Internal Revenue Bulletin 2010-23 (PDF rendition): IRS Revenue Rulings

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

Bulletin No. 201
0-23
June 7, 2010
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2010–15, page 730.
Federal rates; adjusted federal rates; adjusted federal
long-termrateandthelong-termexemptrate.For pur-
poses of sections 382, 642, 1274, 1288, and other sections
of the Code, tables set forth the rates for June 2010.
T.D. 9483, page 726.
Final regulations under section 274 of the Code add clearly
marked public safety officer vehicles as a new type of qualified
nonpersonal use vehicle.
Notice 2010–42, page 733.
This notice announces the phase-out of the new qualified hybrid
motor vehicle credit and the new advanced lean burn technol-
ogy motor vehicle credit for passenger automobiles and light
trucks manufactured by Volkswagen Group of America that are
purchased for use or lease in the United States beginning on
July 1, 2010.
Rev. Proc. 2010–22, page 747.
2011 inflation adjusted amounts for health savings ac-
counts.This procedure provides the 2011 inflation adjusted
amounts for Health Savings Accounts (HSAs) under section
223 of the Code.
ADMINISTRATIVE
Notice 2010–45, page 734.
This notice establishes the qualifying therapeutic discovery
project program under section 48D of the Code. Section
9023(a) of the Patient Protection and Affordable Care Act
(the Act) added section 48D to the Code as part of the
investment credit under section 46. Section 48D provides
a nonrefundable tax credit equal to 50 percent of an eligible
taxpayer’s qualified investment in a qualifying therapeutic dis-
covery project. Under section 9023(e) of the Act, an eligible
taxpayer may elect to receive a grant in lieu of credits. Section
48D(d)(1)(B) limits the total amount of credits or grants to be
allocated under the program to $1 billion during the two-year
period from 2009 through 2010. The Service, in consultation
with the Department of Health and Human Services, will award
certifications for qualified investments. The credits or grants
will only be available to taxpayers having 250 or fewer full-time
and part-time employees.
Finding Lists begin on page ii.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
June 7, 20102010–23 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 42.—Low-Income
Housing Credit
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of June 2010. See Rev. Rul. 2010-15, page 730.
Section 274.—Disallowance
of Certain Entertainment,
etc., Expenses
26 CFR 1.274–5: Substantiation requirements.
T.D. 9483
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Qualified Nonpersonal Use
Vehicles
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final Regulations.
SUMMARY: This document contains fi-
nal regulations relating to qualified non-
personal use vehicles as defined in section
274(i). Qualified nonpersonal use vehi-
cles are excepted from the substantiation
requirements of section 274(d)(4) that ap-
plytolistedpropertyasdefinedinsection
280F(d)(4). These final regulations add
clearly marked public safety officer vehi-
cles as a new type of qualified nonpersonal
use vehicle. These final regulations af-
fect employers that provide their employ-
ees with qualified nonpersonal use vehi-
cles and the employees who use such ve-
hicles.
DATES:Effective Date:These regulations
are effective on May 19, 2010.
Applicability Date:These regulations
apply to uses of clearly marked public
safety officer vehicles occurring after
May 19, 2010.
FOR FURTHER INFORMATION
CONTACT: Don Parkinson at (202)
622–6040 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
SUPPLEMENTARY INFORMATION:
This document contains final Income
Tax Regulations under section 274(i)
added by section 2(b) of Public Law 99–44
(May 24, 1985), which provides a defini-
tion of qualified nonpersonal use vehicle.
Temporary Regulation §1.274–5T(k),
identifying categories of qualified non-
personal use vehicles and Temporary
Regulation §1.274–5T(l), providing for
definitions of the terms “automobile,”
“vehicle,” “employer,” “employee,” and
“personal use” were issued in 1985. (T.D.
8061, 1985–2 C.B. 93 (1985)). A no-
tice of proposed rulemaking was issued
by cross-reference to Temporary Regula-
tion §1.274–5T(k). (LR–145–84, 50 FR
46088, 1985–2 C.B. 809 (1985)).
On June 9, 2008, proposed regulations
(REG–106897–08, 2008–1 C.B. 1175)
were published in theFederal Register
(73 FR 32500). The proposed regulations
incorporated the text of §1.274–5T(k) and
added clearly markedpublic safety offi-
cer vehicles as a new type of qualified
nonpersonal use vehicle, listed along with
clearly marked police and fire vehicles
at §1.274–5(k)(2)(ii)(A). A definition of
clearly marked public safety officer vehi-
cles was added to the provision defining
clearly marked police and fire vehicles
at §1.274–5(k)(3), and an example il-
lustrating application of the rules to a
public safety officer vehicle was added
at §1.274–5(k)(8)Example 3. The pro-
posed regulations incorporated the text
of §1.274–5T(l) with no changes. The
corresponding provisions of the proposed
regulations in LR–145–84 were with-
drawn on June 8, 2008.
Written public comments on the pro-
posed regulations at §1.274–5(k) and (l)
were received and no hearing was re-
quested. After consideration of all the
comments, these final regulations adopt
the provisions of the proposed regula-
tions with an amendment toExample 3
and the provision of a newExample 4
in §1.274–5(k)(8) which are intended to
assist taxpayers in determining whether
individual employeesmeet the definition
of public safety officer. The temporary
regulations at §1.274–5T(k) and (l) are
withdrawn concurrently with the publica-
tion of these final regulations in theFed-
eral Register. The remaining temporary
regulations at §1.274–5T are unaffected
by this Treasury decision.
Summary of Comments and
Explanation of Provisions
Section 274(d) provides that a taxpayer
is not allowed a deduction or credit for cer-
tain expenses unless the expenses are sub-
stantiated. These substantiation require-
ments apply to expenses incurred in the
use of any listed property (defined in sec-
tion 280F(d)(4)), which includes any pas-
senger automobile and any other property
used as a means of transportation. Sec-
tion 274(d) does not apply to any quali-
fied nonpersonal use vehicle as defined in
section 274(i). Both business and personal
use of a vehicle that meets the criteria to
be a qualified nonpersonal use vehicle un-
der section 274(i) will also qualify as a
working condition fringe benefit that is ex-
cluded from the recipient’s income under
section 132(d). Thus, if an employer pro-
vides an employee with a qualified nonper-
sonal use vehicle, the employee does not
need to keep records of how the vehicle is
used, and both the business and the per-
sonal use of the vehicle will be excluded
from the employee’s income as a work-
ing condition fringe benefit under section
132(d).
Section 274(i) provides that a quali-
fied nonpersonal use vehicle is any vehi-
cle which by reason of its nature is not
likely to be used more than ade minimis
amount for personal purposes. The leg-
islative history to section 274(i) provided
a list of qualified nonpersonal use vehicles
and identified a number of examples of
qualified nonpersonal use vehicles such as
school buses, qualified specialized utility
repair trucks, and qualified moving vans.
The legislative history indicated that Con-
gress wanted the Commissioner to expand
the list to include other vehicles appropri-
ate for listing because by their nature it is
highly unlikely that they will be used more
2010–23 I.R.B.726June 7, 2010

than a very minimal amount for personal
purposes. H.R. Rep. No. 99–34, at 11
(1985).
Passenger automobiles such as sedans
and sport utility vehicles are generally not
exempt from taxation as qualified nonper-
sonal use vehicles because by design they
can easily be used for personal purposes.
However, unmarked law enforcement ve-
hicles and clearly marked police and fire
vehicles are included in the list of quali-
fied nonpersonal use vehicles set forth in
the legislative history to section 274(i) and
incorporated into these final regulations.
Under prior rules, clearly marked ve-
hicles provided to Federal, state and lo-
cal government workers who respond to
emergency situations did not satisfy the
current regulations governing qualified
nonpersonal use vehicles if the individ-
ual workers were not employed by either
the fire department or police department.
These final regulations, consistent with the
proposed regulations, add clearly marked
public safety officer vehicles to the list
of qualified nonpersonal use vehicles so
that emergency responders who are not
employed by either the fire department or
police department receive the same treat-
ment as those who work for the police or
fire department.
A clearly marked public safety officer
vehicle is a vehicle owned or leased by
a governmental unit or any agency or in-
strumentality thereof, that is required to
be used for commuting by a public safety
officer as defined in section 402(l)(4)(C)
who, when not on a regular shift, is on
call at all times, provided that any personal
use (other than commuting) of the vehicle
outside the limit of the public safety of-
ficer’s obligation to respond to an emer-
gency is prohibited by such governmen-
tal unit. A public safety officer vehicle is
clearly marked if, through painted insignia
or words, it is readily apparent that the ve-
hicle is a public safety officer vehicle.
Section 402(l)(4)(C) provides that the
term “public safety officer” shall have
the same meaning given such term by the
Omnibus Crime Control and Safe Streets
Act of 1968, as codified at 42 U.S.C. sec-
tion 3796b(9)(A). The definition of public
safety officer is part of the Public Safety
Officer’s Benefits Act which was enacted
as part L of Title I of the Omnibus Crime
Control and Safe Streets Act of 1968. 42
U.S.C. section 3796b(9)(A) defines public
safety officer as “an individual serving
a public agency in an official capacity,
with or without compensation, as a law
enforcement officer, a firefighter, a chap-
lain, or as a member of a rescue squad or
ambulance crew.”
Some commenters suggested eliminat-
ing some of the requirements pertaining
to qualified nonpersonal use vehicles. In
particular, commenters suggested elimina-
tion of the requirement that the vehicle be
clearly marked, or the requirement that the
individual be on call at all times, or the
requirement that the vehicle be specially
equipped.
Qualified nonpersonal use vehicles
were exempted from the substantiation
and recordkeeping requirements imposed
under section 274(d) and minimal personal
use of such vehicles was excluded from
income because the nature of the vehicles
prevents more than ade minimisamount
of personal use. If an individual is not
on call at all times, personal use may be
more thande minimis. If the vehicle is
not required to be specially equipped or
clearly marked, the vehicle will function
easily as a personal use vehicle and is not
readily distinguishable from vehicles rou-
tinely used for personal purposes. Thus,
these suggested changes were not adopted
because they conflict with the underlying
goal and purpose of the statute.
A number of comments were made urg-
ing that various specific types of workers
be included within the definition “public
safety officer.” For example, commenters
suggested the definition of public safety
officer should be expanded to include
employees who respond to local disasters
such as flash floods, pipeline ruptures,
hazardous material accidents, bridge col-
lapses, and mining accidents. Additionally
commenters suggested that child protec-
tive service workers, emergency manage-
ment personnel, and members of Incident
Management Teams which are part of
the Department of Homeland Security’s
National Incident Management System
should all be included in the definition of
public safety officer.
The determination of the status of an in-
dividual as a public safety officer is made
pursuant to a facts and circumstances anal-
ysisbasedonanevaluationoftherelevant
criteria in the Public Safety Officers’ Ben-
efits Act of 1978 and its regulations (PSOB
Regulations, 28 C.F.R. pt. 32). The PSOB
regulations set forth criteria to be used in
determining whether individual workers
are public safety officers. For example, the
PSOB Regulations at 28 C.F.R. 32.3 define
“rescue squad or ambulance crew” as
follows: “a squad or crew whose members
are rescue workers, ambulance drivers,
paramedics, health-care responders,
emergency medical technicians, or other
similar workers who—
(1) Are trained in rescue activity or the
provision of emergency medical services;
and
(2) As such members, have the legal
authority and responsibility to—
(i) Engage in rescue activity; or
(ii) Provide emergency medical ser-
vices.”
Rescue activitymeans “search or rescue
assistance in locating or extracting from
danger persons lost, missing, or in immi-
nent danger of serious bodily harm.”
Emergency medical servicesmeans—
“(1) Provision of first-response emer-
gency medical care (other than in a perma-
nent medical-care facility); or
(2) Transportation of persons in med-
ical distress (or under emergency condi-
tions) to medical-care facilities.”
As a general rule, the determination of
the status of an individual as a rescue squad
or ambulance crew member is based on
whether that individual is trained to engage
in rescue activity or to provide emergency
medical services and whether that individ-
ual has legal authority and legal responsi-
bility to engage in rescue activity or pro-
vide emergency medical services.
Thus, an individual’s job title is not de-
terminative of his or her status as a public
safety officer. Instead, the determination is
made based on the facts and circumstances
of the individual’s employment, including
their training, legal authority and legal re-
sponsibility.Example 3has been modified
and anExample 4has been added to clarify
this analysis using the criteria in the PSOB
Regulations. Moreover, these final regula-
tions have not been amended to add addi-
tional job titles to the definition of public
safety officer as suggested by commenters
because an employee’s job title is not de-
terminative of their status as a public safety
officer.
June 7, 20107272010–23 I.R.B.

Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It has also been deter-
mined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to these regulations. It
is hereby certified that these regulations
will not have a significant economic im-
pact on a substantial number of small enti-
ties. This certification is based upon the
fact that these regulations do not require
a collection of information and do not im-
pose any new or different requirements on
small entities. Therefore, a Regulatory
Flexibility Analysis under the Regulatory
Flexibility Act (5 U.S.C. chapter 6) is not
required. Pursuant to section 7805(f) of
the Internal Revenue Code, this notice of
proposed rulemaking has been submitted
to the Chief Council for Advocacy of the
Small Business Administration for com-
ment on its impact on small business.
Drafting Information
The principal author of these regula-
tionsisDonM.Parkinson,Officeofthe
Associate Chief Counsel (Tax Exempt and
Government Entities). However, other
personnel from the IRS and Treasury
Department participated in their develop-
ment.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.132–5 paragraph (h)
is revised to read as follows:
§1.132–5 Working condition fringes.
*****
(h)Qualified nonpersonal use vehi-
cles—(1)In general. Except as provided
in paragraph (h)(2) of this section, 100
percent of the value of the use of a quali-
fied nonpersonal use vehicle (as described
in §1.274–5(k)) is excluded from gross
income as a working condition fringe,
provided that, in the case of a vehicle de-
scribed in §1.274–5(k)(3) through (8), the
use of the vehicle conforms to the require-
ments of paragraphs (k)(3) through (8).
(2)Shared usage of qualified nonper-
sonal use vehicles. In general, a working
condition fringe under this paragraph (h) is
available to the driver and all passengers of
a qualified nonpersonal use vehicle. How-
ever, a working condition fringe under this
paragraph (h) is available only with respect
to the driver and not with respect to any
passengers of a qualified nonpersonal use
vehicle described in §1.274–5(k)(2)(ii)(L)
or (P).
*****
Par. 3. Section 1.274–5 paragraphs (k)
and (l) and the last sentence of paragraph
(m) are revised to read as follows:
§1.274–5 S
ubstantiation Requirements.
*****
(k)Exceptions for qualified nonper-
sonal use vehicles—(1)In general.The
substantiation requirements of section
274(d) and this section do not apply to any
qualified nonpersonal use vehicle (as de-
fined in paragraph (k)(2) of this section).
(2)Qualified nonpersonal use vehi-
cle—(i)In general. For purposes of section
274(d) and this section, the termqualified
nonpersonal use vehiclemeans any ve-
hicle which, by reason of its nature (that
is, design), is not likely to be used more
than ade minimisamount for personal
purposes.
(ii)List of vehicles. Vehicles which are
qualified nonpersonal use vehicles include
the following:
(A) Clearly marked police, fire, and
public safety officer vehicles (as defined
and to the extent provided in paragraph
(k)(3) of this section),
(B) Ambulances used as such or hearses
used as such,
(C) Any vehicle designed to carry cargo
with a loaded gross vehicle weight over
14,000 pounds,
(D) Bucket trucks (cherry pickers),
(E) Cement mixers,
(F) Combines,
(G) Cranes and derricks,
(H) Delivery trucks with seating only
for the driver, or only for the driver plus
a folding jump seat,
(I) Dump trucks (including garbage
trucks),
(J) Flatbed trucks,
(K) Forklifts,
(L) Passenger buses used as such with a
capacity of at least 20 passengers,
(M) Qualified moving vans (as defined
in paragraph (k)(4) of this section),
(N) Qualified specialized utility repair
trucks (as defined in paragraph (k)(5) of
this section),
(O) Refrigerated trucks,
(P) School buses (as defined in section
4221(d)(7)(c)),
(Q) Tractors and other special purpose
farm vehicles,
(R) Unmarked vehicles used by law en-
forcement officers (as defined in paragraph
(k)(6) of this section) if the use is officially
authorized, and
(S) Such other vehicles as the Commis-
sioner may designate.
(3)Clearly marked police, fire, or pub-
lic safety officer vehicles. A police, fire,
or public safety officer vehicle is a vehicle,
owned or leased by a governmental unit, or
any agency or instrumentality thereof, that
is required to be used for commuting by a
police officer, fire fighter, or public safety
officer (as defined in section 402(l)(4)(C)
of this chapter) who, when not on a reg-
ular shift, is on call at all times, provided
that any personal use (other than commut-
ing) of the vehicle outside the limit of the
police officer’s arrest powers or the fire
fighter’s or public safety officer’s obliga-
tion to respond to an emergency is pro-
hibited by such governmental unit. A po-
lice, fire, or public safety officer vehicle is
clearly marked if, through painted insignia
or words, it is readily apparent that the ve-
hicle is a police, fire, or public safety offi-
cer vehicle. A marking on a license plate
is not a clear marking for purposes of this
paragraph (k).
(4)Qualified moving van.Theterm
qualified moving vanmeans any truck or
van used by a professional moving com-
pany in the trade or business of moving
household or business goods if—
(i) No personal use of the van is allowed
other than for travel to and from a move
site (or forde minimispersonal use, such
asastopforlunchonthewaybetweentwo
move sites);
(ii) Personal use for travel to and from
a move site is an irregular practice (that
2010–23 I.R.B.728June 7, 2010

is, not more than five times a month on
average); and
(iii) Personal use is limited to situations
in which it is more convenient to the em-
ployer, because of the location of the em-
ployee’s residence in relation to the loca-
tion of the move site, for the van not to be
returned to the employer’s business loca-
tion.
(5)Qualified specialized utility repair
truck.Thetermqualified specialized util-
ity repair truckmeans any truck (not in-
cluding a van or pickup truck) specifically
designed and used to carry heavy tools,
testing equipment, or parts if—
(i) The shelves, racks, or other perma-
nent interior construction which has been
installed to carry and store such heavy
itemsissuchthatitisunlikelythatthe
truckwillbeusedmorethanade minimis
amount for personal purposes; and
(ii) The employer requires the em-
ployee to drive the truck home in order to
be able to respond in emergency situations
for purposes of restoring or maintaining
electricity, gas, telephone, water, sewer, or
steam utility services.
(6)Unmarked law enforcement vehi-
cles—(i)In general. The substantiation re-
quirements of section 274(d) and this sec-
tion do not apply to officially authorized
uses of an unmarked vehicle by a “law en-
forcement officer”. To qualify for this ex-
ception, any personal use must be autho-
rized by the Federal, State, county, or local
governmental agency or department that
owns or leases the vehicle and employs
the officer, and must be incident to law-en-
forcement functions, such as being able to
report directly from home to a stakeout or
surveillance site, or to an emergency situ-
ation. Use of an unmarked vehicle for va-
cation or recreation trips cannot qualify as
an authorized use.
(ii)Law enforcement officer.Theterm
law enforcement officermeans an individ-
ual who is employed on a full-time basis
by a governmental unit that is responsible
for the prevention or investigation of crime
involving injury to persons or property (in-
cluding apprehension or detention of per-
sons for such crimes), who is authorized
by law to carry firearms, execute search
warrants, and to make arrests (other than
merely a citizen’s arrest), and who regu-
larly carries firearms (except when it is not
possible to do so because of the require-
ments of undercover work). The term “law
enforcement officer” may include an ar-
son investigator if the investigator other-
wise meets the requirements of this para-
graph (k)(6)(ii), but does not include Inter-
nal Revenue Service special agents.
(7)Trucks and vans. The substantiation
requirements of section 274(d) and this
section apply generally to any pickup truck
or van, unless the truck or van has been
specially modified with the result that it is
notlikelytobeusedmorethanade min-
imisamount for personal purposes. For ex-
ample, a van that has only a front bench
for seating, in which permanent shelving
that fills most of the cargo area has been
installed, that constantly carries merchan-
dise or equipment, and that has been spe-
cially painted with advertising or the com-
pany’s name, is a vehicle not likely to be
used more than ade minimisamount for
personal purposes.
(8)Examples. The following exam-
ples illustrate the provisions of paragraph
(k)(3) and (6) of this section:
Example 1. Detective C, who is a “law enforce-
ment officer” employed by a state police department,
headquartered in City M, is provided with an un-
marked vehicle (equipped with radio communica-
tion) for use during off-duty hours because C must be
able to communicate with headquarters and be avail-
able for duty at any time (for example, to report to
a surveillance or crime site). The police department
generally has officially authorized personal use of
the vehicle by C but has prohibited use of the vehicle
for recreational purposes or for personal purposes
outside the state. Thus, C’s use of the vehicle for
commuting between headquarters or a surveillance
site and home and for personal errands is authorized
personal use as described in paragraph (k)(6)(i) of
this section. With respect to these authorized uses the
vehicle is not subject to the substantiation require-
ments of section 274(d) and the value of these uses
is not included in C’s gross income.
Example 2. Detective T is a “law enforcement of-
ficer” employed by City M. T is authorized to make
arrests only within M’s city limits. T, along with all
other officers of the force, is ordinarily on duty for
eight hours each work day and on call during the other
sixteen hours. T is provided with the use of a clearly
marked police vehicle in which T is required to com-
mute to his home in City M. The police department’s
official policy regarding marked police vehicles pro-
hibits its personal use (other than commuting) of the
vehicles outside the city limits. When not using the
vehicle on the job, T uses the vehicle only for com-
muting, personal errands on the way between work
and home, and personal errands within City M. All
use of the vehicle by T conforms to the requirements
of paragraph (k)(3) of this section. Therefore, the
value of that use is excluded from T’s gross income
as a working condition fringe and the vehicle is not
subject to the substantiation requirements of section
274(d).
Example 3. Director C is employed by City M as
the director of the City’s rescue squad and is provided
with a vehicle for use in responding to emergencies.
Director C is trained in rescue activity and has the
legal authority and legal responsibility to engage in
rescue activity. The city’s rescue squad is not a part
of City M’s police or fire departments. The director’s
vehicle is a sedan which is painted with insignia and
words identifying the vehicle as being owned by the
City’s rescue squad. C, when not on a regular shift, is
on call at all times. The City’s official policy regard-
ing clearly marked public safety officer vehicles pro-
hibits personal use (other than for commuting) of the
vehicle outside of the limits of the public safety of-
ficer’s obligation to respond to an emergency. When
not using the vehicle to respond to emergencies, City
M authorizes C to use the vehicle only for commut-
ing, personal errands on the way between work and
home, and personal errands within the limits of C’s
obligation to respond to emergencies. With respect
to these authorized uses, the vehicle is not subject to
the substantiation requirements of section 274(d) and
the value of these uses is not includable in C’s gross
income.
Example 4. Coroner D is employed by County
N to investigate and determine the cause, time, and
manner of certain deaths occurring in the County.
Coroner D also safeguards the property of the de-
ceased, notifies the next of kin, conducts inquests,
and arranges for the burial of indigent persons. D
is provided with a vehicle for use by County N. The
vehicle is to be used in County N business and for
commuting. Personal use other than for commuting
purposes is forbidden. D is trained in rescue activity
but has no legal authority or legal responsibility to en-
gage in rescue activity. D’s vehicle is a sedan which
is painted with insignia and words identifying it as a
County N vehicle. D, when not on a regular shift, is
on call at all times. D does not satisfy the criteria of
a public safety officer under 28 C.F.R. §32.3 (2008).
Thus, D’s vehicle cannot qualify as a clearly marked
public safety officer vehicle. Accordingly, business
use of the vehicle is subject to the substantiation re-
quirements of section 274(d), and the value of any
personal use of the vehicle, such as commuting, is in-
cludable in D’s gross income.
(l)Definitions. For purposes of section
274(d) and this section, the termsautomo-
bileandvehiclehave the same meanings
as prescribed in §1.61–21(d)(1)(ii) and
(e)(2), respectively. Also, for purposes
of section 274(d) and this section, the
termsemployer,employeeandpersonal
usehave the same meanings as prescribed
in §1.274–6T(e).
(m)***However,paragraph(j)(3)of
this section applies to expenses paid or in-
curred after September 30, 2002, and para-
graph (k) applies to clearly marked pub-
lic safety officer vehicles, as defined in
§1.274–5(k)(3), only with respect to uses
occurring after May 19, 2010.
Par. 4. Section 1.274–5T is amended
by revising paragraphs (k) and (l) to read
as follows:
June 7, 20107292010–23 I.R.B.

