Internal Revenue Bulletin 2012-5 (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
2-5
January 30, 2012
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
T.D. 9561, page 341.
REG–130777–11, page 347.
Temporary and proposed regulations under section 1275 of
theCodeprovidethatataxpayermustusethecouponbond
method described in regulations section 1.1275–7(d) to ac-
count for Treasury Inflation-Protected Securities issued with
more than ade minimisamount of premium. A public hear-
ing is scheduled for March 28, 2012.
T.D. 9562, page 339.
Final regulations under section 881 of the Code apply to mul-
tiple-party financing arrangements that are effected through
disregarded entities, and are necessary in order to determine
which of those arrangements should be recharacterized as a
conduit financing arrangement.
Notice 2012–11, page 346.
This notice provides transitional relief from information report-
ing requirements in section 6045B of the Code that apply to
issuers of stock with respect to organizational actions that af-
fect the basis of the stock.
EMPLOYEE PLANS
Rev. Rul. 2012–5, page 337.
2012 covered compensation tables; permitted disparity.
The covered compensation tables under section 401 of the
Code for the year 2012 are provided for use in determining
contributions to defined benefit plans and permitted disparity.
Notice 2012–10, page 343.
Weighted average interest rate update; corporate bond
indices; 30-year Treasury securities; segment rates.
This notice contains updates for the corporate bond weighted
average interest rate for plan years beginning in January 2012;
the 24-month average segment rates; the funding transitional
segment rates applicable for January 2012; and the minimum
present value transitional rates for December 2011.
ADMINISTRATIVE
Notice 2012–11, page 346.
This notice provides transitional relief from information report-
ing requirements in section 6045B of the Code that apply to
issuers of stock with respect to organizational actions that af-
fect the basis of the stock.
Announcement 2012–5, page 348.
This document contains corrections to final regulations
(T.D. 9517, 2011–15 I.R.B. 610) relating to the enrollment of
actuaries.
Fi
nding Lists begin on page ii.
Index for January begins on page iv.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
January 30, 20122012–5 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 401.—
Qualified
Pension, Profit-Sharing,
and Stock Bonus Plans
26 CFR 1.401(l)–1: Permitted disparity in employer-
provided contributions or benefits.
2012 covered compensation tables;
permitted disparity.The covered com-
pensation tables under section 401 of the
Code for the year 2012 are provided for
use in determining contributions to de-
fined benefit plans and permitted disparity.
Rev. Rul. 2012–5
This revenu
e ruling provides ta-
bles of cove
red compensation under
§401(l)(5)
(E) of the Internal Revenue
Code (the “
Code”) and the Income Tax
Regulatio
ns thereunder, for the 2012 plan
year.
Section 40
1(l)(5)(E)(i) defines covered
compensat
ion with respect to an employee
as the aver
age of the contribution and ben-
efit bases
in effect under section 230 of the
Social Se
curity Act (the “Act”) for each
year in th
e 35-year period ending with the
year in which t
he employee attains social
security reti
rement age.
Section 401(l
)(5)(E)(ii) states that the
determinatio
n for any year preceding the
year in which t
he employee attains social
security ret
irement age shall be made by
assuming tha
t there is no increase in cov-
ered compens
ation after the determination
year and befo
re the employee attains social
security re
tirement age.
Section 1.40
1(l)–1(c)(34) defines the
taxable wag
e base as the contribution and
benefit bas
e under section 230 of the Act.
Section 1.4
01(l)–1(c)(7)(i) defines cov-
ered compen
sation for an employee as the
average (wi
thout indexing) of the taxable
wage bases i
n effect for each calendar year
during the
35-year period ending with the
last day of
the calendar year in which the
employee a
ttains (or will attain) social se-
curity ret
irement age. A 35-year period is
used for a
ll individuals regardless of the
year of bi
rth of the individual. In deter-
mining an
employee’s covered compensa-
tion for a
plan year, the taxable wage base
for all ca
lendar years beginning after the
first da
y of the plan year is assumed to be
thesameasthe
taxablewagebaseinef-
fect as of the b
eginning of the plan year.
An employee’s
covered compensation for
a plan year be
ginning after the 35-year pe-
riod applica
ble under § 1.401(l)–1(c)(7)(i)
is the employ
ee’s covered compensation
for a plan yea
r during which the 35-year
period ends
. An employee’s covered com-
pensation f
or a plan year beginning be-
fore the 35-
year period applicable under
§ 1.401(l)–
1(c)(7)(i) is the taxable wage
base in effe
ct as of the beginning of the
plan year.
Section 1.
401(l)–1(c)(7)(ii) provides
that, for p
urposes of determining the
amount of a
n employee’s covered com-
pensation
under § 1.401(l)–1(c)(7)(i), a
plan may us
e tables, provided by the Com-
missione
r, that are developed by rounding
the actua
l amounts of covered compensa-
tion for d
ifferent years of birth.
For purpo
ses of determining covered
compensa
tion for the 2012 year, the tax-
able wage
base is $110,100.
The follo
wing tables provide covered
compensa
tion for 2012.
ATTACHMENT I
2012 COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
2012 COVERED
COMPENSATION
TABLE II
19071972
$4,488
190819734,704
19091974
5,004
1910
19755,316
19111976
5,664
191219776,060
191319786,480
191419797,044
1915
19807,692
191619818,460
191719829,300
1918198310,23
6
1919198411,232
1920
1985
12,276
1921198613,36
8
19221987
14,520
19231988
15,7
08
1924198916,9
68
1925
199018,312
1926199119,728
192
7
199
2
21,
192
2012–5 I.R.B.337January 30, 2012

ATTACHMENT I
2012 COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
2012 COVERED
COMPENSATION
TABLE II
1928199322,716
1929199424,312
1930
199525,920
19311996
27,576
1932199729,304
1933199831,128
1934199933,060
1935
2000
35,100
1936200137,212
1937200239,444
1938200443,992
1939
2005
46,344
1940200648,816
19412007
51,348
19422008
53,952
19432009
56,628
19442010
59,268
1945
201161,884
19462012
64,560
1947201367,200
1948201469,696
1949
2015
72,096
1950
201674,400
1951
201776,620
1952
201878,744
1953
201980,808
1954
202082,824
1955
202286,664
1956
2023
88,524
1957
202490,300
19582025
91,980
1959
202693,600
19602027
95,160
1961202896,660
1962202998,064
1963203099,468
19642031100,824
1965
2032102,096
19662033103,284
19672034104,364
1968
2035105,324
19692036106,176
19702037106,896
19712038
107,556
19722039108,192
19732040108,768
19742041109,224
1975
2042
109,584
19762043109,812
19772044109,908
1978
2045
110,004
1979 and Later2046 and Later110,100
January 30, 20123382012–5 I.R.B.

