Internal Revenue Bulletin 2017-30 (PDF rendition): IRS Notices

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HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE
Notice 2017–38, page 147.
This Notice describes the Treasury Department’s review of
significant tax regulations as directed by Executive Order
13789 and the regulations identified for burden reduction. It
requests public comments on whether the identified regula-
tions should be rescinded or modified and provides instruc-
tions for the submission of comments.
Finding Lists begin on page ii.
Bulletin No. 2017–30
July 24, 2017

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all
substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of internal
management are not published; however, statements of inter-
nal practices and procedures that affect the rights and duties
of taxpayers are published.
Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
revenue ruling. In those based on positions taken in rulings to
taxpayers or technical advice to Service field offices, identify-
ing details and information of a confidential nature are deleted
to prevent unwarranted invasions of privacy and to comply with
statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions of
the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A, Tax
Conventions and Other Related Items, and Subpart B, Legisla-
tion and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Sec-
retary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index for
the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
July 24, 2017Bulletin No. 2017–30

Part III. Administrative, Procedural, and Miscellaneous
Implementation of
Executive Order 13789
(Identifying and Reducing
Tax Regulatory Burdens)
Notice 2017–38
I. INTRODUCTION
On April 21, 2017, President Donald J.
Trump issued Executive Order 13789, a
directive designed to reduce tax regula-
tory burdens. The order instructed the
Secretary of the Treasury to review all
“significant tax regulations” issued on or
after January 1, 2016, and submit two
reports, followed promptly by concrete
action to alleviate the burdens of regula-
tions that meet criteria outlined in the or-
der. Specifically, the President directed
the Secretary, in consultation with the Ad-
ministrator of the Office of Information
and Regulatory Affairs, to submit a 60-
day interim report identifying regulations
that (i) impose an undue financial burden
on U.S. taxpayers; (ii) add undue com-
plexity to the Federal tax laws; or (iii)
exceed the statutory authority of the Inter-
nal Revenue Service (IRS).
1
The order
further instructs the Secretary to submit a
final report to the President by September
18, 2017, recommending “specific actions
to mitigate the burden imposed by regu-
lations identified in the interim report.”
2
II. SCOPE OF THE TREASURY
DEPARTMENT’S REVIEW
From January 1, 2016, through April
21, 2017, Treasury and the IRS issued 105
temporary, proposed, and final regula-
tions.
3
During this time period, Treasury
and the IRS issued one regulation— under
Section 385 of the Internal Revenue
Code—that the Office of Management
and Budget designated as significant pur-
suant to Executive Order 12866. Execu-
tive Order 13789 provides, however, that
in determining whether a regulation is sig-
nificant for the purpose of this review,
past determinations made pursuant to Ex-
ecutive Order 12866 are not controlling.
Fifty three of the 105 regulations issued
during the relevant review period are minor
or technical in nature and generated minimal
public comment. To ensure a comprehen-
sive review, Treasury treated the remaining
52 regulations as potentially significant and
reexamined all of them for the purpose of
formulating the interim report.
4
Based on that reexamination, Treasury
has identified regulations that meet the
criteria of the President’s order and qual-
ify as significant in view of the Presiden-
tial priorities for tax regulation outlined in
Executive Order 13789.
5
III. REGULATIONS IDENTIFIED FOR
BURDEN REDUCTION
Treasury has concluded that the fol-
lowing eight regulations meet at least one
of the first two criteria specified by Sec-
tion 2 of Executive Order 13789. Consis-
tent with the order, Treasury intends
to propose reforms—potentially ranging
from streamlining problematic rule provi-
sions to full repeal—to mitigate the bur-
dens of these regulations in a final report
submitted to the President.
1. Proposed Regulations under Section
103 on Definition of Political Sub-
division (REG–129067–15; 81 F.R.
8870)
These proposed regulations define a
“political subdivision” of a State (e.g.,
a city or county) that is eligible to
issue tax-exempt bonds for govern-
mental purposes under Section 103 of
the Internal Revenue Code. The pro-
posed regulations require a political
subdivision to possess three attributes:
(i) sovereign powers; (ii) a govern-
mental purpose; and (iii) governmen-
tal control. Commenters stated that
the longstanding “sovereign powers”
standard was settled law and had been
endorsed by Congress, and additional
limitations were unnecessary. Com-
menters also stated that the proposed
regulations would disrupt the status of
numerous existing entities and that it
would be burdensome and costly for
issuers to revise their organizational
structures to meet the new require-
ments of the proposed regulations.
2. Temporary Regulations under Sec-
tion 337(d) on Certain Transfers of
Property to Regulated Investment
Companies (RICs) and Real Estate
Investment Trusts (REITs) (T.D.
9770; 81 F.R. 36793)
These temporary regulations amend
existing rules on transfers of prop-
erty by C corporations to REITs and
RICs generally. In addition, thereg-
ulations provide additional guidance
relating to certain newly-enacted pro-
visions of the Protecting Americans
from Tax Hikes Act of 2015, which
were intended to prevent certain
spinoff transactions involving trans-
fers of property by C corporations to
REITs from qualifying for nonrecog-
nition treatment. Commenters ex-
pressed concern that the REIT spinoff
rules could result in over-inclusion of
gain in some cases, particularly where
a large corporation acquires a small
corporation that engaged in a Section
355 spinoff and the large corporation
subsequently makes a REIT election.
1
Executive Order 13789 § 2(a) (2017).
2
Id.§ 2(b).
3
This number excludes the following Federal Register documents: (1) corrections to proposed, temporary, or final regulations; (2) notices of proposed rulemaking cross-referencing temporary
regulations required pursuant to 26 U.S.C. § 7805(e)(1); (3) notices of proposed rulemaking issued on or after January 1, 2016, for which a subsequentfinal rule was issued on or before
April 21, 2017; (4) notices relating to public hearings; (5) notices withdrawing prior notices of proposed rulemaking; and (6) non-tax regulations jointly issued by the IRS and other
Departments of the Federal Government.
4
Seehttps://www.treasury.gov/resource-center/tax-policy/Pages/Executive-Orders.aspx for a list of the regulations that were reviewed.
5
SeeExecutive Order 12866 § 3(f) (1993) (defining “significant regulatory action” to include,inter alia, “any regulatory action that is likely to result in a rule that may...[r]aise novel...policy
issues arising out of...thePresident’s priorities”). To assess “undue financial burden,” Treasury considered the degree to which the regulation at issue imposed compliance costs or resulted in tax
liabilities that exceed the minimum required to achieve the relevant statutory objectives. To assess “undue complexity,” Treasury considered the extent to which the regulation at issue imposed new
substantive, computational, or other requirements not required to achieve the relevant statutory objectives, or introduced rules that added uncertainty for taxpayers.
Bulletin No. 2017–30July 24, 2017
147