§1.274–5T Substantiation requirements
(temporary).
*****
(k) and (l) [Reserved]. For further guid-
ance, see §1.274–5(k) and (l).
*****
Par. 5. Section 1.280F–6 is amended
by revising paragraph (b)(2)(ii) to read as
follows:
§1.280F–6 Special rules and definitions.
*****
(b) * * *
(2) * * *
(ii)Exception. The term “listed prop-
erty” does not include any vehicle that is
a qualified nonpersonal use vehicle as de-
fined in section 274(i) and §1.274–5(k).
*****
Steven T. Miller,
Deputy Commissioner
for Services and Enforcement.
Approved May 5, 2010.
Michael Mundaca,
Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on May 18, 2010,
8:45 a.m., and published in the issue of the Federal Register
for May 19, 2010, 75 F.R. 27934)
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term rates
are set forth for the month of June 2010. See Rev.
Rul. 2010-15, page 730.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and Certain
Built-In Losses Following
Ownership Change
The adjusted applicable federal long-term rate is
set forth for the month of June 2010. See Rev. Rul.
2010-15, page 730.
Section 412.—Minimum
Funding Standards
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of June 2010. See Rev. Rul. 2010-15, page 730.
Section 467.—Certain
Payments for the Use of
Property or Services
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of June 2010. See Rev. Rul. 2010-15, page 730.
Section 468.—Special
Rules for Min
ing and Solid
Waste Reclamation and
Closing Costs
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of June 2010. See Rev. Rul. 2010-15, page 730.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
Federal short-term, mid-term, and long-term rates
are set forth for the month of June 2010. See Rev.
Rul. 2010-15, page 730.
Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of June 2010. See Rev. Rul. 2010-15, page 730.
Section 642.—Special
Rules for Credits and
Deductions
Federal short-term, mid-term, and long-term rates
are set forth for the month of June 2010. See Rev.
Rul. 2010-15, page 730.
Section 807.—Rules for
Certain Reserves
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of June 2010. See Rev. Rul. 2010-15, page 730.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of June 2010. See Rev. Rul. 2010-15, page 730.
Section 1274.—Determi-
nation of Issue Price in the
Case 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; ad
justed federal rates;
adjusted federa
l long-term rate and the
long-term exemp
trate.For purposes of
sections 382, 64
2, 1274, 1288, and other
sections of the C
ode, tables set forth the
rates for June 2
010.
Rev. Rul. 2010–15
This revenue ruling provides various
prescribed rates for federal income tax pur-
poses for June 2010 (the current month).
Table 1 contains the short-term, mid-term,
and long-term applicable federal rates
(AFR) for the current month for purposes
of section 1274(d) of the Internal Revenue
Code. Table 2 contains the short-term,
mid-term, and long-term adjusted appli-
cable federal rates (adjusted AFR) for
the current month for purposes of section
1288(b). Table 3 sets forth the adjusted
federal long-term rate and the long-term
tax-exempt rate described in section
382(f). Table 4 contains the appropriate
percentages for determining the low-in-
come housing credit described in section
42(b)(1) for buildings placed in service
during the current month. However, under
section 42(b)(2), the applicable percentage
for non-federally subsidized new build-
ings placed in service after July 30, 2008,
and before December 31, 2013, shall not
be less than 9%. Finally, Table 5 contains
the federal rate for determining the present
value of an annuity, an interest for life
or for a term of years, or a remainder or
a reversionary interest for purposes of
section 7520.
2010–23 I.R.B.730June 7, 2010

REV. RUL. 2010–15 TABLE 1
Applicable Federal Rates (AFR) for June 2010
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR.74%.74%.74%.74%
110% AFR.81%.81%.81%.81%
120% AFR.89%.89%.89%.89%
130% AFR.96%.96%.96%.96%
Mid-term
AFR2.72%2.70%2.69%2.68%
110% AFR2.99%2.97%2.96%
2.95%
120% AFR3.27%3.24%3.23%3.22%
130% AFR
3.54%3.51%
3.49%3.48%
150% AFR
4.09%
4.05%
4.03%4.02%
175% AFR
4.79%4.73%4.70%4.68%
Long-term
AFR4.30%
4.25%
4.23%4.21%
110% AFR4.73%4.68%
4.65%
4.64%
120% AFR
5.17%5.10%5.07%5.05%
130% AFR
5.61%5.53%5.49%5.47%
REV. RUL. 2010–15 TABLE 2
Adjusted AFR for June 2010
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted
AFR
.76%.76%.76%.76%
Mid-term adjusted AFR2.08%2.07%2.06%2.06%
Long-term adjusted
AFR
4.01%3.97%
3.95%
3.94%
REV. RUL. 2010–15 TABLE 3
Rates Under Section 382 for June 2010
Adjusted federal long-term rate for the current month4.01%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted
federal long-term rates for the current month and the prior two months.)4.01%
REV. RUL. 2010–15 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for June 2010
Note: Under Section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after
July 30, 2008, and before December 31, 2013, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credi
t
7.81%
Appropriate percentage for the 30% present value low-income housing credit
3.35%
June 7, 20107312010–23 I.R.B.

REV. RUL. 2010–15 TABLE 5
Rate Under Section 7520 for June 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 interest3.2%
Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of June 2010. See Rev. Rul. 2010-15, page 730.
Section 7520.—Valuation
Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of June 2010. See Rev. Rul. 2010-15, page 730.
Section 7872.—Treatment
of Loans With Below-Market
Interest Rates
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of June 2010. See Rev. Rul. 2010-15, page 730.
2010–23 I.R.B.732June 7, 2010

Part III. Administrative, Procedural, and Miscellaneous
Phase-outofCreditfor
New Qualified Hybrid Motor
Vehicles and New Advanced
Lean Burn Technology Motor
Vehicles
Notice 2010–42
SECTION 1. PURPOSE
This notice announces the credit
phase-out schedule for new advanced lean
burn technology motor vehicles and new
qualified hybrid passenger automobiles
and light trucks sold by Volkswagen Group
of America.
SECTION 2. BACKGROUND
Section 30B(a)(2) of the Internal Rev-
enue Code provides for a credit determined
under § 30B(c) for certain new advanced
lean burn technology motor vehicles.
Section 30B(a)(3) provides for a credit
determined under § 30B(d) for certain new
qualified hybrid motor vehicles. Both the
new advanced lean burn technology motor
vehicle credit and the new qualified hybrid
motor vehicle credit begin to phase out for
a manufacturer’s passenger automobiles
and light trucks in the second calendar
quarter after the calendar quarter in which
at least 60,000 of the manufacturer’s pas-
senger automobiles and light trucks that
qualify for either credit have been sold for
use or lease in the United States (deter-
mined on a cumulative basis for sales after
December 31, 2005). Taxpayers purchas-
ing the manufacturer’svehicles during the
first two calendar quarters of the phase-out
period may claim only 50 percent of the
otherwise allowable credit. Taxpayers
purchasing the manufacturer’s vehicles
during the third and fourth calendar quar-
ters of the phase-out period may claim
only 25 percent of the otherwise allowable
credit. No credit is available for vehicles
purchased after the last day of the fourth
calendar quarter of the phase-out period.
Section 30B(k)(2) provides that the credit
provided by § 30B(a) shall not apply to
any property purchased after December
31, 2010.
Notice 2006–9, 2006–1 C.B. 413, pro-
vides procedures for a vehicle manufac-
turer (or in the case of a foreign vehi-
cle manufacturer, its domestic distributor)
to certify to the Internal Revenue Service
(Service) both (1) that a particular make,
model and model year of vehicle quali-
fies for either the new advanced lean burn
technology motor vehicle credit or the new
qualified hybrid motor vehicle credit and
(2) the amount of the credit allowable with
respect to that vehicle.
Section 5.05 of Notice 2006–9 requires
a manufacturer (or, inthe case of a foreign
vehicle manufacturer, its domestic distrib-
utor) that has received from the Service an
acknowledgement of its certification for a
particular make, model, and model year of
vehicle to submit to the Service a report
of the number of qualified vehicles sold
by the manufacturer (or, in the case of a
foreign vehicle manufacturer, its domestic
distributor) to retail dealers during the cal-
endar quarter. A qualified vehicle is de-
fined for this purpose as any passenger au-
tomobile or light truck that is a new ad-
vanced lean burn technology motor vehi-
cle or a new qualified hybrid motor vehi-
cle.
In accordance with section 5.05 of No-
tice 2006–9, Volkswagen Group of Amer-
ica has submitted quarterly reports that in-
dicate that its cumulative sales of quali-
fied vehicles to retail dealers reached the
60,000-vehicle limit during the calendar
quarter ending March 31, 2010. Accord-
ingly, the credit for all new advanced lean
burn technology motor vehicles or new
qualified hybrid passenger automobiles or
light trucks sold by Volkswagen Group of
America will begin to phase out on July 1,
2010.
SECTION 3. SCOPE OF NOTICE
This notice applies to any make, model,
or model year of new advanced lean burn
technology motor vehicle or new qualified
hybrid passenger automobile or light truck
that is —
(1) sold by Volkswagen Group of
America; and
(2) purchased for use or lease in the
United States on or after July 1, 2010.
SECTION 4. CREDIT AMOUNT
.01In general. If a new advanced lean
burn technology motor vehicle or a new
qualified hybrid passenger automobile or
light truck sold by Volkswagen Group of
America is purchased for use or lease after
July 1, 2010, the allowable credit is as fol-
lows:
(1) For vehicles purchased for use or
lease on or after July 1, 2010, and on
or before December 31, 2010, the credit
is 50 percent of the otherwise allowable
amount determined under § 30B(c) or (d)
(whichever is applicable);
(2) For vehicles purchased for use or
lease on or after January 1, 2011, no credit
is allowable, not because of the phase-out
provisions of § 30B(f) but because the
credits under § 30B(c) and § 30B(d) expire
for vehicles purchased after that date.
.02Certified Vehicles.The following
tables set forth the credit available on or
after July 1, 2010, for advanced lean burn
motor vehicles for which Volkswagen
Group of America received an acknowl-
edgement of its certification from the
Service.
June 7, 20107332010–23 I.R.B.

Table 1
July 1, 2010 — December 31, 2010
Model YearsModel
Credit Amount
2009Audi Q7 3.0L TDI
$575
2010Audi Q7 3.0L TDI
$575
2010Audi A3 2.0L TDI
$650
2010Volkswagen Golf 2.0L TDI (automatic)
$850
2010Volkswagen Golf 2.0L TDI (manual)
$650
2009Volkswagen Jetta 2.0L TDI Sedan
$650
2010Volkswagen Jetta 2.0L TDI Sedan
$650
2009Volkswagen Jetta 2.0L TDI SportWagon
$650
2010Volkswagen Jetta 2.0L TDI SportWagon
$650
2009Volkswagen Touareg 3.0L TDI
$575
2010Volkswagen Touareg 3.0L TDI
$575
Table 2
On or after January 1, 2011
Model YearsModel
Credit Amount
2009Audi Q7 3.0L TDI
$0.00
2010Audi Q7 3.0L TDI
$0.00
2010Audi A3 2.0L TDI
$0.00
2010Volkswagen Golf 2.0L TDI (automatic)
$0.00
2010Volkswagen Golf 2.0L TDI (manual)
$0.00
2009Volkswagen Jetta 2.0L TDI Sedan
$0.00
2010Volkswagen Jetta 2.0L TDI Sedan
$0.00
2009Volkswagen Jetta 2.0L TDI SportWagon
$0.00
2010Volkswagen Jetta 2.0L TDI SportWagon
$0.00
2009Volkswagen Touareg 3.0L TDI
$0.00
2010Volkswagen Touareg 3.0L TDI
$0.00
The principal author of this notice is
Patrick S. Kirwan of the Office of Asso-
ciate Chief Counsel (Passthroughs & Spe-
cial Industries). For further information
regarding this notice, contact Mr. Kirwan
at (202) 622–3110 (not a toll-free call).
Qualifying Therapeutic
Discovery Project Credit
Notice 2010–45
SECTION 1. PURPOSE
This notice establishes the qualifying
therapeutic discovery project program
under § 48D of the Internal Revenue
Code (Code), as added to the Code by
section 9023(a) of the Patient Protec-
tion and Affordable Care Act of 2010
(Pub. L. 111–148) (the Affordable Care
Act). This notice provides the procedures
under which an eligible taxpayer may
apply for certification from the Internal
Revenue Service (Service) of a qualified
investment with respect to a qualifying
therapeutic discovery project as eligible
for a credit, or for certain taxpayers, a
grant under the program. The Service will
consult with the Department of Health and
2010–23 I.R.B.734June 7, 2010

