this
section, it is a covered security.
Example 10. F, an individual not otherwise ex-
empt from reporting, is granted 100 shares of stock
in F’s employer by F’s employer. Because F does
not acquire the stock for cash or through a transfer
to an account with a transfer statement (as described
in §1.6045A–1), under paragraph (a)(15) of this sec-
tion, the stock is not a covered security.
Example 11. G, an individual not otherwise ex-
empt from reporting, owns 400 shares of stock in Q,
a corporation, in an account with U, a broker. Of the
400 shares, 100 are covered securities and 300 are
noncovered securities. Q takes a corporate action to
split its stock in a 2-for–1 split. After the stock split,
G owns 800 shares of stock. Because the adjusted ba-
sis of 600 of the 800 shares that G owns is determined
from the basis of noncovered securities, under para-
graphs (a)(15)(iii) and (a)(15)(iv)(B) of this section,
these 600 shares are not covered securities and the re-
maining 200 shares are covered securities.
(c) * * *
(2)Sales required to be reported.Ex-
cept as provided in paragraphs (c)(3),
(c)(5), and (g) of this section, a broker is
required to make a return of information
for each sale by a customer of the broker
if, in the ordinary course of a trade or
business in which the broker stands ready
to effect sales to be made by others, the
broker effects the sale or closes the short
position opened by the sale.
(3) * * *
(i) * * *
(B)***
(1) A corporation as defined in section
7701(a)(3), whether domestic or foreign,
except that this exclusion does not apply to
sales of covered securities acquired on or
after January 1, 2012, by an S corporation
as defined in section 1361(a);
*****
(C)Exemption certificate—(1)In gen-
eral. Except as provided in paragraph
(c)(3)(i)(C)(2) of this section, a broker
may treat a person described in para-
graph (c)(3)(i)(B) of this section as an
exempt recipient based on a properly
completed exemption certificate (as pro-
vided in §31.3406(h)–3 of this chapter);
the broker’s actual knowledge that the
customer is a person described in para-
graph (c)(3)(i)(B) of this section; or
the applicable indicators described in
§1.6049–4(c)(1)(ii)(A) through (M). A
broker may require an exempt recipient to
file a properly completed exemption cer-
tificate and may treat an exempt recipient
that fails to do so as a recipient that is not
exempt.
(2)Limitation for corporate cus-
tomers. For sales of covered securities
acquired on or after January 1, 2012, a
broker may not treat a customer as an
exempt recipient described in paragraph
(c)(3)(i)(B)(1) of this section based on the
indicators of corporate status described
in §1.6049–4(c)(1)(ii)(A). However, for
sales of all securities, a broker may treat a
customer as an exempt recipient if one of
the following applies:
(i) The name of the customer contains
the term “insurance company,” “indemnity
company,” “reinsurance company,” or “as-
surance company.”
(ii) The name of the customer indicates
that it is an entity listed as a per se corpo-
ration under §301.7701–2(b)(8)(i) of this
chapter.
(iii) The broker receives a properly
completed exemption certificate (as pro-
vided in §31.3406(h)–3 of this chapter)
that asserts that the customer is not an S
corporation as defined in section 1361(a).
(iv) The broker receives a withholding
certificate describedin §1.1441–1(e)(2)(i)
that includes a certification that the person
whose name is on the certificate is a for-
eign corporation.
*****
(xi)Short sales—(A)In general.Abro-
ker may not make a return of information
under this section for a short sale of a se-
curity entered into on or after January 1,
2011, until the year a customer delivers a
security to satisfy the short sale obligation.
November 22, 20106912010–47 I.R.B.

The return must be made without regard to
theconstructivesaleruleinsection1259or
to section 1233(h). In general, the broker
must report on a single return the informa-
tion required by paragraph (d)(2)(i) of this
section for the short sale except that the
broker must report the date the short sale
was closed in lieu of the sale date. In ap-
plying paragraph (d)(2)(i) of this section,
the broker must report the relevant infor-
mation regarding the security sold to open
the short sale and the adjusted basis of the
security delivered to close the short sale
and whether any gain or loss on the closing
of the short sale is long-term or short-term
(within the meaning of section 1222).
(B)Short sale closed by delivery of a
noncovered security. A broker is not re-
quired to report adjusted basis and whether
any gain or loss on the closing of the short
sale is long-term or short-term if the short
sale is closed by delivery of a noncovered
security and the return so indicates. A bro-
ker that chooses to report this information
is not subject to penalties under section
6721 or 6722 for failure to report this in-
formation correctly if the broker indicates
on the return that the short sale was closed
by delivery of a noncovered security.
(C)Short sale obligation transferred
to another account. If a short sale obli-
gation is satisfied by delivery of a secu-
rity transferred into a customer’s account
accompanied by a transfer statement (as
described in §1.6045A–1(b)(4)) indicating
that the security was borrowed, the broker
receiving custody of the security may not
file a return of information under this sec-
tion. The receiving broker must furnish a
statement to the transferor that reports the
amount of gross proceeds received from
the short sale, the date of the sale, the
quantity of shares or units sold, and the
Committee on Uniform Security Identifi-
cation Procedures (CUSIP) number of the
sold security (if applicable) or other se-
curity identifier number that the Secre-
tary may designate by publication in the
Federal Registeror in the Internal Rev-
enue Bulletin (see§601.601(d)(2) of this
chapter). The statement to the transferor
also must include the transfer date, the
name and contact information of the re-
ceiving broker, the name and contact in-
formation of the transferor, and sufficient
informationtoidentifythecustomer. If
the customer subsequently closes the short
sale obligation in the transferor’s account
with non-borrowed securities, the trans-
feror must make the return of information
required by this section. In that event, the
transferor must take into account the in-
formation furnished under this paragraph
(c)(3)(xi)(C) on the return unless the trans-
feror knows that the information furnished
under this paragraph is incorrect or incom-
plete. A failure to report correct informa-
tion that arises solely from this reliance is
deemed to be due to reasonable cause for
purposes of penalties under sections 6721
and 6722.See§301.6724–1(a)(1) of this
chapter.
*****
(4) * * *
*****
Example 7. On June 24, 2010, H, an individual
who is not an exempt recipient, opens a short sale of
stockinanaccountwithM,abroker. Becausethe
short sale is entered into before January 1, 2011, para-
graph (c)(3)(xi) of this section does not apply. Under
paragraphs (c)(2) and (j) of this section, M must make
a return of information for the year of the sale regard-
less of when the short sale is closed.
Example 8. (i) On August 25, 2011, H opens a
short sale of stock in an account with M, a broker. H
closes the short sale with M on January 25, 2012, by
purchasing stock of the same corporation in the ac-
count in which H opened the short sale and deliver-
ing the stock to satisfy H’s short sale obligation. The
stock H purchased is a covered security.
(ii) Because the short sale is entered into on or
after January 1, 2011, under paragraphs (c)(2) and
(c)(3)(xi) of this section, the broker closing the short
sale must make a return of information reporting the
sale for the year in which the short sale is closed.
Thus, M is required to report the sale for 2012. M
must report on a single return the relevant information
for the sold stock, the adjusted basis of the purchased
stock, and whether any gain or loss on the closing of
the short sale is long-term or short-term (within the
meaning of section 1222). Thus, M must report the
information about the short sale opening and closing
transactions on a single return for taxable year 2012.
Example 9. (i) Assume the same facts as inEx-
ample 8except that H also has an account with N, a
broker, and satisfies the short sale obligation with M
by borrowing stock of the same corporation from N
and transferring custody of the borrowed stock from
N to M. N indicates on the transfer statement that the
transferred stock was borrowed in accordance with
§1.6045A–1(b)(4).
(ii) Under paragraph (c)(3)(xi)(C) of this section,
M may not file the return of information required un-
der this section. M must furnish a statement to N that
reports the gross proceedsfrom the short sale on Au-
gust 25, 2011, the date of the sale, the quantity of
shares sold, the CUSIP number or other security iden-
tifier number of the sold stock, the transfer date, the
name and contact information of M and N, and in-
formation identifying H such as H’s name and the ac-
count number from which H transferred the borrowed
stock.
(iii) N must report the gross proceeds from the
short sale, the date the short sale was closed, the ad-
justed basis of the stock acquired to close the short
sale, and whether any gain or loss on the closing of
the short sale is long-term or short-term (within the
meaning of section 1222) on the return of information
N is required to file under paragraph (c)(2) of this sec-
tion when H closes the short sale in the account with
N.
*****
(d) * * * (1)In general. A broker that
is required to make a return of informa-
tion under paragraph (c) of this section dur-
ing a reporting period is required to re-
port for each filing group on a separate
Form 1096, “Annual Summary and Trans-
mittal of U.S. Information Returns,” or any
successor form, the information required
by the form in the manner and number of
copies required by the form.
(2)Transactional reporting—(i)Re-
quired information. Except as provided
in paragraph (c)(5) of this section, for
each sale for which a broker is required
to make a return of information under
this section, the broker must report on
Form 1099-B, “Proceeds From Broker
and Barter Exchange Transactions,” or
any successor form the name, address,
and taxpayer identification number of the
customer, the property sold, the CUSIP
number of the security sold (if applicable)
or other security identifier number that the
Secretary may designate by publication
in theFederal Registeror in the Internal
Revenue Bulletin (see§601.601(d)(2) of
this chapter), the adjusted basis of the se-
curity sold, whether any gain or loss with
respect to the security sold is long-term or
short-term (within the meaning of section
1222), the gross proceeds of the sale, the
sale date, and other information required
by the form in the manner and number of
copies required by the form.
(ii)Specific identification of securities.
Except as provided in §1.1012–1(e)(7)(ii),
a broker must report a sale on or after
January 1, 2011, of less than the entire
position in an account of a specified se-
curity that was acquired on different dates
or at different prices consistently with a
customer’s adequate and timely identi-
fication of the security to be sold.See
§1.1012–1(c). If the customer does not
provide an adequate and timely identifi-
cation for the sale, the broker must first
report the sale of any shares or units in
the account for which the broker does
not know the acquisition or purchase date
2010–47 I.R.B.692November 22, 2010

followed by the earliest shares or units
purchased or acquired, whether covered
securities or noncovered securities.
(iii)Sales of noncovered securities.A
broker is not required to report adjusted ba-
sis and whether any gain or loss on the sale
is long-term or short-term for the sale of
a noncovered security if the return identi-
fies the sale as a sale of a noncovered secu-
rity. A broker that chooses to report this in-
formation for a noncovered security is not
subject to penalties under section 6721 or
6722 for failure to report this information
correctly if the return identifies the sale as
a sale of a noncovered security. For pur-
poses of this paragraph (d)(2)(iii), a bro-
ker must treat a security for which a bro-
ker makes the single-account election de-
scribed in §1.1012–1(e)(11)(i) as a covered
security.
(iv)Information from other parties
and other accounts—(A)Transfer and
issuer statements. When reporting a sale
of a covered security, a broker must take
into account all information, other than
the classification of the security (such
as stock), furnished on a transfer state-
ment (as described in §1.6045A–1) and
all information furnished or deemed fur-
nished on an issuer statement (as described
in §1.6045B–1), unless the statement is
incomplete or the broker has actual knowl-
edge that it is incorrect. A broker may
treat a customer as a minority shareholder
when taking the information on an issuer
statement into account unless the broker
knows that the customer is a majority
shareholder and the issuer statement re-
ports the action’s effect on the basis of
majority shareholders. A failure to report
correct information that arises solely from
reliance on information furnished on a
transfer statement or issuer statement is
deemed to be due to reasonable cause for
purposes of penalties under sections 6721
and 6722.See§301.6724–1(a)(1) of this
chapter.
(B)Other information. A broker is
permitted, but not required, to take into
account information about a covered se-
curity other than what is furnished on a
transfer statement or issuer statement, in-
cluding any information the broker has
about securities held by the same cus-
tomer in other accounts with the broker.
For purposes of penalties under sections
6721 and 6722, a broker that takes into
account information received from a cus-
tomer or third party other than information
furnished on a transfer statement or is-
suer statement is deemed to have relied
upon this information in good faith if the
broker neither knows nor has reason to
know that the information is incorrect.See
§301.6724–1(c)(6) of this chapter.
(v)Failure to receive a complete trans-
fer statement. A broker that has not re-
ceived a complete transfer statement as re-
quired under §1.6045A–1(a)(3) for a trans-
fer of a specified security must request
a complete statement from the applicable
person effecting the transfer unless, under
§1.6045A–1(a), the transferor has no duty
to furnish a transfer statement for the trans-
fer. The broker is only required to make
this request once. If the broker does not
receive a complete transfer statement after
requesting it, the broker may treat the secu-
rity as a noncovered security upon its sub-
sequent sale or transfer. A transfer state-
ment for a covered security is complete
if, in the view of the receiving broker, it
provides sufficient information to comply
with this section when reporting the sale
of the security. A transfer statement for a
noncovered security is complete if it indi-
cates that the security is a noncovered se-
curity.
(vi)Reporting by other parties after a
sale—(A)Transfer statements. If a bro-
ker receives a transfer statement indicat-
ing that a security is a covered security af-
ter the broker reports the sale of the secu-
rity, the broker must file a corrected return
within thirty days of receiving the state-
ment unless the broker reported the re-
quired information on the original return
consistently with the transfer statement.
(B)Issuer statements. If a broker re-
ceives or is deemed to receive an issuer
statement after the broker reports the sale
of a covered security, the broker must file
a corrected return within thirty days of re-
ceiving the issuer statement unless the bro-
ker reported the required information on
the original return consistently with the is-
suer statement.
(C)Exception. A broker is not required
to file a corrected return under this para-
graph (d)(2)(vi) if the broker receives the
transfer statement or issuer statement more
than three years after the broker filed the
return.
(vii)Examples. The following exam-
ples illustrate the rules of this paragraph
(d)(2):
Example 1. (i) On February 22, 2012, K sells 100
shares of stock of C, a corporation, at a loss in an ac-
count held with F, a broker. On March 15, 2012, K
purchases 100 shares of C stock for cash in an ac-
count with G, a different broker. Because K acquires
the stock purchased on March 15, 2012, for cash in
an account after January 1, 2012, under paragraph
(a)(15) of this section, the stock is a covered secu-
rity. K asks G to increase K’s adjusted basis in the
stock to account for the application of the wash sale
rulesundersection1091tothelosstransactioninthe
account held with F.
(ii) Under paragraph (d)(2)(iv)(B) of this section,
G is not required to take into account the information
provided by K when subsequently reporting the ad-
justed basis and whether any gain or loss on the sale is
long-term or short-term. If G chooses to take this in-
formation into account, under paragraph (d)(2)(iv)(B)
of this section, G is deemed to have relied upon the
information received from K in good faith for pur-
poses of penalties under sections 6721 and 6722 if G
neither knows nor has reason to know that the infor-
mation provided by K is incorrect.
Example 2. (i) L purchases shares of stock of a
single corporation in an account with F, a broker, on
April 17, 1969, April 17, 2012, April 17, 2013, and
April 17, 2014. In January 2015, L sells all the stock.
(ii) Under paragraph (d)(2)(i) of this section,
F must separately report the gross proceeds and
adjusted basis attributable to the stock purchased
in 2014, for which the gain or loss on the sale is
short-term, and the combined gross proceeds and
adjusted basis attributable to the stock purchased in
2012 and 2013, for which the gain or loss on the sale
is long-term. Under paragraph (d)(2)(iii) of this sec-
tion, F must also separately report the gross proceeds
attributable to the stock purchased in 1969 as the sale
of noncovered securities in order to avoid treatment
of this sale as the sale of covered securities.
*****
(5)Gross proceeds. For purposes of
this section,gross proceedson a sale are
the total amount paid to the customer or
credited to the customer’s account as a
result of the sale reduced by the amount
of any interest reported under paragraph
(d)(3) of this section and increased by any
amount not paid or credited by reason of
repayment of margin loans. In the case
of a closing transaction that results in a
loss, gross proceeds are the amount deb-
ited from the customer’s account. A broker
may, but is not required to, reduce gross
proceeds by the amount of commissions
and transfer taxes, provided the treatment
chosen is consistent with the books of the
broker. For securities sold pursuant to the
exercise of an option granted or acquired
before January 1, 2013, a broker may, but
is not required to, take the option premi-
ums into account in determining the gross
proceeds of the securities sold, provided
the treatment chosen is consistent with the
books of the broker. A broker must re-
November 22, 20106932010–47 I.R.B.

port the gross proceeds of identical stock
(within the meaning of §1.1012–1(e)(4))
by averaging the proceeds of each share
if the stock is sold at separate times on
the same calendar day in executing a sin-
gle trade order and the broker executing
the trade provides a single confirmation to
the customer that reports an aggregate total
price or an average price per share. How-
ever, a broker may not average the pro-
ceeds if the customer notifies the broker in
writingofanintenttodeterminethepro-
ceeds of the stock by the actual proceeds
per share and the broker receives the noti-
fication by January 15 of the calendar year
following the year of the sale. A broker
may extend the January 15 deadline but not
beyond the due date for filing the return re-
quired under this section.
(6)Adjusted basis—(i)In general.For
purposes of this section, the adjusted ba-
sis of a security is determined from the
initial basis under paragraph (d)(6)(ii) of
this section as of the date the security is
acquired in an account, increased by the
commissions and transfer taxes related to
its sale to the extent not accounted for in
gross proceeds as described in paragraph
(d)(5) of this section. A broker is not re-
quired to consider transactions, elections,
or events occurring outside the account ex-
cept for an organizational action taken by
an issuer during the period the broker holds
custody of the security (not including the
transfer settlement date if the security was
transferred) reported on an issuer state-
ment (as described in §1.6045B–1) fur-
nished or deemed furnished to the broker.
(ii)Initial basis—(A)Cost basis.Fora
security acquired forcash, the initial basis
is the total amount of cash paid by the cus-
tomer or credited against the customer’s
account for the security, increased by the
commissions and transfer taxes related to
its acquisition. A broker may, but is not
required to, take option premiums into
account in determining the initial basis of
securities purchased or acquired pursuant
to the exercise of an option granted or
acquired before January 1, 2013. A broker
may, but is not required to, increase ini-
tial basis for income recognized upon the
exercise of a compensatory option or the
vesting or exercise of other equity-based
compensation arrangements, granted or
acquired before January 1, 2013. A broker
must report the basis of identical stock
(within the meaning of §1.1012–1(e)(4))
by averaging the basis of each share if
the stock is purchased at separate times
on the same calendar day in executing a
single trade order and the broker executing
the trade provides a single confirmation
to the customer that reports an aggregate
total price or an average price per share.
However, a broker may not average
the basis if the customer timely notifies
the broker in writing of an intent to
determine the basis of the stock by the
actual cost per share in accordance with
§1.1012–1(c)(1)(ii).
(B)Transferred basis—(1)In general.
The initial basis of a security transferred to
an account is generally the basis reported
on the transfer statement (as described in
§1.6045A–1).
(2)Securities acquired by gift.Ifa
transfer statement indicates that the secu-
rity is acquired as a gift, a broker must ap-
ply the relevant basis rules for property ac-
quired by gift in determining the initial ba-
sis, but is not required to adjust basis for
gift tax. A broker must treat the initial ba-
sis as equal to the gross proceeds from the
sale determined under paragraph (d)(5) of
this section if the relevant basis rules for
property acquired by gift prevent recogniz-
ing both gain and loss, or if the relevant ba-
sis rules treat the initial basis of the secu-
rity as its fair market value as of the date
of the gift and the broker neither knows
nor can readily ascertain this value. If the
transfer statement did not report a date for
the gift, the broker must treat the settle-
ment date for the transfer as the date of the
gift.
(iii)Adjustments for wash sales—(A)In
general. A broker must apply the wash
sale rules under section 1091 if both the
sale and purchase transactions are of cov-
ered securities with the same CUSIP num-
ber or other security identifier number that
the Secretary may designate by publica-
tion in theFederal Registeror in the Inter-
nal Revenue Bulletin (see§601.601(d)(2)
of this chapter). When reporting the sale
transaction that triggered the wash sale, the
broker must report the amount of loss that
is disallowed by section 1091 in addition
to gross proceeds and adjusted basis. The
broker must increase the adjusted basis of
the purchased security by the amount of
loss disallowed on the sale transaction.
(B)Securities in different accounts.A
broker is not required to apply paragraph
(d)(6)(iii)(A) of this section if the securi-
ties are purchased and sold from different
accounts, if the purchased security is trans-
ferred to another account before the wash
sale, or if the securities are treated as held
in separate accounts under §1.1012–1(e).
A security is not purchased in an account
if it is purchased in another account and
transferred into the account.
(C)Effect of election under section
475(f)(1). A broker is not required to ap-
ply paragraph (d)(6)(iii)(A) of this section
to securities in an account if a customer
has in writing both informed the broker
that the customer has made a valid and
timely election under section 475(f)(1) and
identified the account as solely contain-
ing securities subjectto the election. For
purposes of this paragraph (d)(6)(iii)(C),
a writing may be in electronic format. If
a customer subsequently informs a bro-
ker that the election no longer applies
to the customer or the account, the bro-
ker must prospectively apply paragraph
(d)(6)(iii)(A) of this section but is not re-
quired to apply paragraph (d)(6)(iii)(A) of
this section for the period covered by the
customer’s prior instruction to the broker.
A taxpayer that is not a trader in securities
within the meaning of section 475(f)(1)
does not become a trader in securities, or
create an inference that it is a trader in
securities, by notifying a broker that it has
made a valid and timely election under
section 475(f)(1).
(D)Reportingatornearthetimeof
sale. If a wash sale occurs after a broker
has completed a return or statement report-
ing a sale of a covered security, the broker
must redetermine adjusted basis under this
paragraph (d)(6)(iii) and, if the return or
statement included information inconsis-
tent with this redetermination, correct the
return or statement by the applicable origi-
nal due date set forth in this section for the
return or statement.
(iv)Constructive sale and mark-to-
market adjustments. A broker is not re-
quired to apply section 1259 (regarding
constructive sales), section 475 (regard-
ing the mark-to-market method of ac-
counting), or section 1296 (regarding the
mark-to-market method of accounting
for marketable stock in a passive foreign
investment company) when reporting ad-
justed basis.
(v)Average basis method adjustments.
For a covered security for which basis
may be determined by the average basis
2010–47 I.R.B.694November 22, 2010

method, a broker must compute basis us-
ing the average basis method if a customer
validly elects that method for the securities
sold or, in the absence of any instruction
from the customer, if the broker chooses
that method as its default basis determina-
tion method.See§1.1012–1(e).
(vi)Regulated investment company and
real estate investment trust adjustments.A
broker must adjust the basis of a covered
security issued by a regulated investment
company or real estate investment trust for
the effects of undistributed capital gains
reported to or by the broker under section
852(b)(3)(D) or section 857(b)(3)(D).
(vii)Examples. The following exam-
ples, in which all the securities are covered
securities, illustratetherulesofthispara-
graph (d)(6):
Example 1. (i) On September 21, 2012, P pur-
chases 100 shares of stock in an account with J, a bro-
ker. On December 14, 2012, P purchases 100 shares
of stock with the same CUSIP number in the same
account. On January 4, 2013, P sells the 100 shares
purchased on September 21, 2012, at a loss.
(ii) Because the sale of stock on January 4, 2013,
and the purchase of stock on December 14, 2012, are
of covered securities with the same CUSIP number,
under paragraph (d)(6)(iii)(A) of this section, J must
report the amount of loss disallowed by section 1091
in addition to the gross proceeds of the sale and the
adjusted basis of the September 21, 2012, stock.
(iii) P later sells the stock acquired on
December 14, 2012. When reporting the sale of
the stock, under paragraph (d)(6)(iii)(A) of this
section, J must increase the adjusted basis of the
stock acquired on December 14, 2012, by the amount
of loss disallowed on the January 4, 2013, sale.
Example 2. Assume the same facts as inExample
1except that the December 14, 2012, purchase occurs
in another account P maintains with J. Because the
December 14, 2012, purchase does not occur in the
same account as the sale of the September 21, 2012,
stock, under paragraph (d)(6)(iii)(B) of this section, J
is not required to apply the wash sale rules in report-
ing the sale of stock acquired on September 21, 2012,
or December 14, 2012. Under paragraphs (d)(2)(iii)
and (d)(2)(iv)(B) of this section, J may choose to ap-
ply the wash sale rules as if the transactions occurred
in the same account. The result is the same whether
P keeps the stock purchased on December 14, 2012,
in the other account or transfers the stock into the ac-
count from which P sells the stock sold on January 4,
2013.
Example 3. (i) K, a regulated investment com-
pany, offers two funds for sale, Fund D and Fund E.
On April 22, 2012, Q purchases shares of Fund D
and pays a separate load charge. By paying the load
charge, Q acquires a reinvestment right in shares of
Fund E. On April 23, 2012, at the request of Q, Fund
D redeems the shares. Q uses the proceeds to pur-
chase shares of Fund E in a separate account. As a
result of the reinvestment right, Q pays no load charge
in purchasing the Fund E shares.
(ii) Under paragraph (d)(6)(i) of this section,
when reporting adjusted basis of the Fund D and
Fund E shares at the time of their redemption, K
is not required to adjust basis for any deferral of
the load charge under section 852(f), because the
transactions concerningFund D and Fund E occur in
separate accounts. Under paragraph (d)(2)(iv)(B) of
this section, K may choose to apply the provisions of
section 852(f).
Example 4. R,anemployeeofC,acorpo-
ration, participates in C’s stock option plan. On
April 2, 2012, C grants R a nonstatutory option
under the plan to buy 100 shares of stock. The
option becomes substantially vested on April 2,
2013. On October 2, 2013, R exercises the option
and purchases 100 shares. On December 2, 2013, R
sells the 100 shares. Under paragraph (d)(6)(ii)(A)
of this section, C is required to determine adjusted
basis from the amount R pays under the terms of
the option. Because C grants the option to R before
January 1, 2013, under paragraph (d)(6)(ii)(A) of
this section, C is not required to adjust basis for any
amountRmustincludeaswageincomewithrespect
to the October 2, 2013, stock purchase. The result is
the same if C grants R a statutory option.
(7)Long-term or short-term gain or
loss—(i)In general. In determining
whether any gain or loss on the sale of a
security is long-term or short-term within
the meaning of section 1222 for purposes
of this section, a broker must consider the
information reported on a transfer state-
ment (as described in §1.6045A–1) and
apply the relevant rules for property ac-
quired from a decedent or by gift. A broker
is not required to consider transactions,
elections, or events occurring outside the
account except for an organizational ac-
tiontakenbyanissuerduringtheperiod
the broker holds custody of the security
(not including the transfer settlement date
if the security was transferred) reported
on an issuer statement (as described in
§1.6045B–1) furnished or deemed fur-
nished to the broker.
(ii)Adjustments for wash sales—(A)In
general. A broker must apply the wash
sale rules under section 1091 if both the
sale and purchase transactions are of cov-
ered securities with the same CUSIP num-
ber or other security identifier number that
the Secretary may designate by publication
in theFederal Registeror in the Internal
Revenue Bulletin (see§601.601(d)(2) of
this chapter).
(B)Securities in different accounts.A
broker is not required to apply paragraph
(d)(7)(ii)(A)ofthissectionifthesecuri-
ties are purchased and sold from different
accounts, if the purchased security is trans-
ferred to another account before the wash
sale, or if the securities are treated as held
in separate accounts under §1.1012–1(e).
A security is not purchased in an account
if it is purchased in another account and
transferred into the account.
(C)Effect of election under section
475(f)(1). A broker is not required to ap-
ply paragraph (d)(7)(ii)(A) of this section
to securities in an account if a customer
has in writing both informed the broker
that the customer has made a valid and
timely election under section 475(f)(1) and
identified the account as solely contain-
ing securities subjectto the election. For
purposes of this paragraph (d)(7)(ii)(C),
a writing may be in electronic format. If
a customer subsequently informs a bro-
ker that the election no longer applies
to the customer or the account, the bro-
ker must prospectively apply paragraph
(d)(7)(ii)(A) of this section but is not re-
quired to apply paragraph (d)(7)(ii)(A) of
this section for the period covered by the
customer’s prior instruction to the broker.
A taxpayer that is not a trader in securities
within the meaning of section 475(f)(1)
does not become a trader in securities, or
create an inference that it is a trader in
securities, by notifying a broker that it has
made a valid and timely election under
section 475(f)(1).
(D)Reportingatornearthetimeof
sale. If a wash sale occurs after a broker
has completed a return or statement report-
ing a sale of a covered security, the bro-
ker must redetermine whether gain or loss
on the sale is long-term or short-term un-
der this paragraph (d)(7)(ii) and, if the re-
turn or statement included information in-
consistent with this redetermination, cor-
rect the return or statement by the applica-
ble original due date set forth in this sec-
tion for the return or statement.
(iii)Constructive sale and mark-to-
market adjustments. A broker is not re-
quired to apply section 1259 (regarding
constructive sales), section 475 (regard-
ing the mark-to-market method of ac-
counting), or section 1296 (regarding the
mark-to-market method of accounting
for marketable stock in a passive foreign
investment company) when determining
whether any gain or loss on the sale of a
security is long-term or short-term.
(iv)Regulated investment company and
real estate investment trust adjustments.
A broker is not required to apply sections
852(b)(4)(A) and 857(b)(8) (regarding ef-
fect of distributed and undistributed capital
November 22, 20106952010–47 I.R.B.

