Download - Bulletin No. 2010-31 HIGHLIGHTS OF THIS ISSUE · 2012. 7. 17. · Bulletin No. 2010-31 August 2, 2010 HIGHLIGHTS OF THIS ISSUE These synopses are intended only as aids to the reader

Bulletin No. 2010-31August 2, 2010

HIGHLIGHTSOF THIS ISSUEThese synopses are intended only as aids to the reader inidentifying the subject matter covered. They may not berelied upon as authoritative interpretations.

INCOME TAX

Rev. Rul. 2010–19, page 174.Federal rates; adjusted federal rates; adjusted federallong-term rate and the long-term exempt rate. For pur-poses of sections 382, 642, 1274, 1288, and other sectionsof the Code, tables set forth the rates for August 2010.

T.D. 9490, page 176.REG–151605–09, page 184.Final, temporary, and proposed regulations under section 1502of the Code contain rules regarding the implementation of sec-tion 172(b)(1)(H) within a consolidated group. The regulationsalso permit certain acquiring consolidated groups to elect towaive all or a portion of the pre-acquisition portion of the ex-tended carryback period pursuant to section 172(b)(1)(H) forspecific losses attributable to certain acquired members.

Rev. Proc. 2010–27, page 183.This procedure informs the trustee (or debtor in possession)representing the bankruptcy estate of the debtor of the proce-dure to be followed to properly request a tax refund from theService. Rev. Proc. 81–18 obsoleted.

EMPLOYMENT TAX


EXCISE TAX


ADMINISTRATIVE

Notice 2010–53, page 182.This notice contains updated addresses for certain elections,statements, returns and other documents. Notice 2003–19revoked.


Finding Lists begin on page ii.

The IRS MissionProvide America’s taxpayers top-quality service by helpingthem understand and meet their tax responsibilities and en-

force the law with integrity and fairness to all.

IntroductionThe Internal Revenue Bulletin is the authoritative instrument ofthe Commissioner of Internal Revenue for announcing officialrulings and procedures of the Internal Revenue Service and forpublishing Treasury Decisions, Executive Orders, Tax Conven-tions, legislation, court decisions, and other items of generalinterest. It is published weekly and may be obtained from theSuperintendent of Documents on a subscription basis. Bulletincontents 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 ofthe 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 internalpractices and procedures that affect the rights and duties oftaxpayers are published.

Revenue rulings represent the conclusions of the Service on theapplication of the law to the pivotal facts stated in the revenueruling. In those based on positions taken in rulings to taxpayersor technical advice to Service field offices, identifying detailsand information of a confidential nature are deleted to preventunwarranted invasions of privacy and to comply with statutoryrequirements.

Rulings and procedures reported in the Bulletin do not have theforce and effect of Treasury Department Regulations, but theymay be used as precedents. Unpublished rulings will not berelied on, used, or cited as precedents by Service personnel inthe disposition of other cases. In applying published rulings andprocedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,and Service personnel and others concerned are cautionedagainst reaching the same conclusions in other cases unlessthe 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 ofthe 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, Leg-islation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.To the extent practicable, pertinent cross references to thesesubjects are contained in the other Parts and Subparts. Alsoincluded in this part are Bank Secrecy Act Administrative Rul-ings. Bank Secrecy Act Administrative Rulings are issued bythe Department of the Treasury’s Office of the Assistant Secre-tary (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 indexfor the matters published during the preceding months. Thesemonthly indexes are cumulated on a semiannual basis, and arepublished 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.

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

August 2, 2010 2010–31 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Codeof 1986Section 42.—Low-IncomeHousing Credit

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the monthof August 2010. See Rev. Rul. 2010-19, page 174.

Section 280G.—GoldenParachute Payments

Federal short-term, mid-term, and long-term ratesare set forth for the month of August 2010. See Rev.Rul. 2010-19, page 174.

Section 382.—Limitationon Net Operating LossCarryforwards and CertainBuilt-In Losses FollowingOwnership Change

The adjusted applicable federal long-term rate isset forth for the month of August 2010. See Rev. Rul.2010-19, page 174.

Section 412.—MinimumFunding Standards


Section 467.—CertainPayments for the Use ofProperty or Services


Section 468.—SpecialRules for Mining and SolidWaste Reclamation andClosing Costs


Section 482.—Allocationof Income and DeductionsAmong Taxpayers


Section 483.—Interest onCertain Deferred Payments


Section 642.—SpecialRules for Credits andDeductions


Section 807.—Rules forCertain Reserves


Section 846.—DiscountedUnpaid Losses Defined


Section 1274.—Determi-nation of Issue Price in theCase of Certain Debt Instru-ments Issued for Property(Also Sections 42, 280G, 382, 412, 467, 468, 482,483, 642, 807, 846, 1288, 7520, 7872.)

Federal rates; adjusted federal rates;adjusted federal long-term rate and thelong-term exempt rate. For purposes of

sections 382, 642, 1274, 1288, and othersections of the Code, tables set forth therates for August 2010.

Rev. Rul. 2010–19

This revenue ruling provides variousprescribed rates for federal income taxpurposes for August 2010 (the currentmonth). Table 1 contains the short-term,mid-term, and long-term applicable fed-eral rates (AFR) for the current monthfor purposes of section 1274(d) of theInternal Revenue Code. Table 2 containsthe short-term, mid-term, and long-termadjusted applicable federal rates (ad-justed AFR) for the current month forpurposes of section 1288(b). Table 3 setsforth the adjusted federal long-term rateand the long-term tax-exempt rate de-scribed in section 382(f). Table 4 containsthe appropriate percentages for deter-mining the low-income housing creditdescribed in section 42(b)(1) for build-ings placed in service during the currentmonth. However, under section 42(b)(2),the applicable percentage for non-feder-ally subsidized new buildings placed inservice after July 30, 2008, and beforeDecember 31, 2013, shall not be less than9%. Finally, Table 5 contains the federalrate for determining the present value ofan annuity, an interest for life or for a termof years, or a remainder or a reversionaryinterest for purposes of section 7520.

2010–31 I.R.B. 174 August 2, 2010

REV. RUL. 2010–19 TABLE 1

Applicable Federal Rates (AFR) for August 2010

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-term

AFR .53% .53% .53% .53%110% AFR .58% .58% .58% .58%120% AFR .64% .64% .64% .64%130% AFR .69% .69% .69% .69%

Mid-term

AFR 2.18% 2.17% 2.16% 2.16%110% AFR 2.40% 2.39% 2.38% 2.38%120% AFR 2.62% 2.60% 2.59% 2.59%130% AFR 2.84% 2.82% 2.81% 2.80%150% AFR 3.29% 3.26% 3.25% 3.24%175% AFR 3.84% 3.80% 3.78% 3.77%

Long-term

AFR 3.79% 3.75% 3.73% 3.72%110% AFR 4.17% 4.13% 4.11% 4.09%120% AFR 4.55% 4.50% 4.47% 4.46%130% AFR 4.94% 4.88% 4.85% 4.83%


Adjusted AFR for August 2010

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-term adjustedAFR

.58% .58% .58% .58%

Mid-term adjusted AFR 1.93% 1.92% 1.92% 1.91%

Long-term adjustedAFR

3.98% 3.94% 3.92% 3.91%


Rates Under Section 382 for August 2010

Adjusted federal long-term rate for the current month 3.98%

Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjustedfederal long-term rates for the current month and the prior two months.) 4.01%


Appropriate Percentages Under Section 42(b)(1) for August 2010

Note: Under Section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service afterJuly 30, 2008, and before December 31, 2013, shall not be less than 9%.

Appropriate percentage for the 70% present value low-income housing credit 7.69%

Appropriate percentage for the 30% present value low-income housing credit 3.30%

August 2, 2010 175 2010–31 I.R.B.


Rate Under Section 7520 for August 2010

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,or a remainder or reversionary interest 2.6%

Section 1288.—Treatmentof Original Issue Discounton Tax-Exempt Obligations


Section 1502.—Regulations26 CFR 1.1502–21: Net operating losses.

T.D. 9490

DEPARTMENT OF THETREASURYInternal Revenue Service26 CFR Parts 1 and 602

Extended Carryback of Lossesto or from a ConsolidatedGroup

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Final and temporary regula-tions.

