us-irs-revenue-rulings-irb-2020-8-pdf•Internal Revenue Bulletin 2020-8 (PDF rendition): IRS Revenue Rulings
Internal Revenue Bulletin 2020-8 (PDF rendition): IRS Revenue Rulings
us-irs-revenue-rulings-irb-2020-8-pdfInternal Revenue Bulletin 2020-8 (PDF rendition): IRS Revenue RulingsGuidance
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Bulletin No. 2020–8 February 18, 2020 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. EMPLOYMENT TAX, INCOME TAX T.D. 9892, page 439. These final regulations update the due dates and available extensions of time to file certain tax returns and informa- tion returns, to reflect statutory requirements set by section 2006 of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 and section 201 of the Protecting Americans from Tax Hikes Act of 2015. Additionally, the regulations remove a provision for elect- ing large partnerships that was made obsolete by section 1101(b)(1) of the Bipartisan Budget Act of 2015. The regu- lations also delete temporary regulations. EXEMPT ORGANIZATIONS Rev. Proc. 2020-8, page 447. This revenue procedure modifies Rev. Proc. 2020-5 to al- low for the new electronic submission process of the Form 1023. This revenue procedure also modifies language relat- ed to the submission of written requests of Canadian chari- ties to be listed on the Tax Exempt Organizations Search da- tabase or for a determination on private foundation status. Finally, this revenue procedure provides a 90 day transition relief period, during which paper Form 1023 applications will be accepted and processed by EO Determinations. INCOME TAX Rev. Rul. 2020-4, page 444. This revenue ruling clarifies the manner to properly com- pute the income limits applicable to the low-income housing credit under § 42 of the Internal Revenue Code. The Consol- idated Appropriations Act of 2018 added a new minimum set-aside test, the average income test (§ 42(g)(1)(C)), to the existing minimum set-aside tests available to owners of a low-income housing project. This revenue ruling address- es the additional income limits available in the average in- come test. T.D. 9891, page 419. These final regulations would finalize the rules in the tempo- rary regulations under REG-127203-15, published January 19, 2017. These final regulations provide rules that address certain transfers of appreciated property by United States persons to partnerships with foreign partners that are re- lated to the transferor. Specifically, these final regulations override the rules providing for nonrecognition of gain on a contribution of property to a partnership in exchange for an interest in the partnership unless the partnership complies with certain requirement. Those requirements, in turn, are intended to prevent the shifting of tax consequences of pre- contribution gain to the related foreign partner by ensuring that built-in gain with respect to the contributed property will be subject to U.S. tax. Finding Lists begin on page ii. The IRS Mission Provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and en- force the law with integrity and fairness to all. Introduction The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing of- ficial rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. It is published weekly. 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, modify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless other- wise indicated. Procedures relating solely to matters of inter- nal management 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 rul- ings 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.—1986 Code. This part includes rulings and decisions based on provisions of the Internal Revenue Code of 1986. Part II.—Treaties and Tax Legislation. This part is divided into two subparts as follows: Subpart A, Tax Conventions and Other Related Items, and Subpart B, Legislation 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 Rulings. Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury’s Office of the Assistant Secretary (Enforcement). Part IV.—Items of General Interest. This part includes notices of proposed rulemakings, disbar- ment and suspension lists, and announcements. The last Bulletin for each month includes a cumulative 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 contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate. February 18, 2020 Bulletin No. 2020–8 Part I 26 CFR 1.721(c) T.D. 9891 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 Transfers of Certain Property by U.S. Persons to Partnerships with Related Foreign Partners AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final regulations and removal of temporary regulations. SUMMARY: This document contains fi- nal regulations that provide guidance ap- plicable to transfers of appreciated prop- erty by U.S. persons to partnerships with foreign partners related to the transferor. Specifically, when a U.S. person transfers appreciated property to a partnership with a foreign partner related to the transferor, the regulations override the general non- recognition rule unless the partnership adopts the remedial allocation method and certain other requirements are satisfied. The regulations affect U.S. partners in do- mestic or foreign partnerships. DATES: Effective Date: These regulations are effective on January 17, 2020. Applicability Dates: For dates of applica- bility, see §§1.197-2(l)(5)(i), 1.704-1(f), 1.704-3(g)(1), 1.721(c)-1(e), 1.721(c)-2(e), 1.721(c)-3(e), 1.721(c)-4(d), 1.721(c)-5(g), 1.721(c)-6(g), and 1.6038B-2(j)(4). FOR FURTHER INFORMATION CON- TACT: Chadwick Rowland, (202) 317- 6937 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background Section 721(c) was added to the Inter- nal Revenue Code (the “Code”) by the Taxpayer Relief Act of 1997, Public Law 105-34 (111 Stat. 788). In section 721(c), Congress granted the Secretary regulato- ry authority to override the application of the nonrecognition provision of section 721(a) to gain realized on the transfer of property to a partnership (domestic or for- eign) if the gain, when recognized, would be includible in the gross income of a per- son other than a U.S. person. On August 6, 2015, the Department of the Treasury (the “Treasury Department”) and the IRS issued Notice 2015-54, 2015- 34 I.R.B. 210, which announces an intent to issue regulations under section 721(c). On January 19, 2017, the Treasury De- partment and the IRS published temporary and final regulations (T.D. 9814) under sections 721(c), 197, 704, and 6038B in the Federal Register (82 FR 7582) (the “temporary regulations”). A notice of proposed rulemaking (REG-127203-15) cross-referencing the temporary regula- tions was published in the same issue of the Federal Register (82 FR 6368 (the “proposed regulations” and together with the temporary regulations the “2017 reg- ulations”). No public hearing on the 2017 regu- lations was requested or held; however, the Treasury Department and the IRS re- ceived one written comment with respect to the 2017 regulations. The Comment Summary and Explanation of Revisions section summarizes the comment and discusses relevant provisions of the 2017 regulations. Comment Summary and Explanation of Revisions I. Overview The Treasury Department and the IRS received one comment regarding the 2017 regulations. After full consideration of the comment, this Treasury Decision adopts the rules contained in the proposed reg- ulations with certain modifications. This Comment Summary and Explanation of Provisions section summarizes the com- ment received, explains the Treasury De- partment and the IRS’s response to that comment, and discusses the modifications to the proposed regulations adopted in this Treasury Decision. II. Comment The comment expressed concern that an intercompany transaction between a U.S. person and a foreign person may result in a deemed or “accidental partner- ship,” despite no intention by the partners to create one and no realization one was created. As a consequence, the require- ments under the regulations would not be met to avoid gain recognition under sec- tion 721(c). The comment recommended an additional exception to gain recogni- tion under section 721(c) in these circum- stances if the taxpayer has reasonably de- termined that the property in question was not contributed to a partnership, the tax- payer is not amortizing or depreciating the property for section 704(b) purposes with respect to the arrangement for which the property owner has entered into a transac- tion with a related party, and all parties in- volved consistently treat the arrangement, with respect to the subject property, as one to which subchapter K of the Code does not apply. The final regulations do not adopt this recommendation. The issue of what con- stitutes deemed or accidental partnerships and any relief that should be provided for them is not unique to the application of these regulations and, thus, goes beyond the scope of this Treasury Decision. Nev- ertheless, when an accidental partnership exists as the comment describes, the fil- ing obligations under §1.6038B-2(a)(1) (iii) (which cross references the reporting requirements under §1.721(c)-6(b)) will have not been fulfilled and, therefore, the limitations period on assessment under section 6501(c)(8) will remain open until three years after the IRS is provided the information required to be reported under Bulletin No. 2020–8 419 February 18, 2020 section 6038B. Accordingly, a taxpayer that makes a contribution to an accidental partnership could file amended returns ap- plying the gain deferral method, including fulfilling its reporting requirements (see §1.721(c)-6(f)). III. Modifications and Clarifications A. Related party definition Section 1.721(c)-1T(b) provides defi- nitions that apply for purposes of the 2017 regulations. Section 1.721(c)-1T(b) (12) provides that a related person is, with respect to a U.S. transferor, a person that is related (within the meaning of section 267(b) or 707(b)(1)) to the U.S. transferor. A related foreign person is, with respect to a U.S. transferor, a related person (other than a partnership) that is not a U.S. per- son. See §1.721(c)-1T(b)(11). The Treasury Department and the IRS have determined that a modification to the definition of related person is appropri- ate to limit the application of these rules in certain situations. Specifically, a new paragraph is added in §1.721(c)-1(b)(12) that provides that for purposes of deter- mining if a person is a related person with respect to a U.S. transferor, section 267(b) is applied without regard to section 267(c) (3). This modification to the definition of related person provides relief when certain foreign individual partners of a partner- ship would be treated as a related person with respect to a domestic corporation by reason of section 267(c)(3). This change is consistent with section 707(b)(3) and is intended to address the following specific fact pattern, or a variation thereof: A partnership (PRS1) has two partners: a foreign individual that holds 4 percent of the interests in PRS1’s capital and prof- its and a U.S. individual (unrelated to the foreign individual) that holds 96 percent of the interests in PRS1’s capital and prof- its. PRS1 wholly owns a domestic cor- poration (UST) and holds 90 percent of the interests in a lower-tier partnership’s (PRS2) capital and profits. In Year 1, UST and PRS2 form a new partnership (PRS3); as part of the formation, UST contributes section 721(c) property (as defined in §1.721(c)-1(b)(15)) in return for a 90 per- cent interest in PRS3’s capital and profits, and a U.S. individual (unrelated to UST) contributes cash in return for the remain- ing interest in PRS3’s capital and profits. For purposes of determining whether PRS3 is a section 721(c) partnership (as defined in §1.721(c)-1(b)(14)), the rules of section 267(b) must be applied to determine whether the foreign individual is a related foreign person with respect to UST. Sec- tion 267(b)(2) provides that an individual is related to a corporation if the individual holds, directly or indirectly, more than 50 percent in value of the corporation’s out- standing stock. In applying section 267(b) (2), however, the constructive stock owner- ship rules of section 267(c) must be taken into account. Section 267(c)(1) provides that stock owned, directly or indirectly, by a partnership will be treated as owned pro- portionally by its partners. Section 267(c) (5) provides that stock owned constructive- ly by reason of section 267(c)(1) will be treated as actually owned for purposes of applying section 267(c)(3). Section 267(c) (3) provides that an individual owning any stock in a corporation shall be considered as owning the stock owned, directly or in- directly, by or for his partner. But section 267(c)(3) will not apply, and will therefore not attribute stock ownership to an indi- vidual partner, if the individual does not actually own, or constructively own under section 267(c)(1), stock in the corporation that is owned directly or indirectly by or for another partner of the partnership. See §1.267(c)-1(a)(2). In the facts provided, section 267(c)(1) treats the foreign individual as constructive- ly owning a proportionate share of the UST stock that is owned by PRS1; accordingly, the foreign individual is treated as construc- tively owning 4 percent of the UST stock. And because the foreign individual con- structively owns stock in UST under sec- tion 267(c)(1), section 267(c)(3) attributes the stock owned by the U.S individual (the other partner in PRS1) to the foreign indi- vidual. As a result, the foreign individual is treated as owning all of the value of UST’s outstanding stock for purposes of determin - ing relatedness under section 267(b)(2); therefore, the foreign individual is a related person with respect to the U.S. transferor under the rule provided in §1.721(c)-1T(b) (12) of the 2017 regulations. However, because the modified definition of related person provided in this Treasury Decision applies section 267(b) without regard to section 267(c)(3), the foreign individual will not be treated as a related person under §1.721(c)-1(b)(12)(ii). As a consequence, PRS3 is not a section 721(c) partnership. B. Consistent allocation method Section 1.721(c)-3T(b) of the 2017 regulations provides the requirements of the gain deferral method. Among the re- quirements, a section 721(c) partnership is required to adopt the remedial alloca- tion method and apply the consistent al- location method with respect to section 721(c) property. The consistent allocation method, as described in §1.721(c)-3T(c) (1), provides that for each taxable year of a section 721(c) partnership in which there is remaining built-in gain in section 721(c) property, the section 721(c) part- nership must allocate each book item of income, gain, deduction, and loss with re- spect to the section 721(c) property to the U.S. transferor in the same percentage for the taxable year. Although the consistent allocation method requires each book item of income, gain, deduction, and loss with respect to section 721(c) property to be allocated to a U.S. transferor in the same percentage for a single taxable year, the consistent allocation method does not re- quire the allocations to be in the same per- centage among all taxable years in which the gain deferral method is applied. The consistent allocation method, therefore, prevents a U.S. transferor from rendering the remedial allocation method ineffective by, for example, having the partnership al- locate a higher percentage of book depre- cation to the U.S. transferor than the U.S. transferor’s percentage share of income or gain with respect to the section 721(c) property. See preamble to the temporary regulations (82 FR at 7589). The consis- tent allocation method, therefore, ensures that the built-in gain in section 721(c) property will be subject to U.S. tax. The Treasury Department and the IRS have determined that a modification to §1.721(c)-3T(c)(1) of the 2017 regula- tions is appropriate to clarify the applica- tion of the consistent allocation method. Specifically, a new sentence is added in §1.721(c)-3(c)(1); the new sentence pro- vides that upon a variation (as described in §1.706-4(a)(1)) of a U.S. transferor’s interest in a section 721(c) partnership, February 18, 2020 420 Bulletin No. 2020–8 Bulletin No. 2020–8 421 February 18, 2020 book items with respect to section 721(c) property that are allocated under the in- terim closing method (as described in §1.706-4) will be treated as allocated in the same percentage for purposes of ap- plying the consistent allocation method in a single taxable year unless the variation results from a transaction undertaken with a principal purpose of avoiding the tax consequences of the gain deferral method. If any partner’s interest in a partnership changes during a taxable year of the part- nership, section 706(d) grants the Secre- tary regulatory authority to prescribe rules for determining each partner’s distributive share of any partnership item for the tax- able year that takes into account the part- ner’s varying interests in the partnership. The variations described in section 706(d) include, among other things, a reduction in a partner’s interest in a partnership, in- cluding a reduction that occurs due to the entry of a new partner. See §1.706-4(a). If a partner’s interest in a partnership is reduced during a taxable year, but not completely disposed of, the taxable year of the partnership will not close as a re- sult of the variation. See section 706(c)(2) (B). Instead, if a variation occurs during the taxable year of a partnership, §1.706- 4(a)(3) generally allows the partnership to choose how to determine each part- ner’s share of the partnership items for the taxable year under either the proration method or the interim closing method. See §1.706-4(a)(3)(iii). The interim clos- ing method divides the taxable year of the partnership into segments based on the in- terim closings of the partnership’s books; the segments are then used to apportion the partnership items for the year among its segments, and to determine, taking into account the partners’ interests during each segment, the partners’ distributive shares of the partnership items. See generally §1.706-4(a)(3). The modification to the consistent al- location method when the interim closing method is applied is intended to clarify that a U.S. transferor continues to com- ply with the consistent allocation method following certain economic events that do not close the taxable year of the section 721(c) partnership. Given the high thresh- olds required to be subject to these rules, the Treasury Department and the IRS have determined that allowing the partnership to choose the proration method is not appropriate for the consistent allocation method: a section 721(c) partnership will have the resources and capabilities neces- sary to comply with the more precise in- terim closing method without imposing an undue burden on the partnership. C. Reporting The final regulations include the re- porting requirements provided in the 2017 regulations regarding both gain deferral contributions and the annual reporting re- quirements with respect to section 721(c) property to which the gain deferral meth- od applies. The 2017 regulations require much of the reporting to be on statements attached to returns. See §§1.721(c)-6T and 1.6038B-2T. Since the issuance of the 2017 regulations, however, the IRS has updated and added new schedules to Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, to facilitate compliance with these report- ing requirements. The IRS has also issued new Form 8838-P, Consent To Extend the Time To Assess Tax Pursuant to the Gain Deferral Method (Section 721(c)). The purpose of these changes was to include the information that previously was re- ported on the statements. The final regula- tions reference and require the use of these forms and schedules to fulfill the reporting requirements. For tax returns filed before July 17, 2020, however, §1.721(c)-6(g)(3) (ii) provides relief for reporting that met the requirements of §1.721(c)-6T (as in effect before January 1, 2020). The final regulations also clarify the duration for which the U.S. transferor must extend the period of limitations on the assessment of tax under §1.721(c)- 6(b). Section 1.721(c)-6(b)(5) clarifies the relevant periods to which Form 8838-P applies by measuring each period by the number of months occurring after the rel- evant date; accordingly, the final regula- tions measure each period by a fixed term that is determinable on the date of contri- bution. The final regulations also provide a similar clarification in §1.721(c)-6(f)(2). D. Technical terminations Section 708(b) generally provides that a partnership will terminate if the partnership ceases to do business. Be- fore the enactment of the Tax Cuts and Jobs Act, Public Law 115-97 (2017) (the “TCJA”), section 708(b)(1)(B) provided another way for a partnership to termi- nate: a partnership terminated if within any 12-month period, 50 percent or more of the total interest in partnership capital and profits was sold or exchanged. The termination described in section 708(b) (1)(B) is commonly referred to as a “technical termination.” The regulations in §1.708-1(b)(4) provide that a technical termination results in a deemed contri- bution of all the terminated partnership’s assets and liabilities to a new partnership in exchange for an interest in the new partnership, followed by a deemed distri- bution of interests in the new partnership to both the purchasing partners and the remaining partners. The TCJA repealed section 708(b)(1) (B) for all partnership taxable years begin- ning after December 31, 2017; therefore, technical terminations no longer apply. See Conference Report on H.R. 1, Tax Cuts and Jobs Act, H. Rept. 115-446, at 416. The 2017 regulations provide rules re- garding technical terminations in two con- texts: they provide that a partnership will not be treated as a section 721(c) partner- ship (as defined in §1.721(c)-1T(b)(14)) following a deemed contribution that oc- curs as a result of a technical termination, and they treat certain technical termina- tions as successor events for purposes of the acceleration event exceptions provid- ed in §1.721(c)-5T. See §§1.721(c)-2T(d) (2) and 1.721(c)-5T(c)(4). The rules in the 2017 regulations re- garding technical terminations are re- tained in this Treasury Decision. Although the TCJA repealed section 708(b)(1)(B), the applicability date for these final reg- ulations relates back to the applicability date provided in the 2017 regulations, which is before the effective date provided in the TCJA. Accordingly, the rules pro- vided in this Treasury Decision regarding technical terminations will have limited applicability; the rules will only apply to technical terminations occurring on or af- ter the applicability date provided in the 2017 regulations but before the effective date for the repeal of section 708(b)(1)(B) provided in the TCJA. February 18, 2020 422 Bulletin No. 2020–8 E. Request for comments Under the final regulations, as well as the 2017 regulations, stock is exclud- ed from the definition of section 721(c) property and, therefore, a contribution of stock of a controlled foreign corpora- tion (within the meaning of section 957) (“CFC”) to a section 721(c) partnership is not subject to the final regulations. How- ever, the Treasury Department and the IRS are concerned that taxpayers may avail themselves of partnerships to shift the tax liability, in whole or in part, with respect to earnings of a CFC attributable to subpart F income (within the meaning of section 952) or tested income (within the meaning of section 951A(c)(2)(A) and §1.951A-2(b)(1)) to a related for- eign partner that is not owned (within the meaning of section 958(a)) by a United States shareholder (within the meaning of section 951(b)). The Treasury Department and the IRS are studying the use of part- nerships in this context, including under what circumstances it may be appropriate to apply section 721(c) to a contribution of stock of a CFC to a partnership. The Treasury Department and the IRS request comments on this matter. Special Analyses I. Regulatory Planning and Review The Administrator of the Office of In- formation and Regulatory Affairs (OIRA), Office of Management and Budget, has determined that this rule is not a signifi- cant regulatory action, as that term is de- fined in section 3(f) of Executive Order 12866. Therefore, OIRA has not reviewed this rule pursuant to section 6(a)(3)(A) of Executive Order 12866 and the April 11, 2018, Memorandum of Agreement between the Department of Treasury and the Office of Management and Budget (OMB). Pursuant to the Regulatory Flexibili- ty Act (5 U.S.C. chapter 6), it is hereby certified that the collection of informa- tion contained in this regulation will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that the regulations include a $1,000,000 de mi- nimis exception for certain transfers and exclude contributions of tangible proper- ty with built-in gain that does not exceed $20,000. In addition, the regulations apply only when a U.S. transferor contributes property to a partnership with a partner that is a related foreign person and per- sons related to the U.S. transferor own more than 80 percent of the interests in the partnership. Accordingly, the Treasury Department and the IRS expect that these regulations primarily will affect large do- mestic corporations. Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Ad- ministration for comment on their impact on small business. II. Paperwork Reduction Act The collection of information im- posed by these regulations is contained in §§1.721(c)-6 and 1.6038B-2. The collec- tion of information provided by these reg- ulations has been reviewed and approved by the Office of Management and Budget under control numbers 1545-1668 and 1545-0123. The information is required to comply with the gain deferral method, which generally allows a U.S. transferor to avoid immediate gain recognition upon a contribution of section 721(c) property to a section 721(c) partnership. The like- ly respondents are domestic corporations. Estimates for completing these forms can be located in the instructions to Forms 8865, 8838-P, and 1065. Upon a contribution of section 721(c) property to a section 721(c) partnership, a U.S. transferor must comply with the gain deferral method described in §1.721(c)- 3 to avoid immediate gain recognition. To comply with the gain deferral meth- od, §1.721(c)-3(b)(3) provides that the procedural and reporting requirements of §1.721(c)-6 must be met; additional- ly, §1.721(c)-3(b)(4) provides that a U.S. transferor must consent to an extension of the period of limitations on assessment of tax as required by §1.721(c)-6(b)(5). Section 1.721(c)-6(b) describes the procedural and reporting requirements of a U.S. transferor. The collection of informa- tion described in §§1.721(c)-6(b)(2) and (c)(2) and 1.6038B-2(a)(1)(iii) regarding a gain deferral contribution is provided by the U.S. transferor to the IRS on any ap- plicable Schedules to Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, and is mandatory; the relevant Schedules include, as appli- cable, Schedule A-1, Certain Foreign Partners; Schedule A-2, Foreign Partners of Section 721(c) Partnership; Schedule G, Statement of Application of the Gain Deferral Method Under Section 721(c); Schedule H, Acceleration Events and Ex- ceptions Reporting Relating to Gain De- ferral Method Under Section 721(c); and Schedule O, Transfer of Property to a For- eign Partnership. The information will be used by the U.S. transferor to comply with the gain deferral method. The collection of information described in §§1.721(c)-6(b)(3) and 1.6038B-2(a) (1)(iii) is provided on Schedules G, H, and O of Form 8865 and is mandatory. The information will be used by the U.S. transferor to annually report information for each gain deferral contribution. The collection of information de- scribed in §1.721(c)-6(b)(3)(iii), if not al- ready provided elsewhere, is provided on Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, and is mandatory. The information will be used by the U.S. transferor to comply with the gain deferral method. The collection of information de- scribed in §1.721(c)-6(b)(5) is provided by the U.S. transferor to the IRS on Form 8838-P, Consent To Extend the Time To Assess Tax Pursuant to the Gain Deferral Method (Section 721(c)), and is manda- tory. The information will be used by the U.S. transferor to extend the period of lim- itations on the assessment of tax to ensure that the gain deferral method is properly applied. If a section 721(c) partnership does not have a filing obligation under section 6031, the collection of information de- scribed in §1.721(c)-6(c)(3) is provided by a section 721(c) partnership to a U.S. transferor on Schedule K-1 (Form 8865), Partner’s Share of Income, Deduction, Credits, etc., for all related foreign per- sons that are direct or indirect partners in the section 721(c) partnership. The infor- mation will be used by the U.S. transferor to annually report information for each gain deferral contribution. If a section 721(c) partnership has a filing obligation under section 6031, the Bulletin No. 2020–8 423 February 18, 2020 collection of information described in §1.721(c)-6(d)(2) is provided by the sec- tion 721(c) partnership to the U.S. trans- feror on Schedule K-1 (Form 1065). The information will be used by the U.S. trans- feror to comply with the requirements of the gain deferral method provided in §1.721(c)-6(b)(2) and (3). Revision of Existing Forms NewRevision of existing form Number of additional respondents (estimated, rounded to nearest 100) Form 8865Y<200 Form 8838-PY<200 Form 1065Y<200 Source: RAAS:CDW and SOI The numbers of respondents in the Re- vision of Existing Forms table were esti- mated by the Research, Applied Analytics and Statistics Division of the IRS from the Compliance Data Warehouse and Statis- tics of Income, using tax year 2017. Data for each of the Forms 8865, 8838-P, and 1065 represent preliminary estimates of the total number of additional taxpayers that are expected to file these forms. The tax data for 2018 is not yet available. III. Unfunded Mandates Reform Act Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated costs and benefits and take certain other actions be- fore issuing a final rule that includes any Federal mandate that may result in expen- ditures in any one year by a state, local, or tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for inflation. In 2019, that threshold is approximately $154 million. These regulations do not in- clude any Federal mandate that may result in expenditures by state, local, or tribal governments, or by the private sector in excess of that threshold. IV. Executive Order 13132: Federalism Executive Order 13132 (entitled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial, direct compliance costs on state and local governments, and is not required by statute, or preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. This final rule does not have federalism implications and does not impose substantial direct compliance costs on state and local governments or preempt state law within the meaning of the Executive order. Drafting Information The principal authors of these regula- tions are Chadwick Rowland and Ronald M. Gootzeit, Office of the Associate Chief Counsel (International). However, other personnel from the Treasury Department and the IRS participated in their develop- ment. Statement of Availability Notice 2015-54 (cited in this pream- ble) is published in the Internal Revenue Bulletin and is available from the Super- intendent of Documents, U.S. Govern- ment Publishing Office, Washington, DC 20402, or by visiting the IRS website at https://www.irs.gov. Effect on Other Documents The following section of the following publication is obsolete as of January 17, 2020: Section 4 of Notice 2015-54 (2015-34 I.R.B. 210). List of Subjects in 26 CFR Part 1 Income taxes, Reporting and record- keeping requirements. Amendments to the Regulations Accordingly, 26 CFR part 1 is amend- ed as follows: PART 1—INCOME TAXES Paragraph 1. The authority citation for part 1 is amended by removing the sec- tional authority citations for §§1.197-2T, 1.704-3T, 1.721(c)-1T through 1.721(c)- 7T, and 1.6038B-2T and adding entries in numerical order for §§1.721(c)-1 through 1.721(c)-7 to read in part as follows: Authority: 26 U.S.C. 7805, unless oth- erwise noted. * * * * * Section 1.721(c)-1 also issued under 26 U.S.C. 721(c). Section 1.721(c)-2 also issued under 26 U.S.C. 721(c). Section 1.721(c)-3 also issued under 26 U.S.C. 721(c). Section 1.721(c)-4 also issued under 26 U.S.C. 721(c). Section 1.721(c)-5 also issued under 26 U.S.C. 721(c). Section 1.721(c)-6 also issued under 26 U.S.C. 721(c). February 18, 2020 424 Bulletin No. 2020–8 Section 1.721(c)-7 also issued under 26 U.S.C. 721(c). * * * * * Par. 2. Section 1.197-2 is amended by revising paragraphs (h)(12)(vii)(C) and (l) (5) to read as follows: §1.197-2 Amortization of goodwill and certain other intangibles. * * * * * (h) * * * (12) * * * (vii) * * * (C) Rules for section 721(c) partner- ships. See §1.704-3(d)(5)(iii) if there is a contribution of a section 197(f)(9) intan- gible to a section 721(c) partnership (as defined in §1.721(c)-1(b)(14)). * * * * * (l) * * * (5) Applicability dates for section 721(c) partnerships—(i) In general. Ex- cept as provided in paragraph (l)(5)(ii) of this section, paragraph (h)(12)(vii)(C) of this section applies with respect to contri- butions occurring on or after January 18, 2017, and with respect to contributions that occurred before January 18, 2017 re- sulting from an entity classification elec- tion made under §301.7701-3 of this chap- ter that was effective on or before January 18, 2017 but was filed on or after January 18, 2017. (ii) Application of the provisions de- scribed in paragraph (l)(5)(i)(A) of this section retroactively. Paragraph (h)(12) (vii)(C) of this section may be applied with respect to a contribution occurring on or after August 6, 2015, and to a con- tribution that occurred before August 6, 2015 resulting from an entity classifica- tion election made under §301.7701-3 of this chapter that was effective on or before August 6, 2015 but was filed on or after August 6, 2015. A taxpayer applying para- graph (h)(12)(vii)(C) of this section ret- roactively must apply paragraph (h)(12) (vii)(C) of this section on a timely filed original return (including extensions) or an amended return filed no later than July 18, 2017. §1.197-2T [Removed] Par. 3. Section 1.197-2T is removed. Par. 4. Section 1.704-1 is amended by revising paragraphs (b)(2)(iv)(f)(6) and (f) to read as follows: §1.704-1 Partner’s distributive share. * * * * * (b) * * * (2) * * * (iv) * * * (f) * * * (6) Notwithstanding paragraph (b)(2) (iv)(f)(5) of this section, the revaluation is required under §1.721(c)-3(d)(1) as a condition of the application of the gain de- ferral method (as described in §1.721(c)- 3(b)) and is pursuant to an event described in this paragraph (b)(2)(iv)(f)(6). If an interest in a partnership is contributed to a section 721(c) partnership (as defined in §1.721(c)-1(b)(14)), the partnership whose interest is contributed may revalue its property in accordance with this sec- tion. In this case, the revaluation by the partnership whose interest was contrib- uted must occur immediately before the contribution. If a partnership that revalues its property pursuant to this paragraph owns an interest in another partnership, the partnership in which it owns an inter- est may also revalue its property in accor- dance with this section. When multiple partnerships revalue under this paragraph (b)(2)(iv)(f)(6), the revaluations occur in order from the lowest-tier partnership to the highest-tier partnership. * * * * * (f) Applicability dates—(1) In general. Except as provided in paragraph (f)(2) of this section, paragraph (b)(2)(iv)(f)(6) of this section applies with respect to contri- butions occurring on or after January 18, 2017, and with respect to contributions that occurred before January 18, 2017 re- sulting from an entity classification elec- tion made under §301.7701-3 of this chap- ter that was effective on or before January 18, 2017 but was filed on or after January 18, 2017. (2) Election to apply the provisions de- scribed in paragraph (f)(1) of this section retroactively. Paragraph (b)(2)(iv)(f)(6) of this section may, by election, be applied with respect to a contribution that oc- curred on or after August 6, 2015 but be- fore January 18, 2017, and with respect to a contribution that occurred before August 6, 2015 resulting from an entity classifica- tion election made under §301.7701-3 of this chapter that was effective on or before August 6, 2015 but was filed on or after August 6, 2015. The election must have been made by applying paragraph (b)(2) (iv)(f)(6) of this section on a timely filed original return (including extensions) or an amended return filed no later than July 18, 2017. §1.704-1T [Amended] Par. 5. Paragraphs (b)(2)(iv)(f)(6) and (f) of §1.704-1T are removed. Par. 6. Section 1.704-3 is amended by revising paragraphs (a)(13), (d)(5)(iii), and (g) to read as follows: §1.704-3 Contributed property. (a) * * * (13) Rules for tiered section 721(c) partnerships—(i) Revaluations. If a part- nership revalues its property pursuant to §1.704-1(b)(2)(iv)(f)(6) immediately be- fore an interest in the partnership is con- tributed to another partnership, or if an upper-tier partnership owns an interest in a lower-tier partnership, and both the upper-tier partnership and the lower-tier partnership revalue partnership proper- ty pursuant to §1.704-1(b)(2)(iv)(f)(6), the principles of paragraph (a)(9) of this section will apply to any reverse section 704(c) allocations made as a result of the revaluation. (ii) Basis-derivative items. If a low- er-tier partnership that is a section 721(c) partnership applies the gain deferral meth- od, then, for purposes of applying this sec- tion, the upper-tier partnership must treat its distributive share of lower-tier part- nership items of gain, loss, amortization, depreciation, or other cost recovery with respect to the lower-tier partnership’s sec- tion 721(c) property as though they were items of gain, loss, amortization, depreci- ation, or other cost recovery with respect to the upper-tier partnership’s interest in the lower-tier partnership. For purposes of this paragraph (a)(13)(ii), gain defer- ral method is defined in §1.721(c)-1(b) (8), section 721(c) partnership is defined in §1.721(c)-1(b)(14), and section 721(c) property is defined in §1.721(c)-1(b)(15). * * * * * (d) * * * (5) * * * (iii) Special rules for a section 721(c) partnership and anti-churning proper- ty—(A) In general. Solely in the case of a gain deferral contribution of section 721(c) property that is a section 197(f) (9) intangible that was not an amortizable section 197 intangible in the hands of the contributor, the remedial allocation meth- od is modified with respect to allocations Bulletin No. 2020–8 425 February 18, 2020 to a related person to the U.S. transfer- or pursuant to paragraphs (d)(5)(iii)(B) through (F) of this section. For purposes of this paragraph (d)(5)(iii), gain deferral contribution is defined in §1.721(c)-1(b) (7), related person is defined in §1.721(c)- 1(b)(12), section 721(c) partnership is defined in §1.721(c)-1(b)(14), section 721(c) property is defined in §1.721(c)- 1(b)(15), and U.S. transferor is defined in §1.721(c)-1(b)(18). For an example ap- plying the rules of this paragraph (d)(5) (iii), see §1.721(c)-7(b)(6) (Example 6). (B) Book basis recovery. The section 721(c) partnership must amortize the por- tion of the partnership’s book value in the section 197(f)(9) intangible that exceeds the adjusted basis in the property upon contribution using any recovery period and amortization method available to the partnership as if the property had been newly purchased by the partnership from an unrelated party. (C) Effect of ceiling rule limitations. If the ceiling rule causes the book alloca- tion of the item of amortization of a sec- tion 197(f)(9) intangible under paragraph (d)(5)(iii)(B) of this section by a section 721(c) partnership to a related person with respect to the U.S. transferor to differ from the tax allocation of the same item to the related person (a ceiling rule lim- ited related person), the partnership must not create a remedial item of deduction to allocate to the related person but instead must increase the adjusted basis of the section 197(f)(9) intangible by an amount equal to the difference solely with respect to that related person. The partnership si- multaneously must create an offsetting re- medial item in an amount identical to the increase in adjusted tax basis of the sec- tion 197(f)(9) intangible and allocate it to the contributing partner. (D) Effect of basis adjustment—(1) In general. The basis adjustment described in paragraph (d)(5)(iii)(C) of this section constitutes an adjustment to the adjusted basis of a section 197(f)(9) intangible with respect to the ceiling rule limited related person only. No adjustment is made to the common basis of partnership property. Thus, for purposes of calculating gain and loss, the ceiling rule limited related person will have a special basis for that section 197(f)(9) intangible. The adjustment to the basis of partnership property under this section has no effect on the partner- ship’s computation of any item under sec- tion 703. (2) Computation of a partner’s dis- tributive share of partnership items. The partnership first computes its items of gain or loss at the partnership level under sec- tion 703. The partnership then allocates the partnership items among the partners, including the ceiling rule limited related person, in accordance with section 704, and adjusts the partners’ capital accounts accordingly. The partnership then adjusts the ceiling rule limited related person’s distributive share of the items of partner- ship gain or loss, in accordance with para- graph (d)(5)(iii)(D)(3) of this section, to reflect the effects of that person’s basis ad- justment under this section. These adjust- ments to that person’s distributive shares must be reflected on Schedules K and K-1 of the partnership’s return (Form 1065) (when otherwise required to be complet- ed) and do not affect that person’s capital account. (3) Effect of basis adjustment in deter- mining items of income, gain, or loss. The amount of a ceiling rule limited related person’s gain or loss from the sale or ex- change of a section 197(f)(9) intangible in which that person has a tax basis adjust- ment is equal to that person’s share of the partnership’s gain or loss from the sale of the asset (including any remedial alloca- tions under this paragraph (d)), minus the amount of that person’s tax basis adjust- ment for the section 197(f)(9) intangible. (E) Subsequent transfers—(1) In gen- eral. Except as provided in paragraph (d) (5)(iii)(E)(2) of this section, if a ceiling rule limited related person transfers all or part of its partnership interest, the portion of the basis adjustment for a section 197(f) (9) intangible attributable to the interest transferred is eliminated. The transferor of the partnership interest remains the ceiling rule limited related person with respect to any remaining basis adjustment for the section 197(f)(9) intangible. (2) Special rules for substituted basis transactions. Paragraph (d)(5)(iii)(E)(1) of this section does not apply to the extent a ceiling rule limited related person trans- fers its partnership interest in a transaction in which the transferee’s basis in the part- nership interest is determined in whole or in part by reference to the ceiling rule limited related person’s basis in that inter- est. Instead, in such a case, the transferee succeeds to that portion of the transfer- or’s basis adjustment for a section 197(f) (9) intangible attributable to the interest transferred. In such a case, the basis ad- justment in a section 197(f)(9) intangible to which the transferee succeeds is taken into account for purposes of determining the transferee’s share of the adjusted ba- sis to the partnership of the partnership’s property for purposes of §§1.743-1(b) and 1.755-1(b)(5). To the extent a transferee would be required to decrease the adjusted basis of a section 197(f)(9) intangible pur- suant to §§1.743-1(b)(2) and 1.755-1(b) (5), the decrease first reduces the special basis adjustment described in paragraph (d)(5)(iii)(C) of this section, if any, to which the transferee succeeds. (F) Non-amortization of basis adjust- ment. Neither the increase to the adjusted basis of a section 197(f)(9) intangible with respect to a ceiling rule limited related person nor the portion of the basis of any property that was determined by reference to such increase is subject to amortization, depreciation, or other cost recovery. * * * * * (g) Applicability dates for rules for sec- tion 721(c) partnerships—(1) In general. Notwithstanding paragraph (f) of this section, except as provided in paragraph (g)(2) of this section, paragraphs (a)(13) and (d)(5)(iii) of this section apply with respect to contributions occurring on or after January 18, 2017, and with respect to contributions that occurred before January 18, 2017 resulting from an entity classi- fication election made under §301.7701-3 of this chapter that was effective on or be- fore January 18, 2017 but was filed on or after January 18, 2017. (2) Election to apply the provisions de- scribed in paragraph (g)(1) of this section retroactively. Paragraphs (a)(13) and (d) (5)(iii) of this section may, by election, be applied with respect to a contribution that occurred on or after August 6, 2015 but be- fore January 18, 2017, and with respect to a contribution that occurred before August 6, 2015 resulting from an entity classifica- tion election made under §301.7701-3 of this chapter that was effective on or before August 6, 2015 but was filed on or after August 6, 2015. The election must have been made by applying paragraph (a)(13) February 18, 2020 426 Bulletin No. 2020–8 or (d)(5)(iii) of this section, as applicable, on a timely filed original return (including extensions) or an amended return filed no later than July 18, 2017. §1.704-3T [Removed] Par. 7. Section 1.704-3T is removed. Par. 8. Section 1.721(c)-1 is added to read as follows: §1.721(c)-1 Overview, definitions, and rules of general application. (a) Overview—(1) In general. This section and §§1.721(c)-2 through 1.721(c)-7 (collectively, the section 721(c) regulations) provide rules under section 721(c). This section provides definitions and rules of general applica- tion for purposes of the section 721(c) regulations. Section 1.721(c)-2 provides the general operative rules that override section 721(a) nonrecognition of gain upon a contribution of section 721(c) property to a section 721(c) partnership. Section 1.721(c)-3 describes the gain deferral method, which may be applied in order to avoid the immediate recogni- tion of gain upon a contribution of sec- tion 721(c) property to a section 721(c) partnership. Section 1.721(c)-4 provides rules regarding acceleration events for purposes of applying the gain deferral method. Section 1.721(c)-5 identifies exceptions to the rules regarding acceler- ation events provided in §1.721(c)-4(b). Section 1.721(c)-6 provides procedur- al and reporting requirements. Section 1.721(c)-7 provides examples illustrating the application of the section 721(c) reg- ulations. (2) Scope. Paragraph (b) of this section provides definitions. Paragraph (c) of this section describes the treatment of a change in form of a partnership. Paragraph (d) of this section provides an anti-abuse rule. Paragraph (e) of this section provides the dates of applicability. (b) Definitions. The following defi- nitions apply for purposes of the section 721(c) regulations. Unless otherwise indi- cated, the definitions apply on a proper- ty-by-property basis, as applicable. (1) Acceleration event. An accelera- tion event has the meaning provided in §1.721(c)-4(b). (2) Built-in gain. Built-in gain is, with respect to property contributed to a part- nership, the excess of the book value of the property over the partnership’s adjust- ed tax basis in the property upon the con- tribution, determined without regard to the application of §1.721(c)-2(b). (3) Consistent allocation method. The consistent allocation method is the meth- od described in §1.721(c)-3(c). (4) Controlled partnership. A part- nership is a controlled partnership with respect to a U.S. transferor if the U.S. transferor and related persons control the partnership. For purposes of this para- graph (b)(4), control is determined based on all the facts and circumstances, except that a partnership will be deemed to be controlled by a U.S. transferor and related persons if those persons, in the aggregate, own (directly or indirectly through one or more partnerships) more than 50 percent of the interests in the partnership capital or profits. (5) Direct or indirect partner. A direct or indirect partner is a person (other than a partnership) that owns an interest in a partnership directly or indirectly through one or more partnerships. (6) Excluded property. Excluded