gain dividends on a loss on sale of regu-
lated investment company or real estate
investment trust shares held six months or
less)orsection852(b)(4)(B)(regarding
loss disallowance on sale of regulated in-
vestment company shares held six months
or less due to receipt of tax-exempt div-
idends) when determining whether any
gain or loss on the sale of a security is
long-term or short-term.
(v)No adjustments for hedging trans-
actions or offsetting positions.Abroker
isnotrequiredtoapplysection1092(re-
garding straddles), section 1233(b)(2) (re-
garding effect of short sale on holding pe-
riod of substantially identical property), or
§1.1221–2(b) (regarding hedging transac-
tions) when determining whether any gain
or loss on the sale of a security is long-term
or short-term.
(8)Conversion into United States dol-
lars of amounts paid or received in for-
eign currency—(i)Conversion rules.(A)
When a payment is made in a foreign cur-
rency, a broker must determine the U.S.
dollar amount of the payment by convert-
ing the foreign currency into U.S. dollars
on the date it receives, credits, or makes the
payment, as applicable, at the spot rate (as
defined in §1.988–1(d)(1)) or pursuant to
a reasonable spot rate convention. When
reporting the sale of a security traded on
an established securities market, however,
a broker must determine the U.S. dollar
amounts at the spot rate or pursuant to a
reasonable spot rate convention as of the
settlement date of the purchase or sale, as
applicable.
(B) A reasonable spot rate conven-
tion includes a month-end spot rate or a
monthly average spot rate. A spot rate
convention must be used consistently for
all non-dollar amounts reported and from
year to year. The convention may not be
changed without the consent of the Com-
missioner or his or her delegate.
(ii)Effect of identification under
§1.988–5(a), (b), or (c) when the taxpayer
effects a sale and a hedge through the same
broker. In lieu of the amounts reportable
under paragraph (d)(8)(i) of this section,
the gross proceeds and adjusted basis must
each be the integrated amount computed
under §1.988–5(a), (b) or (c) if—
(A) A taxpayer effects through a bro-
ker a sale or exchange of nonfunctional
currency (as defined in §1.988–1(c)) and
hedges all or a part of the sale as provided
in §1.988–5(a), (b) or (c) with the same
broker; and
(B) The taxpayer complies with the re-
quirements of §1.988–5(a), (b) or (c) and
so notifies the broker prior to the end of
the calendar year in which the sale occurs.
(iii)Example. The following exam-
ple illustrates the rules of this paragraph
(d)(8):
Example. (i) Z, an individual, is a U.S. citizen.
On July 4, 2012, Z purchases stock of C, SA, a French
corporation traded on an established securities mar-
ket, in an account with Q, a broker. Q uses a daily
spot rate for converting euro and U.S. dollars. Z
pays€1,200 for the stock. On the settlement date
for the purchase, the spot rate is€1 = $1.30. On
October 4, 2012, Z sells the stock for€1,000. On the
settlement date for the sale, the spot rate is€1 = $1.35.
On October 5, 2012, Z purchases additional shares of
C, SA, that cause the€200 loss on the stock sold on
October 4, 2012, to be disallowed under section 1091.
(ii) Under paragraph (d)(8)(i)(A) of this section,
Q must determine adjusted basis by converting the
€1,200 paid on behalf of Z into U.S. dollars using
the€1 = $1.30 spot rate on the settlement date of the
purchase. Q must convert the€1,000 gross proceeds
into U.S. dollars using the€1 = $1.35 spot rate on the
settlement date for the sale. Thus, Q must report ad-
justed basis equal to $1,560, gross proceeds equal to
$1,350,and$210inlossdisallowedbysection1091.
(9)Coordination with the reporting
rules for widely held fixed investment
trusts under §1.671–5. Information re-
quired to be reported under section 6045(a)
for a sale of a security in a widely held
fixed investment trust (WHFIT) (as de-
fined under §1.671–5) and the sale of an
interest in a WHFIT must be reported as
provided by this section unless the in-
formation is also required to be reported
under §1.671–5. To the extent that this
section requires additional information
under section 6045(g), those requirements
are deemed to be met through compliance
with the rules in §1.671–5.
(e) * * *
(2)***(i)In general. Except as pro-
vided in paragraphs (e)(2)(ii) and (g) of
this section, a barter exchange must make
a return of information for exchanges of
personal property or services through the
barter exchange during the calendar year
among its members or clients or between
these persons and the barter exchange.
For this purpose, property or services are
exchanged through a barter exchange if
payment for property or services is made
by means of a credit on the books of the
barter exchange or scrip issued by the
barter exchange or if the barter exchange
arranges a direct exchange of property
or services among its members or clients
or exchanges property or services with a
member or client.
*****
(f) * * *
(2) * * * (i)In general. As to each
exchange for which a barter exchange is
required to make a return of information
under this section, the barter exchange
must show on Form 1099-B, “Proceeds
From Broker and Barter Exchange Trans-
actions,” or any successor form the name,
address, and taxpayer identification num-
ber of each member or client providing
property or services in the exchange, the
property or services provided, the amount
received by the member or client for the
property or services, the date on which the
exchange occurred, and other information
required by the form in the manner and
number of copies required by the form.
*****
(k)***(1)General requirements.A
broker or barter exchange making a return
of information under this section must fur-
nish to the person whose identifying num-
ber is (or is required to be) shown on the re-
turn a written statement showing the infor-
mation required by paragraph (c)(5), (d),
or (f) of this section and containing a leg-
end stating that the information is being
reported to the Internal Revenue Service.
If the return of information is not made
on magnetic media, this requirement may
be satisfied by furnishing to the person a
copy of all Forms 1099 or any successor
form for the person filed with the Internal
Revenue Service Center. A statement is
considered to be furnished to a person to
whom a statement is required to be made
under this paragraph (k) if it is mailed to
the person at the last address of the person
known to the broker or barter exchange.
(2)Time for furnishing statements.A
broker or barter exchange may furnish the
statements requiredunder this paragraph
(k) yearly, quarterly, monthly, or on any
other basis, without regard to the report-
ing period the broker or barter exchange
elects; however, all statements required to
be furnished under this paragraph (k) for a
calendar year must be furnished on or be-
fore February 15 of the following calendar
year.
(3)Consolidated reporting.(i)The
termconsolidated reporting statement
means a grouping of statements the same
2010–47 I.R.B.696November 22, 2010

broker or barter exchange furnishes to the
same customer or group of customers on
the same date for the same reporting year
that includes a statement required under
this section. A consolidated reporting
statement is limited to statements based on
the same relationship of broker or barter
exchange to customer as the statement re-
quired to be furnished under this section.
For purposes of this paragraph (k)(3)(i), a
broker may treat a shareholder of a broker
as a customer of the broker and may treat
a grouping of statements for a customer as
including a statement required to be fur-
nished under this section if the customer
has an account with the broker for which
a statement would be required to be fur-
nished under this section if the customer
purchased and sold stock in a corporation
in the account during the year.
(ii) A consolidated reporting statement
must be furnished on or before February 15
of the year following the calendar year re-
ported. Any statement that otherwise must
be furnished on or before January 31 must
be furnished on or before February 15 if it
is furnished in the consolidated reporting
statement.
(iii)Examples. The following examples
illustrate the rules of this paragraph (k)(3):
Example 1. D has a taxable account with B, a
broker, consisting solely of stock in a single corpora-
tion. In 2010, D receives reportable dividends from
this stock and sells the stock. Under this section and
§1.6042–4, B must furnish a Form 1099-B,“Pro-
ceeds From Broker and Barter Exchange Transac-
tions,”and Form 1099-DIV, “Dividends and Distri-
butions,”to D in 2011 for the sale and the dividends.
Under paragraph (k)(2) of this section, B is required
to furnish the required statement under this section
toDbyFebruary15,2011.Bmustfurnishthestate-
ment reporting the dividends by the January 31, 2011,
due date provided in §1.6042–4. However, under
paragraph (k)(3)(ii) of this section, B must furnish
the statement reporting the dividends by February 15,
2011, if furnished in a consolidated reporting state-
ment as defined in paragraph (k)(3)(i) of this section.
Example 2. Assume the same facts as inExample
1except that D has invested solely in a money mar-
ket fund for which sales are excepted from the report-
ing required under this section. B therefore is not re-
quired to issue a statement under this section if D sells
an interest in the money market fund. Under para-
graph (k)(3)(i) of this section, B may treat a grouping
of statements for D as including a required statement
under this section because D has an account for which
a statement would be required under this section if
D purchased and sold stock in a corporation in the
account during the year. Therefore, under paragraph
(k)(3)(ii) of this section, B must furnish the statement
reporting the dividends by February 15, 2011.
Example 3. E has a nontaxable IRA account with
B, a broker. This account is the only account E holds
with B. E sells stock in 2010 in this account. E also
receives a cash distribution from the account in 2010.
The cash distribution from the IRA is reportable on
Form 1099-R,“Distributions From Pensions, Annu-
ities, Retirement or Profit-Sharing Plans, IRAs, In-
surance Contracts, etc.,”under §1.408–7. Because
the account is not taxable, sales in the account are not
subject to reporting under this section. Therefore, be-
cause no statement is required under this section, un-
der paragraph (k)(3) of this section, B may not furnish
any statements to E in a consolidated reporting state-
ment. B must furnish the Form 1099-R by the date
required under §1.408–7.
Example 4. Assume the same facts as inExample
3except that E and F have a joint taxable account with
B. Because sales in the joint taxable account are sub-
ject to reporting under this section, under paragraph
(k)(3) of this section, B must furnish by February 15,
2011, all customer statements for 2010 that B oth-
erwise must furnish jointly to E and F on or before
January 31, 2011, if furnished on the same date in
a consolidated reporting statement with the required
statements under this section for any sales in the joint
taxable account. However, B may not include any
statement for E’s IRA account in the consolidated re-
porting statement furnished jointly to E and F because
the statements are not furnished to the same customer
or group of customers.
*****
Par. 8. Section 1.6045–2 is amended by
revising paragraph (d) to read as follows:
§1.6045–2 Furnishing statement required
with respect to certain substitute
payments.
*****
(d)Time for furnishing statements—(1)
General requirements. A broker must fur-
nish the statements required by paragraph
(a) of this section for each calendar year.
The statements must be furnished after
April 30th of the calendar year but in no
case before the final substitute payment
for the calendar year is made, and on or
before February 15 of the following cal-
endar year.
(2)Consolidated reporting.(i)The
termconsolidated reporting statement
means a grouping of statements the same
broker furnishes to the same customer or
group of customers on the same date for
the same reporting year that includes a
statement required under this section. A
consolidated reporting statement is limited
to statements based on the same relation-
ship of broker to customer as the statement
required to be furnished under this section.
(ii) A consolidated reporting statement
must be furnished on or before February 15
of the year following the calendar year re-
ported. Any statement that otherwise must
be furnished on or before January 31 must
befurnishedonorbeforeFebruary15ifit
is furnished in the consolidated reporting
statement.
*****
Par. 9. Section 1.6045–3 is amended by
revising paragraph (e) to read as follows:
§1.6045–3 In
formation reporting for an
acquisition
of control or a substantial
change in cap
ital structure.
*****
(e)Furnishing of forms to cus-
tomers—(1)General requirements.A
broker must furnish Form 1099-B to the
customer on or before February 15 of the
year following the calendar year in which
the customer receives stock, cash or other
property.
(2)Consolidated reporting.(i)The
termconsolidated reporting statement
means a grouping of statements the same
broker furnishes to the same customer or
group of customers on the same date for
the same reporting year that includes a
statement required under this section. A
consolidated reporting statement is limited
to statements based on the same relation-
ship of broker to customer as the statement
required to be furnished under this section.
(ii) A consolidated reporting statement
must be furnished on or before February 15
of the year following the calendar year re-
ported. Any statement that otherwise must
be furnished on or before January 31 must
befurnishedonorbeforeFebruary15ifit
is furnished in the consolidated reporting
statement.
*****
Par. 10. Section 1.6045–4 is amended
by revising paragraph (m)(2) and adding
paragraph (m)(3) to read as follows:
§1.60
45–4 Information reporting on real
esta
te transactions with dates of closing
on or
after January 1, 1991.
*****
(m)***
(2)Time for furnishing statement.The
statement required under this paragraph
(m) must be furnished to the transferor on
or after the date of closing and on or be-
fore February 15 of the following calendar
year.
November 22, 20106972010–47 I.R.B.

(3)Consolidated reporting.(i)The
termconsolidated reporting statement
means a grouping of statements the same
reporting person furnishes to the same
transferor or group of transferors on the
same date for the same reporting year that
includes a statement required under this
section. A consolidated reporting state-
ment is limited to statements based on the
same relationship of reporting person to
transferor as the statement required to be
furnished under this section.
(ii) A consolidated reporting statement
must be furnished on or before February 15
of the year following the calendar year re-
ported. Any statement that otherwise must
be furnished on or before January 31 must
be furnished on or before February 15 if it
is furnished in the consolidated reporting
statement.
*****
Par. 11. Section 1.6045–5 is amended
by revising paragraph (a)(3) to read as fol-
lows:
§1.6045–5 Information reporting on
payments to attorneys.
(a) * * *
(3)Requirement to furnish state-
ment—(i)General requirements. A person
required to file an information return un-
der paragraph (a)(1) of this section must
furnish to the attorney a written statement
of the information required to be shown on
the return. This requirement may be met
by furnishing a copy of the return to the
attorney. The written statement must be
furnished to the attorney on or before Feb-
ruary 15 of the year following the calendar
year in which the payment was made.
(ii)Consolidated reporting.(A)The
termconsolidated reporting statement
means a grouping of statements the same
payor furnishes to the same payee or group
of payees on the same date for the same
reporting year that includes a statement
required under this section. A consol-
idated reporting statement is limited to
statements based on the same relationship
of payor to payee as the statement required
to be furnished under this section.
(B) A consolidated reporting statement
must be furnished on or before February 15
of the year following the calendar year re-
ported. Any statement that otherwise must
be furnished on or before January 31 must
be furnished on or before February 15 if it
is furnished in the consolidated reporting
statement.
*****
Par. 12. Section 1.6045A–1 is added to
read as follows:
§1.6045A–1 Statements of information
required in connection with transfers of
securities.
(a)Duty to furnish transfer state-
ment—(1)In general—(i)Transfers be-
tween accounts. Except as provided in
paragraphs (a)(1)(ii) through (v) of this
section, every applicable person (trans-
feror) (as described in paragraph (a)(4)
of this section) that transfers custody of
a specified security to a broker (as de-
scribed in paragraph (a)(5) of this section)
must furnish to the receiving broker a
transfer statement that includes the infor-
mation described in paragraph (b) of this
section with respect to the transferred se-
curity. Except as provided in paragraphs
(b)(1)(vii) and (b)(3) of this section (relat-
ing to noncovered securities and certain
securities for whichbasis is determined
under an average basis method), a trans-
feror must furnish a separate statement for
each security and, if transferring custody
of the same security acquired on different
dates or at different prices, for each acqui-
sition.
(ii)Cash on delivery accounts and mul-
tiple broker arrangements—(A)Sales.A
custodian or other transferor that transfers
custody of a security to a broker solely to
effect a sale must furnish a transfer state-
ment only to the broker that effects the
sale. However, no transfer statement is re-
quired if the transferor itself either effects
the sale or is required to report the sale of
the security under §1.6045–1.
(B)Purchases. A broker that effects
a purchase but does not receive custody
of the security must furnish a transfer
statement to the broker receiving custody.
However, no transfer statement is required
if the broker effects the purchase solely
at the instruction of the broker receiving
custody.
(iii)Exempt recipients and exempt for-
eign payees. A transferor is not required
to furnish a transfer statement for a secu-
rity that, after the transfer, is held for a
customer that is an exempt recipient un-
der §1.6045–1(c)(3)(i) or an exempt for-
eign person under §1.6045–1(g)(1)(i).
(iv)Securities lending transactions —
transferor as principal. A transferor that
lendsorborrowssecuritiesasaprincipalis
not required to furnish a transfer statement
for a security that is transferred pursuant
to such lending or borrowing arrangement
(for example, when a customer opens or
closes a short sale). This exception does
not apply when a transferor transfers a se-
curity under a lending or borrowing ar-
rangement of the customer. This excep-
tion also does not apply when a transferor
transfers a previouslyborrowed security to
another account of the same customer (for
example, to satisfy an existing short sale
obligation).Seeparagraph (b)(4) of this
section.
(v)Certain money market funds.
A transferor of stock in a regulated
investment company described in
§1.6045–1(c)(3)(vi) is not required to fur-
nish a transfer statement.
(2)Format of transfer statement.The
transfer statement must be furnished in
writing unless both the transferor and the
receiving broker agree to a different format
or method before the transfer. If a trans-
fer occurs between accounts at the same
or affiliated entities, a transfer statement
is deemed to have been furnished and re-
ceived if the required information, includ-
ing any required adjustments, is incorpo-
rated into the records for the recipient ac-
count.
(3)Time for furnishing statement.A
transferor must furnish a transfer statement
within fifteen days after the date of settle-
ment for the transfer.
(4)Applicable person effecting trans-
fer.Applicable personmeans any
transferor who is a person described in
§1.6045–1(a)(1), a person that acts as a
custodian of securities in the ordinary
course of a trade or business, an issuer
of securities, a trustee or custodian of an
individual retirement plan, or any agent of
these persons. Applicable person does not
include the beneficial owner of a security
or any agent substituted for an undisclosed
beneficial owner, any governmental unit
or agency or instrumentality of a govern-
mental unit holding escheated securities,
or any organization that holds and trans-
fers obligations among members of the
organization as a service to its members.
(5)Broker receiving custody
. Solely for
purposes of this section,brokermeans any
person described in §1.6045–1(a)(1), any
2010–47 I.R.B.698November 22, 2010

person that acts as a custodian of securi-
ties in the ordinary course of a trade or
business, any issuer ofsecurities, and any
agent of these persons. Broker does not
include the beneficial owner of a security
or any agent substituted for an undisclosed
beneficial owner, any governmental unit or
agency or instrumentality of a governmen-
tal unit holding escheated securities, or any
organization that holds and transfers obli-
gations among members of the organiza-
tion as a service to its members.
(6)Other terms. For purposes of this
section, the terms sale, specified security,
covered security, noncovered security, and
customer have the same meaning as in
§1.6045–1(a)(9), (a)(14), (a)(15), (a)(16),
and (h)(1).
(7)Examples. The following exam-
ples illustrate the rules of this paragraph
(a). Unless otherwise stated, in each ex-
ample the customer is not treated as an
exempt recipient under §1.6045–1(c)(3)(i)
or an exempt foreign person under
§1.6045–1(g)(1)(i). The examples are as
follows:
Example 1. V, an entity treated as an exempt re-
cipient under §1.6045–1(c)(3)(i), owns a security in
an account with E, a broker. On February 1, 2012,
V instructs E to transfer custody of the security to
an account V maintains with F, another broker. Be-
cause E may treat V as an exempt recipient under
§1.6045–1(c)(3)(i), under paragraph (a)(1)(iii) of this
section, E is not required to furnish a transfer state-
ment.
Example 2. W maintains an account with G, a
custodial broker. On August 1, 2012, W instructs G
to purchase a security. G places an order to purchase
the security with H, a broker with which G has a clear-
ing agreement. W does not maintain a direct account
with H. H executes the purchase and has the security
delivered to G. Under paragraph (a)(1)(ii)(B) of this
section, H is not required to furnish a transfer state-
ment because G received custody of the security and
H purchased the security solely at the instruction of
G.
Example 3. Assume the same facts as inExample
2except that W later instructs G to sell the security. G
places an order with H to sell the security. H executes
the sale. G delivers the security to settle the sale.
G is required to report the sale of the security under
§1.6045–1. Therefore, under paragraph (a)(1)(ii)(A)
of this section, G is not required to furnish a transfer
statement.
Example 4. (i) X maintains an account with J, an
introducing broker. J contracts with K, a clearing bro-
ker, to allow K to execute trades on J’s behalf under
a clearing agreement. K uses L, a custodian of secu-
rities in the ordinary course of a trade or business,
to hold custody of the securities of K’s customers.
K maintains a separate disclosed account for X as a
clearing broker with custody at L. On May 1, 2012,
X instructs J to purchase a security for X as the ben-
eficial owner. J instructs K to purchase the security.
K effects the purchase and has the security delivered
to L.
(ii) K is a broker and therefore is an applicable
person that is a transferor within the meaning of para-
graph (a)(4) of this section. L acts as a custodian of
securities in the ordinary course of a trade or busi-
ness and therefore is a broker within the meaning of
paragraph (a)(5) of this section. Because K effects
the purchase of the security but does not receive cus-
tody of the security, under paragraphs (a)(1)(i) and
(a)(1)(ii)(B) of this section, K must furnish a transfer
statement to L.
Example 5. (i) Assume the same facts as inExam-
ple 4except that X later instructs J to sell the security.
J instructs K to sell the security. K sells the security.
L transfers custody of the security to settle X’s sale
in accordance with its custody arrangement with K
by delivering the security to the purchasing broker.
K deposits the sale proceeds in X’s account with K.
K is required to report the sale of the security under
§1.6045–1.
(ii) L acts as a custodian of securities in the
ordinary course of a trade or business and therefore
is an applicable person that is a transferor within the
meaning of paragraph (a)(4) of this section. Because
L transfers custody of the security to the purchaser’s
broker solely to effect the sale, under paragraphs
(a)(1)(i) and (a)(1)(ii)(A) of this section, L must
furnish a transfer statement to K.
(iii) If the terms of their custody arrangement so
provide, K may furnish the transfer statement as L’s
agent and satisfy L’s duty to furnish the transfer state-
ment under paragraphs (a)(1)(i) and (a)(1)(ii)(A) of
this section. Under paragraph (a)(2) of this section,
K may satisfy this duty by maintaining the informa-
tion required on the transfer statement, including all
required adjustments, in its records for X’s account.
Example 6. (i) Y, an investment advisor, wants to
purchase shares of stock in C, a corporation, for sev-
eral of Y’s customers. Y establishes a delivery-on-
payment account with M, a broker, and provides M a
standing instruction to deliver stock purchased in the
account to Y’s account at N, a custodian of securi-
ties in the ordinary course of a trade or business. On
November 1, 2012, Y enters into a cash-on-delivery
transaction by instructing M to purchase shares of C
stock. M executes the purchase and effects delivery
oftheCstocktoN.
(ii) M is a broker and therefore is an applicable
person that is a transferor within the meaning of para-
graph (a)(4) of this section. N acts as a custodian of
securities in the ordinary course of a trade or business
and therefore is a broker within the meaning of para-
graph (a)(5) of this section. Because M effects the
purchase of the stock and N receives custody of the
stock, under paragraphs (a)(1)(i) and (a)(1)(ii)(B) of
this section, M must furnish a transfer statement to N.
Example 7.(i)ZownssharesofstockinC,acor-
poration, in an account with O, a broker. On Febru-
ary 1, 2013, Z instructs O to transfer the C stock to
C so that ownership is held on the books of the is-
suer. C has an arrangement with D, a transfer agent,
to keep records of ownership of the company’s stock,
how that stock is held, and how many shares each in-
vestor owns. O transfers the stock to D.
(ii) O is a broker and therefore is an applicable
person that is a transferor within the meaning of para-
graph (a)(4) of this section. D is an agent of C, the
issuer of the stock, and therefore is a broker within
the meaning of paragraph (a)(5) of this section. Be-
cause O transfers custody of the stock to D, under
paragraph (a)(1)(i) of this section, O must furnish a
transfer statement to D.
Example 8.Assumethesamefactsasin
Example
7except that Z later instructs D to transfer the stock
to an account Z maintains with P, another broker. D
transfers the stock to P. D is an agent of C, the issuer
of the stock, and therefore is an applicable person that
is a transferor within the meaning of paragraph (a)(4)
of this section. Because P is a broker and D transfers
custody of the stock to P, under paragraph (a)(1)(i) of
this section, D must furnish a transfer statement to P.
(b)Information required—(1)In gen-
eral. Each transfer statement must include
the information described in this paragraph
(b)(1).
(i)Statement date. The date the state-
ment is furnished.
(ii)Applicable person effecting trans-
fer. The name, address, and telephone
number of the applicable person furnish-
ing the statement.
(iii)Broker receiving custody.The
name, address, and telephone number of
the broker receiving custody of the secu-
rity.
(iv)Customers. The name and account
number of the customer or customers for
the account from which the security is
transferred and, if different, the name
and account number of the customer or
customers for the account to which the
security is transferred.
(v)Security identifiers. The Committee
on Uniform Security Identification Pro-
cedures (CUSIP) number of the security
transferred (if applicable) or other secu-
rity identifier number that the Secretary
may designate by publication in theFed-
eral Registeror in the Internal Revenue
Bulletin (see§601.601(d)(2) of this chap-
ter), quantity of shares or units, and classi-
fication of the security (such as stock).
(vi)Transfer dates. The date the trans-
fer was initiated and the settlement date of
the transfer (if known when furnishing the
statement).
(vii)Adjusted basis and acquisition
date. The total adjusted basis of the se-
curity, the original acquisition date of the
security, and, if applicable, the holding pe-
riod adjustment required by section 1091.
The transferor must determine this infor-
mation as provided under §1.6045–1(d)
including reporting the adjusted basis of
the security in U.S. dollars. If the basis
of the transferred security is determined
using an average basis method (as de-
scribed in §1.1012–1(e)), the transferor
November 22, 20106992010–47 I.R.B.