ATTACHMENT II
2012 ROUNDED COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
2012 COVERED
COMPENSATION
ROUNDED
1937
$39,000
1938–1939
45,000
194048,000
1941
51,000
1942
54,000
1943
57,000
194460,000
1945
63,000
1946–194766,000
194869,000
194972,000
195075,000
1951–1952
78,000
1953
81,000
1954
84,000
1955
87,000
1956–1957
90,000
1958–1959
93,000
1960–196196,000
1962–196399,000
1964–1966102,000
1967–1969
105,000
1970–1973108,000
1974 and Later110,100
DRAFTING INFORMATION
The principal author of this rev-
enue ruling is Michael Spaid of the
Employee Plans, Tax Exempt and
Government Entities Division.For
further information regarding this
revenue ruling, please contact the
Employee Plans taxpayer assistance
telephone service at 1–877–829–5500,
between the hours of 8:30 a.m. and
4:30 p.m.Eastern time, Monday
through Friday (a toll-free number).
Mr. Spaid may be reached via e-mail at
RetirementPlanQuestions@irs.gov.
Section 881.—Tax on
Income of Foreign
Corporations Not
Connected With United
States Business
26 CFR 1.881–3: Conduit financing arrangements.
T.D. 9562
Conduit Financing
Arrangements
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulation.
SUMMARY: This document contains final
regulations relating to conduit financing
arrangements. The final regulations apply
to multiple-party financing arrangements
that are effected through disregarded en-
tities, and are necessary in order to deter-
mine which of those arrangements should
be recharacterized asa conduit financing
arrangement.
DATES:Effective Date: These regulations
are effective on December 9, 2011.
Applicability Date: These regulations
apply to payments made on or after De-
cember 9, 2011.
FOR FURTHER INFORMATION
CONTACT: Quyen P. Huynh at (202)
622–3880 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On August 10, 1995, the Department
of the Treasury (Treasury Department)
and the Internal Revenue Service (IRS)
published final regulations under Treas.
Reg. §1.881–3 relating to conduit fi-
nancing arrangements pursuant to the
authority granted by section 7701(l) of
the Internal Revenue Code (the conduit
financing regulations). See T.D. 8611,
1995–2 C.B. 286, (60 FR 40997). On
December 22, 2008, the Treasury De-
partment and the IRS published in the
Federal Register(73FR246)anoticeof
proposed rulemaking (REG–113462–08,
2012–5 I.R.B.339January 30, 2012

2009–4 I.R.B. 379) that proposed amend-
ing §1.881–3(a)(2)(i)(C) of the conduit
financing regulations to treat an entity
disregarded as an entity separate from its
owner for U.S. tax purposes as a person
for purposes of determining whether a
conduit financing arrangement exists. The
proposed regulations were proposed to be
effective as of the date final regulations
are published in theFederal Register.In
addition, the preamble to the proposed reg-
ulations requested comments on whether
“hybrid instruments” (instruments treated
as debt for foreign law purposes and eq-
uity for U.S. purposes) should constitute
per se“financing transactions” under
§1.881–3(a)(2)(ii)(A) and part of a “fi-
nancing arrangement” within the meaning
of §1.881–3(a)(2)(i)(A), or whether, at
a minimum, certain hybrid instruments
should be so treated, depending on spe-
cific factors or criteria.
Only one comment letter responding to
the notice of proposed rulemaking was re-
ceived. No public hearing was requested
or held. After consideration of the com-
ment, this Treasury decision adopts the
proposed regulations with minor edits to
Example 3and to clarify that the effective
date of the final regulations also applies to
newExample 3.
Explanation and Summary of Comment
The comment supported the proposed
regulations and their interpretation of the
term “person” to include a business en-
tity that is disregardedasanentitysepa-
rate from its single member owner under
§301.7701–1 through §301.7701–3. The
comment stated that to disregard an entity
that is “regarded” for purposes of claiming
treaty benefits would be inconsistent with
the policy and purpose of the anti-conduit
financing regulations.
As relates to hybrid instruments, the
comment did not support either approach
raised in the preamble to the proposed
regulations, expressing both policy and
administrative concerns with each. The
comment stated that any specific abuses
that the Treasury Department and the IRS
were concerned about could be better
addressed by a more targeted rule that
described the specific transactions and
limited the application of the regulations
to those transactions. In light of the wide
array of considerations raised, the Trea-
sury Department and the IRS have decided
to continue to study the area and not to
provide any specific rules on hybrid instru-
ments as part of this regulation package.
Accordingly, these regulations are final-
ized without change,except to clarify that
the effective date of the final regulations
also applies to newExample 3andtomake
minor edits toExample 3. The Treasury
Department and the IRS continue to so-
licit comments on the treatment of hybrid
instruments in financing transactions.
No inference should be drawn from any
provision of these final regulations as to
the treatment of financing transactions en-
tered into with disregarded entities before
the effective date of these final regulations
or involving hybrid instruments.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It is hereby certified that
this regulation will not have a significant
economic impact on a substantial number
of small entities. Accordingly, a regu-
latory flexibility analysis is not required.
Pursuant to section 7805(f) of the Inter-
nal Revenue Code, the notice of proposed
rulemaking preceding this regulation was
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administration
for comment on its impact on small busi-
ness.
Drafting Information
The principal author of these regula-
tions is Quyen P. Huynh of the Office of
Associate Chief Counsel (International).
However, other personnel from the IRS
and the Treasury Department participated
in their development.
*****
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 1.881–3 is amended by:
1. Removing the language “district di-
rector” throughout this section and adding
“director of field operations” in its place.
2.Removing the language
“§1.1441–3(j)” throughout this section
and adding “§1.1441–3(g)” in its place.
3.Removing the language
“§1.1441–7(d)” throughout this section
and adding “§1.1441–7(f)” in its place.
4. In the last sentence of paragraph
(a)(3)(ii)(B), removing the second “fi-
nanced” and adding “financing” in its
place.
5.Removing the parenthetical
language “(or a similar interest in a
partnership or trust)” in paragraphs
(a)(2)(ii)(A)(2) and (a)(2)(ii)(B)(1)and
adding “(or a similar interest in a partner-
ship, trust, or other person)” in its place.
6. Adding a new paragraph (a)(2)(i)(C).
7. In paragraph (e), redesignatingEx-
amples 3,4,5,6,7,8,9,10,11,12,13,
14,15
,16,17,18,19,20,21,22,23,24,
and25asExamples 4,5,6,7,8,9,10,11,
12,13,14,15,16,17,18,19,20,21,22,
23,24,25,and26, respectively.
8. Adding a newExample 3in para-
graph (e).
9. Revising the paragraph heading and
adding a new sentence at the end of para-
graph (f).
The revisions and additions read as fol-
lows:
§1.881–3 Conduit financing
arrangements.
*****
(a) * * *
(2) * * *
(i) * * *
(C)Treatment of disregarded entities.
For purposes of this section, the term
person includes a business entity that is
disregarded as an entity separate from its
single member owner under §301.7701–1
through §301.7701–3.
*****
(e)Examples.***
Example 3.Participation of a disregarded in-
termediate entity. The facts are the same as inEx-
ample 2, except that FS is an entity that is disre-
garded as an entity separate from its owner, FP, under
§301.7701–3. Under paragraph (a)(2)(i)(C) of this
section, FS is a person and, therefore, may itself be an
intermediate entity that is linked by financing trans-
actions to other persons in a financing arrangement.
TheDSnoteheldbyFSandtheFSnoteheldbyFP
January 30, 20123402012–5 I.R.B.