Human Services (HHS) in conducting this
program as described below.
SECTION 2. BACKGROUND
.01 Section 46 of the Code provides that
the amount of the investment credit for any
taxable year is the sum of the credits listed
in § 46. That list includes the qualifying
therapeutic discovery project credit.
.02 The qualifying therapeutic discov-
ery project credit is provided under § 48D.
Section 48D(a) of the Code provides
that the qualifying therapeutic discovery
project credit for any taxable year is an
amount equal to 50 percent of the quali-
fied investment (as defined in § 48D(b))
for that taxable year with respect to any
qualifying therapeutic discovery project
(as defined in § 48D(c)(1)) of an eligible
taxpayer (as defined in § 48D(c)(2)). The
amount that is treated as a qualified invest-
ment shall not exceed the amount certified
under section 5 of this notice as eligible
for the credit under §48D.
.03 Section 48D(d)(1)(B) of the Code
provides that the total amount of credits
that may be allocated under the qualify-
ing therapeutic discovery project program
may not exceed $1 billion for the 2-year
period beginning with 2009.
.04 Section 48D(d)(3) of the Code spec-
ifies the criteria that must be considered in
determining the qualifying therapeutic dis-
covery projects with respect to which qual-
ified investments may be certified under
§ 48D(d)(1)(A).
.05 The at-risk rules in § 49 of the Code
and the recapture and other special rules
in § 50 apply to the qualifying therapeutic
discovery project credit.
.06 Section 48D applies to amounts
paid or incurred after December 31, 2008,
in taxable years beginning after that date
under section 9023(f) of the Affordable
Care Act.
.07 Section 9023(e) of the Affordable
Care Act provides that taxpayers may re-
ceive grants in lieu of qualified therapeutic
discovery project credits.
SECTION 3. ESTABLISHMENT OF
THE QUALIFYING THERAPEUTIC
DISCOVERY PROJECT PROGRAM
Section 48D(d)(1) of the Code pro-
vides that not later than 60 days af-
ter March 23, 2010, the date of the
enactment of the Affordable Care Act, the
Secretary of the Treasury or his delegate
(the Secretary), in consultation with the
Secretary of Health and Human Services,
shall establish a qualifying therapeutic
discovery project program to consider
and award certifications for qualified
investments eligible for the credit to
qualifying therapeutic discovery project
sponsors. The Treasury Department and
the Service hereby establish the qualifying
therapeutic discovery project program
under the procedures set forth in sections
5 through 11 of this notice.
SECTION 4. DEFINITIONS
The following definitions apply for pur-
poses of § 48D and this notice:
.01Qualified Investment.
(1) For purposes of § 48D(a), a qual-
ified investment under § 48D(b) of the
Code for any taxable year is the aggre-
gate amount of the costs paid or incurred
in the taxable year for expenses necessary
for and directly related to the conduct of
a qualifying therapeutic discovery project
(as defined in section 4.02 of this notice).
(2) The amount that is treated as qual-
ified investment for all taxable years with
respect to any qualifying therapeutic dis-
covery project may not exceed the amount
certified by the Secretary as eligible for the
credit.
(3) The qualified investment for any
taxable year with respect to any qualifying
therapeutic discoveryproject will not take
into account any cost (a) for remuneration
for any employee described in § 162(m)(3)
of the Code, (b) for interest expenses, (c)
for facility maintenance expenses (as de-
fined in section 4.04 of this notice), (d)
that is identified as a service cost under
§ 1.263A–1(e)(4) of title 26, Code of Fed-
eral Regulations, or (e) for any other ex-
pense as determined by the Secretary.
(4) For purposes of section 4.01(3)(e) of
this notice, the Secretary has determined
that a qualified investment should be re-
duced by the amount of any grant excluded
from gross income under § 61 of the Code,
unless the grant can only be used for costs
not included in the definition of a qual-
ified investment under section 4.01(1) of
this notice.
(5) In the case of costs described in sec-
tion 4.01(1) of this notice that are paid for
property of a character subject to an al-
lowance for depreciation, rules similar to
rulesof§46(c)(4)and(d)oftheCode(as
in effect on the day before the date of en-
actment of the Revenue Reconciliation Act
of 1990) apply.
(6) An investment will be considered
a qualified investment only if that invest-
ment is made in a taxable year beginning
in 2009 or 2010.
.02Qualifying Therapeutic Discovery
Project. A qualifying therapeutic discov-
ery project under § 48D(c)(1) of the Code
means a project that is designed:
(1) To treat or prevent diseases or condi-
tions by conducting pre-clinical activities,
clinical trials, and clinical studies, or carry-
ing out research protocols, for the purpose
of securing approval of a product under
section 505(b) of the Federal Food, Drug,
and Cosmetic Act or section 351(a) of the
Public Health Service Act,
(2) To diagnose diseases or conditions
or to determine molecular factors related
to diseases or conditions by developing
molecular diagnostics to guide therapeutic
decisions, or
(3) To develop a product, process, or
technology to further the delivery or ad-
ministration of therapeutics.
.03Eligible Taxpayer.Aneligibletax-
payer is a taxpayer who employs not more
than 250 employees in all businesses of the
taxpayer at the time of the submission of
the application under § 48D(d)(2) of the
Code. All persons treated as a single em-
ployer under § 52(a) or (b), or § 414(m) or
(o), must be so treated for purposes of the
definition of an eligible taxpayer. For pur-
poses of this section, the term “employee”
includes both full-time and part-time em-
ployees but does not include leased em-
ployees.
.04Facility Maintenance Expenses.Fa-
cility maintenance expenses are costs paid
or incurred to maintain a facility, includ-
ing (1) mortgage or rent payments, (2) in-
surance payments, (3) utility and mainte-
nance costs, and (4) costs of employment
of maintenance personnel.
SECTION 5. QUALIFYING
THERAPEUTIC DISCOVERY
PROJECT PROGRAM
.01In General. The Service will cer-
tify an eligible taxpayer’s qualified invest-
ment associated with a qualifying thera-
peutic discovery project under the qualify-
ing therapeutic discovery project program,
June 7, 20107352010–23 I.R.B.

for which an application has been submit-
ted pursuant to section 6 of this notice,
only if:
(1) HHS determines that the taxpayer’s
project is a qualifying therapeutic discov-
ery project (as defined in section 4.02 of
this notice);
(2) HHS determines that the taxpayer’s
project shows reasonable potential (a) to
result in new therapies (i) to treat areas of
unmet medical need, or (ii) to prevent, de-
tect, or treat chronic or acute diseases and
conditions, (b) to reduce long-term health
care costs in the United States, or (c) to sig-
nificantly advance the goal of curing can-
cer within the 30-year period beginning on
May 21, 2010; and
(3) The Service determines that the tax-
payer’s project is among those projects that
have the greatest potential (a) to create and
sustain (directly or indirectly) high qual-
ity, high-paying jobs in the United States,
and (b) to advance United States competi-
tiveness in the fields of life, biological, and
medical sciences.
.02Program Specifications.
(1) A taxpayer must file with the
Service a separate application under
§ 48D(d)(2)(A) of the Code for each qual-
ifying therapeutic discovery project for
which it is seeking certification of a qual-
ified investment. A primary allocation
round will be conducted in accordance
with the procedures set forth in this notice
to issue certifications for both qualified in-
vestments made in taxable years beginning
in 2009 and qualified investments made
in taxable years beginning in 2010. If any
portion of the $1 billion available under
§ 48D(d)(1)(B) for allocation remains un-
allocated after this primary allocation, one
or more additional allocation rounds may
be conducted.
(2) For the primary 2009–2010 alloca-
tion round, an application for certification
may be filed from the date the application
form is released (see section 6.02 of this
notice), through July 21, 2010. Applica-
tions for certification will not be accepted
if delivered after July 21, 2010. Section
7502 applies in determining the timeliness
of any application for § 48D certification.
Under § 7502, the date of the United States
postmark stamped on the cover of an appli-
cation shall be deemed the date of delivery.
See section 6 of this notice and Appen-
dix A to this notice for the information re-
quired to be filed as part of the application.
See section 10 of this notice and Appendix
B of this notice for a consent to disclosure
that an applicant may file with the applica-
tion. Each application will be subject to a
preliminary review, which will enable the
Service to determine whether the applicant
is an eligible taxpayer (as defined in sec-
tion 4.03 of this notice) and whether the
application is otherwise complete. Prelim-
inary review of timely-filed applications
will end on September 30, 2010.
(3) Under § 48D(d)(2)(B) of the Code,
the Secretary is required to take action to
approve or deny any application within
30 days of the submission of the appli-
cation. Applications will be considered
submitted for purposes of § 48D(d)(2)(B)
on October 1, 2010, the day after the
preliminary review ends. An application
for certification may include a request
for certification of aproject’s costs under
section 4.01(1) of this notice for taxable
years beginning in 2009, 2010, or both.
(4) The Service will determine whether
to certify all or a portion of a taxpayer’s
qualified investment eligible for the thera-
peutic discovery project credit or grant af-
ter HHS has completed its review of all ap-
plications submitted by eligible taxpayers
in accordance with section 5.01(1) and (2)
of this notice (see section 6 of this notice
for the requirements applicable to the ap-
plication for § 48D certification).
(5) The Service will certify all or a por-
tion of an eligible taxpayer’s qualified in-
vestment for each qualifying therapeutic
discovery project for which an application
has been submitted pursuant to section 6
of this notice that meets the certification
requirements under section 5.01 of this no-
tice. The aggregate amount of qualified in-
vestments that will be certified by the Ser-
vice will not exceed $2 billion. The total
amount of credits and grants allocated un-
der the program will not exceed the $1 bil-
lion limitation of § 48D(d)(1)(B). The Ser-
vice will certify an equal amount of quali-
fied investment for each project that meets
the certification requirements under sec-
tion 5.01 of this notice. Nevertheless, in no
case will the Service certify more than the
amount of the qualified investment attrib-
utable to a project. If a project would oth-
erwise receive certification for an amount
of qualified investment that exceeds the
qualified investment described in the ap-
plication as attributable to the project, the
unused certification amount will be appor-
tioned equally among all other projects re-
ceiving a certification for only a portion of
their qualified investments. Such reappor-
tionment will continue until no project re-
ceives certification for an amount that ex-
ceeds the qualified investment described
in the application as attributable to the
project.
(6) For purposes of applying the limita-
tion specified in section 5.02(5) of this no-
tice, a project’s qualified investment will
be considered to include any qualified in-
vestment made or expected to be made in
a taxable year beginning in 2009 or 2010
or both, in each case as represented by the
taxpayer in its application for certification.
See Appendix A for further information
regarding the information required to be
submitted with respect to qualified invest-
ments made or expected to be made in con-
nection with a qualifying therapeutic dis-
covery project.
(7) In addition to the limitation speci-
fied in section 5.02(5) of this notice, the
Service will not certify more than $10
million as a qualified investment for any
single taxpayer, such that no taxpayer
shall be allocated more than $5 million
in credits or grants in the aggregate for
2009 and 2010, regardless of the number
of projects the taxpayer sponsors. If a tax-
payer would otherwise receive certifica-
tion for an amount of qualified investment
that exceeds this $10 million threshold,
the amount in excess of $10 million will
be apportioned equally among all other
projects receiving a certification for only
a portion of their qualified investments.
Such reapportionment will continue un-
til no taxpayer receives certification for
an amount that exceeds the $10 million
threshold.
(8) In the primary 2009–2010 allocation
round, the Service will approve or deny the
taxpayer’s application for § 48D certifica-
tion no later than October 29, 2010, which
is within 30 days after the date timely-filed
applications will be considered to be sub-
mitted pursuant to section 5.02(3), and will
notify the taxpayer, by letter, of its deci-
sion. If the application for certification is
approved, the date of the certification let-
ter will be treated as the approval date.
(9) If the taxpayer’s application for
§ 48D certification is approved by the
Service, then a certification letter approv-
ing the application will state the amount
of qualified investment that is certified
2010–23 I.R.B.736June 7, 2010

as eligible for the credit or grant under
§ 48D and the amount of the credit or
grant allocated to the taxpayer for the tax-
payer’s project(s). If the amount of the
taxpayer’s qualified investment certified
by the Service is less than the taxpayer’s
total qualified investment for 2009 and
2010, then the taxpayer may attribute the
certification to any of the qualified invest-
ment costs of the project(s) to which the
certification relates, subject to the provi-
sions of section 5.02(10) of this notice.
(10) If the taxpayer requests a grant
for both 2009 and 2010 and the aggregate
amount of the taxpayer’s qualified invest-
ment certified by the Service for both 2009
and 2010 is less than the taxpayer’s total
qualified investment for 2009 and 2010,
then the taxpayer’s qualified investment
will be attributed to 2009 before 2010.
(11) If the amount of the taxpayer’s
certification by the Service is based on a
qualified investment expected to be made,
and the amount certified exceeds the tax-
payer’s actual qualified investment for
2009 and 2010, then thecredit allocated to
the taxpayer shall be reduced by 50 percent
of the difference between the qualified
investment certified by the Service and the
taxpayer’s actual qualified investment.
(12) If an applicant has an overpayment
after receiving a certification and claiming
a credit under § 48D, the rules of the Code
with respect to overpayments of tax, in-
cluding the rules of § 6402 relating to off-
sets, will apply. If an applicant elects to
receive a grant, the offset provisions under
Title 31, rather than § 6402 of the Code,
will apply.
SECTION 6. APPLICATION FOR § 48D
CERTIFICATION
.01 A separate application for certifica-
tion must be submitted for each project for
which an eligible taxpayer is seeking certi-
fication of a qualified investment. If an ap-
plication for certification does not include
all of the information required by section
6.02 of this notice and meet the require-
ments of section 7.01 and 7.02 of this no-
tice, the Service and HHS may decline to
consider the application.
.02Application for § 48D Certification.
Applications for § 48D certification will be
made on Form 8942,“Application for Cer-
tification of Qualified Investments Eligible
for Credits and Grants Under the Quali-
fying Therapeutic Discovery Project Pro-
gram.”Form 8942 and its instructions will
provide the manner for submitting applica-
tions. Form 8942 will be released no later
than June 21, 2010, and will be available
to the public onwww.irs.gov.
SECTION 7. OTHER REQUIREMENTS
.01Signature. Each submission under
section 6 of this notice must be signed and
dated by the taxpayer in accordance with
instructions to Form 8942. A stamped sig-
nature or faxed signature is not permitted.
.02Penalties of Perjury Statement.
(1) Each application under section 6 of
this notice must be accompanied by the
following declaration: “Under penalties of
perjury, I declare that I have examined this
submission, including the accompanying
documents, and, to the best of my knowl-
edge and belief, all of the facts contained
herein are true, correct, and complete.”
(2) The declaration must be signed and
dated by the taxpayer in accordance with
instructions to Form 8942. The person
signing for the taxpayer must have per-
sonal knowledge of the facts. Further, the
declaration must be signed by a person au-
thorized to bind the taxpayer such as an
officer on behalf of a corporation, a gen-
eral partner on behalf of a local-law part-
nership, a member-manager on behalf of a
limited liability company, a trustee on be-
half of a trust, and the proprietor in the case
of a sole proprietorship. A stamped signa-
ture or faxed signature is not permitted.
.03Significant Change in Plans.The
taxpayer must inform the Service if the
plans for a qualifying therapeutic dis-
covery project changein any significant
respect from the information set forth in
the application for § 48D certification at
any time prior to the date of certifica-
tion. A significant change is any change,
including any change that would affect
the continuing accuracy of a statement
made in the application, that a reasonable
person would conclude might have in-
fluenced HHS’ evaluation. The taxpayer
must contact Candace Fisher of the Small
Business and Self-Employed Division at
(651) 312–2109 (not a toll-free number),
or by e-mail atacasec9023@irs.gov,at
the time the taxpayer determines there has
been a significant change to the plans for
the project.
.04Effect of Certification and Alloca-
tion. A certification and allocation by the
Service is not a determination that the costs
described in the application were or will
be, in fact, paid or incurred or that the costs
were or will be necessary for and directly
related to the conduct of a qualified thera-
peutic discovery project under § 48D(b) of
the Code.
.05No Right to a Conference or Ap-
peal. A taxpayer does not have a right to
a conference relating to any matters under
this notice. Further, a taxpayer does not
have a right to appeal the decisions made
under this notice (including the amount of
credit allocated to the project and whether
or not to certify the project) to any official
of HHS or the Service or the Department
of the Treasury.
SECTION 8. GRANTS IN LIEU OF
TAX CREDITS FOR QUALIFIED
INVESTMENTS IN A QUALIFYING
THERAPEUTIC DISCOVERY
PROJECT
.01Background.
(1) Section 9023(e)(1) of the Afford-
able Care Act provides that upon applica-
tion, the Secretary will provide a grant to
each person who makes a qualified invest-
ment in a qualifying therapeutic discovery
project in the amount of 50 percent of the
investment. No grant will be made with re-
spect to any investment unless the invest-
ment is made during a taxable year begin-
ning in 2009 or 2010.
(2) Section 9023(e)(2)(A) of the Af-
fordable Care Act provides that, at the
stated election of the applicant, an applica-
tion for certification under § 48D(d)(2) of
the Code for a credit for the taxable year
of the applicant which begins in 2009 will
be considered to be an application for a
grant under section 9023(e)(1) for the tax-
able year.
(3) Section 9023(e)(2)(B) of the Af-
fordable Care Act provides that an appli-
cation for a grant under section 9023(e)(1)
for a taxable year beginning in 2010 must
be submitted (i) not earlier than the day af-
ter the last day of the taxable year, and (ii)
not later than the due date (including ex-
tensions) for filing the return of tax for the
taxable year.
(4) Section 9023(e)(2)(C) of the Af-
fordable Care Act provides that an appli-
cation for a grant under section 9023(e)(1)
June 7, 20107372010–23 I.R.B.

