Internal Revenue Bulletin 2011-5 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 201
1-5
January 31, 2011
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
Rev. Proc. 2011–16, page 440.
This procedure provides a safe harbor to real estate investment
trusts (REITs) with respect to how interest on certain loans se-
cured by real estate that have been modified in response to
default or reasonably foreseeable default will be treated for pur-
poses of the income tests under sections 856(c)(2) and (3) of
the Code. This procedure also provides a safe harbor regard-
ing the treatment of certain mortgage loans for purposes of
the 75 percent asset test under section 856(c)(4)(A).
Rev. Proc. 2011–17, page 441.
This procedure allows a retailer that issues gift cards in ex-
change for returned goods to treat the transactions as (1) the
payment of a cash refund in the amount of the gift card, and
(2) the sale of a gift card in the amount of the gift card. Rev.
Proc. 2008–52 modified.
Rev. Proc. 2011–18, page 443.
This procedure allows taxpayers to defer recognizing in gross
income advance payments received from the sale of gift cards
that are redeemable for goods or services of the taxpayer or
a third party. Rev. Proc. 2004–34 modified and clarified.
EMPLOYEE PLANS
Notice 2011–7, page 437.
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 January 2011;
the 24-month average segment rates; the funding transitional
segment rates applicable for January 2011; and the minimum
present value transitional rates for December 2010.
Announcement 2011–8, page 446.
This announcement contains a correction to Revenue Proce-
dure 2011–8, 2011–1 I.R.B. 237, which contains an error in
the user fee schedule that applies to a non-mass submitter of
a master or prototype (M&P) plan. Rev. Proc. 2011–8 cor-
rected.
ADMINISTRATIVE
Announcement 2011–7, page 446.
This announcement contains corrections to Revenue Procedure
2011–1, 2011–1 I.R.B. 1, which contained two outdated ref-
erences to user fee amounts. Rev. Proc. 2011–1 corrected.
Fi
nding Lists begin on page ii.
Index for January begins on page iv.

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.
January 31, 20112011–5 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 451.—
General Rule
for Taxable Ye
ar of Inclusion
Guidance is pr
ovided allowing taxpayers to defer
recognizing i
n gross income advance payments re-
ceived from th
e sale of gift cards that are redeemable
for goods or s
ervices of the taxpayer or a third party.
See Rev. Proc
. 2011-18, page 443.
Section 1001.
—Determi-
nation of Amou
nt of and
Recognition o
fGainorLoss
26 CFR 1.1001–3: Modifications of debt instruments.
This revenue procedure provides a safe harbor to
real estate investment trusts (REITs) with respect to
how interest on certain loans secured by real estate
that have been
modified in response to default or rea-
sonably fores
eeable default will be treated for pur-
poses of the in
come tests under sections 856(c)(2)
and (3) of the I
nternal Revenue Code. The revenue
procedure al
so provides a safe harbor regarding the
treatment of
certain mortgage loans for purposes of
the 75 percen
t asset test under section 856(c)(4)(A).
See Rev. Proc
. 2011-16, page 440.
2011–5 I.R.B.436January 31, 2011

Part III. Administrative, Procedural, and Miscellaneous
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2011–7
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 cor-
porate bond monthly yield curve (and
the corresponding spot segment rates),
and the 24-month average 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
December 2010 is 5.60 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%
January20116.12
5.51
6.12
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. Sec-
tion 430(h)(2)G) set forth a transitional
rule applicable to plan years beginning in
2008 and 2009 under which the segment
rates were blended with the corporate bond
weighted average described above, includ-
ing an election under § 430(h)(2)(G)(iv)
foranemployertousethesegmentrates
without the transitional rule.
Notice 2007–81, 2007–2 C.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond
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
December 2010 data is in Table I at the end
of this notice. The spot first, second, and
third segment rates for the month of De-
cember 2010 are, respectively, 1.98, 5.23,
and 6.52. The three 24-month average
corporate bond segment rates applicable
for January 2011 are as follows:
First
Segment
Second
Segment
Third
Segment
2.94
5.82
6.46
The transitional rule of § 430(h)(2)(G)
does not apply to plan years beginning af-
ter December 31, 2009. Therefore, for a
plan year beginning after 2009 with a look-
back month to January 2011, the funding
segment rates are the three 24-month aver-
age corporate bond segment rates applica-
ble for January 2011, listed above without
blending for any transitional period.
January 31, 20114372011–5 I.R.B.

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-
ble interest rate for a month is the annual
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 December 2010 is 4.42 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 November 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 Year
s
Beginning inPermissible
Range
MonthYear
30-Year
Treasury
Weighted
Average
90%to
105%
January20114.263.834.47
MINIMUM PRE
SENT VALUE
SEGMENT RAT
ES
Generally f
or plan years beginning af-
ter Decemb
er 31, 2007, the applicable in-
terest rat
es under § 417(e)(3)(D) are seg-
ment rates
computed without regard to a
24-month av
erage. For plan years be-
ginningin2
008 through 2011, the appli-
cable inter
est rates are the monthly spot
segment rat
es blended with the applicable
rate under
§ 417(e)(3)(A)(ii)(II) as in ef-
fect for pl
an years beginning in 2007. No-
tice 2007–
81 provides guidelines for de-
termining t
he minimum present value seg-
ment rates.
Pursuant to that notice, the
minimum pre
sent value transitional seg-
ment rates d
etermined for December 2010,
taking int
o account the December 2010
30-year Tr
easuryrateof4.42statedabove,
are as foll
ows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
20102.964.91
5.68
20112.47
5.07
6.10
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.
2011–5 I.R.B.438January 31, 2011

Table I
Monthly Yield Curve for December 2010
Derived from December 2010 Data
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.5
0.59
20.56.0540.56.5860.5
6.76
80.56.85
1.00.8521.06.0841.06.5961.06.7681.06.85
1.5
1.13
21.5
6.10
41.5
6.59
61.5
6.76
81.56.85
2.0
1.45
22.06.1342.06.6062.06.7782.0
6.85
2.5
1.79
22.56.1542.5
6.61
62.5
6.77
82.56.85
3.0
2.15
23.06.1743.06.6163.06.7783.06.86
3.52.5023.5
6.19
43.5
6.62
63.5
6.78
83.5
6.86
4.02.8324.06.2144.06.6264.06.7884.06.86
4.5
3.13
24.5
6.23
44.5
6.63
64.5
6.78
84.5
6.86
5.0
3.41
25.06.2545.0
6.63
65.0
6.78
85.0
6.86
5.5
3.66
25.5
6.26
45.5
6.64
65.5
6.79
85.5
6.86
6.03.8826.06.2846.06.6466.0
6.79
86.06.87
6.5
4.08
26.5
6.30
46.56.6566.5
6.79
86.5
6.87
7.04.2527.06.3147.06.6567.0
6.79
87.06.87
7.5
4.41
27.5
6.33
47.5
6.66
67.5
6.80
87.5
6.87
8.0
4.55
28.06.3448.06.6668.06.8088.06.87
8.5
4.68
28.56.3548.5
6.67
68.5
6.80
88.5
6.87
9.04.7929.0
6.37
49.0
6.67
69.0
6.80
89.0
6.87
9.5
4.90
29.56.3849.56.6869.56.8189.56.88
10.05.0030.0
6.39
50.06.68 70.06.81
90.0
6.88
10.5
5.09
30.5
6.40
50.5
6.69
70.5
6.8190.56.88
11.0
5.17
31.06.42
51.0
6.69
71.06.81
91.0
6.88
11.55.2531.5
6.43
51.5
6.70
71.5
6.8191.56.88
12.0
5.32
32.06.44
52.0
6.7072.06.82
92.0
6.88
12.5
5.39
32.56.4552.5
6.70
72.5
6.8292.56.88
13.05.4533.06.4653.06.7173.06.82
93.0
6.88
13.55.5133.5
6.47
53.5
6.71
73.5
6.8293.56.89
14.0
5.57
34.06.48
54.0
6.7274.06.82
94.06.89
14.55.6234.5
6.49
54.5
6.72
74.5
6.8394.5
6.89
15.05.6735.06.5055.0
6.72
75.0
6.8395.0
6.89
15.55.7135.56.5055.5
6.73
75.5
6.8395.5
6.89
16.05.7536.06.5156.06.7376.06.83
96.06.89
16.55.8036.56.5256.5
6.73
76.5
6.8396.56.89
17.0
5.83
37.0
6.5357.0
6.7477.06.84
97.06.89
17.55.8737.56.5457.5
6.74
77.5
6.8497.5
6.90
18.05.9038.0
6.5458.0
6.7478.06.84
98.06.90
18.5
5.94
38.56.5558.56.7578.5
6.8498.5
6.90
19.0
5.97
39.0
6.5659.06.75
79.0
6.84
99.06.90
19.56.0039.5
6.57
59.5
6.75
79.56.8499.56.90
20.06.0340.0
6.57
60.06.7680.0
6.85
100.0
6.90
January 31, 20114392011–5 I.R.B.