are financing transactions within the meaning of para-
graph (a)(2)(ii) of this section, and together constitute
a financing arrangement within the meaning of para-
graph (a)(2)(i) of this section.
*****
(f)Effective/applicability date. ***
Paragraph (a)(2)(i)(C) andExample 3of
paragraph (e) of this section apply to pay-
ments made on or after December 9, 2011.
Steven T. Miller,
Deputy Commissioner
for Services and Enforcement.
Approved November 29, 2011.
Emily S. McMahon,
Acting Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on December 8,
2011, 8:45 a.m., and published in the issue of the Federal
Register for December 9, 2011, 76 F.R. 76895)
Section 1275.—Other
Definitions and Special
Rules
26 CFR 1.1275–7T: Inflation-indexed debt instru-
ments (temporary).
T.D. 9561
Treasury Inflation-Protected
Securities Issued at a
Premium
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Temporary regulations.
SUMMARY: This document contains tem-
porary regulations that provide guidance
on the tax treatment of Treasury Inflation-
Protected Securities issued with more than
ade minimisamount of premium. The
text of these temporary regulations also
serves as the text of the proposed regula-
tions (REG–130777–11) set forth in this is-
sue of the Bulletin.
DATES:Effective Date:These regulations
are effective on December 5, 2011.
Applicability Date:For the date of ap-
plicability, see §1.1275–7T(k).
FOR FURTHER INFORMATION
CONTACT: William E. Blanchard, (202)
622–3950 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
Treasury Inflation-Protected Securities
(TIPS) are securities issued by the De-
partment of the Treasury. The principal
amount of a TIPS is adjusted for any in-
flation or deflation that occurs over the
term of the security. The rules for the
taxation of inflation-indexed debt instru-
ments, including TIPS, are contained in
§1.1275–7 of the Income Tax Regulations.
See also§1.171–3(b) (rules for inflation-
indexed debt instruments with bond pre-
mium).
The coupon bond method described in
§1.1275–7(d) has applied to TIPS rather
than the more complex discount bond
method described in §1.1275–7(e). Under
§1.1275–7(d)(2)(i), however, the coupon
bond method is not available with respect
to inflation-indexed debt instruments that
areissuedwithmorethanade minimis
amount of premium (that is, an amount
greater than .0025 times the stated prin-
cipal amount of the security times the
number of complete years to the security’s
maturity).
In Notice 2011–21, 2011–19 I.R.B. 761,
to provide a more uniform method for the
federal income taxation of TIPS, the De-
partment of the Treasury and the Internal
Revenue Service announced that regula-
tions would be issued to provide that tax-
payers must use the coupon bond method
described in §1.1275–7(d) for TIPS issued
with more than ade minimisamount of
premium. As a result, the discount bond
method described in §1.1275–7(e) would
not apply to TIPS issued with more than
ade minimisamount of premium. No-
tice 2011–21 provided that the regulations
would be effective for TIPS issued on or
after April 8, 2011.
Explanation of Provisions
The temporary regulations in this doc-
ument contain the rules described in No-
tice 2011–21. Under the temporary reg-
ulations, a taxpayer must use the coupon
bond method described in §1.1275–7(d)
for a TIPS that is issued with more than a
de minimisamount of premium. The tem-
porary regulations contain an example of
how to apply the coupon bond method to
a TIPS issued with more than ade minimis
amount of premium. As stated in Notice
2011–21, the temporary regulations apply
to TIPS issued on or after April 8, 2011.
See §601.601(d)(2)(ii)(b).
Special Analyses
It has been determined that this Trea-
sury decision is not asignificant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It has also been determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply to these regulations, and because
the regulations do not impose a collection
of information on small entities, the Regu-
latory Flexibility Act (5 U.S.C. chapter 6)
does not apply. Pursuant to section 7805(f)
of the Code, these regulations have been
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administration
for comment on their impact on small busi-
ness.
Drafting Information
The principal author of these regu-
lations is William E. Blanchard, Office
of Associate Chief Counsel (Financial
Institutions and Products). However,
other personnel from the IRS and the
Treasury Department participated in their
development.
*****
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 * * *
Section 1.1275–7T also issued under
26 U.S.C. 1275(d). * * *
Par. 2. Section 1.1275–7T is added to
read as follows:
§1.1275–7T Inflation-indexed debt
instruments (temporary).
(a) through (h) [Reserved]. For further
guidance, see §1.1275–7(a) through (h).
(i) [Reserved]
2012–5 I.R.B.341January 30, 2012

