Internal Revenue Bulletin 2019-47 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 2019–47
November 18, 2019
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.
ADMINISTRATIVE, ESTATE TAX,
EXCISE TAX, GIFT TAX, INCOME TAX
Rev. Proc. 2019-44, page 1093.
This procedure provides the 2020 cost-of-living adjustments
to certain items due to inflation as required by various provi-
sions of the Code and Service guidance.
EMPLOYEE PLANS
Notice 2019-59, page 1091.
Section 415 of the Internal Revenue Code (the Code) pro-
vides for dollar limitations on benefits and contributions un-
der qualified retirement plans. Section 415(d) requires that
the Secretary of the Treasury annually adjust these limits
for cost of living increases. Other limitations applicable to
deferred compensation plans are also affected by these
adjustments under § 415. Under § 415(d), the adjustments
are to be made under adjustment procedures similar to
those used to adjust benefit amounts under § 215(i)(2)(A)
of the Social Security Act.
INCOME TAX
REG-123112-19, page 1104.
This document announces that the Department of the Trea-
sury (Treasury Department) and the IRS intend to issue pro-
posed regulations regarding the treatment of certain inter-
ests in corporations as stock or indebtedness and requests
comments from the public regarding the contemplated
rules. This document also announces that, following the ex-
piration of the 2016 Temporary Regulations (described in
the Background section of this advance notice of proposed
rulemaking), a taxpayer may rely on the 2016 Proposed
Regulations (also described in the Background) until further
notice is given in the Federal Register, provided that the tax-
payer consistently applies the rules in the 2016 Proposed
Regulations in their entirety.
T.D. 9879, page 1052.
TD 9879 provides guidance relating to information report-
ing obligations for reportable policy sales of life insurance
contracts under §6050Y, which was added by section
13520 of the 2017 Tax Cuts and Jobs Act (the TCJA). TD
9879 also provides guidance under §101, as amended by
section 13522 of the TCJA, for reportable policy sales and
to make certain other related changes to the existing regu-
lations under §101.
T.D. 9880, page 1085.
This Treasury Decision removes final regulations identified
by the Secretary of the Treasury as imposing an undue fi-
nancial burden on taxpayers and as being unduly complex.
The final regulations being removed set forth minimum doc-
umentation requirements that ordinarily must be satisfied in
order for certain related-party interests in a corporation to
be treated as indebtedness for federal tax purposes. This
document also adopts conforming amendments to other
final regulations to reflect the removal of those regulations.
Finding Lists begin on page ii.

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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
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stantive rulings necessary to promote a uniform application
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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
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Revenue rulings represent the conclusions of the Service
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Rulings and procedures reported in the Bulletin do not have the
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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.
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To the extent practicable, pertinent cross references to these
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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.
November 18, 2019 Bulletin No. 2019–47

Part I
26 CFR 1.101-1; 26 CFR 1.6050Y-1;
26 CFR 1.6050Y-2; 26 CFR 1.6050Y-3;
26 CFR 1.6050Y-4
T.D. 9879
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Information Reporting for
Certain Life Insurance
Contract Transactions
and Modifications to the
Transfer for Valuable
Consideration Rules
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains fi-
nal regulations providing guidance on
new information reporting obligations
under section 6050Y related to reportable
policy sales of life insurance contracts and
payments of reportable death benefits. The
final regulations also provide guidance on
the amount of death benefits excluded
from gross income under section 101 fol-
lowing a reportable policy sale. The final
regulations affect parties involved in cer-
tain life insurance contract transactions,
including reportable policy sales, trans-
fers of life insurance contracts to foreign
persons, and payments of reportable death
benefits.
DATES: Effective Date: These regulations
are effective October 31, 2019.
Applicability Date: For dates of applica-
bility, see §§1.101-6 and 1.6050Y-1(b).
FOR FURTHER INFORMATION CON-
TACT: Kathryn M. Sneade, (202) 317-
6995 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments
to 26 CFR part 1 under sections 101 and
6050Y of the Internal Revenue Code
(Code). These amendments (final regu-
lations) implement legislative changes
to sections 101 and 6050Y of the Code
by sections 13520 and 13522 of Pub. L.
No. 115-97 (131 Stat. 2054, 2149, 2151),
commonly referred to as the Tax Cuts and
Jobs Act (TCJA). The final regulations
under section 101 amend final regulations
under section 101 published in the Fed-
eral Register on November 26, 1960 (25
FR 11402), as subsequently amended on
December 24, 1964 (29 FR 18356), Sep-
tember 27, 1982 (47 FR 42337), and July
26, 2007 (72 FR 41159) (existing regula-
tions).
Section 13520 of the TCJA added
section 6050Y to chapter 61 (Informa-
tion and Returns) of subtitle F of the
Code (chapter 61). Section 6050Y im-
poses information reporting obligations
related to certain life insurance contract
transactions, including reportable policy
sales and payments of reportable death
benefits. Section 6050Y provides that
each of the returns required by section
6050Y is to be made “at such time and
in such manner as the Secretary shall
prescribe.” The final regulations under
section 6050Y implement section 6050Y
by specifying the manner in which and
time at which the information reporting
obligations must be satisfied. The final
regulations also provide definitions and
rules that govern the application of the
information reporting obligations.