prop- erty is— (i) A cash equivalent; (ii) A security within the meaning of section 475(c)(2), without regard to sec- tion 475(c)(4); (iii) Tangible property with a book value exceeding adjusted tax basis by no more than $20,000 or with an adjusted tax basis in excess of book value; and (iv) An interest in a partnership in which 90 percent or more of the property (as measured by value) held by the part- nership (directly or indirectly through interests in one or more partnerships that are not excluded property) consists of property described in paragraphs (b)(6)(i) through (iii) of this section. (7) Gain deferral contribution. A gain deferral contribution is a contribution of section 721(c) property to a section 721(c) partnership with respect to which the rec- ognition of gain is deferred under the gain deferral method. (8) Gain deferral method. The gain de- ferral method is the method described in §1.721(c)-3(b). (9) Partial acceleration event. A partial acceleration event is an event described in §1.721(c)-5(d)(2) or (3). (10) Regulatory allocation. A regulato- ry allocation is— (i) An allocation pursuant to a min- imum gain chargeback, as defined in §1.704-2(b)(2); (ii) A partner nonrecourse deduction, as determined in §1.704-2(i)(2); (iii) An allocation pursuant to a partner minimum gain chargeback, as described in §1.704-2(i)(4); (iv) An allocation pursuant to a qualified income offset, as defined in §1.704-1(b)(2)(ii)(d); (v) An allocation with respect to the exercise of a noncompensatory option de- scribed in §1.704-1(b)(2)(iv)(s); and (vi) An allocation of partnership lev- el ordinary income or loss described in §1.751-1(b)(3). (11) Related foreign person. A related foreign person is, with respect to a U.S. transferor, a related person (other than a partnership) that is not a U.S. person. (12) Related person—(i) In general. A related person is, with respect to a U.S. transferor, a person that is related (within the meaning of section 267(b) or 707(b) (1)) to the U.S. transferor. (ii) Modification to the application of section 267(b). For purposes of determin- ing if a person is a related person with re- spect to a U.S. transferor, section 267(b) is applied without regard to section 267(c) (3). (13) Remaining built-in gain—(i) In general. Remaining built-in gain is, with respect to section 721(c) property subject to the gain deferral method, the built-in gain reduced by decreases in the differ- ence between the property’s book value and adjusted tax basis, but, for purposes of this paragraph (b)(13)(i), without tak- ing into account increases or decreases to the property’s book value pursuant to §1.704-1(b)(2)(iv)(f) or (s). (ii) Special rule for tiered partnerships. If section 721(c) property is described in §1.721(c)-3(d)(1)(ii), the remaining built-in gain includes the new positive reverse section 704(c) layer described in §1.721(c)-3(d)(1)(ii), reduced by decreas- es in the difference between the property’s book value and adjusted tax basis, but, for purposes of this paragraph (b)(13) (ii), without taking into account increases or decreases to the property’s book value pursuant to §1.704-1(b)(2)(iv)(f) or (s) that are unrelated to the revaluation de- scribed in §1.721(c)-3(d)(1)(i). Bulletin No. 2020–8 427 February 18, 2020 (14) Section 721(c) partnership—(i) In general. A partnership (domestic or foreign) is a section 721(c) partnership if there is a contribution of section 721(c) property to the partnership and, after the contribution and all transactions related to the contribution— (A) A related foreign person with re- spect to the U.S. transferor is a direct or indirect partner in the partnership; and (B) The U.S. transferor and related per- sons own 80 percent or more of the inter- ests in partnership capital, profits, deduc- tions, or losses. (ii) Special rule for tiered partnerships. A partnership described in §1.721(c)-3(d) (1) or (2) is deemed to be a section 721(c) partnership for purposes of the gain defer- ral method. (15) Section 721(c) property—(i) In general. Section 721(c) property is prop- erty, other than excluded property, with built-in gain that is contributed to a part- nership by a U.S. transferor, including pursuant to a contribution described in §1.721(c)-2(d) (partnership look-through rule). If the U.S. transferor is treated as contributing its share of property to a partnership pursuant to §1.721(c)-2(d), the entire property will be section 721(c) property. (ii) Special rule for tiered partnerships. Property described in §1.721(c)-3(d)(1) (ii) and an interest in a partnership de- scribed in §1.721(c)-3(d)(2)(ii) is deemed to be section 721(c) property. (16) Successor event. A successor event is an event described in §1.721(c)-5(c)(2), (3), (4), or (5). (17) Termination event. A termination event is an event described in §1.721(c)- 5(b)(2), (3), (4), (5), (6), or (7). (18) U.S. transferor—(i) In general. A U.S. transferor is a United States person within the meaning of section 7701(a) (30) (a U.S. person), other than a domestic partnership. (ii) Special rule for tiered partnerships. Solely for purposes of applying the con- sistent allocation method, a U.S. transfer- or includes a partnership that is treated as a U.S. transferor under §1.721(c)-3(d)(1) (iii) or (d)(2)(i). (c) Change in form of a partnership. A mere change in identity, form, or place of organization of a partnership or a recapi- talization of a partnership will not cause the partnership to become a section 721(c) partnership. (d) Anti-abuse rule. If a U.S. transfer- or engages in a transaction (or series of transactions) or an arrangement with a principal purpose of avoiding the applica- tion of the section 721(c) regulations, the transaction (or series of transactions) or the arrangement may be recharacterized (including by aggregating or disregarding steps or disregarding an intermediate enti- ty) in accordance with its substance. (e) Applicability dates—(1) In gener- al. Except as provided in paragraphs (e) (2) and (3) of this section, this section ap- plies to contributions occurring on or after August 6, 2015, and to contributions that occurred before August 6, 2015 resulting from an entity classification election made under §301.7701-3 of this chapter that was effective on or before August 6, 2015 but was filed on or after August 6, 2015. (2) Certain provisions. Except as pro- vided in paragraph (e)(3) of this section, paragraphs (b)(6)(iv) and (c) of this sec- tion apply to contributions occurring on or after January 18, 2017, and to contri- butions that occurred before January 18, 2017 resulting from an entity classifica- tion election made under §301.7701-3 of this chapter that was effective on or before January 18, 2017 but was filed on or after January 18, 2017. Except as provided in paragraph (e)(3) of this section, paragraph (b)(14)(i)(B) of this section applies by re- placing “80 percent or more” with “great- er than 50 percent” with respect to contri- butions that occurred on or after August 6, 2015 but before January 18, 2017, and with respect to contributions that occurred before August 6, 2015 resulting from an entity classification election made under §301.7701-3 of this chapter that was ef- fective on or before August 6, 2015, but was filed on or after August 6, 2015 but before January 18, 2017. Except as pro- vided in paragraph (e)(3) of this section, paragraph (b)(12)(ii) of this section ap- plies to contributions occurring on or after January 17, 2020. (3) Election to apply the provisions de- scribed in paragraph (e)(2) of this section retroactively. Paragraphs (b)(6)(iv) and (c) of this section and paragraph (b)(14) (i)(B) of this section, without the modi- fication described in paragraph (e)(2) of this section, may, by election, be applied to a contribution that occurred on or af- ter August 6, 2015 but before January 18, 2017, and to a contribution that occurred before August 6, 2015 resulting from an entity classification election made under §301.7701-3 of this chapter that was ef- fective on or before August 6, 2015 but was filed on or after August 6, 2015. The election described in the preceding sen- tence must have been made by applying paragraph (b)(6)(iv) or (c) as described in paragraph (e)(2) of this section or para- graph (b)(14)(i)(B) of this section, with- out the modification described in para- graph (e)(2) of this section, as applicable, to the contribution on a timely filed orig- inal return (including extensions) or an amended return filed no later than July 18, 2017. Paragraph (b)(12)(ii) of this section, may, by election, be applied to a contri- bution that occurred on or after August 6, 2015 but before January 17, 2020, and to a contribution that occurred before August 6, 2015 resulting from an entity classifica- tion election made under §301.7701-3 of this chapter that was effective on or before August 6, 2015 but was filed on or after August 6, 2015. The election described in the preceding sentence must be made by applying paragraph (b)(12)(ii) of this sec- tion to the contribution on a timely filed original return (including extensions) or an amended return filed no later July 17, 2020. §1.721(c)-1T [Removed] Par. 9. Section 1.721(c)-1T is removed. Par. 10. Section 1.721(c)-2 is added to read as follows: §1.721(c)-2 Recognition of gain on certain contributions of property to part- nerships with related foreign partners. (a) Scope. This section provides the general operative rules that override sec- tion 721(a) nonrecognition of gain upon a contribution of section 721(c) property to a section 721(c) partnership. Paragraph (b) of this section provides the general rule that nonrecognition of gain under section 721(a) does not apply to a contribution of section 721(c) property to a section 721(c) partnership. Paragraph (c) of this section provides a de minimis exception to the ap- plication of the general rule in paragraph (b) of this section. Paragraph (d) of this section provides rules for identifying a section 721(c) partnership when a partner- ship in which a U.S. transferor is a direct February 18, 2020 428 Bulletin No. 2020–8 or indirect partner contributes property to another partnership. Paragraph (e) of this section provides the dates of applicability. For definitions that apply for purposes of this section, see §1.721(c)-1(b). (b) General rule for contributions of section 721(c) property. Except as provid- ed in this paragraph (b), paragraph (c) of this section, and §1.721(c)-3 (describing the gain deferral method), nonrecognition under section 721(a) will not apply to gain realized by the contributing partner upon a contribution of section 721(c) property to a section 721(c) partnership. This para- graph (b) does not apply to a direct con- tribution by a U.S. transferor if the U.S. transferor and related persons with respect to the U.S. transferor do not own 80 per- cent or more of the interests in partnership capital, profits, deductions, or losses. (c) De minimis exception. Paragraph (b) of this section will not apply with re- spect to contributions to a section 721(c) partnership during a taxable year of the section 721(c) partnership for which the sum of the built-in gain with respect to all section 721(c) property contributed in that taxable year does not exceed $1 million. If, pursuant to the last sentence of para- graph (b) of this section, a direct contribu- tion of property to the section 721(c) part- nership by a U.S. transferor is not subject to paragraph (b) of this section, then such contribution is not taken into account for purposes of this paragraph (c). (d) Rules for identifying a section 721(c) partnership when a partnership contributes property to another partner- ship—(1) Partnership look-through rule. If a U.S. transferor is a direct or indirect partner in a partnership (upper-tier part- nership) and the upper-tier partnership contributes all or a portion of its property to another partnership (lower-tier partner- ship), then, for purposes of determining if the lower-tier partnership is a section 721(c) partnership, the U.S. transferor is treated as contributing to the lower-tier partnership its share of the property actu- ally contributed by the upper-tier partner- ship to the lower-tier partnership. (2) Exception for a technical termi- nation of a partnership. Paragraph (d)(1) of this section will not apply to a deemed contribution that occurs as a result of a ter- mination of a partnership described in sec- tion 708(b)(1)(B) (technical termination). If a partnership is a section 721(c) partner- ship immediately before a technical termi- nation, see §1.721(c)-5(c)(4) (which treats technical terminations as successor events in certain circumstances). (e) Applicability dates—(1) In gener- al. Except as provided in paragraphs (e) (2) and (3) of this section, this section ap- plies to contributions occurring on or after August 6, 2015, and to contributions that occurred before August 6, 2015 resulting from an entity classification election made under §301.7701-3 of this chapter that was effective on or before August 6, 2015 but was filed on or after August 6, 2015. (2) Certain provisions. Except as pro- vided in paragraph (e)(3) of this section, the final sentence of paragraph (b) of this section, the final sentence of paragraph (c) of this section, and paragraph (d)(2) of this section apply to contributions occur- ring on or after January 18, 2017, and to contributions that occurred before January 18, 2017 resulting from an entity classi- fication election made under §301.7701-3 of this chapter that was effective on or be- fore January 18, 2017 but was filed on or after January 18, 2017. (3) Election to apply the provisions described in paragraph (e)(2) of this section retroactively. The final sentence of paragraph (b) of this section, the final sentence of paragraph (c) of this section, and paragraph (d)(2) of this section may, by election, be applied to a contribution that occurred on or after August 6, 2015 but before January 18, 2017, and to a con- tribution that occurred before August 6, 2015 resulting from an entity classifica- tion election made under §301.7701-3 of this chapter that was effective on or before August 6, 2015 but was filed on or after August 6, 2015. The election must have been made by applying the final sentence of paragraph (b) of this section, the final sentence of paragraph (c) of this section, or paragraph (d)(2) of this section, as ap- plicable, to the contribution on a timely filed original return (including extensions) or an amended return filed no later than July 18, 2017. §1.721(c)-2T [Removed] Par. 11. Section 1.721(c)-2T is re- moved. Par. 12. Section 1.721(c)-3 is added to read as follows: §1.721(c)-3 Gain deferral method. (a) Scope. This section describes the gain deferral method to avoid the imme- diate recognition of gain upon a contribu- tion of section 721(c) property to a section 721(c) partnership. Paragraph (b) of this section provides the requirements of the gain deferral method, including the re- quirement to apply the consistent alloca- tion method. Paragraph (c) of this section describes the consistent allocation meth- od. Paragraph (d) of this section provides rules for tiered partnerships. Paragraph (e) of this section provides the dates of appli- cability. For definitions that apply for pur- poses of this section, see §1.721(c)-1(b). (b) Requirements of the gain deferral method. A contribution of section 721(c) property to a section 721(c) partnership that would be subject to §1.721(c)-2(b) will not be subject to §1.721(c)-2(b) if the conditions in paragraphs (b)(1) through (5) of this section are satisfied with respect to that property. (1) Either— (i) Both— (A) The section 721(c) partnership adopts the remedial allocation method de- scribed in §1.704-3(d) with respect to the section 721(c) property; and (B) The section 721(c) partnership ap- plies the consistent allocation method pro- vided in paragraph (c) of this section; or (ii) For the period beginning on the date of the contribution of the section 721(c) property and ending on the date on which there is no remaining built-in gain with respect to that property, all distrib- utive shares of income and gain with re- spect to the section 721(c) property for all direct and indirect partners that are related foreign persons with respect to the U.S. transferor will be subject to taxation as in- come effectively connected with a trade or business within the United States (under either section 871 or 882), and neither the section 721(c) partnership nor a related foreign person that is a direct or indirect partner in the section 721(c) partnership claims benefits under an income tax con- vention that would exempt the income or gain from tax or reduce the rate of taxation to which the income or gain is subject. (2) Upon an acceleration event, the U.S. transferor recognizes an amount of gain equal to the remaining built-in gain with respect to the section 721(c) prop- erty or an amount of gain required to be Bulletin No. 2020–8 429 February 18, 2020 recognized under §1.721(c)-5(d) or (e), as applicable. (3) The procedural and reporting re- quirements provided in §1.721(c)-6(b) are satisfied. (4) The U.S. transferor consents to ex- tend the period of limitations on assess- ment of tax as required by §1.721(c)-6(b) (5). (5) If the section 721(c) property is a partnership interest or property described in the partnership look-through rule pro- vided in §1.721(c)-2(d), the applicable tiered-partnership rules provided in para- graph (d) of this section are applied. (c) Consistent allocation method—(1) In general. For each taxable year of a section 721(c) partnership in which there is remaining built-in gain in the section 721(c) property, the section 721(c) part- nership must allocate each book item of income, gain, deduction, and loss with respect to the section 721(c) property to the U.S. transferor in the same percent- age. For purposes of this paragraph (c)(1), upon a variation (as defined in §1.706- 4(a)(1)) of a U.S. transferor’s interest in a section 721(c) partnership, a book item of income, gain, deduction, and loss with re- spect to a section 721(c) property is treated as allocated in the same percentage if the item is allocated under the interim closing method (as described in §1.706-4), unless the variation results from a transaction undertaken with a principal purpose of avoiding the tax consequences of the gain deferral method. For exceptions to the first sentence in this paragraph (c)(1), see para- graph (c)(4) of this section. (2) Determining income or gain with respect to section 721(c) property. For purposes of applying paragraph (c)(1) of this section, a section 721(c) partnership must attribute book income and gain to each item of section 721(c) property in a consistent manner using any reasonable method taking into account all the facts and circumstances. All items of book in- come and gain attributable to an item of section 721(c) property will comprise a single class of gross income for purposes of applying paragraph (c)(3) of this sec- tion. (3) Determining deduction or loss with respect to section 721(c) property. For purposes of applying paragraph (c)(1) of this section, a section 721(c) partner- ship must use the principles of §§1.861- 8 and 1.861-8T to allocate and apportion its items of deduction, except for interest expense and research and experimen- tal expenditures, and loss to the class of gross income with respect to each item of section 721(c) property as determined in paragraph (c)(2) of this section. Accord- ingly, a deduction or loss will be consid- ered to be definitely related and therefore allocable to a class of gross income with respect to particular section 721(c) prop- erty whether or not there is any item of gross income in that class that is received or accrued during the taxable year and whether or not the amount of deduction or loss exceeds the amount of gross income in that class during the taxable year. If a deduction or loss is definitely related and therefore allocable to gross income at- tributable to more than one class of gross income of the section 721(c) partnership or if a deduction or loss is not definitely related to any class of gross income of the section 721(c) partnership, the section 721(c) partnership must apportion that de- duction or loss among its classes of gross income using a reasonable method that reflects to a reasonably close extent the factual relationship between the deduction or loss and the classes of gross income. The section 721(c) partnership may allo- cate and apportion its interest expense and research and experimental expenditures under any reasonable method, including, but not limited to, the methods prescribed in §§1.861-9 and 1.861-9T (interest ex- pense) and §1.861-17 (research and ex- perimental expenditures). For purposes of this paragraph (c)(3), the section 721(c) partnership must allocate and apportion its deductions and losses without regard to the partners’ percentage interests in the partnership. (4) Exceptions to the consistent alloca- tion method—(i) Regulatory allocations. A regulatory allocation (as defined in §1.721(c)-1(b)(10)) of book income, gain, deduction, or loss with respect to section 721(c) property that otherwise would fail to satisfy paragraph (c)(1) of this section is nevertheless deemed to satisfy paragraph (c)(1) of this section if the allocation is— (A) An allocation of income or gain to the U.S. transferor (or a member of its consolidated group as defined in §1.1502- 1(h)); (B) An allocation of deduction or loss to a partner other than the U.S. transferor (or a member of its consolidated group); or (C) Treated as a partial acceleration event pursuant to §1.721(c)-5(d)(2). (ii) Allocation of creditable foreign tax expenditures. An allocation of a credit- able foreign tax expenditure (as defined in §1.704-1(b)(4)(viii)(b)) is not subject to the consistent allocation method. (d) Tiered partnership rules. This para- graph (d) provides the tiered partnership rules referred to in paragraph (b)(5) of this section. (1) Section 721(c) property is a part- nership interest. If the section 721(c) property that is contributed to a section 721(c) partnership is an interest in a part- nership (lower-tier partnership), then the lower-tier partnership, if it is a controlled partnership with respect to the U.S. trans- feror, and each partnership in which an interest is owned (directly or indirectly through one or more partnerships) by the lower-tier partnership and that is a con- trolled partnership with respect to the U.S. transferor, must satisfy the requirements of paragraphs (d)(1)(i), (ii), and (iii) of this section. (i) The partnership must revalue all its property under §1.704-1(b)(2)(iv)(f)(6) if the revaluation would result in a separate positive difference between book value and adjusted tax basis in at least one prop- erty that is not excluded property. (ii) The partnership must apply the gain deferral method for each property (other than excluded property) for which there is a separate positive difference be- tween book value and adjusted tax basis resulting from the revaluation described in paragraph (d)(1) of this section (new positive reverse section 704(c) layer). If the partnership has previously adopted a section 704(c) method other than the re- medial allocation method for the property, the partnership satisfies the requirement of paragraph (b)(1)(i)(A) of this section by adopting the remedial allocation method for the new positive reverse section 704(c) layer. (iii) The partnership must treat a part- ner that is a partnership in which the U.S. transferor is a direct or indirect partner as if it were the U.S. transferor with respect to the section 721(c) property solely for February 18, 2020 430 Bulletin No. 2020–8 purposes of applying the consistent allo- cation method. (2) Section 721(c) property is indirectly contributed by a U.S. transferor under the partnership look-through rule. If the U.S. transferor is a direct or indirect partner in the upper-tier partnership described in §1.721(c)-2(d)(1), and under §1.721(c)- 2(d)(1), the U.S. transferor is treated as contributing the section 721(c) property (including an interest in a partnership de- scribed in paragraph (d)(1) of this section) to a section 721(c) partnership, then the requirements of paragraphs (d)(2)(i), (ii), and (iii) of this section must be satisfied. (i) The section 721(c) partnership must treat the upper-tier partnership as the U.S. transferor of the section 721(c) property solely for purposes of applying the consis- tent allocation method; (ii) The upper-tier partnership, if it is a controlled partnership with respect to the U.S. transferor, must apply the gain de- ferral method to its interest in