3. Final Regulations under Section 7602
on the Participation of a Person De-
scribed in Section 6103(n) in a Sum-
mons Interview (T.D. 9778; 81 F.R.
45409)
These final regulations provide that
persons described in Section 6103(n)
of the Internal Revenue Code and
Treas. Reg. § 301.6103(n)–1(a) with
whom the IRS contracts for services—
such as outside economists,engineers,
consultants, or attorneys—may re-
ceive books, papers, records, or
other data summoned by the IRS
and, in the presence and under the
guidance of an IRS officer or em-
ployee, participate fully in the inter-
view of a person who the IRS has
summoned as a witness to provide
testimony under oath. Commenters
objected to the IRS’s ability tocon-
tract with outside attorneys and permit
them to question witnesses under oath,
and the U.S. Senate Finance Commit-
tee approved legislation in 2016 that
would prohibit the IRS from delegat-
ing to third-party contractors the au-
thority under Section 7602. Treasury
will review these regulations as they
concern the outside attorneys under
contract with the IRS to participate in
the taking of compulsory testimony
under oath.
4. Proposed Regulations under Section
2704 on Restrictions on Liquidation
of an Interest for Estate, Gift and
Generation-Skipping Transfer Taxes
(REG–163113– 02; 81 F.R. 51413)
Section 2704(b) of the Internal Rev-
enue Code provides that certain
non-commercial restrictions on the
ability to dispose of or liquidate
family-controlled entities should be
disregarded in determining the fair
market value of an interest in that
entity for estate and gift tax pur-
poses. These proposed regulations
would create an additional category
of restrictions that also would be dis-
regarded in assessing the fair market
value of an interest. Commenters ex-
pressed concern that the proposed
regulations would eliminate or re-
strict common discounts, such as mi-
nority discounts and discounts for
lack of marketability, which would
result in increased valuations and
transfer tax liability that would in-
crease financial burdens. Commenters
were also concerned that the proposed
regulations would make valuations
more difficult and that the proposed
narrowing of existing regulatory ex-
ceptions was arbitrary and capricious.
5. Temporary Regulations under Sec-
tion 752 on Liabilities Recognized
as Recourse Partnership Liabilities
(T.D. 9788; 81 F.R. 69282)
These temporary regulations gener-
ally provide: (i) rules for how liabil-
ities are allocated under Section 752
solely for purposes of disguised sales
under Section 707 of the Internal Rev-
enue Code; and (ii) rules for determin-
ing whether “bottom-dollar payment
obligations” provide the necessary
“economic risk of loss” to be taken
into account as a recourse liability.
Commenters stated that the first rule
was novel and would unduly limit the
amount of partners’ bases in their part-
nership interests for disguised sale
purposes, which would negatively im-
pact ordinary partnership transactions.
Commenters were concerned that the
bottom-dollarpaymentobligation
rules would prevent many business
transactions compared to the prior reg-
ulations and suggested their removal
or the development of more permis-
sive rules.
6. Final and Temporary Regulations un-
der Section 385 on the Treatment of
Certain Interests in Corporations as
Stock or Indebtedness (T.D. 9790;
81 F.R. 72858)
These final and temporary regulations
address the classification of related-
party debt as debt or equity for federal
tax purposes. The regulations are pri-
marily comprised of (i) rules establish-
ing minimum documentation require-
ments that ordinarily must be satisfied
in order for purported debt among re-
lated parties to be treated as debt for
federal tax purposes; and (ii) transac-
tion rules that treat as stock certain
debt that is issued by a corporation to
a controlling shareholder in a distribu-
tion or in another related-party trans-
action that achieves an economically
similar result. Commenters to the doc-
umentation rules criticized the finan-
cial burdens of compliance, particu-
larly with respect to more ordinary
course transactions. Commenters also
requested a longer delay in the effec-
tive date of the documentation rules.
Commenters to the final transaction
rules criticized the complexity associ-
ated with tracking multiple transac-
tions through a group of companies
and the increased tax burden imposed
on inbound investments.
7. Final Regulations under Section 987
on Income and Currency Gain or
Loss With Respect to a Section 987
Qualified Business Unit (T.D. 9794;
81 F.R. 88806)
These final regulations provide
rules for (i) translating income
from branch operations conducted
in a currency different from the
branch owner’s functional cur-
rency into the owner’s functional
currency, (ii) calculating foreign
currency gain or loss with respect
to the branch’s financial assets and
liabilities, and (iii) recognizing
such foreign currency gain or loss
when the branch makes a transfer
of any property to its owner. Com-
menters on the regulations stated
that the transition rule in the final
regulations imposes an undue fi-
nancial burden on taxpayers be-
cause it disregards losses calcu-
lated by the taxpayer for years
prior to the transition but not pre-
viously recognized. Commenters
also stated that the method pre-
scribed by the final regulations for
calculating foreign currency gain
or loss was unduly complex and
costly to comply with, particularly
where the final regulations differ
from financial accounting rules.
8. Final Regulations under Section 367
on the Treatment of Certain Trans-
fers of Property to Foreign Corpora-
tions (T.D. 9803; 81 F.R. 91012)
Section 367 of the Internal Revenue
Code generally imposes immediate
or future U.S. tax on transfers of
property (tangible and intangible)
to foreign corporations, subject to
certain exceptions. These final reg-
ulations eliminate the ability of
July 24, 2017Bulletin No. 2017–30
148