26 CFR 601.105: Examination of returns and claims
for refund, credit, or abatement; determination of
correct tax liability.
(Also Part I, §§ 856(c), 1001; 1.856–3, 1.856–5,
1.1001–3.)
Rev. Proc. 2011–16
SECTION 1. PURPOSE
This revenue procedure provides guid-
ance regarding aspects of a taxpayer’s
qualification as a real estate investment
trust (REIT) in the context of transactions
involving debt secured by real estate the
fair market value of which has declined.
SECTION 2. BACKGROUND
.01 To qualify as a REIT for a tax-
able year, at least 95 percent of an entity’s
gross income must be derived from the
types of qualifying income listed in section
856(c)(2) of the Internal Revenue Code,
and at least 75 percent of its gross income
must be derived from the types of quali-
fying income listed in section 856(c)(3).
Specifically, all interest is qualifying in-
come for the 95 percent income test under
section 856(c)(2); and interest on obliga-
tions secured by mortgages on real prop-
erty or on interests in real property is qual-
ifying income for purposes of the 75 per-
cent income test under section 856(c)(3).
.02 Section 856(c)(4)(A) provides that
at the close of each quarter of its taxable
year, at least 75 percent of the value of
a REIT’s total assets must be represented
by real estate assets, cash and cash items
(including receivables), and Government
securities.
.03 Under section 856(c)(5)(B), the
term “real estate assets” includes real
property (including interests in real prop-
erty and interests in mortgages on real
property) and shares (or transferable cer-
tificates of beneficial interest) in other
REITs.
.04 Section 856(c)(5)(C) provides that
the term “interests in real property” in-
cludes fee ownership and co-ownership of
land or improvements thereon, leaseholds
of land or improvements thereon, options
to acquire land or improvements thereon,
and options to acquire leaseholds of land
or improvements thereon, but does not in-
clude mineral, oil, or gas royalty interests.
.05 If a mortgage loan is secured by
both real property and other property,
then, for purposes of section 856(c)(3),
§ 1.856–5(c) of the Income Tax Regula-
tions provides rules for apportioning the
interest on the loan between interest on
an obligation that is secured by real prop-
erty (or by an interest in real property)
and interest on an obligation that is not so
secured. Under this apportionment test,
the “loan value of the real property” is
compared to the “amount of the loan.” If
the loan value of the real property is equal
to or exceeds the amount of the loan, then
all of the interest income from the loan
is apportioned to the real property. If the
amount of the loan exceeds the loan value
of the real property, the interest income ap-
portioned to the real property is an amount
equal to the interest income multiplied by
a fraction the numerator of which is the
loan value of the real property and the
denominator of which is the amount of the
loan. The interest income apportioned to
the other property is the excess of the total
interest income over the interest income
apportioned to the real property.
.06 For purposes of the apportionment
test, § 1.856–5(c)(2) generally defines the
“loan value of the real property” that se-
cures a loan as the fair market value of the
real property, determined as of the date on
which a commitment became binding on
the REIT either to make the loan or to pur-
chase the loan, as the case may be. Sec-
tion 1.856–5(c)(3) defines the “amount of
the loan” as the highest principal amount
of the loan outstanding during the taxable
year.
.07 Section 1.1001–3(c)(1)(i) defines a
“modification” of a debt instrument as any
alteration, including any deletion or addi-
tion, in whole or in part, of a legal right
or obligation of the issuer or holder of the
debt instrument, whether the alteration is
evidenced by an express agreement (oral
or written), conduct of the parties, or other-
wise. Section 1.1001–3(e) governs which
modifications of debt instruments are “sig-
nificant.” Under § 1.1001–3(b), for most
federal income tax purposes, a significant
modification produces a deemed exchange
of the original debt instrument for a new
debt instrument.
.08 Section 1.860G–2(b)(1) concerns
modifications of mortgages held by
real estate mortgage investment con-
duits (REMICs). Certain loan modifi-
cations are not significant for purposes
of § 1.860G–2(b)(1) even if the modi-
fications are significant under the rules
in § 1.1001–3. In particular, under
§ 1.860G–2(b)(3)(i), if a change in the
terms of an obligation is “occasioned by
default or a reasonably foreseeable de-
fault,” the change is not a significant mod-
ification for purposes of § 1.860G–2(b)(1),
regardless of the modification’s status un-
der § 1.1001–3.
.09 Section 857(b)(6) imposes a tax
equal to 100 percent of the net income
derived from “prohibited transactions.”
Section 857(b)(6)(B)(iii) defines the term
“prohibited transaction” as a sale or other
disposition of property that is described in
section 1221(a)(1) and that is not foreclo-
sure property.
SECTION 3. SCOPE
.01 Section 4.01 of this revenue proce-
dure applies to a modification of a mort-
gage loan which (or an interest in which)
is held by a REIT if —
(1) The modification was occasioned by
default; or
(2) The modification satisfies both of
the following conditions:
(a) Based on all the facts and circum-
stances, the REIT or servicer of the loan
(the “pre-modified loan”) reasonably be-
lieves that there is a significant risk of
default of the pre-modified loan upon
maturity of the loan or at an earlier date.
This reasonable belief must be based on a
diligent contemporaneous determination
of that risk, which may take into account
credible written factual representations
made by the issuer of the loan if the REIT
or servicer neither knows nor has reason to
know that such representations are false.
In a determination of the significance of
the risk of a default, one relevant factor is
how far in the future the possible default
may be. There is no maximum period,
however, after which default isper senot
foreseeable. For example, in appropriate
circumstances, a REIT or servicer may rea-
sonably believe that there is a significant
risk of default even though the foreseen
default is more than one year in the future.
Similarly, although past performance is
another relevant factor for assessing de-
fault risk, in appropriate circumstances, a
REIT or servicer may reasonably believe
2011–5 I.R.B.440January 31, 2011