the section 721(c) partnership; and (iii) If the U.S. transferor is an indi- rect partner in the upper-tier partnership through one or more partnerships, the principles of paragraphs (d)(2)(i) and (ii) of this section must be applied with re- spect to those partnerships that are con- trolled partnerships with respect to the U.S. transferor. (e) Applicability dates—(1) In gener- al. Except as provided in paragraphs (e) (2) and (3) of this section, this section ap- plies to contributions occurring on or after August 6, 2015, and to contributions that occurred before August 6, 2015 resulting from an entity classification election made under §301.7701-3 of this chapter that was effective on or before August 6, 2015 but was filed on or after August 6, 2015. (2) Certain provisions. Except as pro- vided in paragraph (e)(3) of this section, paragraphs (b)(1)(ii), (c)(2) and (3), (c) (4)(i) and (ii), and (d)(1) and (2) of this section apply to contributions occurring on or after January 18, 2017, and to con- tributions that occurred before January 18, 2017 resulting from an entity classifica- tion election made under §301.7701-3 of this chapter that was effective on or before January 18, 2017 but was filed on or after January 18, 2017. Except as provided in paragraph (e)(3) of this section, the sec- ond sentence of paragraph (c)(1) of this section applies to contributions occurring on or after January 17, 2020. (3) Election to apply the provisions de- scribed in paragraph (e)(2) of this section retroactively. Paragraphs (b)(1)(ii), (c) (2) and (3), (c)(4)(i) and (ii), and (d)(1) and (2) of this section may, by election, be applied to a contribution that occurred on or after August 6, 2015 but before Jan- uary 18, 2017, and to a contribution that occurred before August 6, 2015 resulting from an entity classification election made under §301.7701-3 of this chapter that was effective on or before August 6, 2015 but was filed on or after August 6, 2015. The election described in the preceding sen- tence must have been made by applying paragraph (b)(1)(ii), (c)(2) or (3), (c)(4)(i) or (ii), or (d)(1) or (2) of this section, as applicable, to the contribution on a timely filed original return (including extensions) or an amended return filed no later than July 18, 2017. In order to elect to apply paragraph (c)(2) or (3) of this section to a contribution described in this paragraph (e)(3), an election must also have been made to apply paragraph (c)(3) or (2) of this section, respectively, to the contribu- tion. The second sentence of paragraph (c)(1) of this section, may, by election, be applied to a contribution that occurred on or after August 6, 2015 but before Janu- ary 17, 2020, and to a contribution that occurred before August 6, 2015 resulting from an entity classification election made under §301.7701-3 of this chapter that was effective on or before August 6, 2015 but was filed on or after August 6, 2015. The election described in the preceding sentence must be made by applying the second sentence of paragraph (c)(1) of this section to the contribution on a timely filed original return (including extensions) or an amended return filed no later than July 17, 2020. (4) Transitional rules. If a contribu- tion is described in paragraph (e)(2) of this section and no election described in paragraph (e)(3) of this section is made to apply one or more of paragraphs (c)(2) and (3) and (c)(4)(i) and (ii) of this sec- tion, as applicable, to the contribution, then, for purposes of paragraph (c)(1) of this section, the section 721(c) partner- ship must attribute book income, gain, loss, and deduction to the section 721(c) property in a consistent manner under any reasonable method taking into account all the facts and circumstances. If a contribu- tion is described in paragraph (e)(2) of this section and no election described in para- graph (e)(3) of this section is made to ap- ply paragraph (d)(1) or (2) of this section, as applicable, to the contribution, then, this section must be applied in a manner consistent with the purpose of the section 721(c) regulations. Thus, for example, if a U.S. transferor is a direct or indirect part- ner in a partnership and that partnership contributes section 721(c) property to a lower-tier partnership, or, if a U.S. trans- feror contributes an interest in a partner- ship that owns section 721(c) property to a lower-tier partnership, then paragraph (b) of this section applies as though the U.S. transferor contributed its share of the sec- tion 721(c) property directly. §1.721(c)-3T [Removed] Par. 13. Section 1.721(c)-3T is re- moved. Par. 14. Section 1.721(c)-4 is added to read as follows: §1.721(c)-4 Acceleration events. (a) Scope. This section provides rules regarding acceleration events for purpos- es of applying the gain deferral method. Paragraph (b) of this section defines an acceleration event. Paragraph (c) of this section provides the consequences of an acceleration event. Paragraph (d) of this section provides the dates of applicability. For definitions that apply for purposes of this section, see §1.721(c)-1(b). (b) Definition of an acceleration event—(1) General rules. Except as pro- vided in this paragraph (b) and §1.721(c)- 5 (acceleration event exceptions), an ac- celeration event with respect to section 721(c) property is any event that either would reduce the amount of remaining built-in gain that a U.S. transferor would recognize under the gain deferral method if the event had not occurred or could de- fer the recognition of the remaining built- in gain. An acceleration event includes a contribution of section 721(c) property to another partnership by a section 721(c) partnership and a contribution of an in- terest in a section 721(c) partnership to another partnership. This paragraph (b) applies on a property-by-property basis. (2) Failure to comply with a require- ment of the gain deferral method—(i) General rule. An acceleration event with Bulletin No. 2020–8 431 February 18, 2020 respect to section 721(c) property occurs when any party fails to comply with a con- dition of the gain deferral method with re- spect to the section 721(c) property. (ii) Certain failures to comply with procedural and reporting requirements. Notwithstanding paragraph (b)(2)(i) of this section, an acceleration event will not occur solely as a result of a failure to com- ply with a requirement of §1.721(c)-3(b) (3) that is not willful. See §§1.721(c)-6(f) and 1.6038B-2(h)(3). (3) Lower-tier partnership allocations. Notwithstanding paragraph (b)(1) of this section, an acceleration event will not oc- cur because of a reduction in remaining built-in gain in an interest in a partnership that is section 721(c) property that occurs as a result of allocations of book items of deduction and loss, or tax items of income and gain. (4) Deemed acceleration event. A U.S. transferor may treat an acceleration event as having occurred with respect to section 721(c) property by both recognizing gain in an amount equal to the remaining built- in gain that would have been allocated to the U.S. transferor if the section 721(c) partnership had sold the section 721(c) property immediately before the deemed acceleration event for fair market value and satisfying the reporting required by §1.721(c)-6(b)(3)(i)(D). In this case, see paragraph (c) of this section regarding ba- sis adjustments. (c) Consequences of an acceleration event. Paragraphs (c)(1) and (2) of this section provide the consequences of an acceleration event with respect to section 721(c) property, a partial acceleration event with respect to section 721(c) prop- erty to the extent provided in §1.721(c)- 5(d)(1), and a transfer described in section 367 of section 721(c) property to the ex- tent provided in §1.721(c)-5(e). (1) U.S. transferor. The U.S. transferor must recognize gain in an amount equal to the remaining built-in gain that would have been allocated to the U.S. transferor if the section 721(c) partnership had sold the section 721(c) property immediate- ly before the acceleration event for fair market value. The U.S. transferor will in- crease its basis in its partnership interest by the amount of gain recognized. If the U.S. transferor is an indirect partner in the section 721(c) partnership through one or more tiered partnerships, appropriate ba- sis adjustments will be made to the inter- ests in the tiered partnerships. (2) Section 721(c) partnership. The section 721(c) partnership will increase its basis in the section 721(c) property by the amount of built-in gain recognized by the U.S. transferor under paragraph (c) (1) of this section. Any tax consequences of the acceleration event will be deter- mined taking into account the increase in the partnership’s adjusted tax basis in the section 721(c) property. If the section 721(c) property remains in the partnership after the acceleration event, the increase in basis of the section 721(c) property may be recovered using any applicable recov- ery period and depreciation (or other cost recovery) method (including first-year conventions) available to the partnership for newly purchased property of the same type placed in service on the date of the acceleration event. The section 721(c) property will no longer be subject to the gain deferral method. (d) Applicability dates. This section ap- plies to contributions occurring on or after August 6, 2015, and to contributions that occurred before August 6, 2015 resulting from an entity classification election made under §301.7701-3 of this chapter that was effective on or before August 6, 2015 but was filed on or after August 6, 2015. §1.721(c)-4T [Removed] Par. 15. Section 1.721(c)-4T is re- moved. Par. 16. Section 1.721(c)-5 is added to read as follows: §1.721(c)-5 Acceleration event excep- tions. (a) Scope. This section identifies ex- ceptions to the acceleration events, which, like the rules regarding acceleration events provided in §1.721(c)-4(b), apply on a property-by-property basis. Paragraph (b) of this section identifies the events that terminate the requirement to apply the gain deferral method. Paragraph (c) of this section identifies the successor events that allow for the continued application of the gain deferral method. Paragraph (d) of this section identifies the partial acceleration events. Paragraph (e) of this section pro- vides special rules for transfers of section 721(c) property to a foreign corporation described in section 367. Paragraph (f) of this section allows for the continued appli- cation of the gain deferral method if there is a fully taxable disposition of a portion of an interest in a partnership. Paragraph (g) of this section provides the dates of applicability. For definitions that apply for purposes of this section, see §1.721(c)- 1(b). (b) Termination events—(1) In gener- al. Notwithstanding §1.721(c)-4(b)(1), a termination event with respect to section 721(c) property will not constitute an ac- celeration event. In these cases, the sec- tion 721(c) property will no longer be sub- ject to the gain deferral method. (2) Transfers of section 721(c) proper- ty (other than a partnership interest) to a domestic corporation described in section 351. A termination event occurs if a sec- tion 721(c) partnership transfers section 721(c) property (other than an interest in a partnership) to a domestic corporation in a transaction to which section 351 applies. (3) Certain incorporations of a section 721(c) partnership. A termination event occurs upon an incorporation of a section 721(c) partnership into a domestic cor- poration by any method of incorporation (other than a method involving an actual distribution of partnership property to the partners, followed by a contribution of that property to a corporation), provided that the section 721(c) partnership is liq- uidated as part of the incorporation trans- action. (4) Certain distributions of section 721(c) property. A termination event occurs if a section 721(c) partnership distributes section 721(c) property either to the U.S. transferor or, if the U.S. transferor is a member of a consolidated group (as de- fined in §1.1502-1(h)) at the time of the distribution and the distribution occurs outside the seven-year period described in section 704(c)(1)(B), to a member of the consolidated group. (5) Partnership ceases to have a part- ner that is a related foreign person. A termination event occurs when a section 721(c) partnership ceases to have any di- rect or indirect partners that are related foreign persons with respect to the U.S. transferor, provided there is no plan for a related foreign person to subsequently become a direct or indirect partner in the partnership (or a successor). This para- graph (b)(5) does not apply to a distribu- tion of section 721(c) property in redemp- February 18, 2020 432 Bulletin No. 2020–8 tion of a related foreign person’s interest in a section 721(c) partnership. (6) Fully taxable dispositions of sec- tion 721(c) property. A termination event occurs if a section 721(c) partnership dis- poses of section 721(c) property in a trans- action in which all gain or loss, if any, is recognized. (7) Fully taxable dispositions of an entire interest in a section 721(c) partner- ship. A termination event occurs if a U.S. transferor or a partnership in which a U.S. transferor is a direct or indirect partner disposes of its entire interest in a section 721(c) partnership that owns the section 721(c) property in a transaction in which all gain or loss, if any, is recognized. This paragraph (b)(7) does not apply if a U.S. transferor is a member of a consolidated group (as defined in §1.1502-1(h)) and the interest in the section 721(c) partnership is transferred in an intercompany transaction (as defined in §1.1502-13(b)(1)); see para- graph (c)(3) of this section for a successor event rule applicable to these intercompa- ny transactions. (c) Successor events—(1) In gener- al. Notwithstanding §1.721(c)-4(b)(1), a successor event with respect to section 721(c) property will not constitute an ac- celeration event. If a portion of an interest in a partnership is transferred in a succes- sor event described in this paragraph (c), the principles of §1.704-3(a)(7) apply to determine the remaining built-in gain in section 721(c) property that is attributable to the portion of the interest that is trans- ferred and the portion of the interest that is retained. (2) Transfers of an interest in a section 721(c) partnership by a U.S. transferor or upper-tier partnership to a domestic cor- poration in certain nonrecognition trans- actions. A successor event occurs if a U.S. transferor or a partnership in which a U.S. transferor is a direct or indirect partner transfers (directly or indirectly through one or more partnerships) an interest in a section 721(c) partnership to a domes- tic corporation in a transaction to which section 351 or 381 applies, and the gain deferral method is continued by treating the transferee domestic corporation as the U.S. transferor for purposes of the section 721(c) regulations. If the transfer described in this paragraph (c)(2) also re- sults in a termination under section 708(b) (1)(B) of the section 721(c) partnership, see paragraph (c)(4) of this section. (3) Transfers of an interest in a sec- tion 721(c) partnership in an intercom- pany transaction. A successor event oc- curs if a U.S. transferor that is a member of a consolidated group (as defined in §1.1502-1(h)) transfers (directly or indi- rectly through one or more partnerships) an interest in a section 721(c) partnership in an intercompany transaction (as defined in §1.1502-13(b)(1)), and the gain deferral method is continued by treating the trans- feree member as the U.S. transferor for purposes of the section 721(c) regulations. If the transfer described in this paragraph (c)(3) also results in a termination under section 708(b)(1)(B) of the section 721(c) partnership, see paragraph (c)(4) of this section. (4) Termination under section 708(b) (1)(B) of a section 721(c) partnership. A successor event occurs if there is a ter- mination under section 708(b)(1)(B) of a section 721(c) partnership, and the gain deferral method is continued by treating the new partnership as the section 721(c) partnership for purposes of the section 721(c) regulations. (5) Transactions involving tiered part- nerships—(i) Contributions of section 721(c) property to a lower-tier partner- ship. A successor event occurs if a section 721(c) partnership contributes the section 721(c) property to a partnership that is a controlled partnership with respect to the U.S. transferor (lower-tier section 721(c) partnership) and the requirements of para- graphs (c)(5)(i)(A) through (C) of this section are satisfied. (A) The lower-tier section 721(c) part- nership is a section 721(c) partnership or is treated as a section 721(c) partnership. (B) The gain deferral method is applied with respect to the section 721(c) proper- ty in the hands of the lower-tier section 721(c) partnership. (C) The gain deferral method is applied with respect to the section 721(c) part- nership’s interest in the lower-tier section 721(c) partnership. See §1.721(c)-3(b)(5) and (d)(2). (ii) Contributions of an interest in a section 721(c) partnership to an upper-ti- er partnership. A successor event occurs if a U.S. transferor or a partnership in which a U.S. transferor is a direct or indi- rect partner contributes (directly or indi- rectly through one or more partnerships) an interest in a section 721(c) partnership to a partnership that is a controlled part- nership with respect to the U.S. transfer- or (upper-tier section 721(c) partnership) and the requirements of paragraphs (c)(5) (ii)(A) through (D) of this section are sat- isfied. (A) The gain deferral method is con- tinued with respect to the section 721(c) property in the hands of the section 721(c) partnership. (B) The upper-tier section 721(c) part- nership is, or is treated as, a section 721(c) partnership. (C) If the upper-tier section 721(c) partnership directly owns its interest in the section 721(c) partnership, the gain deferral method is applied with respect to the upper-tier section 721(c) partnership’s interest in the section 721(c) partnership. See §1.721(c)-3(b)(5) and (d)(1). (D) If the upper-tier section 721(c) partnership indirectly owns its interest in the section 721(c) partnership through one or more partnerships, the principles of paragraphs (c)(5)(ii)(B) and (C) of this section are applied with respect to each partnership through which the upper-tier section 721(c) partnership indirectly owns an interest in the section 721(c) partner- ship. (d) Partial acceleration events—(1) In general. Notwithstanding §1.721(c)-4, a partial acceleration event with respect to section 721(c) property does not consti- tute an acceleration event. In these cases, except as provided in paragraph (d)(3) of this section, the rules in §1.721(c)-4(c) (concerning the consequences of an ac- celeration event) for making basis adjust- ments apply to the extent that the U.S. transferor is required to recognize gain under paragraph (d)(2) or (3) of this sec- tion. Furthermore, if there is remaining built-in gain with respect to the section 721(c) property after the application of this paragraph (d), the application of the gain deferral method with respect to the section 721(c) property must be continued in the same manner. (2) Regulatory allocations. If a regulatory allocation is described in §1.721(c)-3(c)(4)(i) but not in §1.721(c)- 3(c)(4)(i)(A) or (B), a partial acceleration event occurs with respect to section 721(c) Bulletin No. 2020–8 433 February 18, 2020 property if the U.S. transferor recognizes an amount of gain (but not in excess of re- maining built-in gain) equal to the amount of the allocation that, under the consistent allocation method, had the regulatory al- location not occurred, would have been allocated to the U.S. transferor in the case of income or gain, or would not have been allocated to the U.S. transferor in the case of deduction or loss. (3) Certain distributions of other part- nership property to a partner that result in an adjustment under section 734. A partial acceleration event occurs with respect to section 721(c) property if there is a dis- tribution of other property by the section 721(c) partnership that results in a posi- tive basis adjustment to the section 721(c) property under section 734. In these cas- es, the U.S. transferor must recognize an amount of gain (but not in excess of the remaining built-in gain) equal to the posi- tive basis adjustment to the section 721(c) property under section 734, reduced (but not below zero) by the amount of gain rec- ognized by the U.S. transferor (or a mem- ber of its consolidated group (as defined in §1.1502-1(h))) under section 731(a). In these cases, the partnership will not in- crease its basis under §1.721(c)-4(c)(2) by the amount of gain recognized by the U.S. transferor. (e) Transfers described in section 367 of section 721(c) property to a foreign cor- poration. If a section 721(c) partnership transfers section 721(c) property, or a U.S. transferor or a partnership in which a U.S. transferor is a direct or indirect partner transfers (directly or indirectly through one or more partnerships) all or a portion of an interest in a section 721(c) partner- ship that owns section 721(c) property, to a foreign corporation in a transaction de- scribed in section 367, then the property will no longer be subject to the gain defer- ral method. To the extent any U.S. trans- feror is treated as transferring the section 721(c) property to the foreign corporation for purposes of section 367, the tax con- sequences will be determined under sec- tion 367. In this regard, see §§1.367(a)- 1T(c)(3)(i) and (ii), 1.367(d)-1T(d)(1), and 1.367(e)-2(b)(1)(iii) (providing for the aggregate treatment of partnerships). However, for the remaining portion of the property (if any), the U.S. transferor must recognize an amount of gain equal to the remaining built-in gain that would have been allocated to the U.S. transferor if the section 721(c) partnership had sold that portion of the section 721(c) proper- ty immediately before the transfer for fair market value. The stock in the transferee foreign corporation received will not be subject to the gain deferral method. The rules in §1.721(c)-4(c) (concerning the consequences of an acceleration event) for making basis adjustments will apply to the extent that the U.S. transferor recognizes gain under this paragraph (e). (f) Fully taxable dispositions of a por- tion of an interest in a partnership. If a U.S. transferor or a partnership in which a U.S. transferor is a direct or indirect partner disposes of (directly or indirectly through one or more partnerships) a por- tion of an interest in a section 721(c) part- nership in a transaction in which all gain or loss, if any, is recognized, an acceler- ation event will not occur with respect to the portion of the interest transferred. The gain deferral method will continue to apply with respect to the section 721(c) property of the section 721(c) partner- ship. The principles of §1.704-3(a)(7) will apply to determine the remaining built- in gain in section 721(c) property that is attributable to the portion of the interest in a section 721(c) partnership that is re- tained. This paragraph (f) will not apply to an intercompany transaction (as defined in §1.1502-13(b)(1)). (g) Applicability dates—(1) In general. Except as provided in paragraph (g)(2) of this section, this section applies to contri- butions occurring on or after January 18, 2017, and to contributions that occurred before January 18, 2017 resulting from an entity classification election made under §301.7701-3 of this chapter that was ef- fective on or before January 18, 2017 but was filed on or after January 18, 2017. (2) Election to apply this section ret- roactively. This section may, by election, be applied to a contribution that occurred on or after August 6, 2015 but before Jan- uary 18, 2017, and to a contribution that occurred before August 6, 2015 resulting from an entity classification election made under §301.7701-3 of this chapter that was effective on or before August 6, 2015 but was filed on or after August 6, 2015. The election must have been made by ap- plying this section to the contribution on a timely filed original return (including extensions) or an amended return filed no later than July 18, 2017. §1.721(c)-5T [Removed] Par. 17. Section 1.721(c)-5T is re- moved. Par. 18. Section 1.721(c)-6 is added to read as follows §1.721(c)-6 Procedural and reporting requirements. (a) Scope. This section provides proce- dural and reporting requirements that must be satisfied under §1.721(c)-3(b)(3) of the gain deferral