(j)Treasury Inflation-Protected
Securities issuedwith more than a
de minimis amount of premium—(1)
Coupon bond method.Notwithstand-
ing §1.1275–7(d)(2)(i), the coupon bond
method described in §1.1275–7(d) applies
to Treasury Inflation-Protected Securities
(TIPS) issued with more than ade minimis
amount of premium. For this purpose, the
de minimisamount is determined using
the principles of §1.1273–1(d).
(2)Example. The following example
illustrates the application of the bond pre-
mium rules to a TIPS issued with bond pre-
mium:
Example.(i)Facts. X, a calendar year taxpayer,
purchases at original issuance TIPS with a stated prin-
cipal amount of $100,000 and a stated interest rate
of .125 percent, compounded semiannually. For pur-
poses of this example, assume that the TIPS are is-
sued in Year 1 on January 1, stated interest is payable
on June 30 and December 31 of each year, and that
the TIPS mature on December 31, Year 5. X pays
$102,000 for the TIPS, which is the issue price for
the TIPS as determined under §1.1275–2(d)(1). As-
sume that the inflation-adjusted principal amount for
the first coupon in Year 1 is $101,225 (resulting in
an interest payment of $63.27) and for the second
coupon in Year 1 is $102,500 (resulting in an inter-
est payment of $64.06). X elects to amortize bond
premium under §1.171–4. (For simplicity, contrary
to actual practice, the TIPS in this example were is-
sued on the date with respect to which the calculation
of the first coupon began.)
(ii)Bond premium. The stated interest on the
TIPS is qualified stated interest under §1.1273–1(c).
X acquired the TIPS with bond premium of $2,000
(basis of $102,000 minus the TIPS’ stated principal
amount of $100,000).See§§1.171–1(d), 1.171–3(b),
and 1.1275–7(f)(3). The $2,000 is more than thede
minimisamount of premium for the TIPS of $1,250
(.0025 times the stated principal amount of the TIPS
($100,000) times the number of complete years to the
TIPS’ maturity (5 years)). Under paragraph (j)(1) of
this section, X must use the coupon bond method to
determine X’s income from the TIPS.
(iii)Allocation of bond premium. Under
§1.171–3(b), the bond premium of $2,000 is allocable
to each semiannual accrual period by assuming that
there will be no inflation or deflation over the term
of the TIPS. Moreover, for purposes of §1.171–2, the
yield of the securities is determined by assuming that
there will be no inflation or deflation over their term.
Based on this assumption, for purposes of section
171, the TIPS provide for semiannual interest pay-
ments of $62.50 and a $100,000 payment at maturity.
As a result, the yield of the securities for purposes of
section 171 is -0.2720 percent, compounded semian-
nually. Under §1.171–2, the bond premium allocable
to an accrual period is the excess of the qualified
stated interest allocable to the accrual period ($62.50
for each accrual period) over the product of the tax-
payer’s adjusted acquisition price at the beginning
of the accrual period (determined without regard to
any inflation or deflation) and the taxpayer’s yield.
Therefore, the $2,000 of bond premium is alloca-
ble to each semiannual accrual period in Year 1 as
follows: $201.22 to the accrual period ending on
June 30, Year 1 (the excess of the stated interest of
$62.50 over ($102,000 x -0.002720/2)); and $200.95
to the accrual period ending on December 31, Year
1 (the excess of the stated interest of $62.50 over
($101,798.78 x -0.002720/2)). The adjusted acqui-
sition price at the beginning of the accrual period
ending on December 31, Year 1 is $101,798.78 (the
adjusted acquisition price of $102,000 at the begin-
ning of the accrual period ending on June 30, Year 1
reduced by the $201.22 of premium allocable to that
accrual period).
(iv)Income determined by applying the coupon
bond method and the bond premium rules. Under
§1.1275–7(d)(4), the application of the coupon bond
method to the TIPS results in a positive inflation ad-
justment in Year 1 of $2,500, which is includible in
X’s income for Year 1. However, because X acquired
the TIPS at a premium and elected to amortize the
premium, the premium allocable to Year 1 will offset
the income on the TIPS as follows: The premium al-
locable to the first accrual period of $201.22 first off-
sets the interest payable for that period of $63.27. The
remaining $137.95 of premium is treated as a defla-
tion adjustment that offsets the positive inflation ad-
justment.See§1.171–3(b). The premium allocable
to the second accrual period of $200.95 first offsets
the interest payable for that period of $64.06. The re-
maining $136.89 of premium is treated as a deflation
adjustment that further offsets the positive inflation
adjustment. As a result, X does not include in in-
come any of the stated interest received in Year 1 and
includes in Year 1 income only $2,225.16 of the posi-
tive inflation adjustment for Year 1 ($2,500 - $137.94
- $136.89).
(k)Effective/applicability date.
Notwithstanding §1.1275–7(h), this sec-
tion applies to Treasury Inflation-Pro-
tected Securities issued on or after April 8,
2011.
(l)Expiration date. The applicabil-
ity of this section expires on or before
December 2, 2014.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved November 21, 2011.
Emily S. McMahon,
Acting Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on December 2,
2011, 8:45 a.m., and published in the issue of the Federal
Register for December 5, 2011, 76 F.R. 75781)
January 30, 20123422012–5 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2012–10
This notice provides guidance as to the
corporate bond weighted average interest
rate and the permissible range of interest
rates specified under § 412(b)(5)(B)(ii)(II)
of the Internal Revenue Code as in ef-
fect for plan years beginning before 2008.
It also provides guidance on the cor-
porate bond monthly yield curve (and
the corresponding spot segment rates),
and the 24-month average segment rates
under § 430(h)(2). In addition, this no-
tice provides guidance as to the interest
rate on 30-year Treasury securities un-
der § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008, the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I), and the min-
imum present value segment rates under
§ 417(e)(3)(D) as in effect for plan years
beginning after 2007.
CORPORATE BOND WEIGHTED
AVERAGE INTEREST RATE
Sections412(b)(5)(B)(ii)and
412(l)(7)(C)(i), as amended by the Pen-
sion Funding Equity Act of 2004 and by
the Pension Protection Act of 2006 (PPA),
provide that the interest rates used to cal-
culate current liability and to determine
the required contribution under § 412(l)
for plan years beginning in 2004 through
2007 must be within a permissible range
based on the weighted average of the rates
of interest on amounts invested conser-
vatively in long term investment grade
corporate bonds during the 4-year period
ending on the last day before the beginning
of the plan year.
Notice 2004–34, 2004–1 C.B. 848, pro-
vides guidelines for determining the cor-
porate bond weighted average interest rate
and the resulting permissible range of in-
terest rates used to calculate current liabil-
ity. That notice establishes that the corpo-
rate bond weighted average is based on the
monthly composite corporate bond rate de-
rived from designated corporate bond in-
dices. The methodology for determining
the monthly composite corporate bond rate
as set forth in Notice 2004–34 continues to
apply in determining that rate. See Notice
2006–75, 2006–2 C.B. 366.
The composite corporate bond rate for
December 2011 is 4.71 percent. Pursuant
to Notice 2004–34, the Service has de-
termined this rate as the average of the
monthly yields for the included corporate
bond indices for that month.
The following corporate bond weighted
average interest rate was determined for
plan years beginning in the month shown
below.
For Plan Years
Beginning inPermissible Range
MonthYear
Corporate
Bond Weighted
Average90%to100%
January2012
5.725.155.72
YIELD CURVE AND SEGMENT
RATES
Generally for plan years beginning
after 2007 (except for delayed effective
dates for certain plans under sections 104,
105, and 106 of PPA), § 430 of the Code
specifies the minimum funding require-
ments that apply to single employer plans
pursuant to § 412. Section 430(h)(2) spec-
ifies the interest rates that must be used
to determine a plan’s target normal cost
and funding target. Under this provision,
present value is generally determined us-
ing three 24-month average interest rates
(“segment rates”), each of which applies
to cash flows during specified periods.
However, an election may be made under
§ 430(h)(2)(D)(ii) to use the monthly yield
curve in place of the segment rates. Sec-
tion 430(h)(2)G) set forth a transitional
rule applicable to plan years beginning in
2008 and 2009 under which the segment
rates were blended with the corporate bond
weighted average described above, includ-
ing an election under § 430(h)(2)(G)(iv)
foranemployertousethesegmentrates
without the transitional rule.
Notice 2007–81, 2007–2 C.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond
segment rates used to compute the tar-
get normal cost and the funding target.
Pursuant to Notice 2007–81, the monthly
corporate bond yield curve derived from
December 2011 data is in Table I at the end
of this notice. The spot first, second, and
third segment rates for the month of De-
cember 2011 are, respectively, 2.07, 4.45,
and 5.24. The three 24-month average
corporate bond segment rates applicable
for January 2012 are as follows:
First
Segment
Second
Segment
Third
Segment
1.98
5.07
6.19
The transitional rule of § 430(h)(2)(G)
does not apply to plan years beginning af-
ter December 31, 2009. Therefore, for a
plan year beginning after 2009 with a look-
back month to January 2012, the funding
segment rates are the three 24-month aver-
age corporate bond segment rates applica-
ble for January 2012, listed above without
blending for any transitional period.
2012–5 I.R.B.343January 30, 2012