SUMMARY: This document contains finaland temporary regulations under section1502 that affect corporations filing con-solidated returns. These regulations con-tain rules regarding the implementation ofsection 172(b)(1)(H) within a consolidatedgroup. These regulations also permit cer-tain acquiring consolidated groups to electto waive all or a portion of the pre-ac-quisition carryback period pursuant to sec-tion 172(b)(1)(H) for specific losses attrib-utable to certain acquired members. Thetext of these temporary regulations alsoserves as the text of the proposed regu-lations (REG–151605–09) set forth in thenotice of proposed rulemaking on this sub-ject in this issue of the Bulletin.

DATES: Effective Date: These regulationsare effective on June 23, 2010.

Applicability Date: For date of applica-bility, see §1.1502–21T(h)(9)(i). The ap-plicability of these regulations will expireon June 21, 2013.

FOR FURTHER INFORMATIONCONTACT: Grid Glyer, (202) 622–7930(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

These regulations are being issuedwithout prior notice and public procedurepursuant to the Administrative ProcedureAct (5 U.S.C. 553). For this reason, thecollection of information contained inthese regulations has been reviewed and,pending receipt and evaluation of pub-lic comments, approved by the Office ofManagement and Budget under controlnumber 1545–2171. Responses to thiscollection of information are required toobtain a benefit.

An agency may not conduct or sponsor,and a person is not required to respond to, acollection of information unless it displaysa valid control number assigned by the Of-fice of Management and Budget.

For further information concerning thiscollection of information, and where tosubmit comments on the collection of in-formation and the accuracy of the esti-mated burden, and suggestions for reduc-ing this burden, please refer to the pream-ble to the cross-referencing notice of pro-posed rulemaking published in this issue ofthe Bulletin.

Books or records relating to the col-lection of information must be retained aslong as their contents may become mate-rial in the administration of any internalrevenue law. Generally, tax returns and taxreturn information are confidential, as re-quired by 26 U.S.C. 6103.

Background

Section 172(b)(1) provides, in part, thata net operating loss for any taxable yearmust generally be carried back to each of

the two taxable years preceding the taxableyear of the loss. Section 172(b)(3) pro-vides that any taxpayer entitled to a carry-back period pursuant to section 172(b)(1)may elect to relinquish the carryback pe-riod with respect to a loss for any taxableyear. An election to relinquish the carry-back period pursuant to section 172(b)(3)must be made by the due date (includingextensions) of the taxpayer’s return for thetaxable year of the loss and in the man-ner prescribed by the Secretary. Normally,this election is irrevocable. A consoli-dated group is permitted to make this elec-tion for its entire consolidated net oper-ating loss (CNOL) pursuant to the proce-dures provided in §1.1502–21(b)(3)(i). Inaddition, §1.1502–21(b)(3)(ii)(B) permitsan acquiring consolidated group to make aseparate election to waive, for all taxableyears of the acquiring group, and solelywith respect to all consolidated net operat-ing losses attributable to certain acquiredmembers, the portion of the carryback pe-riod for which the acquired corporationswere members of another group. Thiselection is irrevocable and must be madeby the due date (including extensions) ofthe acquiring group for the taxable year ofthe acquisition.

Section 172(b)(1)(H) was amendedby the Worker, Homeownership, andBusiness Assistance Act of 2009,which was signed by the President onNovember 6, 2009 (Public Law 111–92,123 Stat. 2984) (the Act). As amended,section 172(b)(1)(H) allows taxpayersto elect to extend the standard two-yearcarryback period for an additional periodof up to three years (Extended CarrybackPeriod) for a net operating loss arisingin a single taxable year ending afterDecember 31, 2007, and beginning beforeJanuary 1, 2010 (Applicable NOL).However, section 172(b)(1)(H) does notapply to any taxpayer if that taxpayer, orany member of the taxpayer’s affiliatedgroup (within the meaning of the Act), isdescribed in section 13(f) of the Act.

As described in Revenue Procedure2009–52, 2009–49 I.R.B. 744, section

2010–31 I.R.B. 176 August 2, 2010

13(e)(4) of the Act permits any taxpayerthat previously elected pursuant to section172(b)(3) to forgo the carryback periodfor a loss arising in a taxable year end-ing before the date of enactment of theAct (November 6, 2009) to revoke suchelection in order to take advantage of theExtended Carryback Period, provided thatthe taxpayer revokes the election beforethe due date (including extensions) for fil-ing the return for the taxpayer’s last taxableyear beginning in 2009. Revenue Proce-dure 2009–52 also permits a taxpayer thatfiled an application for a tentative car-ryback adjustment or an amended returnusing the two-year carryback period foran Applicable NOL to file certain formsto claim the Extended Carryback Periodprovided pursuant to section 172(b)(1)(H).Revenue Procedure 2009–52 further clar-ifies that a taxpayer includes an affiliatedgroup filing a consolidated return, an Ap-plicable NOL includes a CNOL, and thesection 172(b)(1)(H) election is made bythe common parent of the group.

Explanation of Provisions

1. Extended Carryback Period electionand computation of limitation for fifthpreceding consolidated return year

a. Extended Carryback Period electionand revocation of prior elections

These temporary regulations providethat a consolidated group may elect tocarry back a consolidated net operatingloss arising in a consolidated return yearending after December 31, 2007, or begin-ning before January 1, 2010 (ApplicableCNOL) to the Extended Carryback Pe-riod. In addition, these regulations providethat a group may revoke a prior electionpursuant to §1.1502–21(b)(3)(i) in orderto make an election pursuant to section172(b)(1)(H). See section 4.01(3) and (4)of Rev. Proc. 2009–52 for the manner inwhich a group makes the election pursuantto section 172(b)(1)(H) and revokes a priorelection pursuant to §1.1502–21(b)(3)(i).

If a member (Electing Member) of aconsolidated group elects an ExtendedCarryback Period pursuant to section172(b)(1)(H) with regard to an Appli-cable NOL arising in a separate returnyear ending before the Electing Member’sacquisition by a consolidated group, theelection will not disqualify the acquiring

group from making an otherwise availableelection pursuant to section 172(b)(1)(H)with regard to an Applicable CNOL for aconsolidated return year.

b. Implementation of the ExtendedCarryback Period with respect to aconsolidated return year

As contemplated by section172(b)(1)(H), the designated taxable yearwithin the Extended Carryback Periodmay be the fifth taxable year preceding theyear of the loss (Five-Year Carryback).A taxpayer may also choose the thirdor fourth preceding taxable year for theExtended Carryback Period. However,section 172(b)(1)(H)(iv) provides that theamount of an Applicable NOL that maybe the subject of a Five-Year Carrybackshall not exceed 50 percent of taxpayer’staxable income (computed without regardto the NOL deduction attributable to theloss year or any taxable year thereafter)for such fifth preceding taxable year.

These temporary regulations providethat, if a group elects pursuant to section172(b)(1)(H) to make a Five-Year Carry-back into a consolidated return year of thesame group, for purposes of computing thegroup’s 50 percent limitation, taxpayer’staxable income means the consolidatedtaxable income (CTI) (computed withoutregard to any CNOL deduction attributableto the loss year or any equivalent taxableyear as defined in §1.1502–21(b)(2)(iii),or any taxable year thereafter) of the groupin its fifth consolidated return year preced-ing the year of the loss for which the grouphas elected the Five-Year Carryback.

These temporary regulations also pro-vide that a limitation applies to each yearof a consolidated group that absorbs aFive-Year Carryback, even if the groupitself has not made a section 172(b)(1)(H)election. For example, the annual limi-tation provided in these temporary reg-ulations may limit the amount of lossabsorbed by the group where such lossrepresents a Five-Year Carryback fromseparate return years of one or more for-mer members. See also §1.1502–21(c)(SRLY limitation).