method. Paragraph (b) of this section describes the procedural and reporting requirements of a U.S. transfer- or. Paragraph (c) of this section describes information required to be reported with respect to related foreign persons and partnerships. Paragraph (d) of this section describes the procedural and reporting requirements of a section 721(c) partner- ship with a section 6031 filing obligation. Paragraph (e) of this section provides the proper signatory for the information pro- vided under this section. Paragraph (f) of this section provides relief for certain fail- ures to comply that are not willful. Para- graph (g) of this section provides the dates of applicability. For definitions that apply for purposes of this section, see §1.721(c)- 1(b). (b) Procedural and reporting require- ments of a U.S. transferor—(1) In gener- al. This paragraph (b) describes the pro- cedural and reporting requirements that a U.S. transferor (as defined §1.721(c)-1(b) (18)(i)) must satisfy in applying the gain deferral method. The information required under this paragraph (b) must be includ- ed with the U.S. transferor’s timely filed return on (or attached to) the appropriate forms or schedules (or their successors) and must be submitted in the form and manner and to the extent prescribed by the forms and schedules (and their accompa- nying instructions). (2) Reporting of a gain deferral contri- bution. A U.S. transferor must report the following information with respect to a gain deferral contribution: (i) On Schedule A-1, Certain Foreign Partners, Schedule A-2, Foreign Partners of Section 721(c) Partnership, Schedule G, Statement of Application of the Gain Deferral Method Under Section 721(c), and Schedule H, Acceleration Events and February 18, 2020 434 Bulletin No. 2020–8 Exceptions Reporting Relating to Gain Deferral Method Under Section 721(c) (for each such Schedule, with respect to Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships), as applicable, the following information with respect to the section 721(c) proper- ty— (A) A description of the property and recovery period (or periods) for the prop- erty; (B) Whether the property is an intangi- ble described in section 197(f)(9); (C) A calculation of the built-in gain, the basis, and fair market value on the date of the contribution, including the amount of gain recognized by the U.S. transferor, if any, on the gain deferral contribution; (D) The name, U.S. taxpayer identifi- cation number (if any), address, and coun- try of organization (if any) of each direct or indirect partner in the section 721(c) partnership that is a related person with respect to the U.S. transferor, and a de- scription of each partner’s interest in cap- ital and profits immediately after the gain deferral contribution; and (E) When the section 721(c) property is a partnership interest, the information de- scribed in paragraphs (b)(2)(i)(A) through (D) of this section with respect to each property of a lower-tier partnership to which the gain deferral method is applied under §1.721(c)-3(d)(1); (ii) On Form 8838-P, Consent To Ex- tend the Time To Assess Tax Pursuant to the Gain Deferral Method (Section 721(c)), an extension of the period of limitations on the assessment of tax as de- scribed in paragraph (b)(5) of this section; (iii) A copy of the waiver of treaty ben- efits described in paragraph (c)(1) of this section (if any); (iv) On Schedule A-1, Schedule A-2, and Schedule G (for each such Schedule, with respect to Form 8865), as applicable, information relating to the section 721(c) partnership described in paragraph (c)(2) of this section (if any); (v) On, Schedule O, Transfer of Prop- erty to a Foreign Partnership (Form 8865) with respect to any foreign partnership, (or partnership treated as foreign under paragraph (b)(4) of this section), the infor- mation required under §1.6038B-2(c)(1) through (7); and (vi) The information required under paragraph (b)(3) of this section. (3) Annual reporting relating to gain deferral method. A U.S. transferor must annually report information for each gain deferral contribution. The information re- ported must be with respect to the partner- ship taxable year that ends with, or with- in, the taxable year of the U.S. transferor, beginning with the partnership’s taxable year that includes the date of the gain de- ferral contribution and ending with the last taxable year in which the gain defer- ral method is applied to the section 721(c) property. The information reported must include: (i) For each deferral contribution, the U.S. transferor must report the following information on Schedule G and Sched- ule H (for each Schedule, with respect to Form 8865), as applicable: (A) The amount of book income, gain, deduction, and loss and tax items allocat- ed to the U.S. transferor with respect to the section 721(c) property, including a description of any regulatory allocations; (B) The proportion (expressed as a percentage) in which the book income, gain, deduction, and loss with respect to the section 721(c) property was allocated among the U.S. transferor and related per- sons that are partners in the section 721(c) partnership under the consistent allocation method; (C) The amount of remaining built-in gain at the beginning of the taxable year, the remedial income allocated to the U.S. transferor under the remedial allocation method, the amount of built-in gain taken into account by reason of an acceleration event or partial acceleration event (if any), the partnership’s adjustment to its tax ba- sis in the section 721(c) property, and the remaining built-in gain at the end of the taxable year; (D) A declaration stating whether an acceleration event or partial acceleration event occurred during the taxable year, the date of the event, and a description of the event (including a citation to the relevant paragraph of §1.721(c)-5(d) in the case of a partial acceleration event, and wheth- er the acceleration event is described in §1.721(c)-4(b)(4)); (E) A description of a termination event or any successor event that occurred during the taxable year with a citation to the relevant paragraph of §1.721(c)-5(b) or (c), the date of the event, and, in the case of a successor event, the name, address, and U.S. taxpayer identification number (if any) of any successor partnership, low- er-tier partnership, upper-tier partnership, or U.S. corporation (as applicable); (F) A description of all transfers of section 721(c) property to a foreign cor- poration described in §1.721(c)-5(e) that occurred during the taxable year, and for each transfer, the date of the transfer, the section 721(c) property transferred, and the name, address, and U.S. taxpayer identification number (if any) of the for- eign transferee corporation; and (G) With respect to section 721(c) property for which a waiver of treaty ben- efits was filed under paragraph (b)(2)(iii) of this section, a declaration that, after ex- ercising reasonable diligence, to the best of the U.S. transferor’s knowledge and belief, all income from the section 721(c) property allocated to the partners during the taxable year remained subject to taxa- tion as income effectively connected with the conduct of a trade or business within the United States (under either section 871 or 882) for all direct or indirect partners that are related foreign persons with re- spect to the U.S. transferor (regardless of whether any such partner was a partner at the time of the gain deferral contribution), and, that neither the partnership nor any such partner has made any claim under any income tax convention to an exemp- tion from U.S. income tax or a reduced rate of U.S. income taxation on income derived from the use of the section 721(c) property; (ii) On Form 8838-P, an extension of the period of limitations on the assessment of tax, in the case of a gain deferral contri- bution, as described in paragraph (b)(5)(ii) of this section, and, in the case of certain contributions on which gain is recognized, as described in paragraph (b)(5)(iii) of this section; (iii) If the section 721(c) partnership is a partnership that does not have a filing ob- ligation under section 6031, the informa- tion described in §1.6038-3(g) (contents of information returns required of certain United States persons with respect to con- trolled foreign partnerships), if not already reported elsewhere, without regard to whether the section 721(c) partnership is Bulletin No. 2020–8 435 February 18, 2020 a controlled foreign partnership within the meaning of section 6038. If the U.S. trans- feror is not a controlling fifty-percent part- ner (as defined in §1.6038-3(a)), the U.S. transferor complies with the requirement of this paragraph (b)(3)(iii) by providing the information described in §1.6038-3(g) (1); (iv) On Schedule O (Form 8865), a description of all section 721(c) proper- ty contributed by the U.S. transferor to the section 721(c) partnership (including pursuant to a contribution described in §1.721(c)-2(d)(1)) during the taxable year to which the gain deferral method is not applied; and (v) The information required in para- graphs (c)(2) and (3) of this section for related foreign persons that are direct or indirect partners in the section 721(c) partnership and the section 721(c) part- nership itself (if any). (4) Domestic partnerships treated as foreign. Solely for purposes of this sec- tion, a U.S. transferor must treat a domes- tic section 721(c) partnership as a foreign partnership if the partnership was formed on or after January 18, 2017. If the section 721(c) partnership has an information re- turn filing obligation under section 6031, that requirement is not affected by the re- quirement of this paragraph (b)(4) that the U.S. transferor treat the partnership as a foreign partnership. (5) Extension of period of limitations on assessment of tax. In order to comply with the gain deferral method, a U.S. transferor must extend the period of limitations on the assessment of tax using Form 8838-P: (i) With respect to the gain realized but not recognized on a gain deferral contri- bution, through the date that is 96 months after the close of the U.S. transferor’s tax- able year that includes the date of the gain deferral contribution; (ii) With respect to all book and tax items with respect to the section 721(c) property allocated to the U.S. transferor in the partnership’s taxable year that in- cludes the date of the gain deferral con- tribution and the subsequent two years, through the date that is 72 months after the close of such taxable year with which, or within which, the partnership’s taxable year ends; and (iii) With respect to the gain recog- nized on a contribution of section 721(c) property to a section 721(c) partnership for which the gain deferral method is not applied, if the contribution occurs within five partnership taxable years following a partnership taxable year that includes the date of a gain deferral contribution, through the date that is 60 months after the close of the U.S. transferor’s taxable year that includes the date of the contribution on which gain is recognized. (c) Information with respect to sec- tion 721(c) partnerships and related for- eign persons—(1) Effectively connected income. If the gain deferral method is applied with respect to a contribution of section 721(c) property that satisfies the condition in §1.721(c)-3(b)(1)(ii), the U.S. transferor must obtain a statement from the section 721(c) partnership and from each related foreign person that is a direct or indirect partner in the section 721(c) partnership, titled “Statement of Waiver of Treaty Benefits under §1.721(c)-6,” pur- suant to which the partner and the partner- ship waive any claim under any income tax convention (whether or not currently in force at the time of the contribution) to an exemption from U.S. income tax or a reduced rate of U.S. income taxation on income derived from the use of the sec- tion 721(c) property for the period during which the section 721(c) property is sub- ject to the gain deferral method. (2) Partnerships in tiered-partner- ship structures applying the gain deferral method. If the gain deferral method is ap- plied as a result of a transaction described in §1.721(c)-3(d), the U.S. transferor must supply all the information that a section 721(c) partnership would be required to report under paragraph (b) of this section if the section 721(c) partnership were a U.S. transferor. (3) Schedules K-1 for related foreign partners. If a section 721(c) partnership does not have a filing obligation under section 6031, the U.S. transferor must obtain a Schedule K-1 (Form 8865), Part- ner’s Share of Income, Deduction, Cred- its, etc., for all related foreign persons that are direct or indirect partners in the sec- tion 721(c) partnership. (d) Reporting and procedural require- ments of a section 721(c) partnership with a section 6031 filing obligation—(1) Waiver of treaty benefits. A section 721(c) partnership with a return filing obligation under section 6031 must include its waiv- er of treaty benefits described in paragraph (c)(1) of this section with its tax return for the taxable year that includes the date of the gain deferral contribution. (2) Information on Schedule K-1. A section 721(c) partnership with a return filing obligation under section 6031 must provide the relevant information neces- sary for the U.S. transferor to comply with the requirements in paragraphs (b)(2) and (3) of this section (using the Forms and Schedules specified in paragraphs (b) (2) and (3) of this section) with the U.S. transferor’s Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc. The partnership must also attach a Schedule K-1 (Form 1065) to its Form 1065 for each direct or indirect part- ner that is a related foreign person with respect to the U.S. transferor. (e) Signatory. Any statements required in this section must be signed under pen- alties of perjury by an agent of the U.S. transferor, the related foreign person that is a direct or indirect partner in the sec- tion 721(c) partnership, or the section 721(c) partnership, as applicable, that is authorized to sign under a general or spe- cific power of attorney, or by an appro- priate party. For the U.S. transferor, an appropriate party is a person described in §1.367(a)-8(e)(1). For a partnership with a section 6031 filing obligation, an appro- priate party is any party authorized to sign Form 1065. (f) Relief for certain failures to file or failures to comply that are not willful—(1) In general. This paragraph (f)(1) provides relief from the failure to comply with the procedural and reporting requirements of the gain deferral method prescribed by §1.721(c)-3(b)(3) and provided in para- graph (b) of this section if there is a failure to file or to include information required by this section (failure to comply). A fail- ure to comply will be deemed not to have occurred for purposes of §1.721(c)-3(b) (3) if the U.S. transferor demonstrates that the failure was not willful using the pro- cedure provided in this paragraph (f). For purposes of this paragraph (f), willful is to be interpreted consistent with the meaning of that term in the context of other civil penalties, which would include a failure due to gross negligence, reckless disre- gard, or willful neglect. Whether a failure February 18, 2020 436 Bulletin No. 2020–8 to comply was willful will be determined by the Director of Field Operations, Cross Border Activities Practice Area of Large Business & International (or any succes- sor to the roles and responsibilities of such position, as appropriate) (Director) based on all the facts and circumstances. The U.S. transferor must submit a request for relief and an explanation as provided in paragraph (f)(2) of this section. A U.S. transferor whose failure to comply is de- termined not to be willful under this para- graph (f) will be subject to a penalty under section 6038B if it fails to satisfy the ap- plicable reporting requirements under that section and does not demonstrate that the failure was due to reasonable cause and not willful neglect. See §1.6038B-2(h). The determination of whether the failure to comply was willful under this section has no effect on any request for relief made under §1.6038B-2(h). (2) Procedures for establishing that a failure to comply was not willful—(i) Time and manner of submission. A U.S. transferor’s statement that a failure to comply was not willful will be considered only if, promptly after the U.S. transferor becomes aware of the failure, an amend- ed return is filed for the taxable year to which the failure relates that includes the information that should have been in- cluded with the original return for such taxable year or that otherwise complies with the rules of this section as well as a written statement explaining the reasons for the failure to comply. The U.S. trans- feror also must file, with the amended re- turn, a Schedule O (Form 8865) and Form 8838-P (as described in paragraph (b)(5) of this section), completed and executed as prescribed in forms and instructions, consenting to extend the period of lim- itations on assessment of tax with respect to the gain realized but not recognized on the gain deferral contribution to the lat- er of the date that is 96 months after the close of the U.S. transferor’s taxable year that includes the date of the gain deferral contribution (date one), or the date that is 36 months after the date on which the required information is provided to the Director (date two). However, the U.S. transferor is not required to file a Sched- ule O (Form 8865), with the amended return if both date one is later than date two and a consent to extend the period of limitations on assessment of tax with respect to the gain realized but not rec- ognized on the gain deferral contribution for the U.S. transferor’s taxable year that includes the date of the contribution was previously submitted with a Schedule O (Form 8865). The amended return and ei- ther a Schedule O (Form 8865) or a copy of the previously filed Schedule O (Form 8865), as the case may be, must be filed with the Internal Revenue Service at the location where the U.S. transferor filed its original return. The U.S. transferor may submit a request for relief from the penalty under section 6038B as part of the same submission. See §1.6038B-2(h) (3). (ii) Notice requirement. In addition to the requirements of paragraph (f)(2)(i) of this section, the U.S. transferor must com- ply with the notice requirements of this paragraph (f)(2)(ii). If any taxable year of the U.S. transferor is under examination when the amended return is filed, a copy of the amended return must be delivered to the Internal Revenue Service personnel conducting the examination. If no taxable year of the U.S. transferor is under exam- ination when the amended return is filed, a copy of the amended return must be deliv- ered to the Director. (g) Applicability dates—(1) In general. Except as provided in paragraphs (g)(2) and (3) of this section, this section applies with respect to contributions occurring on or after January 18, 2017, and with respect to contributions that occurred before Janu- ary 18, 2017 resulting from an entity clas- sification election made under §301.7701- 3 of this chapter that was effective on or before January 18, 2017 but was filed on or after January 18, 2017. (2) Reporting relating to effectively connected income. Paragraphs (b)(2)(iii), (b)(3)(i)(G), and (d)(1) of this section ap- ply to a contribution occurring on or after August 6, 2015, and to a contribution that occurred before August 6, 2015 resulting from an entity classification election made under §301.7701-3 of this chapter that was effective on or before August 6, 2015 but was filed on or after August 6, 2015, and, in either case, provided §1.721(c)-3(b)(1) (ii) applies to the contribution. To the ex- tent that a previously filed return did not comply with paragraph (b)(2)(iii), (b)(3) (i)(G), or (d)(1) of this section, an amend- ed return complying with such paragraphs must have been filed no later than July 18, 2017. (3) Transition rules—(i) Reporting under sections 6038, 6038B, and 6046A. For transfers occurring on or after August 6, 2015, and for transfers that occurred before August 6, 2015 resulting from an entity classification election made under §301.7701-3 of this chapter that was ef- fective on or before August 6, 2015 but was filed on or after August 6, 2015, a U.S. transferor (or a domestic partnership in which a U.S. transferor is a direct or indirect partner) must fulfill any report- ing requirements imposed under sections 6038, 6038B, and 6046A with respect to the contribution of the section 721(c) property to the section 721(c) partnership. (ii) Reporting using statements in- stead of prescribed forms and schedules. For tax returns filed before July 17, 2020, reporting that met the requirements of §1.721(c)-6T (see 26 CFR part 1, revised as of April 1, 2019) as in effect before January 1, 2020, will be deemed to satis- fy the corresponding requirements of this section. §1.721(c)-6T [Removed] Par. 19. Section 1.721(c)-6T is re- moved. Par. 20. Section 1.721(c)-7 is added to read as follows: §1.721(c)-7 Examples. (a) Presumed facts. For purposes of the examples in paragraph (b) of this section, assume that there are no other transac- tions that are related to the transactions described in the examples and that all partnership allocations have substantial economic effect under section 704(b). For definitions that apply for purposes of this section, see §1.721(c)-1(b). Except where otherwise indicated, the following facts are presumed— (1) USP and USX are domestic corpo- rations that each use a calendar taxable year. USX is not a related person with re- spect to USP. (2) CFC1, CFC2, FX, and FY are for- eign corporations. (3) USP wholly owns CFC1 and CFC2. Neither FX nor FY is a related person with respect to USP or with respect to each oth- er. (4) PRS1, PRS2, and PRS3 are foreign entities classified as partnerships for U.S. Bulletin No. 2020–8 437 February 18, 2020 tax purposes. A partnership interest in PRS1, PRS2, and PRS3 is not described in section 475(c)(2). (5) A taxable year is referred to, for ex- ample, as year 1. (6) A partner in a partnership has the same percentage interest in income, gain, loss, deduction, and capital of the partner- ship. (7) No property is described in section 197(f)(9) in the hands of a contributing partner. (8) No partnership is a controlled part- nership solely under the facts and circum- stances test in §1.721(c)-1(b)(4). (b) Examples. The application of the rules stated in §§1.721(c)-1 through 1.721(c)-6 may be illustrated by the fol- lowing examples: (1) Example 1: Determining if a partnership is a section 721(c) partnership— (i) Facts. In year 1, USP and CFC1 form PRS1 as equal partners. CFC1 contributes cash of $1.5 million to PRS1, and USP contributes three properties to PRS1: a patent with a book value of $1.2 million and an adjusted tax ba- sis of zero, a security (within the meaning of section 475(c)(2)) with a book value of $100,000 and an adjusted tax basis of $20,000, and a machine with a book value of $200,000 and an adjusted tax basis of $600,000. (ii) Results. (A) Under §1.721(c)-1(b)(18)(i), USP is a U.S. transferor because USP is a U.S. per- son and not a domestic partnership. Under §1.721(c)- 1(b)(2), the patent has built-in gain of $1.2 million. The patent is not excluded property under §1.721(c)- 1(b)(6). Therefore, under §1.721(c)-1(b)(15)(i), the patent is section 721(c) property because it is prop- erty, other than excluded property, with built-in gain that is contributed by a U.S. transferor, USP. (B) Under §1.721(c)-1(b)(2), the security has built-in gain of $80,000. Under §1.721(c)-1(b)(6) (ii), the security is excluded property because it is described in section 475(c)(2). Therefore, the securi- ty is not section 721(c) property. (C) The tax basis of the machine exceeds its book value. Under §1.721(c)-1(b)(6)(iii), the machine is excluded property and therefore is not section 721(c) property. (D) Under §1.721(c)-1(b)(12), CFC1 is a related person with respect to USP, and under §1.721(c)- 1(b)(11), CFC1 is a related foreign person. Because USP and CFC1 collectively own at least 80 percent of the interests in the capital, profits, deductions, or losses of PRS1, under §1.721(c)-1(b)(14)(i), PRS1 is a section 721(c) partnership upon the contribution by USP of the patent. (E) The de minimis exception described in §1.721(c)-2(c) does not apply to the contribution because during PRS1’s year 1 the sum of the built- in gain with respect to all section 721(c) property contributed in year 1 to PRS1 is $1.2 million, which exceeds the de minimis threshold of $1 million. As