that there is a significant risk of default
even if the loan is performing, and
(b) Based on all the facts and circum-
stances, the REIT or servicer reasonably
believes that the modified loan presents
a substantially reduced risk of default, as
compared with the pre-modified loan.
.02 Section 4.02 of this revenue pro-
cedure applies to any corporation that has
elected to be taxed as a REIT.
SECTION 4. APPLICATION
.01Modifications.If a modification of a
mortgage loan is described in section 3.01
of this revenue procedure—
(1) For purposes of ascertaining under
§ 1.856–5(c)(2) the “loan value of the real
property” securing that loan, a REIT may
treat the modification as not being a new
commitment to make or purchase a loan;
and
(2) The modification of the mortgage
loan will not be treated as a prohibited
transaction under section 857(b)(6).
.02Asset test.The Service will not
challenge a REIT’s treatment of a loan
as being in part a “real estate asset” for
purposes of section 856(c)(4) if the REIT
treats the loan as being a real estate asset
in an amount equal to the lesser of—
(1) The value of the loan as determined
under § 1.856–3(a), or
(2) The loan value of the real prop-
erty securing the loan as determined under
§ 1.856–5(c) and this revenue procedure.
SECTION 5. EXAMPLES
.01Example 1. In 2007,X,aREIT,madea$100
mortgage loan toA.X’s loan toAwas secured by
both real property and personal property. WhenX’s
commitment to make the loan became binding onX,
the real property had a fair market value of $115.
At the end of the calendar quarter in whichXmade
the loan, the value of the loan as determined under
§ 1.856–3(a) was $100. At all times through the end
of 2010, under § 1.856–5(c)(3), the amount of the
loan continued to be $100.
By the start of 2009, the fair market value of the
real property had fallen to $55 and the fair market
value of the personal property was $5. They remained
at these levels throughout 2009 and 2010. Through-
out 2009 and 2010, the value of the loan, as deter-
mined under § 1.856–3(a), was $60.
During 2009,XandAmodified the terms of the
mortgage loan. The modification of the loan is de-
scribed in section 3.01 of this revenue procedure and
is a significant modification under § 1.1001–3.
(1)Income Test. WhenXmade the mortgage loan
in 2007, the loan value of the real property for pur-
poses of § 1.856–5(c) was its fair market value ($115)
determined as of the date on which the commitment
to make the loan became binding onX. This amount
exceeded the amount of the loan for that year ($100).
Accordingly, in the year that the loan was made, all
of the interest from the loan was apportioned to the
real property.See§ 1.856–5(c)(1).
Between the time that the loan was made and
the time of the modification, the loan value of the
real property continued to be $115, notwithstanding
changes in the fair market valueofthatrealproperty.
See§ 1.856–5(c)(2). Similarly, the amount of the loan
continued to be $100. Accordingly, the loan value
of the real property ($115) continued to exceed the
amount of the loan ($100), and all of the interest on
the loan continued to be apportioned to the real prop-
erty.
The fair market value of the real property that se-
cured the mortgage loan had fallen to $55 by the time
thatXandAmodified the loan in 2009. That mod-
ification, however, is described in section 3.01, and
Xchose to treat the modification as not being a new
commitment to make or purchase a loan. Therefore,
the loan value of the real property ($115) does not
change. Because the loan value of the real property
($115) continued to exceed the amount of the loan
for the year of modification ($100), all of the interest
from the loan during that year is apportioned to real
property.
(2)Asset Test. In 2007, at the end of the calendar
quarter in whichXmade the mortgage loan, the value
of the loan (as determined under § 1.856–3(a)) was
$100, and the loan value of the real property securing
the loan (as determined under § 1.856–5(c)(2)) was
$115. For this calendar quarter, under section 4.02 of
this revenue procedure,Xmaytreatthelesserofthese
two values ($100) as the amount of the loan that is a
real estate asset for purposes of section 856(c)(4).
In 2009, at the end of the calendar quarter in
whichXmodified the mortgage loan, the value of the
loan (as determined under § 1.856–3(a)) was $60, and
the loan value of the real property securing the loan
(as determined under § 1.856–5(c) and section 4.01 of
this revenue procedure) was $115. For this calendar
quarter, under section 4.02 of this revenue procedure,
Xmay treat the lesser of these two values ($60) as the
amount of the loan that is a real estate asset for pur-
poses of section 856(c)(4).
.02Example 2. The facts include all of the facts
in Example 1. Additionally, during the first quarter
of 2010,Y, a REIT, committed to purchase, and pur-
chased, the mortgage loan fromXfor $60.
(1)Income Test. Under § 1.856–5(c)(2), the loan
value of the real property securing the loan is the fair
market value of the real property determined as of the
date on whichY’s commitment to purchase the loan
became binding onY($55). This value is compared
to the amount of the loan for the year ($100). Be-
cause the amount of the loan exceeds the loan value
of the real property, the interest income apportioned
to the real property is an amount equal to the inter-
est income multiplied by a fraction the numerator of
which is the loan value of the real property ($55) and
the denominator of which is the amount of the loan
($100). Therefore, 55 percent of the interest income
fromY’s loan is apportioned to the real property se-
curing the loan. Interest income apportioned to the
other property is the excess of the total interest in-
come over the interest income apportioned to the real
property.See§ 1.856–5(c)(2).
(2)Asset Test. At the end of every calendar quar-
ter during 2010, the value of the loan (as determined
under § 1.856–3(a)) was $60, and the loan value of the
real property securing the loan (as determined under
§ 1.856–5(c) and this revenue procedure) was $55.
For every calendar quarter during 2010, under sec-
tion 4.02 of this revenue procedure,Ymay treat the
lesser of these two values ($55) as the amount of the
loan that is a real estate asset for purposes of section
856(c)(4).
SECTION 6. EFFECTIVE DATE
This revenue procedure is effective for
all calendar quarters and all taxable years.
SECTION 7. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Jonathan D. Silver of the
Office of Associate Chief Counsel (Finan-
cial Institutions & Products). For further
information regarding this revenue proce-
dure, contact Jonathan D. Silver at (202)
622–3930 (not a toll-free call).
26 CFR 601.204: Changes in accounting
periods and
methods of accounting.
(Also Part I, §§ 451; 461; 1.451–5.)
Rev. Proc. 2011–17
PURPOSE
This revenue procedure provides a safe
harbor method of accounting for the treat-
ment of gift cards issued to customers in
exchange for returned merchandise. This
revenue procedure also provides adminis-
trative procedures for a taxpayer within the
scope of this revenue procedure to obtain
consent to change to the method of ac-
counting permitted in section 4 of this rev-
enue procedure.
SECTION 2. BACKGROUND
.01 Section 451 of the Internal Revenue
Code provides that the amount of any item
of gross income is recognized in the tax-
able year the taxpayer receives the item un-
less, under the method of accounting used
in computing taxable income, the income
is properly recognized in a different pe-
riod. Section 1.451–1(a) of the Income
Tax Regulations provides that, under an
accrual method of accounting, income is
includible in gross income when all the
January 31, 20114412011–5 I.R.B.

events have occurredthat fix the right to
receive the income and the amount can be
determined with reasonable accuracy. All
the events that fix the right to receive in-
come generally occur when (1) the tax-
payer earns the payment through perfor-
mance, (2) payment is due to the taxpayer,
or (3) the taxpayer receives the payment,
whichever happens first. See Rev. Rul.
84–31, 1984–1 C.B. 127.
.02 A taxpayer generally must recog-
nize advance payments in income in the
year of receipt, because receipt satisfies the
all events test of § 1.451–1(a). However
deferral beyond the year of receipt is per-
mitted in two situations.
(1) Section 1.451–5 generally allows an
accrual method taxpayer to defer recogniz-
ing advance payments for goods as income
until the taxable year the taxpayer recog-
nizes the advance payments in revenue un-
der the taxpayer’s method of accounting
for financial reporting purposes. However,
§ 1.451–5(c) limits deferral of substantial
advance payments for inventoriable goods
to the end of the second taxable year fol-
lowing the year the taxpayer receives the
payments.
(2) Rev. Proc. 2004–34, 2004–1 C.B.
991, generally allows an accrual method
taxpayer to defer recognizing advance
payments received for goods, services, or
a mixture of goods and services as income
until the taxable year the taxpayer recog-
nizes the advance payments in revenue
under the taxpayer’s method of accounting
for financial reporting purposes. How-
ever, section 5.02(1)(a)(ii) of Rev. Proc.
2004–34 limits the deferral to the end of
the next succeeding taxable year following
the year the taxpayer receives the pay-
ments.
.03 Section 461(a) provides that a tax-
payer takes a deduction or credit in the
taxable year that is the proper taxable
year under the method of accounting used
in computing taxable income. Section
1.461–1(a)(2)(i) provides that, under an
accrual method of accounting, a liability
(as defined in § 1.446–1(c)(1)(ii)(B)) is
incurred, and generally is taken into ac-
count for federal income tax purposes, in
the taxable year in which all the events
have occurred that establish the fact of the
liability, the amount of the liability can be
determined with reasonable accuracy, and
economic performance has occurred. Sec-
tion 1.461–4(g)(3) provides that economic
performance occurs for a refund liability
when the refund is paid (whether paid in
property, money, or a reduction in the price
of goods or services to be provided in the
future). Section 1.461–4(g)(3) generally
applies to refund liabilities regardless of
whether they are characterized as deduc-
tions from gross income, adjustments to
gross receipts or total sales, or adjustments
or additions to cost of goods sold. Thus,
for federal income tax purposes, refunds
reducing gross receipts generally are in-
curred when paid. Sections 1.61–3(a) and
1.446–1(c)(1)(ii)(B).
.04 Taxpayers (merchants) commonly
handle returns of inventoriable goods in
one of two ways. The merchant may give
thecustomeracashrefundinexchangefor
the returned goods, or the merchant may
issue a credit, for example in the form of a
gift card, to the customer for the returned
goods.
(1) A taxpayer that pays a customer
an immediate cash refund for returned
goods has incurred a refund liability. The
payment satisfies the requirements of
§ 1.461–1(a)(2)(i) (including economic
performance), therefore the taxpayer may
reduce gross receipts for the amount of the
refund. If the customer uses the refund
to purchase a gift card, the taxpayer has
received an advance payment from the
sale of a gift card. The taxpayer may defer
the proceeds of this sale under a method
of accounting that complies with either
§ 1.451–5 or Rev. Proc. 2004–34.
(2) A taxpayer that, instead of paying
a cash refund, only will issue a gift card
to a customer in exchange for returned
goods does not have a fixed liability un-
der § 1.461–1(a)(2)(i) because it is condi-
tioned on the future redemption of the gift
card.
.05 Many commentators in the retail
industry contend that cash refunds and
gift cards provided as refunds for returned
goods should be treated the same. The
commentators argue that issuing a gift
card for returned goodsistantamountto
making a cash refund that the customer
immediately uses to purchase a gift card.
To avoid disputes about the proper charac-
terization of gift cards issued for returned
goods, provide better matching of income
and costs, and simplify recordkeeping, the
Internal Revenue Service will permit a
taxpayer within the scope of this revenue
procedure to treat gift cards issued for
returned goods as the payment of a cash
refund and sale of a gift card. A taxpayer
may use this method whether or not it is
the taxpayer’s policy to provide a cash
refund for returned goods.
.06 In general, a taxpayer must se-
cure the consent of the Commissioner
before changing a method of accounting
for federal income tax purposes. Sec-
tions 446(e) and 1.446–1(e)(2)(i). Section
1.446–1(e)(3)(ii) authorizes the Commis-
sioner to prescribe administrative proce-
dures stating the limitations, terms, and
conditions of the Commissioner’s con-
sent to change a method of accounting.
Section 481(a) generally requires adjust-
ments to prevent duplication or omission
of amounts when a taxpayer changes a
method of accounting.
SECTION 3. SCOPE
This revenue procedure applies to tax-
payers engaged in the trade or business of
selling goods at retail that use an over-
all accrual method of accounting and is-
suegiftcardsdescribedinsection4.02of
this revenue procedure in exchange for re-
turned goods.
SECTION 4. APPLICATION
.01In general. A taxpayer within the
scope of this revenue procedure may treat
the issuance of a gift card in exchange for
returned goods as (1) the payment of a cash
refund in the amount of the gift card, and
(2) the sale of a gift card in the amount of
the gift card. The taxpayer may account
for the amount deemed received for the
sale of the gift card under § 1.451–5 or
Rev. Proc. 2004–34, if otherwise eligible.
.02Gift cards. For purposes of this rev-
enue procedure, a gift card is any evidence
of a promise to provide a specific dollar
amount of goods and/or services to a cus-
tomer in a future sale, whether imprinted
electronically on a plastic card, issued
electronically with a special code, pro-
vided as a printed certificate, or recorded
on a taxpayer’s books. A card or other
evidence of a promise to provide a specific
dollar amount of goods and/or services is
not a gift card for purposes of this revenue
procedure if the customer must perform
any act or service in addition to presenting
the card, such as purchasing additional
2011–5 I.R.B.442January 31, 2011