2. Elections to waive the entire carrybackperiod or the Extended Carryback Periodfor pre-acquisition consolidated returnyears of acquired members

Given the enactment of section172(b)(1)(H), and taxpayers’ ability torevoke prior elections pursuant to section172(b)(3) in order to take advantage ofthe Extended Carryback Period, the IRSand the Treasury Department believe thatit is appropriate to afford consolidatedgroups an opportunity to waive the entirecarryback period or the Extended Car-ryback Period with regard to the portionof the Applicable CNOL that is alloca-ble to certain acquired members. Thecarryback period may be waived only tothe extent of years preceding the acquisi-tion during which the acquired memberswere included in another consolidatedgroup. Further, this election is availableonly to groups that did not make an elec-tion described in §1.1502–21(b)(3)(ii)(B)to waive all carrybacks with respect tothe acquired members. In this regard,the regulations in this Treasury deci-sion add §1.1502–21T(b)(3)(ii)(C), whichsets forth two elections. These tempo-rary regulations accordingly permit aconsolidated group to make a carrybackwaiver that, as to an Applicable CNOL,is similar to the waiver described in§1.1502–21(b)(3)(ii)(B), even though thelatter waiver election would otherwise betime-barred.

Each of the two carryback waiver elec-tions added by this temporary regulationapplies only if (i) the acquiring consoli-dated group makes a section 172(b)(1)(H)election; and (ii) a portion of the Appli-cable CNOL is attributable to a memberacquired from another group. Pursuant tothe first election, an acquiring group maywaive the part of the five-year carrybackperiod during which the member was amember of another group. With regard tothe apportioned loss, this election may re-sult in a waiver of the entire five-year car-ryback period to the taxable years priorto the acquisition. However, the waiveris only available where none of such losshas previously been carried back to a tax-able year of a group of which the acquiredmember was previously a member.

Pursuant to the second election, an ac-quiring group may waive the part of theExtended Carryback Period during which

August 2, 2010 177 2010–31 I.R.B.

the member was a member of anothergroup. Thus, with regard to the appor-tioned loss, this second election permitsa waiver of the third, fourth, and fifthcarryback years only, to the extent thatsuch years are prior to the acquisition.Moreover, this election is available evenwhere such loss has been carried back tothe first or second carryback years of theacquired member that are pre-acquisitionyears. However, this second election isavailable only where none of the loss hasbeen carried back to a taxable year of agroup of which the acquired member waspreviously a member which is prior to thesecond taxable year preceding the taxableyear of the loss. Depending upon thefacts of a particular group, it is possiblethat either of the two carryback waiverelections added by this Treasury decisioncould produce the same result.

Unlike the election pursuant to§1.1502–21(b)(3)(ii)(B), the elections pro-vided in these regulations apply only toa group’s Applicable CNOL with regardto which the taxpayer makes an electionpursuant to section 172(b)(1)(H) (that is,a single taxable year). An election thatrelates to an Applicable CNOL must bemade by the due date (including exten-sion of time) for filing the return for thetaxpayer’s last taxable year beginning in2009.

If the acquiring consolidated groupfiles a valid election described in§1.1502–21(b)(3)(ii)(B) with respect tothe acquisition of a member, no elec-tion pursuant to §1.1502–21T(b)(3)(ii)(C)needs to be (nor should be) filed to ensurethat an Applicable CNOL is not carriedback to the relevant pre-acquisition yearsof the acquired member.

Special Analyses

These regulations are necessary to pro-vide taxpayers with immediate electiverelief pursuant to section 172(b)(1)(H),which was amended as part of the Act.These regulations provide rules necessaryto implement section 172(b)(1)(H) withina consolidated group. These regulationsfurther permit certain acquiring consoli-dated groups to elect to waive the standardcarryback period or Extended CarrybackPeriod with respect to certain acquiredmembers. The regulations apply to NOLsarising in taxable years ending after De-

cember 31, 2007, and beginning beforeJanuary 1, 2010. Based on these consid-erations, it has been determined that theseregulations will provide taxpayers withthe necessary guidance and authority toensure equitable administration of the taxlaws. Because of the need for immediateguidance, notice and public procedure areimpracticable and contrary to the publicinterest pursuant to 5 U.S.C. 553(b)(3)(B)and a delayed effective date is not requiredpursuant to 5 U.S.C. 553(d)(1) and (3).

Further, it has been determined that thisTreasury decision is not a significant reg-ulatory action as defined in Executive Or-der 12866. Therefore, a regulatory assess-ment is not required. It has also been de-termined that section 553(b) of the Admin-istrative Procedure Act (5 U.S.C. chapter5) does not apply to these regulations. Forthe applicability of the Regulatory Flexi-bility Act (5 U.S.C. chapter 6) refer to theSpecial Analyses section of the preambleto the cross-reference notice of proposedrulemaking published in this issue of theBulletin. Pursuant to section 7805(f) of theInternal Revenue Code, these regulationshave been submitted to the Chief Counselfor Advocacy of the Small Business Ad-ministration for comment on their impacton small business.

Drafting Information

The principal author of these regula-tions is Grid Glyer, Office of AssociateChief Counsel (Corporate). However,other personnel from the IRS and theTreasury Department participated in theirdevelopment.

* * * * *

Amendments to the Regulations

Accordingly, 26 CFR parts 1 and 602are amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation forpart 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *Par. 2. Section 1.1502–21 is amended

by adding paragraphs (b)(3)(v) and (h)(9)to read as follows:

§1.1502–21 Net operating losses.

* * * * *

(b) * * *(3) * * *(v) [Reserved]. For further guidance,

see §1.1502–21T(b)(3)(v).

* * * * *(h) * * *(9) [Reserved]. For further guidance,

see §1.1502–21T(h)(9).Par. 3. Section 1.1502–21T is revised

to read as follows:

§1.1502–21T Net operating losses(temporary).

(a) through (b)(3)(ii)(B) [Reserved].For further guidance, see §1.1502–21(a)through (b)(3)(ii)(B).

(C) Partial waiver of carryback pe-riod for an applicable consolidated netoperating loss—(1) Application. Theacquiring group may make an electiondescribed in paragraph (b)(3)(ii)(C)(2) or(b)(3)(ii)(C)(3) of this section with respectto an acquired member or members onlyif it did not file a valid election describedin §1.1502–21(b)(3)(ii)(B) with respect tosuch acquired member or members on orbefore June 23, 2010.

(2) Partial waiver of entire pre-acqui-sition carryback period. If one or moremembers of a consolidated group becomemembers of another consolidated group,then, with respect to the consolidated netoperating loss arising in a taxable year end-ing after December 31, 2007, and begin-ning before January 1, 2010 (ApplicableCNOL) for which the group has made anelection pursuant to section 172(b)(1)(H),the acquiring group may make an irrev-ocable election to relinquish, for the partof the Applicable CNOL attributable tosuch member, the portion of the carrybackperiod during which the corporation wasa member of another group. This electioncould thus operate to relinquish carrybackfor up to five taxable years, including theExtended Carryback Period (as defined inparagraph (b)(3)(v) of this section). How-ever, any other corporation joining theacquiring group that was affiliated withthe member immediately before it joinedthe acquiring group must also be includedin the waiver, and the conditions of thisparagraph (b)(3)(ii)(C)(2) must be satis-fied. The acquiring group cannot makethe election described in this paragraph(b)(3)(ii)(C)(2) with respect to any par-ticular portion of an Applicable CNOL if

2010–31 I.R.B. 178 August 2, 2010

any carryback is claimed, as provided inparagraph (b)(3)(ii)(C)(4) of this section,with respect to any such loss on a returnor other filing by a group of which the ac-quired member was previously a memberand such claim is filed on or before thedate the election described in this para-graph (b)(3)(ii)(C)(2) is filed. The electionmust be made in a separate statemententitled “THIS IS AN ELECTION PUR-SUANT TO §1.1502–21T(b)(3)(ii)(C)(2)TO WAIVE THE PRE-[insert the firstday of the first taxable year for whichthe member (or members) was a memberof the acquiring group] CARRYBACKPERIOD FOR THE CNOL ATTRIBUT-ABLE TO THE [insert taxable year ofloss] TAXABLE YEAR OF [insert namesand employer identification numbers ofmembers].” Such statement must be filedas provided in paragraph (b)(3)(ii)(C)(5)of this section.