may report any securities acquired more
than five years before the transfer on a
single statement on which the original ac-
quisition date is reported as “VARIOUS”
if the other information reported on the
statement applies to all of the securities.
(viii)Examples. The following exam-
ples illustrate the rules of this paragraph
(b)(1):
Example 1. (i) In a single account with P, a broker,
Q purchases three lots of 100 shares of stock each in
C, a corporation, at different prices on April 2, 2012,
July 2, 2012, and October 2, 2012. Q instructs P to
enroll the shares of the C stock in P’s dividend rein-
vestment plan and to average the basis of the shares
of the C stock. All of the C stock purchased by P has
the same CUSIP number. On September 13, 2013,
less than five years after the acquisition dates for all
three lots, Q transfers all 300 shares of the C stock to
an account with another broker.
(ii) Under paragraph (a)(1)(i) of this section, P
must furnish three transfer statements. Under para-
graph (b)(1) of this section, one statement must re-
port the transfer of 100 shares with an original acqui-
sition date of April 2, 2012, one statement must report
the transfer of 100 shares with an original acquisition
date of July 2, 2012, and one statement must report
the transfer of 100 shares with an original acquisition
date of October 2, 2012.
Example 2. Assume the same facts as inExample
1except that Q transfers the shares to the account
with the other broker on September 13, 2017. For the
100 shares purchased on April 2, 2012, and the 100
shares purchased on July 2, 2012, under paragraph
(b)(1)(vii) of this section, P may furnish a single
transfer statement reporting the transfer of 200 shares
with the original acquisition date as “VARIOUS” in-
stead of furnishing two separate transfer statements.
Example 3. (i) Assume the same facts as inEx-
ample 1except that, on June 15, 2012, Q sells the 100
shares purchased on April 2, 2012, at a loss.
(ii) Under paragraph (a)(1)(i) of this sec-
tion, P must furnish twotransfer statements.
Under paragraph (b)(1)(vii) of this section and
§1.6045–1(d)(6)(iii) and (d)(7)(ii), P must determine
the average basis for the 200 transferred shares and
the date for computing whether any gain or loss with
respect to the stock purchased on July 2, 2012, is
long-term or short-term by applying the rules for bro-
ker reporting of wash sales to the stock purchased on
July 2, 2012. Therefore, on both transfer statements,
P must increase the average basis of the stock by the
amount of loss disallowed under section 1091 on the
sale of the 100 shares purchased on April 2, 2012.
On the transfer statement reporting the transfer of
the 100 shares purchased on July 2, 2012, P must
adjust the holding period of the July 2, 2012, shares
in accordance with section 1091.
Example 4. (i) R, an employee of C, a corpora-
tion, participates in C’s employee stock purchase pro-
gram that satisfies the requirements of section 423. D
administers the plan. R purchases stock in the plan
at a 15 percent discount to the fair market value of
the stock determined on the date of purchase. R pur-
chases stock through the plan during 2012 until R ter-
minates employment on October 15, 2012. R later in-
structs D to transfer the plan shares to S, a broker.
(ii) D is the agent of C, the issuer of the securi-
ties, and therefore is an applicable person within the
meaning of paragraph (a)(4) of this section. Because
S is a broker and D transfers custody of the stock to
S, under paragraph (a)(1)(i) of this section, D must
furnish a transfer statement to S.
(iii) Under paragraph (b)(1)(vii) of this section
and §1.6045–1(d)(6)(ii)(A), D must report adjusted
basis on the transfer statement based on the amount
paid by R. Under paragraph (b)(1)(vii) of this section
and §1.6045–1(d)(6)(ii)(A), D is permitted, but is not
required, to increase the adjusted basis for the amount
(if any) includible as wage income by R for R’s pur-
chases of the stock.
(2)Format of identification.Anap-
plicable person furnishing a transfer state-
ment and a broker receiving the transfer
statement may agree to combine the infor-
mation required in paragraph (b)(1) of this
section in any format or to use a code in
place of one or more required items. For
example, a transferor and a receiving bro-
kermayagreetouseasinglecodetorep-
resent the broker instead of the broker’s
name, address, and telephone number, or
may use a security symbol or other identi-
fication number or scheme instead of the
security identifier required by paragraph
(b)(1) of this section.
(3)Transfers of noncovered securities.
The information described in paragraphs
(b)(1)(vii), (b)(5), and (b)(6) of this sec-
tion is not required for a transfer of a non-
covered security if the transfer statement
identifies the security as a noncovered se-
curity. A transferor that chooses to re-
port nonrequired information is not sub-
ject to penalties under section 6722 for
failure to report this information correctly
if the transfer statement identifies the se-
curity as a noncovered security. A sin-
gle transfer statement may report the trans-
fer of multiple noncovered securities if the
transfer statement clearly conveys, either
specifically or generally, the information
described in paragraph (b)(1)(v) of this
section to identify each security. For pur-
poses of this paragraph(b)(3), a transferor
must treat a security for which a broker
makes a single-account election described
in §1.1012–1(e)(11)(i) as a covered secu-
rity.
(4)Transfers of borrowed securities.
The transfer statement must indicate that
a transferred security is borrowed if the
transferor knows that the security is trans-
ferred pursuant to a lending or borrowing
arrangement. The transfer statement must
not report an adjusted basis If the trans-
feror knows that the transferred security is
lent or borrowed pursuant to a short sale.
The receiving broker may be subject to
special transfer reporting rules upon re-
ceipt of a borrowed security if the security
is used to satisfy an existing short sale
obligation.See§1.6045–1(c)(3)(xi)(C).
(5)Transfers pursuant to an inheri-
tance—(i)In general. A transfer statement
for a transfer of a security from a decedent
or decedent’s estate must indicate that the
security is inherited. The transfer state-
ment must report the date of death as the
original acquisition date and must report
adjusted basis according to the instructions
or valuations furnished by an authorized
representative of the estate, including any
required adjustments to basis for property
acquired from a decedent. If a transferor
has not received instructions or valua-
tions from an authorized representative,
the transferor must report basis as the fair
market value of the security on the date of
death. However, if the transferor neither
knows nor can readily ascertain the fair
market value of the security on the date
of death at the time the transfer statement
is prepared, the transfer statement must
indicate that the transfer consists of an
inherited security but may otherwise re-
port the security as if it were a noncovered
security. If the transferor cannot identify
which securities in a joint account have
been transferred from the decedent, the
transferor must treat each security in the
account as if it were a noncovered security
but must not indicate that any security is
an inherited security.
(ii)Transfersofsharestosatisfyacash
legacy. If a security is transferred from a
decedent or a decedent’s estate to satisfy a
cash legacy, paragraph (b)(1) of this sec-
tion applies and paragraph (b)(5)(i) of this
section does not apply.
(iii)Subsequent transfers of inherited
securities. A transfer statement must indi-
cate that the transfer consists of an inher-
ited security if a priortransfer statement re-
ported the security as inherited.
(6)Gift or deemed gift transfers—(i)In
general. A transfer statement for a secu-
rity transferred to a different owner (other
than a transfer that the transferor knows
is pursuant to a lending or borrowing ar-
rangement or is from a decedent or dece-
dent’s estate) must indicate that the secu-
rity is a gift and must report the date of the
gift (if known when furnishing the state-
ment) and the fair market value of the gift
2010–47 I.R.B.700November 22, 2010

on that date (if knownor readily ascertain-
able at the time the transfer statement is
prepared). The transfer statement must re-
port the adjusted basis and original acqui-
sition date of the security in the hands of
the donor. However, if the transfer is be-
tween persons for whom gift-related basis
adjustments are inapplicable or between
accounts that share at least one common
customer, the transferor must apply para-
graph(b)(1)ofthissection as if the secu-
rity were not a gift or deemed gift.
(ii)Subsequent transfers of gifts by the
same customer. If a transferor transfers to
a different account of the same customer
a security that a prior transfer statement
reported as a gifted security, the trans-
feror must include on the transfer state-
ment the information described in para-
graph (b)(6)(i) of this section for the date
of the gift to the customer. If the prior
transfer statement did not report a date for
the gift, the transferor must treat the settle-
ment date for the prior transfer as the date
of the gift.
(iii)Examples. The following examples
illustrate the rules of this paragraph (b)(6):
Example 1. XinstructsS,abroker,togivetoY
stock in a publicly traded company that X holds in an
account with S. The stock is a covered security. On
X’s instruction, S transfers custody of the stock to T,
Y’s broker. The transfer settles on August 15, 2013.
Under paragraph (b)(6)(i) of this section, S must pro-
vide a transfer statement to T that identifies the se-
curities as gifted securities and indicates X’s adjusted
basis and original acquisition date. If S knows the
settlement date, the transfer statement must also in-
dicate that the date of the gift was August 15, 2013,
and, because S can readily ascertain the fair market
value of the stock on August 15, 2013, the fair mar-
ket value of the stock on that date.
Example 2. Assume the same facts as inExample
1except that, one year later, Y transfers the stock to
an account in his name with U, another broker. Under
paragraph (b)(6)(ii) of this section, T must provide a
transfer statement to U thatidentifies the securities as
gifted securities and indicates X’s adjusted basis and
original acquisition date of the stock. The transfer
statement must also indicate the date of the gift, Au-
gust 15, 2013, and the fair market value of the stock
on that date either by reporting the value that S re-
ported to T or, because T can readily ascertain the
fair market value of the stock on August 15, 2013, by
determining the fair market value of the stock on that
date.
(7)Specific identification of securities.
Except as provided in §1.1012–1(e)(7)(ii),
a transfer statement must report a trans-
fer of less than the entire position in an
account of a security that was acquired
on different dates or at different prices
consistently with a customer’s adequate
and timely identification of the security
to be transferred.See§1.1012–1(c). If
the customer does not provide an adequate
and timely identification for the transfer, a
transferor must first report the transfer of
any shares or units inthe account for which
the transferor does not know the acquisi-
tion or purchase date followed by the ear-
liest shares or units purchased or acquired,
whether covered securities or noncovered
securities.
(8)Information from other parties and
other accounts—(i)Transfer and issuer
statements and transfers pursuant to an in-
heritance. When reporting a transfer of
a covered security, a transferor must take
into account all information, other than
the classification of the security (such as
stock), furnished on a transfer statement,
all information furnished or deemed fur-
nished on an issuer statement (as described
in §1.6045B–1), and all instructions and
valuations furnished by an authorized rep-
resentative of the estate of a decedent, un-
less the statement or instructions are in-
complete or the broker has actual knowl-
edge that they are incorrect. A transferor
may treat a customer as a minority share-
holder when taking the information on an
issuer statement into account unless the
transferor knows that the customer is a ma-
jority shareholder andthe issuer statement
reports the action’s effect on the basis of
majority shareholders. Any failure to re-
port correct information that arises solely
from reliance on information furnished on
a transfer statement or issuer statement or
by an authorized representative of the es-
tate is deemed to be due to reasonable
cause for purposes of penalties under sec-
tion 6722.See§301.6724–1(a)(1) of this
chapter.
(ii)Other information. A transferor is
permitted, but not required, to take into ac-
count information about a covered secu-
rity other than what is furnished on a trans-
fer statement or issuer statement or by an
authorized representative of the estate of
a decedent, including any information the
transferor has about securities held by the
same customer in other accounts with the
transferor. For purposes of penalties under
section 6722, a transferor that takes into
account information received from a cus-
tomer or third party other than information
furnished on a transfer statement or issuer
statement or by an authorized representa-
tive of the estate of a decedent is deemed to
have relied upon this information in good
faith if the transferor neither knows nor
has reason to know that the information is
incorrect.See§301.6724–1(c)(6) of this
chapter.
(9)Failure to receive a complete trans-
fer statement. A receiving broker that has
not received a complete transfer statement
as required under paragraph (a)(3) of this
section for the transfer must request a com-
plete statement from the transferor unless,
under paragraph (a) of this section, the
transferor has no duty to furnish a trans-
fer statement for the transfer. The receiv-
ingbrokerisonlyrequiredtomakethisre-
quest once. If the receiving broker does
not receive a complete transfer statement
after requesting it, the receiving broker
may treat the security as a noncovered se-
curity upon its subsequent sale or transfer.
A transfer statement for a covered security
is complete if, in the view of the receiving
broker, it provides sufficient information
to comply with §1.6045–1 when reporting
the sale of the security. A transfer state-
ment for a noncovered security is complete
if it indicates that the security is a noncov-
ered security.
(c)Reporting by other parties after a
transfer—(1)In general. A transferor that
has furnished a transfer statement must fur-
nish a corrected statement for a covered
security within fifteen days of receiving
a transfer statement, an issuer statement
(as described in §1.6045B–1), or instruc-
tions or valuations from an authorized rep-
resentative of an estate, that provides infor-
mation under paragraph (b) of this section
that was not reported onthe initial transfer
statement.
(2)Exception. A transferor is not
required to furnish a corrected transfer
statement for a covered security under this
paragraph (c) if the transferor receives
the transfer statement or issuer statement
or receives the instructions or valuations
from an authorized representative of an
estate more than eighteen months after the
transferor furnished the transfer statement.
(d)Effective/applicability dates.This
section applies to transfers on or after
January 1, 2011, of specified securities
other than stock in a regulated invest-
ment company within the meaning of
§1.1012–1(e)(5) and to transfers on or af-
ter January 1, 2012, of stock in a regulated
investment company.
November 22, 20107012010–47 I.R.B.

Par. 13. Section 1.6045B–1 is added to
read as follows:
§1.6045B–1 Returns relating to actions
affecting basis of securities.
(a)In general—(1)Information re-
quired. An issuer of a specified security
(within the meaning of §1.6045–1(a)(14))
that takes an organizational action that
affects the basis of the security must file
an issuer return setting forth the following
information and any other information
specified in the return form and instruc-
tions:
(i)Reporting issuer. The name and tax-
payer identification number of the report-
ing issuer.
(ii)Security identifiers. The identifiers
of each security involved in the organi-
zational action including, as applicable,
the Committee on Uniform Security Iden-
tification Procedures (CUSIP) number or
other security identifier number that the
Secretary may designate by publication in
theFederal Registeror in the Internal
Revenue Bulletin (see§601.601(d)(2) of
this chapter), classification of the secu-
rity (such as stock), account number, serial
number, and ticker symbol, as well as any
descriptions about the class of security af-
fected.
(iii)Contact at reporting issuer.The
name, address, e-mail address, and tele-
phone number of a contact person at the
issuer.
(iv)Information about action. The type
or nature of the organizational action in-
cluding, as applicable, the date of the ac-
tion or the date against which sharehold-
ers’ ownership is measured for the action.
(v)Effect of the action. The quantitative
effect of the organizational action on the
basis of the security in the hands of a U.S.
taxpayer as an adjustment per share or as
a percentage of old basis, including a de-
scription of the calculation, the applicable
Internal Revenue Code section and subsec-
tion upon which the tax treatment is based,
thedatasupportingthe calculation such as
the market values of securities and valua-
tion dates, any other information necessary
to implement the adjustment including the
reportable taxable year, and whether any
resulting loss may be recognized.
(2)Time for filing the return—(i)In
general. An issuer must file an issuer
return with the IRS pursuant to the pre-
scribed form and instructions on or before
the 45th day following the organizational
action, or, if earlier, January 15 of the year
following the calendar year of the organi-
zational action. For purposes of this para-
graph (a)(2), a redemption occurs on the
last day a holder may redeem a security.
The issuer may file the return before the
organizational action if the quantitative ef-
fect on basis is determinable beforehand.
(ii)Reasonable assumptions. To report
the quantitative effect on basis by the due
date in paragraph (a)(2)(i) of this section,
an issuer may make reasonable assump-
tions about facts that cannot be determined
before the due date. An issuer must file a
corrected return within forty-five days of
determining facts that result in a different
quantitative effect on basis from what the
issuer previously reported. However, for
purposes of this paragraph (a)(2)(ii), an is-
suer must treat a payment that may be a
dividend consistently with its treatment of
the payment under section 6042(b)(3) and
§1.6042–3(c).
(3)Exception for public reporting.An
issuer is not required to file a return with
the IRS under this paragraph (a) if, by the
due date described in paragraph (a)(2)(i) of
this section, the issuer posts the return with
the required information in a readily acces-
sible format in an area of its primary pub-
lic Web site dedicated to this purpose and
keeps the return accessible for ten years to
the public on its primary public Web site
or the primary public Web site of any suc-
cessor organization.
(4)Exception when holders are exempt
recipients. No reporting is required under
this paragraph (a) if the issuer reasonably
determines that all of the holders of the
security are exempt recipients under para-
graph (b)(5) of this section.
(5)Exception for certain money mar-
ket funds. No reporting is required
under this paragraph (a) by a regu-
lated investment company described in
§1.6045–1(c)(3)(vi).
(b)Statements to nominees and certifi-
cate holders—(1)In general.Anissuerre-
quired to file an information return under
this section must furnish a written state-
ment with the same information to each
holder of record of the security or to the
holder’s nominee. This issuer statement
must indicate that the information is being
reported to the IRS. An issuer may satisfy
this requirement by furnishing a copy of
the information return.
(2)Time for furnishing statements.An
issuer must furnish each issuer statement
on or before January 15 of the year fol-
lowing the calendar year of the organiza-
tional action. For purposes of this para-
graph (b)(2), a redemption occurs on the
last day a holder may redeem a security.
An issuer may furnish the statement before
the organizational action if the quantitative
effect on basis is determinable beforehand.
An issuer must furnish a statement that cor-
responds to a corrected return described in
paragraph (a)(2)(ii) of this section by the
later of the due date described in this para-
graph (b)(2) or forty-five days after deter-
mining the facts that result in a different
quantitative effect on basis from what the
issuer previously reported on the return.
(3)Recipients of statements. An issuer
must furnish a separate statement to each
holder of record of the security as of the
date of the organizational action and all
subsequent holders of record up to the date
the issuer furnishes the statement required
under this section. If the issuer records the
security on its books in the name of a nom-
inee, the issuer must furnish the statement
to the nominee in lieu of the holder. How-
ever, if the nominee is the issuer, an agent
of the issuer, or a plan operated by the is-
suer, the issuer must furnish the statement
to the holder.
(4)Exception for public reporting.An
issuer is deemed to furnish an issuer state-
ment under this paragraph (b) to all hold-
ers and nominees if the issuer satisfies
the public reporting requirements of para-
graph (a)(3) of this section.
(5)Exempt recipients—(i)In general.
An issuer is not required to furnish an
issuer statement to a holder or its nom-
inee if the holder is an exempt recipient
under §1.6045–1(c)(3)(i)(B), provided
the issuer has actual knowledge that the
holder is described in that section or has a
properly completed exemption certificate
from the holder asserting that the holder
is an exempt recipient (as provided in
§31.3406(h)–3 of this chapter). An issuer
may treat a holder as an exempt recipient
based on the applicable indicators de-
scribed in §1.6049–4(c)(1)(ii)(A) through
(M).
(ii)Limitation for corporate holders.
For an organizational action occurring
on or after January 1, 2012, an issuer
2010–47 I.R.B.702November 22, 2010

may treat a holder as an exempt recip-
ient based on the indicator described in
§1.6049–4(c)(1)(ii)(A) only if one of the
following applies:
(A) The name of the holder contains
the term “insurance company,” “indemnity
company,” “reinsurance company,” or “as-
surance company.”
(B) The name of the holder indicates
that it is an entity listed as a per se corpo-
ration under §301.7701–2(b)(8)(i) of this
chapter.
(C) The issuer receives a properly com-
pleted exemption certificate (as provided
in §31.3406(h)–3 of this chapter) that as-
serts that the holder is not an S corporation
as defined in section 1361(a).
(D) The issuer receives a withholding
certificate described in§1.1441–1(e)(2)(i)
that includes a certification that the person
whose name is on the certificate is a for-
eign corporation.
(iii)Foreign holders.Anissuermay
treat a holder as an exempt recipient if
the issuer, prior to the transaction, as-
sociates the holder with documentation
uponwhichtheissuermayrelyinorder
to treat payments to the holder as made
to a foreign beneficial owner in accor-
dance with §1.1441–1(e)(1)(ii) or as made
to a foreign payee in accordance with
§1.6049–5(d)(1) or presumed to be made
to a foreign payee under §1.6049–5(d)(2)
or (3). For purposes of this paragraph
(b)(5)(iii), the provisions in §1.6049–5(c)
(regarding rules applicable to documen-
tation of foreign status and definition of
U.S. payor and non-U.S. payor) apply.
Rules similar to the rules of §1.1441–1
apply by substituting the terms “issuer”
and “holder” in place of the terms “with-
holding agent” and “payee” and without
regard to the limitation to amounts sub-
ject to withholding under chapter 3 of the
Internal Revenue Code. Rules similar to
the rules of §1.6049–5(d) apply by substi-
tuting the terms “issuer” and “holder” in
place of the terms “payor” and “payee.”
(c)Special rule for S corporations.
An S corporation (as defined in section
1361(a)) is deemed to satisfy the require-
ments of paragraphs (a) and (b) of this sec-
tion for any organizational action affecting
the basis of its stock if the corporation
reports the effect of the organizational ac-
tion on a timely filed Schedule K–1 (Form
1120S),“Shareholder’s Share of Income,
Deductions, Credits, etc.,”for each share-
holder and timely furnishes copies of these
schedules to all proper parties.
(d)Special rule for certain regulated
investment companies and real estate in-
vestment trusts. A regulated investment
company (RIC) that reports undistributed
capital gains to shareholders under section
852(b)(3)(D) or a real estate investment
trust (REIT) that reports undistributed
capital gains to shareholders under section
857(b)(3)(D) is deemed to have satisfied
the requirements of paragraphs (a) and (b)
of this section for undistributed capital
gains affecting the basis of its stock if the
RIC or REIT timely files and furnishes the
information returns required under section
852(b)(3)(D) or section 857(b)(3)(D) to
all proper parties for the organizational
action.
(e)Acquiring and successor entities.
An acquiring or successor entity of an is-
suer that fails to satisfy the reporting obli-
gations of paragraphs (a) or (b) of this sec-
tion must satisfy these reporting obliga-
tions. If neither the issuer nor the acquiring
or successor entity satisfies these report-
ing obligations, both parties are jointly and
severally liable for any applicable penal-
ties.
(f)Penalties. An issuer may use an
agent to satisfy the requirements of this
section for the issuer. Nonetheless, the
issuer remains liable for penalty for any
failure to comply unless it is shown that the
failure is due to reasonable cause and not
willful neglect.Seesections 6721 through
6724.
(g)Examples. The following examples
illustrate the rules of this section:
Example 1. (i) C, a corporation, distributes stock
to shareholders on March 31, 2013.
(ii) Under paragraph (a)(2)(i) of this section, C
must file an issuer return with the IRS on or before
May 15, 2013 (45 days after the distribution date),
reporting the quantitative effect of this distribution
on the basis of C’s stock. Under paragraph (b)(2)
of this section, C must furnish issuer statements to
its nominees and certificate holders on or before
January 15, 2014.
(iii) Alternatively, under paragraphs (a)(3) and
(b)(4) of this section, C may post by May 15, 2013,
and maintain for ten years, the return with the re-
quired information in a readily accessible format in
an area of its primary public Web site dedicated to
this purpose.
Example 2. (i) D, a corporation, makes a cash
distribution to shareholders on December 10, 2013.
(ii) Under paragraphs (a)(2)(i) and (b)(2) of this
section, D is required to file an issuer return with the
IRS and furnish issuer statements to its nominees and
certificate holders on or before January 15, 2014.
(iii) On January 15, 2014, D is unsure whether the
distribution will exceed its earnings and profits for the
fiscal year. For purposes of section 6042(b)(3) and
§1.6042–3(c), D must treat the distribution as a div-
idend. Therefore, under paragraph (a)(2)(ii) of this
section, D is not required to file an issuer return. If
D later determines that dividend treatment was incor-
rect, D must file an issuer return reporting the correct
quantitative effect on basis.
Example 3. E, a corporation, undertakes a stock
split as of April 1, 2014. E furnishes issuer statements
under paragraph (b) of this section on April 1, 2014,
at which time the books and records of E show that
90 percent of its outstanding stock is owned by share-
holders through a clearing organization as their nom-
inee, 7 percent is owned by 5,000 individuals, and
the remaining 3 percent is owned by a dividend rein-
vestment plan operated by E that has 1,000 members.
Under paragraph (b)(3) of this section, E must fur-
nish statements to the clearing organization, the 5,000
individuals, and the 1,000 members of the dividend
reinvestment plan.
(h)Effective/applicability dates.This
section applies to organizational actions
occurring on or after January 1, 2011,
that affect the basis ofspecified securities
within the meaning of §1.6045–1(a)(14)
other than stock in a regulated invest-
ment company within the meaning of
§1.1012–1(e)(5) and to organizational ac-
tions occurring on or after January 1, 2012,
that affect stock in a regulated investment
company.
Par. 14. Section 1.6049–6 is amended
by adding two new sentences to the end
of paragraphs (c) and (e)(2) to read as fol-
lows:
§1.6049–6 Statements to recipients
of interest payments and holders of
obligations for attributed original issue
discount.
*****
(c) * * * However, for a state-
ment required to be furnished after
December 31, 2008, the February 15
due date under section 6045 applies
to the statement if the statement is
furnished in a consolidated reporting
statement under section 6045.See
§§1.6045–1(k)(3),1.6045–2(d)(2),
1.6045–3(e)(2), 1.6045–4(m)(3), and
1.6045–5(a)(3)(ii).
*****
(e) * * *
(2)***However,forastate-
ment required to be furnished after
December 31, 2008, the February 15
due date under section 6045 applies
to the statement if the statement is
November 22, 20107032010–47 I.R.B.

furnished in a consolidated reporting
statement under section 6045.See
§§1.6045–1(k)(3),1.6045–2(d)(2),
1.6045–3(e)(2), 1.6045–4(m)(3), and
1.6045–5(a)(3)(ii).
*****
PART 31—EMPLOYMENT TAXES
AND COLLECTION OF INCOME TAX
AT THE SOURCE
Par. 15. The authority citation for part
31 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 16. Section 31.6051–4 is amended
by revising paragraph (c)(2) and adding
two new sentences at the end of paragraph
(d) to read as follows:
§31.6051–4 Statement required in case of
backup withholding.
*****
(c) * * *
(2) Except as provided in the prescribed
form or instructions, the amount subject
to reporting under section 6041, 6041A(a),
6042, 6044, 6045, 6049, 6050A, 6050N, or
6050W whether or not the amount of the
reportable payment is less than the amount
for which an information return is required
or, if tax is withheld under section 3406,
the amount of the payment withheld upon;
*****
(d) * * * However, for a statement
required to be furnished after Decem-
ber 31, 2008, the February 15 due date
under section 6045 applies to the state-
ment if the statement reports tax withheld
from a payment reportable under section
6045 or is furnished in a consolidated
reporting statement under section 6045.
See§§1.6045–1(k)(3), 1.6045–2(d)(2),
1.6045–3(e)(2), 1.6045–4(m)(3), and
1.6045–5(a)(3)(ii) of this chapter.
*****
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 17. The authority citation for part
301 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 18. Section 301.6721–1 is
amended by revising paragraphs (g)(2)
and (g)(3) to read as follows:
§301.6721–1 Failure to file correct
information returns.
*****
(g) * * *
(2)Statements. The statements subject
to this section are the statements required
by—
(i)Section6041(a)or(b)(relatingto
certain information at source, generally
reported on Form 1099-MISC,“Miscel-
laneous Income”;Form W–2,“Wage
and Tax Statement”; Form W–2G,“Cer-
tain Gambling Winnings”;andForm
1099-INT,“Interest Income”);
(ii) Section 6042(a)(1) (relating to pay-
ments of dividends, generally reported on
Form 1099-DIV,“Dividends and Distribu-
tions”);
(iii) Section 6044(a)(1) (relating to pay-
ments of patronage dividends, generally
reported on Form 1099-PATR,“Taxable
Distributions Received From Coopera-
tives”);
(iv)Section6049(a)(relatingtopay-
ments of interest, generally reported on
Form 1099-INT or Form 1099-OID,
“Original Issue Discount”);
(v) Section 6050A(a) (relating to re-
porting requirements of certain fishing
boat operators, generally reported on Form
1099-MISC);
(vi) Section 6050N(a)(relating to pay-
ments of royalties, generally reported on
Form 1099-MISC);
(vii) Section 6051(d) (relating to in-
formation returns with respect to income
tax withheld, generally reported on Form
W–2);
(viii) Section 6050R(relating to returns
relating to certain purchases of fish, gener-
ally reported on Form 1099-MISC);
(ix) Section 110(d) (relating to qualified
lessee construction allowances for short-
term leases, generally reported by attach-
ing a statement to an income tax return);
(x) Section 408(i) (relating to reports
with respect to individual retirement ac-
counts or annuities on Form 1099-R,“Dis-
tributions From Pensions, Annuities, Re-
tirement or Profit-Sharing Plans, IRAs, In-
surance Contracts, etc.”); or
(xi) Section 6047(d) (relating to reports
by employers, plan administrators, etc., on
Form 1099-R).
(3)Returns. The returns subject to this
section are the returns required by—
(i)Section6041A(a)or(b)(relatingto
returns of direct sellers, generally reported
on Form 1099-MISC);
(ii) Section 6043A(a) (relating to re-
turns relating to taxable mergers and acqui-
sitions);
(iii) Section 6045(a) or (d) (relating to
returns of brokers, generally reported on
Form 1099-B,“Proceeds From Broker and
Barter Exchange Transactions,”for bro-
ker transactions; Form 1099-S,“Proceeds
From Real Estate Transactions,”for gross
proceeds from the sale or exchange of real
estate; and Form 1099-MISC for certain
substitute payments and payments to attor-
neys);
(iv) Section 6045B(a) (relating to re-
turns relating to actions affecting basis of
specified securities);
(v) Section 6050H(a) or (h)(1) (relat-
ing to mortgage interest received in trade
or business from individuals, generally re-
ported on Form 1098,“Mortgage Interest
Statement”);
(vi) Section 6050I(a) or (g)(1) (relating
to cash received in trade or business, etc.,
generally reported on Form 8300,“Report
of Cash Payments Over $10,000 Received
In a Trade or Business”);
(vii) Section 6050J(a) (relating to fore-
closures and abandonments of security,
generally reported on Form 1099-A,“Ac-
quisition or Abandonment of Secured
Property”);
(viii) Section 6050K(a) (relating to ex-
changes of certain partnership interests,
generally reported on Form 8308,“Report
of a Sale or Exchange of Certain Partner-
ship Interests”);
(ix) Section 6050L(a) (relating to re-
turns relating to certain dispositions of do-
nated property, generally reported on Form
8282,“Donee Information Return”);
(x) Section 6050P (relating to returns
relating to the cancellation of indebtedness
by certain financial entities, generally re-
ported on Form 1099-C,“Cancellation of
Debt”);
(xi) Section 6050Q (relating to certain
long-term care benefits, generally reported
on Form 1099-LTC,“Long-Term Care and
Accelerated Death Benefits”);
(xii) Section 6050S (relating to returns
relating to payments for qualified tuition
and related expenses, generally reported
on Form 1098-E,“Student Loan Inter-
est Statement,”or Form 1098-T,“Tuition
Statement”);
2010–47 I.R.B.704November 22, 2010