products, to obtain the goods and/or ser-
vices.
SECTION 5. CHANGE IN METHOD
OF ACCOUNTING
.01Consent to change. A change in
a taxpayer’s treatment of gift cards issued
as a refund for returned goods is a change
in method of accounting within the mean-
ing of §§ 446 and 481 and the regulations
thereunder.
(1)Automatic consent. A taxpayer that
wants to change its method of accounting
to the method of accounting permitted in
section 4 of this revenue procedure must
obtain the consent of the Commissioner
under § 446(e) and § 1.446–1(e)(3) by
following the automatic consent proce-
dures in 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, or its successor, except as
provided below. For purposes of section
6.02(4) of Rev. Proc. 2008–52, the tax-
payer must include on line 1a of the Form
3115 the designated automatic accounting
method change number 156. A taxpayer
may change its method of accounting to a
proper method under Rev. Proc. 2004–34
and to the method permitted in section 4 of
this revenue procedure on one Form 3115
and must include both change numbers on
line 1a.
(2)Advance consent. A taxpayer may
change its method of accounting to a
proper method under § 1.451–5 and to
the method permitted in section 4 of this
revenue procedure on one Form 3115 but
must use the advance consent procedures
of Rev. Proc. 97–27, 1997–1 C.B. 680.
.02Transition rules. If a taxpayer
within the scope of this revenue procedure
has timely requested consent on or before
January 5, 2011, under Rev. Proc. 97–27
to change its method of accounting for
gift cards issued in exchange for returned
goods and the Form 3115,Application for
Change in Accounting Method, is pending
with the national office, the taxpayer may
convert its Form 3115 to an application
for automatic consent under Rev. Proc.
2008–52, if otherwise eligible. The tax-
payer must notify the national office of
the conversion before the national office
issues a letter ruling under Rev. Proc.
97–27. If the taxpayer converts the Form
3115 under this section 5.02 before the na-
tional office has ruled on the Form 3115,
the national office will return the Form
3115 to the taxpayer and refund the user
fee.
.03Scope limitations waived.The
scope limitations in section 4.02 of Rev.
Proc. 2008–52 do not apply to this change
in method of accounting for a taxpayer’s
first or second taxable year ending on or
after December 31, 2010. However, if a
taxpayer is under examination, before an
appeals office, or before a federal court for
any income tax issue when the taxpayer
files the copy of the Form 3115 with the
national office, the taxpayer must provide
a copy of the Form 3115 to the examining
agent, appeals officer, or counsel for the
government, as appropriate, at the same
time. The Form 3115 must contain the
name(s) and telephone number(s) of the
examining agent, appeals officer, or coun-
sel for the government, as appropriate.
SECTION 6. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2008–52 is modified to
include in the APPENDIX the automatic
change in method of accounting permitted
by this revenue procedure.
SECTION 7. EFFECTIVE DATE
This revenue procedure is effective
for taxable years ending on or after
December 31, 2010.
SECTION 8. AUDIT PROTECTION
If a taxpayer within the scope of this
revenue procedure used a method of ac-
counting permitted by section 4 of this rev-
enue procedure in a taxable year ending
before December 31, 2010, the Service
will not challenge the use of that method
of accounting. Moreover, if the use by a
taxpayer within the scope of this revenue
procedure of a method of accounting per-
mitted by section 4 of this revenue proce-
dure is an issue under consideration in an
examination, in appeals, or before the U.S.
Tax Court, the Service will not further pur-
sue the issue.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Sean M. Dwyer of the Office
of Associate Chief Counsel (Income Tax
& Accounting). For further information
regarding this revenue procedure, con-
tact Mr. Dwyer at (202) 622–5020 (not a
toll-free number).
26 CFR 601.204: Changes in accounting periods and
in methods of accounting.
(Also Part 1: §§ 446, 451; 1.446–1, 1.451–1.)
Rev. Proc. 2011–18
SECTION 1. PURPOSE
This revenue procedure allows taxpay-
ers to defer recognizing in gross income
advance payments received from the sale
of gift cards that are redeemable for goods
or services of the taxpayer or a third party.
This revenue procedure modifies and clar-
ifies Rev. Proc. 2004–34, 2004–1 C.B.
991.
SECTION 2. BACKGROUND
.01 The sale of gift cards and gift certifi-
cates is a widespread business practice in
many industries, especially retail. For in-
come tax purposes, payment for a gift cer-
tificate or gift card is viewed as payment
for goods or services to be provided in the
future.
.02 In general, amounts received by an
accrual method taxpayer for goods or ser-
vices to be provided in the future (advance
payments) must be included in gross in-
come in the taxable year of receipt.See
§451;Schlude v. Commissioner,372U.S.
128 (1963); Rev. Rul. 84–31, 1984–1 C.B.
127. Two exceptions to this general rule
are provided by § 1.451–5 of the Income
Tax Regulations and Rev. Proc. 2004–34.
.03 Section 1.451–5 generally allows
accrual method taxpayers a limited defer-
ral for advance payments received for the
sale of goods. The taxpayer may defer
recognition of this income until the tax-
able year that the payments are recognized
in revenues under the taxpayer’s method
of accounting for financial reporting pur-
poses. However, § 1.451–5(c) provides
that a taxpayer generally may not defer
advance payments for inventoriable goods
beyond the end of the second taxable year
following the year the taxpayer receives
substantial advance payments.
January 31, 20114432011–5 I.R.B.