a result, under §1.721(c)-2(b), section 721(a) does not apply to USP’s contribution of the patent to PRS1, unless the requirements of the gain deferral method are satisfied. (2) Example 2: Determining if partnership in- terest is section 721(c) property—(i) Facts. In year 1, USP and FX form PRS2. USP contributes a secu- rity (within the meaning of section 475(c)(2)) with a book value of $100,000 and an adjusted tax basis of $20,000 and a building located in country X with a book value of $30,000 and an adjusted tax basis of $8,000 in exchange for a 40-percent interest. FX contributes a machine with a book value of $195,000 and an adjusted tax basis of $250,000 in exchange for a 60-percent interest. (ii) Results. PRS2 is not a section 721(c) partner- ship because FX is not a related person with respect to USP. USP’s contributions to PRS2 are not subject to §1.721(c)-2(b). (iii) Alternative facts and results. (A) The facts are the same as in paragraph (b)(2)(i) of this section (the facts in Example 2). In addition, USP and CFC1 form PRS1 as equal partners. CFC1 contributes cash of $130,000 to PRS1, and USP contributes its 40-percent interest in PRS2. (B) PRS2’s property consists of a security and a machine that are excluded property, and a build- ing with built-in gain in excess of $20,000. Under §1.721(c)-1(b)(6)(iv), because more than 90 per- cent of the value of the property of PRS2 consists of excluded property described in §1.721(c)-1(b)(6) (i) through (iii) (the security and the machine), any interest in PRS2 is excluded property. Therefore, the 40-percent interest in PRS2 contributed by USP to PRS1 is not section 721(c) property. Accordingly, USP’s contribution of its interest in PRS2 to PRS1 is not subject to §1.721(c)-2(b). (3) Example 3: Assets-over tiered partnerships— (i) Facts. In year 1, USP and CFC1 form PRS1 as equal partners. USP contributes a patent with a book value of $300 million and an adjusted tax basis of $30 million (USP contribution). CFC1 contributes cash of $300 million. Immediately thereafter, PRS1 contributes the patent to PRS2 in exchange for a two-thirds interest (PRS1 contribution), and CFC2 contributes cash of $150 million in exchange for a one-third interest. The patent has a remaining recov- ery period of 5 years out of a total of 15 years. With respect to all contributions described in §1.721(c)- 2(b), the de minimis exception does not apply, and the gain deferral method is applied. Thus, the part- nership agreements of PRS1 and PRS2 provide that the partnership will make allocations under section 704(c) using the remedial allocation method under §1.704-3(d). (ii) Results: USP contribution. PRS1 is a section 721(c) partnership as a result of the USP contribu- tion. (iii) Results: PRS1 contribution. (A) For purpos- es of determining whether PRS2 is a section 721(c) partnership as a result of the PRS1 contribution, un- der §1.721(c)-2(d)(1), USP is treated as contributing to PRS2 its share of the patent that PRS1 actually contributes to PRS2. USP and CFC1 are each one- third indirect partners in PRS2. Taking into account the one-third interest in PRS2 directly owned by CFC2, USP, CFC1, and CFC2 collectively own at least 80 percent of the interests in PRS2. Thus, PRS2 is a section 721(c) partnership as a result of the PRS1 contribution. (B) Under §1.721(c)-2(b), section 721(a) does not apply to PRS1’s contribution of the patent to PRS2, unless the requirements of the gain deferral method are satisfied. Under §1.721(c)-3(b), the gain deferral method must be applied with respect to the patent. In addition, under §1.721(c)-3(d)(2), because PRS1 is a controlled partnership with respect to USP, the gain deferral method must be applied with respect to PRS1’s interest in PRS2, and, solely for purposes of applying the consistent allocation method, PRS2 must treat PRS1 as the U.S. transferor. As stated in paragraph (b)(3)(i) of this section (the facts in Exam- ple 3), the gain deferral method is applied. PRS2 is a controlled partnership with respect to USP. Under §1.721(c)-5(c)(5)(i), the PRS1 contribution is a suc- cessor event with respect to the USP contribution. (iv) Results: application of remedial allocation method. (A) Under §1.704-3(d)(2), in year 1, PRS2 has $24 million of book amortization with respect to the patent ($6 million ($30 million of book val- ue equal to adjusted tax basis divided by the 5-year remaining recovery period) plus $18 million ($270 million excess of book value over tax basis divided by the new 15-year recovery period)). PRS2 has $6 million of tax amortization. Under the PRS2 partner- ship agreement, PRS2 allocates $8 million of book amortization to CFC2 and $16 million of book amor- tization to PRS1. Because of the application of the ceiling rule, PRS2 allocates $6 million of tax amorti- zation to CFC2 and $0 of tax amortization to PRS1. Because the ceiling rule would cause a disparity of $2 million between CFC2’s book and tax amortiza- tion, PRS2 must make a remedial allocation of $2 million of tax amortization to CFC2 and an offsetting remedial allocation of $2 million of taxable income to PRS1. (B) PRS1’s distributive share of each of PRS2’s items with respect to the patent is $16 million of book amortization, $0 of tax amortization, and $2 million of taxable income from the remedial alloca- tion from PRS1. Under §1.704-3(a)(9), PRS1 must allocate its distributive share of each of PRS2’s items with respect to the patent in a manner that takes into account USP’s remaining built-in gain in the patent. Therefore, PRS1 allocates $2 million of taxable in- come to USP. Under §1.704-3(a)(13)(ii), PRS1 treats its distributive share of each of PRS2’s items of amortization with respect to PRS2’s patent as items of amortization with respect to PRS1’s interest in PRS2. Under the PRS1 partnership agreement, PRS1 allocates $8 million of book amortization and $0 of tax amortization to CFC1, and $8 million of book amortization and $0 of tax amortization to USP. Be- cause the ceiling rule would cause a disparity of $8 million between CFC1’s book and tax amortization, PRS1 must make a remedial allocation of $8 mil- lion of tax amortization to CFC1. PRS1 must also make an offsetting remedial allocation of $8 million of taxable income to USP. USP reports $10 million of taxable income ($2 million of remedial income from PRS2 and $8 million of remedial income from PRS1). (4) Example 4: Section 721(c) partnership ceas- es to have a related foreign person as a partner—(i) Facts. In year 1, USP and CFC1 form PRS1. USP contributes a trademark with a built-in gain of $5 million in exchange for a 60-percent interest, and CFC1 contributes other property in exchange for February 18, 2020 438 Bulletin No. 2020–8 the remaining 40-percent interest. With respect to all contributions described in §1.721(c)-2(b), the de mi- nimis exception does not apply, and the gain deferral method is applied. On day 1 of year 4, CFC1 sells its entire interest in PRS1 to FX. There is no plan for a related foreign person with respect to USP to subse- quently become a partner in PRS1 (or a successor). (ii) Results. (A) PRS1 is a section 721(c) part- nership. (B) With respect to year 4, under §1.721(c)-5(b) (5), the sale is a termination event because, as a result of CFC1’s sale of its interest, PRS1 will no longer have a partner that is a related foreign person, and there is no plan for a related foreign person to subse- quently become a partner in PRS1 (or a successor). Thus, under §1.721(c)-5(b)(1), the trademark is no longer subject to the gain deferral method. (5) Example 5: Transfer described in section 367 of section 721(c) property to a foreign corpo- ration—(i) Facts. In year 1, USP, CFC1, and USX form PRS1. USP contributes a patent with a built-in gain of $5 million in exchange for a 60-percent in- terest, CFC1 contributes other property in exchange for a 30-percent interest, and USX contributes cash in exchange for a 10-percent interest. With respect to all contributions described in §1.721(c)-2(b), the de minimis exception does not apply, and the gain deferral method is applied. In year 3, when the patent has remaining built-in gain, PRS1 transfers the pat- ent to FX in a transaction described in section 351. (ii) Results. (A) PRS1 is a section 721(c) part- nership. (B) With respect to year 3, the transfer of the patent to FX is a transaction described in section 367(d). Therefore, under §1.721(c)-5(e), the patent is no longer subject to the gain deferral method. Un- der §§1.367(d)-1T(d)(1) and 1.367(a)-1T(c)(3)(i), for purposes of section 367(d), USP and USX are treated as transferring their proportionate share of the patent actually transferred by PRS1 to FX. Un- der §1.721(c)-5(e), to the extent USP and USX are treated as transferring the patent to FX, the tax con- sequences are determined under section 367(d) and the regulations under section 367(d). With respect to the remaining portion of the patent, if any, which is attributable to CFC1, USP must recognize an amount of gain equal to the remaining built-in gain that would have been allocated to USP if PRS1 had sold that portion of the patent immediately before the transfer for fair market value. Under §1.721(c)-4(c) (1), USP must increase the basis in its partnership interest in PRS1 by the amount of gain recognized by USP and under §1.721(c)-4(c)(2), immediately be- fore the transfer, PRS1 must increase its basis in the patent by the same amount. The stock in FX received by PRS1 is not subject to the gain deferral method. (6) Example 6: Limited remedial allocation method for anti-churning property with respect to related partners—(i) Facts. USP, CFC1, and FX form PRS1. On January 1 of year 1, USP contributes intellectual property (IP) with a book value of $600 million and an adjusted tax basis of $0 in exchange for a 60-percent interest. The IP is a section 197(f) (9) intangible (within the meaning of §1.197-2(h) (1)(i)) that was not an amortizable section 197 in- tangible in USP’s hands. CFC1 contributes cash of $300 million in exchange for a 30-percent interest, and FX contributes cash of $100 million in exchange for a 10-percent interest. The IP is section 721(c) property, and PRS1 is a section 721(c) partnership. The gain deferral method is applied. The partnership agreement provides that PRS1 will make allocations under section 704(c) with respect to the IP using the remedial allocation method under §1.704-3(d)(5) (iii). All of PRS1’s allocations with respect to the IP satisfy the requirements of the gain deferral method. On January 1 of year 16, PRS1 sells the IP for cash of $900 million to a person that is not a related person. During years 1 through 16, PRS1 earns no income other than gain from the sale of the IP in year 16, has no expenses or deductions other than from amortiza- tion of the IP, and makes no distributions. (ii) Results: year 1. Under §1.704-3(d)(5)(iii)(B), PRS1 must recover the excess of the book value of the IP over its adjusted tax basis at the time of the contribution ($600 million) using any recovery pe- riod and amortization method that would have been available to PRS1 if the property had been newly purchased property from an unrelated party. Thus, under section 197(a), PRS1 must amortize $600 mil- lion of the IP’s book value ratably over 15 years for book purposes, and PRS1 will have $40 million of book amortization per year without any tax amorti- zation. Under the partnership agreement, in year 1, PRS1 allocates book amortization of $24 million to USP, $12 million to CFC1, and $4 million to FX. Be- cause in year 1 the ceiling rule would cause a dispar- ity between FX’s allocations of book and tax amor- tization, PRS1 makes a remedial allocation of tax amortization of $4 million to FX and an offsetting remedial allocation of $4 million of taxable income to USP. In year 1, the ceiling rule would also cause a disparity between CFC1’s allocations of book and tax amortization. However, §1.197-2(h)(12)(vii)(B) precludes PRS1 from making a remedial allocation of tax amortization to CFC1. Instead, pursuant to §1.704-3(d)(5)(iii)(C), PRS1 increases the adjusted tax basis in the IP by $12 million, and pursuant to §1.704-3(d)(5)(iii)(D), that basis adjustment is solely with respect to CFC1. Pursuant to §1.704-3(d)(5)(iii) (C), PRS1 also makes an offsetting remedial alloca- tion of $12 million of taxable income to USP. (iii) Results: years 2-15. At the end of year 15, PRS1 has book basis and adjusted tax basis of $0 in the IP. PRS1 has amortized $600 million for book purposes by allocating total book amortization de- ductions of $360 million to USP, $180 million to CFC1, and $60 million to FX. For U.S. tax purpos- es, by the end of year 15, PRS1 has made remedial allocations of $60 million of tax amortization to FX and increased the adjusted tax basis in the IP by $180 million solely with respect to CFC1. PRS1 has also made total remedial allocations of $240 million of taxable income to USP (attributable to $60 million of remedial tax amortization to FX and $180 million of tax basis adjustments with respect to CFC1). With respect to their partnership interests in PRS1, USP has a capital account and an adjusted tax basis of $240 million, CFC1 has a capital account of $120 million and an adjusted tax basis of $300 million, and FX has a capital account and an adjusted tax ba- sis of $40 million. (iv) Results: sale of property in year 16. PRS1’s sale of the IP for cash of $900 million on January 1 of year 16 results in $900 million of book and tax gain ($900 million - $0). PRS1 allocates the book and tax gain 60 percent to USP ($540 million), 10 percent to FX ($90 million), and 30 percent to CFC1 ($270 million). However, under §1.704-3(d) (5)(iii)(D)(3), CFC1’s tax gain is $90 million, equal to its share of PRS1’s gain ($270 million), minus the amount of the tax basis adjustment ($180 mil- lion). After the sale, PRS1’s only property is cash of $1.3 billion. With respect to their partnership inter- ests in PRS1, USP has a capital account and an ad- justed tax basis of $780 million, CFC1 has a capital account and an adjusted tax basis of $390 million, and FX has a capital account and an adjusted tax basis of $130 million. § 1.721(c)-7T [Removed] Par. 21. Section 1.721(c)-7T is re- moved. Par. 22. Section 1.6038B-2 is amended by: 1. Revising paragraphs (a)(1)(iii), (a) (3), and (c)(8) and (9). 2. In paragraph (h)(1) introductory text, removing “§1.721(c)-6T” and adding “§1.721(c)-6” in its place. 3. Revising paragraphs (h)(3) and (j)(4) and (5). The revisions read as follows: §1.6038B-2 Reporting of certain trans- fers to foreign partnerships. (a) * * * (1) * * * (iii) The United States person is a U.S. transferor (as defined in §1.721(c)-1(b) (18)) that makes a gain deferral contri- bution and is required to report under §1.721(c)-6(b)(2). The reporting required under this paragraph (a) includes the an- nual reporting required by §1.721(c)-6(b) (3). For purposes of applying this para- graph (a)(1)(iii) to partnerships formed on or after January 18, 2017, a domestic part- nership is treated as a foreign partnership pursuant to section 7701(a)(4). * * * * * (3) Indirect transfer through a foreign partnership. Solely for purposes of this section, if a foreign partnership trans- fers section 721(c) property (as defined in §1.721(c)-1(b)(15)) to another foreign partnership in a transfer described in §1.721(c)-3(d) (tiered-partnership rules), then the transferor foreign partnership’s partners will be considered to have trans- ferred a proportionate share of the proper- ty to the foreign partnership. * * * * * (c) * * * (8) With respect to reporting required under §1.721(c)-6(b)(2) and paragraph (a) (1)(iii) of this section with regard to a gain deferral contribution, the information re- quired by §1.721(c)-6(b)(2); and Bulletin No. 2020–8 439 February 18, 2020 (9) With respect to section 721(c) prop- erty for which reporting is required under §1.721(c)-6(b)(3) and paragraph (a)(1) (iii) of this section, the information re- quired by §1.721(c)-6(b)(3). * * * * * (h) * * * (3) Reasonable cause exception. Un- der section 6038B(c)(2) and this section, the provisions of paragraph (h)(1) of this section will not apply if the United States person shows, in a timely manner, that a failure to comply was due to reasonable cause and not willful neglect. A United States person’s statement that the failure to comply was due to reasonable cause and not willful neglect will be considered timely only if, promptly after the Unit- ed States person becomes aware of the failure, an amended return is filed for the taxable year to which the failure relates that includes the information that should have been included with the original re- turn for such taxable year or that other- wise complies with the rules of this sec- tion, and that includes a written statement explaining the reasons for the failure to comply. If any taxable year of the Unit- ed States person is under examination when the amended return is filed, a copy of the amended return must be delivered to the Internal Revenue Service person- nel conducting the examination when the amended return is filed. If no taxable year of the United States person is under examination when the amended return is filed, a copy of the amended return must be delivered to the Director of Field Op- erations, Cross Border Activities Practice Area of Large Business & International (or any successor to the roles and respon- sibilities of such position, as appropriate) (Director). Whether a failure to comply was due to reasonable cause and not willful neglect will be determined by the Director under all the facts and circum- stances. * * * * * (j) * * * (4) Transfers of section 721(c) proper- ty. Paragraph (c)(8) of this section applies to transfers occurring on or after August 6, 2015, and to transfers that occurred before August 6, 2015 resulting from an entity classification election made under §301.7701-3 of this chapter that was ef- fective on or before August 6, 2015 but was filed on or after August 6, 2015. Para- graphs (a)(1)(iii), (a)(3), and (c)(9) of this section apply to transfers occurring on or after January 18, 2017, and to transfers that occurred before January 18, 2017 re- sulting from entity classification elections made under §301.7701-3 of this chapter that were effective on or before January 18, 2017 but were filed on or after January 18, 2017. (5) Reasonable cause exception. Para- graph (h)(3) of this section applies to all requests for relief for transfers of property to partnerships filed on or after January 18, 2017. §1.6038-2T [Removed] Par. 23. Section 1.6038B-2T is re- moved. Sunita Lough Deputy Commissioner for Services and Enforcement. Approved: December 11, 2019 David J. Kautter Assistant Secretary of the Treasury (Tax Policy). (Filed by the Office of the Federal Register on Jan- uary 17, 2020, 4:15 p.m., and published in the issue of the Federal Register for January 23, 2020, 85 F.R. 3833) 26 CFR Parts 1 and 31 T.D. 9892 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1 and 31 Return Due Date and Extended Due Date Changes AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final regulations. SUMMARY: This document contains fi- nal regulations that update the due dates and available extensions of time to file certain tax returns and information re- turns. The dates are updated to reflect the statutory requirements set by section 2006 of the Surface Transportation and Veter- ans Health Care Choice Improvement Act of 2015 and section 201 of the Protecting Americans from Tax Hikes Act of 2015. Additionally, the regulations remove a provision for electing large partnerships that was made obsolete by section 1101(b) (1) of the Bipartisan Budget Act of 2015. These regulations affect taxpayers who file Form W-2 (series, except Form W-2G), Form W-3, Form 990 (series), Form 1099- MISC, Form 1041, Form 1041-A, Form 1065, Form 1065-B, Form 1120 (series), Form 4720, Form 5227, Form 6069, Form 8804, or Form 8870. DATES: Effective Date: These regulations are effective January 30, 2020. Applicability Date: For dates of applica- bility, see §§1.1446-3(g), 1.6012-6(c), 1.6031(a)-1(f), 1.6032-1(b), 1.6033-2(k), 1.6041-2(d), 1.6041-6(c), 1.6072-2(g), 1.6081-1(c), 1.6081-2(h), 1.6081-3(g), 1.6081-5(f), 1.6081-6(g), 1.6081-9(f), and 31.6071(a)-1(g). FOR FURTHER INFORMATION CON- TACT: Isaac Brooks Fishman, (202) 317- 6845 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background This document contains final regula- tions that reflect changes in tax return due dates enacted by section 2006 of the Sur- face Transportation and Veterans Health Care Choice Improvement Act of 2015, Public Law 114-41, 129 Stat. 443 (2015), as well as changes to information return due dates enacted by section 201 of the Protecting Americans from Tax Hikes Act of 2015, Public Law 114-113, Div. Q, 129 Stat. 2242 (2015). On July 20, 2017, the IRS published in the Federal Register temporary regulations (TD 9821 (82 FR 33441)) that conformed the due dates and the available extensions of time to file var- ious tax returns and information returns to those provided by statute. The temporary regulations were applicable for tax returns and information returns filed after July 20, February 18, 2020 440 Bulletin No. 2020–8 2017, with an expiration date of July 17, 2020. The IRS published a notice of proposed rulemaking (REG-128483-15 (82 FR 33467)) cross-referencing the temporary regulations in the Federal Register the same day it published the temporary regu- lations. The IRS received no comments on the notice of proposed rulemaking, and no public hearing was requested or held. This Treasury Decision removes the temporary regulations and adopts the pro- posed regulations as final regulations with only nonsubstantive revisions. The revi- sions are discussed in the Explanation of Provisions. Explanation of Provisions A detailed explanation of these reg- ulations can be found in the preamble to the temporary regulations. One additional provision of these regulations that is not discussed in the preamble to the tempo- rary regulations is explained below. Section 1.6081-2(a)(1) of the proposed regulations addresses the extension of time for a partnership to file Form 1065, ‘‘U.S. Partnership Return of Income,’’ or Form 8804, ‘‘Annual Return for Part- nership Withholding Tax.’’ Similarly, §1.6081-2(a)(2) of the final regulations in place prior to the publication of this Trea- sury Decision addressed the extension of time to file Form 1065-B, “U.S. Return of Income for Electing Large Partnerships.” Section 1101(b)(1) of the Bipartisan Bud- get Act of 2015, Public Law 114-74, 129 Stat. 625 (2015), repealed part IV of sub- chapter K of chapter 1 of subtitle A of the Internal Revenue Code (Code), which, prior to repeal, provided in former sec- tions 771 through 777 for the treatment of certain partnerships as electing large part- nerships. The amendment was effective for returns filed for partnership taxable years beginning after December 31, 2017. As a consequence, electing large partner- ships do not exist and Forms 1065-B will not be filed for taxable years beginning after December 31, 2017. Because §1.6081-2(a)(2) is therefore obsolete, and the only remaining effective provision in §1.6081-2(a) was §1.6081- 2(a)(1), this Treasury Decision removes §1.6081-2(a)(2) and redesignates pro- posed §1.6081-2(a)(1) as §1.6081-2(a). This change is purely ministerial and has no substantive effect. Accordingly, the IRS finds good cause for dispensing with notice and public comment pursuant to 5 U.S.C. 553(b) and (c) and with a delayed effective date pursuant to 5 U.S.C. 553(d) for this change. Special Analyses These regulations are not subject to re- view under section 6(b) of Executive Or- der 12866 pursuant to the Memorandum of Agreement (April 11, 2018) between the Department of the Treasury and the Office of Management and Budget regard- ing review of tax regulations. Pursuant to the Regulatory Flexibil- ity Act (5 U.S.C. chapter 6) it is hereby certified that this final rule will not have a significant economic impact on a substan- tial number of small entities. These regu- lations only update the due dates and ex- tensions of time to file certain collections of information and include some existing regulatory language concerning collec- tions of information that affect small enti- ties for the convenience of the reader. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking preceding these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for com- ment on their impact on small business. No comments were received from the Small Business Administration. Drafting Information The principal author of these regu- lations is Jonathan R. Black formerly of the Office of the Associate Chief Counsel (Procedure and Administration). List of Subjects 26 CFR Part 1 Income taxes, Reporting and record- keeping requirements. 