Section 13522 of the TCJA amended
section 101. New section 101(a)(3) de-
fines the term “reportable policy sale” and
provides rules for determining the amount
of death benefits excluded from gross in-
come following a reportable policy sale.
The final regulations under section 101
provide definitions applicable under sec-
tions 101 and 6050Y and guidance for
determining the amount of death benefits
excluded from gross income following a
reportable policy sale.
Notice 2018-41, 2018-20 I.R.B. 584,
described sections 13520 and 13522 of the
TCJA and the regulations the Department
of the Treasury (Treasury Department)
and the IRS expected to propose under
section 6050Y, requested comments on
the definition of “reportable policy sale”
set forth in section 101(a)(3)(B), among
other things, and identified the need for
regulations providing guidance on the ap-
plication of section 101(a) following the
addition of section 101(a)(3) to the Code.
The Treasury Department and the IRS re-
ceived comments in response to the notice
and considered these comments in devel-
oping the proposed regulations.
The Treasury Department and the IRS
published proposed regulations under sec-
tions 101 and 6050Y (REG-103083-18) in
the Federal Register (84 FR 11009) on
March 25, 2019 (proposed regulations).
The Treasury Department and the IRS re-
ceived public comments on the proposed
regulations and held a public hearing on
June 5, 2019.
After consideration of all of the com-
ments on the proposed regulations, the
proposed regulations are adopted as
amended by this Treasury decision.
Summary of Comments and
Explanation of Revisions
This section discusses the public com-
ments received on the proposed regula-
tions and explains the revisions adopted
by the final regulations in response to
those comments.
1. Comments and Changes Relating to
Applicability Dates
A. Applicability date for section 6050Y
regulations
Section 1.6050Y-1 of the proposed
regulations provides that the rules in
§1.6050Y-1 through 1.6050Y-4 of the
proposed regulations apply to reportable
policy sales made and reportable death
benefits paid after December 31, 2017,
and provides transition relief with respect
to reporting required on reportable policy
sales and payments of reportable death
benefits occurring after December 31,
2017, and before the date final regulations
November 18, 2019 1052 Bulletin No. 2019–47

under section 6050Y are published in the
Federal Register.
One commenter recommended that re-
porting obligations under section 6050Y
(as well as application of the rules under
section 101 relating to section 6050Y) be
delayed until 60 days after the date the fi-
nal regulations are published in the Fed-
eral Register. Informal comments also
were received requesting transition relief
(such as delayed reporting) or permanent
relief with respect to the reporting obliga-
tions under section 6050Y for reportable
policy sales and payments of reportable
death benefits occurring after December
31, 2017, and before January 1, 2019
(such as waiving the reporting obligations
for this period). One commenter request-
ed that at least an additional 30 days be
added to the 90-day relief period provided
in §1.6050Y-1(b)(2) and (3) of the pro-
posed regulations for filing returns and
furnishing statements required under sec-
tion 6050Y(b) and (c) and §1.6050Y-3 and
1.6050Y-4 of the proposed regulations, to
give issuers at least 60 days to complete
their reporting after the 60-day exten-
sion period provided to acquirers of an
interest in a life insurance contract under
§1.6050Y-1(b)(1) of the proposed regula-
tions. The commenter asserted that issuers
require significantly more time than the
30 days effectively provided to complete
Forms 1099-SB, “Seller’s Investment in
Life Insurance Contract,” and 1099-R
“Distributions From Pensions, Annuities,
Retirement or Profit-Sharing Plans, IRAs,
Insurance Contracts, etc.”, and to add new
forms (such as Form 1099-SB) to their
systems. The commenter stated that issu-
ers must identify policies that are subject
to reporting once the Forms 1099-LS,
“Reportable Life Insurance Sale,” are re-
ceived as well as enhance systems to track
these policies over their life and transmit
data between various systems in order to
accurately report under sections 6050Y(b)
and (c).
In response to these comments, and to
give acquirers and issuers ample time to
develop and implement reporting systems,
the final regulations provide that the rules
in §§1.6050Y-1 through 1.6050Y-4 of the
final regulations apply to reportable pol-
icy sales made and reportable death ben-
efits paid after December 31, 2018. See
§1.6050Y-1(b) of the final regulations.
As a result, no reporting is required under
section 6050Y for reportable policy sales
made and reportable death benefits paid
after December 31, 2017, and before Jan-
uary 1, 2019.
Section 1.6050Y-1(a)(12) of the final
regulations defines “reportable death ben-
efits” as “amounts paid by reason of the
death of the insured under a life insurance
contract that are attributable to an interest
in the contract that was transferred in a
reportable policy sale.” Accordingly, be-
cause the definition of “reportable policy
sale” under §1.6050Y-1(a)(14) of the final
regulations applies only to transfers of
interests in life insurance contracts made
after December 31, 2018, death bene-
fits are “reportable death benefits” under
§1.6050Y-1(a)(12) of the final regulations
and are subject to the reporting require-
ments of §1.6050Y-4 of the final regula-
tions only if the death benefits are paid by
reason of the death of the insured under
a life insurance contract transferred after
December 31, 2018, in a reportable policy
sale.