(3) Partial waiver of pre-acquisitionExtended Carryback Period. If one ormore members of a consolidated groupbecome members of another consolidatedgroup, then, with respect to the Applica-ble CNOL for which the acquiring grouphas made an election pursuant to section172(b)(1)(H), the acquiring group maymake an irrevocable election to relinquish,for the part of the Applicable CNOL attrib-utable to such member, the portion of theExtended Carryback Period (as defined inparagraph (b)(3)(v) of this section) duringwhich the corporation was a member ofanother group. This election could thusoperate to relinquish carryback for up tothree taxable years. However, any othercorporation joining the acquiring groupthat was affiliated with the member im-mediately before it joined the acquiringgroup must also be included in the waiver,and the conditions of this paragraph(b)(3)(ii)(C)(3) must be satisfied. Theacquiring group cannot make the electiondescribed in this paragraph (b)(3)(ii)(C)(3)with respect to any particular portion ofan Applicable CNOL if a carryback toone or more taxable years that are prior tothe taxable year that is two taxable yearspreceding the taxable year of the Appli-cable CNOL is claimed, as provided inparagraph (b)(3)(ii)(C)(4) of this section,with respect to any such loss on a returnor other filing by a group of which the ac-quired member was previously a member,and such claim is filed on or before the

date the election described in this para-graph (b)(3)(ii)(C)(3) is filed. The electionmust be made in a separate statemententitled “THIS IS AN ELECTION PUR-SUANT TO §1.1502–21T(b)(3)(ii)(C)(3)TO WAIVE THE PRE-[insert the firstday of the first taxable year for which themember (or members) was a member ofthe acquiring group] EXTENDED CAR-RYBACK PERIOD FOR THE CNOLATTRIBUTABLE TO THE [insert tax-able year of losses] TAXABLE YEAR OF[insert names and employer identificationnumbers of members].” Such statementmust be filed as provided in paragraph(b)(3)(ii)(C)(5) of this section.

(4) Claim for a carryback. For pur-poses of paragraphs (b)(3)(ii)(C)(2) and(b)(3)(ii)(C)(3) of this section, a carrybackis claimed with respect to a net operat-ing loss if there is a claim for refund, anamended return, an application for a ten-tative carryback adjustment, or any otherfiling that claims the benefit of the NOLor CNOL in a taxable year prior to thetaxable year of the loss, whether or notsubsequently revoked in favor of a claimbased on an Extended Carryback Periodprovided under section 172(b)(1)(H).

(5) Time and manner for filing state-ment. A statement described in paragraph(b)(3)(ii)(C)(2) or (b)(3)(ii)(C)(3) of thissection that relates to an Applicable CNOLshall be made by the due date (includingextension of time) for filing the return forthe taxpayer’s last taxable year beginningin 2009.

(6) Example. (i) Waiver in case of pre-consol-idation separate return years. T was a separatecorporation that was not part of a consolidated group,until December 31, 2004, when it was acquired by theX Group. On December 31, 2007, the X Group soldall of the stock of T to the P Group. P did not makethe election described in §1.1502–21(b)(3)(ii)(B) torelinquish, with respect to all CNOLs attributableto T, the portion of the carryback period for whichT was a member of the X Group. In 2008, the PGroup sustained a $1,000 CNOL, $600 of which wasattributable to T under §1.1502–21(b)(2)(iv)(A). Pelected a Five-Year Carryback (as defined in para-graph (b)(3)(v) of this section) pursuant to section172(b)(1)(H) with regard to the P Group’s 2008CNOL, and the P Group elected, pursuant to para-graph (b)(3)(ii)(C)(2) of this section, to waive theportion of the carryback period during which T wasincluded in any other consolidated group. T’s fifthand fourth taxable years preceding the year of theloss were its 2003 and 2004 separate return years.Due to the P Group’s election pursuant to paragraph(b)(3)(ii)(C)(2) of this section, T’s allocable portionof the P Group’s 2008 CNOL will not be carriedback to the years for which it was a member of

the X Group. However, T’s allocable portion ofthe P Group’s 2008 CNOL will be carried backto T’s non-consolidated taxable years (2003 and2004), subject to the limitation provided in section172(b)(1)(H)(iv).

(ii) Split-waiver election made. The facts are thesame as in paragraph (i) except that the group madethe election described in §1.1502–21(b)(3)(ii)(B)with regard to its acquisition of T in 2007.Due to the P Group’s election pursuant to§1.1502–21(b)(3)(ii)(B), T’s allocable portion of theP Group’s 2008 CNOL will not be carried back tothe years for which T was a member of the X Group.However, T’s allocable portion of the P Group’s2008 CNOL will be carried back to T’s non-consol-idated taxable years (2003 and 2004), subject to thelimitation provided in section 172(b)(1)(H)(iv).

(b)(3)(iii) and (b)(3)(iv) [Re-served]. For further guidance, see§1.1502–21(b)(3)(iii) and (b)(3)(iv).

(v) Extended Carryback Periodunder section 172(b)(1)(H). Section172(b)(1)(H) allows a taxpayer to electto carry back a single net operating lossarising in a taxable year ending after De-cember 31, 2007, and beginning beforeJanuary 1, 2010 (Applicable NOL) to itsthird, fourth, or fifth taxable year preced-ing the taxable year of the loss (ExtendedCarryback Period). As contemplated bysection 172(b)(1)(H), the designated tax-able year within the Extended CarrybackPeriod may be the fifth taxable year pre-ceding the year of the loss (Five-YearCarryback), and section 172(b)(1)(H)(iv)limits the amount of the Applicable NOLthat may be carried back to 50 percent ofthe taxpayer’s taxable income (computedwithout regard to any NOL deduction at-tributable to the loss year or any taxableyear thereafter) for such fifth precedingtaxable year. This paragraph (b)(3)(v) pro-vides rules for computing the 50 percentlimitation under section 172(b)(1)(H)(iv)where a Five-Year Carryback is made to aconsolidated return year from any consol-idated return year or separate return year.

(A) Election—(1) In general. Exceptas otherwise provided in this section, aconsolidated group may elect an ExtendedCarryback Period pursuant to section172(b)(1)(H) with regard to a consolidatednet operating loss arising in a taxable yearending after December 31, 2007 and be-ginning before January 1, 2010 (Applica-ble CNOL). However, no election may bemade under this paragraph for a taxpayerdescribed in section 13(f) of the Worker,Homeownership, and Business AssistanceAct of 2009, Public Law 111–92, 123

August 2, 2010 179 2010–31 I.R.B.

Stat. 2984 (November 6, 2009). Theelection pursuant to section 172(b)(1)(H)applies to the entire Applicable CNOL,except as otherwise provided in paragraph(b)(3)(ii)(C) of this section or in this para-graph (b)(3)(v). See also paragraph (c) ofthis section (SRLY limitation).

(2) Revoking a previous carrybackwaiver. A consolidated group mayrevoke a prior election pursuant to§1.1502–21(b)(3)(i) to relinquish the en-tire carryback period with respect to anApplicable CNOL, but only if the groupmakes the election pursuant to section172(b)(1)(H) with regard to such Applica-ble CNOL.

(3) Pre-acquisition electing member. Ifa member (Electing Member) of a con-solidated group makes an Extended Car-ryback Period election pursuant to section172(b)(1)(H) with regard to a loss froma separate return year ending before theElecting Member’s inclusion in a consol-idated group, the election will not dis-qualify the acquiring group from makingan otherwise available election pursuantto section 172(b)(1)(H) with regard to anApplicable CNOL incurred in a consoli-dated return year that includes the ElectingMember.

(B) Taxpayer’s taxable income. Forpurposes of computing the limitationunder section 172(b)(1)(H)(iv) on aFive-Year Carryback to any consoli-dated return year from any consolidatedreturn year or separate return year, tax-payer’s taxable income as used in section172(b)(1)(H)(iv)(I) means consolidatedtaxable income (CTI) in the consolidatedreturn year that is the fifth taxable yearpreceding the year of the loss. For pur-poses of the preceding sentence, CTI iscomputed without regard to any CNOLdeduction attributable to the particularFive-Year Carryback or any NOL fromany member’s taxable year ending on thesame date as the taxable year in which theFive-Year Carryback arises, or any taxableyear thereafter.