taxpayers under prior regulations
to transfer foreign goodwill and
going concern value to a foreign
corporation without immediate or
future U.S. income tax. Some com-
menters stated that the final regu-
lations would increase burdens by
taxing transactions that were pre-
viously exempt, noting in particu-
lar that the legislative history to
Section 367 contemplated an ex-
ception for outbound transfers of
foreign goodwill and going con-
cern value. Commenters also stated
that an exception should be pro-
vided for transfers of foreign good-
will and going concern value in
circumstances that would not lead
to an abuse of the exception.
IV. REQUEST FOR COMMENTS
Treasury is requesting comments on
whether the regulations described in this
notice should be rescinded or modified,
and in the latter case, how the regulations
should be modified in order to reduce bur-
dens and complexity. Comments from the
public are due by August 7, 2017. Com-
ments should be submitted to: Internal
RevenueService, CC:PA:LPD:PR (Notice
2017–38), Room 5205, P.O. Box 7604, Ben
Franklin Station, Washington, DC 20224.
Alternatively, comments may be hand-
delivered Monday through Friday between
the hours of 8:00 a.m. to 4:00 p.m. to:
CC:PA:LPD:PR (Notice 2017–38), Couri-
er’s Desk, Internal Revenue Service, 1111
Constitution Avenue, N.W., Washington,
DC. Comments may also be submitted elec-
tronically via the following e-mail address:
Notice.Comments@irscounsel.treas.gov.
Please include Notice 2017–38 in the
subject line of any electronic submis-
sions. Comments will be available for
public inspection and copying.
Pursuant to Executive Order 13777,
Presidential Executive Order on Enforc-
ing the Regulatory Reform Agenda,
Treasury is responsible for conducting a
broader review of existing regulations,
including tax regulations beyond those
addressed in this notice. In a Request for
Information published on June 14, 2017
(82 F.R. 27217), Treasury invited public
comment concerning regulations that
should be modified or eliminated in or-
der to reduce unnecessary burdens.
Comments in response to the Request
for Information are due by July 31,
2017. In addition, in Notice 2017–28,
Treasury and the IRS invited public
comment on recommendations for the
2017–2018 Priority Guidance Plan for
tax guidance, including recommenda-
tions relating to Executive Order 13777.
Taxpayers may submit recommenda-
tions for tax guidance at any time during
the year.
Bulletin No. 2017–30July 24, 2017
149