30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 417(e)(3)(A)(ii)(II) (prior to
amendment by PPA) defines the appli-
cable interest rate, which must be used
for purposes of determining the minimum
present value of a participant’s benefit
under § 417(e)(1) and (2), as the annual
rate of interest on 30-year Treasury se-
curities for the month before the date
of distribution or such other time as the
Secretary may by regulations prescribe.
Section 1.417(e)–1(d)(3) of the Income
Tax Regulations provides that the applica-
ble interest rate for a month is the annual
rate of interest on 30-year Treasury secu-
rities as specified by the Commissioner
for that month in revenue rulings, notices
or other guidance published in the Internal
Revenue Bulletin.
The rate of interest on 30-year Treasury
securities for December 2011 is 2.98 per-
cent. The Service has determined this rate
as the average of the daily determinations
of yield on the 30-year Treasury bond ma-
turing in November 2041.
Generally for plan years beginning
after 2007, § 431 specifies the mini-
mum funding requirements that apply to
multiemployer plans pursuant to § 412.
Section 431(c)(6)(B)specifies a minimum
amount for the full-funding limitation
described in section 431(c)(6)(A), based
on the plan’s current liability. Section
431(c)(6)(E)(ii)(I) provides that the inter-
est rate used to calculate current liability
for this purpose must be no more than 5
percent above and no more than 10 percent
below the weighted average of the rates of
interest on 30-year Treasury securities dur-
ing the four-year period ending on the last
day before the beginning of the plan year.
Notice 88–73, 1988–2 C.B. 383, provides
guidelines for determining the weighted
average interest rate. The following rates
were determined for plan years beginning
in the month shown below.
For Plan Year
s
Beginning inPermissible
Range
MonthYear
30-Year
Treasury
Weighted
Average90%to105%
January20124.083.674.29
MINIMUM PRE
SENT VALUE
SEGMENT RAT
ES
Generally f
or plan years beginning af-
ter Decemb
er 31, 2007, the applicable in-
terest rat
es under § 417(e)(3)(D) are seg-
ment rates
computed without regard to a
24-month av
erage. For plan years be-
ginningin2
008 through 2011, the appli-
cable inter
est rates are the monthly spot
segment rat
es blended with the applicable
rate under
§ 417(e)(3)(A)(ii)(II) as in ef-
fect for pl
an years beginning in 2007. No-
tice 2007–
81 provides guidelines for de-
termining t
he minimum present value seg-
ment rates.
Pursuant to that notice, the
minimum pre
sent value transitional seg-
ment rates d
etermined for December 2011,
taking int
o account the December 2011
30-year Tr
easuryrateof2.98statedabove,
are as foll
ows:
For Plan
Years
Beginning in
First
Segment
Second
Segment
Third
Segment
2011
2.25
4.164.79
20122.07
4.455.24
DRAFTING INFORMATION
The principal author of this notice is
Tony Montanaro of the Employee Plans,
Tax Exempt and Government Entities
Division. Mr. Montanaro may be e-mailed
atRetirementPlanQuestions@irs.gov.
January 30, 20123442012–5 I.R.B.

Table I
Monthly Yield Curve for December 2011
Derived from December 2011 Data
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.5
0.67
20.55.0340.55.2760.55.3680.55.40
1.01.1021.0
5.04
41.0
5.27
61.0
5.36
81.0
5.40
1.5
1.49
21.55.0541.55.2861.55.3681.55.40
2.01.8322.0
5.06
42.0
5.28
62.0
5.36
82.0
5.40
2.5
2.11
22.55.0742.55.2862.55.3682.55.40
3.02.3423.05.0843.05.2963.05.3683.05.40
3.52.5423.55.0943.55.2963.55.3683.55.40
4.02.7224.0
5.10
44.0
5.29
64.0
5.37
84.0
5.40
4.5
2.89
24.55.1144.55.3064.55.3784.55.40
5.0
3.04
25.05.1145.05.3065.05.3785.05.41
5.5
3.20
25.55.1245.55.3065.55.3785.55.41
6.03.3426.05.1346.05.3066.05.3786.05.41
6.5
3.49
26.55.1446.55.3066.55.3786.55.41
7.03.6227.0
5.14
47.0
5.31
67.0
5.37
87.0
5.41
7.53.7527.55.1547.55.3167.55.3787.55.41
8.03.8728.0
5.16
48.0
5.31
68.0
5.37
88.0
5.41
8.5
3.98
28.55.1648.55.3168.55.3888.55.41
9.04.0929.05.1749.05.3269.05.3889.05.41
9.5
4.19
29.55.1749.55.3269.55.3889.55.41
10.04.2830.0
5.1850.05.32
70.0
5.38
90.0
5.41
10.5
4.36
30.55.1950.55.3270.55.3890.55.41
11.04.4431.0
5.1951.05.32
71.0
5.38
91.0
5.41
11.54.5131.55.2051.55.3371.55.3891.55.41
12.04.5732.05.2052.05.3372.05.3892.05.41
12.5
4.63
32.55.2152.55.3372.55.3892.55.42
13.04.6833.0
5.2153.05.33
73.0
5.39
93.0
5.42
13.5
4.72
33.55.2253.55.3373.55.3993.55.42
14.04.7634.0
5.2254.05.33
74.0
5.39
94.0
5.42
14.5
4.80
34.55.2354.55.3474.55.3994.55.42
15.04.8335.05.2355.05.3475.05.3995.05.42
15.5
4.86
35.55.2355.55.3475.55.3995.55.42
16.04.8936.0
5.2456.05.34
76.0
5.39
96.0
5.42
16.5
4.91
36.55.2456.55.3476.55.3996.55.42
17.04.9337.0
5.2557.05.35
77.0
5.39
97.0
5.42
17.54.9537.55.2557.55.3577.55.3997.55.42
18.04.9738.05.2658.05.3578.05.3998.05.42
18.5
4.98
38.55.2658.55.3578.55.4098.55.42
19.0
5.00
39.0
5.2659.05.35
79.0
5.40
99.0
5.42
19.55.0139.55.2659.55.3579.55.4099.55.42
20.0
5.02
40.0
5.27
60.0
5.35
80.0
5.40
100.0
5.42
2012–5 I.R.B.345January 30, 2012

