IRB 2012-05 (Rev. January 30, 2012) - IRS tax forms

Bulletin No. 2012-5January 30, 2012

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

T.D. 9561, page 341.REG–130777–11, page 347.Temporary and proposed regulations under section 1275 ofthe Code provide that a taxpayer must use the coupon bondmethod described in regulations section 1.1275–7(d) to ac-count for Treasury Inflation-Protected Securities issued withmore than a de minimis amount of premium. A public hear-ing is scheduled for March 28, 2012.

T.D. 9562, page 339.Final regulations under section 881 of the Code apply to mul-tiple-party financing arrangements that are effected throughdisregarded entities, and are necessary in order to determinewhich of those arrangements should be recharacterized as aconduit financing arrangement.

Notice 2012–11, page 346.This notice provides transitional relief from information report-ing requirements in section 6045B of the Code that apply toissuers of stock with respect to organizational actions that af-fect the basis of the stock.

EMPLOYEE PLANS

Rev. Rul. 2012–5, page 337.2012 covered compensation tables; permitted disparity.The covered compensation tables under section 401 of theCode for the year 2012 are provided for use in determiningcontributions to defined benefit plans and permitted disparity.

Notice 2012–10, page 343.Weighted average interest rate update; corporate bondindices; 30-year Treasury securities; segment rates.This notice contains updates for the corporate bond weightedaverage interest rate for plan years beginning in January 2012;the 24-month average segment rates; the funding transitionalsegment rates applicable for January 2012; and the minimumpresent value transitional rates for December 2011.

ADMINISTRATIVE

Notice 2012–11, page 346.This notice provides transitional relief from information report-ing requirements in section 6045B of the Code that apply toissuers of stock with respect to organizational actions that af-fect the basis of the stock.

Announcement 2012–5, page 348.This document contains corrections to final regulations(T.D. 9517, 2011–15 I.R.B. 610) relating to the enrollment ofactuaries.

Finding Lists begin on page ii.Index for January begins on page iv.

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.

January 30, 2012 2012–5 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Codeof 1986Section 401.—QualifiedPension, Profit-Sharing,and Stock Bonus Plans26 CFR 1.401(l)–1: Permitted disparity in employer-provided contributions or benefits.

2012 covered compensation tables;permitted disparity. The covered com-pensation tables under section 401 of theCode for the year 2012 are provided foruse in determining contributions to de-fined benefit plans and permitted disparity.

Rev. Rul. 2012–5

This revenue ruling provides ta-bles of covered compensation under§ 401(l)(5)(E) of the Internal RevenueCode (the “Code”) and the Income TaxRegulations thereunder, for the 2012 planyear.

Section 401(l)(5)(E)(i) defines coveredcompensation with respect to an employeeas the average of the contribution and ben-efit bases in effect under section 230 of theSocial Security Act (the “Act”) for eachyear in the 35-year period ending with the

year in which the employee attains socialsecurity retirement age.

Section 401(l)(5)(E)(ii) states that thedetermination for any year preceding theyear in which the employee attains socialsecurity retirement age shall be made byassuming that there is no increase in cov-ered compensation after the determinationyear and before the employee attains socialsecurity retirement age.

Section 1.401(l)–1(c)(34) defines thetaxable wage base as the contribution andbenefit base under section 230 of the Act.

Section 1.401(l)–1(c)(7)(i) defines cov-ered compensation for an employee as theaverage (without indexing) of the taxablewage bases in effect for each calendar yearduring the 35-year period ending with thelast day of the calendar year in which theemployee attains (or will attain) social se-curity retirement age. A 35-year period isused for all individuals regardless of theyear of birth of the individual. In deter-mining an employee’s covered compensa-tion for a plan year, the taxable wage basefor all calendar years beginning after thefirst day of the plan year is assumed to be

the same as the taxable wage base in ef-fect as of the beginning of the plan year.An employee’s covered compensation fora plan year beginning after the 35-year pe-riod applicable under § 1.401(l)–1(c)(7)(i)is the employee’s covered compensationfor a plan year during which the 35-yearperiod ends. An employee’s covered com-pensation for a plan year beginning be-fore the 35-year period applicable under§ 1.401(l)–1(c)(7)(i) is the taxable wagebase in effect as of the beginning of theplan year.

Section 1.401(l)–1(c)(7)(ii) providesthat, for purposes of determining theamount of an employee’s covered com-pensation under § 1.401(l)–1(c)(7)(i), aplan may use tables, provided by the Com-missioner, that are developed by roundingthe actual amounts of covered compensa-tion for different years of birth.

For purposes of determining coveredcompensation for the 2012 year, the tax-able wage base is $110,100.

The following tables provide coveredcompensation for 2012.

ATTACHMENT I

2012 COVERED COMPENSATION TABLE

CALENDARYEAR OF

BIRTH

CALENDAR YEAR OFSOCIAL SECURITYRETIREMENT AGE

2012 COVEREDCOMPENSATION

TABLE II

1907 1972 $4,4881908 1973 4,7041909 1974 5,0041910 1975 5,3161911 1976 5,6641912 1977 6,0601913 1978 6,4801914 1979 7,0441915 1980 7,6921916 1981 8,4601917 1982 9,3001918 1983 10,2361919 1984 11,2321920 1985 12,2761921 1986 13,3681922 1987 14,5201923 1988 15,7081924 1989 16,9681925 1990 18,3121926 1991 19,7281927 1992 21,192

2012–5 I.R.B. 337 January 30, 2012

ATTACHMENT I

2012 COVERED COMPENSATION TABLE

CALENDARYEAR OF

BIRTH

CALENDAR YEAR OFSOCIAL SECURITYRETIREMENT AGE


TABLE II

1928 1993 22,7161929 1994 24,3121930 1995 25,9201931 1996 27,5761932 1997 29,3041933 1998 31,1281934 1999 33,0601935 2000 35,1001936 2001 37,2121937 2002 39,4441938 2004 43,9921939 2005 46,3441940 2006 48,8161941 2007 51,3481942 2008 53,9521943 2009 56,6281944 2010 59,2681945 2011 61,8841946 2012 64,5601947 2013 67,2001948 2014 69,6961949 2015 72,0961950 2016 74,4001951 2017 76,6201952 2018 78,7441953 2019 80,8081954 2020 82,8241955 2022 86,6641956 2023 88,5241957 2024 90,3001958 2025 91,9801959 2026 93,6001960 2027 95,1601961 2028 96,6601962 2029 98,0641963 2030 99,4681964 2031 100,8241965 2032 102,0961966 2033 103,2841967 2034 104,3641968 2035 105,3241969 2036 106,1761970 2037 106,8961971 2038 107,5561972 2039 108,1921973 2040 108,7681974 2041 109,2241975 2042 109,5841976 2043 109,8121977 2044 109,9081978 2045 110,004

1979 and Later 2046 and Later 110,100

January 30, 2012 338 2012–5 I.R.B.

ATTACHMENT II

2012 ROUNDED COVERED COMPENSATION TABLE

CALENDARYEAR OF

BIRTH


ROUNDED

1937 $39,0001938–1939 45,0001940 48,0001941 51,0001942 54,0001943 57,0001944 60,0001945 63,0001946–1947 66,0001948 69,0001949 72,0001950 75,0001951–1952 78,0001953 81,0001954 84,0001955 87,0001956–1957 90,0001958–1959 93,0001960–1961 96,0001962–1963 99,0001964–1966 102,0001967–1969 105,0001970–1973 108,0001974 and Later 110,100

DRAFTING INFORMATION

The principal author of this rev-enue ruling is Michael Spaid of theEmployee Plans, Tax Exempt andGovernment Entities Division. Forfurther information regarding thisrevenue ruling, please contact theEmployee Plans taxpayer assistancetelephone service at 1–877–829–5500,between the hours of 8:30 a.m. and4:30 p.m. Eastern time, Mondaythrough Friday (a toll-free number).Mr. Spaid may be reached via e-mail [email protected].