The final regulations also provide tran-
sition relief as set forth in the proposed
regulations with two modifications. First,
the transition relief applies with respect to
reportable policy sales made and report-
able death benefits paid after December
31, 2018, and on or before October 31,
2019. Second, as requested by one of the
commenters, §1.6050Y-1(b)(3), (4), and
(5) of the final regulations provide issu-
ers with at least 120 days after the final
regulations are published in the Federal
Register to file returns and furnish state-
ments under section 6050Y(b) and (c) and
§§1.6050Y-3 and 1.6050Y-4 of the final
regulations. These features of the final
regulations are intended to give acquirers
and issuers ample time to develop and im-
plement reporting systems.
Noting that 250 or more information
returns of a single taxpayer must be filed
electronically, one commenter requested
waivers from electronic filing for 2018
and 2019 issuer reporting under section
6050Y(b) and (c). The Treasury Depart-
ment and the IRS have determined not to
provide the requested waiver in the final
regulations under section 6050Y because
procedures already exist for any person
required to file 250 or more returns during
the calendar year to request a waiver from
the requirement to file electronically by
showing hardship. See §301.6011-2(c).
B. Applicability date for section 101
regulations
Section 1.101-6(b) of the proposed
regulations provides that, for purposes
of section 6050Y, §1.101-1(b), (c), (d),
(e), (f), and (g) apply to reportable poli-
cy sales made after December 31, 2017,
and to reportable death benefits paid after
December 31, 2017. Section 1.101-6(b) of
the proposed regulations further provides
that, for any other purpose, §1.101-1(b),
(c), (d), (e), (f), and (g) apply to transfers
of life insurance contracts, or interests
therein, made after the date the Treasury
decision adopting the proposed regula-
tions as final regulations is published in
the Federal Register.
Several commenters requested clari-
fication regarding the applicability dates
set forth in §1.101-6(b) of the proposed
regulations. Two of these commenters re-
quested that the Treasury Department and
the IRS clarify that the rules issued with
respect to section 101(a)(3) apply to all
transfers of life insurance contracts, or in-
terests therein, made after December 31,
2017, or alternatively, that the Treasury
Department and the IRS allow taxpayers
to rely upon the rules in §1.101-1 of the
proposed regulations for transactions un-
dertaken after December 31, 2017, and be-
fore the date that the Treasury Department
adopts final rules. Another commenter
recommended that application of the rules
under section 101 (as well as the reporting
obligations under section 6050Y) be de-
layed until 60 days after the date the final
regulations are published in the Federal
Register, but suggested that language
should be included in the preamble to the
final regulations to provide that taxpayers
may rely on the proposed regulations for
the period prior to the effective date of the
final regulations.
Because the final regulations provide
that the reporting obligations under sec-
tion 6050Y apply to reportable policy
sales and payments of reportable death
benefits occurring after December 31,
2018, for purposes of determining wheth-
er a transfer of an interest in a life insur-
ance contract is a reportable policy sale or
a payment of death benefits is a payment
Bulletin No. 2019–47 1053 November 18, 2019

November 18, 2019 1054 Bulletin No. 2019–47
of reportable death benefits subject to the
reporting requirements of section 6050Y
and §§1.6050Y-1 through 1.6050Y-4 of
the final regulations, the definitions and
rules set forth in §1.101-1(b) through (g)
of the final regulations apply to report-
able policy sales made after December 31,
2018, and to reportable death benefits paid
after December 31, 2018. See §§1.101-
6(b) and 1.6050Y-1(b) of the final regu-
lations.
The final regulations provide that, for
other purposes, specifically for purposes
of determining the amount of the pro-
ceeds of life insurance contracts payable
by reason of death excluded from gross
income under section 101, §1.101-1(b)
through (g) of the final regulations apply
to amounts paid by reason of the death
of the insured under a life insurance con-
tract, or interest therein, transferred after
October 31, 2019. However, under section
7805(b)(7), a taxpayer may apply the rules
set forth in §1.101-1(b) through (g) of the
final regulations, in their entirety, with re-
spect to all amounts paid by reason of the
death of the insured under a life insurance
contract, or interest therein, transferred af-
ter December 31, 2017, and on or before
October 31, 2019.