(C) Limitation on Five-Year Carry-backs to a consolidated group.—(1) An-nual Limitation. The aggregate amount ofFive-Year Carrybacks from years endingon the same date (Testing Date) to anyconsolidated return year may not exceedthe excess of 50 percent of the CTI forthat year over the total of Five-Year Car-rybacks to that consolidated return year

from years ending before the Testing Date(Annual Limitation). For purposes ofthe preceding sentence, CTI is computedwithout regard to—

(i) Any CNOL deduction attributable toFive-Year Carrybacks to such year; or

(ii) Any NOL from any member’s tax-able year ending on the Testing Date or anytaxable year thereafter.

(2) Pro rata absorption of limited andnon-limited losses. Any Five-Year Carry-back, and other net operating losses, fromyears ending on the same date that areavailable to offset CTI in the same yearare absorbed on a pro rata basis. See§1.1502–21(b)(1).

(D) Election by small business. Thisparagraph (b)(3)(v) does not apply to anyloss of an eligible small business as de-fined in section 172(b)(1)(H)(v)(II) withrespect to any election made pursuant tosection 172(b)(1)(H) as in effect on theday before the date of the enactment ofthe Worker, Homeownership, and Busi-ness Assistance Act of 2009.

(E) Examples. The rules of this para-graph (b)(3)(v) are illustrated by the fol-lowing examples. For purposes of the ex-amples, all affiliated groups file consoli-dated returns, all corporations are includi-ble corporations that have calendar taxableyears, the facts set forth the only relevantcorporate activity, and all transactions arewith unrelated parties.

Example 1. Computation and Absorption of Five-Year Carrybacks. (i) Facts. P is the common par-ent of the P Group. On June 30, 2006, P acquiredall of the stock of T from X, the common parent ofthe X Group. The X Group has been in existencesince 1996. P did not make the election describedin §1.1502–21(b)(3)(ii)(B) to relinquish, with respectto all CNOLs attributable to T, the portion of the car-ryback period for which T was a member of the XGroup. In 2008, the P Group sustained a $1,000CNOL, $600 of which was attributable to T under§1.1502–21(b)(2)(iv)(A). P elected a Five-Year Car-ryback pursuant to section 172(b)(1)(H) with regardto the P Group’s 2008 CNOL. P did not make an elec-tion pursuant to paragraph (b)(3)(ii)(C) of this sectionto waive any portion of the period during which T wasincluded in the X Group. T’s fifth taxable year pre-ceding the year of the loss was the X Group’s 2004consolidated return year. For 2004, T’s separate re-turn limitation year (SRLY) limitation for losses car-ried into the X Group was $400. The X Group’sCTI for 2004 is $200. The X Group did not makea Five-Year Carryback election for a CNOL from its2008 or 2009 taxable year. There are no other NOLcarrybacks into the X Group’s 2004 consolidated tax-able year.

(ii) Five-Year Carryback from separate returnyear. Pursuant to paragraph (b)(3)(v)(C)(1) of this

section, the amount of T’s apportioned loss that iseligible for Five-Year Carryback is limited to 50 per-cent of the X Group’s CTI for 2004, or $100 ($200 x50 percent). Therefore, $100 of T’s apportioned losswill be carried into the X Group’s 2004 consolidatedreturn year. In addition, T’s 2008 loss is subject tothe SRLY limitation of $400 with respect to the XGroup. Thus, the amount of T’s portion of the PGroup’s 2008 CNOL that may offset the X Group’s2004 CTI is $100 (the lesser of $400 (T’s SRLYlimitation) or $100 (the amount of T’s Five-YearCarryback)).

(iii) Pro rata absorption of limited and non-lim-ited losses within a single consolidated return year.The facts are the same as in paragraph (i), except thatthe X Group sustained a $750 CNOL in 2008, whichX elected to carry back four years to its 2004 consoli-dated return year (no Five-Year Carryback). Further,the X Group had CTI of $500 in 2004. Therefore, theX Group and the P Group both carry back CNOLsfrom years ending December 31, 2008, although onlythe P Group’s CNOL (including the portion alloca-ble to T) constitutes a Five-Year Carryback. TheAnnual Limitation on Five-Year Carrybacks will be$250 ($500 x 50 percent), with CTI determined with-out taking into account the portion of P’s 2008 CNOLcarried back to the X Group’s 2004 consolidated re-turn year or the X Group’s 2008 CNOL, which arisesfrom a taxable year ending on the same date as theFive-Year Carryback. The $750 CNOL carrybackwithin the X Group is subject to no limitation. Under§1.1502–21(b)(1), because the 2008 CNOL of the XGroup and the 2008 SRLY loss of T are losses fromyears ending on the same date and are available tooffset CTI in the same year, the two losses offset theX Group’s $500 CTI on a pro rata basis. Accord-ingly, $375 of the X’s Group’s 2008 CNOL [$500 x$750/($750 + $250)] and $125 of T’s portion of theP Group’s 2008 CNOL [$500 x $250/($750 + $250)]offset the X Group’s 2004 CTI.

Example 2. Multiple carryback years. (i) Facts.On January 1, 2004, Individual A formed X, whichformed corporations S and T, and X elected to filea consolidated Federal income tax return. For its2004 consolidated taxable year, the X Group’s CTIwas $1,100. For its 2005 consolidated taxable year,the X Group’s CTI was $1,000. On June 30, 2007,the X Group sold all of the S stock to the Y Groupand sold all of the T stock to the Z Group. The XGroup terminated in 2007. Neither Y nor Z madethe election described in §1.1502–21(b)(3)(ii)(B) torelinquish, with respect to all CNOLs attributable toS and T, respectively, the portion of the carrybackperiod for which S and T were members of the XGroup. In 2008, the Y Group sustained an $800CNOL, $400 of which was attributable to S under§1.1502–21(b)(2)(iv)(A). Y elected a Five-Year Car-ryback with regard to the Y Group’s 2008 CNOLpursuant to section 172(b)(1)(H). Y did not make anelection pursuant to paragraph (b)(3)(ii)(C) of thissection to waive any portion of the period duringwhich S was included in the X Group. In 2009, theZ Group sustained a $1,000 CNOL, $600 of whichwas attributable to T under §1.1502–21(b)(2)(iv)(A).Z elected a Five-Year Carryback with regard tothe Z Group’s 2009 CNOL pursuant to section172(b)(1)(H). Z did not make an election pursuant toparagraph (b)(3)(ii)(C) of this section to waive any

2010–31 I.R.B. 180 August 2, 2010

portion of the Extended Carryback Period duringwhich T was included in the X Group.

(ii) Analysis. The $400 of Y Group’s 2008 CNOLthat is apportioned to S is carried back as a sepa-rate return year Five-Year Carryback to the X Group’s2004 consolidated return year. The $600 of Z Group’s2009 CNOL that is apportioned to T is also a sepa-rate return year Five-Year Carryback to the X Group’s2005 consolidated return year. The Annual Limita-tion on Five-Year Carryback to the X Group’s 2004consolidated return year computed under paragraph(b)(3)(v)(C)(1) of this section equals $550 ($1,100of CTI x 50 percent). Because S is making the soleFive-Year Carryback to the X Group’s 2004 consol-idated return year, S will make a Five-Year Carry-back of the full $400. Similarly, the Annual Limita-tion for Five-Year Carryback to the X Group’s 2005consolidated return year computed under paragraph(b)(3)(v)(C)(1) of this section equals $500 ($1,000of CTI x 50 percent). Because T is making the soleFive-Year Carryback to the X Group’s 2005 consoli-dated return year, T will make a Five-Year Carrybackof the full $500. The SRLY limitations for S and T, re-spectively, may limit the absorption of the Five-YearCarrybacks within the X Group.

Example 3. Pre-acquisition election by T. P is thecommon parent of the P Group. On December 31,2008, P acquired all of the stock of T from X, thecommon parent of the X Group. T had been a mem-ber of the X Group since 1999. P did not make the

election described in §1.1502–21(b)(3)(ii)(B) to re-linquish, with respect to all CNOLs attributable toT, the portion of the carryback period for which Twas a member of the X Group. Pursuant to sec-tion 172(b)(1)(H), the X Group elected to make aFive-Year Carryback of its 2008 CNOL back to 2003.A portion of this CNOL is attributable to T pursuantto §1.1502–21(b)(2)(iv)(A). In 2009, the P Group in-curred a CNOL of $1,000, $600 of which is attribut-able to T pursuant to §1.1502–21(b)(2)(iv)(A). Pur-suant to section 172(b)(1)(H), the P Group elected aFive-Year Carryback with regard to its 2009 CNOL.P did not make the election pursuant to paragraph(b)(3)(ii)(C) of this section to waive any portion of theperiod during which T was included in the X Group.The Five-Year Carryback election by the X Groupwith respect to its 2008 CNOL (which includes theportion of the CNOL attributable to T) does not dis-qualify the P Group from electing a Five-Year Carry-back with regard to its 2009 CNOL. Therefore, the PGroup may carry back its CNOL, including the por-tion attributable to T, in accordance with §1.1502–21and the rules of this section.