(xiii) Section 6050T(relating to returns
relating to credit for health insurance costs
of eligible individuals, generally reported
on Form 1099-H,“Health Coverage Tax
Credit (HCTC) Advance Payments”);
(xiv) Section 6052(a) (relating to re-
porting payment of wages in the form of
group-life insurance, generally reported on
Form W–2);
(xv) Section 6050V (relating to returns
relating to applicable insurance contracts
in which certain exempt organizations hold
interests, generally reported on Form 8921,
“Applicable Insurance Contract Informa-
tion Return”);
(xvi) Section 6053(c)(1) (relating to re-
porting with respect to certain tips, gener-
ally reported on Form 8027,“Employer’s
Annual Information Return of Tip Income
and Allocated Tips”);
(xvii) Section 1060(b) (relating to re-
porting requirements of transferors and
transferees in certainasset acquisitions,
generally reported on Form 8594,“As-
set Acquisition Statement”), or section
1060(e) (relating to information required
in the case of certain transfers of interests
in entities (effective for acquisitions after
October 9, 1990, except any acquisition
pursuant to a written binding contract in
effect on October 9, 1990, and at all times
thereafter before such acquisition));
(xviii) Section 4101(d) (relating to in-
formation reporting with respect to fuel
oils (effective for information returns re-
quired to be filed after November 30,
1990));
(xix) Section 338(h)(10)(C) (relating to
informationrequiredtobefurnishedtothe
Secretary in case of elective recognition of
gain or loss (effective for acquisitions after
October 9, 1990, except any acquisition
pursuant to a written binding contract in
effect on October 9, 1990, and at all times
thereafter before such acquisition));
(xx) Section 264(f)(5)(A)(iv) (relating
to reporting with respect to certain life in-
surance and annuity contracts);
(xxi) Section 6050U (relating to
charges or payments for qualified
long-term care insurance contracts un-
der combined arrangements, generally
reported on Form 1099-R);
(xxii) Section 6039(a) (relating to re-
turns required with respect to certain op-
tions); or
(xxiii) Section 6050W (relating to in-
formation returns with respect to payments
made in settlement of payment card and
third party network transactions).
*****
Par. 19. Section 301.6722–1 is
amended by revising paragraph (d)(2) to
read as follows:
§301.6722–1 Failure to furnish correct
payee statements.
*****
(d) * * *
(2)Payee statement.Thetermpayee
statementmeans any statement required to
be furnished under—
(i) Section 6031(b) or (c), 6034A, or
6037(b) (relating to statements furnished
by certain pass-thru entities, generally a
Schedule K–1 (Form 1065),“Partner’s
Share of Income, Deductions, Credits,
etc.,”for section 6031(b) or (c), a copy
of the Schedule K–1 (Form 1041),“Ben-
eficiary’s Share of Income, Deductions,
Credits, etc.,” for section 6034A, and a
copy of Schedule K–1 (Form 1120S),
“Shareholder’s Share of Income, Deduc-
tions, Credits, etc.,”for section 6037(b));
(ii) Section 6039(b) (relating to infor-
mation required in connection with certain
options);
(iii) Section 6041(d) (relating to infor-
mation at source, generally the recipient
copy of Form 1099-MISC, “Miscella-
neous Income”; Form W–2,“Wage and
Tax Statement”; Form 1099-INT,“Interest
Income”; and the winner’s copies of Form
W–2G,“Certain Gambling Winnings”);
(iv) Section 6041A(e) (relating to re-
turns regarding payments of remuneration
for services and direct sales, generally the
recipient copy of Form 1099-MISC);
(v) Section 6042(c) (relating to returns
regarding payments of dividends and cor-
porate earnings and profits, generally the
recipient copy of Form 1099-DIV,“Divi-
dends and Distributions”);
(vi) Section 6043A(b) or (d) (relating
to returns relating to taxable mergers and
acquisitions);
(vii) Section 6044(e) (relating to re-
turns regarding payments of patronage
dividends, generally the recipient copy of
Form 1099-PATR,“Taxable Distributions
Received From Cooperatives”);
(viii) Section 6045(b) or (d) (relat-
ing to returns of brokers, generally the
recipient copy of Form 1099-B,“Pro-
ceeds From Broker and Barter Exchange
Transactions,”for broker transactions; the
transferor copy of Form 1099-S,“Pro-
ceeds From Real Estate Transactions,”
for reporting proceeds from real estate
transactions; and the recipient copy of
Form 1099-MISC for certain substitute
payments and payments to attorneys);
(ix) Section 6045A (relating to informa-
tion required in connection with transfers
of covered securities to brokers);
(x) Section 6045B(c) or (e) (relating to
returns relating to actions affecting basis of
specified securities);
(xi) Section 6049(c) (relating to returns
regarding payments of interest, generally
the recipient copy of Form 1099-INT or
Form 1099-OID,“Original Issue Dis-
count”);
(xii) Section 6050A(b) (relating to re-
porting requirements of certain fishing
boat operators, generally the recipient
copy of Form 1099-MISC);
(xiii) Section 6050H(d) or (h)(2) (relat-
ing to returns relating to mortgage inter-
est received in trade or business from indi-
viduals, generally the payor copy of Form
1098,“Mortgage Interest Statement”);
(xiv) Section 6050I(e), (g)(4), or (g)(5)
(relating to returns relating to cash re-
ceived in trade or business, etc., generally
a copy of Form 8300,“ReportofCash
Payments Over $10,000 Received In a
Trade or Business”);
(xv) Section 6050J(e) (relating to re-
turns relating to foreclosures and aban-
donments of security, generally the bor-
rower copy of Form 1099-A,“Acquisition
or Abandonment of Secured Property”);
(xvi) Section 6050K(b) (relating to re-
turns relating to exchanges of certain part-
nership interests, generally a copy of Form
8308,“Report of a Sale or Exchange of
Certain Partnership Interests”);
(xvii) Section 6050L(c) (relating to re-
turns relating to certain dispositions of do-
nated property, generally a copy of Form
8282,“Donee Information Return”);
(xviii) Section 6050N(b) (relating to re-
turns regarding payments of royalties, gen-
erally the recipient copy of Form 1099-
MISC);
(xix) Section 6050P(d) (relating to re-
turns relating to the cancellation of indebt-
edness by certain financial entities, gen-
erally the recipient copy of Form 1099-C,
“Cancellation of Debt”);
(xx) Section 6050Q(b) (relating to cer-
tain long-term care benefits, generally the
November 22, 20107052010–47 I.R.B.

policyholder and insured copies of Form
1099-LTC,“Long-Term Care and Acceler-
ated Death Benefits”);
(xxi) Section 6050R(c) (relating to re-
turns relating to certain purchases of fish,
generally the recipient copy of Form 1099-
MISC);
(xxii) Section 6051 (relating to receipts
for employees, generally the employee
copy of Form W–2);
(xxiii) Section 6052(b) (relating to re-
turns regarding payment of wages in the
form of group-term life insurance, gener-
ally the employee copy of Form W–2);
(xxiv) Section 6053(b) or (c) (relating
to reports of tips, generally the employee
copy of Form W–2);
(xxv) Section 6048(b)(1)(B) (relating to
foreign trust reporting requirements, gen-
erally copies of the owner and beneficiary
statements of Form 3520-A,“Annual In-
formation Return of Foreign Trust With a
U.S. Owner”);
(xxvi) Section 408(i) (relating to reports
with respect to individual retirement plans
on the recipient copies of Form 1099-R,
“Distributions From Pensions, Annuities,
Retirement or Profit-Sharing Plans, IRAs,
Insurance Contracts, etc.”);
(xxvii) Section 6047(d) (relating to re-
ports by plan administrators on the recipi-
ent copies of Form 1099-R);
(xxviii) Section 6050S(d) (relating to
returns relating to qualified tuition and
related expenses, generally the borrower
copy of Form 1098-E,“Student Loan In-
terest Statement,”or the student copy of
Form 1098-T,“Tuition Statement”);
(xxix) Section 264(f)(5)(A)(iv) (relat-
ing to reporting with respect to certain life
insurance and annuity contracts);
(xxx) Section 6050T (relating to returns
relating to credit for health insurance costs
of eligible individuals, generally the recip-
ient copy of Form 1099-H,“Health Cov-
erage Tax Credit (HCTC) Advance Pay-
ments”);
(xxxi) Section 6050U (relating to
charges or payments for qualified
long-term care insurance contracts under
combined arrangements, generally the re-
cipient copy of Form 1099-R); or
(xxxii) Section 6050W (relating to in-
formation returns with respect to payments
made in settlement of payment card and
third party network transactions).
*****
PART 602—OMB CONTROL
NUMBERS UNDER THE PAPERWORK
REDUCTION ACT
Par. 20. The authority citation for part
602 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 21. In §602.101, paragraph (b) is
amended by adding the following entries
to the table in numerical order to read in
part as follows:
§602.101 OMB Control numbers.
*****
(b) * * *
CFR part or section where
identified and described
Current OMB
control No.
*****
1.6045–1(c)(3)(xi)(C)
...........................................................
1545–2186
1.6045A–1
...........................................................
1545–2186
*****
*****
Steven T. M
iller,
Deputy Com
missioner for
Services a
nd Enforcement.
Approved O
ctober 1, 2010.
Michael Mu
ndaca,
Assistant
Secretary of
the Treas
ury(TaxPolicy).
(Filed by the Office of the Federal Register on October 12,
2010, 4:15 p.m., and published in the issue of the Federal
Register
for October 18, 2010, 75 F.R. 64072)
Section 61
09.—Identifying
Numbers
26 CFR 301.0: User fees; in general.
T.D. 9503
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 300
User Fees Relating to
Enrollment and Preparer
Tax Identification Numbers
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains
amendments to the regulations relating to
the imposi
tion of certain user fees on cer-
tain tax pr
actitioners. The final regulations
establish
a new user fee for individuals
who apply f
or or renew a preparer tax
identific
ation number (PTIN). The final
regulati
ons affect individuals who apply
fororren
ew a PTIN.
DATES:Ef
fective Date:These regulations
are effec
tive on September 30, 2010.
Applicab
ility Date:For dates of ap-
plicabil
ity see §§300.1(d), 300.2(d),
300.3(d)
, 300.4(d), 300.5(d), 300.6(d),
300.7(d)
, 300.8(d), and 300.9(d).
FOR FURT
HER INFORMATION
CONTACT
: Concerning the final reg-
ulation
s, Emily M. Lesniak at (202)
622–457
0; concerning cost methodology
EvaJ.Wi
lliams at (202) 435–5514 (not
toll-f
ree numbers).
2010–47 I.R.B.706November 22, 2010

SUPPLEMENTARY INFORMATION:
Background
This document contains final regula-
tions relating to the imposition of a user
fee to apply for or renew a PTIN and the
reorganization of the effective date provi-
sions under §§300.0 through 300.8. Sec-
tion 300.9 establishes a $50 user fee to
apply for or renew a PTIN. The Indepen-
dent Offices Appropriations Act of 1952
(IOAA), which is codified at 31 U.S.C.
9701, authorizes agencies to prescribe reg-
ulations establishing user fees for services
provided by the agency. Regulations pre-
scribing user fees are subject to the poli-
cies of the President, which are currently
set forth in the Office of Management and
Budget Circular A–25 (the OMB Circu-
lar), 58 FR 38142 (July 15, 1993). The
OMB Circular requires agencies seeking
to impose user fees for providing special
benefits to identifiable recipients to calcu-
late the full cost of providing those bene-
fits.
On September 30, 2010, the Treasury
Department and the IRS published in the
Federal Registerfinal regulations under
section 6109 (T.D. 9501, 2010–46 I.R.B.
651) that require tax return preparers who
prepare all or substantially all of a tax re-
turn or claim for refund to use a PTIN as
their identifying number. These regula-
tions also provide that to be eligible to re-
ceive a PTIN, a tax return preparer must
be an attorney, certified public accountant,
enrolled agent, or registered tax return pre-
parer.
On July 23, 2010, the Treasury Depart-
ment and the IRS published in theFed-
eral Register(75 FR 43110) a notice of
proposed rulemaking (REG–139343–08,
2010–33 I.R.B. 256) proposing amend-
ments to part 300 of title 26 of the Code
of Federal Regulations. New §300.9 of
these regulations proposed to establish a
$50 user fee to apply for or renew a PTIN.
These regulations do not include any fees
charged by the vendor, which vendor fee is
now calculated to be $14.25. Additionally,
these regulations proposed to reorganize
the effective date provisions of §§300.0
through 300.8. A public hearing regard-
ing the proposed regulations was held on
August 24, 2010. The IRS also received
written public comments in response to
the proposed regulations.
After careful consideration of all writ-
ten public comments and statements made
during the public hearing, the Treasury
Department and the IRS have decided to
adopt without modification the proposed
regulations that establish a $50 user fee
to apply for or renew a PTIN, recover-
ing the full cost to the IRS for adminis-
tering the PTIN application and renewal
program. The Treasury Department and
the IRS also have decided to adopt with-
out modification the proposed regulations
reorganizing the effective date provisions
under §§300.0 through 300.8.
Summary of Comments
Over 10,000 written comments were
received in response to the notice of
proposed rulemaking. The comments
were considered and are available for
public inspection upon request. The
comments related to the $50 user fee to
apply for or renew a PTIN, the related
PTIN regulations under section 6109,
or the proposed amendments to regula-
tions governing practice before the IRS
under 31 CFR part 10 (Circular 230).
No comments were received regarding
the reorganization of the effective date
provisions. Many of the comments are
summarized in this preamble.
To the extent comments received with
respect to the user fee regulation raise is-
sues pertaining to the PTIN regulations un-
der section 6109 or Circular 230, the Trea-
sury Department and the IRS are consider-
ing and addressing those comments in con-
nection with the relevant regulations. Ac-
cordingly, the summary of comments be-
low addresses only those comments that
seek modification or clarification of the
user fee as set forth in the proposed reg-
ulations.
1.Tax Return Preparers Who Already Are
Subject to Fees
The Treasury Department and the IRS
received numerous comments stating that
taxreturnpreparerswhoareattorneys,
certified public accountants, or enrolled
agents already are required to maintain
licenses and pay numerous fees associ-
ated with obtaining and maintaining their
licenses. Some commentators also stated
that regulation of currently unenrolled tax
return preparers or imposing a user fee to
apply for or renew a PTIN for currently
unenrolled tax return preparers was ac-
ceptable, but individuals who are regulated
currently should not be required to obtain
aPTINorpayauserfee. Othersimi-
lar comments requested that licensed tax
consultants in Oregon be grandfathered
into the new regulatory scheme and that
individuals who currently have a PTIN be
exempt from the requirements to apply for
and renew a PTIN.
Having a PTIN is a special benefit that
allows specified tax return preparers to
prepare all or substantially all of a tax re-
turn or claim for refund for compensa-
tion. The OMB Circular encourages user
fees for government-provided services that
confer special benefits on identifiable re-
cipients over and above those benefits re-
ceived by the general public. A user fee
mustbesetatanamountthatallowsthe
agency to recover the full cost of provid-
ing the special services unless the Office
of Management and Budget grants an ex-
ception.
The same special benefit is conferred
on all persons who obtain a PTIN, and the
cost to the government is the same for pro-
viding PTINs to attorneys, certified pub-
lic accountants, and enrolled agents as it
is for providing PTINs to formerly un-
enrolled tax return preparers. Under the
OMB Circular, absent special approval,
the IRS must recover the full costs for pro-
viding the special benefits associated with
a PTIN. The IRS cannot charge a user fee
solely to tax return preparers who are not
otherwise licensed as an attorney, certified
public accountant, orenrolled agent. Al-
though many comments sought exceptions
to the user fee, one commentator encour-
aged the Treasury Department and the IRS
to maintain a uniform user fee for obtain-
ing a PTIN. Consequently, the Treasury
Department and the IRS are adopting the
proposed regulations and requiring all tax
return preparers to pay a user fee to apply
fororrenewaPTIN.
2.Calculation of the User Fee
The Treasury Department and the IRS
received a comment that the proposed reg-
ulations do not comply with the provisions
of IOAA because a PTIN is not a service or
thing of value to a tax return preparer. The
commentator also stated that the proposed
regulations do not comply with the general
November 22, 20107072010–47 I.R.B.

policies for implementing user fees, as pro-
vided in the OMB Circular, because pro-
viding a PTIN to a tax return preparer ben-
efits the general public by tracking incom-
petent and unscrupulous tax return prepar-
ers and that the IRS already meets a goal
of the OMB Circular because it is already
self-sustaining, asthe IRS collects more
taxes than it costs to run the agency.
The IOAA authorizes agencies to pre-
scribe regulations that establish charges
for services provided by the agency. The
charges must be fair and must be based
on the costs to the government, the value
of the service to the recipient, the public
policy or interest served, and other rele-
vant facts. The IOAA provides that reg-
ulations implementing user fees are sub-
ject to policies prescribed by the President;
these policies are currently set forth in the
OMB Circular. The OMB Circular encour-
ages user fees for government-provided
services that confer benefits on identifiable
recipients over and above those benefits
received by the general public. Under the
OMB Circular, an agency that seeks to im-
pose a user fee for government-provided
services must calculate the full cost of pro-
viding those services.
The user fee was determined to be con-
sistent with the IOAA and the OMB Cir-
cular. A PTIN both confers a special bene-
fit on an identifiable recipient and is a ser-
vice or thing of value to a tax return pre-
parer. A PTIN confers a special benefit be-
cause without a PTIN, a tax return preparer
could not receive compensation for prepar-
ing all or substantially all of a federal tax
return or claim forrefund. Because only
attorneys, certified public accountants, en-
rolled agents, and registered tax return pre-
parers are eligible to obtain a PTIN, only a
subset of the generalpublic is entitled to
a PTIN and the special benefit of receiv-
ing compensation for the preparation of a
return that it confers. This analysis is con-
sistent with the current practice of charg-
ingauserfeeonindividualsseekingtobe-
come enrolled agents. Being an enrolled
agent confers special benefits; and, there-
fore, the IRS currently charges a user fee
on applicants seeking those special bene-
fits.
Further, while it is anticipated that re-
quiring tax return preparers to obtain a
PTIN will benefit tax administration gen-
erally, only the tax return preparer who
receives the PTIN can take advantage of
the special benefit associated with having
a PTIN. The OMB Circular provides that a
government agency should recover the full
cost of providing a special benefit when
the general public receives a benefit as a
necessary consequence of the government
providing a special benefit to an identifi-
able recipient.
The OMB Circular also provides that
one of the objectives of establishing a user
fee is to “ensure that each service, sale, or
use of Government goods or resources pro-
vided by an agency to specific recipients
be self-sustaining.” As described above,
the issuance of a PTIN provides a special
benefit to the specific tax return preparer
who receives the PTIN. The administra-
tion of the PTIN application and renewal
program requires the use of IRS services,
goods, and resources. For the PTIN appli-
cation and renewal program to be self-sus-
taining, the IRS must charge a user fee to
recover the costs of providing the special
benefits associated with PTIN. The fact
that the IRS collects tax revenue for use by
the government as a whole does not affect
the analysis of whether the PTIN applica-
tion and renewal program is self-sustain-
ing. Thus, the Treasury Department and
the IRS are complying with the provisions
of the IOAA and the OMB Circular by im-
plementing a user fee to recover the costs
associated with the issuance of PTINs.
3.Renewing a PTIN
Several commentators objected to re-
newing their PTIN on a yearly basis and
requested longer renewal periods. At this
time the Treasury Department and the IRS
have determined that an annual renewal of
a PTIN is the most effective procedure.
The user fee to renew a PTIN is, however,
part of the larger implementation of rec-
ommendations in Publication 4832, “Re-
turn Preparer Review,” which was pub-
lished on January 4, 2010, to be effec-
tive for the 2011 Federal tax filing season
(January-April 2011). These recommen-
dations include revisions to Circular 230
implementing the registered tax return pre-
parer program and revisions to the regula-
tions under section 6109 requiring all tax
return preparers to obtain and use a PTIN
as their identifying number. As these pro-
grams are implemented, the IRS will con-
tinually monitor their administration and
make appropriate adjustments to increase
effectiveness. Thus, in the future, the Trea-
sury Department and the IRS will review
the requirement to annually renew a PTIN
and will make modifications, as appropri-
ate.
4.The Amount of the User Fee
Many commentators objected to the
amount of the user fee. Some stated that
the user fee should be smaller or that tax
return preparers who prepare a limited
number of returns should pay a smaller
user fee. Other commentators character-
ized the user fee as a tax or a revenue
raiser.
As stated earlier in this preamble, un-
der the OMB Circular, the IRS must re-
cover the full cost of providing a PTIN.
The full cost to the government to adminis-
ter the PTIN application and renewal pro-
gram was calculated to be $50 per appli-
cation or renewal. The user fee does not
provide funds beyond the cost to process
PTIN applications. Thus, the user fee to
apply for or renew a PTIN does not pro-
vide additional revenue to the IRS that can
be allocated to other programs. The PTIN
user fee merely offsets costs the IRS incurs
to provide the specialbenefits associated
with having a PTIN.
The cost of processing PTIN applica-
tions is not affected by the number of tax
returns that a tax return preparer prepares
during a given tax season. For example,
the cost to the IRS to process the PTIN ap-
plications of individuals who prepare over
500 tax returns per year, approximately
100 tax returns per year, or under 10 tax
returns per year is the same. The IRS will
perform the same tax compliance and suit-
ability checks on theseindividuals and will
provide these individuals with the same
PTIN support services. The IRS must also
maintain the same data in its PTIN data-
base regarding these individuals and de-
velop the same reconsideration process for
these individuals in the event their PTIN
applications are denied. Because the cost
to the IRS is not dependent on the quantity
of returns that an individual tax return pre-
parer prepares, the final regulations adopt
the $50 user fee for all tax return preparers
to apply for or renew a PTIN.
5.Burden Imposed by the User Fee
Some commentators stated that the $50
user fee will be a burden on their busi-
2010–47 I.R.B.708November 22, 2010

nesses or that the cost to apply for or renew
aPTINwillbepassedontoclients. The
IRS recognizes that some individuals who
prepare a small number of tax returns may
stop preparing tax returns or that the PTIN
user fee may be passed on to clients. The
IRS, however, believes that the implemen-
tation of the registered tax return preparer
program and the requirement to use a PTIN
as provided in the section 6109 regulations
will benefit taxpayers and tax administra-
tion as a whole. The registered tax return
preparer program will ensure that tax re-
turn preparers meet and maintain a min-
imum level of competency. The require-
ment to use a PTIN will provide the IRS an
effective way to monitor tax return prepar-
ers and enforce the regulation of tax return
preparers. The Treasury Department and
the IRS believe that a user fee to apply for
or renew a PTIN is necessary to recover
the cost that the IRS will incur to imple-
ment and administer the PTIN application
and renewal program.
Other commentators suggested that the
user fee to apply for or renew a PTIN
would cause some tax return preparers
to revert to using their social security
number when preparing tax returns rather
than a PTIN, which would contravene
the identity protection currently provided
by PTINs. The regulations under section
6109, however, require tax return prepar-
ers to use a PTIN as their sole identifying
number when preparing tax returns or
claims for refund for compensation. Thus,
taxreturnpreparersarenotallowedtouse
their social security numbers as an identi-
fying number when preparing tax returns
or claims for refund.
6.Use of a Third Party Vendor
Several commentators objected to pro-
viding identifying information to the third
party vendor, and numerous commentators
objected to paying a separate fee to the
vendor.
The third party vendor is statutorily
and contractually obligated to protect all
personally identifiable information. The
vendor is subject to the confidentiality and
disclosure provisions of section 6103. The
vendor also must comply with the provi-
sions of the Federal Information Security
Management Act; the E-Government Act
of 2002; IRS Acquisitions Procedures;
the Federal Acquisitions Regulations;
the Taxpayer Browsing Protection Act
of 1997; and the Privacy Act of 1974,
which is codified at 5 U.S.C. 552a, regard-
ing all non-tax information. The vendor
must comply with numerous policies of
the Office of Management and Budget,
including OMB Circular No. A–130, Se-
curity and Federal Automated Information
Resources Appendix III; OMB Circular
policy M–06–16, Protection of Sensitive
Agency Information; OMB Circular Pol-
icy M–06–15, Safeguarding Personally
Identifiable Information; and OMB Circu-
lar Policy M–06–19, Reporting Incidents
Involving Personally Identifiable Infor-
mation.
The vendor faces significant conse-
quences for the unauthorized inspection
or disclosure of confidential tax informa-
tion. These consequences include, among
others, that an officer or employee of the
vendor may be subject to civil damages;
civil or criminal sanctions, such as sanc-
tions imposed by 18 U.S.C. 641 and 3571;
or penalties as prescribed in sections 7213,
7213A, and 7431.
The vendor’s fee, currently set at
$14.25, covers the costs incurred by the
vendor to administer the application and
renewal process. These costs are separate
from the costs to the IRS for adminis-
tering the PTIN application and renewal
program, which are recovered in the $50
user fee. The respective fees pay for dif-
ferent aspects of administering the PTIN
program, each of which is essential to
providing PTINs to tax return preparers.
Additionally, under the vendor’s contract
with the IRS, the vendor’s fee is reviewed
and approved by the IRS.
After consideration of all of the public
comments and statements made during the
public hearing, the Treasury Department
and the IRS have adopted the proposed
regulations in full.
Effective/Applicability Date
The Administrative Procedure Act pro-
vides that substantive rules generally will
not be effective until thirty days after the
final regulations are published in theFed-
eral Register(5 U.S.C. 553(d)). Final
regulations may be effective prior to thirty
days after publication if the publishing
agency finds that there is good cause for
an earlier effective date.
This regulation is part of the IRS’ effort
to implement the recommendations in the
“Return Preparer Review.” The review
concluded that obtaining more complete
and accurate information on individual
tax return preparers and improved IRS
oversight of tax returnpreparers and their
preparation of tax returns and claims for
refund is necessary for effective tax ad-
ministration. The PTIN is the mechanism
that allows the IRS to obtain more com-
plete and accurate information on tax
return preparers. Thus, the issuance of a
PTIN is a threshold requirement to im-
plementing the recommendations in the
report.
This regulation must be effective sig-
nificantly in advance of the beginning of
the 2011 filing season to enable the IRS
to charge a user fee to recover the cost
of administering the program under which
all individuals who prepare all or substan-
tially all of a tax return or claim for re-
fund of tax are required to obtain a PTIN
for use during the 2011 Federal tax filing
season. For all tax return preparers to re-
ceive a PTIN prior to the 2011 filing sea-
son, the IRS must begin registering pre-
parers as quickly as possible. Thus, the
Treasury Department and the IRS find that
there is good cause for these regulations to
be effective upon the publication of a Trea-
sury decision adopting these rules as final
regulations in theFederal Register.
Special Analyses
It has been determined that these final
regulations are a significant regulatory ac-
tion as defined in Executive Order 12866.
It has been determined that a final reg-
ulatory flexibility analysis under 5 U.S.C.
604 is required for this final rule. The anal-
ysis is set forth under the heading, “Final
Regulatory Flexibility Analysis.”
Pursuant to section 7805(f) of the Code,
the notice of proposed rulemaking preced-
ing these final regulations was submitted
to the Chief Counsel for Advocacy of the
Small Business Administration for com-
ment on its impact on small business. The
Chief Counsel for Advocacy did not sub-
mit comments on the notice of proposed
rulemaking.
Final Regulatory Flexibility Analysis
When an agency either promulgates a
final rule that follows a required notice
November 22, 20107092010–47 I.R.B.