2. Comments and Changes Relating to
§1.101-1(b) of the Proposed Regulations
Generally, amounts received under a
life insurance contract that are paid by rea-
son of the death of the insured are excluded
from gross income for Federal income tax
purposes under section 101(a)(1). Howev-
er, if a life insurance contract or interest
therein is sold or otherwise transferred
for valuable consideration, the “transfer
for value rule” set forth in section 101(a)
(2) limits the excludable portion of the
amount received by reason of the death of
the insured to the sum of the consideration
paid for the contract or interest therein and
any premiums and other amounts subse-
quently paid by the transferee with respect
to the contract or interest therein. Section
101(a)(2)(A) and (B) provide two excep-
tions to this transfer for value rule. One
exception (the “certain person exception”)
applies to transfers to the insured, a part-
ner of the insured, a partnership in which
the insured is a partner, or a corporation in
which the insured is a shareholder or offi-
cer (“certain persons”). See section 101(a)
(2)(B). The other exception (the “carry-
over basis exception”) applies if the trans-
feree’s basis for determining gain or loss
in the life insurance contract or interest
therein is determined in whole or in part
by reference to the transferor’s basis in
the contract or interest therein. See section
101(a)(2)(A). Under section 101(a)(3),
which was added by section 13522 of the
TCJA, neither of these exceptions to the
transfer for value rule applies in the case
of a transfer of a life insurance contract,
or any interest therein, that is a reportable
policy sale.
Section 1.101-1(b)(1)(i) of the pro-
posed regulations provides the general
transfer for value rule set forth in section
101(a)(2). Section 1.101-1(b)(1)(ii) of the
proposed regulations sets forth the excep-
tions from this general rule for transfers
for valuable consideration that are not re-
portable policy sales (the certain person
exception and carryover basis exception
provided in section 101(a)(2)). Section
1.101-1(b)(2) of the proposed regulations
provides rules regarding gratuitous trans-
fers of interests in life insurance contracts,
as well as transfers of only a part of an
interest in a life insurance contract and
bargain sales of an interest in a life insur-
ance contract (that is, transfers that are in
part gratuitous and in part transfers for
valuable consideration). This section of
this Summary of Comments and Expla-
nation of Revisions discusses comments
received on §1.101-1(b) of the proposed
regulations.
A. Transfers to certain persons
One commenter on the proposed reg-
ulations described a life insurance policy
subject to the section 101(a)(2) transfer
for value rule as “tainted,” in that death
benefits paid under the policy are no lon-
ger fully excluded from income under sec-
tion 101(a)(1). The commenter asked that
the final regulations provide for removal
of the “taint” by a transfer to the insured,
as was permitted before the TCJA, and
asked for clarification regarding whether
a transfer of a policy to the insured must
be a sale for fair market value to remove
the “taint” of a transfer for valuable con-
sideration. The commenter suggested that
mistakes happen, including the mistake of
not seeking tax advice from a professional
who knows the section 101 rules, and that
taxpayers should be able to take correc-
tive measures to remove this “taint.” The
commenter noted that the insured may no
longer have a business or other need for
the current transferee to own the policy
and may wish to hold the policy to pro-
tect the insured’s family, or the insured
may regret selling the policy and wish to
buy the policy back after the policy was
transferred in a reportable policy sale. The
commenter pointed out that §1.101-1(b)
(3)(ii) of the existing regulations (not yet
revised to reflect TCJA changes to section
101) currently provides such a corrective
measure, allowing the “taint” to be re-
moved by a transfer of the policy to cer-
tain persons. However, §1.101-1(b)(1)(ii)
(B)(2) of the proposed regulations makes
this corrective measure unavailable to the
extent that the transfer to those certain
persons was preceded by a transfer of the
policy for valuable consideration in a re-
portable policy sale. The commenter also
noted that §1.101-1(b)(3)(ii) of the exist-
ing regulations does not require the cor-
rective transfer to be a sale for fair market
value, and that §1.101-1(b)(1)(ii)(B)(1)
of the proposed regulations does not im-
pose such a requirement. The commenter
suggested that Example 1, Example 2, and
Example 3 in §1.101-1(g)(1), (2), and (3)
of the proposed regulations, read together,
however, appear to require that the trans-
fer to the insured be a sale for fair market
value to clear the “taint” of a prior transfer
for valuable consideration. The comment-
er asked for clarification on this point. The
commenter suggested that the transfer to
the insured be available as a corrective
measure even if that transfer was preced-
ed by a reportable policy sale, and, to pre-
vent any possible abuse, that the insured
be required to pay fair market value if the
policy previously had been transferred in
a reportable policy sale.
Section 1.101-1(b)(1)(ii)(B)(1) of the
proposed regulations does not explicitly
require that the valuable consideration
for a transfer of an interest in a life in-
surance contract be equal to the interest’s
fair market value, but, in the case of a
bargain sale, the rules implementing the
provisions of section 101 are applied sep-
arately to the sale and gift portions of the
transferred interest. Under §1.101-1(b)

Bulletin No. 2019–47 1055 November 18, 2019
(2)(iii) of the proposed regulations, part
of the transfer in a bargain sale is treated
as a gratuitous transfer subject to §1.101-
1(b)(2)(i) of the proposed regulations.
Example 1, Example 2, and Example 3
in §1.101-1(g)(1), (2), and (3) of the pro-
posed regulations are intended to illus-
trate the application of the rules imple-
menting the changes made by the TCJA.