Section 881.—Tax onIncome of ForeignCorporations NotConnected With UnitedStates Business26 CFR 1.881–3: Conduit financing arrangements.

T.D. 9562

Conduit FinancingArrangements

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Final regulation.

SUMMARY: This document contains finalregulations relating to conduit financingarrangements. The final regulations applyto multiple-party financing arrangementsthat are effected through disregarded en-tities, and are necessary in order to deter-mine which of those arrangements shouldbe recharacterized as a conduit financingarrangement.

DATES: Effective Date: These regulationsare effective on December 9, 2011.

Applicability Date: These regulationsapply to payments made on or after De-cember 9, 2011.

FOR FURTHER INFORMATIONCONTACT: Quyen P. Huynh at (202)622–3880 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

On August 10, 1995, the Departmentof the Treasury (Treasury Department)and the Internal Revenue Service (IRS)published final regulations under Treas.Reg. §1.881–3 relating to conduit fi-nancing arrangements pursuant to theauthority granted by section 7701(l) ofthe Internal Revenue Code (the conduitfinancing regulations). See T.D. 8611,1995–2 C.B. 286, (60 FR 40997). OnDecember 22, 2008, the Treasury De-partment and the IRS published in theFederal Register (73 FR 246) a notice ofproposed rulemaking (REG–113462–08,

2012–5 I.R.B. 339 January 30, 2012

2009–4 I.R.B. 379) that proposed amend-ing §1.881–3(a)(2)(i)(C) of the conduitfinancing regulations to treat an entitydisregarded as an entity separate from itsowner for U.S. tax purposes as a personfor purposes of determining whether aconduit financing arrangement exists. Theproposed regulations were proposed to beeffective as of the date final regulationsare published in the Federal Register. Inaddition, the preamble to the proposed reg-ulations requested comments on whether“hybrid instruments” (instruments treatedas debt for foreign law purposes and eq-uity for U.S. purposes) should constituteper se “financing transactions” under§1.881–3(a)(2)(ii)(A) and part of a “fi-nancing arrangement” within the meaningof §1.881–3(a)(2)(i)(A), or whether, ata minimum, certain hybrid instrumentsshould be so treated, depending on spe-cific factors or criteria.

Only one comment letter responding tothe notice of proposed rulemaking was re-ceived. No public hearing was requestedor held. After consideration of the com-ment, this Treasury decision adopts theproposed regulations with minor edits toExample 3 and to clarify that the effectivedate of the final regulations also applies tonew Example 3.

Explanation and Summary of Comment

The comment supported the proposedregulations and their interpretation of theterm “person” to include a business en-tity that is disregarded as an entity sepa-rate from its single member owner under§301.7701–1 through §301.7701–3. Thecomment stated that to disregard an entitythat is “regarded” for purposes of claimingtreaty benefits would be inconsistent withthe policy and purpose of the anti-conduitfinancing regulations.

As relates to hybrid instruments, thecomment did not support either approachraised in the preamble to the proposedregulations, expressing both policy andadministrative concerns with each. Thecomment stated that any specific abusesthat the Treasury Department and the IRSwere concerned about could be betteraddressed by a more targeted rule thatdescribed the specific transactions andlimited the application of the regulationsto those transactions. In light of the widearray of considerations raised, the Trea-

sury Department and the IRS have decidedto continue to study the area and not toprovide any specific rules on hybrid instru-ments as part of this regulation package.Accordingly, these regulations are final-ized without change, except to clarify thatthe effective date of the final regulationsalso applies to new Example 3 and to makeminor edits to Example 3. The TreasuryDepartment and the IRS continue to so-licit comments on the treatment of hybridinstruments in financing transactions.

No inference should be drawn from anyprovision of these final regulations as tothe treatment of financing transactions en-tered into with disregarded entities beforethe effective date of these final regulationsor involving hybrid instruments.

Special Analyses

It has been determined that this Trea-sury decision is not a significant regula-tory action as defined in Executive Order12866. Therefore, a regulatory assessmentis not required. It is hereby certified thatthis regulation will not have a significanteconomic impact on a substantial numberof small entities. Accordingly, a regu-latory flexibility analysis is not required.Pursuant to section 7805(f) of the Inter-nal Revenue Code, the notice of proposedrulemaking preceding this regulation wassubmitted to the Chief Counsel for Advo-cacy of the Small Business Administrationfor comment on its impact on small busi-ness.

Drafting Information

The principal author of these regula-tions is Quyen P. Huynh of the Office ofAssociate Chief Counsel (International).However, other personnel from the IRSand the Treasury Department participatedin their development.

* * * * *

Adoption of Amendments to theRegulations

Accordingly, 26 CFR part 1 is amendedas 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 1.881–3 is amended by:1. Removing the language “district di-

rector” throughout this section and adding“director of field operations” in its place.

2. Removing the language“§1.1441–3(j)” throughout this sectionand adding “§1.1441–3(g)” in its place.

3. Removing the language“§1.1441–7(d)” throughout this sectionand adding “§1.1441–7(f)” in its place.

4. In the last sentence of paragraph(a)(3)(ii)(B), removing the second “fi-nanced” and adding “financing” in itsplace.

5. Removing the parentheticallanguage “(or a similar interest in apartnership or trust)” in paragraphs(a)(2)(ii)(A)(2) and (a)(2)(ii)(B)(1) andadding “(or a similar interest in a partner-ship, trust, or other person)” in its place.

6. Adding a new paragraph (a)(2)(i)(C).7. In paragraph (e), redesignating Ex-

amples 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13,14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24,and 25 as Examples 4, 5, 6, 7, 8, 9, 10, 11,12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22,23, 24, 25, and 26, respectively.

8. Adding a new Example 3 in para-graph (e).

9. Revising the paragraph heading andadding a new sentence at the end of para-graph (f).

The revisions and additions read as fol-lows:

§1.881–3 Conduit financingarrangements.

* * * * *(a) * * *(2) * * *(i) * * *(C) Treatment of disregarded entities.

For purposes of this section, the termperson includes a business entity that isdisregarded as an entity separate from itssingle member owner under §301.7701–1through §301.7701–3.

* * * * *(e) Examples. * * *Example 3. Participation of a disregarded in-

termediate entity. The facts are the same as in Ex-ample 2, except that FS is an entity that is disre-garded as an entity separate from its owner, FP, under§301.7701–3. Under paragraph (a)(2)(i)(C) of thissection, FS is a person and, therefore, may itself be anintermediate entity that is linked by financing trans-actions to other persons in a financing arrangement.The DS note held by FS and the FS note held by FP

January 30, 2012 340 2012–5 I.R.B.

are financing transactions within the meaning of para-graph (a)(2)(ii) of this section, and together constitutea financing arrangement within the meaning of para-graph (a)(2)(i) of this section.

* * * * *(f) Effective/applicability date. * * *

Paragraph (a)(2)(i)(C) and Example 3 ofparagraph (e) of this section apply to pay-ments made on or after December 9, 2011.

Steven T. Miller,Deputy Commissioner

for Services and Enforcement.

Approved November 29, 2011.

Emily S. McMahon,Acting Assistant Secretary

of the Treasury (Tax Policy).

(Filed by the Office of the Federal Register on December 8,2011, 8:45 a.m., and published in the issue of the FederalRegister for December 9, 2011, 76 F.R. 76895)

Section 1275.—OtherDefinitions and SpecialRules26 CFR 1.1275–7T: Inflation-indexed debt instru-ments (temporary).