.04 Rev. Proc. 2004–34 provides a
“deferral method” of accounting that al-
lows an accrual method taxpayer receiving
advance payments for goods or services
to defer recognizing income to the extent
the taxpayer defers recognizing the pay-
ments as revenues in its “applicable finan-
cial statement.” If the taxpayer does not in-
clude advance payments as revenues in its
applicable financial statement in the year
of receipt, the taxpayer must include the
advance payments in gross income in the
next succeeding taxable year.
.05 The manner in which retailers mar-
ket, sell to customers, and redeem (that
is, accept as payment for goods or ser-
vices) gift cards has evolved over time.
Historically, a single retailer would sell a
gift certificate or gift card to a buyer and
would redeem the card or certificate it-
self by providing goods or services to the
holder. Under Rev. Proc. 2004–34, the re-
tailer could defer recognizing the advance
payment from the sale of the gift card.
Today, however, gift cards are commonly
sold by one retailer and redeemed either by
that retailer or by others (related or unre-
lated to the selling entity) under a gift card
service agreement.
.06 A taxpayer that sells gift cards (gift
card entity) typically operates its gift card
program under a service agreement with
participating merchants. For example:
•Members of an affiliated group of cor-
porations may establish a gift card sub-
sidiary to sell gift cards that may be
redeemed for goods or services pro-
vided by the gift card subsidiary or
other members of the affiliated group;
•A franchisor, purchasing coopera-
tive, not-for-profit membership or-
ganization, or franchisee may sell
gift cards that may be redeemed for
goods or services provided by indepen-
dently-owned franchisees or members;
•A restaurant management company
may sell gift cards that may be re-
deemed by participating restaurants in
different geographic locations or with
different trade names; or
•A retailer may issue a gift card that
may be redeemed for merchandise at
the retailer’s stores, retail stores oper-
ated by a related party, or retail stores
operated by unrelated parties.
.07Althoughgiftcardentitystructures
and gift card service agreements can vary
widely, it is common for a gift card entity
to receive and hold the proceeds from gift
card sales until a customer uses the card
to purchase merchandise or services. If a
customer uses a gift card to purchase mer-
chandise or services from a participating
merchant, the participating merchant is ob-
ligated to accept the gift card as payment
for its goods or services and the gift card
entity is obligated to reimburse the par-
ticipating merchant for the sales price of
the goods or services purchased with the
gift card. Under the terms of a typical gift
card service agreement,the gift card entity
is primarily liable to the customer for the
value of the gift card until the card expires
or is redeemed.
.08 The Service and the Treasury De-
partment have concluded that, provided
the other requirements of Rev. Proc.
2004–34 are met, a taxpayer that sells gift
cards redeemable through other entities
should be treated the same as a taxpayer
that sells gift cards redeemable only by
that taxpayer. Accordingly, this revenue
procedure modifies the definition of ad-
vance payments in Rev. Proc. 2004–34
to allow deferral of advance payments re-
ceived under additional types of gift card
arrangements. This revenue procedure,
however, does not modify § 1.451–5 to
allow deferral of advance payments re-
ceived under additional types of gift card
arrangements. Section 1.451–5 applies
only to “an agreement for the sale or other
disposition in a future taxable year of
goodsheld by the taxpayerprimarily for
sale to customers in the ordinary course of
his trade or business.” Goods provided by
entities other than the taxpayer issuing the
gift card are not “held by the taxpayer” for
sale as required by § 1.451–5.
SECTION 3. MODIFICATIONS TO
REV. PROC. 2004–34
.01 Section 4.01(3) of Rev. Proc.
2004–34 is modified to revise paragraph
(h), revise paragraph (i) and redesignate it
as paragraph (j), and add a new paragraph
(i). As modified, the provisions read as
follows:
.01Advance Payment. Except as pro-
vided in section 4.02 of this revenue pro-
cedure, a payment received by a taxpayer
is an “advance payment” if —
***
(3) the payment is for —
***
(h) memberships in an organization
(other than memberships for which an
election under § 456 is in effect);
(i) an eligible gift card sale; or
(j) any combination of items described
in subparagraphs (a) through
(i)ofthissection4.01(3).
***
.02 Section 4 of Rev. Proc. 2004–34
is modified to add new sections 4.07 and
4.08 to read as follows:
.07Eligible Gift Card Sale.Aneligi-
ble gift card sale is the sale of a gift card
(or gift certificate) if: (1) the taxpayer is
primarily liable to the customer (or holder
of the gift card) for the value of the card
until redemption or expiration, and (2) the
gift card is redeemable by the taxpayer or
by any other entity that is legally obligated
to the taxpayer to accept the gift card from
a customer as payment for items listed in
sections 4.01(3)(a)-(j) of this revenue pro-
cedure;
.08Financial Statement for Consoli-
dated Group Members. If the taxpayer is
a member of an affiliated group of corpo-
rations that files a consolidated return for
federal income tax purposes, the group’s
financial statement (as defined in section
4.06 of this revenue procedure) is a finan-
cial statement of the taxpayer.
.03 Section 5.03 of Rev. Proc. 2004–34
is modified to add the following new Ex-
amples 23, 24, and 25 to read as follows:
Example 23.Rcorporation operates department
stores.Ucorporation,Vcorporation, andWcorpora-
tion are wholly owned domestic subsidiaries ofRthat
file a consolidated federal income tax return withR.X
corporation is a controlled foreign subsidiary ofRthat
is prohibited from filing a consolidated return withR.
Usells Brand A goods,Vsells Brand B goods,Xsells
Brand C goods, andZis an unrelated entity that sells
Brand D goods.Wadministers a gift card program
for theRconsolidated group,X,andZ. Pursuant to
the underlying agreements,Wissues gift cards that
are redeemable for goods or services offered byU,V,
X,andZ. In addition,U,V,X,andZsell gift cards to
customers on behalf ofWand remit amounts received
toW. The agreements provide thatWis primarily li-
able to the customer for the value of the gift card until
redemption, andU,V,X,andZare obligated to ac-
cept the gift card as payment for goods or services.
When a customer purchases goods or services with a
gift card atU,V,X,orZ,Wreimburses that entity for
the sales price of the goods or services purchased with
the gift card, up to the total gift card value. In Year
1,Wsells gift cards with a total value of $900,000,
and, at the end of Year 1, the unredeemed balance
2011–5 I.R.B.444January 31, 2011