must include the information and be in the
form as the Secretary may require to state
the amount of the credit allowable (but
for the receipt of the grant under section
9023(e)(1)) under § 48D for the taxable
year for the qualified investment with re-
spect to which the application is made.
(5) Section 9023(e)(3)(A) of the Af-
fordable Care Act provides that the Secre-
tary must make payment of the amount of
any grant during the 30-day period begin-
ning on the later of (i) the date of the ap-
plication for the grant, or (ii) the date the
qualified investment for which the grant is
being made is made.
(6)Section9023(e)(4)oftheAfford-
able Care Act provides that the term quali-
fied investment means a qualified invest-
ment that is certified under § 48D(d) of
the Code for purposes of the credit under
§48D.
.02Application Procedures for Grants.
(1) For taxable years beginning in 2009
or 2010, at the election of an applicant on
Form 8942, an application for § 48D cer-
tification for a credit will be an applica-
tion for a grant. The applicant must affir-
matively elect on Form 8942 to apply for
a grant for 2009 or 2010. If an applicant
is submitting an application for certifica-
tion of a qualified investment made in both
2009 and 2010, then the applicant may ap-
ply for a grant for 2009 only, 2010 only, or
both 2009 and 2010.
(2)AvalidelectiononForm8942toap-
ply for a grant for a taxpayer’s 2010 tax-
able year will be considered effective the
day after the last day of the taxpayer’s 2010
taxable year. If a taxpayer receives a cer-
tification for a credit for its 2010 taxable
year but did not request a grant on Form
8942 at the time it filed its application, the
taxpayer may request a grant in lieu of the
credit by filing an amended Form 8942, in-
cluding all information required in section
8.02(3) and (4) of this notice, requesting a
grant not later than the due date (including
extensions) for filing the return of tax for
the taxpayer’s 2010 taxable year in which
the certified qualified investment to which
the grant relates was made.
(3) An election on Form 8942 to ap-
ply for a grant must include the appli-
cant’s Data Universal Numbering System
(DUNS) number from Dun and Brad-
street. If the applicant does not already
have a DUNS number, it may request
one at no cost by calling the dedicated
toll-free DUNS Number request line at
1–866–705–5711.
(4) To make a valid election, ap-
plicants for a grant must also regis-
ter with the Central Contractor Reg-
istration (CCR). To register, go to
www.ccr.gov/startregistration.aspx.The
registration must be completed before a
payment can be made.
(5) When an application for certifica-
tion of qualified investment in a qualifying
therapeutic discovery project is approved
and the applicant has requested a grant in
lieu of a credit, the Service will send a let-
ter to the applicant in the same manner as
described in section 5 of this notice. The
notice will inform the grant applicant that
the payment of the grant will be made by
the Department of Treasury.
(6)Payment of Grants for Taxpayers
with Taxable Years Beginning in 2009.
(a) For a certified applicant that re-
quests a grant for its 2009 taxable year
on a timely-filed Form 8942, or on an
amended Form 8942 filed no later than
September 30, 2010, the Department of
Treasury will authorize payment to the
certified applicant for its 2009 taxable
year no later than October 29, 2010. If
an applicant files an amended Form 8942
requesting a grant for its 2009 taxable year
after September 30, 2010, and not later
than the due date (including extensions)
for filing the return for the 2009 taxable
year, then the Department of Treasury
will authorize payment to the certified
applicant for its 2009 taxable year within
30 days after the request for the grant is
filed.
(b) For an applicant with a 2009 fiscal
year ending on or before September 30,
2010, the Department of Treasury will au-
thorize full payment to the certified appli-
cant no later than October 29, 2010, if the
applicant’s qualified investment reported
on Form 8942 as having been paid or in-
curred by September 30, 2010, is equal to,
or greater than, the amount of the qualified
investment certified by the Service.
(c) For an applicant with a 2009 taxable
year ending after September 30, 2010, if
the applicant’s qualified investment as re-
ported on Form 8942 as having been paid
or incurred by September 30, 2010, is less
than the qualified investment certified by
the Service, then the Department of Trea-
sury will authorize payment to the certified
applicant no later than October 29, 2010,
for a grant equal to 50 percent of the appli-
cant’s qualified investment as reported on
Form 8942 as having been paid or incurred
by September 30, 2010. The remaining
amount of the grant will be authorized for
payment within 30 days after the end of the
applicant’s 2009 taxable year.
(7) The Department of Treasury will
make payment to the certified applicant for
its 2010 taxable year during the 30-day pe-
riod beginning on the day after the last day
of the 2010 taxable year if the applicant
requested a grant on the Form 8942 filed
by July 21, 2010, or if the taxpayer files
an amended Form 8942 requesting a grant
pursuant to section 8.02(2) of this notice
no later than the last date of its 2010 tax-
able year. If the taxpayer files an amended
Form 8942 requesting a grant pursuant to
section 8.02(2) of this notice after the end
of its 2010 taxable year and not later than
the due date (including extensions) for fil-
ing the return for the 2010 taxable year,
then the Department of Treasury will au-
thorize payment to thecertified applicant
for its 2010 taxable year within 30 days af-
ter the request for the grant is filed.
.03Special Rules.
(1) Section 48D(f)(1) of the Code pro-
vides that in the case of any investment
with respect to which the Secretary makes
a grant under section 9023(e) of the Af-
fordable Care Act, no credit will be deter-
mined with respect to the investment for
the taxable year in which the grant is made
or any subsequent taxable year.
(2) Section 48D(f)(2) of the Code pro-
vides that if a credit was determined under
§ 48D with respect to the investment for
any taxable year ending before the grant is
made (A) the tax imposed under subtitle
A on the taxpayer for the taxable year in
which the grant is made will be increased
by so much of the credit as was allowed
under § 38, (B) the general business carry-
forwards under § 39 will be adjusted so as
to recapture the portion of the credit which
was not so allowed, and (C) the amount
of the grant will be determined without re-
gard to any reduction in the basis of any
property of a character subject to an al-
lowance for depreciation by reason of the
credit.
(3) Section 48D(f)(3) of the Code pro-
vides that a grant made by the Secretary
under section 9023(e) of the Affordable
Care Act will not be includible in the gross
income of the taxpayer.
2010–23 I.R.B.738June 7, 2010

(4) Section 9023(e)(5)(A) of the Af-
fordable Care Act provides that in mak-
ing grants, the Secretary will apply rules
similar to the rules of § 50 of the Code.
In applying such rules, any increase in tax
under chapter 1 of the Code by reason of
an investment ceasing to be a qualified in-
vestment will be imposed on the person to
whom the grant was made.
(5) Section 9023(e)(5)(B)(i) of the Af-
fordable Care Act provides that if the
amount of the grant made under section
9023(e) exceeds the amount allowable as a
grant, the excess must be recaptured under
section 9023(e)(5)(A)as if the investment
to which the excess portion of the grant
related had ceased to be a qualified in-
vestment immediately after the grant was
made.
(6) Section 9023(e)(5)(B)(ii) of the Af-
fordable Care Act provides that in no event
will the amount of a grant, the identity of
the person to whom the grant was made,
or a description of the investment with
respect to which the grant was made be
treated as return information for purposes
of § 6103 of the Code.
(7)Section9023(e)(6)oftheAfford-
able Care Act provides that the Secretary
will not make any grant to (A) any Fed-
eral, State, or local government (or any po-
litical subdivision, agency, or instrumen-
tality thereof), (B) any organization de-
scribed in § 501(c) of the Code and ex-
empt from tax under § 501(a), (C) any en-
tity referred to in § 54(j), or (D) any part-
nership or other pass-thru entity any part-
ner (or other holder of an equity or profits
interest) of which is described in section
9023(e)(6)(A) through (C). A partnership
or pass-thru entity is not eligible for a grant
if any direct or indirect partner (or other
holder of an equity or profits interest) is de-
scribed in section 9023(e)(6)(A) through
(C). A partnership or other pass-thru en-
tity must determine if any of its partners
or other holders of any equity or profits in-
terest is described in section 9023(e)(6)(A)
through (C) before the partnership or the
pass-thru entity may apply for a grant.
SECTION 9. SPECIAL RULES FOR
CREDITS AND GRANTS IN LIEU OF
TAX CREDITS
.01 Section 48D(e)(1) of the Code pro-
vides that if a credit is allowed for an ex-
penditure related to property of a character
subject to an allowance for depreciation,
the basis of the property must be reduced
by the amount of the credit.
.02 Section 48D(e)(2)(A) of the Code
provides that a credit will not be allowed
for any investment for which bonus de-
preciation is allowed under § 168(k),
§ 1400L(b)(1), or § 1400N(d)(1).
.03 Section 48D(e)(2)(B) of the Code
provides that no deduction will be allowed
for the portion of the expenses otherwise
allowable as a deduction taken into ac-
count in determining the credit for the tax-
able year which is equal to the amount of
the credit determined for the taxable year
attributable to that portion. This rule does
notapplytoexpensesrelated to property
of a character subject to an allowance for
depreciation the basis of which is reduced
under § 48D(e)(1), or which are described
in § 280C(g).
.04 Section 48D(e)(2)(C)(i) of the
Code provides that, except as provided
in § 48D(e)(2)(C)(ii), any expenses taken
into account for a taxable year must not be
taken into account for purposes of deter-
mining the credit allowable under § 41 or
§ 45C for the taxable year.
.05 Section 48D(e)(2)(C)(ii) of the
Code provides that any expenses for any
taxable year which are qualified research
expenses (within the meaning of § 41(b))
must be taken into account in determin-
ing base period research expenses for
purposes of applying § 41 to subsequent
taxable years.
.06 Section 280C(g)(1) of the Code
provides that, in general, no deduction will
be allowed for that portion of the quali-
fied investment (as defined in § 48D(b))
otherwise allowable as a deduction for the
taxable year which (A) would be qualified
research expenses (as defined in § 41(b)),
basic research expenses (as defined in
§ 41(e)(2)), or qualified clinical testing
expenses (as defined in § 45C(b)) if the
credit under § 41 or § 45C were allowed
with respect to the expenses for the taxable
year, and (B) is equal to the amount of
the credit determined for the taxable year
under § 48D(a), reduced by (i) the amount
disallowed as a deduction by reason of
§ 48D(e)(2)(B), and (ii) the amount of any
basis reduction under § 48D(e)(1).
.07 Section 280C(g)(2) of the Code
provides that, in the case of expenses de-
scribed in § 280C(g)(1) taken into account
in determining the credit under § 48D
for the taxable year, if (A) the amount
of the portion of the credit determined
with respect to the expenses, exceeds (B)
the amount allowable as a deduction for
the taxable year for the expenses (deter-
mined without regard to § 280C(g)(1)),
the amount chargeable to capital account
for the taxable year for the expenses must
be reduced by the amount of the excess.
.08 For controlled groups, § 280C(g)(3)
of the Code provides that § 280C(b)(3) ap-
plies for purposes of § 280C(g).
.09 The rules under this section 9 apply
to credits under § 48D of the Code and
grants in lieu of tax credits.
SECTION 10. DISCLOSURE OF
INFORMATION
.01Announcement. Consistent with
§ 48D(d)(4) of the Code and section
9023(e)(5)(B)(ii) of the Affordable Care
Act, the Service will, upon making a
certification for credit or grant, publicly
disclose the identity of the applicant and
the amount of the credit or grant with re-
spect to the applicant. In addition, upon
making a certification with respect to tax-
payers that have either elected to receive
a grant for the 2009 tax year or provided
the consent as provided in section 10.02 of
this notice with respect to their application
for credit, the Service will also publish
the type and location of the project that is
the subject of the application for § 48D
qualifying therapeutic discovery project
certification in the event the project re-
ceives an allocation.
.02Consent to disclosure of informa-
tion concerning the allocation. Section
48D(d)(4) of the Code provides that the
Service will, upon making a certifica-
tion, publicly disclose the identity of the
applicant and the amount of the credit
with respect to the applicant. Section
9023(e)(5)(B)(ii) of the Affordable Care
Act provides that in no event will the
amount of a grant, the identity of the
person to whom the grant was made, or
a description of the investment with re-
spect to which the grant was made be
treated as return information for purposes
of § 6103. Thus, the statute authorizes
public disclosure of more information for
taxpayers awarded allocation for a grant
than for taxpayers awarded allocation for
a credit. In order to provide the public
with the same information on taxpayers
June 7, 20107392010–23 I.R.B.