T.D. 9561

Treasury Inflation-ProtectedSecurities Issued at aPremium


ACTION: Temporary regulations.

SUMMARY: This document contains tem-porary regulations that provide guidanceon the tax treatment of Treasury Inflation-Protected Securities issued with more thana de minimis amount of premium. Thetext of these temporary regulations alsoserves as the text of the proposed regula-tions (REG–130777–11) set forth in this is-sue of the Bulletin.

DATES: Effective Date: These regulationsare effective on December 5, 2011.

Applicability Date: For the date of ap-plicability, see §1.1275–7T(k).

FOR FURTHER INFORMATIONCONTACT: William E. Blanchard, (202)622–3950 (not a toll-free number).


Background

Treasury Inflation-Protected Securities(TIPS) are securities issued by the De-partment of the Treasury. The principalamount of a TIPS is adjusted for any in-flation or deflation that occurs over theterm of the security. The rules for thetaxation of inflation-indexed debt instru-ments, including TIPS, are contained in§1.1275–7 of the Income Tax Regulations.See also §1.171–3(b) (rules for inflation-indexed debt instruments with bond pre-mium).

The coupon bond method described in§1.1275–7(d) has applied to TIPS ratherthan the more complex discount bondmethod described in §1.1275–7(e). Under§1.1275–7(d)(2)(i), however, the couponbond method is not available with respectto inflation-indexed debt instruments thatare issued with more than a de minimisamount of premium (that is, an amountgreater than .0025 times the stated prin-cipal amount of the security times thenumber of complete years to the security’smaturity).

In Notice 2011–21, 2011–19 I.R.B. 761,to provide a more uniform method for thefederal income taxation of TIPS, the De-partment of the Treasury and the InternalRevenue Service announced that regula-tions would be issued to provide that tax-payers must use the coupon bond methoddescribed in §1.1275–7(d) for TIPS issuedwith more than a de minimis amount ofpremium. As a result, the discount bondmethod described in §1.1275–7(e) wouldnot apply to TIPS issued with more thana de minimis amount of premium. No-tice 2011–21 provided that the regulationswould be effective for TIPS issued on orafter April 8, 2011.

Explanation of Provisions

The temporary regulations in this doc-ument contain the rules described in No-tice 2011–21. Under the temporary reg-ulations, a taxpayer must use the couponbond method described in §1.1275–7(d)for a TIPS that is issued with more than ade minimis amount of premium. The tem-porary regulations contain an example ofhow to apply the coupon bond method toa TIPS issued with more than a de minimis

amount of premium. As stated in Notice2011–21, the temporary regulations applyto TIPS issued on or after April 8, 2011.See §601.601(d)(2)(ii)(b).

Special Analyses

It has been determined that this Trea-sury decision is not a significant regula-tory action as defined in Executive Order12866. Therefore, a regulatory assessmentis not required. It has also been determinedthat section 553(b) of the AdministrativeProcedure Act (5 U.S.C. chapter 5) doesnot apply to these regulations, and becausethe regulations do not impose a collectionof information on small entities, the Regu-latory Flexibility Act (5 U.S.C. chapter 6)does not apply. Pursuant to section 7805(f)of the Code, these regulations have beensubmitted to the Chief Counsel for Advo-cacy of the Small Business Administrationfor comment on their impact on small busi-ness.


The principal author of these regu-lations is William E. Blanchard, Officeof Associate Chief Counsel (FinancialInstitutions and Products). However,other personnel from the IRS and theTreasury Department participated in theirdevelopment.

* * * * *

Amendments to the Regulations

Accordingly, 26 CFR part 1 is amendedas follows:



Authority: 26 U.S.C. 7805 * * *

Section 1.1275–7T also issued under26 U.S.C. 1275(d). * * *

Par. 2. Section 1.1275–7T is added toread as follows:

§1.1275–7T Inflation-indexed debtinstruments (temporary).

(a) through (h) [Reserved]. For furtherguidance, see §1.1275–7(a) through (h).

(i) [Reserved]

2012–5 I.R.B. 341 January 30, 2012

(j) Treasury Inflation-ProtectedSecurities issued with more than ade minimis amount of premium—(1)Coupon bond method. Notwithstand-ing §1.1275–7(d)(2)(i), the coupon bondmethod described in §1.1275–7(d) appliesto Treasury Inflation-Protected Securities(TIPS) issued with more than a de minimisamount of premium. For this purpose, thede minimis amount is determined usingthe principles of §1.1273–1(d).

(2) Example. The following exampleillustrates the application of the bond pre-mium rules to a TIPS issued with bond pre-mium:

Example. (i) Facts. X, a calendar year taxpayer,purchases at original issuance TIPS with a stated prin-cipal amount of $100,000 and a stated interest rateof .125 percent, compounded semiannually. For pur-poses of this example, assume that the TIPS are is-sued in Year 1 on January 1, stated interest is payableon June 30 and December 31 of each year, and thatthe TIPS mature on December 31, Year 5. X pays$102,000 for the TIPS, which is the issue price forthe TIPS as determined under §1.1275–2(d)(1). As-sume that the inflation-adjusted principal amount forthe first coupon in Year 1 is $101,225 (resulting inan interest payment of $63.27) and for the secondcoupon in Year 1 is $102,500 (resulting in an inter-est payment of $64.06). X elects to amortize bondpremium under §1.171–4. (For simplicity, contraryto actual practice, the TIPS in this example were is-sued on the date with respect to which the calculationof the first coupon began.)

(ii) Bond premium. The stated interest on theTIPS is qualified stated interest under §1.1273–1(c).X acquired the TIPS with bond premium of $2,000(basis of $102,000 minus the TIPS’ stated principalamount of $100,000). See §§1.171–1(d), 1.171–3(b),and 1.1275–7(f)(3). The $2,000 is more than the de

minimis amount of premium for the TIPS of $1,250(.0025 times the stated principal amount of the TIPS($100,000) times the number of complete years to theTIPS’ maturity (5 years)). Under paragraph (j)(1) ofthis section, X must use the coupon bond method todetermine X’s income from the TIPS.

(iii) Allocation of bond premium. Under§1.171–3(b), the bond premium of $2,000 is allocableto each semiannual accrual period by assuming thatthere will be no inflation or deflation over the termof the TIPS. Moreover, for purposes of §1.171–2, theyield of the securities is determined by assuming thatthere will be no inflation or deflation over their term.Based on this assumption, for purposes of section171, the TIPS provide for semiannual interest pay-ments of $62.50 and a $100,000 payment at maturity.As a result, the yield of the securities for purposes ofsection 171 is -0.2720 percent, compounded semian-nually. Under §1.171–2, the bond premium allocableto an accrual period is the excess of the qualifiedstated interest allocable to the accrual period ($62.50for each accrual period) over the product of the tax-payer’s adjusted acquisition price at the beginningof the accrual period (determined without regard toany inflation or deflation) and the taxpayer’s yield.Therefore, the $2,000 of bond premium is alloca-ble to each semiannual accrual period in Year 1 asfollows: $201.22 to the accrual period ending onJune 30, Year 1 (the excess of the stated interest of$62.50 over ($102,000 x -0.002720/2)); and $200.95to the accrual period ending on December 31, Year1 (the excess of the stated interest of $62.50 over($101,798.78 x -0.002720/2)). The adjusted acqui-sition price at the beginning of the accrual periodending on December 31, Year 1 is $101,798.78 (theadjusted acquisition price of $102,000 at the begin-ning of the accrual period ending on June 30, Year 1reduced by the $201.22 of premium allocable to thataccrual period).