of proposed rulemaking or promulgates a
final interpretative rule involving the inter-
nal revenue laws as described in 5 U.S.C.
603(a), the Regulatory Flexibility Act
(5 U.S.C. chapter 6) requires the agency
to “prepare a final regulatory flexibility
analysis.” A final regulatory flexibility
analysis must, pursuant to 5 U.S.C. 604(a),
contain the five elements listed in this
final regulatory flexibility analysis. For
purposes of this final regulatory flexibility
analysis, a small entity is defined as a small
business, small nonprofit organization,
or small governmental jurisdiction.
5 U.S.C. 601(3)-(6). The Treasury
Department and the IRS conclude that
the final regulations (together with other
contemplated guidance provided for in
these regulations) will impact a substantial
number of small entities and the economic
impact will be significant.
A statement of the need for, and the
objectives of, the final rule.
The final regulations are necessary to
recover the full cost to the IRS associ-
ated with administering the PTIN applica-
tion and renewal program and providing
the special benefits that are associated with
obtaining a PTIN.
The Treasury Department and the IRS
are implementing regulatory changes that
increase the oversight of the tax return pre-
parer industry. These regulatory changes
are based upon findings and recommenda-
tions made by the IRS in the “Return Pre-
parer Review.” Based upon findings in the
review, all individuals who prepare all or
substantially all of a tax return or claim for
refund will be required to use a PTIN as
their identifying number. Except as pro-
vided in any transitional period, only attor-
neys, certified public accountants, enrolled
agents, or registered tax return preparers
may apply for a PTIN. Thus, only attor-
neys, certified public accountants, enrolled
agents, and registered tax return preparers
will be eligible to prepare all or substan-
tially all of a tax return or claim for refund.
By limiting the individuals who may pre-
pare all or substantially all of a tax return or
claim for refund to individuals who have a
PTIN, the IRS is providing a special bene-
fit to the individuals who obtain a PTIN.
The objective of the final regulations
is to recover the costs to the government
that are associated withproviding this spe-
cial benefit. The costs to the government
include the development and maintenance
of the IRS information technology system
that interfaces with the vendor; the devel-
opment and maintenance of internal ap-
plications; IRS customer service support
activities, which include development and
maintenance of an IRS website and call
center staffing; and personnel, administra-
tive, and management support needed to
evaluate and address tax compliance is-
sues, investigate and address conduct and
suitability issues, and otherwise support
and enforce the programs that require in-
dividuals to apply for or renew a PTIN.
Summaries of the significant issues raised
in the public comments responding to the
initial regulatory flexibility analysis and
of the agency’s assessment of the issues,
and a statement of any changes made to
theruleasaresultofthecomments.
A summary of the comments is set forth
elsewhere in this preamble, along with the
Treasury Department’s and the IRS’ as-
sessment of the issues raised in the com-
ments.
A description and an estimate of the
number of small entities to which the rule
will apply or an explanation of why an
estimate is not available.
The final regulations affect all individ-
uals who want to become a registered tax
return preparer under the new oversight
rules in Circular 230. Only individuals,
not businesses, can practice before the IRS
or become a registered tax return preparer.
Thus, the economic impact of these regu-
lations on any small entity generally will
be a result of applicants and registered tax
return preparers owning a small business
or a small entity employing applicants or
registered tax return preparers.
The final regulations further affect all
individual tax return preparers who are re-
quired to apply for or renew a PTIN. Only
individuals, not businesses, can apply for
or renew a PTIN. Thus, the economic im-
pact of these regulations on any small en-
tity generally will be a result of an individ-
ual tax return preparer who owns a small
business and who is required to apply for
or renew a PTIN, or a small business oth-
erwise employing an individual tax return
preparer who is required to apply for or re-
new a PTIN, to prepare all or substantially
allofataxreturnorclaimforrefund.
The appropriate NAICS codes for the
registered tax return preparer program and
PTINs are those that relate to tax prepa-
ration services (NAICS code 541213),
other accounting services (NAICS code
541219), offices of lawyers (NAICS code
541110), and offices of certified public ac-
countants (NAICS code 541211). Entities
identified as tax preparation services and
offices of lawyers are considered small
under the Small Business Administration
size standards (13 CFR 121.201) if their
annual revenue is less than $7 million.
Entities identified as other accounting
services and offices of certified public
accountants are considered small under
the Small Business Administration size
standards if their annual revenue is less
than $8.5 million. The IRS estimates that
approximately 70 to 80 percent of the
individuals subject to these proposed reg-
ulations are tax returnpreparers operating
as or employed by small entities.
A description of the projected reporting,
recordkeeping, and other compliance
requirements of the rule, including an
estimate of the classes of small entities
subject to the requirements and the
type of professional skills necessary for
preparation of a report or record.
No reporting or recordkeeping require-
ments are projected tobe associated with
the final regulation.
A description of the steps the agency has
taken to minimize the significant economic
impact on small entities consistent with the
stated objectives of applicable statutes,
including a statement of the factual,
policy, and legal reasons for selecting
any alternative adopted in the final rule
and why other significant alternatives
affecting the impact on small entities that
the agency considered were rejected.
The Treasury Department and the IRS
are not aware of any steps that could be
taken to minimize the economic impact on
small entities that would also be consistent
with the objectives of these final regula-
tions. These regulations do not impose any
more requirements on small entities than
are necessary to effectively administer the
internal revenue laws. Further, the regu-
lations do not subject small entities to any
2010–47 I.R.B.710November 22, 2010

requirements that are not also applicable to
larger entities covered by the regulations.
The Treasury Department and the IRS
have determined that there are no viable
alternatives to the final regulations.
The IOAA authorizes the charging of
user fees for agency services, subject to
policies designated by the President. The
OMB Circular implements presidential
policies regarding user fees and encour-
ages user fees when a government agency
provides a special benefit to a member of
the public. As Congress has not appro-
priated funds to the registered tax return
preparer program or the PTIN application
and renewal program, there are no viable
alternatives to the imposition of user fees.
Drafting Information
The principal author of these final reg-
ulations is Emily M. Lesniak, Office of the
Associate Chief Counsel (Procedure and
Administration).
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 300 is
amended as follows:
Paragraph 1. The authority citation for
part 300 continues to read in part as fol-
lows:
Authority: 31 U.S.C. 9701.
Par. 2. Section 300.0 is amended by
1. Adding paragraph (b)(9).
2. Removing paragraph (c).
The addition reads as follows:
§300.0 User fees; in general.
*****
(b) * * *
(9) Applying for a preparer tax identifi-
cation number.
Par. 3. Section 300.1 is amended by
adding paragraph (d) to read as follows:
§300.1 Installment agreement fee.
*****
(d)Effective/applicability date.This
section is applicable beginning March 16,
1995, except that the user fee for enter-
ing into installment agreements on or after
January 1, 2007, is applicable January 1,
2007.
Par. 4. Section 300.2 is amended by
adding paragraph (d) to read as follows:
§300.2 Restructuring or reinstatement of
installment agreement fee.
*****
(d)Effective/applicability date.This
section is applicable beginning March 16,
1995, except that the user fee for restruc-
turing or reinstatement of an installment
agreement on or after January 1, 2007, is
applicable January 1, 2007.
Par. 5. Section 300.3 is amended by
adding paragraph (d) to read as follows:
§300.3 Offer to compromise fee.
*****
(d)Effective/applicability date.
This section is applicable beginning
November 1, 2003.
Par. 6. Section 300.4 is amended by
adding paragraph (d) to read as follows:
§300.4 Special enrollment examination
fee.
*****
(d)Effective/applicability date.
This section is applicable beginning
November 6, 2006.
Par. 7. Section 300.5 is amended by
adding paragraph (d) to read as follows:
§300.5 Enrollment of enrolled agent fee.
*****
(d)Effective/applicability date.
This section is applicable beginning
November 6, 2006.
Par. 8. Section 300.6 is amended by
adding paragraph (d) to read as follows:
§300.6 Renewal of enrollment of enrolled
agent fee.
*****
(d)Effective/applicability date.
This section is applicable beginning
November 6, 2006.
Par. 9. Section 300.7 is amended by
adding paragraph (d) to read as follows:
§300.7 Enrollment of enrolled actuary fee.
*****
(d)Effective/applicability date.This
section is applicable beginning January 22,
2008.
Par. 10. Section 300.8 is amended by
adding paragraph (d) to read as follows:
§300.8 Renewal of enrollment of enrolled
actuary fee.
*****
(d)Effective/applicability date.This
section is applicable beginning January 22,
2008.
Par. 11. Section 300.9 is added to read
as follows:
§300.9 Fee for obtaining a preparer tax
identification number.
(a)Applicability. This section applies
to the application for and renewal of a pre-
parer tax identification number pursuant to
26 CFR 1.6109–2(d).
(b)Fee. The fee to apply for or re-
new a preparer tax identification number is
$50 per year, which is the cost to the gov-
ernment for processing the application for
a preparer tax identification number and
does not include any fees charged by the
vendor.
(c)Person liable for the fee. The indi-
vidual liable for the application or renewal
fee is the individual applying for and re-
newing a preparer tax identification num-
ber from the IRS.
(d)Effective/applicability date.
This section is applicable beginning
September 30, 2010.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved August 24, 2010.
Michael Mundaca,
Assistant Secretary of
theTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on September 28,
2010, 11:15 a.m., and published in the issue of the Federal
Register for September 30, 2010, 75 F.R. 60316)
November 22, 20107112010–47 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2010–76
This notice provides guidance as to the
corporate bond weighted average interest
rate and the permissible range of interest
rates specified under § 412(b)(5)(B)(ii)(II)
of the Internal Revenue Code as in ef-
fect for plan years beginning before 2008.
It also provides guidance on the corpo-
rate bond monthly yield curve (and the
corresponding spot segment rates), the
24-month average segment rates, and
the funding transitional segment rates
under § 430(h)(2). In addition, this no-
tice provides guidance as to the interest
rate on 30-year Treasury securities un-
der § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008, the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I), and the min-
imum present value segment rates under
§ 417(e)(3)(D) as in effect for plan years
beginning after 2007.
CORPORATE BOND WEIGHTED
AVERAGE INTEREST RATE
Sections412(b)(5)(B)(ii)and
412(l)(7)(C)(i), as amended by the Pen-
sion Funding Equity Act of 2004 and by
the Pension Protection Act of 2006 (PPA),
provide that the interest rates used to cal-
culate current liability and to determine
the required contribution under § 412(l)
for plan years beginning in 2004 through
2007 must be within a permissible range
based on the weighted average of the rates
of interest on amounts invested conser-
vatively in long term investment grade
corporate bonds during the 4-year period
ending on the last day before the beginning
of the plan year.
Notice 2004–34, 2004–1 C.B. 848, pro-
vides guidelines for determining the cor-
porate bond weighted average interest rate
and the resulting permissible range of in-
terest rates used to calculate current liabil-
ity. That notice establishes that the corpo-
rate bond weighted average is based on the
monthly composite corporate bond rate de-
rived from designated corporate bond in-
dices. The methodology for determining
the monthly composite corporate bond rate
as set forth in Notice 2004–34 continues to
apply in determining that rate. See Notice
2006–75, 2006–2 C.B. 366.
The composite corporate bond rate for
October 2010 is 5.20 percent. Pursuant
to Notice 2004–34, the Service has de-
termined this rate as the average of the
monthly yields for the included corporate
bond indices for that month.
The following corporate bond weighted
average interest rate was determined for
plan years beginning in the month shown
below.
For Plan Years
Beginning inPermissible Range
MonthYear
Corporate
Bond Weighted
Average90%to100%
November20106.17
5.55
6.17
YIELD CURVE AND SEGMENT
RATES
Generally for plan years beginning
after 2007 (except for delayed effective
dates for certain plans under sections 104,
105, and 106 of PPA), § 430 of the Code
specifies the minimum funding require-
ments that apply to single employer plans
pursuant to § 412. Section 430(h)(2) spec-
ifies 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 us-
ing three 24-month average interest rates
(“segment rates”), each of which applies
to cash flows during specified periods.
However, an election may be made under
§ 430(h)(2)(D)(ii) to use the monthly yield
curve in place of the segment rates. For
plan years beginning in 2008 and 2009, a
transitional rule under § 430(h)(2)(G) pro-
vides that the segment rates are blended
with the corporate bond weighted average
as specified above. An election may be
made under § 430(h)(2)(G)(iv) to use the
segment rates without applying the transi-
tional rule.
Notice 2007–81, 2007–2 C.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, the
24-month average corporate bond seg-
ment rates, and the funding transitional
segment rates used to compute the tar-
get normal cost and the funding target.
Pursuant to Notice 2007–81, the monthly
corporate bond yield curve derived from
October 2010 data is in Table I at the end
of this notice. The spot first, second, and
third segment rates for the month of Oc-
tober 2010 are, respectively, 1.56, 4.73,
and 6.22. The three 24-month average
corporate bond segment rates applicable
for November 2010 under the election of
§ 430(h)(2)(G)(iv) are as follows:
First
Segment
Second
Segment
Third
Segment
3.376.046.49
2010–47 I.R.B.712November 22, 2010

The transitional segment rates under
§ 430(h)(2)(G) applicable for November
2010, taking into account the corporate
bond weighted average of 6.17 stated
above, are as follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
20094.306.086.38
The transitional rule of § 430(h)(2)(G)
does not apply to plan years starting in
2010. Therefore, for a plan year starting in
2010 with a lookback month to November
2010, the funding segment rates are the
three 24-month average corporate bond
segment rates applicable for November
2010, listed above without blending for
the transitional period.
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 417(e)(3)(A)(ii)(II) (prior to
amendment by PPA) defines the appli-
cable interest rate, which must be used
for purposes of determining the minimum
present value of a participant’s benefit
under § 417(e)(1) and (2), as the annual
rate of interest on 30-year Treasury se-
curities for the month before the date
of distribution or such other time as the
Secretary may by regulations prescribe.
Section 1.417(e)–1(d)(3) of the Income
Tax Regulations provides that the applica-
bleinterestrateforamonthistheannual
rate of interest on 30-year Treasury secu-
rities as specified by the Commissioner
for that month in revenue rulings, notices
or other guidance published in the Internal
Revenue Bulletin.
The rate of interest on 30-year Treasury
securities for October 2010 is 3.87 per-
cent. The Service has determined this rate
as the average of the daily determinations
of yield on the 30-year Treasury bond ma-
turing in August 2040.
Generally for plan years beginning
after 2007, § 431 specifies the mini-
mum funding requirements that apply to
multiemployer plans pursuant to § 412.
Section 431(c)(6)(B) specifies a minimum
amount for the full-funding limitation
described in section 431(c)(6)(A), based
on the plan’s current liability. Section
431(c)(6)(E)(ii)(I) provides that the inter-
est 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 on 30-year Treasury securities dur-
ing 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 following rates
were determined for plan years beginning
in the month shown below.
For Plan Yea
rs
Beginning i
n
Permissibl
e Range
MonthYear
30-Year
Treasury
Weighted
Average
90%to
105%
November20104.263.834.47
MINIMUM PRE
SENT VALUE
SEGMENT RA
TES
Generally
for plan years beginning af-
ter Decemb
er 31, 2007, the applicable in-
terest rat
es under § 417(e)(3)(D) are seg-
ment rate
s computed without regard to a
24-month av
erage. For plan years begin-
ning in 200
8 through 2011, the applica-
ble intere
st rates are the monthly spot seg-
ment rates
blended with the applicable rate
under § 417
(e)(3)(A)(ii)(II) as in effect
for plan ye
ars beginning in 2007. Notice
2007–81 p
rovides guidelines for determin-
ing the mini
mum present value segment
rates. Pur
suant to that notice, the min-
imum prese
nt value transitional segment
rates dete
rmined for October 2010, tak-
ingintoac
count the October 2010 30-year
Treasury r
ate of 3.87 stated above, are as
follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
2009
2.95
4.214.81
20102.484.39
5.28
20112.02
4.565.75
DRAFTING INFORMATION
The principal author of this notice is
Tony Montanaro of the Employee Plans,
Tax Exempt and Government Entities Di-
vision. Mr. Montanaro may be e-mailed at
RetirementPlanQuestions@irs.gov.
November 22, 20107132010–47 I.R.B.

Table I
Monthly Yield Curve for October 2010
Derived from October 2010 Data
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.5
0.66
20.55.7140.5
6.28
60.5
6.48
80.56.57
1.00.7821.05.7341.0
6.29
61.06.4881.06.58
1.5
0.93
21.55.7641.5
6.29
61.5
6.48
81.56.58
2.01.1222.0
5.78
42.06.3062.0
6.49
82.0
6.58
2.51.3522.55.8142.5
6.31
62.5
6.49
82.56.58
3.01.6123.0
5.83
43.06.3163.0
6.49
83.0
6.58
3.5
1.88
23.55.8543.5
6.32
63.5
6.49
83.5
6.59
4.02.1524.05.8744.06.3364.06.5084.06.59
4.5
2.41
24.5
5.89
44.5
6.33
64.56.5084.5
6.59
5.0
2.66
25.0
5.91
45.0
6.34
65.06.5085.0
6.59
5.5
2.90
25.5
5.93
45.5
6.34
65.56.5185.5
6.59
6.03.1226.05.9546.0
6.35
66.0
6.51
86.06.59
6.5
3.33
26.5
5.97
46.5
6.36
66.56.5186.5
6.60
7.03.5227.05.9847.06.3667.06.5187.06.60
7.5
3.70
27.5
6.00
47.5
6.37
67.56.5287.5
6.60
8.03.8728.06.0248.06.3768.0
6.52
88.06.60
8.5
4.02
28.5
6.03
48.5
6.38
68.56.5288.5
6.60
9.0
4.17
29.0
6.04
49.0
6.38
69.0
6.52
89.0
6.60
9.54.3029.56.0649.5
6.39
69.5
6.53
89.56.60
10.04.4330.06.0750.0
6.39
70.06.53
90.0
6.61
10.54.5530.5
6.09
50.5
6.40
70.56.53
90.56.61
11.04.6631.06.10
51.0
6.4071.0
6.53
91.0
6.61
11.5
4.76
31.5
6.11
51.5
6.41
71.56.54
91.56.61
12.0
4.85
32.06.12
52.0
6.4172.0
6.54
92.0
6.61
12.5
4.93
32.5
6.13
52.5
6.42
72.56.54
92.56.61
13.05.0133.06.1453.06.4273.06.54
93.0
6.61
13.5
5.09
33.5
6.16
53.5
6.42
73.56.55
93.56.62
14.0
5.15
34.06.17
54.0
6.4374.0
6.55
94.0
6.62
14.55.2234.5
6.18
54.5
6.43
74.56.55
94.56.62
15.05.2735.0
6.19
55.0
6.44
75.06.55
95.06.62
15.55.3335.5
6.20
55.5
6.44
75.56.55
95.56.62
16.05.3836.06.2156.06.4476.06.56
96.0
6.62
16.55.4236.5
6.21
56.56.45 76.56.56
96.56.62
17.0
5.47
37.06.22
57.06.45
77.0
6.56
97.0
6.63
17.55.5137.5
6.23
57.5
6.46
77.56.56
97.56.63
18.0
5.55
38.06.24
58.0
6.4678.0
6.57
98.0
6.63
18.55.5838.56.2558.5
6.46
78.56.57
98.56.63
19.0
5.62
39.0
6.2659.06.47
79.0
6.57
99.0
6.63
19.5
5.65
39.56.2659.56.4779.5
6.57
99.56.63
20.0
5.68
40.06.2760.06.4780.0
6.57
100.06.63
2010–47 I.R.B.714November 22, 2010

Note.This revenue procedure will be reproduced as the next revision of IRS Publication 1141, General Rules and Specifications for
Substitute Forms W-2 and W-3.
26 CFR 601.602: Tax forms and instructions.
(Also Part I, Sections 6041, 6051, 6071, 6081, 6091; 1.6041–1, 1.6041–2, 31.6051–1, 31.6051–2, 31.6071(a)–1, 31.6081(a)–1, 31.6091–1.)
Rev. Proc. 2010–42
TABLE OF CONTENTS
Part A. General
SECTION 1. PURPOSE............................................................................................ 715
SECTION 2. WHAT’S NEW......................................................................................... 717
SECTION 3. GENERAL RULES FOR PAPER FORMS W-2 AND W-3.................................................... 717
SECTION 4. GENERAL RULES FOR FILING FORMS W-2 (COPY A) ELECTRONICALLY................................ 719
Part B. Specifications for Substitute Forms W-2 and W-3
SECTION 1A. SPECIFICATIONS FOR RED-INKSUBSTITUTE FORM W-2 (COPY A) AND FORM W-3
FILED WITH THE SSA
................................................................................. 719
SECTION 1B. SPECIFICATIONS FOR SUBSTITUTE BLACK-AND-WHITE COPY A AND W-3 FORMS
FILED WITH THE SSA
................................................................................. 721
SECTION 2. REQUIREMENTS FOR SUBSTITUTE FORMS FURNISHED TO EMPLOYEES (COPIES B, C,
AND 2 OF FORM W-2)
................................................................................. 723
SECTION 3. ELECTRONIC DELIVERY OF FORM W-2 AND W-2C RECIPIENT STATEMENTS............................ 725
Part C. Additional Instructions
SECTION 1. ADDITIONAL INSTRUCTIONS FOR FORM PRINTERS................................................... 726
SECTION 2. INSTRUCTIONS FOR EMPLOYERS..................................................................... 726
SECTION 3. OMB REQUIREMENTS FOR BOTH RED-INK AND BLACK-AND-WHITE COPY A AND W-3
SUBSTITUTE FORMS
................................................................................. 726
SECTION 4. REPRODUCIBLE COPIES OF FORMS................................................................... 727
SECTION 5. EFFECT ON OTHER DOCUMENTS..................................................................... 728
Part A. General
Section 1. Purpose
.01The purpose of this revenue procedure is to state the requirements of the Internal Revenue Service (IRS) and the Social Security
Administration (SSA) regarding the preparation and use of substitute forms for Form W-2, Wage and Tax Statement, and Form W-3,
Transmittal of Wage and Tax Statements, for wages paid during the 2010 calendar year.
.02For purposes of this revenue procedure, substitute Form W-2 (Copy A) and substitute Form W-3 are forms that are not printed
by the IRS. Copy A or any other copies of a substitute Form W-2or a substitute Form W-3 must conform to the specifications in
this revenue procedure to be acceptable to the IRS and the SSA. No IRS office is authorized to allow deviations from this revenue
procedure. Preparers should also refer to the separate 2010 Instructions for Forms W-2 and W-3 for details on how to complete these
forms. See Part C, Section 4, for information on obtaining the official IRS forms and instructions. See Part B, Sections 2 and 3, for
requirements for the copies of substitute forms furnished to employees.
.03For purposes of this revenue procedure, the official IRS-printed red dropout ink Forms W-2 (Copy A) and W-3, and their
exact substitutes, are referred to as “red-ink.” The SSA-approved black-and-white Forms W-2 (Copy A) and W-3 are referred to as
“substitute black-and-white Copy A” and “substitute black-and-white W-3” forms.
November 22, 20107152010–47 I.R.B.

Any questions about the red-ink Form W-2 (Copy A) and Form W-3 and the substitute employee statements should be emailed to
S
ubstituteforms@irs.gov. Please enter “Substitute Forms” on thesubject line. Or send your questions to:
Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:T:T:SP, IR 6526
1111 Constitution Ave., NW
Washington DC 20224
Any questions about the black-and-white Copy A and W-3 forms should be emailed toc
opy.a.forms@ssa.govor sent to:
Social Security Administration
Data Operations Center
Attn: Substitute Black-and-White Copy A Forms, Room 348
1150 E. Mountain Drive
Wilkes-Barre PA 18702-7997
Also, see Sections 3.05 and 3.06 of Part A.
Note.You should receive a response from either the IRS or the SSA within 30 days.
.04Some Forms W-2 that include logos, slogans, and advertisements(including advertisements for tax preparation software) may
be confused with questionable Forms W-2. An employee may not recognize the importance of the employee copy for tax reporting
purposes due to the use of logos, slogans, and advertisements. Thus, the IRS has determined that logos, slogans, and advertising on
Forms W-3, Copy A of Forms W-2, or any employee copies reportingwages paid during the 2011 calendar year and thereafter will
not be allowed, with the following exceptions:
•Forms may include the exact name of the employer or agent, primary trade name, trademark, service mark, or symbol of the
employer or agent.
•Forms may include an embossment or watermark on the information return (and copies) that is a representation of the name, a
primary trade name, trademark, service mark, or symbol of the employer or agent.
•Presentation may be in any typeface, font, st
ylized fashion, or print color normally used by the employer or agent, and used in a
non-intrusive manner.
•These items must not materially interfere with the ability of the recipient to recognize,understand, and use the tax information on
the employee copies.
•Corrected information on information returns and employee copies that was shown on Forms W-2 for amounts paid before
January 1, 2011, is an exception.
The IRS e-file logo on the IRS official employee copies may be included, but it is not required, on any of the substitute form copies.
The information return and employee copies must clearly identify the employer’s name associated with its employer identification
number.
Forms W-2 and W-3 are subject to annual review and possible change. The IRS has postponed the prohibition against including
slogans, advertising, and logos on information returns and employee copies reporting wages paid during the 2010 calendar year that
was announced in Rev. Proc. 2008-33 (the previous revision of Publication 1141). The prohibition is now in effect for reporting wages
paid in 2011 and thereafter. Do not include logos, slogans, or advertising on any information returns or employee copies filed in 2011
or thereafter, except as provided above. This revenue procedure may be revised at a futuredate to state other requirements of the IRS
and the SSA regarding the preparation and use of substitutes forForm W-2 and Form W-3 for wages paid during the 2011 calendar
year. If you have comments about the prohibition against includingslogans, advertising, and logoson information returns and em-
ployee copies, send or email your comments to: Internal Revenue Service, Attn: Substitute Forms Program, SE:W:CAR:MP:T:T:SP,
IR 6526, 1111 Constitution Ave., NW, Washington, DC, 20224 orS
ubstituteforms@irs.gov.
.05The Internal Revenue Service/Information Returns Branch (IRS/IRB) maintains acentralized customer service call site to an-
swer questions related to information returns (Forms W-2, W-3, W-2c, W-3c, 1099 series, 1096, etc.). You can reach the call site at
1-866-455-7438 (toll-free) or 304-263-8700 (not a toll-free number) . The Telecommunication Device for the Deaf (TDD) number is
304-579-4827 (not a toll-free number). The hours of operation are Monday through Friday from 8:30 a.m. to 4:30 p.m. Eastern time.
You may also send questions to the call site via the Internet atm
ccirp@irs.gov. IRS/IRB does not process information returns which
are filed on paper forms. IRS/IRB does not process Forms W-2 (Copy A). Forms W-2 (Copy A) prepared on paper or electronically
2010–47 I.R.B.716November 22, 2010

must be filed with the SSA. IRS/IRB does, however, process waiver requests (Form 8508, Request for Waiver From Filing Informa-
tion Returns Electronically) and extension of time to file requests (Form 8809, Application for Extension of Time To File Information
Returns) for Forms W-2 (Copy A) and requests for an extension of time to furnish the employee copies of Form W-2. See Publication
1220, Specifications for Filing Forms 1097-BTC, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically, for information on
waivers and extensions of time.
.06The following form instructions and publications provide more detailed filing procedures for certain information returns:
•2010 Instructions for Forms W-2 and W-3,
•Instructions for Forms W-2c and W-3c (Rev. April 2010) , and
•Publication 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c.
Section 2. What’s New
.01 Logos, slogans, and advertising.Forms W-2 and W-3 are subject to annual review and possible change. The IRS has post-
poned the prohibition against including slogans, advertising, and logos on information returns and employee copies reporting wages
paid during the 2010 calendar year that was announced in Rev. Proc. 2008-33 (the previous issue of Publication 1141). The prohibition
is now in effect for reporting wages paid in 2011 and thereafter. Do notinclude logos, slogans or advertising on any information returns
or employee copies filed in 2011 or thereafter, except as provided in Section 1.04. This revenue procedure may be revised to state other
requirements of the IRS and the SSA regarding the preparation and use of substitute forms for Form W-2 and Form W-3 at a future
date. If you have comments about the prohibition against includingslogans, advertising, and logoson information returns and em-
ployee copies, send or email your comments to: Internal Revenue Service, Attn: Substitute Forms Program, SE:W:CAR:MP:T:T:SP,
IR 6526, 1111 Constitution Ave., NW, Washington, DC, 20224, orS
ubstituteforms@irs.gov.
.02 New box 12b on 2010 Form W-3.Because of the Hiring Incentives to Restore Employment (HIRE) Act, the total of new code
CC is reported in new box 12b on the 2010 Form W-3. The total of deferred compensation amounts,previously reported in box 12,
is now reported in new box 12a on Form W-3.
.03 Optional 2D barcoding for Forms W-2 and W-3.In response to feedback from the user community, the SSA (and the IRS)
have added a barcoded version for the substitute Form W-2 and Form W-3 to the list of acceptable submission formats. This version
is an optional alternative to the non-barcoded substitute Forms W-2 and W-3. Both versions are fully supported by the SSA. At this
time, neither the IRS nor the SSA mandates the use of barcoded substitute forms. See new Section 1B.07 of Part B. Also, see Exhibits
G and H for placement of the barcode.
Note.The data contained in the barcode must not differ from the data displayed on the form. The data in the barcode will be ignored
and the data displayed on the form will be considered the submission.
.04 Substitute black-and-white forms name change.The Social Security Administrationis changing the name “Laser Forms”
to “Substitute black-and-white Copy A and W-3 forms.”
.05 SSA email address change.The Social Security Administration is changing the email address “l
aser.forms@ssa.gov”to
“c
opy.a.forms@ssa.gov.” The address is changed throughout this document.
.06 SSA address change.The Attention line for the SSA Data Operations Center is now Substitute Black-and-White Copy A
Forms, Room 348.
.07 New Part B, Section 3.We added a new Part B, Section 3, to provide guidelines for the electronic delivery of Form W-2 and
W-2c recipient statements.
.08 Revised Part C, Section 4.Part C, Section 4, has been revised to reflect changes concerning IRS Publication 1796.
.09 Website reference change.The IRS website will now be referred to as IRS.gov rather than www.irs.gov.
.10 Enterprise Computing Center name change.The Enterprise Computing Center – Martinsburg (ECC) is now referred to as
The Internal Revenue Service/Information Returns Branch (IRS/IRB). Section 1.05, Part A, is updated.
.11 Editorial changes.We made editorial changes. Redundancies were eliminated as much as possible.
Section 3. General Rules for Paper Fo
rms W-2 and W-3
.01Employers not filing electronically must file paper FormsW-2(CopyA)alongwithFormW-3withtheSSAbyusingeither
the official IRS form or a substitute form that exactly meets thespecifications shown in Parts B and C of this revenue procedure.
Note.Substitute territorial forms (W-2AS, W-2GU, W-2VI) shouldalso conform to the specifications as outlined in this revenue
procedure. These forms require the form designation (“W-2AS,” “W-2GU,” “W-2VI”) on Copy A to be in black ink. If you are
an employer in the Commonwealth of the Northern Mariana Islands, you must contact Department of Finance, Division of Revenue
and Taxation, Commonwealth of the Northern Mariana Islands, P.O. Box 5234 CHRB, Saipan, MP 96950 orw
ww.cnmidof.netto
November 22, 20107172010–47 I.R.B.