Transitional Relief for Section
6045B Issuer Returns
and Statements for 2011
Organizational Actions
Notice 2012–11
PURPOSE
This notice provides transitional relief
from information reporting requirements
in section 6045B of the Internal Revenue
Code that apply to issuers of stock with re-
spect to organizational actions that affect
the basis of the stock. This notice provides
that posting either Form 8937,Report of
Organizational Actions Affecting Basis of
Securities, or the required information in
a readily accessible format to an issuer’s
primary public Web site will satisfy an is-
suer’s requirement to file and furnish Form
8937 for organizational actions occurring
in 2011. This notice also provides that the
Internal Revenue Service will not impose
penalties for reporting incorrect informa-
tion against issuers under sections 6721 or
6722 related to filing and furnishing Form
8937 for 2011 organizational actions pro-
vided that they make good-faith efforts in
timely posting the Form 8937 or the re-
quired information on the issuers’ primary
public Web sites or filing accurate Forms
8937 and furnishing the corresponding is-
suer statements.
BACKGROUND
Section 403 of the Energy Improvement
and Extension Act of 2008, Div. B of
Pub. L. No. 110–343, 122 Stat. 3765,
enacted on October 3, 2008, added section
6045B to the Code. Section 6045B pro-
vides that, for organizational actions be-
ginning in 2011, an issuer of stock must
file a return with the Service to describe
any organizationalaction (such as a stock
split, merger, or acquisition) that affects
the basis of a specified security. Under sec-
tion 6045B(d) and section 6045(g)(3)(B),
in 2011, a specified security is limited to
stock in a corporation. The issuer gener-
ally must file the return within 45 days af-
ter the organizational action. The issuer
must also furnish a corresponding state-
ment to each nominee of the stockholder
(or to each stockholder if there is no nomi-
nee) by January 15th of the year following
the calendar year of the organizational ac-
tion.
Because January 15, 2012, is a Sunday
and January 16, 2012, is a Federal holi-
day, issuers must furnish the required state-
ments to stockholders or nominees by Jan-
uary 17, 2012. Further, the Service an-
nounced that issuers may report 2011 orga-
nizational actions without penalty if Form
8937 is filed by January 17, 2012. Notice
2011–18, 2011–11 I.R.B. 549 (March 14,
2011).
An issuer is not required to file an
issuer return with the Service or furnish
issuer statements to stockholders or nom-
inees if it posts the return on its primary
public Web site in a readily accessible
format by the filing date. Treas. Reg.
§ 1.6045B–1(a)(3), (b)(4).
The requirements under section 6045B
do not apply to issuers of stock in a regu-
lated investment company until 2012.
TRANSITIONAL INFORMATION
REPORTING REQUIREMENTS FOR
ISSUERSOFSTOCKREPORTING
ORGANIZATIONAL ACTIONS TAKEN
IN 2011
Section 6721 imposes a penalty on any
issuer of stock that does not timely file a
correct issuer return with the Service as re-
quired by section 6045B(a). Section 6722
imposes a penalty on any issuer of stock
that does not timely furnish correct issuer
statements to stockholders or nominees as
required by section 6045B(c). The Ser-
vice has learned that a number of ques-
tions have arisen following the release of
the final Form 8937 and instructions and
recognizes that the release date provides a
very limited timeframe remaining before
the due date of the form.
Accordingly, the Service will permit an
issuer to publicly report an organizational
action by posting either Form 8937 or the
required information in a readily accessi-
ble format to an area of its primary public
Web site. The Service will treat the issuer
as having filed Form 8937 and furnished
issuer statements to stockholders or nom-
inees on the date of posting of the Form
8937 or the required information.
Further, the Service will not impose
penalties for reporting incorrect infor-
mation under sections 6721 and 6722
on issuers that must file information re-
turns and furnish statements under section
6045B provided that they make good-faith
efforts to timely post the Form 8937 or
the required information on their primary
public Web sites or file accurate Forms
8937 and furnish the corresponding issuer
statements. The potential impact of the
issues addressed in this notice will be con-
sidered in assessing reasonable cause with
respect to broker reporting required under
section 6045(g).
This transitional relief is limited to re-
porting organizational actions occurring in
2011. This transitional relief does not ap-
ply to issuers of stock in a regulated invest-
ment company, which are not subject to the
issuer reporting requirements for 2011 or-
ganizational actions.
DRAFTING INFORMATION
The principal author of this no-
tice is Carlton King of the Office of
Associate Chief Counsel (Procedure &
Administration). For further information
regarding this notice, please contact
Carlton King at (202) 622–4910 (not a
toll-free call).
January 30, 20123462012–5 I.R.B.

Part IV. Items o
fGeneralInterest
Notice of Proposed
Rulemaking by
Cross-Reference to
Temporary Regulations
and Notice of Public Hearing
Treasury Inflation-Protected
Securities Issued at a
Premium
REG–130777–11
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
by cross-reference to temporary regula-
tions and notice of public hearing.
SUMMARY: In this issue of the Bul-
letin, the IRS is issuing temporary
regulations (T.D. 9561) that provide
guidance on the tax treatment of Treasury
Inflation-ProtectedSecurities issued
with more than ade minimisamount of
premium. The text of those regulations
also serves as the text of these proposed
regulations. This document also provides
notice of a public hearing on these
proposed regulations.
DATES: Written or electronic comments
must be received by March 5, 2012. Out-
lines of topics to be discussed at the pub-
lic hearing scheduled for March 28, 2012,
must be received by March 7, 2012.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR(REG–130777–11),
room 5203, Internal Revenue Service,
PO Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may
be hand-delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (REG–130777–11),
Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue, N.W.,
Washington, DC, or sent electronically,
viatheFederaleRulemaking
Portal atwww.regulations.gov(IRS
REG–130777–11).
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, William E. Blanchard, (202)
622–3950; concerning submissions of
comments, the hearing, and/or to be placed
on the building access list to attend the
hearing, Oluwafunmilayo (Funmi) Taylor,
(202) 622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background and Explanation of
Provisions
Temporary regulations in this issue of
the Bulletin amend the Income Tax Regu-
lations (26 CFR part 1) relating to section
1275. The temporary regulations provide
that the coupon bond method described
in §1.1275–7(d) applies to Treasury In-
flation-Protected Securities (TIPS) issued
with more than ade minimisamount of
premium. The temporary regulations ap-
plytoTIPSissuedonorafterApril8,2011.
The text of the temporary regulations also
serves as the text of these proposed reg-
ulations. In addition to comments on the
text of the temporary regulations, the IRS
and the Treasury Department request com-
ments on whether the rules in the tem-
porary regulations should be extended to
other types of inflation-indexed debt in-
struments.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory
assessment is not required. It also has
been determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these reg-
ulations, and because the regulations do
not impose a collection of information on
small entities, the Regulatory Flexibility
Act (5 U.S.C. chapter 6) does not apply.
Pursuant to section 7805(f) of the Internal
Revenue Code, this notice of proposed
rulemaking has been submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
its impact on small businesses.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written comments
(a signed original and eight (8) copies)
or electronic comments that are submitted
timelytotheIRS.TheIRSandtheTrea-
sury Department specifically request com-
ments on the clarity of the proposed rule
and how it may be made easier to under-
stand. All comments will be available for
public inspection and copying.
A public hearing has been scheduled
for March 28, 2012, beginning at 10 a.m.
in the IRS Auditorium, Internal Rev-
enue Building, 1111 Constitution Avenue,
N.W., Washington, DC. Due to building
security procedures, visitors must enter
through the Constitution Avenue entrance.
In addition, all visitors must present photo
identification to enter the building. Be-
cause of access restrictions, visitors will
not be admitted beyond the immediate
entrance area more than 30 minutes before
the hearing starts. For information about
having your name placed on the build-
ing access list to attend the hearing, see
the “FOR FURTHER INFORMATION
CONTACT” section of this preamble.
The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing. Persons who wish to
present oral comments at the hearing must
submit written or electronic comments by
March 5, 2012 and submit an outline of the
topics to be discussed and the time to be
devoted to each topic (signed original and
eight (8) copies) by March 7, 2012. A pe-
riod of 10 minutes will be allotted to each
person for making comments. An agenda
showing the scheduling of the speakers
will be prepared after the deadline for re-
ceiving outlines has passed. Copies of the
agenda will be available free of charge at
the hearing.
Drafting Information
The principal author of these regu-
lations is William E. Blanchard, Office
of Associate Chief Counsel (Financial
Institutions and Products). However,
other personnel from the IRS and the
Treasury Department participated in their
development.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
2012–5 I.R.B.347January 30, 2012