of the gift cards is $100,000. In the consolidated
group’s applicable financial statement, the group rec-
ognizes revenue from the sale of a gift card when the
gift card is redeemed.Wtracks sales and redemp-
tions of gift cards electronically, is able to determine
the extent to which advance payments are recognized
in revenues in its consolidated applicable financial
statement for the taxable year of receipt, and meets
the requirements of section 5.02(1)(b)(i) of this rev-
enue procedure. The paymentsWreceives from the
sale of gift cards are advance payments because they
are payments for eligible gift card sales under section
4.01(3)(i) of this revenue procedure and meet the re-
quirements of sections 4.01(1) and (2). Thus,Wis el-
igible to use the Deferral Method. At the end of Year
1,Wrecognizes $800,000 in income in its consoli-
dated applicable financial statement. Under the De-
ferral Method,Wmust include $800,000 of the pay-
ments from gift card sales in gross income in Year 1
and the remaining $100,000 of the payments in gross
income in Year 2.
Example 24.Wis a Subchapter S corporation that
operates an affiliated restaurant corporation and man-
ages other affiliated restaurants. These other restau-
rants are owned by other Subchapter S corporations,
partnerships, and limited liability companies.Whas
a partnership interest or an equity interest in some of
the restaurants.Wadministers a gift card program for
participating restaurants. Each participating restau-
rant operates under a different trade name. Under
the gift card program,Wand each of the participat-
ing restaurants sell gift cards, which are issued with
W’s brand name and are redeemable at all participat-
ing restaurants. Participating restaurants sell the gift
cards to customers and remit the proceeds toW.W
is primarily liable to the customer for the value of
the gift card until redemption, and the participating
restaurants are obligated under an agreement withW
to accept the gift card as payment for food, bever-
ages, taxes, and gratuities. When a customer uses a
gift card to make a purchaseat a participating restau-
rant,Wis obligated to reimburse that restaurant for
the amount of the purchase, up to the total gift card
value. InW’s applicable financial statement,Wrec-
ognizes revenue from the sale of a gift card when a
gift card is redeemed at a participating restaurant.W
tracks sales and redemptions of gift cards electroni-
cally, is able to determine the extent to which advance
payments are recognized inrevenues in its applicable
financial statement for the taxable year of receipt, and
meets the requirements of section 5.02(1)(b)(i) of this
revenue procedure. The paymentsWreceives from
thesaleofgiftcardsareadvance payments because
they are payments for eligible gift card sales under
section 4.01(3)(i) of this revenue procedure and meet
the requirements of sections 4.01(1) and (2). Thus,W
is eligible to use the Deferral Method.
Example 25.Xis a corporation that operates
for the benefit of its franchisee members, who own
and operate domestic and international individual
member hotels.Xcollects membership fees from the
member hotels in exchange for providing a wide va-
riety of management support services, which include
making reservations for customers at the various
member hotels.Xalso administers a gift card pro-
gram for its members by selling gift cards that may
be redeemed for hotel rooms and food or beverages
provided by any member hotel. The agreements
underlying the gift card program provide thatXis
entitled to the proceeds from the sale of the gift cards,
must reimburse the member hotel for the value of
a gift card redeemed, anduntil redemption remains
primarily liable to the customer for the value of the
card. InX’s applicable financial statement,Xrec-
ognizes payments from the sale of a gift card when
the card is redeemed.Xtracks sales and redemptions
of gift cards electronically, is able to determine the
extent to which advance payments are recognized in
revenues in its applicable financial statement for the
taxable year of receipt, and meets the requirements
of section 5.02(1)(b)(i) of this revenue procedure.
The paymentsXreceives from the sale of gift cards
are advance payments because they are payments
for eligible gift card sales under section 4.01(3)(i) of
this revenue procedure and meet the requirements of
sections 4.01(1) and (2). Thus,Xis eligible to use
the Deferral Method.
SECTION 4. EFFECTIVE DATE
This revenue procedure is effective
for taxable years ending on or after
December 31, 2010.
SECTION 5. AUDIT PROTECTION
For taxable years ending before Decem-
ber 31, 2010, the Service will not raise
upon examination the issue of whether the
Deferral Method provided in section 5 of
Rev. Proc. 2004–34 can apply to eligible
gift card sales as defined in section 4.07
of that revenue procedure. Moreover, if
the taxpayer’s use of the Deferral Method
for eligible gift card sales is an issue under
consideration in examination, appeals, or
before the U.S. Tax Court in a taxable year
that ends before December 31, 2010, the
Service will not further pursue the issue.
SECTION 6. CHANGE IN METHOD
OF ACCOUNTING
.01Consent to change.
(1)Automatic consent. A taxpayer that
wants to change its method of accounting
to one of the permissible methods of ac-
counting for advance payments for eligi-
ble gift card sales (except methods under
section 5.02(3)(b)(i) or (iii) of Rev. Proc.
2004–34) makes the change under section
15.07 of 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, or its successor.
(2)Advance consent. A taxpayer that
wants to use the Deferral Method for pay-
ments for which a method under section
5.02(3)(b)(i) or (iii) of Rev. Proc. 2004–34
applies must follow the change in method
of accounting procedures in Rev. Proc.
97–27.
.02Transition rules. If a taxpayer
has timely requested consent on or be-
fore January 5, 2011, under Rev. Proc.
97–27, 1997–1 C.B. 680, to change its
method of accounting for advance pay-
ments for eligible gift card sales and the
Form 3115,Application for Change in
Accounting Method, is pending with the
national office, the taxpayer may convert
itsForm3115toanapplicationforauto-
matic consent under Rev. Proc. 2008–52,
if otherwise eligible. The taxpayer must
notify the national office of the conversion
before the national office issues a letter
ruling under Rev. Proc. 97–27. If the tax-
payer converts the Form 3115 under this
section 4.02 before the national office has
ruled on the Form 3115, the national office
will return the Form 3115 to the taxpayer
and refund the user fee.
.03Scope limitations waived.The
scope limitations in section 4.02 of Rev.
Proc. 2008–52 do not apply to this change
in method of accounting for a taxpayer’s
first or second taxable year ending on or
after December 31, 2010. If a taxpayer
is under examination, before an appeals
office, or before a federal court for any in-
come tax issue when the taxpayer files the
copy of the Form 3115 with the national
office, the taxpayer must provide a copy
of the Form 3115 to the examining agent,
appeals officer, or counsel for the gov-
ernment, as appropriate, at the same time.
The Form 3115 must contain the name(s)
and telephone number(s)oftheexamining
agent, appeals officer, or counsel for the
government, as appropriate.
SECTION 7. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2004–34 is modified and
clarified.
SECTION 8. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Jamie J. Kim of the Office
of Associate Chief Counsel (Income Tax
& Accounting). For further information
regarding this revenue procedure, contact
Jamie J. Kim or Susie K. Bird at (202)
622–4950 (not a toll-free call).
January 31, 20114452011–5 I.R.B.

Part IV. Items o
fGeneralInterest
Corrections t
o Revenue
Procedure 201
1–1, User Fees
in Appendix A
Announcemen
t 2011–7
This documen
t contains corrections
to Revenue Pr
ocedure 2011–1, 2011–1
I.R.B. 1, whi
ch contained two outdated
references t
o user fee amounts.
Correction 1
:
Appendix A(A
)(5)(a) incorrectly read:
“Substantia
lly identical letter rulings
requested (o
ther than changes in methods
of accountin
g requested on Form 3115)
Situations i
n which a taxpayer requests
substantial
ly identical letter rulings for
multiple en
tities with a common member
or sponsor,
or for multiple members of a
common enti
ty, or for two or more iden-
tical trust
s or for multiple beneficiaries
of a trust o
r a trust divided into identical
subtrusts
or for husband and wife making
split gift
s, for each additional letter ruling
request af
ter the$11,500fee or reduced
fee, as app
licable, has been paid for the
first let
ter ruling request
NOTE: Eac
hentityormemberthatis
entitled
to the user fee under paragraph
(A)(5)(a
) of this appendix, that receives
relief un
der § 301.9100–3 (for example, an
extensio
n of time to file an election) will
be charg
ed a separate user fee for the letter
ruling r
equest on the underlying issue.
NOTE: Th
e fee charged for the first let-
ter ruli
ng is the highest fee applicable to
any of th
e entities. If any of the additional
entitie
s would meet the income test for the
$625 fee
, then that fee applies.”
Appendi
x A(A)(5)(a) should have read:
“Substa
ntially identical letter rulings
request
ed (other than changes in methods
of accou
nting requested on Form 3115)
Situati
ons in which a taxpayer requests
substan
tially identical letter rulings for
multip
le entities with a common member
or sponsor, or
for multiple members of a
common entity
, or for two or more iden-
tical trusts o
r for multiple beneficiaries
of a trust or a t
rust divided into identical
subtrusts or f
or husband and wife making
split gifts,
for each additional letter ruling
request afte
rthe$14,000fee or reduced
fee, as appli
cable, has been paid for the
first letter
ruling request
NOTE: Each en
tityormemberthatis
entitled to t
he user fee under paragraph
(A)(5)(a) o
f this appendix, that receives
relief unde
r § 301.9100–3 (for example, an
extension o
f time to file an election) will
be charged a
separate user fee for the letter
ruling req
uest on the underlying issue.
NOTE: The fe
e charged for the first let-
ter ruling
is the highest fee applicable to
any of the e
ntities. If any of the additional
entities w
ould meet the income test for the
$625 fee, t
hen that fee applies.”
Correctio
n2:
Appendix A
(A)(5)(b) read:
“Identica
l change in method of ac-
counting r
equested on a single Form 3115,
Applicati
on for Change in Accounting
Method,f
or a situation (but not a combi-
nation of
situations) described in section
15.07(4)
.
A situati
on (but not a combination of
situatio
ns) described in section 15.07(4)
for each a
dditional applicant seeking the
identic
al change in method of accounting
on the sa
me Form 3115 after the$3,800
fee or $6
25 reduced fee, as applicable, has
been pai
d for the first applicant.”
Appendi
x A(A)(5)(b) should have read:
“Identi
cal change in method of ac-
countin
g requested on a single Form 3115,
Applica
tion for Change in Accounting
Method,
for a situation (but not a combi-
nation
of situations) described in section
15.07(
4).
A situa
tion (but not a combination of
situat
ions) described insection 15.07(4)
for eac
h additional applicant seeking the
identical cha
nge in method of accounting
onthesameFor
m3115afterthe$4,200
fee or $625 red
uced fee, as applicable, has
been paid for t
he first applicant.”
The principal
author of this announce-
ment is Kimber
ly S. Barsa of the Office
of Associate C
hief Counsel (Procedure
& Administra
tion). For further informa-
tion regardi
ng this announcement, contact
Kimberly S. B
arsa at (202) 622–3620 (not
atoll-freec
all).
Correction
to Revenue
Procedure 2
011–8, User Fee
Schedule
Announcem
ent 2011–8
Revenue Pr
ocedure 2011–8 as pub-
lished on J
anuary 3, 2011 (2011–1 I.R.B.
237) conta
ins an error in the user fee
schedule t
hat applies to a nonmass sub-
mitter of
amasterorprototype(M&P)
plan. Rev
enue Procedure 2011–8 provides
guidance
for complying with the user fee
program o
f the Internal Revenue Service
on matter
s under the jurisdiction of the
Commiss
ioner, Tax Exempt and Govern-
ment Ent
ities Division. This announce-
ment cor
rects sections 2.03, 6.03(1) and
6.03(2)
of Rev. Proc. 2011–8.
The word
s “or nonmass submitter” are
added to
section 6.03(1). This correction
clarifi
es that the $12,000 user fee for the
basic p
lan document with one adoption
agreem
ent applies to both a mass submitter
and a no
nmass submitter. The word “addi-
tional
” is added to section 6.03(2) to clarify
that th
e $9,500 fee for an M&P sponsor’s
nonma
ss submission applies to each addi-
tiona
l adoption agreement.
Section 6.03(1) and (2) of Rev. Proc 2011–8 now reads as follows:
(1) Mass submitter or nonmass submitter M & P plan,
per basic plan document, new or amended, with one adoption agreement $12,000
(2) Nonmass submission (new or amended) by M & P sponsor,
per additional adoption agreement$9,500
2011–5 I.R.B.446January 31, 2011