get Form W-2CM and instructions for completing and filing the form. For information on Forms 499R-2/W-2PR, use this website:
h
ttp//www.hacienda.gobierno.pr.
Employers who file with the SSA electronically or on paper may design their own statements tofurnish to employees. These
employee statements designed by employers must comply with the requirements shown in Parts B and C.
.02Red-ink substitute forms that completely conform to the specifications contained in this revenue procedure may be privately
printed without prior approval from the IRS or the SSA. Onlythe substitute black-and-white Copy A and W-3 forms need to be
submitted to the SSA for approval, prior to their use (see Section 1B of Part B).
.03As in the past, SSA-approved black-and-white Copy A and FormW-3 may be generated using a printer by following all guide-
lines and specifications (also see Section 1B of Part B). In general,regardless of the method of entering data, using black ink on Forms
W-2 and W-3 provides better readability for processing by scanning equipment. Colorsother than black are not easily read by the
scanner and may result in delays or errors in the processing ofForms W-2 (Copy A) and W-3. The printing of the data should be
centered within the boxes. The size of the variable data must be printed in a font no smaller than 10-point.
Note.With the exception of the identifying number, the year, the form number for Form W-3, and the corner register marks, the
preprinted form layout for the red-ink Forms W-2 (Copy A) and W-3 must be in Flint J-6983 red OCR dropout ink or an exact match.
(See Section 1A.03 of Part B.)
.04Substitute forms filed with the SSA and substitute copies furnished to employees that do not conform to these specifications
are unacceptable. Forms W-2 (Copy A) and W-3 filed with the SSA that do not conform may be returned. In addition, penalties may
be assessed for not complying with the form specifications.
.05Substitute red-ink forms should not be submitted to either theIRS or the SSA for specific approval. If you are uncertain of any
specification and want clarification, do the following.
(1)Submit a letter or email citing the specification to the appropriate address in Section 3.06 of Part A.
(2)State your understanding of the specification.
(3)Enclose an example (if appropriate) of how the form would appear if produced using your understanding.
(4)Be sure to include your name, complete address, phone number, and if applicable, your email address with your correspon-
dence.
.06Any questions about the specifications, especially those for the red-ink Form W-2 (Copy A) and Form W-3, should be emailed
toS
ubstituteforms@irs.gov. Please enter “Substitute Forms” on the subject line. Or send your questions to:
Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:T:T:SP, IR 6526
1111 Constitution Ave., NW
Washington DC 20224
Any questions about the substitute black-and-white Copy A and W-3 should be emailed toc
opy.a.forms@ssa.govor sent to:
Social Security Administration
Data Operations Center
Attn: Substitute Black-and-White Copy A Forms, Room 348
1150 E. Mountain Drive
Wilkes-Barre PA 18702-7997
Note.You should receive a response within 30 days from either the IRS or the SSA.
.07Forms W-2 and W-3 are subject to annual review and possible change. Therefore, employers arecautioned against overstocking
supplies of privately-printed substitutes.
.08Separate instructions for Forms W-2 and W-3 are provided inthe 2010 Instructions for Forms W-2 and W-3. Form W-3 should
be used only to transmit paper Forms W-2 (Copy A). Form W-3 is a single sheet including only essential filing information. Be sure
to make a copy of your completed Form W-3 for your records. Copies of the current year official IRS Forms W-2 and W-3, and the
instructions for those forms, may be obtained from most IRS offices or by calling 1-800-829-3676. The IRS provides only cutsheet
sets of Forms W-2 and cutsheets of Form W-3. The instructions and information copies of the forms may also be found at IRS.gov.
.09Because substitute Forms W-2 (Copy A) and W-3 are machine-imaged and scanned by the SSA, the forms must meet the same
specifications as the official IRS Forms W-2 and W-3 (as shown in the exhibits).
2010–47 I.R.B.718November 22, 2010

Section 4. General Rules for Filing Forms W-2 (Copy A) Electronically
.01Employers must file Forms W-2 (Copy A) with the SSA electronically if they are required to file 250 or more for a calendar
year unless the IRS grants a waiver. For details, get the 2010 Instructions for Forms W-2 and W-3. The SSA publication EFW2, Spec-
ifications for Filing Forms W-2 Electronically, contains specifications and procedures for electronic filing of Form W-2 information
with the SSA. Employers are cautioned to obtain the most recent revision of EFW2 (and supplements) due to any subsequent changes
in specifications and procedures.
.02You may obtain a copy of the EFW2 by:
•Accessing the SSA website at:
w
ww.socialsecurity.gov/employer/pub.htm,
•Writing to:
Social Security Administration
OCO, DES; Attn: Employer Reporting Services Center
300 North Greene Street
Baltimore MD 21290-0300
•Calling your local SSA Employer Services Liaison Officer (ESLO) (the ESLOs’ phone numbers are available at:
w
ww.socialsecurity.gov/employer/empcontacts.htm), or
•Calling the SSA’s Employer Reporting Services staff, toll-free, at 1-800-772-6270.
.03Electronic filers do not file a paper Form W-3. See the SSA publication EFW2 for guidance on transmitting Form W-2 (Copy
A) information to SSA electronically.
.04Employers filing fewer than 250 Forms W-2 are encouraged to electronically fileForms W-2 (Copy A) with the SSA. Doing
so will enhance the timeliness and accuracy of forms processing.
.05Employers who do not comply with the electronic filing requirements for Form W-2 (Copy A) and who are not granted a waiver
by the IRS may be subject to penalties. Employers who file Form W-2 information with the SSA electronically must not send the
same data to the SSA on paper Forms W-2 (Copy A). Any duplicate reporting may subject filers to unnecessary contacts by the SSA
or the IRS.
Part B. Specifications for Substitute Forms W-2 and W-3
Section 1A. Specifications for Red-Ink Substitute Form W-2 (Copy A) and Form W-3 Filed
with the SSA
.01The official IRS-printed red dropout ink Form W-2 (Copy A) and W-3 and their exact substitutes are referred to as red-ink in
this revenue procedure. Employers may file substitute Forms W-2 (Copy A) and W-3 with the SSA. The substitute forms must be
exact replicas of the official IRS forms with respect to layoutand content because they will be read by scanner equipment.
.02Paper used for cutsheets and continuous-pinfed forms for substitute Form W-2 (Copy A) and Form W-3 that are to be filed with
the SSA must be white 100% bleached chemical wood, 18-20 pound paper only, optical characterrecognition (OCR) bond produced
in accordance with the following specifications:
•Acidity:Phvalue,average,notlessthan..................................................
4.5
•
Basisweight:17x22inch500cutsheets,pound..........................................
18-20
•Metric equivalent—gm./sq. meter
(atoleranceof+5pct.isallowed) .......................................................68-75
•Stiffness: Average, each direction, not less than—milligrams
Crossdirection........................................................................
50
Machinedirection .....................................................................80
•Tearing strength: Average, eachdirection, not less than—grams.............................40
•Opacity:Average,notlessthan—percent.................................................82
•Reflectivity:Average,notlessthan—percent .............................................68
November 22, 20107192010–47 I.R.B.

•Thickness:Average—inch..............................................................0.0038
Metricequivalent—mm................................................................0.097
(a tolerance of +0.0005 inch (0.0127 mm) is allowed) Paper cannot vary more than 0.0004
inch (0.0102 mm) from one edge to the other.
•Porosity:Average,notlessthan—seconds................................................10
•Finish (smoothness): Average, each side—seconds........................................
20-55
(forinformationonly)theSheffieldequivalent—units......................................170-d200
•Dirt: Average, each side, notto exceed—parts per million..................................8
Note.Reclaimed fiber in any percentage is permitted, provided the requirements of this standard are met.
.03All printing of red-ink substitute Forms W-2 (Copy A) and W-3 must be in Flint red OCR dropout ink except as specified
below. The following must be printed in nonreflective black ink:
•Identifying number “22222” or “33333” at the top of the forms.
•Tax year at the bottom of the forms.
•The four (4) corner register marks on the forms.
•The form identification number (“W-3”) at the bottom of Form W-3.
•All the instructions below Form W-3 beginning with “Send this entire page....” line to the bottom of Form W-3.
.04The vertical and horizontal spacing for all federal payment and data boxes on Forms W-2 and W-3 must meet specifications.
On Form W-3 and Form W-2 (Copy A), all the perimeter rules must be 1-point (0.014-inch), while all other rules must be one-half
point (0.007-inch). Vertical rules must be parallel to the left edge of the form; horizontal rules parallel to the top edge.
.05The official red-ink Form W-3 and Form W-2 (Copy A) are 7.5inches wide. Employers filing Forms W-2 (Copy A) with the
SSA on paper must also file a Form W-3. Form W-3 must be the same width (7.5 inches) as the Form W-2. One Form W-3 is printed
on a standard-size, 8.5 x 11-inch page. Two official Forms W-2 (Copy A) are contained on a single 8.5 x 11-inch page (exclusive of
any snap-stubs).
.06The top, left, and right margins for the Form W-2 (Copy A) and Form W-3 are .5 inches (
1
/2inch). All margins must be free of
printing except for the words “DO NOT STAPLE” on red-ink Form W-3. The space between the two Forms W-2 (Copy A) is 1.33
inches.
.07The identifying numbers are “22222” for Form W-2 (Copies A (and 1)) and “33333” for Form W-3. No printing should appear
anywhere near the identifying numbers.
Note.The identifying number must be printed in nonreflective black ink in OCR-A font of 10 characters per inch.
.08The depth of the individual scannable image on a page must be the same as that on the official IRS forms. The depth from the
top line to the bottom line of an individual Form W-2 (Copy A) must be 4.17 inches and the depth from the top line to the bottom line
of Form W-3 must be 4.67 inches. (See Exhibits A and B.)
.09Continuous-pinfed Forms W-2 (Copy A) must be separated into 11-inch deep pages. The pinfed strips must be removed when
Forms W-2 (Copy A) are filed with the SSA. The two Forms W-2 (CopyA) on the 11-inch page must not be separated (only the pages
are to be separated (burst)). The words “Do Not Cut, Fold, or Staple Forms on This Page” must be printed twice between the two
Forms W-2 (Copy A) in Flint red OCR dropout ink. All other copies (Copies 1, B, C, 2, and D) must be able to be distinguished and
separated into individual forms.
.10Box 12 of Form W-2 (Copy A) contains four entry boxes – 12a, 12b, 12c, and 12d. Do not make more than one entry per box.
Enter your first code in box 12a (for example, enter Code D in box 12a, not 12d, if it is your first entry). If more than four items need
to be reported in box 12, use a second Form W-2 to report the additional items (see “Multiple forms” in the 2010 Instructions for
Forms W-2 and W-3). Do not report the same federal tax data to the SSA on more than one Form W-2 (Copy A). However, repeat
the identifying information (employee’s name, address, and SSN; employer’s name, address, and EIN) on each additional form.
.11The checkboxes in box 13 of Form W-2 (Copy A) must be .14 inches each; the space before the first checkbox is .20 inches;
the spacing on each remaining side of the 3 checkboxes is .36 inches (see Exhibit A). The checkboxes in box b of Form W-3 must
also be .14 inches (see Exhibit B for other dimensions in box b).
Note.More than 50% of an applicable checkboxmustbecoveredbyan“X.”
2010–47 I.R.B.720November 22, 2010

.12All substitute Forms W-2 (Copy A) and W-3 in the red-ink formatmust have the tax year, form number, and form title printed
on the bottom face of each form using type identical to that of the official IRS form. The red-ink substitute Form W-2 (Copy A) and
Form W-3 must have the form producer’s EIN entered directly to the left of “Department of the Treasury,” in red.
.13The words “For Privacy Act and Paperwork Reduction Act Notice, see back of Copy D.” must be printed in Flint red OCR
dropout ink in the same location as on the official Form W-2 (Copy A). The words “For Privacy Act and Paperwork Reduction Act
Notice, see back of Copy D of Form W-2.” must be printed at the bottom of the page of Form W-3 in black ink.
.14The Office of Management and Budget (OMB) Number must be printed on substitute Forms W-3 and W-2 (on each ply) in the
same location as on the official IRS forms.
.15All substitute Forms W-3 must include the instructions that are printed on the same sheet below the official IRS form.
.16The back of substitute Form W-2 (Copy A) and Form W-3 must be free of all printing.
.17All copies must be clearly legible. Fadingmust be minimized to assure legibility.
.18Chemical transfer paper is permitted for Form W-2 (Copy A) only if the following standards are met:
•Only chemically-backed paper is acceptable for Form W-2 (Copy A). Front and back chemically-treated paper cannot be processed
properly by scanning equipment.
•Chemically-transferred images must be black.
•Carbon-coated forms are not permitted.
.19The Government Printing Office (GPO) symbol and the CatalogNumber (Cat. No.) must be deleted from substitute Form W-2
(Copy A) and Form W-3.
Section 1B. Specifications for Substitute Black-and-White Copy A and W-3 Forms Filed with
the SSA
.01The SSA-approved substitute black-and-white Forms W-2 (Copy A) and W-3 are referred to as substitute black-and-white Copy
A and W-3. Specifications for the substitute black-and-white CopyAandW-3aresimilartothered-inkforms(PartB,Section1A)
except for the items that follow (see Exhibits E and F). Exhibits are samples only and must not be downloaded to meet tax obligations.
(1) Forms must be printed on 8.5 x 11-inch single-sheet paper only. There must be two Forms W-2 (Copy A) printed on a page.
There must be no horizontal perforations between the two Forms W-2 (Copy A) on each page.
(2) All forms and data must be printed in nonreflective black ink only.
(3) The data and forms must be programmed to print simultaneously. Forms cannot be produced separately from wage data entries.
(4) The forms must not contain corner register marks.
(5) The forms must not contain any shadedareas, including those boxes that are entirely shaded on the red-ink forms.
(6) Identifying numbers on both Form W-2 (“22222”) and Form W-3 (“33333”) must be preprinted in 14-point Arial bold font
or
a close approximation.
(7) The form numbers (“W-2” and “W-3”) must be in 18-point Arial font or a close approximation. The tax year (for example,
“2010”) on Forms W-2 (Copy A) and W-3 must be in 20-point Arial font or a close approximation.
(8) No part of the box titles or the data printed on the forms may touch any of the vertical or horizontal lines, nor should any of
the data intermingle with the box titles. The data should be centered in the boxes.
(9) Do not print any information in the margins of the substitute black-and-white Copy A and W-3 forms (for example, do not
print “DO NOT STAPLE” in the top margin of Form W-3).
(10) The word “Code” must not appear in box 12 on Form W-2 (Copy A).
(11) A 4-digit vendor code preceded by four zeros and a slash (for example, 0000/9876) must appear in 12-point Arial font, or
a close approximation, under the tax year in place of the Cat. No. on Form W-2 (Copy A) and in the bottom right corner of the
“For Official Use Only” box at the bottom of Form W-3. Do not display the form producer’s EIN to the left of “Department of the
Treasury.” The vendor code will be used to identify the form producer.
(12) Do not print Catalog Numbers (Cat. No.) on either Form W-2 (Copy A) or Form W-3.
(13) Do not print the checkboxes in:
November 22, 20107212010–47 I.R.B.

•Box (b) of Form W-3. The “X” should be programmed to be printedand centered directly below theapplicable “Kind of Payer.”
•Box13ofFormW-2(CopyA).The“X”shouldbeprogrammedtobeprinted and centered directly below the applicable box title.
(14) Do not print dollar signs. If there are no money amounts being reported, the entire field should be left blank.
(15) The space between the two Forms W-2 (Copy A) is 1.33 inches.
.02You must submit samples of your substitute black-and-white Copy A and W-3 forms to the SSA. Only black-and-white sub-
stitute Forms W-2 (Copy A) and W-3for tax year 2010 will be accepted for approval bythe SSA. Questions regarding other red-ink
forms (that is, red-ink Forms W-2c, W-3c, 1099 series, 1096, etc.) must be directed to the IRS only.
.03You will be required to send one set of blank and one set of dummy-data substitute black-and-white Copy A and W-3 forms for
approval. Sample data entries should be filled in to the maximumlength for each box entry, preferably using numeric data or alpha
data, depending upon the type required to be entered. Include in your submission the name, telephone number, fax number, and email
address of a contact person who can answer questions regarding your sample forms.
.04To receive approval, you may first contact the SSA atc
opy.a.forms@ssa.govto obtain a template and further instructions in
PDF or Excel format. You may also send your 2010 sample substitute black-and-white Copy A and W-3 forms to:
Social Security Administration
Data Operations Center
Attn: Substitute Black-and-White Copy A Forms, Room 348
1150 E. Mountain Drive
Wilkes-Barre PA 18702-7997
Send your sample forms via private mail carrier or certified mail in order to verify their receipt. You can expect approval (or
disapproval) by the SSA within 30 days of receipt of your sample forms.
.05The 4-digit vendor code preceded by fourzeros and a slash (0000/9876) must be preprinted on the sample substitute black-
and-white Copy A and W-3 forms. Forms notcontaining a vendor code will be rejected and will not be submitted for testing or
approval. If you have a valid vendor code provided to you throughthe National Association of Computerized Tax Processors, you
should use that code. If you do not have a valid vendor code, contact the Social Security Administration atc
opy.a.forms@ssa.govto
obtain an SSA-issued code. (Additional information on vendorcodes may be obtained from the SSA or the National Association of
Computerized Tax Processors via email atp
resident@nactp.org.)
Note.Vendor codes are only required by those companies producing the W-2 family of forms as part of a product for resale to be
used by multiple employers and payroll professionals. Employersdeveloping Forms W-2 or W-3 to be used only for their individual
company do not require a vendor code.
.06 If you use forms produced by a vendor and have questions concerning approval,do not send the forms to the SSA for
approval. Instead, you may contact the software vendor to obtain acopy of SSA’s dated approval notice supplied to that vendor.
.07In response to feedback from the user community, the SSA (and the IRS) have added a 2-D barcoded version for the substitute
Form W-2 and Form W-3 to the list of acceptable submission formats. This version is an optional alternative to the non-barcoded
substitute Forms W-2 and W-3. Both versions are fully supported by the SSA. At this time, neither the IRS nor the SSA mandates the
use of 2-D barcoded substitute forms.
Note.The data contained in the barcode must not differ from the data displayed on the form. The data in the barcode will be ignored
and the data displayed on the form will be considered the submission.
To get the barcode information:
•See the SSA’s BSO website athttp://www.socialsecurity.gov/bso,
•Get the pdf version of the specifications atcopy.a.forms@ssa.gov,
•Download the “TY 10 Substitute W3/W2 2-D Barcoding Standards” fromhttp://www.socialsecurity.gov/employer/subBar-
CodeStd.pdf
Exhibits G and H show the placement for the 2-D barcodes for Forms W-2 and W-3.
2010–47 I.R.B.722November 22, 2010

Section 2. Requirements for Substitute Forms Furnished to Employees (Copies B, C, and
2ofFormW-2)
Note.Printers are cautioned that therules in Part B, Section 2 (this section), apply only to employee copies of Form W-2 (Copies
B, C, and 2).Paper filers who send Forms W-2 (Copy A) to the SSA must follow the requirements in Part B, Sections 1A and/or 1B
above.
.01All employers (including those who file electronically) must furnish employees with at least two copies of Form W-2 (three or
more for employees required to file a state, city, or local income tax return). The following rules are guidelines for preparing employee
copies.
The dimensions of these copies (Copies B, C, and 2), but not Copy A, may differ from the dimensions of the official IRS form to
allow space for reporting additional information, including additional entries such as withholding for health insurance, union dues,
bonds, or charity in box 14. The limitation of a maximum of four items in box 12 of Form W-2 applies only to Copy A, which is filed
with the SSA.
Note.Payee statements (Copies B, C, and 2 of Form W-2) may be furnished electronically if employees give their consent (as de-
scribed in Treasury Regulations Section 31.6051–1(j)). See also Publication 15-A, Employer’s Supplemental Tax Guide, and new
Section 3 of Part B.
.02The minimum dimensions for employee copies only (not Copy A) of Form W-2 should be 2.67 inches deep by 4.25 inches
wide. The maximum dimensions should be no more than 6.5 inches deep by no more than 8.5 inches wide.
Note.The maximum and minimum size specifications in this document are for tax year 2010 only and may change in future years.
.03Either horizontal or vertical format is permitted (see Exhibit D).
.04The paper for all copies must be white and printed in black ink. The substitute Copy B, which employees are instructed to
attach to their federal income tax returns, should be at least 9-pound paper (basis 17 x 22-500). Other copies furnished to employees
should also be at least 9-pound paper (basis 17 x 22-500) unless a state, city, or local government provides other specifications.
.05Employee copies of Form W-2 (Copies B, C, and 2), including those that are printed on a single sheet of paper, must be
easily separated. The best method of separation is to provide perforations between the individual copies. Each copy should be easily
distinguished whatever method of separation is used.
Note.Perforation does not apply to printouts of copies of Forms W-2 that are furnished electronically to employees (as described
in Treasury Regulations Section 31.6051–1(j)). However, these employees should be cautioned to carefully separate the copies of
Form W-2. See Publication 15-A, Employer’s Supplemental Tax Guide, and new Section 3 of Part B for information on electronically
furnishing Forms W-2 to employees.
.06Interleaved carbon and chemical transfer paper employee copies must be clearly legible. Fading must be minimized to assure
legibility.
.07The electronic tax logo on the IRS official employee copies is not required on any of the substitute form copies. To avoid
confusion and questions by employees, employers are encouraged to delete the identifying number (“22222”) from the employee
copies of Form W-2.
.08All substitute employee copies must contain boxes, box numbers, and box titles that match the official IRS Form W-2. Boxes
that do not apply can be deleted. However, certain core boxes must be included. The placement, numbering, and size of this informa-
tion is specified as follows:
•The items and box numbers that constitute the core data are:
Box 1 — Wages, tips, other compensation,
Box 2 — Federal income tax withheld,
Box 3 — Social security wages,
Box 4 — Social security tax withheld,
Box 5 — Medicare wages and tips, and
Box 6 — Medicare tax withheld.
The core boxes must be printed in the exact order shown on the official IRS form.
November 22, 20107232010–47 I.R.B.

•The core data boxes (1 through 6) must be placed in the upper right of the form. Substitute vertical-format copies may have the
core data across the top of the form (see Exhibit D). Boxes or otherinformation will definitely not be permitted to the right of the
core data.
•The form title, number, or copy designation (B, C, or 2) may be at the top of the form. Also, a reversed or blocked-out area to
accommodate a postal permit number or other postalconsiderations is allowed in the upper-right.
•Boxes 1 through 6 must each be a minimum of 1
1
/8inches wide x
1
/4inch deep.
•Other required boxes are:
a) Employee’s social security number,
b) Employer identification number (EIN),
c) Employer’s name, address, and ZIP code,
e) Employee’s name, and
f) Employee’s address and ZIP code.
Identifying items must be present on the form and be in boxes similar to those on the official IRS form. However, they may be
placed in any location other than the top or upper right. You do not need to use the lettering system (a-c, e-f) used on the official IRS
form. The employer identification number (EIN) may be included with the employer’s name and address and not in a separate box.
Note.Box d (“Control number”) is not required.
.09All copies of Form W-2 furnished to employees must clearly showthe form number, the form title, and the tax year prominently
displayed together in one area of the form. The title of Form W-2 is“Wage and Tax Statement.” It is recommended (but not required)
that this be located on the bottom left of substitute Forms W-2. Thereference to the “Department of the Treasury — Internal Revenue
Service” must be on all copies of substitute Forms W-2 furnishedto employees. It is recommended (but not required) that this be
located on the bottom right of Form W-2.
.10If the substitute employee copies are labeled, the forms must contain the applicable description:
•“Copy B, To Be Filed With Employee’s FEDERAL Tax Return.”
•“Copy C, For EMPLOYEE’S RECORDS.”
•“Copy 2, To Be Filed With Employee’s State, City, or Local Income Tax Return.”
It is recommended (but not required) that these be located on the lower left of Form W-2. If the substitute employee copies are not
labeled as to the disposition of the copies, then written notification using similar wordingmust be provided to each employee.
.11The tax year (for example, 2010) must be clearly printed on all copies of substitute Form W-2. It is recommended (but not
required) that this information be in the middle at the bottom of the Form W-2. The use of 24-pt. OCR-A font is recommended (but
not required).
.12Boxes1,2,and9(ifapplicable)onCopyBmustbeoutlinedinbold 2-point rule or highlighted in some manner to distinguish
them. If “Allocated tips” are being reported, it is recommended (but not required) that box 8 also be outlined. If reported, “Social
security tips” (box 7) must be shown separately from “Social security wages” (box 3).
Note.Boxes 8 and 9 may be omitted if not applicable.
.13If employers are required to withhold and report state or local income tax, the applicable boxes are also considered core infor-
mation and must be placed at the bottom of the form. State information is included in:
•Box 15 (State, Employer’s state ID number)
•Box 16 (State wages, tips, etc.)
•Box17(Stateincometax)
Local information is included in:
•Box 18 (Local wages, tips, etc.)
•Box 19 (Local income tax)
2010–47 I.R.B.724November 22, 2010

•Box 20 (Locality name)
.14Boxes 7 through 14 may be omitted from substitute employee copies unless the employer must report any of that information to
the employee. For example, if an employee did not have “Social security tips” (box 7), the form could be printed without that box. But
if an employer provided dependent care benefits, the amount must be reported separately, shown in box 10, and labeled “Dependent
care benefits.”
.15Employers may enter more than four codes in box 12 of substitute Copies B, C, and 2 (and 1 and D) of Form W-2, but each
entry must use Codes A-CC (see the 2010 Instructions for Forms W-2 and W-3).
.16If an employer has employees in any of the three categories in box 13, all checkbox headings must be shown and the proper
checkmark made, when applicable.
.17Employers may use box 14 for any other information that they wish to give to their employees. Each item must be labeled.
(See the instructions for box 14 in the 2010 Instructions for Forms W-2 and W-3.)
.18The front of Copy C of a substitute Form W-2 must contain the note “This information is being furnished to the Internal Revenue
Service. If you are required to file a tax return, a negligence penalty or other sanction may be imposed on you if this income is taxable
and you fail to report it.”
.19Instructions similar to those contained on the back of Copies B, C, and 2 of the official IRS Form W-2 must be provided to
each employee. An employer may modify or delete instructions thatdo not apply to its employees. (For example, remove Railroad
Retirement Tier 1 and Tier 2 compensation information for nonrailroad employees orinformation about dependent care benefits that
the employer does not provide.)
.20Employers must notify their employees who have no income tax withheld that theymay be able to claim a tax refund because
of the earned income credit (EIC). They will meet this notification requirement if they furnish a substitute Form W-2 with the EIC
notice on the back of Copy B, IRS Notice 797, Possible FederalTax Refund Due to the Earned Income Credit (EIC), or on their
own statement containing the same wording. They may also change the font on Copies B, C, and 2 so that the EIC notification and
Form W-2 instructions fit differently. For more information aboutnotification requirements, see Notice 1015, “Have You Told Your
Employees About the Earned Income Credit (EIC)?”
Note.An employer does not have to notify anyemployee who claimed exemption from withholding on Form W-4, Employee’s
Withholding Allowance Certificate, for the calendar year.
Section 3. Electronic Delivery of Form W-2 and W-2c Recipient Statements
.01If you are required to furnish a written statement (Copy B or anacceptable substitute) to a recipient, then you may furnish the
statement electronicallyinstead of on paper. This includes furnishing the statement to recipients of Forms W-2 and W-2c.
If you meet the requirements listed below, you are treated as furnishing the statement timely.
.02The recipient must consent in the affirmative and not have withdrawn the consent before the statement is furnished. The consent
by the recipient must be made electronically in a way that shows that he or she can access the statement in the electronic format in
which it will be furnished.
You must notify the recipient of any hardware or software changes prior to furnishingthe statement. A new consent to receive the
statement electronically is required after the new hardware or software is put into service.
Prior to furnishing the statements electronically, you must provide the recipient a statement with the following Information promi-
nently displayed:
•If the recipient does not consent to receive the statement electronically, a paper copy will be provided.
•The scope and duration of the consent. For example, whether the consent applies to every year the statement is furnished or only
until January 31 immediately following the date of the consent.
•How to obtain a paper copy after giving consent.
•How to withdraw the consent. The consent may be withdrawn at anytime by furnishing the withdrawal in writing (electronically or
on paper) to the person whose name appears on the statement. Confirmation of the withdrawal also will be in writing (electronically
or on paper).
•Notice of termination. The notice must state under what conditions the statements will no longer be furnished to the recipient.
•Procedures to update the recipient’s information.
•A description of the hardware and software required to access, print and retain a statement, and a date the statement will no longer
be available on the website.
.03Additionally, you must:
November 22, 20107252010–47 I.R.B.