For the sake of simplicity, the consider-
ation in these examples equals fair mar-
ket value, so the bargain sale rules do not
apply. The final regulations include an
example that illustrates the application of
the bargain sale rules. See Example 7 in
§1.101-1(g)(7) of the final regulations.
In response to the comments received,
the final regulations provide for a fresh
start with respect to an interest gratu-
itously transferred to the insured, provid-
ed the interest has not previously been
transferred for value in a reportable pol-
icy sale. See §1.101-1(b)(2)(i) of the final
regulations. Example 2 in §1.101-1(g)
(2) of the final regulations illustrates the
application of this rule. The final regula-
tions also provide for a fresh start with
respect to an interest (or portion thereof)
that is transferred to the insured following
a reportable policy sale of the interest for
valuable consideration, but only to the ex-
tent that the insured pays fair market val-
ue for the interest and only with respect
to the interest (or relevant portion there-
of) transferred to the insured that is not
subsequently transferred in a transfer for
valuable consideration or in a reportable
policy sale. See §1.101-1(b)(1)(ii)(B)(3)
of the final regulations. The application of
this rule is illustrated in revised Example
6, new Example 7, new Example 8, and
new Example 9 in §1.101-1(g)(6), (g)(7),
(g)(8), and (g)(9) of the final regulations.
B. Gratuitous transfers
Under §1.101-1(b)(2)(i) of the pro-
posed regulations, the amount of the pol-
icy proceeds attributable to a gratuitously
transferred interest in a life insurance pol-
icy that is excludable from gross income
under section 101(a)(1) is limited to the
sum of the amount attributable to the gra-
tuitously transferred interest that would
have been excludable by the transferor if
the transfer had not occurred, and the pre-
miums and other amounts subsequently
paid by the transferee with respect to the
interest. Unlike the existing regulations,
the proposed regulations do not provide a
special rule for a gratuitous transfer made
by or to certain persons.
1
As explained in
the preamble to the proposed regulations,
such a rule is not required by section
101(a), and a special rule for these trans-
fers could be subject to abuse. See 84 FR
11009, 11017.
Section 1.101-1(b)(2)(i) of the pro-
posed regulations applies to any gratuitous
transfer of an interest in a life insurance
contract, “including a reportable poli-
cy sale that is not for valuable consider-
ation.” One commenter requested that this
language be deleted, asserting that includ-
ing gratuitous transfers within the defini-
tion of reportable policy sales is not con-
sistent with section 101.
2
The commenter
noted that the title of section 101(a)(3) is
“Exception to valuable consideration rules
for commercial transactions,” which the
commenter asserted makes clear that a re-
portable policy sale can occur only if there
has been a transfer for valuable consider-
ation. The commenter further asserted that
the provisions of section 101(a)(3)(A)
and (B) limit the relevance of reportable
policy sales to those situations in which
a taxpayer needs to determine whether
one of the section 101(a)(2) exceptions
applies and, because those exceptions are
never relevant for gratuitous transfers, re-
portable policy sales are never relevant for
gratuitous transfers.
The TCJA added section 101(a)(3)(A)
to provide that the two pre-existing ex-
ceptions to the transfer for value rules no
longer apply if the transfer is a reportable
policy sale. Section 101(a)(3)(B) defines
a reportable policy sale as any acquisi-
tion of an interest in a life insurance
contract in the absence of the described
relationship between the acquirer and in-
sured. Although the availability of excep-
tions from the transfer for value rules is
not directly relevant to a gratuitous trans-
fer standing alone, the acquisition of an
interest in a contract by an acquirer that
does not have the described relationship
with the insured, including a gratuitous
transfer, may affect the exclusion of the
policy proceeds from gross income under
section 101(a) and the regulations there-
under if there are subsequent transfers.
Consistent with the statutory language,
the definition of a reportable policy sale
in the final regulations does not exclude
gratuitous transfers.
3. Comments and Changes Relating
to §1.101-1(c) of the Proposed
Regulations
Under section 101(a)(3)(B) and
§1.101-1(c)(1) of the proposed regula-
tions, a reportable policy sale is, as a
general matter, any direct or indirect ac-
quisition of an interest in a life insurance
contract if the acquirer has, at the time
of the acquisition, no substantial family,
business, or financial relationship with the
insured apart from the acquirer’s interest
in the life insurance contract. Exceptions
to the definition of reportable policy sale
for transfers between certain related enti-
ties are provided in §1.101-1(c)(2)(i) and
(ii) of the proposed regulations. Section
1.101-1(c)(2)(iii) of the proposed regula-
tions sets forth exceptions from the defini-
tion of reportable policy sales for certain
indirect acquisitions. This section of this
Summary of Comments and Explanation
of Revisions discusses comments received
on §1.101-1(c) of the proposed regula-
tions.