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarifiedis used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
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
being stated in a new ruling.
Supersededdescribes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the new
ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example,modifiedand
supersededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in ma-
terial published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE
—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Bulletin No. 2017–30July 24, 2017
i

Numerical Finding List
1
Bulletin 2017–27 through 2017–30
Action on Decision:
2017-5, 2017-27 I.R.B.1
Announcements:
2017-05, 2017-27 I.R.B.5
2017-08, 2017-28 I.R.B.9
Notices:
2017-37, 2017-29 I.R.B.89
2017-38, 2017-30 I.R.B.147
Proposed Regulations:
REG-136118-15, 2017-28 I.R.B.9
Revenue Procedures:
2017-41, 2017-29 I.R.B.92
2017-42, 2017-29 I.R.B.124
Revenue Rulings:
2017-14, 2017-27 I.R.B.2
Treasury Decisions:
9819, 2017-29 I.R.B.85
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2017– 01 through 2017–26 is in Internal Revenue Bulletin
2017–26, dated June 27, 2017.
July 24, 2017Bulletin No. 2017–30
ii

Finding List of Current Actions on
Previously Published Items
1
Bulletin 2017–27 through 2017–30
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2017– 01 through 2017–26 is in Internal Revenue Bulletin
2017–26, dated June 27, 2017.
Bulletin No. 2017–30July 24, 2017
iii

INTERNAL REVENUE BULLETIN
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