(iv) Income determined by applying the couponbond method and the bond premium rules. Under§1.1275–7(d)(4), the application of the coupon bondmethod to the TIPS results in a positive inflation ad-

justment in Year 1 of $2,500, which is includible inX’s income for Year 1. However, because X acquiredthe TIPS at a premium and elected to amortize thepremium, the premium allocable to Year 1 will offsetthe income on the TIPS as follows: The premium al-locable to the first accrual period of $201.22 first off-sets the interest payable for that period of $63.27. Theremaining $137.95 of premium is treated as a defla-tion adjustment that offsets the positive inflation ad-justment. See §1.171–3(b). The premium allocableto the second accrual period of $200.95 first offsetsthe interest payable for that period of $64.06. The re-maining $136.89 of premium is treated as a deflationadjustment that further offsets the positive inflationadjustment. As a result, X does not include in in-come any of the stated interest received in Year 1 andincludes in Year 1 income only $2,225.16 of the posi-tive inflation adjustment for Year 1 ($2,500 - $137.94- $136.89).

(k) Effective/applicability date.Notwithstanding §1.1275–7(h), this sec-tion applies to Treasury Inflation-Pro-tected Securities issued on or after April 8,2011.

(l) Expiration date. The applicabil-ity of this section expires on or beforeDecember 2, 2014.

Steven T. Miller,Deputy Commissioner forServices and Enforcement.

Approved November 21, 2011.

Emily S. McMahon,Acting Assistant Secretary

of the Treasury (Tax Policy).


January 30, 2012 342 2012–5 I.R.B.

Part III. Administrative, Procedural, and MiscellaneousUpdate for Weighted AverageInterest Rates, Yield Curves,and Segment Rates

Notice 2012–10

This notice provides guidance as to thecorporate bond weighted average interestrate and the permissible range of interestrates 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 (andthe corresponding spot segment rates),and the 24-month average segment ratesunder § 430(h)(2). In addition, this no-tice provides guidance as to the interestrate on 30-year Treasury securities un-der § 417(e)(3)(A)(ii)(II) as in effect forplan years beginning before 2008, the30-year Treasury weighted average rateunder § 431(c)(6)(E)(ii)(I), and the min-

imum present value segment rates under§ 417(e)(3)(D) as in effect for plan yearsbeginning after 2007.

CORPORATE BOND WEIGHTEDAVERAGE INTEREST RATE

Sections 412(b)(5)(B)(ii) and412(l)(7)(C)(i), as amended by the Pen-sion Funding Equity Act of 2004 and bythe Pension Protection Act of 2006 (PPA),provide that the interest rates used to cal-culate current liability and to determinethe required contribution under § 412(l)for plan years beginning in 2004 through2007 must be within a permissible rangebased on the weighted average of the ratesof interest on amounts invested conser-vatively in long term investment gradecorporate bonds during the 4-year periodending on the last day before the beginningof the plan year.

Notice 2004–34, 2004–1 C.B. 848, pro-vides guidelines for determining the cor-

porate bond weighted average interest rateand 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 themonthly composite corporate bond rate de-rived from designated corporate bond in-dices. The methodology for determiningthe monthly composite corporate bond rateas set forth in Notice 2004–34 continues toapply in determining that rate. See Notice2006–75, 2006–2 C.B. 366.

The composite corporate bond rate forDecember 2011 is 4.71 percent. Pursuantto Notice 2004–34, the Service has de-termined this rate as the average of themonthly yields for the included corporatebond indices for that month.

The following corporate bond weightedaverage interest rate was determined forplan years beginning in the month shownbelow.

For Plan YearsBeginning in Permissible Range

Month Year

CorporateBond Weighted

Average 90% to 100%

January 2012 5.72 5.15 5.72

YIELD CURVE AND SEGMENTRATES

Generally for plan years beginningafter 2007 (except for delayed effectivedates for certain plans under sections 104,105, and 106 of PPA), § 430 of the Codespecifies the minimum funding require-ments that apply to single employer planspursuant to § 412. Section 430(h)(2) spec-ifies the interest rates that must be usedto determine a plan’s target normal costand funding target. Under this provision,present value is generally determined us-ing three 24-month average interest rates

(“segment rates”), each of which appliesto cash flows during specified periods.However, an election may be made under§ 430(h)(2)(D)(ii) to use the monthly yieldcurve in place of the segment rates. Sec-tion 430(h)(2)G) set forth a transitionalrule applicable to plan years beginning in2008 and 2009 under which the segmentrates were blended with the corporate bondweighted average described above, includ-ing an election under § 430(h)(2)(G)(iv)for an employer to use the segment rateswithout the transitional rule.

Notice 2007–81, 2007–2 C.B. 899,provides guidelines for determining the

monthly corporate bond yield curve, andthe 24-month average corporate bondsegment rates used to compute the tar-get normal cost and the funding target.Pursuant to Notice 2007–81, the monthlycorporate bond yield curve derived fromDecember 2011 data is in Table I at the endof this notice. The spot first, second, andthird segment rates for the month of De-cember 2011 are, respectively, 2.07, 4.45,and 5.24. The three 24-month averagecorporate bond segment rates applicablefor January 2012 are as follows:

FirstSegment

SecondSegment

ThirdSegment

1.98 5.07 6.19

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 2012, the fundingsegment rates are the three 24-month aver-

age corporate bond segment rates applica-ble for January 2012, listed above withoutblending for any transitional period.

2012–5 I.R.B. 343 January 30, 2012

30-YEAR TREASURY SECURITIESINTEREST RATES

Section 417(e)(3)(A)(ii)(II) (prior toamendment by PPA) defines the appli-cable interest rate, which must be usedfor purposes of determining the minimumpresent value of a participant’s benefitunder § 417(e)(1) and (2), as the annualrate of interest on 30-year Treasury se-curities for the month before the dateof distribution or such other time as theSecretary may by regulations prescribe.Section 1.417(e)–1(d)(3) of the IncomeTax 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 Commissionerfor that month in revenue rulings, noticesor other guidance published in the InternalRevenue Bulletin.

The rate of interest on 30-year Treasurysecurities for December 2011 is 2.98 per-cent. The Service has determined this rateas the average of the daily determinationsof yield on the 30-year Treasury bond ma-turing in November 2041.

Generally for plan years beginningafter 2007, § 431 specifies the mini-mum funding requirements that apply tomultiemployer plans pursuant to § 412.Section 431(c)(6)(B) specifies a minimum

amount for the full-funding limitationdescribed in section 431(c)(6)(A), basedon the plan’s current liability. Section431(c)(6)(E)(ii)(I) provides that the inter-est rate used to calculate current liabilityfor this purpose must be no more than 5percent above and no more than 10 percentbelow the weighted average of the rates ofinterest on 30-year Treasury securities dur-ing the four-year period ending on the lastday before the beginning of the plan year.Notice 88–73, 1988–2 C.B. 383, providesguidelines for determining the weightedaverage interest rate. The following rateswere determined for plan years beginningin the month shown below.

For Plan YearsBeginning in Permissible Range

Month Year

30-YearTreasuryWeightedAverage 90% to 105%

January 2012 4.08 3.67 4.29

MINIMUM PRESENT VALUESEGMENT RATES

Generally for plan years beginning af-ter December 31, 2007, the applicable in-terest rates under § 417(e)(3)(D) are seg-ment rates computed without regard to a

24-month average. For plan years be-ginning in 2008 through 2011, the appli-cable interest rates are the monthly spotsegment rates blended with the applicablerate under § 417(e)(3)(A)(ii)(II) as in ef-fect for plan years beginning in 2007. No-tice 2007–81 provides guidelines for de-

termining the minimum present value seg-ment rates. Pursuant to that notice, theminimum present value transitional seg-ment rates determined for December 2011,taking into account the December 201130-year Treasury rate of 2.98 stated above,are as follows:

For PlanYears

Beginning inFirst

SegmentSecond

SegmentThird

Segment

2011 2.25 4.16 4.792012 2.07 4.45 5.24


The principal author of this notice isTony Montanaro of the Employee Plans,

Tax Exempt and Government EntitiesDivision. Mr. Montanaro may be e-mailedat [email protected].