1
Under §1.101-1(b)(2) of the existing regulations, in the case of a gratuitous transfer, by assignment or otherwise, of a life insurance policy or any interest therein, the amount of the proceeds
attributable to such policy or interest that is excludable from the transferee’s gross income under section 101(a) is, as a general rule, limited to the sum of the amount which would have been
excludable by the transferor if no such transfer had taken place and any premiums and other amounts subsequently paid by the transferee with respect to the interest. However, if the gratuitous
transfer in question is made by or to the insured, a partner of the insured, a partnership in which the insured is a partner, or a corporation in which the insured is a shareholder or officer, the
entire amount of the proceeds attributable to the policy or interest transferred is excludable from the transferee’s gross income.
2
The commenter also asserted that this language creates unnecessary and confusing reporting requirements under section 6050Y for gift transfers and is inconsistent with the statutory lan-
guage, which, according to the commenter, indicates that a reportable policy sale must be a transfer for value. The commenter’s concerns about reporting are discussed in section 10.A of this
Summary of Comments and Explanation of Revisions.

November 18, 2019 1056 Bulletin No. 2019–47
A. Pre-TCJA acquisitions
Two commenters on the proposed reg-
ulations requested clarification regarding
the application of §1.101-1(c)(2)(iii)(A)
with respect to the indirect acquisition
of an interest in a life insurance contract
if the entity that directly holds the inter-
est acquired the interest before January
1, 2018 (that is, before the existence of
any reporting requirements under sec-
tion 6050Y(a)). Both commenters rec-
ommended that an exception from the
definition of reportable policy sale be
provided with respect to the indirect ac-
quisition of an interest in a life insurance
contract by a person if the partnership,
trust, or other entity that directly holds
the interest in the life insurance contract
acquired the interest before January 1,
2018. One commenter recommended
that, if the requested exception is not
provided, the partnership, trust, or other
entity in which the investment interest
is purchased should be permitted to un-
dertake the applicable reporting, instead
of requiring the investor to navigate the
complexities of the reporting require-
ments. This commenter also suggested
that, if the requested exception is provid-
ed, the partnership, trust, or other entity
could file an information return with the
IRS for its portfolio of policies acquired
prior to January 1, 2018, as a transition
solution. However, the other comment-
er suggested that the partnership, trust,
or other entity may not have tracked or
retained information sufficient to satisfy
the reporting requirements under section
6050Y with respect to interests acquired
before January 1, 2018.
In response to these comments, §1.101-
1(c)(2)(iii)(A) of the final regulations pro-
vides an exception from the definition of
reportable policy sale with respect to the
indirect acquisition of an interest in a life
insurance contract by a person if a part-
nership, trust, or other entity in which an
ownership interest is being acquired di-
rectly or indirectly holds the interest in
the life insurance contract and acquired
that interest before January 1, 2019, or ac-
quired that interest in a reportable policy
sale reported in compliance with section
6050Y(a) and §1.6050Y-2.
3
B. Additional requests for expanded
indirect acquisition exceptions
One commenter on the proposed reg-
ulations identified the existence of a pos-
sible technical issue with §1.101-1(c)
(2)(iii)(A) of the proposed regulations,
which provides an exception from report-
able policy sale status for certain indirect
acquisitions. The commenter noted that,
under this provision, the indirect acqui-
sition of an interest in a life insurance
contract is not a reportable policy sale if
the partnership, trust, or other entity that
directly holds the interest in the life in-
surance contract acquired the interest in
a reportable policy sale that was reported
in compliance with section 6050Y(a) and
the regulations thereunder. The comment-
er described a fact pattern in which legal
title to a life insurance contract is held
by a nominee (for example, a securities
intermediary) on behalf of a partnership,
trust, or other entity (for example, an in-
vestment fund). The commenter conclud-
ed that, in this fact pattern, the exception
in §1.101-1(c)(2)(iii)(A) of the proposed
regulations cannot apply to an investor in
the partnership, trust, or other entity be-
cause the investor’s ownership interest
is in the partnership, trust, or other enti-
ty (which does not hold a direct interest
in the life insurance contract), not in the
nominee (which directly holds the legal
interest in the life insurance contract).
The commenter also recommended that
§1.101-1(c)(2)(iii)(A) be revised to clari-
fy that the exception applies if reporting
under section 6050Y is done by either the
legal owner of the life insurance contract
(such as a securities intermediary holding
legal title as a nominee) or the beneficial
owner of the life insurance policy that
controls the life insurance contract under
a securities account agreement (such as an
investment fund).
In the fact pattern described in the
comment letter, the partnership, trust, or
other entity in which the investor acquires
an ownership interest holds an interest in
the life insurance contract. An interest in a
life insurance contract is not limited to le-
gal ownership of the contract. Instead, any
person that acquires an enforceable right
to receive all or a part of the proceeds of
the life insurance contract or acquires the
right to any other economic benefits of the
policy as described in §20.2042-1(c)(2)
acquires an interest in the life insurance
contract under §1.101-1(e)(1) of the pro-
posed regulations.
The partnership, trust, or other entity
described by the commenter presumably
would hold such an interest directly, even
though legal title to the life insurance
contract is held by a nominee or other
intermediary. By acquiring an interest in
the partnership, trust, or other entity, the
investor indirectly would acquire a benefi-
cial interest in the life insurance contract.