who are allocated credits as receive grants,
the Service is seeking authorization to
publish the type of qualifying therapeutic
discovery project that is the subject of the
application for § 48Dcertification in those
instances where disclosure of that infor-
mation is not authorized by the statute.
Therefore, the Service requests that each
taxpayer that applies for a credit, or for a
grant for a taxable year beginning in 2010,
submit with the application for § 48D
certification a declaration, consenting to
the Service’s disclosure of the type and
location of the project that is the subject
of the application for § 48D qualifying
therapeutic discoveryproject certification
in the event the project receives an allo-
cation. To provide a valid consent, the
declaration must be in the form set forth
in Appendix B. A taxpayer is not required
to provide a declaration consenting to
disclosure of certain information in order
to receive an allocation of the qualifying
therapeutic discovery project credit. Nor
is a declaration consenting to disclosure
needed if the taxpayer elects to receive a
grant for a taxable year beginning in 2009.
The Service will not publish any return
information with respect to applications
that are not awarded an allocation of the
qualifying therapeutic discovery project
credit or grant.
.03FOIA Requests. Anyone interested
in submitting a request for records un-
der the FOIA with respect to the qual-
ifying therapeutic discovery project pro-
gram under § 48D (including a request for
records relating to the HHS recommenda-
tion) should direct a request that conforms
to the Service’s FOIA regulations, found at
26 C.F.R. § 601.702, to the following ad-
dress:
IRS FOIA Request
HQ FOIA
Stop 211
2385 Chamblee Tucker Road
Chamblee, GA 30341
Except for the information the Service
is authorized to make available to the pub-
lic under § 48D(d)(4) of the Code, section
9023(e)(5)(B)(ii) of the Affordable Care
Act, or pursuant to an applicant’s con-
sent, the Service expects that such infor-
mation would be exempt from disclosure
under one or more of the following Free-
dom of Information Act (FOIA) exemp-
tions: 5 U.S.C. § 552(b)(3), in conjunc-
tion with § 6103 of the Code with respect
to returns and return information, 5 U.S.C.
§ 552(b)(4) with respect to trade secret or
other confidential commercial or financial
information, 5 U.S.C. § 552(b)(5) with re-
spect to predecisional and deliberative ma-
terial, and 5 U.S.C. § 552(b)(6) with re-
spect to personal information.
SECTION 11. EFFECTIVE DATE
This notice is effective May 21, 2010.
SECTION 12. PAPERWORK
REDUCTION ACT
The collection of information contained
in this notice has been reviewed and ap-
proved by the Office of Management and
Budget (OMB) in accordance with the Pa-
perwork Reduction Act (44 U.S.C. § 3507)
under control number 1545–2175.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collections of information in this
notice are in sections 5, 6, 7, 8, and Ap-
pendix A of this notice. Form 8942,Ap-
plication for Certification of Qualified In-
vestments Eligible for Credits,willbeused
to collect the information in sections 5,
6, 7, and 8. This information is required
to obtain an allocation of qualifying ther-
apeutic discovery project credit or grant.
This information will be used by the Ser-
vice to verify that the taxpayer is eligi-
ble for the qualifying therapeutic discov-
ery project credit or grant. The collection
of information is required to obtain bene-
fit. The likely respondents are business or
other for-profit institutions.
The estimated total annual reporting
burden is 14,544 hours.
The estimated annual burden per re-
spondent varies, depending on the individ-
ual circumstances, with an estimated aver-
age of 12 hours, 7 minutes. The estimated
number of respondents is 1,200.
The estimated annual frequency of re-
sponses is on occasion.
Books or records relating to a collection
of information must be retained as long
as the contents may become material in
the administration of any internal revenue
law. Generally, tax returns and return in-
formation are confidential, as required by
26 U.S.C. § 6103.
SECTION 13. DRAFTING
INFORMATION
The principal author of this notice
is Julie Hanlon Bolton of the Office of
Associate Chief Counsel (Passthroughs
& Special Industries). For further in-
formation regarding this notice, contact
Julie Hanlon Bolton at (202) 622–3040
(not a toll-free call).For further
information regarding the application
for certification, the documentation to
be submitted to the Service establishing
that the requirements of § 48D(d)(3) of
the Code are satisfied, and the issuance
of the certification that the requirements
of § 48D(d)(3) are satisfied, contact
Candace Fisher of the Small Business
and Self-Employed Division at (651)
312–2109 (not a toll-free number)
or by e-mail atacasec9023@irs.gov.
For further information regarding
the selection criteria for HHS’
evaluation, contact JoAnne Goodnight at
QTDP@mail.nih.gov.
2010–23 I.R.B.740June 7, 2010

APPENDIX A
APPLICATIONS FOR CERTIFICATION OF QUALIFIED INVESTMENTS ATTRIBUTABLE TO
QUALIFYING THERAPEUTIC DISCOVERY PROJECTS
The Internal Revenue Service (Service), in consultation with the Department of Health and Human Services (HHS), will select for
certification applications from eligible taxpayers under § 48D(c)(2) of the Internal Revenue Code (Code) for one or more projects
that are qualifying therapeutic discovery projects under § 48D(c)(1) and that meet the selection criteria in § 48D(d)(3)(A) and (B).
This Appendix A:
1. Describes the content and format of information to be provided by an applicant for certification,
2. Provides the questions that must be answered in a Project Information Memorandum to be filed with the applicant’s Form
8942,“Application for Certification of Qualified Investments Eligible for Credits and Grants Under the Qualifying Thera-
peutic Discovery Project Program,”and
3. Identifies the evaluation criteria to be used by the Service and HHS in the review of applications forcertification.
The Service and HHS reserve the right to request clarifications and/or supplementalinformation from some or all applicants
through written submissions and/or oral presentations. No additional written submissions, or requests to make oral presentations,
will be accepted if not explicitly solicited by the Service or HHS.It is expected that the Service and HHS will determine whether
to approve an application at any time after the application has been received without any further exchanges or discussions with the
applicant. Therefore, all applicants are advised to submit complete and fully responsive applications.
Applications will not be returned to applicants.
SUBMISSION INFORMATION FOR CERTIFICATION
A. General
A complete application for certification includes Form 8942, completed in accordance with instructions, an attached Project
Information Memorandum as described below,and, if the applicant elects to consent to certain limited disclosure (see Section 10.2
of Notice 2010–45 (Notice)), a properly executed copy of the “Consent to Public Disclosure of Certain Qualifying Therapeutic
Discovery Project Program Application Information” (Consent) contained in Appendix B to the Notice. A complete application
must be submitted for each qualifying therapeutic discovery project that the applicant sponsors for which the applicant is
requesting a credit or a grant. All applications shall be prepared in accordance with this Appendix A in order to provide a standard
basis for review and to ensure that each application will be uniform as to format and content.
Each application should clearlyrespond to each question to demonstrate the applicant’s capability, knowledge, and experience
regarding the requirements addressed herein.
Applicants should fully address the requirements of the notice, including this Appendix A, and shouldnotrely on the presumed
background knowledge of reviewers. The Service and HHS may reject an application that does not follow the instructions
regarding the organization and content of the application when the nature of the deviation and/or omission precludes complete or
meaningful review of the application.
B. Unnecessarily Elaborate Applications
Brochures or other presentations are not permitted as part of the application and will not be considered.
C. Application Submission for Certification
An application for certification will not beconsidered in the primary allocation round for the taxpayer’s 2009 and 2010 taxable
years unless the application is filed by July 21, 2010. (See section 5.02(2) of the Notice.)
D. Final Application Content, Format, and Evaluation
This section describes the information to be submitted by the applicant for certification on Form 8942 and in the Project
Information Memorandum.
Part I: Form 8942, Application for Certification of Qualified Investments Eligible for Credits and Grants Under the
Qualifying Therapeutic Discovery Project Program
The applicant must submit a Form 8942 in accordance with the instructions to the form. The Form 8942 will require the following
information:
1. The applicant’s general information, including the applicant’s name, address and taxpayer identification number.
June 7, 20107412010–23 I.R.B.

2. The name of a contact person for the applicant. The contact person is the person whom the Service or HHS may contact if
there is an issue with the application. If the contact person does nothave legal authority to bind theapplicant, the applicant must
attach to Form 8942 a properly executed power of attorney on Form 2848,“Power of Attorney and Declaration of Representative.”
3. The type of entity of the applicant.
4. The ownership of the applicant.
5. The number of full-time and part-time employees employed by the applicant.
6. Whether the applicant is requesting a grant in lieu of a qualifying therapeutic discovery project credit.
7. A description of the applicant’s qualified investments for 2009, 2010 or both, as applicable, and the amounts thereof. Such
qualified investments may include expenses for wages, supplies andlab costs, depreciable property, contractor costs, and any other
costs that would be considered part of the qualified investment for the project. (See section 4.01 of the Notice.)
8. The number of full-time and part-time employees in the United States whose work is directly billed to the project and the
average salaries of the employees in each category. For this purpose, both actual employees of the applicant and leased employees
may be included. The Service will review the information describedinthisparagraph8inordertodetermine(asdescribedin
section 5.01(3) of the Notice) which projects have the greatest potential to create and sustain (directly or indirectly) high quality,
high-paying jobs in the United States.
9 The number of contractors in the United States paid for work on the project, and the average monthly compensation and average
monthly hours of the contractors. The Service will review the information described in this paragraph 9 in order to determine (as
described in section 5.01(3) of the Notice) which projects have thegreatest potential to create and sustain (directly or indirectly)
high quality, high-paying jobs in the United States.
10. Whether, as of the date on which the application is submitted, the project is active, terminated, or suspended and, if the project
is terminated or suspended, whether this is because the project faileda clinical trial, faileda pre-clinical research milestone, or failed
to secure FDA licensure. The Service will review the information described in this paragraph 10 in determining (as described in
section 5.01(3) of the Notice) which projects have the greatest potential to advance United States competitiveness in the fields of
life, biological, and medical sciences. A project that has been terminated or suspended because the project failed a clinical trial,
failed a pre-clinical research milestone, or failed to secure FDA licensure will be determined to have insufficient potential to advance
United States competitiveness in the fields of life, biological and medical sciences and thus will be determined to be ineligible for
certification.
11. Whether the project:
a. Will produce a new or significantly improved technology, or a new application or significant improvement to existing tech-
nology, as compared to commercial technologies currently in service; and
b. Is expected to lead to the construction or use of a contract production facility in the United States in the next 5 years.
The Service will review the information described in this paragraph 11 in determining (as described in section 5.01(3) of the
Notice) which projects have the greatest potential to advance United States competitiveness in the fields of life, biological,
and medical sciences.
Form 8942 will also contain a Penalties of Perjury Statement. Each applicant must sign and date this statement. The person
signing for the applicant must have personal knowledge of the facts. Further, the declaration must be signed by a person authorized
to bind the applicant. The Penalties of Perjury statement is effective for ALL information submitted as a complete application.
Part II: Project Information Memorandum
HHS will review information provided by the applicant in the Project Information Memorandum in order to determine whether a
project meets the definition of “qualifying therapeutic discovery project” and whether the applicant has demonstrated that its
project shows a “reasonable potential” to meet one or more of the goals specified in the statute.
The Project Information Memorandum must follow the format specified herein. It must contain the questions specified and the
answers as to which the applicant must check yes or no. The form also requires, as stated, that the applicant provide written
narratives with respect to certain questions, including narratives supporting and explaining the basis for each yes answer. The
statements included in the Project Information Memorandum shall not exceed the stated word limits. If statements exceed
the stated word limits, words beyond those limits will not be considered. Statements that otherwise fail to comply with the
instructions set out in the application will not be considered. All text shall be typed, single spaced, using 12 point font, 1 inch
margins, and unreduced 8
1
/2inch by 11 inch pages (A Project Information Memorandum that is submitted using the form provided
on the IRS website will be deemed in compliance with spacing, font, margins, and page size requirements with regard to the
information submitted on such form). All applications shall be legible. Pages shall be sequentiallynumbered and identified with
the name of the applicant and the date. No material may be incorporated in any application by reference.
2010–23 I.R.B.742June 7, 2010