26 CFR Part 31 Employment taxes, Income taxes, Penal- ties, Pensions, Railroad retirement, Report- ing and recordkeeping requirements, Social security, Unemployment compensation. Amendments to the Regulations Accordingly, 26 CFR parts 1 and 31 are amended as follows: PA RT 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. Revise paragraphs (b)(2)(v)(C) and (g) of §1.1446-3 to read as follows: §1.1446-3 Time and manner of calcu- lating and paying over the 1446 tax. * * * * * (b) * * * (2) * * * (v) * * * (C) Period of underpayment. The pe- riod of the underpayment set forth in sec- tion 6655(b)(2) shall end on the earlier of the date the partnership is required to file Form 8804 (as provided in paragraph (d)(1)(iii) of this section and without re- gard to extensions), or with respect to any portion of the underpayment, the date on which such portion is paid. * * * * * (g) Applicability date. This section ap- plies to returns filed on or after January 30, 2020. Section 1.1446-3T (as contained in 26 CFR part 1, revised April 2019) applies to returns filed before January 30, 2020. §1.1446-3T [Removed] Par. 3. Section 1.1446-3T is removed. Par. 4. Revise paragraph (a)(1) and add paragraph (c) to §1.6012-6 to read as fol- lows: §1.6012-6 Returns by political organi- zations. (a) * * * (1) In general. For taxable years beginning after December 31, 1974, every political organization described in section 527(e)(1), and every fund described in sec- tion 527(f)(3) or section 527(g), and every organization described in section 501(c) and exempt from taxation under section 501(a) shall, if a tax is imposed on such an organization or fund by section 527(b), make a return of income on or before the fifteenth day of the fourth month following the close of the taxable year. * * * * * (c) Applicability date. This section ap- plies to returns filed on or after January 30, Bulletin No. 2020–8 441 February 18, 2020 2020. Section 1.6012-6T (as contained in 26 CFR part 1, revised April 2019) applies to returns filed before January 30, 2020. §1.6012-6T [Removed] Par. 5. Section 1.6012-6T is removed. Par. 6. Revise paragraphs (e)(2) and (f) of §1.6031(a)-1 to read as follows: §1.6031(a)-1 Return of partnership in- come. * * * * * (e) * * * (2) Time for filing. The return of a part- nership must be filed on or before the date prescribed by section 6072(b). * * * * * (f) Applicability date. This section ap- plies to returns filed on or after January 30, 2020. Section 1.6031(a)-1T (as con- tained in 26 CFR part 1, revised April 2019) applies to returns filed before Jan- uary 30, 2020. §1.6031(a)-1T [Removed] Par. 7. Section 1.6031(a)-1T is re- moved. Par. 8. Revise §1.6032-1 to read as fol- lows: §1.6032-1 Returns of banks with re- spect to common trust funds. (a) Every bank (as defined in section 581) maintaining a common trust fund shall make a return of income of the com- mon trust fund, regardless of the amount of its taxable income. Member banks of an affiliated group that serve as co-trust- ees with respect to a common trust fund must act jointly in making a return for the fund. If a bank maintains more than one common trust fund, a separate return shall be made for each. No particular form is prescribed for making the return under this section, but Form 1065 may be used if it is designated by the bank as the re- turn of a common trust fund. The return shall be made for the taxable year of the common trust fund and shall be filed on or before the date prescribed by section 6072(b) with the service center prescribed in the relevant Internal Revenue Service revenue procedure, publication, form, or instructions to the form (see §601.601(d) (2) of this chapter). Such return shall state specifically with respect to the fund the items of gross income and the deductions allowed by subtitle A of the Internal Reve- nue Code, shall include each participant’s name and address, the participant’s propor- tionate share of taxable income or net loss (exclusive of gains and losses from sales or exchanges of capital assets), the partic- ipant’s proportionate share of gains and losses from sales or exchanges of capital assets, and the participant’s share of items which enter into the determination of the tax imposed by section 56. See §§1.584- 2 and 1.58-5. If the common trust fund is maintained by two or more banks that are members of the same affiliated group, the return must also identify the member bank in the group that has contributed each par- ticipant’s property or money to the fund. A copy of the plan of the common trust fund must be filed with the return. If, however, a copy of such plan has once been filed with a return, it need not again be filed if the return contains a statement showing when and where it was filed. If the plan is amended in any way after such copy has been filed, a copy of the amendment must be filed with the return for the taxable year in which the amendment was made. For the signing of a return of a bank with re- spect to common trust funds, see §1.6062- 1, relating to the manner prescribed for the signing of a return of a corporation. (b) This section applies to returns filed on or after January 30, 2020. Section 1.6032-1T (as contained in 26 CFR part 1, revised April 2019) applies to taxable years beginning before January 30, 2020. §1.6032-1T [Removed] Par. 9. Section 1.6032-1T is removed. Par. 10. Revise paragraphs (e) and (k) of §1.6033-2 to read as follows: §1.6033-2 Returns by exempt organi- zations (taxable years beginning after De- cember 31, 1969) and returns by certain nonexempt organizations (taxable years beginning after December 31, 1980). * * * * * (e) Time and place for filing. The annu- al return required by this section shall be filed on or before the 15th day of the fifth month following the close of the period for which the return is required to be filed. The annual return on Form 1065 required to be filed by a religious or apostolic as- sociation or corporation shall be filed on or before the date prescribed by section 6072(b). Each such return shall be filed in accordance with the instructions applica- ble thereto. * * * * * (k) Applicability date. This section ap- plies to returns filed on or after January 30, 2020. Section 1.6033-2T (as contained in 26 CFR part 1, revised April 2019) applies to returns filed before January 30, 2020. §1.6033-2T [Removed] Par. 11. Section 1.6033-2T is removed. Par. 12. Revise paragraph (a)(3)(ii) and add paragraph (d) to §1.6041-2 to read as follows: §1.6041-2 Return of information as to payments to employees. (a) * * * (3) * * * (ii) Exception. In a case where an employer is not required to file Forms W-3 and W-2 under §31.6011(a)-4 or §31.6011(a)-5 of this chapter, returns on Forms W-3 and W-2 required under this paragraph (a) for any calendar year shall be filed on or before January 31 of the fol- lowing year. * * * * * (d) Applicability date. This section ap- plies to returns filed on or after January 30, 2020. Section 1.6041-2T (as contained in 26 CFR part 1, revised April 2019) applies to returns filed before January 30, 2020. §1.6041-2T [Removed] Par. 13. Section 1.6041-2T is removed. Par. 14. Revise §1.6041-6 to read as follows: §1.6041-6 Returns made on Forms 1096 and 1099 under section 6041; con- tents and time and place for filing. (a) In general. Except as provided in paragraph (b) of this section, returns made under section 6041 on Forms 1096 and 1099 for any calendar year shall be filed on or before February 28 (March 31 if filed electronically) of the following year with any of the Internal Revenue Service Centers, the addresses of which are list- ed in the instructions for such forms. The name and address of the person making the payment and the name and address of the recipient of the payment shall be stat- ed on Form 1099. If the present address of the recipient is not available, the last February 18, 2020 442 Bulletin No. 2020–8 known post office address must be given. See section 6109 and the regulations in part 301 of this title under section 6109 for rules requiring the inclusion of identifying numbers in Form 1099. (b) Exception. Returns made on Form 1099 reporting nonemployee compensa- tion shall be filed on or before January 31 of the year following the calendar year to which such returns relate. (c) Applicability date. This section ap- plies to returns filed on or after January 30, 2020. Section 1.6041-6T (as contained in 26 CFR part 1, revised April 2019) applies to returns filed before January 30, 2020. §1.6041-6T [Removed] Par. 15. Section 1.6041-6T is removed. Par. 16. Revise paragraphs (a) and (d)(1) and (2) and add paragraph (g) to §1.6072-2 to read as follows: §1.6072-2 Time for filing returns of corporations. (a) Domestic and certain foreign cor- porations—(1) In general—(i) C cor- porations. Except as provided in para- graph (a)(2) of this section, the income tax return required under section 6012 of a domestic C corporation (as defined in section 1361(a)(2)) or of a foreign C corporation having an office or place of business in the United States shall be filed on or before the fifteenth day of the fourth month following the close of the taxable year. (ii) S corporations. The income tax return required under sections 6012 and 6037 of an S corporation (as defined in section 1361(a)(1)) shall be filed on or before the fifteenth day of the third month following the close of the taxable year. (2) Exception. For taxable years begin- ning before January 1, 2026, the income tax return of a C corporation described in paragraph (a)(1)(i) of this section that has a taxable year that ends on June 30 shall be filed on or before the fifteenth day of the third month following the close of the taxable year. For purposes of this para- graph (a)(2), the return for a short period (within the meaning of section 443) that ends on any day in June shall be treated as the return for a taxable year that ends on June 30. * * * * * (d) * * * (1) Section 521 associations. A farm- ers’, fruit growers’, or like association, organized and operated in compliance with the requirements of section 521 and §1.521-1; and (2) Section 1381 corporations. For a taxable year beginning after December 31, 1962, a corporation described in sec- tion 1381(a)(2), which is under a valid enforceable written obligation to pay pa- tronage dividends (as defined in section 1388(a) and §1.1388-1(a)) in an amount equal to at least 50 percent of its net earn- ings from business done with or for its pa- trons, or which paid patronage dividends in such an amount out of the net earnings from business done with or for patrons during the most recent taxable year for which it had such net earnings. Net earn- ings for purposes of this paragraph (d)(2) shall not be reduced by any taxes imposed by subtitle A of the Internal Revenue Code and shall not be reduced by dividends paid on capital stock or other proprietary inter- est. * * * * * (g) Applicability date. This section ap- plies to returns filed on or after January 30, 2020. Section 1.6072-2T (as contained in 26 CFR part 1, revised April 2019) ap- plies to returns before January 30, 2020. §1.6072-2T [Removed] Par. 17. Section 1.6072-2T is removed. Par. 18. Revise paragraphs (a) and (c) of §1.6081-1 to read as follows: §1.6081-1 Extension of time for filing returns. (a) In general. The Commissioner is authorized to grant a reasonable extension of time for filing any return, declaration, statement, or other document that relates to any tax imposed by subtitle A of the Internal Revenue Code (Code) and that is required under the provisions of subtitle A or F of the Code. However, other than in the case of taxpayers who are abroad or as specified in section 6081(b), such exten- sions of time shall not be granted for more than six months, and the extension of time for filing the return of a DISC (as defined in section 992(a)), as specified in section 6072(b), shall not be granted. Except in the case of an extension of time pursuant to §1.6081-5, an extension of time for fil- ing an income tax return shall not operate to extend the time for the payment of the tax unless specified to the contrary in the extension. For rules relating to extensions of time for paying tax, see §1.6161-1. * * * * * (c) Applicability date. This section ap- plies to requests for extension of time to file returns on or after January 30, 2020. Section 1.6081-1T (as contained in 26 CFR part 1, revised April 2019) applies to requests for extension of time to file re- turns before January 30, 2020. §1.6081-1T [Removed] Par. 19. Section 1.6081-1T is removed. Par. 20. Revise paragraphs (a) and (h) of §1.6081-2 to read as follows: §1.6081-2 Automatic extension of time to file certain returns filed by partnerships. (a) In general. A partnership required to file Form 1065, “U.S. Partnership Re- turn of Income,” or Form 8804, “Annual Return for Partnership Withholding Tax,” for any taxable year will be allowed an automatic six-month extension of time to file the return after the date prescribed for filing the return if the partnership files an application under this section in accor- dance with paragraph (b) of this section. No additional extension will be allowed pursuant to §1.6081-1(b) beyond the au- tomatic six-month extension provided by this section. In the case of a partnership described in §1.6081-5(a)(1), the automat- ic extension of time to file allowed under this section runs concurrently with an ex- tension of time to file granted pursuant to §1.6081-5. * * * * * (h) Applicability date. This section applies to applications for an automatic extension of time to file the partnership returns listed in paragraph (a) of this sec- tion on or after January 30, 2020. Section 1.6081-2T (as contained in 26 CFR part 1, revised April 2019) applies to applications for an automatic extension of time to file before January 30, 2020. §1.6081-2T [Removed] Par. 21. Section 1.6081-2T is removed. Par. 22. Revise paragraphs (a) introduc- tory text and (e) through (g) of §1.6081-3 to read as follows: §1.6081-3 Automatic extension of time for filing corporation income tax returns. Bulletin No. 2020–8 443 February 18, 2020 (a) In general. Except as provided in paragraphs (e) and (f) of this section, a corporation or an affiliated group of cor- porations filing a consolidated return will be allowed an automatic 6-month exten- sion of time to file its income tax return after the date prescribed for filing the re- turn if the following requirements are met. * * * * * (e) Exception. In the case of any return for a taxable year of a C corporation that ends on June 30 and begins before Janu- ary 1, 2026, the first sentence of paragraph (a) of this section shall be applied by sub- stituting “7-month” for “6-month.” For purposes of this paragraph (e), the return for a short period (within the meaning of section 443) that ends on any day in June shall be treated as the return for a taxable year that ends on June 30. (f) Cross reference. For provisions re- lating to extensions of time to file Form 1120-POL, “U.S. Income Tax Return for Certain Political Organizations,” see §1.6081-9. (g) Applicability date. This section ap- plies to requests for extension of time to file corporation income tax returns on or after January 30, 2020. Section 1.6081-3T (as contained in 26 CFR part 1, revised April 2019) applies to applications for an automatic extension of time to file before January 30, 2020. §1.6081-3T [Removed] Par. 23. Section 1.6081-3T is removed. Par. 24. Revise paragraphs (a)(1) and (f) of §1.6081-5 to read as follows: §1.6081-5 Extensions of time in the case of certain partnerships, corporations and U.S. citizens and residents. (a) * * * (1) Partnerships, which are required under section 6072(b) to file returns on the fifteenth day of the third month following the close of the taxable year of the part- nership, that keep their records and books of account outside the United States and Puerto Rico; * * * * * (f) This section applies to returns filed on or after January 30, 2020. Section 1.6081-5T (as contained in 26 CFR part 1, revised April 2019) applies to applications for an automatic extension of time to file returns before January 30, 2020. §1.6081-5T [Removed] Par. 25. Section 1.6081-5T is removed. Par. 26. Revise paragraphs (a)(1) and (g) of §1.6081-6 to read as follows: §1.6081-6 Automatic extension of time to file estate or trust income tax return. (a) * * * (1) Except as provided in paragraph (a)(2) of this section, any es- tate, including but not limited to an estate defined in section 2031, or trust required to file an income tax return on Form 1041, “U.S. Income Tax Return for Estates and Trusts,” will be allowed an automatic five and one-half month extension of time to file the return after the date prescribed for filing the return if the estate or trust files an application under this section in accor- dance with paragraph (b) of this section. No additional extension will be allowed pursuant to §1.6081-1(b) beyond the au- tomatic five and one-half month extension provided by this section. * * * * * (g) Applicability date. This section applies to applications for an automatic extension of time to file an estate or trust income tax return on or after January 30, 2020. Section 1.6081-6T (as contained in 26 CFR part 1, revised April 2019) applies to applications for an automatic extension of time to file a return before January 30, 2020. §1.6081-6T [Removed] Par. 27. Section 1.6081-6T is removed. Par. 28. Revise paragraphs (a), (b)(1) and (3), and (c) through (f) of §1.6081-9 to read as follows: §1.6081-9 Automatic extension of time to file exempt or political organization re- turns. (a) In general. An entity required to file a return on a form in the Form 990 series (Form 990, “Return of Organization Ex- empt From Income Tax,” Form 990-BL, “Information and Initial Excise Tax Re- turn for Black Lung Benefit Trusts and Certain Related Persons,” Form 990-EZ, “Short Form Return of Organization Ex- empt From Income Tax,” Form 990-PF, “Return of Private Foundation,” and Form 990-T, “Exempt Organization Business Tax Return”), Form 1041-A, “U.S. In- formation Return-Trust Accumulation of Charitable Amounts,” Form 1120-POL, “U.S. Income Tax Return for Certain Po- litical Organizations,” Form 4720, “Re- turn of Certain Excise Taxes Under Chap- ters 41 and 42 of the Internal Revenue Code,” Form 5227, “Split-Interest Trust Information Return,” Form 6069, “Return of Excise Tax on Excess Contributions to Black Lung Benefit Trust Under Section 4953 and Computation of Section 192 Deduction,” and Form 8870, “Informa- tion Return for Transfers Associated With Certain Personal Benefit Contracts,” will be allowed an automatic six-month exten- sion of time to file the return after the date prescribed for filing if the entity files an application in accordance with paragraph (b) of this section. (b) * * * (1) Be submitted on Form 7004, “Ap- plication for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns” (in the case of an extension of time to file Form 1120-POL), Form 8868, “Ap- plication for Automatic Extension of Time to File an Exempt Organization Return” (in the case of an extension of time to file any other return listed in paragraph (a) of this section), or in any other manner as may be prescribed by the Commissioner; * * * * * (3) Show the full amount properly esti- mated as tentative tax for the entity for the taxable year; and * * * * * (c) Termination of automatic extension. The Commissioner may terminate an au- tomatic extension at any time by mailing to the entity a notice of termination. The notice must be mailed at least 10 days prior to the termination date designated in such notice. The notice of termination must be mailed to the address shown on the application for extension or to the entity’s last known address. For further guidance regarding the definition of last known address, see §301.6212-2 of this chapter. (d) Penalties. See sections 6651 and 6652(c) for failure to file a return or fail- ure to pay the amount shown as tax on the return. (e) Coordination with §1.6081-1. No extension of time will be granted under §1.6081-1 for filing a return listed in para- graph (a) of this section until an automatic February 18, 2020 444 Bulletin No. 2020–8 extension has been allowed pursuant to this section. (f) Applicability date. This section ap- plies to requests for extensions of time to file returns listed in paragraph (a) of this section on or after January 30, 2020. Sections 1.6081-3T and 1.6081-9T (as contained in 26 CFR part 1, revised April 2019) apply to requests for extensions be- fore January 30, 2020. §1.6081-9T [Removed] Par. 29. Section 1.6081-9T is removed. PART 31—EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT THE SOURCE Par. 30. The authority citation for part 31 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * Par. 31. Revise paragraph (a)(3) and add paragraph (g) to §31.6071(a)-1 to read as follows: §31.6071(a)-1 Time for filing returns and other documents. (a) * * * (3) Information returns—(i) General rule. Each information return in respect of wages as defined in the Federal Insur- ance Contributions Act or of income tax withheld from wages as required under §31.6051-2 must be filed on or before Jan- uary 31 of the year following the calendar year for which it is made, except that, if a tax return under §31.6011(a)-5(a) is filed as a final return for a period ending prior to December 31, the information return must be filed on or before the last day of the first month following the period for which the tax return is filed. (ii) Expedited filing. If an employer who is required to make a return pursuant to §31.6011(a)-1 or §31.6011(a)-4 is required to make a final return on Form 941, or a variation thereof, under §31.6011(a)-6(a) (1) (relating to the final return for Feder- al Insurance Contributions Act taxes and income tax withholding from wages), the return which is required to be made under §31.6051-2 must be filed on or before the last day of the first month following the pe- riod for which the final return is filed. The requirements set forth in this paragraph (a) (3)(ii) do not apply to employers with re- spect to employees whose wages are for domestic service in the private home of the employer. See §31.6011(a)-1(a)(3). * * * * * (g) Applicability date. This section ap- plies to returns filed on or after January 30, 2020. Section 31.6071(a)-1T (as con- tained in 26 CFR part 31, revised April 2019) applies to returns filed before Jan- uary 30, 2020. §31.6071(a)-1T [Removed] Par. 32. Section 31.6071(a)-1T is re- moved. Sunita Lough, Deputy Commissioner for Services and Enforcement. Approved: November 25, 2019. David J. Kautter, Assistant Secretary of the Treasury (Tax Policy). (Filed by the Office of the Federal Register on Jan- uary 29, 2020, 8:45 a.m., and published in the issue of the Federal Register for January 30, 2020, 85 FR 5323) Section 42.