The exception in §1.101-1(c)(2)(iii)(A) of
the proposed regulations would apply to
this indirect acquisition if the partnership,
trust, or other entity reported its acquisi-
tion of the beneficial interest in the con-
tract in compliance with section 6050Y(a).
The commenter’s recommended revision
to §1.101-1(c)(2)(iii)(A) of the proposed
regulations therefore is not adopted in the
final regulations.
The commenter also proposed that
§1.101-1(c)(2)(iii)(A) of the proposed
regulations be modified to apply if “the
partnership, trust, or other entity that di-
rectly or indirectly holds the interest in
the life insurance contract acquired that
interest in a reportable policy sale report-
ed in compliance with section 6050Y(a)
and §1.6050Y-2.” This change is adopted
in the final regulations, which also clarify
that the partnership, trust, or other entity
must be a partnership, trust, or other entity
in which an ownership interest is being ac-
quired. As modified, the exception applies
to the indirect acquisition of an interest in a
life insurance contract by a person acquir-
ing an ownership interest in a partnership,
trust, or other entity that holds the interest
in the life insurance contract, regardless of
whether the person’s ownership interest in
the partnership, trust, or other entity that
reported its acquisition of the interest in
the life insurance contract is direct or in-
3
As discussed in section 1.A of this Summary of Comments and Explanation of Revisions, the final regulations provide that the reporting obligations under section 6050Y apply to report-
able policy sales and payments of reportable death benefits occurring after December 31, 2018. See §1.6050Y-1(b) of the final regulations. Section 3.B of this Summary of Comments and
Explanation of Revisions describes changes adopted in §1.101-1(c)(2)(iii)(A) of the final regulations in response to other comments requesting expanded indirect acquisition exceptions.

Bulletin No. 2019–47 1057 November 18, 2019
direct and regardless of whether that part-
nership, trust, or other entity acquired its
interest in a direct or indirect acquisition,
provided the partnership, trust, or other
entity acquired its interest in a reportable
policy sale reported in compliance with
section 6050Y(a) and §1.6050Y-2 or, as
discussed in section 3.A of this Summary
of Comments and Explanation, acquired
its interest before January 1, 2019.
One commenter on the proposed reg-
ulations reiterated its previous request,
made in comments on Notice 2018-41,
that an exception from the reporting re-
quirements of section 6050Y be provided
with respect to an indirect acquisition of
an interest in a life insurance contract by
any investor that acquires a 5 percent or
less economic and voting interest in an
investment vehicle that holds, directly or
indirectly, life insurance policies, with the
added proviso that the investor must not
be an officer or director of the investment
vehicle. Section 1.101-1(c)(2)(iii)(B) of
the proposed regulations provides that the
indirect acquisition of an interest in a life
insurance contract is not a reportable poli-
cy sale if the acquirer and his or her family
members own, in the aggregate, 5 percent
or less of the partnership, trust, or other
entity that directly holds the interest in the
life insurance contract, but this exception
applies only if, immediately before the
acquisition, no more than 50 percent of
the gross value of the assets of the part-
nership, trust, or other entity that directly
holds the interest in the life insurance con-
tract consists of life insurance contracts.
The final regulations do not adopt the
proposed change because, if more than
50 percent of an entity’s asset value is life
insurance contracts, investment in life in-
surance contracts is likely the entity’s pri-
mary business activity, and it is reasonable
to expect even small investors to be able
to determine the primary activity of the
business they are investing in, regardless
of whether they are also officers or direc-
tors of the entity. In addition, any investor
that does not qualify for the exception set
forth in §1.101-1(c)(2)(iii)(B) of the final
regulations because more than 50 percent
of the gross value of the assets of the part-
nership, trust, or other entity that directly
holds the interest in the life insurance con-
tract consists of life insurance contracts
may still qualify for the exception set
forth in §1.101-1(c)(2)(iii)(A) of the final
regulations if a partnership, trust, or other
entity that directly or indirectly holds the
interest in the life insurance contract ac-
quired the interest before January 1, 2019,
or acquired that interest in a reportable
policy sale reported in compliance with
section 6050Y(a) and §1.6050Y-2.
Separately, §1.101-1(c)(2)(iii)(B) of
the final regulations clarifies that, if the
partnership, trust, or other entity in which
the acquirer is directly acquiring an own-
ership interest indirectly holds an interest
in one or more life insurance contracts, (i)
the assets of the partnership, trust, or oth-
er entity in which the ownership interest
is being acquired are tested to determine
whether more than 50 percent of the gross
value of the assets of that partnership,
trust, or other entity consists of life in-
surance contracts, and (ii) the ownership
interest in that partnership, trust, or oth-
er entity held by the acquirer and his or
her family members after the acquisition
is tested to determine whether they hold
more than a 5 percent ownership interest
in the entity. The assets of the partnership,
trust, or other entity that directly holds the
interest in the life insurance contract and
the interest in that partnership, trust, or
other entity held by the acquirer and his or
her family member are tested only if the
acquirer is directly acquiring an owner-
ship interest in that partnership, trust, or
other entity.