Section 2.03 is amended to read as follows:
.03 Changed the fees in sections 6.03(2) and 6.04(1)(b) to $9,500, added “additional” to section 6.03(2), and inserted “or
nonmass submitter” after “Mass Submitter” in section 6.03(1).
Drafting Information
The principal author of this announce-
ment is Kathleen Herrmann of the Em-
ployee Plans, Tax Exempt and Gov-
ernment Entities Division. For further
information regarding this announce-
ment, please contact the Employee
Plans taxpayer assistance answering ser-
vice at 1–877–829–5500 (a toll-free
number) or e-mail Ms. Herrmann at
RetirementPlanQuestions@irs.gov.
January 31, 20114472011–5 I.R.B.

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.
2011–5 I.R.B.iJanuary 31, 2011

Numerical Finding List
1
Bulletin 2011–1 through 2011–5
Announcements:
2011-1, 2011-2 I.R.B.304
2011-2, 2011-3 I.R.B.324
2011-3, 2011-3 I.R.B.324
2011-4, 2011-4 I.R.B.424
2011-5, 2011-4 I.R.B.430
2011-6, 2011-4 I.R.B.433
2011-7, 2011-5 I.R.B.446
2011-8, 2011-5 I.R.B.446
Notices:
2011-1, 2011-2 I.R.B.259
2011-2, 2011-2 I.R.B.260
2011-3, 2011-2 I.R.B.263
2011-4, 2011-2 I.R.B.282
2011-5, 2011-3 I.R.B.314
2011-6, 2011-3 I.R.B.315
2011-7, 2011-5 I.R.B.437
Proposed Regulations:
REG-124018-10, 2011-2 I.R.B.301
Revenue Procedures:
2011-1, 2011-1 I.R.B.1
2011-2, 2011-1 I.R.B.90
2011-3, 2011-1 I.R.B.111
2011-4, 2011-1 I.R.B.123
2011-5, 2011-1 I.R.B.167
2011-6, 2011-1 I.R.B.195
2011-7, 2011-1 I.R.B.233
2011-8, 2011-1 I.R.B.237
2011-9, 2011-2 I.R.B.283
2011-10, 2011-2 I.R.B.294
2011-11, 2011-4 I.R.B.329
2011-12, 2011-2 I.R.B.297
2011-13, 2011-3 I.R.B.318
2011-14, 2011-4 I.R.B.330
2011-15, 2011-3 I.R.B.322
2011-16, 2011-5 I.R.B.440
2011-17, 2011-5 I.R.B.441
2011-18, 2011-5 I.R.B.443
Revenue Rulings:
2011-1, 2011-2 I.R.B.251
2011-2, 2011-2 I.R.B.256
2011-3, 2011-4 I.R.B.326
Treasury Decisions:
9507, 2011-3 I.R.B.305
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2010–27 through 2010–52 is in Internal Revenue Bulletin
2010–52, dated December 27, 2010.
January 31, 2011ii2011–5 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletin 2011–1 through 2011–5
Announcements:
85-88
Obsoleted by
Rev. Proc. 2011-10, 2011-2 I.R.B.294
2008-11
Modified by
Ann. 2011-6, 2011-4 I.R.B.433
2009-62
Obsoleted by
Rev. Proc. 2011-10, 2011-2 I.R.B.294
Notices:
2010-59
Modified by
Notice 2011-5, 2011-3 I.R.B.314
2010-79
Clarified and modified by
Notice 2011-4, 2011-2 I.R.B.282
Revenue Procedures:
72-50
Modified and superseded by
Rev. Proc. 2011-10, 2011-2 I.R.B.294
76-34
Modified and supersed by
Rev. Proc. 2011-10, 2011-2 I.R.B.294
83-23
Modified and superseded by
Rev. Proc. 2011-15, 2011-3 I.R.B.322
94-17
Modified and superseded by
Rev. Proc. 2011-15, 2011-3 I.R.B.322
97-27
Clarified and modified by
Rev. Proc. 2011-4, 2011-1 I.R.B.330
2001-10
Modified by
Rev. Proc. 2011-4, 2011-4 I.R.B.330
2002-28
Modified by
Rev. Proc. 2011-4, 2011-4 I.R.B.330
2003-21
Modified and superseded by
Rev. Proc. 2011-15, 2011-3 I.R.B.322
2004-34
Modified by
Rev. Proc. 2011-14, 2011-4 I.R.B.330
Revenue Procedures— Continued:
Modified and clarified by
Rev. Proc. 2011-18, 2011-5 I.R.B.443
2006-44
Modified by
Ann. 2011-6, 2011-4 I.R.B.433
2006-56
Modified by
Rev. Proc. 2011-14, 2011-4 I.R.B.330
2008-52
Modified by
Notice 2011-4, 2011-2 I.R.B.282
Rev. Proc. 2011-17, 2011-5 I.R.B.441
Superseded in part by
Rev. Proc. 2011-14, 2011-4 I.R.B.330
2009-39
Superseded in part by
Rev. Proc. 2011-14, 2011-4 I.R.B.330
2009-44
Modified by
Ann. 2011-6, 2011-4 I.R.B.433
2010-1
Superseded by
Rev. Proc. 2011-1, 2011-1 I.R.B.1
2010-2
Superseded by
Rev. Proc. 2011-2, 2011-1 I.R.B.283
2010-3
Superseded by
Rev. Proc. 2011-3, 2011-1 I.R.B.111
2010-4
Superseded by
Rev. Proc. 2011-4, 2011-1 I.R.B.123
2010-5
Superseded by
Rev. Proc. 2011-5, 2011-1 I.R.B.167
2010-6
Superseded by
Rev. Proc. 2011-6, 2011-1 I.R.B.195
2010-7
Superseded by
Rev. Proc. 2011-7, 2011-1 I.R.B.233
2010-8
Superseded by
Rev. Proc. 2011-8, 2011-1 I.R.B.237
2010-9
Superseded by
Rev. Proc. 2011-9, 2011-2 I.R.B.283
Revenue Procedures— Continued:
2010-15
Updated by
Rev. Proc. 2011-13, 2011-3 I.R.B.318
2011-1
Corrected by
Ann. 2011-7, 2011-5 I.R.B.446
2011-8
Corrected by
Ann. 2011-8, 2011-5 I.R.B.446
Revenue Rulings:
81-100
Modified by
Rev. Rul. 2011-1, 2011-2 I.R.B.251
2004-67
Modified by
Rev. Rul. 2011-1, 2011-2 I.R.B.251
2008-40
Modified by
Rev. Rul. 2011-1, 2011-2 I.R.B.251
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2010–27 through 2010–52 is in Internal Revenue Bulletin 2010–52, dated December 27,
2010.
2011–5 I.R.B.iiiJanuary 31, 2011