•Ensure the electronic format contains all the required information and complies with the guidelines in this document.
•If posting the statement on a website, post it for the recipient to access on or before the January 31 due date through October 15
of that year.
•Inform the recipient, in person, electronically or by mail, of the posting and how to access and print the statement.
For more information, see Regulations section 31.6051-1(j).
Part C. Additional Instructions
Section 1. Additional Instructions for Form Printers
.01If electronic media is not used for filing with the SSA, the substitute copies of Forms W-2 (either red-ink or substitute black-
and-white forms) should be assembled in the same order as the official IRS Forms W-2. Copy A should be first, followed sequentially
by perforated sets (Copies 1, B, C, 2, and D).
.02The substitute form to be filed by the employer with the SSA must carry the designation “Copy A.”
Note.Electronic filers do not submit either red-ink or substituteblack-and-white paper Form W-2 (Copy A) or Form W-3 to the SSA.
.03Substitute forms (red-ink or substitute black-and-white Copy A or W-3) do not require a copy to be retained by employers
(Copy D of Form W-2). However, employers must be prepared to verify or duplicate the information if it is requested by the IRS or
the SSA. Paper filers who do not keep a Form W-2 (Copy D) should be able to generate a facsimile of Form W-2 (Copy A) in case
of loss.
.04Except for copies in the official assembly, no additional copies that may be prepared by employers should be placed ahead of
Form W-2 (Copy C) “For EMPLOYEE’S RECORDS.”
.05You must provide instructions similar to those contained on the back of Copies B,C, and 2 of the official IRS Form W-2 to each
employee. You may print them on the back of the substitute Copies B, C, and 2 or provide them to employees on a separate statement.
You do not need to use the back of Copy 2. If you do not use Copy 2, you may include all the information that appears on the back of
the official Copies B, C, and 2 on the back of your substitute Copies B and C only. As an example, you may use the “Note” on the
back of the official Copy C as the dividing point between the text for your substitute Copies B and C. Do not print these instructions
on the back of Copy 1. Any Forms W-2 (Copy A) and W-3 that are filed with the SSA must have no printing on the reverse side.
Section 2. Instructions for Employers
.01Only originals of Form W-2 (Copy A) and Form W-3 may be filedwith the SSA. Carbon copies and photocopies are unaccept-
able.
.02Employers should type or machine-print data entries on plain paper forms whenever possible. Ensure good quality by using a
high-quality type face, inserting data in the middle of blocks that are well separated from other printing and guidelines, and taking any
other measures that will guarantee clear, sharp images. Black ink mustbeusedwithnoscripttype,inverted font, italics or dual-case
alpha characters.
Note.12-point Courier font is preferred by the SSA.
.03Form W-2 (Copy A) requires decimal entries for wage data. Dollar signs should not be printed with money amounts on the
Forms W-2 (Copy A) and W-3.
.04The employer must provide a machine-scannable Form W-2 (Copy A). The employer must also provide employee copies
(Copies B, C, and 2) that are legible and able to be photocopied (by the employee). Do not print any data in the top margin of the
payee copies of the forms.
.05Any printing in box d (Control number) on Form W-2 or box a on Form W-3 may not touch any vertical or horizontal lines
and should be centered in the box.
.06The filer’s employer identification number (EIN) must be entered in box b of Form W-2 and box e of Form W-3. The EIN
entered on Form(s) W-2 (box b) and Form W-3 (box e) must be the same as on Forms 941, 943, 944, CT-1, Schedule H (Form 1040),
or any other corresponding forms filed withthe IRS. Be sure to use EIN format (00-0000000) rather than SSN format (000-00-0000).
.07The employer’s name, address, and EIN may be preprinted.
Section 3. OMB Requirements for Both Red-Ink and Black-and-White Copy A and W-3
Substitute Forms
.01The Paperwork Reduction Act (the Act) of 1995 (Public Law 104-13) requires the following:
2010–47 I.R.B.726November 22, 2010

•The Office of Management and Budget (OMB) approves all IRS tax forms that are subject to the Act.
•Each IRS form contains (in or near the upper right corner) the OMB approval number, if assigned. (The official OMB numbers
may be found on the official IRS printed forms and are also shown on the forms in Exhibits A, B, C, E, and F.)
•Each IRS form (or its instructions) states:
(1) Why the IRS needs the information,
(2) How it will be used, and
(3) Whether or not the information is required to be furnished to the IRS.
.02This information must be provided to any users of official or substitute IRS forms or instructions.
.03The OMB requirements for substitute IRS Form W-2 (Copy A) and Form W-3 are the following.
•Any substitute form or substitute statement to a recipient must show the OMB number as it appears on the official IRS form.
•The OMB number (1545-0008) must appear exactly as shown on the official IRS form.
•For any copy of Form W-2 other than Copy A, the OMB number must use one of the following formats:
(1) OMB No. 1545-0008 (preferred) or
(2) OMB # 1545-0008 (acceptable).
.04Any substitute Form W-2 (Copy A only) must state “For Privacy Act and Paperwork Reduction Act Notice, see back of Copy
D.” Any substitute Form W-3 must state “For Privacy Act and Paperwork Reduction Act Notice, see back of Copy D of Form W-2.”
If no instructions are provided to users of your forms, you must furnish them with the exact text of the Privacy Act and Paperwork
Reduction Act Notice.
Section 4. Reproducible Copies of Forms
.01You can obtain official IRS forms and information copies of federal tax materials at local IRS offices or by calling the IRS
Distribution Center at 1-800-829-3676. Other ways to get federal tax material include the following.
•Accessing IRS.gov.
•Ordering IRS Tax Products on DVD (Publication 1796).
Only contact the IRS, not the SSA, for forms.
Note.Many IRS forms are provided at IRS.gov and on the IRS Tax Products on DVD. But copies of Form W-2 (Copy A) and
Form W-3 cannot be used for filing with the SSA when obtained by these methods because the forms do notmeet the specific printing
specifications as described in this publication. Copies of Forms W-2 and W-3 obtained from these sources are for information purposes
only.
.02The DVD contains approximately 2,800 tax forms and publications for small businesses, return preparers, and others who
frequently need current or prior year tax products. Most current tax forms on the DVD may be filled in electronically, then printed out
for submission and saved for recordkeeping. Other products on the DVD include the Internal Revenue Bulletins, Tax Supplements,
and Internet resources and links for the tax professional.
For system requirements, contact the National Technical Information Service (NTIS) ath
ttp://www.ntis.gov. Prices are subject to
change. The cost of the DVD if purchased from NTIS via IRS.gov atw
ww.irs.gov/formspubs/article/0,,id=108660,00.htmlis $30
(with no handling fee). If purchased using the following methods, the cost for each DVD is $30 (plus a $6 handling fee). These
methods are:
•By phone – 1-877-CDFORMS (1-877-233-6767) (For IRS DVD purchase only),
•By fax – 703-605-6900 (For IRS DVD purchase only),
November 22, 20107272010–47 I.R.B.

•By mail – to:
National Technical Information Service
5301 Shawnee Road
Alexandria, VA 22312
Section5.EffectonOtherDocuments
.01Revenue Procedure 2008-33, 2008-28 I.R.B. 93, dated July 14, 2008 (reprinted as Publication 1141, Revised 7-2008), is su-
perseded.
2010–47 I.R.B.728November 22, 2010

ListofExhibits
Exhibit A — Form W-2 (Copy A) (Red-Ink) 2010
Exhibit B — Form W-3 (Red-Ink) 2010
Exhibit C — Form W-2 (Copy B) 2010
Exhibit D — Form W-2 Alternative Employee Copies (Illustrating Horizontal and Vertical Formats)
Exhibit E — Form W-2 (Copy A) (Substitute Black-and-White) 2010
Exhibit F — Form W-3 (Substitute Black-and-White) 2010
Exhibit G — Form W-2 (Copy A) (Substitute Black-and-White) 2010 (To Show2-D Barcode Placement)
Exhibit H — Form W-3 (Substitute Black-and-White) 2010 (To Show 2-D Barcode Placement)
November 22, 20107292010–47 I.R.B.

2010–47 I.R.B.730November 22, 2010

November 22, 20107312010–47 I.R.B.

2010–47 I.R.B.732November 22, 2010

November 22, 20107332010–47 I.R.B.

2010–47 I.R.B.734November 22, 2010

November 22, 20107352010–47 I.R.B.

2010–47 I.R.B.736November 22, 2010

November 22, 20107372010–47 I.R.B.

Note.This revenue procedure will be reproduced as the next revision of IRS Publication 1223, General Rules and Specifications for
Substitute Forms W-2c and W-3c.
Special Note About A New Revision of Publication 1223.Because Form W-3c is being revised for release in early 2011 due to
recent legislative changes, the Form W-3c revision in this revenue procedure (Publication 1223,November 2010 Revision) will be
obsolete at that time. Because employers are going to need to use the early 2011 revision of Form W-3c as soon as it is released and
to prevent employers and print vendors from over-ordering or over-printing a quantity of forms, Publication 1223 will also be revised
again in early 2011.
Rev. Proc. 2010–43
TABLE OF CONTENTS
SECTION 1 - PURPOSE
............................................................................................ 738
SECTION 2 - WHAT’S NEW........................................................................................ 739
SECTION 3 - FILING FORMS W-2C AND W-3C ELECTRONICALLY................................................... 740
SECTION 4 - SPECIFICATIONS FOR RED-INK SUBSTITUTE FORMS W-2C (COPY A) AND W-3C FILED
WITH THE SSA
....................................................................................... 740
SECTION 5 - SPECIFICATIONS FOR SUBSTITUTE BLACK-AND-WHITE COPY A AND W-3C FORMS
FILED WITH THE SSA
................................................................................ 743
SECTION 6 - REQUIREMENTS FOR SUBSTITUTE PRIVATELY-PRINTED FORMS W-2C (COPIES B, C,
AND 2) FURNISHED TO EMPLOYEES
................................................................... 744
SECTION 7 - ELECTRONIC DELIVERY OF FORM W-2 AND W-2C RECIPIENT STATEMENTS........................... 745
SECTION 8 - INSTRUCTIONS FOR EMPLOYERS.................................................................... 746
SECTION 9 - OMB REQUIREMENTS FOR BOTH RED-INK AND BLACK-AND-WHITE COPY A AND
W-3C SUBSTITUTE FORMS
............................................................................ 747
SECTION 10 - REPRODUCIBLE COPIES OF FORMS................................................................. 747
SECTION11-EFFECTONOTHERDOCUMENTS.................................................................... 748
SECTION 12 - EXHIBITS........................................................................................... 748
Section 1 - Purpose
.01The purpose of this reve
nueprocedureistostatetherequirementsoftheInternal Revenue Service (IRS) and the Social Security
Administration (SSA) rega
rding the preparation and use of substitute forms for Form W-2c, Corrected Wage and Tax Statement, and
Form W-3c, Transmittal of C
orrected Wage and Tax Statements.
.02The official IRS Form W-
2c is a six-part form and the official IRS Form W-3c is a one-part form. Red-ink substitute forms
that completely conform to
the specifications contained in this document may beprivately-printed without the prior approval of the
IRS or the SSA. Only the subs
titute black-and-white Copy A of Form W-2c and substitute black-and-white Form W-3c need to be
submitted to the SSA for ap
proval.
Note.Both paper substitute forms filed with the SSA, and those furnished to employees, that do not totally conform to these specifi-
cations are not acceptable. Forms W-2c (Copy A) and Forms W-3c that do not conform may be returned. In addition, penalties may
be assessed by the IRS.
.03Substitute red-ink forms should not be submitted to either theIRS or the SSA for specific approval. If you are uncertain of any
specification and want clarification, do the following.
(1) Submit a letter to the appropriate address below citing the specification.
(2) State your understanding of the specification.
2010–47 I.R.B.738November 22, 2010

(3) Enclose an example (if appropriate) of how the formwould appear if produced using your understanding.
(4) Be sure to include your name, complete address, phone number, and, if applicable, your email address with your correspon-
dence.
.04Any questions about the specifications, especially those for the red-ink Form W-2c (Copy A) and Form W-3c, should be emailed
tos
ubstituteforms@irs.gov. Please enter “Substitute Forms” on the subject line. Or send your questions to:
Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:T:T:SP, IR 6526
1111 Constitution Ave., NW
Washington DC 20224
Any questions about the substitute black-and-white Copy A and W-3c should be emailed toc
opy.a.forms@ssa.govor sent to:
Social Security Administration
Data Operations Center
Attn: Substitute Black-and-White Copy A Forms, Room 348
1150 E. Mountain Drive
Wilkes-Barre PA 18702-7997
Note.You should receive a response from either the IRS or the SSA within 30 days.
.05The Internal Revenue Service/Information Returns Branch (IRS/IRB) maintains acentralized customer service call site to an-
swer questions related to information returns (Forms W-2, W-3, W-2c, W-3c, 1099 series, 1096, etc.). You can reach the call site at
1-866-455-7438 (toll-free) or 304-263-8700 (not a toll-free number). The Telecommunication Device for the Deaf (TDD) number is
304-579-4827 (not a toll-free number). The hours of operation are Monday through Friday from 8:30 a.m. to 4:30 p.m. Eastern time.
You may also send questions to the call site via the Internet atm
ccirp@irs.gov. IRS/IRB does not process information returns which
are filed on paper forms.
.06The following form instructions and publications provide more detailed filing procedures for certain information returns.
•Instructions for Forms W-2 and W-3.
•Instructions for Forms W-2c and W-3c (Rev. April 2010).
•Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3.
Section 2 - What’s New
.01We are revising this revenue procedure, which will be reproduced as Publication 1223, GeneralRules and Specifications for
Substitute Forms W-2c and W-3c, because Form W-3c was revised in April 2010. Publication 1223 will only be available online at
IRS.gov. Some changes have been made to Form W-3c since it was previously revised in February 2009. The changes include the
following.
•Because of the Hiring Incentives to Restore Employment (HIRE) Act, the correctedtotal of new code CC amounts is reported
in new box 12b on Form W-3c. The corrected total of deferred compensation amounts, previously reported in box 12, is now
reported in new box 12a on Form W-3c.
•Parentheses defining the “Telephone number” and the “Fax number” were deleted from Form W-3c.
.02The following changes have been made to Publication 1223 since the last revision (December 2009
). The major changes include
the following.
•Substitute forms name change.The Social Security Administration is changing the name “Laser Forms” to “Substitute black-
and-white Copy A and W-3c forms.”
•SSA email address change.The Social Security Administration is changing the email address “laser.forms@ssa.gov”to
“c
opy.a.forms@ssa.gov.” The address is changed throughout this document.
•SSA address change.The Attention line for the SSA Data Operations Center is now “Substitute Black-and-White Copy A Forms,
Room 348.”
November 22, 20107392010–47 I.R.B.

•Website reference change.The IRS website will now be referred to as IRS.gov rather than www.irs.gov.
•Enterprise Computing Center name change.The Enterprise Computing Center – Martinsburg(ECC)isnowreferredtoasThe
Internal Revenue Service/Information Returns Branch (IRS/IRB).
•New Section 7.We added a new Section 7 to provide guidelines for theelectronic delivery of Form W-2 and W-2c recipient
statements.
•Revised Section 10.Section 10 has been revised to reflect changes concerning IRS Publication 1796.
•Editorial changes.We made editorial changes. Redundancies were eliminated as much as possible.
Section 3 - Filing Forms W-2c and W-3c Electronically
.01Employers must file electronically with the SSA if they file250 or more Forms W-2c (Copy A) during a calendar year unless
the IRS granted you a waiver. For details, seethe Instructions for Forms W-2c and W-3c.SSA publication 42-014, Specifications for
Filing Forms W-2c Electronically (EFW2C),contains specifications and procedures for filing Forms W-2c. Employers are cautioned
to obtain the most recent revision of EFW2C (and supplements) dueto any subsequent changes in specifications and procedures.
Note.For purposes of the electronic filing requirement, only Forms W-2c for the immediate prior year are taken into account.
.02You may obtain a copy of the EFW2C by:
•Accessing the SSA website atwww.socialsecurity.gov/employer/pub.htm.
•Writing to:
Social Security Administration
OCO, DES; Attn: Employer Reporting Services Center
300 North Greene Street
Baltimore MD 21290-0300
•Calling your local SSA Employer Services Liaison Officer (ESLO). Their phone numbers are available atwww.socialsecu-
rity.gov/employer/empcontacts.htm.
•Calling the SSA’s Employer Reporting Services Branch at 1-800-772-6270.
.03Electronic filers do not file a paper Form W-3c. See the SSApublication EFW2C for guidance on transmitting Form W-2c
(Copy A) information to the SSA electronically.
.04Employers filing fewer than 250 Forms W-2c are encouraged tofile electronically with the SSA. Doing so will enhance the
timeliness and accuracy of forms processing.
.05Employers who do not comply with the electronic filing requirements for Form W-2c (Copy A) and who are not granted a
waiver by the IRS may be subject to penalties. Employers who fileForm W-2c information with theSSA electronically must not send
the same data to the SSA on paper Forms W-2c (Copy A). Any duplicate reporting may subject filersto unnecessary contacts by the
SSA or the IRS.
Section 4 - Specifications for Red-Ink Substitute Forms W-2c (Copy A) and W-3c Filed With
the SSA
.01The official IRS-printed red dropout ink Form W-2c (Copy A) and W-3c and their exact substitutes are referred to as red-ink
in this revenue procedure. Employers may file substitute Forms W-2c (Copy A) and W-3c with the SSA. The substitute forms must
be exact replicas of the official IRS forms with respect to layout and content because they will be read by scanner equipment.
.02Paper used for cutsheets and continuous pin-fed forms for substitute Form W-2c (Copy A) and Form W-3c that are to be
filed with the SSA must be white 100% bleached chemical wood, 18-20 pound paper only, optical character recognition (OCR) bond
produced in accordance with the following specifications:
Acidity: Ph value, average, not less than4.5
Basis weight: 17 x 22 inch 500 cut sheets, pound18-20
Metric equivalent—gm./sq. meter (a tolerance of +5 pct. is allowed)
68-75
2010–47 I.R.B.740November 22, 2010

Stiffness: Aver
age, each direction, not less than—milligrams
Cross direction
Machine directi
on
50
80
Tearing strength: Average, each direction, not less than—grams40
Opacity: Average, not less than—percent
82
Reflectivity: Av
erage, not less than—percent
68
Thickness: Average—inch0.0038
Metric equivalent—mm.
(a tolerance of +0.0005 inch (0.0127 mm) is allowed)
Paper cannot vary more than 0.0004 inch (0.0102 mm) from one edge to the other
0.097
Porosity: Average, not less than—seconds10
Finish (smoothness): Average, each side—seconds
20-55
(for information only) the Sheffield equivalent—units
170-d200
Dirt: Average, each side, not to exceed—parts per million8
Color and paper quality for Copy A of Form W-2c (cut sheets andcontinuous pin-fed forms) and Form W-3c, as specified by JCP
Code 0-25 dated November 29, 1978, must be white 100% bleached chemical wood, optical characterrecognition (OCR) bond. The
contractor must initiate or have a quality control program to ensure OCR ink density.
Note.Reclaimed fiber in any percentage is permitted, provided the requirements of this standard are met.
.03All printing of substitute Forms W-2c (Copy A) and W-3c must be in Flint red OCR dropout ink except as specified below.
The following must be printed in nonreflective black ink:
•Identifying number “44444” or “55555” at the top of the forms.
•The four (4) corner register marks on the forms.
•The form identification number (“W-3c”) at the bottom of Form W-3c.
•All the instructions below Form W-3c beginning with “Purpose of Form” line to the bottom of Form W-3c.
.04The vertical and horizontal spacingon Forms W-2c and W-3c must meet specifications. See Exhibits A and B.
•On Form W-3c and Form W-2c (Copy A), all the perimeter rules must be 1-point (0.
014-inch), while all other rules must be
one-half point (0.007-inch). Verticalrules must be parallel to the left edg
e of the form; horizontal rules parallel to the top edge.
•The left and top margins on Form W-2c (Copy A) and Form W-3c must be .5 inches. The width of a substitute Form W-2c (Copy
A) or W-3c must be 7.5 inches. See Exhibits A and B.
•Each column on Form W-2c (Copy A) and FormW-3c must measure 1.9 inches in width.
.05The official red-ink Form W-3c and Form W-2c (Copy A) are 7.5 inches wide. Employers filing Forms W-2c (Copy A) with
the SSA on paper must also file a Form W-3c. Form W-3c must be the same width (7.5 inches) as the Form W-2c. One Form W-2c
or Form W-3c is contained on a standard-size, 8.5 x 11-inch page.
.06The top, left, and right margins for the Form W-2c (Copy A) and Form W-3c are .5 inches (
1
/2inch). All margins must be free
of printing except for the words “DO NOT CUT, FOLD, OR STAPLE THIS FORM” on red-ink Form W-2c (Copy A) or “DO NOT
CUT, FOLD, OR STAPLE” on red-ink Form W-3c.
.07The identifying numbers are “44444” for Form W-2c and “55555” for Form W-3c. No printing should appear anywhere near
the identifying numbers.
Note.The identifying number must be printed in nonreflective black ink in OCR-A font of 10 characters per inch.
.08Continuous pin-fed Forms W-2c (Copy A) must be separated into 11-inch deep pages. The pin-fed strips must be removed
when Forms W-2c (Copy A) are filed with the SSA.
.09Box 12 of Form W-2c (Copy A) contains four entry boxes – 12a, 12b, 12c, and 12d. Do not make more than one entry per box.
Enter your first code in box 12a (for example, enter Code D in box 12a, not 12d, if it is your first entry). If more than four items need
to be reported in box 12, use a second Form W-2c to report the additional items. Do not report the same federal tax data to the SSA on
November 22, 20107412010–47 I.R.B.

more than one Form W-2c (Copy A). However, repeat the identifyinginformation (employee’s name, address, and SSN; employer’s
name, address, and EIN) on each additional form.
.10The checkboxes in box 13 of Form W-2c (Copy A) must be .14 inches each; the space before the first checkbox is .20 inches;
the spacing on each remaining side of the three checkboxes is .36 inches. The checkboxes in box c of Form W-3c must also be .14
inches.
Note.More than 50% of an applicable checkboxmustbecoveredbyan“X.”
.11All substitute Forms W-2c (Copy A) and W-3c in the red-ink format must have the form number and form title printed on the
bottom face of each form using type identical ora close approximation to that of the official IRS form. The red-ink substitute must
have the form producer’s (not the form filer’s) EIN entered in redin place of the Cat. No. (directly to the left of “Department of the
Treasury” for Form W-2c (Copy A) and at the bottom for Form W-3c).
.12The words “For Privacy Act and Paperwork Reduction Act Notice, see separate instructions.”must be printed on all Forms
W-2c (Copy A) and Forms W-3c.
.13The Office of Management and Budget (OMB) Number must be printed on substitute Forms W-3c and W-2c (on each ply) in
the same location as on the official IRS forms.
.14All substitute Forms W-3c must include the instructions that are printed on the same sheet below the official IRS form.
.15The appropriate SSA addresses must be printed on the front of Form W-3c below the body of the form (see Exhibit B).
If you use the U.S. Postal Service, the address is:
Social Security Administration
Data Operations Center
P.O. Box 3333
Wilkes-Barre PA 18767-3333.
If you use a carrier other than the U.S. Postal Service, the address is:
Social Security Administration
Data Operations Center
Attn: W-2c Process
1150 E. Mountain Drive
Wilkes-Barre PA 18702-7997.
.16The back of substitute Form W-2c (Copy A) and Form W-3c must be free of all printing.
.17All copies must be clearly legible. Fading must be minimized to ensure legibility.
.18Chemical transfer paper is permitted for Form W-2c (Copy A) only if the following standards are met:
•Only chemically-backed paper is acceptable for Form W-2c (CopyA). Front and back chemically-treated paper cannot be pro-
cessed properly by scanning equipment.
•Chemically-transferred images must be black.
•Carbon-coated forms are not permitted.
.19The Government Printing Office (GPO) symbol and the Catalog Number (Cat. No.) must be deleted from substitute Form
W-2c (Copy A) and Form W-3c.
.20The sequence for assembling the copies of Form W-2c is as follows.
•Copy A — For Social Security Administration
•Copy 1 — State, City, or Local Tax Department
•Copy
B—ToBeFiledwithEmployee’sFEDERALTaxReturn
•Copy C — For EMPLOYEE’s RECORDS
•Copy2—ToBeFiledwithEmployee’sState, City, or Local Income Tax Return
•Copy D — For Employer
2010–47 I.R.B.742November 22, 2010

Section 5 - Specifications for Substitute Black-and-White Copy A and W-3c Forms Filed With
the SSA
.01The SSA-approved substitute black-and-white Forms W-2c (Copy A) and W-3c are referred to as substitute black-and-white
Copy A and W-3c . Specifications for the substitute black-and-white Copy A and W-3c are similar to the red-ink forms (Section
4) except for the items that follow (see Exhibits C and D). You may contact the SSA via email atc
opy.a.forms@ssa.govfor more
information.
Note.Exhibits are samples only and must not be downloaded to meet tax obligations.
(1) Forms must be printed on 8.5 x 11-inch single-sheet paper only. There must be one Form W-2c (Copy A) or W-3c printed on
a page.
(2) All forms and data must be printed in nonreflective black ink only.
(3) The data and forms must be programmed to print simultaneously. Forms cannot be pro
duced separately from wage data entries.
(4) The forms must not contain corner register marks.
(5) The forms must not contain any shaded areas, including those boxes that are entirely shaded, on the red-ink forms.
(6) Identifying numbers on both Form W-2c (“44444”) and Form W-3c (“55555”) must be preprinted in 14-point Arial bold font
or a close approximation.
(7) The form numbers (“W-2c” and “W-3c”) must bein 18-point Arial font or a close approximation.
(8) No part of the box titles or the data printed on the forms may touch any of the vertical or horizontal lines, nor should any of
the data intermingle with the box titles. The data should be centered in the boxes.
(9) Do not print any information in the margins of the black-and-white forms (for example, do not print “DO NOT CUT, FOLD,
OR STAPLE” in the top margin of Form W-3c).
(10) The word “Code” must not appear in box 12 on Form W-2c (Copy A).
(11) A 4-digit vendor code (not filer code) preceded by four zerosand a slash (for example, 0000/9876) must appear in 12-point
Arial font, or a close approximation, in place of the Cat. No. to the left of “Department of the Treasury”on Form W-2c (Copy A) and
in the bottom right corner of Form W-3c.
Note.Do not display the form producer’s EIN. The vendor code will be used to identify
the form producer.
(12) Do not print Catalog Numbers (Cat. No.) on either Form W-2c (Copy A) or Form W-3c.
(13) Do not print the checkboxes in:
•Box c or the “Yes/No” area above the signature area of Form W-3c. The “X” should be programmed to be printed and centered
directly below the applicable “Kind of Payer” in box c. The “X”s for the “Yes/No” area above the signature area should be
programmed to be printed before “Yes” or “No.”
•Box e or Box 13 of Form W-2c (Copy A). The “X” should be programmed to be printed and centered in the same location as the
checkbox in Box e or directly below the applicable box title in Box 13.
(14) Do not print dollar signs. If there are no money amounts being reported, the entire field should be left blank.
.02The dimensions for the substitute black-and-white Copy A and W-3c are as follows. See Exhibits C and D.
(1) The left and top margins on Form W-2c (Copy A) and Form W-3c must measure
1
/2(0.5) inch.
(2) The distance from the top line of Form W-3c to the bottom line of the form must measure 7
1
/6(7.17) inches.
(3) The distance from the top line of Form W-2c (Copy A) to the bottom line of the form must measure 9
1
/3(9.33) inches.
(4) Each box on Form W-2c (Copy A) and Form W-3c must measure
1
/3(.33) inch in height.
November 22, 20107432010–47 I.R.B.