January 30, 2012 344 2012–5 I.R.B.

Table I

Monthly Yield Curve for December 2011Derived from December 2011 Data

Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield

0.5 0.67 20.5 5.03 40.5 5.27 60.5 5.36 80.5 5.40

1.0 1.10 21.0 5.04 41.0 5.27 61.0 5.36 81.0 5.40

1.5 1.49 21.5 5.05 41.5 5.28 61.5 5.36 81.5 5.40

2.0 1.83 22.0 5.06 42.0 5.28 62.0 5.36 82.0 5.40

2.5 2.11 22.5 5.07 42.5 5.28 62.5 5.36 82.5 5.40

3.0 2.34 23.0 5.08 43.0 5.29 63.0 5.36 83.0 5.40

3.5 2.54 23.5 5.09 43.5 5.29 63.5 5.36 83.5 5.40

4.0 2.72 24.0 5.10 44.0 5.29 64.0 5.37 84.0 5.40

4.5 2.89 24.5 5.11 44.5 5.30 64.5 5.37 84.5 5.40

5.0 3.04 25.0 5.11 45.0 5.30 65.0 5.37 85.0 5.41

5.5 3.20 25.5 5.12 45.5 5.30 65.5 5.37 85.5 5.41

6.0 3.34 26.0 5.13 46.0 5.30 66.0 5.37 86.0 5.41

6.5 3.49 26.5 5.14 46.5 5.30 66.5 5.37 86.5 5.41

7.0 3.62 27.0 5.14 47.0 5.31 67.0 5.37 87.0 5.41

7.5 3.75 27.5 5.15 47.5 5.31 67.5 5.37 87.5 5.41

8.0 3.87 28.0 5.16 48.0 5.31 68.0 5.37 88.0 5.41

8.5 3.98 28.5 5.16 48.5 5.31 68.5 5.38 88.5 5.41

9.0 4.09 29.0 5.17 49.0 5.32 69.0 5.38 89.0 5.41

9.5 4.19 29.5 5.17 49.5 5.32 69.5 5.38 89.5 5.41

10.0 4.28 30.0 5.18 50.0 5.32 70.0 5.38 90.0 5.41

10.5 4.36 30.5 5.19 50.5 5.32 70.5 5.38 90.5 5.41

11.0 4.44 31.0 5.19 51.0 5.32 71.0 5.38 91.0 5.41

11.5 4.51 31.5 5.20 51.5 5.33 71.5 5.38 91.5 5.41

12.0 4.57 32.0 5.20 52.0 5.33 72.0 5.38 92.0 5.41

12.5 4.63 32.5 5.21 52.5 5.33 72.5 5.38 92.5 5.42

13.0 4.68 33.0 5.21 53.0 5.33 73.0 5.39 93.0 5.42

13.5 4.72 33.5 5.22 53.5 5.33 73.5 5.39 93.5 5.42

14.0 4.76 34.0 5.22 54.0 5.33 74.0 5.39 94.0 5.42

14.5 4.80 34.5 5.23 54.5 5.34 74.5 5.39 94.5 5.42

15.0 4.83 35.0 5.23 55.0 5.34 75.0 5.39 95.0 5.42

15.5 4.86 35.5 5.23 55.5 5.34 75.5 5.39 95.5 5.42

16.0 4.89 36.0 5.24 56.0 5.34 76.0 5.39 96.0 5.42

16.5 4.91 36.5 5.24 56.5 5.34 76.5 5.39 96.5 5.42

17.0 4.93 37.0 5.25 57.0 5.35 77.0 5.39 97.0 5.42

17.5 4.95 37.5 5.25 57.5 5.35 77.5 5.39 97.5 5.42

18.0 4.97 38.0 5.26 58.0 5.35 78.0 5.39 98.0 5.42

18.5 4.98 38.5 5.26 58.5 5.35 78.5 5.40 98.5 5.42

19.0 5.00 39.0 5.26 59.0 5.35 79.0 5.40 99.0 5.42

19.5 5.01 39.5 5.26 59.5 5.35 79.5 5.40 99.5 5.42

20.0 5.02 40.0 5.27 60.0 5.35 80.0 5.40 100.0 5.42

2012–5 I.R.B. 345 January 30, 2012

Transitional Relief for Section6045B Issuer Returnsand Statements for 2011Organizational Actions

Notice 2012–11

PURPOSE

This notice provides transitional relieffrom information reporting requirementsin section 6045B of the Internal RevenueCode that apply to issuers of stock with re-spect to organizational actions that affectthe basis of the stock. This notice providesthat posting either Form 8937, Report ofOrganizational Actions Affecting Basis ofSecurities, or the required information ina readily accessible format to an issuer’sprimary public Web site will satisfy an is-suer’s requirement to file and furnish Form8937 for organizational actions occurringin 2011. This notice also provides that theInternal Revenue Service will not imposepenalties for reporting incorrect informa-tion against issuers under sections 6721 or6722 related to filing and furnishing Form8937 for 2011 organizational actions pro-vided that they make good-faith efforts intimely posting the Form 8937 or the re-quired information on the issuers’ primarypublic Web sites or filing accurate Forms8937 and furnishing the corresponding is-suer statements.

BACKGROUND

Section 403 of the Energy Improvementand Extension Act of 2008, Div. B ofPub. L. No. 110–343, 122 Stat. 3765,enacted on October 3, 2008, added section6045B to the Code. Section 6045B pro-vides that, for organizational actions be-ginning in 2011, an issuer of stock must

file a return with the Service to describeany organizational action (such as a stocksplit, merger, or acquisition) that affectsthe basis of a specified security. Under sec-tion 6045B(d) and section 6045(g)(3)(B),in 2011, a specified security is limited tostock in a corporation. The issuer gener-ally must file the return within 45 days af-ter the organizational action. The issuermust also furnish a corresponding state-ment to each nominee of the stockholder(or to each stockholder if there is no nomi-nee) by January 15th of the year followingthe calendar year of the organizational ac-tion.

Because January 15, 2012, is a Sundayand January 16, 2012, is a Federal holi-day, issuers must furnish the required state-ments to stockholders or nominees by Jan-uary 17, 2012. Further, the Service an-nounced that issuers may report 2011 orga-nizational actions without penalty if Form8937 is filed by January 17, 2012. Notice2011–18, 2011–11 I.R.B. 549 (March 14,2011).

An issuer is not required to file anissuer return with the Service or furnishissuer statements to stockholders or nom-inees if it posts the return on its primarypublic Web site in a readily accessibleformat by the filing date. Treas. Reg.§ 1.6045B–1(a)(3), (b)(4).

The requirements under section 6045Bdo not apply to issuers of stock in a regu-lated investment company until 2012.

TRANSITIONAL INFORMATIONREPORTING REQUIREMENTS FORISSUERS OF STOCK REPORTINGORGANIZATIONAL ACTIONS TAKENIN 2011

Section 6721 imposes a penalty on anyissuer of stock that does not timely file acorrect issuer return with the Service as re-quired by section 6045B(a). Section 6722imposes a penalty on any issuer of stockthat does not timely furnish correct issuerstatements to stockholders or nominees as

required by section 6045B(c). The Ser-vice has learned that a number of ques-tions have arisen following the release ofthe final Form 8937 and instructions andrecognizes that the release date provides avery limited timeframe remaining beforethe due date of the form.