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 1.1275–7 is revised to
read as follows:
§1.1275–7 Inflation-indexed debt
instruments.
[The text of the proposed amendments
to §1.1275–7 is the same as the text for
§1.1275–7T(i) through (k) published else-
where in this issue of the Bulletin].
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on December 2,
2011, 8:45 a.m., and published in the issue of the Federal
Register for December 5, 2011, 76 F.R. 75829)
Regulations G
overning the
Performance o
fActuarial
Services Unde
r the Employee
Retirement I
ncome Security
Act of 1974; C
orrection
Announcement 2012–5
AGENCY: Joint Board for the Enrollment
of Actuaries.
ACTION: Correcting amendment.
SUMMARY: This document describes
correcting amendments to final regula-
tions (T.D. 9517, 2011–15 I.R.B. 610)
relating to the enrollment of actuaries.
These regulations were published in the
Federal Registeron Thursday, March 31,
2011 (76 FR 17762).
DATES: This correction is effective on
December 28, 2011, and is applicable on
March 31, 2011.
FOR FURTHER INFORMATION
CONTACT: Patrick McDonough, Execu-
tive Director, Joint Board for the Enroll-
ment of Actuaries, at (202) 622–8229 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final regulations (T.D. 9517) that
are the subject of thiscorrection are un-
der section 3042 of the Employee Re-
tirement Income Security Act of 1974
(88 Stat. 829), Public Law 93–406
(ERISA).
Need for Correction
As published, final regulations
(T.D. 9517) contain errors that may prove
to be misleading and are in need of
clarification.
*****
Correction of Publication
Accordingly, 20 CFR part 901 is cor-
rected by making the following correcting
amendments:
PART 901—REGULATIONS
GOVERNING THE PERFORMANCE
OF ACTUARIAL SERVICES UNDER
THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974
Paragraph 1. The authority citation for
part 901 continues to read in part as fol-
lows:
Authority: These rules are issued under
authority of 88 Stat.1002; 29 U.S.C. 1241,
1242.See also5U.S.C.301;31U.S.C.
330; and 31 U.S.C. 321.
Par. 2. Section 901.11 is amended by:
1. Revising the first sentence of para-
graph (f)(1)(i).
2. Revising paragraph (l)(4)(ii).
3. Revising the last sentence of para-
graph (o)Example 4(i), and paragraphs (o)
Example 6(iii) and (o)Example 7(ii).
The revisions read as follows:
§901–11 Enrollment procedures
*****
(f) * * *
(1) * * *
(i) Core subject matter is program con-
tent and knowledge that is integral and
necessary to the satisfactory performance
of pension actuarial services and actuarial
certifications under ERISA and the Inter-
nal Revenue Code. * * *
*****
(l) * * *
(4) * * *
(ii)Placement on the inactive roster af-
ter notice and right to respond.TheEx-
ecutive Director will move an enrolled ac-
tuary who does not submit a timely appli-
cation of renewal that shows timely com-
pletion of the required continuing profes-
sional education to the inactive roster only
after giving the enrolled actuary 60 days to
respond as described in paragraph (l)(1) of
this section.
*****
(o) * * *
Example 4. (i) * * * Accordingly, effective
April 1, 2014, H is placed on the roster of inactive
enrolled actuaries and is ineligible to perform pension
actuarial services as an enrolled actuary under ERISA
and the Internal Revenue Code.
*****
Example 6. ***
(iii) Note that the total of 15 hours of con-
tinuing professional education credit that H com-
pletes between January 1, 2011, and December 31,
2013, as well as the 10 hours of continuing profes-
sional education credit between January 1, 2014,
and December 31, 2016, are not counted toward
H’s return to active status and are not taken into
account toward the additional hours of continuing
professional education credit that H must complete
between January 1, 2020, and December 31, 2022, in
order to be eligible to file an application for renewal
of enrollment active status effective April 1, 2023.
Example 7. ***
(ii) J completes 5 hours of core continuing profes-
sional education credit and 4 hours of non-core con-
tinuing professional education credit between Jan-
uary 1, 2014, and October 6, 2014. Because J did
not complete the required 12 hours of continuing pro-
fessional education (of which at least 6 hours must
consist of core subject matter) during J’s initial en-
rollment cycle, J is not eligible to file an application
for a return to active enrollment on October 6, 2014,
notwithstanding the fact that had J completed such
hours between January 1, 2012, and December 31,
2013, J would have satisfied the requirements for re-
newed enrollment effective April 1, 2014.
*****
Guy R. Traynor,
Acting Chief, Publications
and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on December 27,
2011, 8:45 a.m., and published in the issue of the Federal
Register for December 28,2011, 76 F.R. 81362)
January 30, 20123482012–5 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2012–5 I.R.B.iJanuary 30, 2012

Numerical Finding List
1
Bulletins 2012–1 through 2012–5
Announcements:
2012-1, 2012-1 I.R.B.249
2012-2, 2012-2 I.R.B.285
2012-3, 2012-4 I.R.B.335
2012-4, 2012-4 I.R.B.335
2012-5, 2012-5 I.R.B.348
Notices:
2012-1, 2012-2 I.R.B.260
2012-3, 2012-3 I.R.B.289
2012-4, 2012-3 I.R.B.290
2012-5, 2012-3 I.R.B.291
2012-6, 2012-3 I.R.B.293
2012-7, 2012-4 I.R.B.308
2012-8, 2012-4 I.R.B.309
2012-9, 2012-4 I.R.B.315
2012-10, 2012-5 I.R.B.343
2012-11, 2012-5 I.R.B.346
Proposed Regulations:
REG-149625-10, 2012-2 I.R.B.279
REG-102988-11, 2012-4 I.R.B.326
REG-130777-11, 2012-5 I.R.B.347
Revenue Procedures:
2012-1, 2012-1 I.R.B.1
2012-2, 2012-1 I.R.B.92
2012-3, 2012-1 I.R.B.113
2012-4, 2012-1 I.R.B.125
2012-5, 2012-1 I.R.B.169
2012-6, 2012-1 I.R.B.197
2012-7, 2012-1 I.R.B.232
2012-8, 2012-1 I.R.B.235
2012-9, 2012-2 I.R.B.261
2012-10, 2012-2 I.R.B.273
2012-12, 2012-2 I.R.B.275
2012-13, 2012-3 I.R.B.295
2012-14, 2012-3 I.R.B.296
Revenue Rulings:
2012-1, 2012-2 I.R.B.255
2012-2, 2012-3 I.R.B.286
2012-5, 2012-5 I.R.B.337
Treasury Decisions:
9559, 2012-2 I.R.B.252
9560, 2012-4 I.R.B.299
9561, 2012-5 I.R.B.341
9562, 2012-5 I.R.B.339
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2011–27 through 2011–52 is in Internal Revenue Bulletin
2011–52, dated December 27, 2011.
January 30, 2012ii2012–5 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2012–1 through 2012–5
Notices:
2010-88
As modified by Ann. 2011-40, is superseded by
Notice 2012-1, 2012-2 I.R.B.260
2011-28
Superseded by
Notice 2012-9, 2012-4 I.R.B.315
Revenue Procedures:
2003-61
Superseded by
Notice 2012-8, 2012-4 I.R.B.309
2007-44
Modified by
Ann. 2012-3, 2012-4 I.R.B.335
2011-1
Superseded by
Rev. Proc. 2012-1, 2012-1 I.R.B.1
2011-2
Superseded by
Rev. Proc. 2012-2, 2012-1 I.R.B.92
2011-3
Superseded by
Rev. Proc. 2012-3, 2012-1 I.R.B.113
2011-4
Superseded by
Rev. Proc. 2012-4, 2012-1 I.R.B.125
2011-5
Superseded by
Rev. Proc. 2012-5, 2012-1 I.R.B.169
2011-6
Superseded by
Rev. Proc. 2012-6, 2012-1 I.R.B.197
2011-7
Superseded by
Rev. Proc. 2012-7, 2012-1 I.R.B.232
2011-8
Superseded by
Rev. Proc. 2012-8, 2012-1 I.R.B.235
2011-9
Superseded by
Rev. Proc. 2012-9, 2012-2 I.R.B.261
2011-10
Superseded by
Rev. Proc. 2012-10, 2012-2 I.R.B.273
Revenue Procedures— Continued:
2011-49
Modified by
Ann. 2012-3, 2012-4 I.R.B.335
Revenue Rulings:
2008-40
Modified by
Notice 2012-6, 2012-3 I.R.B.293
2011-1
Modified by
Notice 2012-6, 2012-3 I.R.B.293
Treasury Decision:
9517
Corrected by
Ann. 2012-4, 2012-4 I.R.B.335
Ann. 2012-5, 2012-5 I.R.B.348
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2011–27 through 2011–52 is in Internal Revenue Bulletin 2011–52, dated December 27,
2011.
2012–5 I.R.B.iiiJanuary 30, 2012