(5) BoxbonFormW-3cmustmeasure
5
/6(.83) inch in height.
(6) Box a on Form W-2c (Copy A) must measure 1
1
/3(1.33) inches in height and box 14 must measure
5
/6(0.83) inch in height.
(7) Each column on Form W-2c (Copy A) and Form W-3c must m
easure 1
9
/10(1.9) inches in width.
(8) The “Explain decreases here” box and the“Signature” box on Form W-3c must measure
1
/2(0.5) inches in height.
.03You must submit samples of your black-and-white substituteforms to the SSA. Only black-and-white substitute Copy A and
W-3c will be accepted for approval by the SSA. Questions regarding other forms (that is, red-ink Forms W-2, W-2c, W-3, W-3c, 1099
series, 1096, etc.) must be directed to the IRS. Also see IRS Publications 1141 and 1179.
.04You will be required to send one set of blank and one set of dummy-data substitute black-and-white Copy A and W-3c for
approval. Do not use live taxpayer information. Sample data entries should be filled in to the maximum length for each box entry,
preferably using numeric data or alpha data, depending upon the type required to be entered. Include in your submission the name,
telephone number, fax number, and email address of a contact person who can answer questions regarding your sample forms.
.05To receive approval, you may first contact the SSA atc
opy.a.forms@ssa.govto obtain a template and further instructions in
PDF or Excel format. You may also send your sample substitute black-and-white forms to:
Social Security Administration
Data Operations Center
Attn: Substitute Black-and-White Copy A Forms, Room 348
1150 E. Mountain Drive
Wilkes-Barre PA 18702-7997
Send your sample forms via private mail carrier or certified mail in orderto verify their receipt. You can expect approval (or disap-
proval) by the SSA within 30 daysof receipt of your sample forms.
.06The 4-digit vendor code preceded by fourzeros and a slash (0000/9876) must be preprinted on the sample black-and-white
substitute forms. Forms not containing a vendor code will be rejected and will not be submitted for testing or approval. If you have a
valid vendor code provided to you through the National Association of Computerized Tax Processors, you should use that code. If you
do not have a valid vendor code, contactthe Social Security Administration atc
opy.a.forms@ssa.govto obtain an SSA-issued code.
(Additional information on vendor codes may be obtained from the SSA or the National Associationof ComputerizedTax Processors
via email atp
resident@nactp.org.)
Note.Vendor codes are only required by those companies producing the W-2 family of forms as part of a product for resale to be used
by multiple employers and payroll professionals. Employers developing Forms W-2c or W-3c to be used only for their individual
company do not require a vendor code.
.07 If you use forms produced by a vendor and have questions concerning approval,do not send the forms to the SSA for
approval. Instead, you may contact the software vendor to obtain acopy of SSA’s dated approval notice supplied to that vendor.
Section 6 - Requirements for Substitute Privately-Printed Forms W-2c (Copies B, C, and 2)
Furnished to Employees
.01All employers (including those who file electronically) must furnish employees with at least two copies of Form W-2c (three
or more for employees required to file a state, city, or local incometax return). Employee copies do not require approval as long as
these requirements are followed.
Note.Although substitute Copy 1 of Form W-2c can be printed in black instead of the red dropout ink, it should conform as closely
as possible to Copy A of the official IRS form in content, format, andlayout in order to satisfy state and local reporting requirements.
.02Some Forms W-2c that include logos, slogans, and advertisements(including advertisements for tax preparation software) may
be confused with questionable Forms W-2c. An employee may not recognize the importance of the employee copy for tax reporting
purposes due to the use of logos, slogans, and advertisements. Thus, the IRS has determined that logos, slogans, and advertising on
Forms W-3c, Copy A of Forms W-2c, or any employee copies reporting wages paid during the 2011 calendar year and thereafter will
not be allowed, with the following exceptions:
•Forms may include the exact name of the employer or agent, primary trade name, trademark, service mark, or symbol of the
employer or agent.
•Forms may include an embossment or watermark on the information return (and copies) that is a representation of the name, a
primary trade name, trademark, service mark, or symbol of the employer or agent.
2010–47 I.R.B.744November 22, 2010

•Presentation may be in any typeface, font, stylized fashion, or print color normally used by the employer or agent, and used in a
non-intrusive manner.
•These items must not materially interfere with the ability of the recipient to recogn
ize, understand, and usethe tax information on
the employee copies.
•Corrected information on information returns and employee copies that was shown on Forms W-2c for amounts paid before Jan-
uary 1, 2011, is an exception.
The IRS e-file logo on the IRS official employee copies may be included, but it is not required, on any of the substitute form copies.
The information return and employee copies must clearly identify the employer’s name associated with its employer identification
number.
Forms W-2c and W-3c are subject to annual review and possible change. The IRS has postponed the prohibition against including
slogans, advertising, and logos on information returns and employee copies reporting wages paid during the 2010 calendar year an-
nounced in Rev. Proc. 2008-33 (Publication 1141). The prohibition against including slogans, advertising, and logos on information
returns and employee copies reporting wages paid during the 2011 calendar year, and thereafter,is being announced at this time to
provide further advance notice. This revenue procedure may be revised at a future date to state other requirements of the IRS and the
SSA regarding the preparation and use of substitute forms for Form W-2c and Form W-3c for wages paid during the 2011 calendar
year. If you have comments about the prohibition against includingslogans, advertising, and logoson information returns and em-
ployee copies, send or email your comments to: Internal Revenue Service, Attn: Substitute Forms Program, SE:W:CAR:MP:T:T:SP,
IR 6526, 1111 Constitution Ave., NW, Washington, DC 20224 orS
ubstituteforms@irs.gov.
.03Chemical transfer paper for employee copies must be clearly legible, have the capability to be photocopied, and not fade to
such a degree as to preclude legibility and the ability to photocopy.
.04Chemical transfer paper for employee copies must be clearly legible, have the capability to be photocopied, and not fade to
such a degree as to preclude legibility and the ability to photocopy.
.05Type must be substantially identical in size and shape to that on the official form.
.06Substitute forms for employees need to contain only the payment boxes and captions that are applicable. These boxes, box
numbers, and box titles must, when applicable, match the IRS-printed form. In all cases, the employee name, address, and SSN, as
well as the employer name, address, and EIN, must be present.
.07The dimensions of the boxes on these copies (Copies B, C, and 2), but not Copy A, may be adjusted to allow space for conveying
additional information. This may permit theemployer to eliminate other statements or notices that would otherwise be furnished to
employees.
.08The maximum allowable dimensions for employee copies of Form W-2c are no more than 11 inches deep by 8.5 inches wide.
The minimum allowable dimensions for employee copies of Form W-2c are 2.67 inches deep by 4.25 inches wide.
Note.These maximum and minimum size specifications are subject to future change.
.09Either horizontal or vertical format is permitted for substitute employee copies of Forms W-2c. That is, the width of the form
may be either greater or less than the depth of the form.
.10All copies of Form W-2c must clearly and prominently display the form number and the form title together in one area of the
form. It is recommended (but not required) that this be located on the bottom left of Form W-2c. The reference to the “Department
of the Treasury – Internal Revenue Service” must be on all copies of Form W-2c. It is recommended (but not required) that this be
located on the bottom right of Form W-2c.
.11If the substitute Forms W-2c are not labeled as to the disposition of the copies, then written notification must be provided to
each employee as specified below.
•The first copy of Form W-2c (Copy B) is filed with the employee’s federal tax return.
•The second copy of Form W-2c (Copy C) is for the employee’s records.
•If applicable, the third copy (Copy 2) of Form W-2c is filed with the employee’s state, city, or local income tax return.
If the substitute Forms W-2c are labeled, the forms must contain the applicable description as stated on the official form.
.12Instructions similar to those on the back of Form W-2c (Copy C) of the official form must be provided to each employee.
Section 7 - Electronic Delivery of Form W-2 and W-2c Recipient Statements
.01If you are required to furnish a written statement (Copy B or anacceptable substitute) to a recipient, then you may furnish the
statement electronicallyinstead of on paper. This includes furnishing the statement to recipients of Forms W-2 and W-2c.
If you meet the requirements listed below, you are treated as furnishing the statement timely.
November 22, 20107452010–47 I.R.B.

.02The recipient must consent in the affirmative and not have withdrawn the consent before the statement is furnished. The consent
by the recipient must be made electronically in a way that shows that he or she can access the statement in the electronic format in
which it will be furnished.
You must notify the recipient of any hardware or software changes prior to furnishingthe statement. A new consent to receive the
statement electronically is required after the new hardware or software is put into service.
Prior to furnishing the statements electronically, you must provide the recipient a statement with the following information promi-
nently displayed:
•If the recipient does not consent to receive the statement electronically, a paper copy will be provided.
•The scope and duration of the consent. For example, whether the consent applies to every year the statement is furnished or only
until January 31 immediately following the date of the consent.
•How to obtain a paper copy after giving consent.
•How to withdraw the consent. The consent may be withdrawn at anytime by furnishing the withdrawal in writing (electronically or
on paper) to the person whose name appears on the statement. Confirmation of the withdrawal also will be in writing (electronically
or on paper).
•Notice of termination. The notice must state under what conditions the statements will no longer be furnished to the recipient.
•Procedures to update the recipient’s information.
•A description of the hardware and software required to access, print and retain a statement, and a date the statement will no longer
be available on the website.
.03Additionally, you must:
•Ensure the electronic format contains all the required info
rmation and complies with the guidelines in this document.
•If posting the statement on a website, post it for the recipient to access on or before the January 31 due date through October 15
of that year.
•Inform the recipient, in person, electronically or by mail, of the posting and how to access and print the statement.
For more information, see Regulations section 31.6051-1(j).
Section 8 - Instructions for Employers
.01Privately-printed substitute Forms W-2c are not required to contain a copy to be retained by employers (Copy D). However,
employers must be prepared to verify or duplicate this information if the IRS or the SSA requests it. Paper filers who do not keep
Copy D of Form W-2c should be able to generate afacsimile of Form W-2c (Copy A) in case of loss.
.02If Copy D is provided for the employer, instructions contained on the back of Copy D of the official form must appear on the
back of the substitute form. If Copy D is not provided, these instructions must be furnished to the employer on a separate statement.
.03Only originals or compliant substitute copies of Forms W-2c (Copy A) and Forms W-3c may be filed with the SSA. Carbon
copies and photocopies are unacceptable.
.04Employers should type or machine print entries on plain paper forms whenever possible and provide good quality data entries
by using a high quality type face, inserting data in the middle of blocks that are well separated from other printing and guidelines, and
taking any other measures that willguarantee clear, sharp images.
Note.12-point Courier font is preferred by the SSA.
.05Because employers must file a machine-scannable Form W-2c, they should meet the following requirements.
•Use 12-point Courier (SSA-preferred) font for data entries.
•Proportional-spaced fonts are unacceptable.
•Refrain from printing any data in the top margin of the forms.
.06The employer must also furnish payee copies of Forms W-2c (Copies B, C, and 2) that are legible and capable of being photo-
copied (by the employee).
.07When Forms W-2c or W-3c are typed, black ink must be used with no script type, inverted font, italics, or dual-case alpha
characters.
2010–47 I.R.B.746November 22, 2010

.08Form W-2c (Copy A) requires decimal entries for wage data. Dollar signs should not be printed with money amounts on Forms
W-2c (Copy A) and Form W-3c.
.09The filer’s employer identification number (EIN) must be entered in box (b) of Form W-2c and box (e) of Form W-3c.
.10The employer’s name, address, EIN, and state ID number may be preprinted.
Section 9 - OMB Requirements for Both Red-Ink and Black-and-White Copy A and W-3c
Substitute Forms
.01The Paperwork Reduction Act (the Act) of 1995 (Public Law 104-13) requires the following.
•The Office of Management and Budget (OMB) approves all IRS tax forms that are subject to the Act.
•Each IRS form contains the OMB approval number, if assigned. (The official OMB numbers may be found on the offi
cial IRS
forms and are also shown on the forms in the exhibits.)
•Each IRS form (or its instructions) states:
(1) Why the IRS needs the information,
(2) How it will be used, and
(3) Whether or not the information is required to be furnished to the IRS.
.02This information must be provided to any users of official or substitute IRS forms or instructions.
.03The OMB requirements for substitute IRS forms are the following.
•Any substitute form or substitute statement to a recipient must show the OMB number as it appears on the official IRS form.
•For Form W-3c and Form W-2c (Copy A), the OMB number (1545-0008) must appear exactly as shown on the official IRS form.
•For any copy of Form W-3c or Form W-2c, other than Copy A, the OMB number must use one of the following formats.
(1) OMB No. 1545-0008 (preferred) or
(2) OMB # 1545-0008 (acceptable).
.04Any substitute Form W-3c and Form W-2c (Copy A) must state “For Privacy Act and Paperwork Reduction Act Notice, see
separate instructions.” If no instructionsare provided to users of your forms, you must furnish them the exact text of the Privacy Act
and Paperwork Reduction Act Notice.
Section 10 - Reproducible Copies of Forms
.01You can obtain official IRS forms and information copies of federal tax materials at local IRS offices or by calling the IRS
Distribution Center at 1-800-829-3676. Other ways to get federal tax material include the following.
•Accessing IRS.gov.
•Ordering IRS Tax
Products on DVD (Publication 1796).
Only contact the
IRS, not the SSA, for forms.
Note.Many IRS forms are provided on IRS.gov and on the IRS TaxProducts on DVD. But copies of Form W-2c (Copy A) and Form
W-3c cannot be used for filing with the SSA when obtained by these methods because the forms do not meet the specific printing
specifications as described in this publication. Copies of Forms W-2c and W-3c obtained from these sources are for information
purposes only.
.02The DVD contains approximately 2,800 tax forms and publications for small businesses, return preparers, and others who
frequently need current or prior year tax products. Most current tax forms on the DVD may be filled in electronically, then printed out
for submission and saved for recordkeeping. Other products on the DVD include the Internal Revenue Bulletins, Tax Supplements,
and Internet resources and links for the tax professional.
For system requirements, contact the National Technical Information Service (NTIS) ath
ttp://www.ntis.gov. Prices are subject to
change. The cost of the DVD if purchased from NTIS via IRS.gov atw
ww.irs.gov/formspubs/article/0,,id=108660,00.htmlis $30
(with no handling fee). If purchased using the following methods, the cost for each DVD is $30 (plus a $6 handling fee). These
methods are:
November 22, 20107472010–47 I.R.B.

•By phone – 1-877-CDFORMS (1-877-233-6767) (For IRS DVD purchase only),
•By fax – 703-605-6900 (For IRS DVD purchase only),
•By mail – to:
National Technical Information Service
5301 Shawnee Road
Alexandria VA 22312
Section 11 - Effect on Other Documents
.01Revenue Procedure 2009-48, 2009-51 I.R.B. 864 (reprinted as Publication 1223, Rev. 12-2009), is superseded.
Section 12 - Exhibits
2010–47 I.R.B.748November 22, 2010

November 22, 20107492010–47 I.R.B.

2010–47 I.R.B.750November 22, 2010

November 22, 20107512010–47 I.R.B.

2010–47 I.R.B.752November 22, 2010

Part IV. Items o
fGeneralInterest
Tribal Econom
ic Development
Bonds — Extens
ion of
Deadline to Is
sue Bonds
Announcemen
t 2010–88
SECTION 1. BA
CKGROUND
In Notice 200
9–51, 2009–28 I.R.B. 128
(July 13, 200
9), the Treasury Department
and the IRS ad
dressed administrative pro-
cedures for
allocations of the $2 billion
national bo
nd volume limitation authority
(“volume ca
p”) to issue tribal economic
developmen
t bonds (“Tribal Economic
Developme
nt Bonds”) under § 7871(f) of
the Intern
al Revenue Code (“Code”). On
September
15, 2009, the IRS announced
allocatio
ns in an aggregate amount of ap-
proximat
ely $1 billion of volume cap in
the first
tranche of allocation (the “First
Allocati
on”) of authority to issue Tribal
Economic
Development Bonds. Section
7(f) of No
tice 2009–51 provides that if
bonds ar
e not issued by December 31,
2010, fo
r any or all of the allocation re-
ceived b
yanIndiantribalgovernment
from the
First Allocation, then such allo-
cation i
s treated as forfeited.
SECTION
2. EXTENSION OF
ADMINI
STRATIVE DEADLINE TO
ISSUE B
ONDS
.01 Exc
ept as otherwise provided in this
Announ
cement, Indian tribal governments
that re
ceived an allocation of volume cap
from t
he First Allocation will receive an
autom
atic extension of time of six months
from D
ecember 31, 2010, to June 30,
2011,
to issue Tribal Economic Develop-
ment B
onds pursuant to those allocations.
This
extension does not apply to an Indian
trib
al government that has notified or will
noti
fy the IRS that it does not intend to
use i
ts allocation of volume cap from the
Firs
t Allocation to issue Tribal Economic
Deve
lopment Bonds. In those cases, the
all
ocation has been, or will be, forfeited as
of t
he date of the notification. The exten-
sio
n described in this Announcement does
not
change that forfeiture.
.02
Additionally, Indian tribal gov-
ern
ments that received an allocation of
vol
ume cap from the First Allocation may
submit a writt
en request for an additional
extension of t
ime of six months from
June 30, 2011,
to December 31, 2011,
to issue Triba
l Economic Development
Bonds pursuan
t to those allocations.
Indian triba
l governments must submit
requests for
additional extensions to the
IRS by March 3
1, 2011. A request for
an additiona
l extension must include: (1)
a copy of the
allocation letter from the
IRS for the a
llocation to which the request
relates; an
d (2) statements from an official
of the India
n tribal government duly
authorize
d to execute legal documents on
behalf of t
he Indian tribal government in
making the
request, made under penalty
of perjury
, including (a) a statement
explainin
g the reason for the extension of
time, (b)
a statement that the Indian tribal
governme
nt reasonably expects to issue
Tribal Ec
onomic Development Bonds
pursuant
to such allocation on or before
Decembe
r 31, 2011, to finance the project
describ
ed in the Indian tribal government’s
origina
l application (“Application”), and
(c) a sta
tement that such official has
knowled
ge of the relevant facts and
circum
stances relating to the request
and the
Application, has examined the
reques
t and the Application, and that
the inf
ormation contained in the request
and the
Application is true, correct, and
compl
ete.
.03 A re
quest for an additional exten-
sion m
ustbesubmittedbyhardcopyin
dupli
cate accompanied by a copy of the
reque
st in electronic format on compact
disc s
ent by mail to the Internal Rev-
enue S
ervice (IRS), SE:T:GE:TEB:CPM,
Atte
ntion: Mark Helfer, 1122 Town &
Coun
try Commons, Chesterfield, Mis-
sour
i 63017.
.04 A
request for an additional exten-
sion
should not include an inquiry relating
to de
viations from information submitted
in th
e Application under Section 8 of No-
tic
e 2009–51. Section 8 of Notice 2009–51
pro
vides that an allocation of Tribal Eco-
nom
ic Development Bond volume cap is
val
id notwithstanding insubstantial devia-
tio
ns from the information submitted in the
App
lication. Section 8 of Notice 2009–51
al
so describes criteria applicable to deter-
mi
nations of whether a deviation with re-
sp
ect to the information submitted in the
Application i
s insubstantial, as well as pro-
cedures to app
ly for approval of specific
insubstantia
l deviations.
.05 For reques
ts submitted in compli-
ance with the r
equirements described in
this Announce
ment for additional exten-
sions from Jun
e 30, 2011, to December 31,
2011, the IRS
expects to confirm the ex-
tensions by M
ay 31, 2011. Indian tribal
governments
that receive additional exten-
sions will re
ceive a total extension of one
year from De
cember 31, 2010, to Decem-
ber 31, 2011
, to issue Tribal Economic De-
velopment B
onds pursuant to volume cap
received in
the First Allocation.
SECTION 3. F
ORFEITURE OF
ALLOCATIO
NS
If bonds ar
e not issued by June 30,
2011, for a
ny or all of an allocation re-
ceivedbya
n Indian tribal government pur-
suant to th
e First Allocation with respect
to which t
he Indian tribal government does
not recei
ve an additional extension as de-
scribed i
n section 2.02 of this Announce-
ment, the
n such allocation is treated as for-
feited. I
f bonds are not issued by Decem-
ber 31, 2
011, for any or all of an alloca-
tion rec
eivedbyanIndiantribalgovern-
ment pur
suant to the First Allocation with
respect
to which the Indian tribal govern-
ment rec
eives such an additional exten-
sion, t
hen such allocation is treated as for-
feited
. Any allocation amounts treated as
forfei
ted may be available for allocation by
the IRS
as part of an allocation process to
be anno
unced by the IRS at some future
date.
SECTI
ON 4. EFFECT ON OTHER
TIMIN
G REQUIREMENTS
.01 In
February, 2010, the IRS an-
nounc
ed allocations in an aggregate
amoun
t of approximately $1 billion of
volum
e cap in the second tranche of al-
loca
tion (the “Second Allocation”) of
auth
ority to issue Tribal Economic De-
velo
pment Bonds. Section 7(f) of Notice
2009
–51 provides that if bonds are not
issu
ed by December 31, 2011, for any or
all o
f the allocation received by an Indian
tri
bal government pursuant to the Sec-
ond
Allocation, then such allocation is
tre
ated as forfeited.This Announcement
November 22, 20107532010–47 I.R.B.

does not modify any provisions relating
to the forfeiture of allocations of volume
cap received by Indian tribal governments
pursuant to the Second Allocation.
.02 Tribal Economic Development
Bonds may be issued as build Amer-
ica bonds (“Build America Bonds”) if
additional eligibility requirements for
Build America Bonds are met. Section
54AA(d)(1)(B) of the Code requires Build
America Bonds to be issued before Jan-
uary 1, 2011. This Announcement does
not modify the statutory requirement that
Build America Bonds be issued before
January 1, 2011.
SECTION 5. DRAFTING
INFORMATION
The principal author of this Announce-
ment is Debbie Cho of the IRS Office
of Tax Exempt Bonds. However, other
personnel from the IRS and Treasury De-
partment participated in its development.
For further information regarding this An-
nouncement, contact Debbie Cho at (714)
347–9431 (not a toll-free call).
2010–47 I.R.B.754November 22, 2010

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
November 22, 2010i2010–47 I.R.B.

Numerical Finding List
1
Bulletins 2010–27 through 2010–47
Announcements:
2010-43, 2010-27 I.R.B.42
2010-44, 2010-28 I.R.B.54
2010-45, 2010-29 I.R.B.87
2010-46, 2010-29 I.R.B.87
2010-47, 2010-30 I.R.B.173
2010-48, 2010-32 I.R.B.234
2010-49, 2010-34 I.R.B.272
2010-50, 2010-33 I.R.B.260
2010-51, 2010-33 I.R.B.261
2010-52, 2010-36 I.R.B.315
2010-53, 2010-36 I.R.B.323
2010-54, 2010-38 I.R.B.386
2010-55, 2010-37 I.R.B.346
2010-56, 2010-39 I.R.B.398
2010-57, 2010-38 I.R.B.386
2010-58, 2010-38 I.R.B.387
2010-59, 2010-39 I.R.B.399
2010-60, 2010-40 I.R.B.417
2010-61, 2010-40 I.R.B.417
2010-62, 2010-40 I.R.B.417
2010-63, 2010-40 I.R.B.417
2010-64, 2010-40 I.R.B.418
2010-65, 2010-40 I.R.B.418
2010-66, 2010-40 I.R.B.418
2010-67, 2010-40 I.R.B.418
2010-68, 2010-40 I.R.B.418
2010-69, 2010-40 I.R.B.418
2010-70, 2010-40 I.R.B.418
2010-71, 2010-40 I.R.B.418
2010-72, 2010-40 I.R.B.419
2010-73, 2010-40 I.R.B.419
2010-74, 2010-40 I.R.B.419
2010-75, 2010-41 I.R.B.428
2010-76, 2010-41 I.R.B.432
2010-77, 2010-41 I.R.B.433
2010-78, 2010-41 I.R.B.433
2010-79, 2010-42 I.R.B.475
2010-80, 2010-45 I.R.B.638
2010-81, 2010-45 I.R.B.638
2010-82, 2010-42 I.R.B.476
2010-84, 2010-44 I.R.B.603
2010-85, 2010-44 I.R.B.604
2010-86, 2010-44 I.R.B.604
2010-87, 2010-43 I.R.B.557
2010-88, 2010-47 I.R.B.753
2010-89, 2010-46 I.R.B.669
Notices:
2010-48, 2010-27 I.R.B.9
2010-49, 2010-27 I.R.B.10
2010-50, 2010-27 I.R.B.12
Notices— Continued:
2010-51, 2010-29 I.R.B.83
2010-52, 2010-30 I.R.B.88
2010-53, 2010-31 I.R.B.182
2010-54, 2010-40 I.R.B.403
2010-55, 2010-33 I.R.B.253
2010-56, 2010-33 I.R.B.254
2010-57, 2010-34 I.R.B.267
2010-58, 2010-37 I.R.B.326
2010-59, 2010-39 I.R.B.396
2010-60, 2010-37 I.R.B.329
2010-61, 2010-40 I.R.B.408
2010-62, 2010-40 I.R.B.411
2010-63, 2010-41 I.R.B.420
2010-64, 2010-41 I.R.B.421
2010-65, 2010-41 I.R.B.424
2010-66, 2010-42 I.R.B.437
2010-67, 2010-43 I.R.B.529
2010-68, 2010-44 I.R.B.576
2010-69, 2010-44 I.R.B.576
2010-70, 2010-44 I.R.B.576
2010-72, 2010-46 I.R.B.661
2010-73, 2010-46 I.R.B.662
2010-74, 2010-46 I.R.B.663
2010-76, 2010-47 I.R.B.712
Proposed Regulations:
REG-138637-07, 2010-44 I.R.B.581
REG-139343-08, 2010-33 I.R.B.256
REG-119921-09, 2010-45 I.R.B.626
REG-137486-09, 2010-46 I.R.B.668
REG-142800-09, 2010-44 I.R.B.580
REG-144762-09, 2010-45 I.R.B.637
REG-151605-09, 2010-31 I.R.B.184
REG-153340-09, 2010-42 I.R.B.469
REG-112841-10, 2010-27 I.R.B.41
REG-118412-10, 2010-29 I.R.B.85
REG-119046-10, 2010-40 I.R.B.415
REG-120391-10, 2010-35 I.R.B.310
REG-120399-10, 2010-32 I.R.B.239
REG-125592-10, 2010-43 I.R.B.556
Revenue Procedures:
2010-25, 2010-27 I.R.B.16
2010-26, 2010-30 I.R.B.91
2010-27, 2010-31 I.R.B.183
2010-28, 2010-34 I.R.B.270
2010-29, 2010-35 I.R.B.309
2010-30, 2010-36 I.R.B.316
2010-31, 2010-40 I.R.B.413
2010-32, 2010-36 I.R.B.320
2010-33, 2010-38 I.R.B.347
2010-34, 2010-41 I.R.B.426
2010-35, 2010-42 I.R.B.438
2010-36, 2010-42 I.R.B.439
2010-37, 2010-42 I.R.B.440
Revenue Procedures— Continued:
2010-38, 2010-43 I.R.B.530
2010-39, 2010-42 I.R.B.459
2010-40, 2010-46 I.R.B.663
2010-42, 2010-47 I.R.B.715
2010-43, 2010-47 I.R.B.738
Revenue Rulings:
2010-18, 2010-27 I.R.B.1
2010-19, 2010-31 I.R.B.174
2010-20, 2010-36 I.R.B.312
2010-21, 2010-39 I.R.B.388
2010-22, 2010-39 I.R.B.388
2010-23, 2010-39 I.R.B.388
2010-24, 2010-40 I.R.B.400
2010-25, 2010-44 I.R.B.571
2010-26, 2010-44 I.R.B.573
2010-27, 2010-45 I.R.B.620
Tax Conventions:
2010-48, 2010-32 I.R.B.234
2010-52, 2010-36 I.R.B.315
Treasury Decisions:
9486, 2010-27 I.R.B.3
9487, 2010-28 I.R.B.48
9488, 2010-28 I.R.B.51
9489, 2010-29 I.R.B.55
9490, 2010-31 I.R.B.176
9491, 2010-32 I.R.B.186
9492, 2010-33 I.R.B.242
9493, 2010-35 I.R.B.273
9494, 2010-43 I.R.B.500
9495, 2010-43 I.R.B.477
9496, 2010-43 I.R.B.484
9497, 2010-44 I.R.B.558
9498, 2010-45 I.R.B.605
9499, 2010-45 I.R.B.622
9500, 2010-46 I.R.B.649
9501, 2010-46 I.R.B.651
9502, 2010-46 I.R.B.641
9503, 2010-47 I.R.B.706
9504, 2010-47 I.R.B.670
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2010–1 through 2010–26 is in Internal Revenue Bulletin
2010–26, dated June 28, 2010.
2010–47 I.R.B.iiNovember 22, 2010

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2010–27 through 2010–47
Notices:
96-53
Modified by
Notice 2010-59, 2010-39 I.R.B.396
2003-19
Revoked by
Notice 2010-53, 2010-31 I.R.B.182
2004-2
Modified by
Notice 2010-59, 2010-39 I.R.B.396
2004-50
Modified by
Notice 2010-59, 2010-39 I.R.B.396
2005-90
Supplemented by
Notice 2010-65, 2010-41 I.R.B.424
2006-69
Amplified by
Notice 2010-59, 2010-39 I.R.B.396
2008-51
Modified by
Notice 2010-59, 2010-39 I.R.B.396
2008-52
Modified by
Notice 2010-59, 2010-39 I.R.B.396
2009-47
Obsoleted by
Rev. Proc. 2010-28, 2010-34 I.R.B.270
2009-80
Corrected by
Ann. 2010-59, 2010-39 I.R.B.399
2009-90
Superseded by
Notice 2010-54, 2010-40 I.R.B.403
Proposed Regulations:
REG-115037-00
Withdrawn by
Ann. 2010-60, 2010-40 I.R.B.417
REG-146893-02
Withdrawn by
Ann. 2010-60, 2010-40 I.R.B.417
Revenue Procedures:
81-18
Obsoleted by
Rev. Proc. 2010-27, 2010-31 I.R.B.183
Revenue Procedures— Continued:
2007-44
Modified by
Notice 2010-48, 2010-27 I.R.B.9
2008-33
Superseded by
Rev. Proc. 2010-42, 2010-47 I.R.B.715
2008-49
Superseded by
Rev. Proc. 2010-38, 2010-43 I.R.B.530
2008-52
Modified by
T.D. 9504, 2010-47 I.R.B.670
2009-18
Obsoleted in part by
Rev. Proc. 2010-25, 2010-27 I.R.B.16
2009-30
Superseded by
Rev. Proc. 2010-26, 2010-30 I.R.B.91
2009-35
Superseded by
Rev. Proc. 2010-33, 2010-38 I.R.B.347
2009-46
Superseded by
Rev. Proc. 2010-37, 2010-42 I.R.B.440
2009-47
Superseded by
Rev. Proc. 2010-39, 2010-42 I.R.B.459
2009-48
Superseded by
Rev. Proc. 2010-43, 2010-47 I.R.B.738
2009-50
Modified by
Rev. Proc. 2010-35, 2010-42 I.R.B.438
2010-3
Modified by
Notice 2010-62, 2010-40 I.R.B.411
Revenue Rulings:
2003-102
Obsoleted by
Rev. Rul. 2010-23, 2010-39 I.R.B.388
67-436
Obsoleted by
T.D. 9504, 2010-47 I.R.B.670
Treasury Decisions:
9487
Corrected by
Ann. 2010-50, 2010-33 I.R.B.260
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2010–1 through 2010–26 is in Internal Revenue Bulletin 2010–26, dated June 28, 2010.
November 22, 2010iii2010–47 I.R.B.

2010–47 I.R.B.November 22, 2010

November 22, 20102010–47 I.R.B.

INTERNAL REVENUE BULLETIN
The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superin-
tendent of Documents when their subscriptions must be renewed.
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The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are
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