Accordingly, the Service will permit anissuer to publicly report an organizationalaction by posting either Form 8937 or therequired information in a readily accessi-ble format to an area of its primary publicWeb site. The Service will treat the issueras having filed Form 8937 and furnishedissuer statements to stockholders or nom-inees on the date of posting of the Form8937 or the required information.

Further, the Service will not imposepenalties for reporting incorrect infor-mation under sections 6721 and 6722on issuers that must file information re-turns and furnish statements under section6045B provided that they make good-faithefforts to timely post the Form 8937 orthe required information on their primarypublic Web sites or file accurate Forms8937 and furnish the corresponding issuerstatements. The potential impact of theissues addressed in this notice will be con-sidered in assessing reasonable cause withrespect to broker reporting required undersection 6045(g).

This transitional relief is limited to re-porting organizational actions occurring in2011. This transitional relief does not ap-ply to issuers of stock in a regulated invest-ment company, which are not subject to theissuer reporting requirements for 2011 or-ganizational actions.


The principal author of this no-tice is Carlton King of the Office ofAssociate Chief Counsel (Procedure &Administration). For further informationregarding this notice, please contactCarlton King at (202) 622–4910 (not atoll-free call).

January 30, 2012 346 2012–5 I.R.B.

Part IV. Items of General InterestNotice of ProposedRulemaking byCross-Reference toTemporary Regulationsand Notice of Public Hearing

Treasury Inflation-ProtectedSecurities Issued at aPremium

REG–130777–11


ACTION: Notice of proposed rulemakingby cross-reference to temporary regula-tions and notice of public hearing.

SUMMARY: In this issue of the Bul-letin, the IRS is issuing temporaryregulations (T.D. 9561) that provideguidance on the tax treatment of TreasuryInflation-Protected Securities issuedwith more than a de minimis amount ofpremium. The text of those regulationsalso serves as the text of these proposedregulations. This document also providesnotice of a public hearing on theseproposed regulations.

DATES: Written or electronic commentsmust be received by March 5, 2012. Out-lines of topics to be discussed at the pub-lic hearing scheduled for March 28, 2012,must be received by March 7, 2012.

ADDRESSES: Send submissions to:CC:PA:LPD:PR (REG–130777–11),room 5203, Internal Revenue Service,PO 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–130777–11),Courier’s Desk, Internal RevenueService, 1111 Constitution Avenue, N.W.,Washington, DC, or sent electronically,via the Federal eRulemakingPortal at www.regulations.gov (IRSREG–130777–11).

FOR FURTHER INFORMATIONCONTACT: Concerning the proposedregulations, William E. Blanchard, (202)622–3950; concerning submissions of

comments, the hearing, and/or to be placedon the building access list to attend thehearing, Oluwafunmilayo (Funmi) Taylor,(202) 622–7180 (not toll-free numbers).


Background and Explanation ofProvisions

Temporary regulations in this issue ofthe Bulletin amend the Income Tax Regu-lations (26 CFR part 1) relating to section1275. The temporary regulations providethat the coupon bond method describedin §1.1275–7(d) applies to Treasury In-flation-Protected Securities (TIPS) issuedwith more than a de minimis amount ofpremium. The temporary regulations ap-ply to TIPS issued on or after April 8, 2011.The text of the temporary regulations alsoserves as the text of these proposed reg-ulations. In addition to comments on thetext of the temporary regulations, the IRSand the Treasury Department request com-ments on whether the rules in the tem-porary regulations should be extended toother types of inflation-indexed debt in-struments.

Special Analyses

It has been determined that this noticeof proposed rulemaking is not a significantregulatory action as defined in ExecutiveOrder 12866. Therefore, a regulatoryassessment is not required. It also hasbeen determined that section 553(b) of theAdministrative Procedure Act (5 U.S.C.chapter 5) does not apply to these reg-ulations, and because the regulations donot impose a collection of information onsmall entities, the Regulatory FlexibilityAct (5 U.S.C. chapter 6) does not apply.Pursuant to section 7805(f) of the InternalRevenue Code, this notice of proposedrulemaking has been submitted to theChief Counsel for Advocacy of the SmallBusiness Administration for comment onits impact on small businesses.

Comments and Public Hearing

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. The IRS and the Trea-sury Department specifically request com-ments on the clarity of the proposed ruleand how it may be made easier to under-stand. All comments will be available forpublic inspection and copying.

A public hearing has been scheduledfor March 28, 2012, beginning at 10 a.m.in the IRS Auditorium, Internal Rev-enue Building, 1111 Constitution Avenue,N.W., Washington, DC. Due to buildingsecurity procedures, visitors must enterthrough the Constitution Avenue entrance.In addition, all visitors must present photoidentification to enter the building. Be-cause of access restrictions, visitors willnot be admitted beyond the immediateentrance area more than 30 minutes beforethe hearing starts. For information abouthaving your name placed on the build-ing access list to attend the hearing, seethe “FOR FURTHER INFORMATIONCONTACT” section of this preamble.

The rules of 26 CFR 601.601(a)(3) ap-ply to the hearing. Persons who wish topresent oral comments at the hearing mustsubmit written or electronic comments byMarch 5, 2012 and submit an outline of thetopics to be discussed and the time to bedevoted to each topic (signed original andeight (8) copies) by March 7, 2012. A pe-riod of 10 minutes will be allotted to eachperson for making comments. An agendashowing the scheduling of the speakerswill be prepared after the deadline for re-ceiving outlines has passed. Copies of theagenda will be available free of charge atthe hearing.


The principal author of these regu-lations is William E. Blanchard, Officeof Associate Chief Counsel (FinancialInstitutions and Products). However,other personnel from the IRS and theTreasury Department participated in theirdevelopment.

* * * * *

Proposed Amendments to theRegulations

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

2012–5 I.R.B. 347 January 30, 2012



Authority: 26 U.S.C. 7805 * * *Par. 2. Section 1.1275–7 is revised to

read as follows:

§1.1275–7 Inflation-indexed debtinstruments.

[The text of the proposed amendmentsto §1.1275–7 is the same as the text for§1.1275–7T(i) through (k) published else-where in this issue of the Bulletin].

Steven T. Miller,Deputy Commissioner forServices and Enforcement.


Regulations Governing thePerformance of ActuarialServices Under the EmployeeRetirement Income SecurityAct of 1974; Correction

Announcement 2012–5

AGENCY: Joint Board for the Enrollmentof Actuaries.

ACTION: Correcting amendment.

SUMMARY: This document describescorrecting amendments to final regula-tions (T.D. 9517, 2011–15 I.R.B. 610)relating to the enrollment of actuaries.These regulations were published in theFederal Register on Thursday, March 31,2011 (76 FR 17762).

DATES: This correction is effective onDecember 28, 2011, and is applicable onMarch 31, 2011.

FOR FURTHER INFORMATIONCONTACT: Patrick McDonough, Execu-tive Director, Joint Board for the Enroll-ment of Actuaries, at (202) 622–8229 (nota toll-free number).


Background

The final regulations (T.D. 9517) thatare the subject of this correction are un-der section 3042 of the Employee Re-tirement Income Security Act of 1974(88 Stat. 829), Public Law 93–406(ERISA).

Need for Correction

As published, final regulations(T.D. 9517) contain errors that may proveto be misleading and are in need ofclarification.

* * * * *

Correction of Publication

Accordingly, 20 CFR part 901 is cor-rected by making the following correctingamendments:

PART 901—REGULATIONSGOVERNING THE PERFORMANCEOF ACTUARIAL SERVICES UNDERTHE EMPLOYEE RETIREMENTINCOME SECURITY ACT OF 1974

Paragraph 1. The authority citation forpart 901 continues to read in part as fol-lows:

Authority: These rules are issued underauthority of 88 Stat.1002; 29 U.S.C. 1241,1242. See also 5 U.S.C. 301; 31 U.S.C.330; and 31 U.S.C. 321.