(c) through (h)(8) [Reserved]. For fur-ther guidance, see §1.1502–21(c) through(h)(8).

(9) Section 172(b)(1)(H)—(i) Applica-bility date. This section applies to any con-solidated Federal income tax return due

(without extensions) after June 23, 2010, ifsuch return was not filed on or before suchdate. However, a consolidated group mayapply this section to any consolidated Fed-eral income tax return that is not describedin the preceding sentence.

(ii) Expiration date. The applicabilityof this section will expire on June 21, 2013.

PART 602—OMB CONTROLNUMBERS UNDER THE PAPERWORKREDUCTION ACT

Par. 4. The authority citation for part602 continues to read as follows:

Authority: 26 U.S.C. 7805.Par. 5. In §602.101, paragraph (b) the

entry for §1.1502–21T is revised to read asfollows:

§602.101 OMB Control Numbers.

* * * * *(b) * * *

CFR part or section whereidentified and described

Current OMBcontrol No.

* * * * *1.1502–21T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1545–2171

* * * * *

Steven T. Miller,Deputy Commissioner forServices and Enforcement.

Approved June 16, 2010.

Michael F. Mundaca,Assistant Secretary

of the Treasury (Tax Policy).

(Filed by the Office of the Federal Register on June 22, 2010,8:45 a.m., and published in the issue of the Federal Registerfor June 23, 2010, 75 F.R. 35643)

Section 7520.—ValuationTables


Section 7872.—Treatmentof Loans With Below-MarketInterest Rates


August 2, 2010 181 2010–31 I.R.B.

Part III. Administrative, Procedural, and MiscellaneousRevocation of Notice 2003–19

Notice 2010–53

PURPOSE

This notice revokes Notice 2003–19,2003–1 C.B. 703.

DISCUSSION

SECTION 1. BACKGROUND

Section 1001(a) of the Internal RevenueService Restructuring and Reform Act of1998, Pub. L. No. 105–206, 112 Stat. 686,(“RRA 1998”) required the Commissionerof Internal Revenue to develop and im-plement a plan to reorganize the Service.As part of this reorganization, the Servicereplaced the national, regional, and dis-trict structure with organizational units thatserve particular industries and groups oftaxpayers.

At the time the Service was reorga-nized, existing regulations directed tax-payers to file certain elections, statements,returns, and other documents with various

national, regional, and district offices thatthe Service abolished during the reorgani-zation. Some of those regulations spec-ified what later became outdated placesof filing due to the reorganization (e.g.,the Office of District Director), containedoutdated filing instructions, or lacked spe-cific filing addresses for documents that,at the time, were required or permitted tobe filed. Accordingly, the Service pub-lished Notice 2003–19, 2003–1 C.B. 703,Place of Filing Certain Elections, State-ments, Returns, and Other Documents, toadvise taxpayers of the proper addresses tofile these documents with the Service as aresult of the reorganization.

SECTION 2. DISCUSSION

Since its publication, many of thelocations that Notice 2003–19 lists fortaxpayers to file documents have changedand are now inaccurate. Accordingly,Notice 2003–19 is revoked and taxpayersshould no longer rely on it to determinewhere to file the documents listed therein.Instead, the location to file many of thedocuments listed in Notice 2003–19 can

be found on the IRS website, irs.gov,or in current IRS forms, instructions toforms, and publications. For those doc-uments where the location to file is notlisted on an existing IRS webpage, or inan IRS form, instruction, or publication,a new IRS webpage will list where to filethat particular document. To access thisnew webpage, type http://www.irs.gov/into the address box on your Internetbrowser. Once the webpage opens, click“Contact IRS” on the toolbar at thetop and click “IRS Mailing Addresses(“Where To File”)”. Then click “Whereto File Certain Elections, Statements,Returns, and Other Documents”. Oryou may type http://www.irs.gov/file/arti-cle/0,,id=224931,00.html into the addressbox on your Internet browser. This web-page describes where to file all of thedocuments listed in Notice 2003–19, ex-cept those documents for which addressesalready can be found on irs.gov, or incurrent IRS forms, instructions to forms,or publications. If additional assistanceis needed taxpayers may contact an IRSrepresentative at the appropriate telephonenumbers listed below.

Type of Taxpayer Phone number to call for assistance in determiningwhere to file document

Individuals 1–800–829–1040Monday-Friday: 7:00 AM-10:00 PM your local time (Alaskaand Hawaii follow Pacific time)

Businesses 1–800–829–4933Monday-Friday: 7:00 AM-10:00 PM your local time (Alaskaand Hawaii follow Pacific time)

Exempt Organizations, Retirement Plan Administrators, andGovernment Entities

1–877–829–5500Monday-Friday: 7:00 AM-5:30 PM Central Time

For people with hearing impairments 1–800–829–4059 (TDD)Monday-Friday: 7:00 AM-10:00 PM your local time (Alaskaand Hawaii follow Pacific time)

In addition, taxpayers required tofile elections, statements, returns, andother documents may obtain assistanceat one of the IRS Taxpayer AssistanceCenters. Information regarding the lo-cation of the nearest office can be foundat http://www.irs.gov/localcontacts/in-dex.html.

SECTION 3. EFFECTIVE DATE

The notice is effective for elections,statements, returns, and other documentsfiled on or after August 2, 2010.

EFFECT ON OTHER DOCUMENTS

Notice 2003–19, 2003–1 C.B. 703,Place of Filing Certain Elections, State-

ments, Returns, and Other Documents, isrevoked.

DRAFTING INFORMATION

The principal author of this notice isMelissa Segal of the Office of AssociateChief Counsel (Procedure & Administra-tion). For further information regarding

2010–31 I.R.B. 182 August 2, 2010

this notice, contact Melissa Segal at (202)622–7950 (not a toll-free call).

26 CFR § 601.105: Examination of returns andclaims for refund, credit or abatement; determinationof correct tax liability.(Also: 26 C.F.R. § 301.6402–2: Claims for credit orrefund.)

Rev. Proc. 2010–27

SECTION 1. PURPOSE

This revenue procedure informs thetrustee (or debtor in possession) represent-ing the bankruptcy estate of the debtor ofthe procedure to be followed to properlyrequest a tax refund from the Service. Thisrevenue procedure does not apply to thefiling by the trustee of an application fora tentative carryback or refund adjustmentunder section 6411 of the Internal RevenueCode.

SECTION 2. BACKGROUND

During the administration of a bank-ruptcy case, the bankruptcy estate mayhave a right to a tax refund. Under sec-tion 505(a)(2)(B) of Title 11 of the UnitedStates Code (Bankruptcy Code) the bank-ruptcy court may not determine any rightof the bankruptcy estate to a tax refundbefore the earlier of

(1) 120 days after the trustee properlyrequests such refund from the governmen-tal unit from which such refund is claimed;or

(2) a determination by such governmen-tal unit of such request.

SECTION 3. APPLICATION

.01 If a credit or refund of an over-payment of tax was not claimed on a re-turn previously filed by the debtor, thetrustee may do so by filing the appropri-ate amended return or form.

(1) Pursuant to section 301.6402–3(a)of the Regulations on Procedure and Ad-ministration and section 601.105(e)(1)of the Statement of Procedural Rules(26 CFR Part 601), in the case of anoverpayment of income taxes for a taxableyear for which:

(a) a Form 1040 or 1040A has been filedby an individual debtor, a claim for creditor refund shall be made by the trustee onForm 1040X, Amended U.S. Individual In-come Tax Return;

(b) a Form 1120 has been filed by acorporate debtor, a claim for credit orrefund shall be made by the trustee onForm 1120X, Amended U.S. CorporationIncome Tax Return;

(c) a form other than Form 1040,1040A, or 1120 has been filed by a debtor(such as Form 1041, U.S. Fiduciary In-come Tax Return), a claim for credit orrefund shall be made by the trustee on theappropriate amended income tax return.