INDEX
Internal Revenue Bulletin 2011–1 through
2011–5
The abbreviation and number in parenthesis following the index entry
refer to the specific item; numbers in roman and italic type following
the parenthesis refers to the Internal Revenue Bulletin in which the item
may be found and the page number on which it appears.
Key to Abbreviations:
AnnAnnouncement
CDCourt Decision
DODelegation Order
EOExecutive Order
PLPublic Law
PTEProhibited Transaction Exemption
RPRevenue Procedure
RRRevenue Ruling
SPRStatement of Procedural Rules
TCTax Convention
TDTreasury Decision
TDOTreasury Department Order
EMPLOYEE PLANS
Affordable Care Act, nondiscrimination provisions applicable to
insured group health plans (Notice 1) 2,259
Determination letters, issuing procedures (RP 6) 1,195
Full funding limitations, weighted average interest rates, seg-
ment rates for:
January 2011 (Notice 7) 5,437
Guidance under section 162(m)(6) (Notice 2) 2,260
Letter rulings:
And determination letters, areas which will not be issued
from:
Associates Chief Counsel and Division Counsel (TE/GE)
(RP 3) 1,111
Associate Chief Counsel (International) (RP 7) 1,233
And general information letters, procedures (RP 4) 1,123
User fees, request for letter rulings (RP 8) 1,237; correction
(Ann 8) 5,446
Technical advice to IRS employees (RP 5) 1,167
Qualified plans:
Covered compensation tables, permitted disparity (RR 3) 4,
326
Group trusts (RR 1) 2,251
Minimum funding requirements relief (Notice 3) 2,263
EMPLOYMENT TAX
Electronic Funds Transfer (EFT) of depository taxes (TD 9507)
3,305
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1;correction(Ann7)5,446
EMPLOYMENT TAX—Cont.
Regulations:
26 CFR 1.1461–1, amended; 1.6302–1 thru –4, amended;
31.6071, amended; 31.6302–0 thru –2, –4, amended;
31.6302(c)–2A, removed; 31.6302(c)–3, amended;
40.6302(c)–1 thru –3, amended; 301.6302–1, amended;
301.6656–1, amended; 301.7502–2, removed; Electronic
Funds Transfer (EFT) of depository taxes (TD 9507) 3,305
Technical Advice Memoranda (TAMs) (RP 2) 1,90
ESTATE TAX
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1;correction(Ann7)5,446
Technical Advice Memoranda (TAMs) (RP 2) 1,90
EXCISE TAX
Electronic Funds Transfer (EFT) of depository taxes (TD 9507)
3,305
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1;correction(Ann7)5,446
Regulations:
26 CFR 1.1461–1, amended; 1.6302–1 thru –4, amended;
31.6071, amended; 31.6302–0 thru –2, –4, amended;
31.6302(c)–2A, removed; 31.6302(c)–3, amended;
40.6302(c)–1 thru –3, amended; 301.6302–1, amended;
301.6656–1, amended; 301.7502–2, removed; Electronic
Funds Transfer (EFT) of depository taxes (TD 9507) 3,305
Technical Advice Memoranda (TAMs) (RP 2) 1,90
EXEMPT ORGANIZATIONS
Electronic Funds Transfer (EFT) of depository taxes (TD 9507)
3,305
Filing thresholds for Form 990 (RP 15) 3,322
Letter rulings:
And determination letters:
Areas which will not be issued from Associates Chief
Counsel and Division Counsel (TE/GE) (RP 3) 1,111
Exemption application determination letter rulings under
sections 501, 509, 4940, and 4942 (RP 10) 2,294
Exemption application determination letter rulings under
sections 501 and 521 (RP 9) 2,283
And general information letters, procedures (RP 4) 1,123
User fees, request for letter rulings (RP 8) 1,237; correction
(Ann 8) 5,446
List of organizations classified as private foundations (Ann 3) 3,
324
January 31, 2011iv2011–5 I.R.B.

EXEMPT ORGANIZATIONS—Cont.
Regulations:
26 CFR 1.1461–1, amended; 1.6302–1 thru –4, amended;
31.6071, amended; 31.6302–0 thru –2, –4, amended;
31.6302(c)–2A, removed; 31.6302(c)–3, amended;
40.6302(c)–1 thru –3, amended; 301.6302–1, amended;
301.6656–1, amended; 301.7502–2, removed; Electronic
Funds Transfer (EFT) of depository taxes (TD 9507) 3,305
Revocations (Ann 2) 3,324
Technical advice to IRS employees (RP 5) 1,167
GIFT TAX
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1;correction(Ann7)5,446
Technical Advice Memoranda (TAMs) (RP 2) 1,90
INCOME TAX
Accounting methods, automatic consent for Blue Cross/Blue
Shield and certain other health organizations to change method
of accounting for unearned premiums (Notice 4) 2,282
Accrual of liabilities (RP 17) 5,441
Cost-of-living adjustments for inflation for 2011 (RP 12) 2,297
Disciplinary actions involving attorneys, certified public accoun-
tants, enrolled agents, and enrolled actuaries (Ann 4) 4,424
Electronic Funds Transfer (EFT) of depository taxes (TD 9507)
3,305
Employer-provided vehicles, cents-per-mile rule, maximum ve-
hicle values for 2011 (RP 11) 4,329
Extension of Fast Track Settlement (FTS) for SB/SE taxpayers
pilot program (Ann 5) 4,430
Guidance under section 162(m)(6) (Notice 2) 2,260
Health FSA/HRA debit cards, over-the-counter drug purchases
(Notice 5) 3,314
Implementation of rules governing tax return preparers (Notice
6) 3,315
Income recognition for advance payments received from the sale
of gift cards (RP 18) 5,443
Interest:
Investment:
Federal short-term, mid-term, and long-term rates for:
January 2011 (RR 2) 2,256
Letter rulings:
And determination letters, areas which will not be issued
from:
Associate Chief Counsel andDivision Counsel (TE/GE)
(RP 3) 1,111
Associate Chief Counsel (International) (RP 7) 1,233
And information letters issued by Associate Offices, determi-
nation letters issued by Operating Divisions (RP 1) 1,1;
correction (Ann 7) 5,446
Methods of accounting, automatic and non-automatic changes
(RP 14) 4,330
INCOME TAX—Cont.
Penalties, substantial understatement, preparer penalty (RP 13)
3,318
Private foundations, organizations now classified as (Ann 3) 3,
324
Proposed Regulations:
26 CFR Part 300.0, .4, .5, .6, amended; Parts 300.9 thru
.11, added, user fees relative to retirement plan agents
(REG–124018–10) 2,301
Publication:
1220, changes affecting tax year 2010 filing of information
returns (Ann 1) 2,304
Real Estate Investment Trust (REIT) distressed debt (RP 16) 5,
440
Regulations:
26 CFR 1.1461–1, amended; 1.6302–1 thru –4, amended;
31.6071, amended; 31.6302–0 thru –2, –4, amended;
31.6302(c)–2A, removed; 31.6302(c)–3, amended;
40.6302(c)–1 thru –3, amended; 301.6302–1, amended;
301.6656–1, amended; 301.7502–2, removed; Electronic
Funds Transfer (EFT) of depository taxes (TD 9507) 3,305
Revocations, exempt organizations (Ann 2) 3,324
Technical Advice Memoranda (TAMs) (RP 2) 1,90
Test of procedures for mediation and arbitration for Offer in
Compromise (OIC) and Trust Fund Recovery Penalty (TFRP)
cases in appeals (Ann 6) 4,433
User fees relating to enrolled agents and enrolled retirement plan
agents (REG–124018–10) 2,301
SELF-EMPLOYMENT TAX
Electronic Funds Transfer (EFT) of depository taxes (TD 9507)
3,305
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1;correction(Ann7)5,446
Regulations:
26 CFR 1.1461–1, amended; 1.6302–1 thru –4, amended;
31.6071, amended; 31.6302–0 thru –2, –4, amended;
31.6302(c)–2A, removed; 31.6302(c)–3, amended;
40.6302(c)–1 thru –3, amended; 301.6302–1, amended;
301.6656–1, amended; 301.7502–2, removed; Electronic
Funds Transfer (EFT) of depository taxes (TD 9507) 3,305
Technical Advice Memoranda (TAMs) (RP 2) 1,90
2011–5 I.R.B.vJanuary 31, 2011

January 31, 20112011–5 I.R.B.

2011–5 I.R.B.January 31, 2011

January 31, 20112011–5 I.R.B.

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