Par. 2. Section 901.11 is amended by:1. Revising the first sentence of para-

graph (f)(1)(i).2. Revising paragraph (l)(4)(ii).3. Revising the last sentence of para-

graph (o) Example 4 (i), and paragraphs (o)Example 6 (iii) and (o) Example 7 (ii).

The revisions read as follows:

§901–11 Enrollment procedures

* * * * *(f) * * *(1) * * *(i) Core subject matter is program con-

tent and knowledge that is integral andnecessary to the satisfactory performanceof pension actuarial services and actuarialcertifications under ERISA and the Inter-nal Revenue Code. * * *

* * * * *(l) * * *(4) * * *(ii) Placement on the inactive roster af-

ter notice and right to respond. The Ex-ecutive Director will move an enrolled ac-tuary who does not submit a timely appli-cation of renewal that shows timely com-pletion of the required continuing profes-sional education to the inactive roster onlyafter giving the enrolled actuary 60 days torespond as described in paragraph (l)(1) ofthis section.

* * * * *(o) * * *Example 4. (i) * * * Accordingly, effective

April 1, 2014, H is placed on the roster of inactiveenrolled actuaries and is ineligible to perform pensionactuarial services as an enrolled actuary under ERISAand the Internal Revenue Code.

* * * * *Example 6. * * *(iii) Note that the total of 15 hours of con-

tinuing professional education credit that H com-pletes between January 1, 2011, and December 31,2013, as well as the 10 hours of continuing profes-sional education credit between January 1, 2014,and December 31, 2016, are not counted towardH’s return to active status and are not taken intoaccount toward the additional hours of continuingprofessional education credit that H must completebetween January 1, 2020, and December 31, 2022, inorder to be eligible to file an application for renewalof enrollment active status effective April 1, 2023.

Example 7. * * *(ii) J completes 5 hours of core continuing profes-

sional education credit and 4 hours of non-core con-tinuing professional education credit between Jan-uary 1, 2014, and October 6, 2014. Because J didnot complete the required 12 hours of continuing pro-fessional education (of which at least 6 hours mustconsist of core subject matter) during J’s initial en-rollment cycle, J is not eligible to file an applicationfor a return to active enrollment on October 6, 2014,notwithstanding the fact that had J completed suchhours between January 1, 2012, and December 31,2013, J would have satisfied the requirements for re-newed enrollment effective April 1, 2014.

* * * * *

Guy R. Traynor,Acting Chief, Publications

and Regulations Branch,Legal Processing Division,

Associate Chief Counsel(Procedure and Administration).


January 30, 2012 348 2012–5 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.

2012–5 I.R.B. i January 30, 2012

Numerical Finding List1

Bulletins 2012–1 through 2012–5

Announcements:

2012-1, 2012-1 I.R.B. 249

2012-2, 2012-2 I.R.B. 285

2012-3, 2012-4 I.R.B. 335

2012-4, 2012-4 I.R.B. 335

2012-5, 2012-5 I.R.B. 348

Notices:

2012-1, 2012-2 I.R.B. 260

2012-3, 2012-3 I.R.B. 289

2012-4, 2012-3 I.R.B. 290

2012-5, 2012-3 I.R.B. 291

2012-6, 2012-3 I.R.B. 293

2012-7, 2012-4 I.R.B. 308

2012-8, 2012-4 I.R.B. 309

2012-9, 2012-4 I.R.B. 315

2012-10, 2012-5 I.R.B. 343

2012-11, 2012-5 I.R.B. 346

Proposed Regulations:

REG-149625-10, 2012-2 I.R.B. 279

REG-102988-11, 2012-4 I.R.B. 326

REG-130777-11, 2012-5 I.R.B. 347

Revenue Procedures:

2012-1, 2012-1 I.R.B. 1

2012-2, 2012-1 I.R.B. 92

2012-3, 2012-1 I.R.B. 113

2012-4, 2012-1 I.R.B. 125

2012-5, 2012-1 I.R.B. 169

2012-6, 2012-1 I.R.B. 197

2012-7, 2012-1 I.R.B. 232

2012-8, 2012-1 I.R.B. 235

2012-9, 2012-2 I.R.B. 261

2012-10, 2012-2 I.R.B. 273

2012-12, 2012-2 I.R.B. 275

2012-13, 2012-3 I.R.B. 295

2012-14, 2012-3 I.R.B. 296

Revenue Rulings:

2012-1, 2012-2 I.R.B. 255

2012-2, 2012-3 I.R.B. 286

2012-5, 2012-5 I.R.B. 337

Treasury Decisions:

9559, 2012-2 I.R.B. 252

9560, 2012-4 I.R.B. 299

9561, 2012-5 I.R.B. 341

9562, 2012-5 I.R.B. 339

1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2011–27 through 2011–52 is in Internal Revenue Bulletin2011–52, dated December 27, 2011.

January 30, 2012 ii 2012–5 I.R.B.

Finding List of Current Actions onPreviously Published Items1

Bulletins 2012–1 through 2012–5

Notices:

2010-88

As modified by Ann. 2011-40, is superseded by

Notice 2012-1, 2012-2 I.R.B. 260

2011-28

Superseded by

Notice 2012-9, 2012-4 I.R.B. 315

Revenue Procedures:

2003-61

Superseded by

Notice 2012-8, 2012-4 I.R.B. 309

2007-44

Modified by

Ann. 2012-3, 2012-4 I.R.B. 335

2011-1

Superseded by

Rev. Proc. 2012-1, 2012-1 I.R.B. 1

2011-2

Superseded by

Rev. Proc. 2012-2, 2012-1 I.R.B. 92

2011-3

Superseded by

Rev. Proc. 2012-3, 2012-1 I.R.B. 113

2011-4

Superseded by

Rev. Proc. 2012-4, 2012-1 I.R.B. 125

2011-5

Superseded by

Rev. Proc. 2012-5, 2012-1 I.R.B. 169

2011-6

Superseded by

Rev. Proc. 2012-6, 2012-1 I.R.B. 197

2011-7

Superseded by

Rev. Proc. 2012-7, 2012-1 I.R.B. 232

2011-8

Superseded by

Rev. Proc. 2012-8, 2012-1 I.R.B. 235

2011-9

Superseded by

Rev. Proc. 2012-9, 2012-2 I.R.B. 261

2011-10

Superseded by

Rev. Proc. 2012-10, 2012-2 I.R.B. 273

Revenue Procedures— Continued:

2011-49

Modified by

Ann. 2012-3, 2012-4 I.R.B. 335

Revenue Rulings:

2008-40

Modified by

Notice 2012-6, 2012-3 I.R.B. 293

2011-1

Modified by

Notice 2012-6, 2012-3 I.R.B. 293

Treasury Decision:

9517

Corrected by

Ann. 2012-4, 2012-4 I.R.B. 335Ann. 2012-5, 2012-5 I.R.B. 348

1 A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2011–27 through 2011–52 is in Internal Revenue Bulletin 2011–52, dated December 27,2011.

2012–5 I.R.B. iii January 30, 2012

INDEXInternal Revenue Bulletins 2012–1 through2012–5

The abbreviation and number in parenthesis following the index entryrefer to the specific item; numbers in roman and italic type followingthe parentheses refer to the Internal Revenue Bulletin in which the itemmay be found and the page number on which it appears.