(2) Pursuant to section 301.6402–2(c)and section 601.105(e)(1), in the case ofan overpayment of taxes other than incometax for which the debtor has filed a return,a claim for credit or refund shall be madeon Form 843, Claim for Refund and Re-quest for Abatement. An exact copy ofthe return (or returns) that is the subjectof the claim should also be submitted, to-gether with a statement of the name and lo-cation of the office where the return wasfiled. See section 301.6402–2(e), relatingto proof of representative capacity to ac-company the claim.

.02 If the debtor has claimed a creditor refund of an overpayment of tax on aproperly filed return or form, the trusteemay rely on such claim.

.03 With regard to an overpayment oftaxes of the bankruptcy estate incurred dur-ing the administration of the bankruptcycase, a properly executed tax return shall,at the election of the trustee, constitute aclaim for credit or refund of the overpay-ment.

.04 The forms or returns described inthis section must be mailed to Central-ized Insolvency Operation, Post OfficeBox 21126, Philadelphia, PA 19114. Thereturn or form must be marked “Requestfor Prompt Refund” and be accompaniedby a written statement explaining that therequest is being submitted pursuant tosection 505(a) of the Bankruptcy Code.

.05 The Service will examine the appro-priate amended return, Form 843, or orig-inal return filed by the trustee on an expe-dited basis. The Service will complete theexamination and notify the trustee of thedecision rendered within 120 days fromthe date of the filing of the claim.

SECTION 4. EFFECT ON OTHERDOCUMENTS

Rev. Proc. 81–18, 1981–1 C.B. 688, isobsoleted.

SECTION 5. EFFECTIVE DATE

This revenue procedure applies to allcases commenced under the BankruptcyCode with the exception of chapter 9 mu-nicipal debt adjustment cases and chapter15 ancillary and cross-border cases.

SECTION 6. DRAFTINGINFORMATION

The principal author of this revenueprocedure is Teresa Dondlinger Trissellof the Office of Associate Chief Counsel(Procedure & Administration). For fur-ther information regarding this revenueprocedure, contact William Beard at (202)622–3620 (not a toll-free call).

August 2, 2010 183 2010–31 I.R.B.

Part IV. Items of General InterestNotice of ProposedRulemaking byCross-Reference toTemporary Regulations

Extended Carryback of Lossesto or from a ConsolidatedGroup

REG–151605–09

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Notice of proposed rulemakingby cross-reference to temporary regula-tions.

SUMMARY: In this issue of the Bulletin,the IRS is issuing temporary regulations(T.D. 9490) that provides guidance to con-solidated groups that implements the revi-sions to section 172(b)(1)(H). The text ofthose regulations also serves as the text ofthese proposed regulations.

DATES: Written or electronic commentsand a request for a public hearing must bereceived by September 21, 2010.

ADDRESSES: Send submissions to:CC:PA:LPD:PR (REG–151605–09),Room 5203, Internal Revenue Service,P.O. Box 7604, Ben Franklin Station,Washington, DC 20044. Submissions maybe hand-delivered Monday through Fridaybetween the hours of 8 a.m. and 4 p.m.to CC:PA:LPD:PR (REG–151605–09),Courier’s Desk, Internal Revenue Ser-vice, 1111 Constitution Avenue NW,Washington, DC, or sent electroni-cally via the Federal eRulemaking Por-tal at http://www.regulations.gov (IRSREG–151605–09).

FOR FURTHER INFORMATIONCONTACT: Concerning the proposedregulations, Grid Glyer, (202) 622–7930,concerning submissions of comments,Regina Johnson (202) 622–7180 (nottoll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information containedin this notice of proposed rulemaking hasbeen submitted to the Office of Manage-ment and Budget for review in accordancewith the Paperwork Reduction Act of 1995(44 U.S.C. 3507(d) under control number1545–2171). Comments on the collectionof information should be sent to the Of-fice of Management and Budget, Attn:Desk Officer for the Department of theTreasury, Office of Information and Reg-ulatory Affairs, Washington, D.C. 20503,with copies to the Internal Revenue Ser-vice, Attn: IRS Reports Clearance Offi-cer, SE:W:CAR:MP:T:T:SP, Washington,D.C. 20224. Comments on the collec-tion of information should be received byAugust 23, 2010.

Comments are specifically requestedconcerning:

Whether the proposed collection of in-formation is necessary for the proper per-formance of the functions of the InternalRevenue Service, including whether theinformation will have practical utility;

The accuracy of the estimated burdenassociated with the proposed collection ofinformation;

How the quality, utility and clarity ofthe information to be collected may be en-hanced;

How the burden of complying with theproposed collection of information may beminimized, including through the appli-cation of automated collection techniquesor other forms of information technology;and

Estimates of capital or start-up costsand costs of operation, maintenance andpurchase of service to provide information.

The collection of informationin these proposed regulations isin §§1.1502–21(b)(3)(ii)(C)(2) and1.1502–21(b)(3)(ii)(C)(3).

The proposed regulations provideguidance to consolidated groups thatimplements the revisions to section172(b)(1)(H).

The collection of information is re-quired in order to obtain a benefit. Thelikely respondents are corporations thatare members of consolidated groups.

Estimated total annual reporting bur-den: 1,000 hours.

Estimated average annual burden hoursper respondent: 0.25 hours.

Estimated number of respondents:4,000.

Estimated frequency of responses:Once.

An agency may not conduct or sponsor,and a person is not required to respond to, acollection of information unless it displaysa valid control number assigned by the Of-fice of Management and Budget.

Books or records relating to a collectionof information must be retained as longas their contents may become material inthe administration of any internal revenuelaw. Generally, tax returns and tax returninformation are confidential, as requiredby 26 U.S.C. 6103.

Background and Explanation ofProvisions

Temporary regulations in this issue ofthe Bulletin amend 26 CFR Part 1 to revise§1.1502–21T. The text of those temporaryregulations also serves as the text of theseproposed regulations. The preamble to thetemporary regulations explains the amend-ments.

Special Analyses

It has been determined that this noticeof proposed rulemaking is not a signifi-cant regulatory action as defined in Execu-tive Order 12866. Therefore, a regulatoryassessment is not required. With respectto the proposed regulation, §1.1502–21,it is hereby certified that this provisionwill not have a significant economic im-pact on a substantial number of small enti-ties. This certification is based on the factthat these regulations primarily affect largecorporations that are members of consoli-dated groups and will provide a benefit ifthe election is made. Therefore, a regu-latory flexibility analysis is not required.Pursuant to section 7805(f) of the Inter-nal Revenue Code, these regulations havebeen submitted to the Chief Counsel forAdvocacy of the Small Business Admin-istration for comment on their impact onsmall business.

2010–31 I.R.B. 184 August 2, 2010

Comments and Requests for a PublicHearing

Before these proposed regulations areadopted as final regulations, considerationwill be given to any written comments(a signed original and eight (8) copies)or electronic comments that are submittedtimely to the IRS. All comments will beavailable for public inspection and copy-ing. A public hearing may be scheduledif requested in writing by any person thattimely submits written comments. If apublic hearing is scheduled, notice of thedate, time, and place for the public hearingwill be published in the Federal Register.

Drafting Information

The principal author of these regula-tions is Grid Glyer of the Office of As-sociate Chief Counsel (Corporate). Otherpersonnel from the Treasury Departmentand the IRS participated in their develop-ment.

* * * * *

Proposed Amendments to theRegulations

Accordingly, 26 CFR part 1 is proposedto be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation forpart 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *Section 1.1502–21 also issued under

26 U.S.C. 1502. * * *Par. 2. Section 1.1502–21 is revised to

read as follows:

§1.1502–21 Net operating losses.

[The text of proposed §1.1502–21 isthe same as the text for §1.1502–21T(a)through (h)(9)(i) published elsewhere inthis issue of the Bulletin].

Steven T. Miller,Deputy Commissioner forServices and Enforcement.

(Filed by the Office of the Federal Register on June 22, 2010,8:45 a.m., and published in the issue of the Federal Registerfor June 23, 2010, 75 F.R. 35710)

August 2, 2010 185 2010–31 I.R.B.