INDEX
Internal Revenue Bulletins 2012–1 through
2012–5
The abbreviation and number in parenthesis following the index entry
refer to the specific item; numbers in roman and italic type following
the parentheses refer to the Internal Revenue Bulletin in which the item
may be found and the page number on which it appears.
Key to Abbreviations:
AnnAnnouncement
CDCourt Decision
DODelegation Order
EOExecutive Order
PLPublic Law
PTEProhibited Transaction Exemption
RPRevenue Procedure
RRRevenue Ruling
SPRStatement of Procedural Rules
TCTax Convention
TDTreasury Decision
TDOTreasury Department Order
EMPLOYEE PLANS
Determination letters, issuing procedures (RP 6) 1,197
Letter rulings:
And determination letters, areas which will not be issued
from:
Associates Chief Counsel and Division Counsel (TE/GE)
(RP 3) 1,113
Associate Chief Counsel (International) (RP 7) 1,232
And general information letters, procedures (RP 4) 1,125
User fees, request for letter rulings (RP 8) 1,235
Qualified plans:
Determination letters (Ann 3) 4,335
Group trusts (Notice 6) 3,293
Retirement plans, covered compensation, permitted disparity
(RR 5) 5,337
Technical advice to IRS employees (RP 5) 1,169
Full funding limitations, weighted average interest rates, seg-
ment rates for:
January 2012 (Notice 10) 5,343
EMPLOYMENT TAX
Interim guidance for cost of health care coverage reporting on
Form W-2 (Notice 9) 4,315
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Technical Advice Memoranda (RP 2) 1,92
ESTATE TAX
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Technical Advice Memoranda (RP 2) 1,92
EXCISE TAX
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Technical Advice Memoranda (RP 2) 1,92
EXEMPT ORGANIZATIONS
Annual notice to donors regarding pending and settled declara-
tory judgment suits (Ann 1) 1,249
Certain filing changes for tax-exempt organizations (Notice 4) 3,
290
Letter rulings:
And determination letters:
Areas which will not be issued from Associates Chief
Counsel and Division Counsel (TE/GE) (RP 3) 1,113
And general information letters, procedures (RP 4) 1,125
Exemption application determination letter rulings under sec-
tions 501, 509, 4940, and 4942 (RP 10) 2,273
Exemption application determination letter rulings under sec-
tions 501 and 521 (RP 9) 2,261
User fees, request for letter rulings (RP 8) 1,235
Technical advice to IRS employees (RP 5) 1,169
GIFT TAX
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Technical Advice Memoranda (TAMs) (RP 2) 1,92
INCOME TAX
Application of the segregation rules to small shareholders
(REG–149625–10) 2,279
Basis reporting by securities brokers and basis determination for
debt instruments and options (REG–102988–11) 4,326
Conduit financing arrangements (TD 9562) 5,339
Continuing education provider and accrediting organization (RP
12) 2,275
Credits:
Iowa credit disaster relief (Notice 7) 4,308
New markets tax credit (TD 9560) 4,299
Current refundings of tax-exemptbonds in certain disaster relief
bond programs (Notice 3) 3,289
Equitable relief under section 66(c) or section 6015(f) (Notice 8)
4,309
January 30, 2012iv2012–5 I.R.B.

INCOME TAX—Cont.
Forms:
1097, 1098, 3921, 3922, 5498, 8935, and W-2, requirements
for filing electronically; correction to Rev. Proc. 2011–40
(Ann 2) 2,285
Interest:
Investment:
Federal short-term, mid-term, and long-term rates for:
January (RR 2) 3,286
Letters rulings:
And determination letters, areas which will not be issued
from:
Associate Chief Counsel andDivision Counsel (TE/GE)
(RP 3) 1,113
Associate Chief Counsel (International) (RP 7) 1,232
And information letters issued by Associate Offices, determi-
nation letters issued by Operating Divisions (RP 1) 1,1
Maximum vehicle values, specialvaluation rules, 2012 (RP 13)
3,295
Proposed Regulations:
26 CFR 1.275–7, revised; treasury inflation-protected securi-
ties issued at a premium (REG–130777–11) 5,347
26 CFR 1.382–3, amended; application of the segregation
rules to small shareholders (REG–149625–10) 2,279
26 CFR 1.6045–1, amended; 1.6045A–1, amended;
1.6045B–1, amended; basis reporting by securities brokers
and basis determination for debt instruments and options
(REG–102988–11) 4,326
Publication 1220, specifications for filing forms 1097, 1098,
3921, 3922, 5498, 8935, and W-2 electronically; correction to
Rev. Proc. 2011–40 (Ann 2) 2,285
Recurring item exception (RR 1) 2,255
Regulations:
26 CFR 1.45D–1, added; 1.45D–1, amended; new markets
tax credit (TD 9560) 4,299
26 CFR 1.275–7T, added; treasury inflation-protected securi-
ties issued at a premium (TD 9561) 5,341
26 CFR 1.881–3, amended; conduit financing arrangements
(TD 9562) 5,339
26 CFR 300.0, amended; 300.12, revised; 300.13, added; user
fee to take the registered tax return preparer competency
examination (TD 9559) 2,252
26 CFR 901.11, amended; regulations governing the perfor-
mance of actuarial services under the Employee Retirement
Income Security Act (ERISA)of 1974; correction (Ann 4)
4,335; correction (Ann 5) 5,348
Regulations governing the performance of actuarial services un-
der the Employee Retirement Income Security Act (ERISA) of
1974; correction (Ann 4) 4,335; correction (Ann 5) 5,348
Safe harbor reporting:
Eligible REMICs required to report on Schedule Q informa-
tion with respect to REMIC assets (Notice 5) 3,291
Guidance for REIT investing in certain REMIC regular and
residual interests (RP 14) 3,296
Standard mileage rates, 2012 (Notice 1) 2,260
Technical Advice Memoranda (TAMs) (RP 2) 1,92
INCOME TAX—Cont.
Transitional relief for section 6045B issuer returns and state-
ments for 2011 organizational actions (Notice 11) 5,346
Treasury inflation-protected securities issued at a premium (TD
9561) 5,341; (REG–130777–11) 5,347
User fee to take the registered tax return preparer competency
examination (TD 9559) 2,252
SELF-EMPLOYMENT TAX
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Technical Advice Memoranda (TAMs) (RP 2) 1,92
2012–5 I.R.B.vJanuary 30, 2012

January 30, 20122012–5 I.R.B.

2012–5 I.R.B.January 30, 2012

January 30, 20122012–5 I.R.B.

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