Key to Abbreviations:Ann AnnouncementCD Court DecisionDO Delegation OrderEO Executive OrderPL Public LawPTE Prohibited Transaction ExemptionRP Revenue ProcedureRR Revenue RulingSPR Statement of Procedural RulesTC Tax ConventionTD Treasury DecisionTDO Treasury Department Order

EMPLOYEE PLANSDetermination letters, issuing procedures (RP 6) 1, 197Letter rulings:

And determination letters, areas which will not be issuedfrom:Associates Chief Counsel and Division Counsel (TE/GE)

(RP 3) 1, 113Associate Chief Counsel (International) (RP 7) 1, 232

And general information letters, procedures (RP 4) 1, 125User fees, request for letter rulings (RP 8) 1, 235

Qualified plans:Determination letters (Ann 3) 4, 335Group trusts (Notice 6) 3, 293Retirement plans, covered compensation, permitted disparity

(RR 5) 5, 337Technical advice to IRS employees (RP 5) 1, 169Full funding limitations, weighted average interest rates, seg-

ment rates for:January 2012 (Notice 10) 5, 343

EMPLOYMENT TAXInterim guidance for cost of health care coverage reporting on

Form W-2 (Notice 9) 4, 315Letter rulings and information letters issued by Associate Of-

fices, determination letters issued by Operating Divisions (RP1) 1, 1

Technical Advice Memoranda (RP 2) 1, 92

ESTATE TAXLetter rulings and information letters issued by Associate Of-



EXCISE TAXLetter rulings and information letters issued by Associate Of-



EXEMPT ORGANIZATIONSAnnual notice to donors regarding pending and settled declara-

tory judgment suits (Ann 1) 1, 249Certain filing changes for tax-exempt organizations (Notice 4) 3,

290Letter rulings:

And determination letters:Areas which will not be issued from Associates Chief

Counsel and Division Counsel (TE/GE) (RP 3) 1, 113And general information letters, procedures (RP 4) 1, 125Exemption application determination letter rulings under sec-

tions 501, 509, 4940, and 4942 (RP 10) 2, 273Exemption application determination letter rulings under sec-

tions 501 and 521 (RP 9) 2, 261User fees, request for letter rulings (RP 8) 1, 235

Technical advice to IRS employees (RP 5) 1, 169

GIFT TAXLetter rulings and information letters issued by Associate Of-


Technical Advice Memoranda (TAMs) (RP 2) 1, 92

INCOME TAXApplication of the segregation rules to small shareholders

(REG–149625–10) 2, 279Basis reporting by securities brokers and basis determination for

debt instruments and options (REG–102988–11) 4, 326Conduit financing arrangements (TD 9562) 5, 339Continuing education provider and accrediting organization (RP

12) 2, 275Credits:

Iowa credit disaster relief (Notice 7) 4, 308New markets tax credit (TD 9560) 4, 299

Current refundings of tax-exempt bonds in certain disaster reliefbond programs (Notice 3) 3, 289

Equitable relief under section 66(c) or section 6015(f) (Notice 8)4, 309

January 30, 2012 iv 2012–5 I.R.B.

INCOME TAX—Cont.Forms:

1097, 1098, 3921, 3922, 5498, 8935, and W-2, requirementsfor filing electronically; correction to Rev. Proc. 2011–40(Ann 2) 2, 285

Interest:Investment:

Federal short-term, mid-term, and long-term rates for:January (RR 2) 3, 286

Letters rulings:And determination letters, areas which will not be issued

from:Associate Chief Counsel and Division Counsel (TE/GE)

(RP 3) 1, 113Associate Chief Counsel (International) (RP 7) 1, 232

And information letters issued by Associate Offices, determi-nation letters issued by Operating Divisions (RP 1) 1, 1

Maximum vehicle values, special valuation rules, 2012 (RP 13)3, 295

Proposed Regulations:26 CFR 1.275–7, revised; treasury inflation-protected securi-

ties issued at a premium (REG–130777–11) 5, 34726 CFR 1.382–3, amended; application of the segregation

rules to small shareholders (REG–149625–10) 2, 27926 CFR 1.6045–1, amended; 1.6045A–1, amended;

1.6045B–1, amended; basis reporting by securities brokersand basis determination for debt instruments and options(REG–102988–11) 4, 326

Publication 1220, specifications for filing forms 1097, 1098,3921, 3922, 5498, 8935, and W-2 electronically; correction toRev. Proc. 2011–40 (Ann 2) 2, 285

Recurring item exception (RR 1) 2, 255Regulations:

26 CFR 1.45D–1, added; 1.45D–1, amended; new marketstax credit (TD 9560) 4, 299

26 CFR 1.275–7T, added; treasury inflation-protected securi-ties issued at a premium (TD 9561) 5, 341

26 CFR 1.881–3, amended; conduit financing arrangements(TD 9562) 5, 339

26 CFR 300.0, amended; 300.12, revised; 300.13, added; userfee to take the registered tax return preparer competencyexamination (TD 9559) 2, 252

26 CFR 901.11, amended; regulations governing the perfor-mance of actuarial services under the Employee RetirementIncome Security Act (ERISA) of 1974; correction (Ann 4)4, 335; correction (Ann 5) 5, 348

Regulations governing the performance of actuarial services un-der the Employee Retirement Income Security Act (ERISA) of1974; correction (Ann 4) 4, 335; correction (Ann 5) 5, 348

Safe harbor reporting:Eligible REMICs required to report on Schedule Q informa-

tion with respect to REMIC assets (Notice 5) 3, 291Guidance for REIT investing in certain REMIC regular and

residual interests (RP 14) 3, 296Standard mileage rates, 2012 (Notice 1) 2, 260Technical Advice Memoranda (TAMs) (RP 2) 1, 92

INCOME TAX—Cont.Transitional relief for section 6045B issuer returns and state-

ments for 2011 organizational actions (Notice 11) 5, 346Treasury inflation-protected securities issued at a premium (TD

9561) 5, 341; (REG–130777–11) 5, 347User fee to take the registered tax return preparer competency

examination (TD 9559) 2, 252

SELF-EMPLOYMENT TAXLetter rulings and information letters issued by Associate Of-


Technical Advice Memoranda (TAMs) (RP 2) 1, 92

2012–5 I.R.B. v January 30, 2012

January 30, 2012 2012–5 I.R.B.

2012–5 I.R.B. January 30, 2012

January 30, 2012 2012–5 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

Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superin-tendent of Documents when their subscriptions must be renewed.

CUMULATIVE BULLETINSThe contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are

sold on a single copy basis and are not included as part of the subscription to the Internal Revenue Bulletin. Subscribers to the weeklyBulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of printand are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from theSuperintendent of Documents.

ACCESS THE INTERNAL REVENUE BULLETIN ON THE INTERNETYou may view the Internal Revenue Bulletin on the Internet at www.irs.gov. Select Businesses. Under Businesses Topics, select

More Topics. Then select Internal Revenue Bulletins.

INTERNAL REVENUE BULLETINS ON CD-ROMInternal Revenue Bulletins are available annually as part of Publication 1796 (Tax Products CD-ROM). The CD-ROM can be

purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders (discount for online orders)or by calling 1-877-233-6767. The first release is available in mid-December and the final release is available in late January.

HOW TO ORDERCheck the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,

detach entire page, and mail to the Superintendent of Documents, P.O. Box 979050, St. Louis, MO 63197–9000. Please allow two tosix weeks, plus mailing time, for delivery.

WE WELCOME COMMENTS ABOUT THE INTERNALREVENUE BULLETIN

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, wewould be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page (www.irs.gov)or write to the IRS Bulletin Unit, SE:W:CAR:MP:T:T:SP, Washington, DC 20224.

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

IRB 2012-05 (Rev. January 30, 2012) - IRS tax forms

Documents

Transcript of IRB 2012-05 (Rev. January 30, 2012) - IRS tax forms