Definition of TermsRevenue rulings and revenue procedures(hereinafter referred to as “rulings”) thathave an effect on previous rulings use thefollowing defined terms to describe the ef-fect:

Amplified describes a situation whereno change is being made in a prior pub-lished position, but the prior position is be-ing extended to apply to a variation of thefact situation set forth therein. Thus, ifan earlier ruling held that a principle ap-plied to A, and the new ruling holds that thesame principle also applies to B, the earlierruling is amplified. (Compare with modi-fied, below).

Clarified is used in those instanceswhere the language in a prior ruling is be-ing made clear because the language hascaused, or may cause, some confusion.It is not used where a position in a priorruling is being changed.

Distinguished describes a situationwhere a ruling mentions a previously pub-lished ruling and points out an essentialdifference between them.

Modified is used where the substanceof a previously published position is beingchanged. Thus, if a prior ruling held that aprinciple applied to A but not to B, and thenew ruling holds that it applies to both A

and B, the prior ruling is modified becauseit corrects a published position. (Comparewith amplified and clarified, above).

Obsoleted describes a previously pub-lished ruling that is not considered deter-minative with respect to future transac-tions. This term is most commonly used ina ruling that lists previously published rul-ings that are obsoleted because of changesin laws or regulations. A ruling may alsobe obsoleted because the substance hasbeen included in regulations subsequentlyadopted.

Revoked describes situations where theposition in the previously published rulingis not correct and the correct position isbeing stated in a new ruling.

Superseded describes a situation wherethe 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 the1986 Code and regulations the same po-sition published under the 1939 Code andregulations. The term is also used whenit is desired to republish in a single rul-ing a series of situations, names, etc., thatwere previously published over a period oftime in separate rulings. If the new rul-ing does more than restate the substance

of a prior ruling, a combination of termsis used. For example, modified and su-perseded describes a situation where thesubstance of a previously published rulingis being changed in part and is continuedwithout change in part and it is desired torestate the valid portion of the previouslypublished ruling in a new ruling that is selfcontained. In this case, the previously pub-lished ruling is first modified and then, asmodified, is superseded.

Supplemented is used in situations inwhich a list, such as a list of the names ofcountries, is published in a ruling and thatlist is expanded by adding further names insubsequent rulings. After the original rul-ing has been supplemented several times, anew ruling may be published that includesthe list in the original ruling and the ad-ditions, and supersedes all prior rulings inthe series.

Suspended is used in rare situations toshow that the previous published rulingswill not be applied pending some futureaction such as the issuance of new oramended regulations, the outcome of casesin litigation, or the outcome of a Servicestudy.

AbbreviationsThe following abbreviations in current useand formerly used will appear in materialpublished 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.

2010–31 I.R.B. i August 2, 2010

Numerical Finding List1

Bulletins 2010–27 through 2010–31

Announcements:

2010-43, 2010-27 I.R.B. 42

2010-44, 2010-28 I.R.B. 54

2010-45, 2010-29 I.R.B. 87

2010-46, 2010-29 I.R.B. 87

2010-47, 2010-30 I.R.B. 173

Notices:

2010-48, 2010-27 I.R.B. 9

2010-49, 2010-27 I.R.B. 10

2010-50, 2010-27 I.R.B. 12

2010-51, 2010-29 I.R.B. 83

2010-52, 2010-30 I.R.B. 88

2010-53, 2010-31 I.R.B. 182

Proposed Regulations:

REG-151605-09, 2010-31 I.R.B. 184

REG-112841-10, 2010-27 I.R.B. 41

REG-118412-10, 2010-29 I.R.B. 85

Revenue Procedures:

2010-25, 2010-27 I.R.B. 16

2010-26, 2010-30 I.R.B. 91

2010-27, 2010-31 I.R.B. 183

Revenue Rulings:

2010-18, 2010-27 I.R.B. 1

2010-19, 2010-31 I.R.B. 174

Treasury Decisions:

9486, 2010-27 I.R.B. 3

9487, 2010-28 I.R.B. 48

9488, 2010-28 I.R.B. 51

9489, 2010-29 I.R.B. 55

9490, 2010-31 I.R.B. 176

1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2010–1 through 2010–26 is in Internal Revenue Bulletin2010–26, dated June 28, 2010.

August 2, 2010 ii 2010–31 I.R.B.

Finding List of Current Actions onPreviously Published Items1

Bulletins 2010–27 through 2010–31

Notices:

2003-19

Revoked by

Notice 2010-53, 2010-31 I.R.B. 182

Revenue Procedures:

2007-44

Modified by

Notice 2010-48, 2010-27 I.R.B. 9

2009-18

Obsoleted in part by

Rev. Proc. 2010-25, 2010-27 I.R.B. 16

2009-30

Superseded by

Rev. Proc. 2010-26, 2010-30 I.R.B. 91

81-18

Obsoleted by

Rev. Proc. 2010-27, 2010-31 I.R.B. 183

1 A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2010–1 through 2010–26 is in Internal Revenue Bulletin 2010–26, dated June 28, 2010.

2010–31 I.R.B. iii August 2, 2010

August 2, 2010 2010–31 I.R.B.

INTERNAL REVENUE BULLETINThe Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue

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Internal Revenue ServiceWashington, DC 20224Official BusinessPenalty for Private Use, $300

tocINCOME TAXT.D. 9490, page 176 .Rev. Proc. 2010–27, page 183 .EMPLOYMENT TAXEXCISE TAXADMINISTRATIVERev. Proc. 2010–27, page 183 .The IRS Mission Introduction

Part I. Rulings and Decisions Under the Internal Revenue Code ofFederal rates; adjusted federal rates; adjusted federal long-terThis revenue ruling provides various prescribed rates for federa

T.D. 9490AGENCY: Internal Revenue Service (IRS), Treasury.ACTION: Final and temporary regulations.SUMMARY: This document contains final and temporary regulations DATES: Effective Date: These regulations are effective on June 2FOR FURTHER INFORMATION CONTACT: Grid Glyer, (202) 622–7930 (notSUPPLEMENTARY INFORMATION:Paperwork Reduction ActBackgroundExplanation of Provisions1. Extended Carryback Period election and computation of limitata. Extended Carryback Period election and revocation of prior elb. Implementation of the Extended Carryback Period with respect 2. Elections to waive the entire carryback period or the ExtendeSpecial Analyses

Drafting InformationAmendments to the RegulationsPART 1—INCOME TAXES§1.1502–21 Net operating losses .§1.1502–21T Net operating losses (temporary) .

PART 602—OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT§602.101 OMB Control Numbers .

Part III. Administrative, Procedural, and MiscellaneousRevocation of Notice 2003–19PURPOSEDISCUSSIONSECTION 1. BACKGROUNDSECTION 2. DISCUSSIONSECTION 3. EFFECTIVE DATEEFFECT ON OTHER DOCUMENTSDRAFTING INFORMATION

Rev. Proc. 2010–27SECTION 1. PURPOSESECTION 2. BACKGROUNDSECTION 3. APPLICATIONSECTION 4. EFFECT ON OTHER DOCUMENTSSECTION 5. EFFECTIVE DATESECTION 6. DRAFTING INFORMATION

Part IV. Items of General InterestNotice of Proposed Rulemaking by Cross-Reference to Temporary ReAGENCY: Internal Revenue Service (IRS), Treasury.ACTION: Notice of proposed rulemaking by cross-reference to tempSUMMARY: In this issue of the Bulletin, the IRS is issuing tempoDATES: Written or electronic comments and a request for a publicADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–151605–09), RFOR FURTHER INFORMATION CONTACT: Concerning the proposed regulatSUPPLEMENTARY INFORMATION:Paperwork Reduction ActBackground and Explanation of ProvisionsSpecial AnalysesComments and Requests for a Public Hearing

Drafting InformationProposed Amendments to the RegulationsPART 1—INCOME TAXES§1.1502–21 Net operating losses.

Definition of TermsAbbreviations

Numerical Finding List 1Announcements:Notices:Proposed Regulations:Revenue Procedures:Revenue Rulings:Treasury Decisions:

Finding List of Current Actions on Previously Published Items 1Notices:Revenue Procedures:

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