Note:Any language beyond any word limits in the application will be disregarded for purposes of review.
If elements of the Project Information Memorandum contain information the applicant considers to be trade secrets, confidential,
privileged or otherwise exempt from disclosure under the Freedom of Information Act (FOIA, 5 U.S.C. 552), the applicant shall
assert a claim of exemption at the time of application by placing the following text on thefirstpage of the Project Information
Memorandum, and specify the page or pages of the application to be restricted.
“Thedatacontainedinpages[]ofthisdocumentwhichherebyformsapartoftheapplicationhavebeensubmittedinconfidence
and contain trade secrets or proprietary information, and such data shall be used or disclosed only for review purposes. This
restriction does not limit the government’s right to use or disclose data obtained without restriction from any source, including
the applicant.”
To further protect trade secret, confidential, privileged or otherwise exempt information, each line or paragraph on the page or
pages containing such data must be specifically identified and marked with text that is similar to the following:
“The following contains proprietary information that [name of applicant] requests not to be released to persons outside of the
Government, except for purposes of review.”
Note: Any text used to protect confidentiality will not be counted against the total word limits of the Project Information
Memorandum.
Project Information Memorandum
A. Provide an overview of the project for which you are seeking a credit or grant, including a description of the product, process or
technology under development. The description may not exceed 250 words. If the projectinvolves a new therapy, the description
must include an explanation of why thattherapy is novel.
B. Check each applicable box in the following and provide a short(not more than 50 words)statement supporting each positive
assertion (i.e., where “Yes” is checked). Check all that apply, butyou need check only one Yes for answers 1 through 4 for
initial qualification.
Qualifying Therapeutic Discovery Project definition
1. Is the project
•designed to develop a product to treat or prevent a disease or condition;
•by conducting pre-clinical activities, clinical trials, or clinical studies, or by carrying out research protocols; and
•for the purpose of securing approval of a product under section 505(b) of the Federal Food, Drug, and Cosmetic Act or
section 351(a) of the Public Health Service Act?
□Yes□No
2. Is the project designed to diagnose a disease or condition?
□Yes□No
3. Is the project designed to determine molecular factors related to diseases or conditions by developing molecular diagnostics
to guide therapeutic decisions?
□Yes□No
4. Is the project designed to develop a product, process, or technology to further the delivery or administration of therapeutics?
□Yes□No
Selection criteria
5. Is the project likely to result in one or more new therapies?
□Yes□No
6. If the answer to question 5 is Yes, are the new therapy(ies) expected to:
a. treat areas of unmet medical need?
□Yes□No
b. prevent, detect, or treat chronic or acute diseases or conditions?
□Yes□No
7. Is the project likely to reduce long-term health care costs in the United States?
□Yes□No
8. Is the project likely to significantly advance the goal of curing cancer within the next 30 years?
□Yes□No
For each of questions 9, 10, and 11, provide a short statement, not to exceed a total of 250 words, including responses to
bulleted items.For question 9, applicants may also submit up to five literature citations in the specified format that will not be
counted against the 250-word limit.
9. Explain the scientific rationale, based on prior conceptual and empirical work, which supports the belief that the proposed
project will lead to the outcome the applicant has identified above. Explain the research and development plan that will lead
June 7, 20107432010–23 I.R.B.

to the outcome identified above. Describethe scientific evidence relied on by the applicant, including a description of any
peer review of the project and a list of no more than five literature citations using the following format:
•Include the names of all authors (in the same sequence in which they appear in the publication), the article and journal
title, book title, volume number, page numbers, and year of publication.
•When citing articles that were authored or co-authored by the applicant and arose from NIH support, if available, provide
the NIH Manuscript Submission reference number (e.g., NIHMS97531) or the Pubmed Central (PMC) reference number
(e.g., PMCID234567) for each citation.
•Citations for which an NIH Manuscript Submission reference number is not available but are publicly available in a free,
online format should include URLs or PMCID numbers along with the full reference. The references should be limited
to relevant and current literature.
10. Describe the stage of development of the project, including a description of pre-clinical and clinical trial results that are
relevant to the proposal.
•If the project involves the development of a product that is regulated by the Food and Drug Administration, an expla-
nation of whether an investigational new drug application or an investigational device exemption has been filed with
the Food and Drug Administration, and whether an application for approval, license, or clearance has been filed, and,
if so, the status of that application as of the date of application as of the date this project information memorandum is
submitted.
•If the project involves testing in humans, information about the phase(s) of the testing that has been completed and
the number of subjects tested in each phase and information about trials for which the applicant is actively recruiting
subjects. Summarize the results of the trails,noting any failed trials or successful trials.
•The planned research and development strategy for the test or treatment being researched and a summary schedule for
development of the project, including timelines and milestones planned and completed.
11. Describe the resources, management experience and organizational capacity of the applicant and explain how applicant
believes that such resources, experienceand capacity will support successful completion of the project. Include in this
description
•A statement of the revenue levels and sourcesfor this project over the past three years.
•A statement of the revenue levels and sources for the proposed research and development plan delineated in response to
question 10.
•A description of any significant public or private investment, such as by venture capitalists, in the development or com-
mercialization of the project.
•A description of any strategic partnerships for the development or commercialization of the project.
•A statement of whether the applicant has suspended operations for the project and, if so, whether the suspension is
temporary or permanent. If the project has been suspended, terminate, or is otherwise inactive, explain why, including
whether the cause is a lack of financial resources or other reasons.
Evaluation Criteria and Factors for the Project Information Memorandum
HHS will make the determination described in sections 5.01(1) and (2) of the Notice based on the information provided in the
Project Information Memorandum and on the following eligibility and evaluation criteria and factors:
Definitions
A project that does not meet the definition of “qualifying therapeutic discovery project” will be found to be ineligible. A project
that does not support an affirmative response to any of questions 1 – 4 does not meet the statutory definition of a qualifying
therapeutic discovery project. The applicant must effectively support each yes answer through the accompanying narrative.
Question 1 focuses on the requirement of § 48D(c)(1)(A) of theCode. To satisfy this provision, the project must be designed
to treat or prevent diseases or conditions. It must be designed to do so by conducting pre-clinical activities, clinical trials, or
clinical studies or carrying out a clinical protocol. It must also be for the purpose of obtainingapproval of a product under one of
two statutory provisions—Section 505(b) of the Federal Food, Drug, and Cosmetic Act (FFDCA) (a new drug application) or
Section 351(a) of the Public Health Service Act (PHSA) (a biologic license application) . For example, a medical countermeasure
against a known threat or emerging infectious disease that is developed for the purpose of securing approval under one of
these provisions would satisfy this provision.
2010–23 I.R.B.744June 7, 2010

Note that generic drugs, which are approved under Section 505(j) of the FFDCA, and biosimilar products, which are approved
under Section 351(k) of the PHSA, would be excluded. Dietary supplements and most cosmetics would also be excluded because
they are generally not the subject of a newdrug or biologic license application.
Questions 2 and 3 focus on the requirements of § 48D(c)(1)(B) ofthe Code. This provision covers two separate categories of
products. The first, covered by question 2, is a product to diagnose a disease or condition. Any product that diagnoses a disease or
condition would meet this criterion, whether or not it determines molecular factors or is a molecular diagnostic. Relevant products
would include point of care diagnostics for infectious agents.
Question 3 covers a product that determines molecular factors related to diseases or conditions by developing molecular
diagnostics to guide therapeutic decisions. This might include, for example, a test that would determine which patients with a
particular disease or condition would be likely to respond best to a particular drug or device.
Question 4 focuses on the requirement of § 48D(c)(1)(C) of the Code. To qualify under question 4, a product, process, or
technology must further the delivery or administration of therapeutics. For the purposes of § 48D(c)(1)(C), the term “therapeutics”
means drugs or medical devices, as those terms are defined inSection201(g)and(h)oftheFFDCA,21U.S.C.321(g)and
(h). Biologics that are licensed under the PHSA will generally be either drugs or medical devices. Thus, a drug-eluting stent
or infusion pump would be an example of a product that furthers the delivery or administration of a drug and would meet the
requirements of this provision. However, a medical device, orother product, process or technology that does not further the
delivery or administration of a drug or medical device would not meet the requirements of this provision because such products do
not deliver or administer a therapeutic within the meaning of § 48D(c)(1)(C). The term “therapeutic” is narrower than the term
“therapy,” which appears elsewhere in section 48D. Therefore, products, processes or technologiesthat deliver other therapies
which are not therapeutics, such as speech, physical, and cognitive therapies, would for the same reasons be excluded.
Reasonable potential selection criteria
If HHS determines that a project meets the definition of “qualifying therapeutic discovery project,” HHS will proceed to
determine whether the applicant has demonstrated, through responses to questions 5–11, that its project shows a reasonable
potential to meet a statutory goal. This determination will be based on an evaluation of whether the project is designed to
achieve one or more of the goals specified in section 48D and, ifso, whether the applicant has shown a reasonable potential to
achieve the goal(s). Specifically, the applicant must show that its project is designed to achieve one of the statutory goals by
checking yes for one or more of the following:
•question 5 and question 6.a;
•question 5 and question 6.b;
•question 7; or
•question 8.
In addition, the applicant must effectively support each yes answer through the accompanying narrative.
Question 5 addresses the requirement of § 48D(d)(3)(A)(i) of theCode that, to satisfy the statutory goal of that provision, the
project must be a “new therapy.” Thus, the therapy must be novel and cannot be the same as, or difficult to meaningfully
distinguish from, a therapy currently on the market. For example, this means the therapy should not be in the same class as
existing therapies, unless such therapy is expected to offer a significant enhancement in safety or effectiveness. HHS will evaluate
the information provided as to the novelty of the product based onthe explanation provided with any Yes response to this question
and the initial narrative description of the project(Section A of the Project Information Memorandum).
Question 6 addresses the requirement of § 48D(d)(3)(A)(i) of the Code that a new therapy either treats areas of unmet medical
need, or prevents, detects, or treats chronic or acute diseasesor conditions. For example, unmet medical needs would include
novel influenza vaccine technologies, broad spectrum anti-viral medications, novel antibiotics, and platform vaccine technologies.
In addition to new therapies that treat diseases and conditions, such products that detect or prevent diseases and conditions
are also covered by this provision.
Question 7 addresses the requirement of § 48D(d)(3)(A)(ii) of the Code, which covers projects that will reduce long-term health
care costs in the United States. The narrative accompanying any Yes response should explain howthe project is likely to reduce
health care costs, including a description of how the project willlead to actual cost reductions, not just substituting one cost for
another and the basis of this determination. The narrative should provide a reasonable estimate of savings and demonstrate a
reasonable potential toachieve these savings.
Question 8 addresses the requirement of § 48D(d)(3)(A)(iii) of the Code, which covers projects that will significantly advance the
goal of curing cancer within the next 30 years.
June 7, 20107452010–23 I.R.B.

If HHS determines that the applicant satisfies the requirements to which questions 5 through 8 are addressed, regarding the
specific statutory selection criteria, HHS will proceed to review the responses to questions 9–11 and evaluate whether the
information provided supports a determination that there is a reasonable potential that the project will achieve one or more of the
statutory goals. HHS will make this determination based on an analysis of the scientific rationale for the project (question 9), the
current stage of development of the project (question 10), and the evidence that the applicant has the capacity to bring the project
to fruition (question 11). HHS will notify the Service of the results of the HHS evaluation as to whether the project is a qualifying
therapeutic discovery project and shows a reasonable potential to achieve one or more of the statutory goals.
E. Certification
Only those qualifying therapeutic development projects that have both (a) a reasonable potential to achieve one or more of the
statutory goals set forth in section 48D(d)(3)(A) as determined by HHS and (b) the greatest potential to (i) create and sustain
(directly or indirectly) high quality, high-paying jobs in the United States, and (ii) advance United States competitiveness in the
fields of life, biological, and medical sciences as determined by the Service will receive a certification for all or a portion of their
qualified investment. The Service will certify an amount of qualified investment made by an eligible taxpayer for qualifying
therapeutic development projects inaccordance with the provisions of section 5.02(5) through (7) of the Notice.
2010–23 I.R.B.746June 7, 2010

APPENDIX B
CONSENT TO PUBLIC DISCLOSURE OF CERTAIN
QUALIFYING THERAPEUTIC DISCOVERY PROJECT PROGRAM
APPLICATION INFORMATION
In the event that the Application for § 48D Certification of [insert name of applicant-taxpayer here):
] (the Applicant-Taxpayer) for an allocation of qualifying therapeutic discovery project
credit under § 48D of the Internal Revenue Code is approved, the undersigned authorized representative of the Applicant-Taxpayer
hereby consents to the disclosure by the Internal Revenue Service of the type of the project that is the subject of the Application
for § 48D Certification. The undersigned understands that this information might be published, broadcast, discussed, or otherwise
disseminated in the public record.
This authorization shall becomeeffective upon the execution thereof. I certify that I have the authority to execute this consent to
disclose on behalf of the taxpayer named below.
Date:
Signature:
Print name:
Title:
Name of Applicant-Taxpayer:
Taxpayer Identification Number:
Taxpayer’s Address:
26 CFR 601.602: Tax forms and instructions.
(Also: Part 1, §§ 1, 223.)
Rev. Proc. 2010–22
SECTION 1. PURPOSE
This revenue procedure provides the
2011 inflation adjusted amounts for Health
Savings Accounts (HSAs) as determined
under § 223 of the Internal Revenue Code.
The amounts for 2011 are unchanged
from the amounts for 2010 because, after
the application of the cost-of-living ad-
justment rules of § 223(g) (including the
rounding rule of § 223(g)(2)), the changes
in the Consumer Price Index for the rele-
vant period do not result in changes to the
amounts for 2011.
SECTION 2. 2011 INFLATION
ADJUSTED ITEMS
Annual contribution limitation. For cal-
endar year 2011, the annual limitation on
deductions under § 223(b)(2)(A) for an in-
dividual with self-only coverage under a
high deductible health plan is $3,050. For
calendar year 2011, the annual limitation
on deductions under § 223(b)(2)(B) for an
individual with family coverage under a
high deductible health plan is $6,150.
High deductible health plan. For cal-
endar year 2011, a “high deductible health
plan” is defined under § 223(c)(2)(A) as
a health plan with an annual deductible
that is not less than $1,200 for self-only
coverage or $2,400 for family coverage,
and the annual out-of-pocket expenses
(deductibles, co-payments, and other
amounts, but not premiums) do not exceed
$5,950 for self-only coverage or $11,900
for family coverage.
SECTION 3. EFFECTIVE DATE
This revenue procedure is effective for
calendar year 2011.
SECTION 4. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Frank W. Dunham III of the
Office of Associate Chief Counsel (In-
come Tax & Accounting). For further
information regarding§223andHSAs,
contact Leslie Paul at (202) 622–6080 (not
a toll-free call). For further information
regarding the calculation of the inflation
adjustments in this revenue procedure,
contact Mr. Dunham at (202) 622–4920
(not a toll-free call).
June 7, 20107472010–23 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2010–23 I.R.B.iJune 7, 2010