—Low-Income Housing Credit (Also Section 7805; 301.7805-1) Rev. Rul. 2020-4 ISSUE For purposes of the low-income hous- ing credit under § 42 of the Internal Reve- nue Code (Code), how should the income limits in the average income test under § 42(g)(1)(C) be computed? L AW The Tax Reform Act of 1986, Pub. L. No. 99-514, 100 Stat. 2085 (1986 Act) created the low-income housing credit un- der § 42 of the Code. Section 42(a) provides that the amount of the low-income housing credit for any taxable year in the credit period is an amount equal to the applicable percent- age of the qualified basis of each qualified low-income building. Section 42(c)(1)(A) provides that the qualified basis of any qualified low-in- come building for any taxable year is an amount equal to (i) the applicable fraction (determined as of the close of the taxable year) of (ii) the eligible basis of the build- ing (determined under § 42(d)). Sections 42(c) and 42(d) define applicable fraction and eligible basis. Section 42(d)(1) and (2) define the eligible basis of a new build- ing and an existing building, respectively. Generally, section 42(c)(2) defines a qualified low-income building as any building that is part of a qualified low-in- come housing project at all times during the compliance period (the period of 15 taxable years beginning with the first tax- able year of the credit period). To qualify as a low-income housing project, one of the § 42(g) minimum set-aside tests, as elected by the taxpayer, must be satisfied. Prior to the enactment of the Consol- idated Appropriations Act of 2018, Pub. L. No. 115-141, 132 Stat. 348 (2018 Act), § 42(g) set forth two minimum set-aside tests, known as the 20-50 test and the 40- 60 test. Under the 20-50 test, at least 20 percent of the residential units in the proj- ect must be both rent-restricted and occu- pied by tenants whose gross income is 50 percent or less of the area median gross income (AMGI). Under the 40-60 test, at least 40 percent of the residential units in the project must be both rent-restricted and occupied by tenants whose gross in- come is 60 percent or less of AMGI. Section 103 of Division T of the 2018 Act added a third minimum set-aside test, the average income test, under § 42(g)(1) (C). Section 42(g)(1)(C)(i) provides that, a project meets the minimum requirements of the average income test if 40 percent or more (25 percent or more in the case of a project located in a high cost housing area) of the residential units in the project are both rent-restricted and occupied by tenants whose income does not exceed the imputed income limitation designated by the taxpayer with respect to the respective unit. Section 42(g)(1)(C)(ii) provides spe- cial rules relating to the income limitation. Specifically, the taxpayer must designate the imputed income limitation for each unit. The designated imputed income lim- itation of any unit must be 20, 30, 40, 50, 60, 70, or 80 percent of AMGI. The av- Bulletin No. 2020–8 445 February 18, 2020 erage of the designated imputed income limitations must not exceed 60 percent of AMGI. Under § 42(g), once a taxpayer elects to use a particular set-aside test, that election is irrevocable. Section 42(g)(4) provides generally that § 142(d)(2) applies for pur- poses of determining whether any project is a qualified low-income housing project and whether any unit is a low-income unit. Section 142(d)(2)(B) provides that the income of individuals and AMGI is determined in a manner consistent with determinations of lower income families and AMGI under Section 8 of the United States Housing Act of 1937 (Section 8) or, if the Section 8 program is terminated, under the program as in effect immediate- ly before the termination. Determinations under the preceding sentence include ad- justments for family size. 1 In determining eligibility for various aspects of the Section 8 program, the De- partment of Housing and Urban Develop- ment (HUD) uses three different principal income level calculation categories: (1) low-income; (2) very low-income; and (3) extremely low-income. Specifically, HUD sets the low-income limits at 80 percent of AMGI, the very low-income limits at 50 percent of AMGI, and the extreme- ly low-income limits at the higher of 30 percent of AMGI or the “Federal Poverty Level.” See HUD, FY2019 Income Lim- its, Methodology for Determining Section 8 Limits at 1 (2019) (hereinafter, HUD Methodology). 2 In describing the unique role of the very low-income limits, HUD explains, “The very low-income limits (usually based on 50 percent of median incomes) are the basis of all other income limits, as they are the best-defined income limits and have been the subject of specific, lim- ited legislative adjustments subsequent to reviews of the HUD calculation method- ology.” HUD Methodology at 2. Sever- al of the HUD income limit standards are intended to have progressive relationships with respect to other limits and, to ensure this, unless there is explicit statutory lan- guage to the contrary, HUD uses the very low-income limits as the basis for deriv- ing these limits. Id. The conference committee report for the 1986 Act states that HUD’s AMGI as adjusted by family size serves as the base for computing the income limits of § 42(g). See H.R. Rep. No. 99-841, 1986-3 C.B. Vol. 2. The report provides further, in part, that, for purposes of the then-ex- isting set-aside tests (the 20-50 and 40-60 tests), for areas with unusually low fam- ily income or high housing costs relative to family income, adjustments should be made in a manner consistent with determi- nations of very low-income families and AMGI under Section 8. Id. Rev. Rul. 89-24, 1989-1 C.B. 24 (as modified and superseded in part by Rev. Rul. 94-57, 1994-2 C.B. 5 for the limited purpose of permitting taxpayers to rely on a list of income limits released by HUD), provides the manner in which to properly compute the income limits applicable un- der § 42 with respect to the 20-50 and 40- 60 tests. The income limits are computed based on the income limits of the very low-income families under Section 8, as adjusted by family size. This is consistent with the legislative history’s reference to HUD’s very low-income limits. ANALYSIS AND HOLDING Consistent with the holding in Rev. Rul. 89-24, the Internal Revenue Service (Service) has required that HUD’s deter- minations for very low-income families be used in calculating the low-income housing credit income limits of 50 per- cent and 60 percent of AMGI. In adding the average income test, Congress did not indicate that a different HUD income level calculation category should be used, and therefore, this revenue ruling contin- ues to use HUD’s determinations for very low-income families. Moreover, for purposes of Section 8, HUD makes numerous, additional ad- justments to arrive at the low-income (80 percent) and extremely low-income (30 percent) determinations. See HUD Methodology at 2. Those adjustments may be irrelevant to the overall structure of the low-income housing credit. Addi- tionally, when HUD seeks for its income limit determinations to have a progressive relationship with respect to other limit determinations, HUD bases its income limit calculations on the very low-income limits. Similarly, because § 42(g)(1)(C) (ii)(II) requires computing an average of the income limits, the relationship of all of the limits under the average income set- aside should be preserved and uniformly incremental. Therefore, these income lim- its should be determined by computing them all from the same basis, that is, from HUD’s very low-income limits. For these reasons, this revenue ruling holds that HUD’s very low-income cal- culation, as adjusted by family size and consistent with the methods provided in Rev. Rul. 89-24, is to be used as the basis for determining the full range of income limits under the average-income set-aside. As described in Rev. Rul. 89- 24, the income limits for the very low-in- come families for purposes of Section 8 are computed and listed according to family size by HUD. HUD computes and lists these limits for metropolitan areas (some Core Based Statistical Areas (CB- SAs) as defined by the Office of Man- agement and Budget (OMB) and some HUD-defined components of OMB-de- fined CBSAs) 3 and for nonmetropolitan counties of the United States and Puerto Rico. HUD also computes and releases income limits for Guam, the Virgin Is- lands, American Samoa, and the North- ern Mariana Islands. For the average income test under § 42(g)(1)(C), the 20, 30, 40, 50, 60, 70, and 80 percent of AMGI income limita- tions must be calculated as follows— Twenty (20) percent limit: 40 percent or less of the income limit for a very low-income family of the same size. Thirty (30) percent limit: 60 percent or less of the income limit for a very low-in- come family of the same size. 1 For descriptions of the Department of Housing and Urban Development’s (HUD’s) determinations of income limits, see HUD, FY2019 Income Limits, Frequently Asked Questions (2019), https://www.huduser.gov/portal/datasets/il/il19/FAQs_19.pdf, and HUD, Assessment of Small Area Median Family Income Estimates (2018), https://www.huduser.gov/portal/ sites/default/files/pdf/Assessment-of-Small-Area-Median-Family-Income-Estimates.pdf. 2 https://www.huduser.gov/portal/datasets/il/il19/IncomeLimitsMethodology-FY19.pdf. 3 HUD identifies Core Based Statistical Areas (CBSAs) with the “Metropolitan Statistical Area (MSA)” designation, and HUD-defined metropolitan areas as “HUD Metropolitan Fair Market Rent Areas (HMFAs).” The set of CBSAs and HMFAs together identify the complete list of OMB-defined metropolitan areas. February 18, 2020 446 Bulletin No. 2020–8 Forty (40) percent: 80 percent or less of the income limit for a very low-income family of the same size. Fifty (50) percent: equal to or less than the income limit for a very low-income family of the same size. Sixty (60) percent: 120 percent or less of the income limit for a very low-income family of the same size. Seventy (70) percent limit: 140 per- cent or less of the income limit for a very low-income family of the same size. Eighty (80) percent limit: 160 per- cent or less of the income limit for a very low-income family of the same size. As provided by Rev. Rul. 94-57, 1994- 2 C.B. 5, a list of income limits released by HUD may be relied upon until 45 days after HUD releases a new list of income limits, or until HUD’s effective date for this new list, whichever is later. EFFECT ON OTHER REVENUE RULINGS Rev. Rul. 89-24, as modified and su- perseded by Rev. Rul. 94-57 in part, is amplified. PROSPECTIVE APPLICATION Pursuant to § 7805(b)(8), the applica- tion of this revenue ruling is modified to the extent provided below: (1) If— (A) The taxpayer submitted a docu- ment to a State or local housing credit agency (Agency) as part of, or in connec- tion with, the taxpayer’s request for an al- location of a housing credit dollar amount for a project, (B) The request unambiguously indi- cated that the taxpayer intended to elect the average-income set-aside, the request unambiguously indicated that a specific dollar amount was an expected designated imputed income limitation for a unit in the project, and that dollar amount is higher than the amount determined under this revenue ruling, (C) The taxpayer’s treatment of that amount in this manner was reasonable, and (D) Prior to February 18, 2019, the Agency allocated a housing credit amount in response to that request, then, consistent with the second sentence of § 42(g)(2)(A), for that taxpayer, for the remaining compliance period of the build- ing that contains the relevant unit, the dol- lar amount for the income limits under this revenue ruling for that unit is not less than that reasonable amount. (2) If— (A) Paragraph (1) of this prospective application section of this revenue ruling applies to a project, (B) When a tenant began occupancy of a unit in the project, the tenant’s income exceeded the amount that would otherwise be required by this revenue ruling, but (C) The tenant’s income at that time did not exceed the amount that paragraph (1) permits to be used for that unit, then, for purposes of § 42(g)(2)(D), the tenant is treated as having initially met the income limitation for the unit. Except as expressly provided in this prospective application section of this revenue ruling, both a low-income hous- ing project that has elected the average income test and tenants in such a project must meet all other rules and requirements of § 42. DRAFTING INFORMATION The principal author of this revenue ruling is Dillon Taylor of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further informa- tion regarding this revenue ruling, contact Mr. Taylor at (202) 317-4137 (not a toll- free number). Bulletin No. 2020–8 447 February 18, 2020 Part III 26 CFR 601.201: Rulings and determination letters. Rev. Proc. 2020-8 SECTION 1. PURPOSE This revenue procedure modifies Reve- nue Procedure 2020-5, 2020-1 I.R.B. 241, by updating the procedures for Exempt Organizations determination letters with respect to the electronically submitted Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, which is the application used to apply for recognition of exemption as an entity described in § 501(c)(3). The modifications to Rev. Proc. 2020-5 made by this revenue procedure provide that the electronic submission process is the exclusive means of submit- ting a completed Form 1023, except for submissions eligible for the 90-day tran- sition relief provided in section 4 of this revenue procedure. SECTION 2. CHANGED SUBMISSION PROCESS The IRS has revised and updated Form 1023 and provided for it to be electroni- cally submitted at www.pay.gov. The elec- tronic submission process for Form 1023 replaces the paper submission process for Form 1023 after January 31, 2020, subject to the transition relief provided in section 4 of this revenue procedure. Section 3 of this revenue procedure modifies Rev. Proc. 2020-5 to set forth procedures for is- suing determination letters in response to electronically submitted Form 1023 appli- cations. Unless otherwise modified in this revenue procedure, the provisions of Rev. Proc. 2020-5 continue to apply. SECTION 3. MODIFICATIONS TO REVENUE PROCEDURE 2020-5 .01 Section 4.01 of Rev. Proc. 2020-5 is modified to read as follows: .01 This section explains the general instructions for requesting determination letters. However, certain procedures do not apply to requests submitted on Form 1023, Application for Recognition of Ex- emption Under Section 501(c)(3) of the Internal Revenue Code or Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, as indicat- ed in this revenue procedure or in forms and their instructions. In addition to these general instructions, specific procedures apply to requests submitted by letter (as described in section 5), applications for recognition of exemption from Federal income tax under § 501 or § 521 (as de- scribed in section 6), and to requests for determinations submitted on Form 8940, Request for Miscellaneous Determination (as described in section 7). .02 Paragraph (1) of section 4.02 of Rev. Proc. 2020-5 is modified to read as follows: (1) Form 1023 application. An orga- nization seeking recognition of exemption under § 501(c)(3) (including an organiza- tion that is additionally seeking a deter- mination that it is described in § 501(e), (f), (k), (n), (q), or (r)) must electronically submit a completed Form 1023 at www. pay.gov. In the case of an organization that provides credit counseling services, see § 501(q). In the case of an organiza- tion that is a hospital and is seeking ex- emption under § 501(c)(3), see § 501(r). Notwithstanding the foregoing, eligible organizations may seek recognition of ex- emption under § 501(c)(3) by submitting a completed Form 1023-EZ, as described in section 6.06(2) of this revenue procedure, rather than by submitting Form 1023. For additional information about the electron- ic submission process, refer to Form 1023 and its Instructions. .03 The first paragraph of section 4.09(1) of Rev. Proc. 2020-5 is modified to read as follows: (1) Procedures for requesting expe- dited handling. Except for a request on the electronically submitted Form 1023, the request for expedited handling must be made in writing, preferably in a sepa- rate letter sent with, or soon after filing, the request for the determination letter. If the request is not made in a separate letter, then the letter in which the determination letter request is made should say, at the top of the first page: “Expedited Handling Is Requested. See page ___ of this letter.” In the case of the electronically sub- mitted Form 1023, a request for expedited handling must be indicated on the form and a supporting written statement must be submitted as an attachment with the completed application. .04 Section 6.06(1)(a) of Rev. Proc. 2020-5 is modified to read as follows: (1) A completed application (other than a Form 1023-EZ), including a letter appli- cation, is one that: (a) is signed or, in the case of a Form 1023, is electronically signed by an autho- rized individual under penalties of perjury (see sections 4.04 and 4.06 of this revenue procedure); .05 Paragraph (4) of section 6.08 of Rev. Proc. 2020-5 is modified to read as follows: (4) When an application is not sub- mitted within 27 months of formation. An organization that otherwise meets the requirements for tax-exempt status and the issuance of a determination letter that does not meet the requirements for rec- ognition from date of formation will be recognized from the postmark date of its application or the electronic submission date of its Form 1023 or Form 1023-EZ, as applicable. .06 Paragraph (1) of section 14.06 of Rev. Proc. 2020-5 is modified to read as follows: (1) Payment of user fees for appli- cations of recognition of exemption on Form 1023 or Form 1023-EZ. User fees for applications for recognition of exemp- tion on Form 1023 or Form 1023-EZ must be paid through www.pay.gov. .07 Section 15.01(1)(a) of Rev. Proc. 2020-5 is modified to read as follows: (1) The following types of requests and applications handled by the EO Determi- nations Office should be sent to the Inter- nal Revenue Service Center, at the address in section 15.01(2): (a) applications for recognition of tax exemption on Form 1024, Form 1024-A, and Form 1028; .08 Section 15.02 of Rev. Proc. 2020-5 is modified to read as follows: .02 Applications for recognition of ex- emption on Form 1023 and Form 1023- EZ are handled by the EO Determinations Office but must be submitted electronical- February 18, 2020 448 Bulletin No. 2020–8 ly online at www.pay.gov. Paper submis- sions of Form 1023 or Form 1023-EZ will not be accepted. .09 Paragraph (4) of Appendix A of Rev. Proc. 2020-5 is modified to read as follows: (4) Canadian registered charities Note: In accordance with the income tax treaty between the United States and Canada, and pursuant to a mutual arrange- ment between the competent authorities of the two countries, Canadian registered charities are automatically recognized as exempt under § 501(c)(3) without filing an application for exemption. For details, see Notice 99-47, 1999-2 C.B. 391. There- fore, no user fee is required when a Cana- dian registered charity submits a written request to be listed in Tax Exempt Orga- nization Search database for organizations eligible to receive tax-deductible chari- table contributions (Pub. 78 data), or for a determination on its private foundation status. For additional information about the submission process, refer to the Form 1023 Instructions. SECTION 4. TRANSITION RELIEF .01 Except as provided in section 4.02, an organization seeking recognition of tax exempt status under § 501(c)(3) using Form 1023 must electronically submit the form and user fee online at www.pay.gov. .02 The Internal Revenue Service will accept for processing a completed paper Form 1023 accompanied by the correct user fee, as described in Rev. Proc. 2020-5, without applying the modifications of this revenue procedure, if the submission of the Form 1023 is postmarked on or before the date that is 90 days after the effective date of this revenue procedure. SECTION 5. EFFECT ON OTHER DOCUMENTS Rev. Proc. 2020-5 is modified. SECTION 6. EFFECTIVE DATE This revenue procedure is effective Jan- uary 31, 2020, the date this revenue proce- dure was announced by news release. SECTION 7. DRAFTING INFORMATION The principal author of this revenue procedure is Patrick Sternal of the Office of Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Em- ployment Taxes). For further information regarding this revenue procedure contact Mr. Sternal at (202) 317-5800 (not a toll- free number). Bulletin No. 2020–8 i February 18, 2020 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 effect: Amplified describes a situation where no change is being made in a prior pub- lished position, but the prior position is being extended to apply to a variation of the 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 with modified, below). Clarified is 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 rul- ing is being changed. Distinguished describes a situation where a ruling mentions a previously pub- lished ruling and points out an essential difference between them. Modified is 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 with amplified and clarified, above). Obsoleted describes a previously pub- lished ruling that is not considered deter- minative with respect to future transactions. This term is most commonly used in a ruling that lists previously published rulings 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. Revoked describes situations where the position in the previously published ruling is not correct and the correct position is being stated in a new ruling. Superseded describes a situation where the new ruling does nothing more than restate the substance and situation of a previously published ruling (or rulings). Thus, the term is used to republish under the 1986 Code and regulations the same position published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single ruling a series of situations, names, etc., that were previously published over a period of time in separate rulings. If the new ruling does more than restate the sub- stance of a prior ruling, a combination of terms is used. For example, modified and superseded describes 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 previous- ly published ruling in a new ruling that is self contained. In this case, the previously published ruling is first modified and then, as modified, is superseded. Supplemented is 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 ruling has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the additions, and supersedes all prior rul- ings in the series. Suspended is 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 cas- es in litigation, or the outcome of a Ser- vice study. Abbreviations The following abbreviations in current use and formerly used will appear in material published in the Bulletin. A—Individual. Acq.—Acquiescence. B—Individual. BE—Beneficiary. BK—Bank. B.T.A.—Board of Tax Appeals. C—Individual. C.B.—Cumulative Bulletin. CFR—Code of Federal Regulations. CI—City. COOP—Cooperative. Ct.D.—Court Decision. CY—County. D—Decedent. DC—Dummy Corporation. DE—Donee. Del. Order—Delegation Order. DISC—Domestic International Sales Corporation. DR—Donor. E—Estate. EE—Employee. E.O.—Executive Order. ER—Employer. ERISA—Employee Retirement Income Security Act. EX—Executor. F—Fiduciary. FC—Foreign Country. FICA—Federal Insurance Contributions Act. FISC—Foreign International Sales Company. FPH—Foreign Personal Holding Company. F.R.—Federal Register. FUTA—Federal Unemployment Tax Act. FX—Foreign corporation. G.C.M.—Chief Counsel’s Memorandum. GE—Grantee. GP—General Partner. GR—Grantor. IC—Insurance Company. I.R.B.—Internal Revenue Bulletin. LE—Lessee. LP—Limited Partner. LR—Lessor. M—Minor. Nonacq.—Nonacquiescence. O—Organization. P—Parent Corporation. PHC—Personal Holding Company. PO—Possession of the U.S. PR—Partner. PRS—Partnership. PTE—Prohibited Transaction Exemption. Pub. L.—Public Law. REIT—Real Estate Investment Trust. Rev. Proc.—Revenue Procedure. Rev. Rul.—Revenue Ruling. S—Subsidiary. S.P.R.—Statement of Procedural Rules. Stat.—Statutes at Large. T—Target Corporation. T.C.—Tax Court. T.D.—Treasury Decision. TFE—Transferee. TFR—Transferor. T.I.R.—Technical Information Release. TP—Taxpayer. TR—Trust. TT—Trustee. U.S.C.—United States Code. X—Corporation. Y—Corporation. Z—Corporation. February 18, 2020 ii Bulletin No. 2020–8 Numerical Finding List 1 Bulletin 2020–8 Announcements: 2020-1, 2020-5 I.R.B. 552 Notices: 2020-1, 2020-2 I.R.B. 290 2020-2, 2020-3 I.R.B. 327 2020-3, 2020-3 I.R.B. 330 2020-4, 2020-4 I.R.B. 380 2020-5, 2020-4 I.R.B. 380 2020-6, 2020-7 I.R.B. 411 2020-7, 2020-7 I.R.B. 411 2020-8, 2020-7 I.R.B. 415 2020-9, 2020-7 I.R.B. 417 Proposed Regulations: REG-107431-19, 2020-3 I.R.B. 332 REG-122180-18, 2020-3 I.R.B. 342 REG-100956-19, 2020-4 I.R.B. 383 REG-125710-18, 2020-5 I.R.B. 554 Treasury Decisions: 9886, 2020-2 I.R.B. 285 9887, 2020-3 I.R.B. 302 9888, 2020-3 I.R.B. 306 9891, 2020-8 I.R.B. 419 9892, 2020-8 I.R.B. 439 Revenue Procedures: 2020-1, 2020-01 I.R.B. 1 2020-2, 2020-01 I.R.B. 107 2020-3, 2020-01 I.R.B. 131 2020-4, 2020-01 I.R.B. 148 2020-5, 2020-01 I.R.B. 241 2020-7, 2020-01 I.R.B. 281 2020-9, 2020-02 I.R.B. 294 2020-10, 2020-02 I.R.B. 295 2020-11, 2020-06 I.R.B. 406 2020-8, 2020-08 I.R.B. 447 Revenue Rulings: 2020-1, 2020-3 I.R.B. 296 2020-2, 2020-3 I.R.B. 298 2020-3, 2020-3 I.R.B. 409 2020-4, 2020-4 I.R.B. 444 1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2018–27 through 2018–52 is in Internal Revenue Bulletin 2018–52, dated December 27, 2018. Bulletin No. 2020–8 iii February 18, 2020 Finding List of Current Actions on Previously Published Items 1 Bulletin 2020–8 1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2018–27 through 2018–52 is in Internal Revenue Bulletin 2018–52, dated December 27, 2018. Internal Revenue Service Washington, DC 20224 Official Business Penalty for Private Use, $300 INTERNAL REVENUE BULLETIN The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue Bulletins are available at www.irs.gov/irb/. We Welcome Comments About the Internal Revenue Bulletin If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave. NW, IR-6230 Washington, DC 20224.
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