Numerical Finding List
1
Bulletins 2010–1 through 2010–23
Announcements:
2010-1, 2010-4 I.R.B.333
2010-2, 2010-2 I.R.B.271
2010-3, 2010-4 I.R.B.333
2010-4, 2010-5 I.R.B.384
2010-5, 2010-6 I.R.B.402
2010-6, 2010-6 I.R.B.402
2010-7, 2010-6 I.R.B.403
2010-8, 2010-7 I.R.B.408
2010-9, 2010-7 I.R.B.408
2010-10, 2010-7 I.R.B.410
2010-11, 2010-10 I.R.B.438
2010-12, 2010-7 I.R.B.410
2010-13, 2010-8 I.R.B.426
2010-14, 2010-11 I.R.B.449
2010-15, 2010-10 I.R.B.438
2010-16, 2010-11 I.R.B.450
2010-17, 2010-13 I.R.B.515
2010-18, 2010-12 I.R.B.460
2010-19, 2010-14 I.R.B.529
2010-20, 2010-15 I.R.B.551
2010-21, 2010-15 I.R.B.551
2010-22, 2010-16 I.R.B.602
2010-23, 2010-16 I.R.B.602
2010-24, 2010-15 I.R.B.587
2010-25, 2010-15 I.R.B.588
2010-26, 2010-16 I.R.B.604
2010-27, 2010-18 I.R.B.657
2010-28, 2010-17 I.R.B.616
2010-29, 2010-17 I.R.B.616
2010-30, 2010-19 I.R.B.668
2010-31, 2010-19 I.R.B.681
2010-32, 2010-19 I.R.B.681
2010-33, 2010-18 I.R.B.658
2010-34, 2010-20 I.R.B.685
2010-35, 2010-20 I.R.B.685
2010-36, 2010-21 I.R.B.696
2010-37, 2010-20 I.R.B.685
2010-38, 2010-21 I.R.B.696
2010-39, 2010-22 I.R.B.724
2010-40, 2010-22 I.R.B.725
Notices:
2010-1, 2010-2 I.R.B.251
2010-2, 2010-2 I.R.B.251
2010-3, 2010-2 I.R.B.253
2010-4, 2010-2 I.R.B.253
2010-5, 2010-2 I.R.B.256
2010-6, 2010-3 I.R.B.275
2010-7, 2010-3 I.R.B.296
2010-8, 2010-3 I.R.B.297
2010-9, 2010-3 I.R.B.298
Notices— Continued:
2010-10, 2010-3 I.R.B.299
2010-11, 2010-4 I.R.B.326
2010-12, 2010-4 I.R.B.326
2010-13, 2010-4 I.R.B.327
2010-14, 2010-5 I.R.B.344
2010-15, 2010-6 I.R.B.390
2010-16, 2010-6 I.R.B.396
2010-17, 2010-14 I.R.B.519
2010-18, 2010-14 I.R.B.525
2010-19, 2010-7 I.R.B.404
2010-20, 2010-8 I.R.B.422
2010-21, 2010-12 I.R.B.451
2010-22, 2010-10 I.R.B.435
2010-23, 2010-11 I.R.B.441
2010-24, 2010-12 I.R.B.452
2010-25, 2010-14 I.R.B.527
2010-26, 2010-14 I.R.B.527
2010-27, 2010-15 I.R.B.531
2010-28, 2010-15 I.R.B.541
2010-29, 2010-15 I.R.B.547
2010-30, 2010-18 I.R.B.650
2010-31, 2010-16 I.R.B.594
2010-32, 2010-16 I.R.B.594
2010-33, 2010-17 I.R.B.609
2010-34, 2010-17 I.R.B.612
2010-35, 2010-19 I.R.B.660
2010-36, 2010-17 I.R.B.612
2010-37, 2010-18 I.R.B.654
2010-38, 2010-20 I.R.B.682
2010-40, 2010-21 I.R.B.693
2010-41, 2010-22 I.R.B.715
2010-42, 2010-23 I.R.B.733
2010-43, 2010-22 I.R.B.716
2010-44, 2010-22 I.R.B.717
2010-45, 2010-23 I.R.B.734
Proposed Regulations:
REG-132232-08, 2010-6 I.R.B.401
REG-134235-08, 2010-16 I.R.B.596
REG-137036-08, 2010-6 I.R.B.398
REG-101896-09, 2010-5 I.R.B.347
REG-117501-09, 2010-11 I.R.B.442
REG-131028-09, 2010-4 I.R.B.332
REG-148681-09, 2010-11 I.R.B.443
REG-114494-10, 2010-22 I.R.B.723
Revenue Procedures:
2010-1, 2010-1 I.R.B.1
2010-2, 2010-1 I.R.B.90
2010-3, 2010-1 I.R.B.110
2010-4, 2010-1 I.R.B.122
2010-5, 2010-1 I.R.B.165
2010-6, 2010-1 I.R.B.193
2010-7, 2010-1 I.R.B.231
2010-8, 2010-1 I.R.B.234
Revenue Procedures— Continued:
2010-9, 2010-2 I.R.B.258
2010-10, 2010-3 I.R.B.300
2010-11, 2010-2 I.R.B.269
2010-12, 2010-3 I.R.B.302
2010-13, 2010-4 I.R.B.329
2010-14, 2010-12 I.R.B.456
2010-15, 2010-7 I.R.B.404
2010-16, 2010-19 I.R.B.664
2010-17, 2010-8 I.R.B.425
2010-18, 2010-9 I.R.B.427
2010-19, 2010-13 I.R.B.469
2010-20, 2010-14 I.R.B.528
2010-21, 2010-13 I.R.B.473
2010-22, 2010-23 I.R.B.747
Revenue Rulings:
2010-1, 2010-2 I.R.B.248
2010-2, 2010-3 I.R.B.272
2010-3, 2010-3 I.R.B.272
2010-4, 2010-4 I.R.B.309
2010-5, 2010-4 I.R.B.312
2010-6, 2010-6 I.R.B.387
2010-7, 2010-8 I.R.B.417
2010-8, 2010-10 I.R.B.432
2010-9, 2010-13 I.R.B.461
2010-10, 2010-13 I.R.B.461
2010-11, 2010-14 I.R.B.516
2010-12, 2010-18 I.R.B.617
2010-13, 2010-21 I.R.B.691
2010-15, 2010-23 I.R.B.730
Tax Conventions:
2010-2, 2010-2 I.R.B.271
2010-26, 2010-16 I.R.B.604
2010-27, 2010-18 I.R.B.657
Treasury Decisions:
9474, 2010-4 I.R.B.322
9475, 2010-4 I.R.B.304
9476, 2010-5 I.R.B.336
9477, 2010-6 I.R.B.385
9478, 2010-4 I.R.B.315
9479, 2010-18 I.R.B.618
9480, 2010-11 I.R.B.439
9481, 2010-17 I.R.B.605
9482, 2010-22 I.R.B.698
9483, 2010-23 I.R.B.726
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2009–27 through 2009–52 is in Internal Revenue Bulletin
2009–52, dated December 28, 2009.
June 7, 2010ii2010–23 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2010–1 through 2010–23
Announcements:
2009-23
Corrected by
Ann. 2010-29, 2010-17 I.R.B.616
2009-51
Supplemented and superseded by
Ann. 2010-16, 2010-11 I.R.B.450
2010-4
Corrected by
Ann. 2010-10, 2010-7 I.R.B.410
2010-22
Corrected by
Ann. 2010-34, 2010-20 I.R.B.685
Notices:
2005-88
Superseded by
Notice 2010-13, 2010-4 I.R.B.327
2006-87
Superseded by
Notice 2010-27, 2010-15 I.R.B.531
2007-25
Superseded by
Notice 2010-27, 2010-15 I.R.B.531
2007-77
Superseded by
Notice 2010-27, 2010-15 I.R.B.531
2008-14
Modified and superseded by
Notice 2010-33, 2010-17 I.R.B.609
2008-41
Modified by
Notice 2010-7, 2010-3 I.R.B.296
2008-55
Modified by
Notice 2010-3, 2010-2 I.R.B.253
2008-88
Modified by
Notice 2010-7, 2010-3 I.R.B.296
2008-107
Superseded by
Notice 2010-27, 2010-15 I.R.B.531
2008-113
Modified by
Notice 2010-6, 2010-3 I.R.B.275
Notices— Continued:
2008-115
Modified by
Notice 2010-6, 2010-3 I.R.B.275
2008-116
Modified and superseded by
Notice 2010-32, 2010-16 I.R.B.594
2009-11
Amplified by
Notice 2010-9, 2010-3 I.R.B.298
2009-13
Obsoleted by
T.D. 9478, 2010-4 I.R.B.315
REG-131028-09, 2010-4 I.R.B.332
2009-35
Supplemented by
Notice 2010-17, 2010-14 I.R.B.519
2009-38
Amplified and superseded by
Notice 2010-2, 2010-2 I.R.B.251
2009-62
Modified and supplemented by
Notice 2010-23, 2010-11 I.R.B.441
Proposed Regulations:
REG-127270-06
Hearing scheduled by
Ann. 2010-6, 2010-6 I.R.B.402
REG-134235-08
Hearing scheduled by
Ann. 2010-33, 2010-18 I.R.B.658
Revenue Procedures:
80-59
Modified and superseded by
Rev. Proc. 2010-11, 2010-2 I.R.B.269
87-35
Obsoleted by
Rev. Proc. 2010-3, 2010-1 I.R.B.110
2001-18
Superseded by
Rev. Proc. 2010-16, 2010-19 I.R.B.664
2008-14
Updated by
Rev. Proc. 2010-15, 2010-7 I.R.B.404
2009-1
Superseded by
Rev. Proc. 2010-1, 2010-1 I.R.B.1
2009-2
Superseded by
Rev. Proc. 2010-2, 2010-1 I.R.B.90
Revenue Procedures— Continued:
2009-3
Superseded by
Rev. Proc. 2010-3, 2010-1 I.R.B.110
2009-4
Superseded by
Rev. Proc. 2010-4, 2010-1 I.R.B.122
2009-5
Superseded by
Rev. Proc. 2010-5, 2010-1 I.R.B.165
2009-6
Superseded by
Rev. Proc. 2010-6, 2010-1 I.R.B.193
2009-7
Superseded by
Rev. Proc. 2010-7, 2010-1 I.R.B.231
2009-8
Superseded by
Rev. Proc. 2010-8, 2010-1 I.R.B.234
2009-9
Superseded by
Rev. Proc. 2010-9, 2010-2 I.R.B.258
2009-15
Amplified and superseded by
Rev. Proc. 2010-12, 2010-3 I.R.B.302
2009-17
Superseded by
Rev. Proc. 2010-21, 2010-13 I.R.B.473
2009-25
Superseded by
Rev. Proc. 2010-3, 2010-1 I.R.B.110
2009-55
Corrected by
Ann. 2010-11, 2010-10 I.R.B.438
2010-1
Corrected by
Ann. 2010-5, 2010-6 I.R.B.402
Revenue Rulings:
67-436
Obsoleted by
REG-101896-09, 2010-5 I.R.B.347
92-19
Supplemented in part by
Rev. Rul. 2010-7, 2010-8 I.R.B.417
2008-52
Supplemented and superseded by
Rev. Rul. 2010-2, 2010-3 I.R.B.272
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2009–27 through 2009–52 is in Internal Revenue Bulletin 2009–52, dated December 28,
2009.
2010–23 I.R.B.iiiJune 7, 2010

Treasury Decisions:
9350
Corrected by
Ann. 2010-38, 2010-21 I.R.B.696
Ann. 2010-39, 2010-22 I.R.B.724
9424
Corrected by
Ann. 2010-18, 2010-12 I.R.B.460
9443
Corrected by
Ann. 2010-8, 2010-7 I.R.B.408
9458
Corrected by
Ann. 2010-7, 2010-6 I.R.B.403
June 7, 2010iv2010–23 I.R.B.

2010–23 I.R.B.June 7, 2010

June 7, 20102010–23 I.R.B.

INTERNAL REVENUE BULLETIN
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