4. Comments and Changes Relating to
§1.101-1(e) of the Proposed Regulations
Section 1.101-1(e) of the proposed
regulations defines the terms used to de-
termine whether there has been an ac-
quisition of an interest in a life insurance
contract. This section of this Summary of
Comments and Explanation of Revisions
discusses comments that generally relate
to the definitions in §1.101-1(e) of the
proposed regulations.
A. Interest in a life insurance contract
Under §1.101-1(e)(1) of the proposed
regulations, an “interest in a life insur-
ance contract” is generally defined as the
interest held by any person that has tak-
en title to or possession of the life insur-
ance contract, in whole or part, for state
law purposes, and the interest held by any
person that has an enforceable right to re-
ceive all or a part of the proceeds of the
life insurance contract or to any other eco-
nomic benefits of the policy as described
in §20.2042-1(c)(2). Section 1.101-1(e)
(2) of the proposed regulations provides
that the term “transfer of an interest in a
life insurance contract” means the trans-
fer of any interest in the life insurance
contract, including any transfer of title to,
possession of, or legal or beneficial own-
ership of the life insurance contract itself.
Under §1.101-1(e)(3) of the proposed reg-
ulations, the acquisition of an interest in
a life insurance contract may be direct or
indirect, as described in §1.101-1(e)(3)(i)
(defining “direct acquisition of an interest
in a life insurance contract”) and (ii) (de-
fining “indirect acquisition of an interest
in a life insurance contract”).
One commenter on the proposed regu-
lations suggested that, in a life settlement
transaction in which a securities inter-
mediary holds legal title to the acquired
life insurance contract as nominee for the
new beneficial owner of the life insurance
contract pursuant to a securities account
agreement, the new beneficial owner does
not acquire an interest in the life insurance
contract under §1.101-1(e)(3) of the pro-
posed regulations, even though the new
beneficial owner controls and enjoys all
of the benefits of the life insurance policy,
because the new beneficial owner neither
acquires legal title to the life insurance
policy nor holds an ownership interest in
the securities intermediary holding legal
title. However, under the proposed regu-
lations, the new beneficial owner acquires
an interest in the life insurance contract
because it acquires control of all of the
benefits of the life insurance policy. Any
person that acquires an enforceable right to
receive all or a part of the proceeds of the
life insurance contract or to any other eco-
nomic benefits of the policy as described
in §20.2042-1(c)(2) acquires an interest in
the life insurance contract under §1.101-
1(e)(1) of the proposed regulations. In the
situation described in the comment, after
the life settlement transaction, there are
two persons who have an interest in the
life insurance contract at issue: the legal
title holder and the new beneficial owner.
Example 16 of §1.101-1(g)(16) of the final
regulations illustrates a reportable policy

November 18, 2019 1058 Bulletin No. 2019–47
sale in which one acquirer acquires legal
title and another acquires beneficial own-
ership.
B. Section 1035 exchanges
Section 1.101-1(e)(2) of the proposed
regulations provides that the issuance of
a life insurance contract to a policyholder,
other than the issuance of a policy in an
exchange pursuant to section 1035, is not
a transfer of an interest in a life insurance
contract. The preamble to the proposed
regulations requests comments on wheth-
er the proposed regulations should include
additional provisions regarding the treat-
ment of section 1035 exchanges of life
insurance contracts. See 84 FR 11009,
11019.
One commenter on the proposed reg-
ulations recommended that no additional
provisions be added to the proposed reg-
ulations for this circumstance. The com-
menter stated that the acquirer of a life
insurance contract in a reportable policy
sale would be unlikely to meet the re-
quirements for an insurable interest in the
insured and, consequently, would not be
able to make a section 1035 exchange. In
support of this position, the commenter
explained that, in order for an exchange
of policies to qualify as a section 1035
exchange, the owner of the new contract
must be the same person who owned the
old contract at the time of the exchange.
The commenter also stated that an insur-
er can issue a new policy only when that
new policy will meet state insurance laws
requiring an insurable interest in the in-
sured, and an insurable interest is gener-
ally based on a close familial relationship
with the insured or a lawful and substan-
tial financial interest in the continued life
of the insured.
Another commenter recommended that
the statement in §1.101-1(e)(2) of the pro-
posed regulations regarding section 1035
exchanges be deleted or amended to elimi-
nate any suggestion that such transactions,
by themselves, can lead to reportable poli-
cy sales. The commenter indicated that the
statement suggests that the mere issuance
of a new life insurance policy in a section
1035 exchange could (or perhaps would)
give rise to a reportable policy sale and as-
serted that such treatment is unnecessary
and would be inappropriate.
In support of this position, the com-
menter explained that, mechanically, a
section 1035 exchange typically involves
the assignment by the policyholder of the
existing policy to the carrier, followed by
the surrender of the policy and the applica-
tion of the cash proceeds as a premium un-
der a new policy issued to the same owner
on the same insured’s life. The commenter
remarked that, although the new carrier
acquires an interest in the old policy, that
interest is immediately extinguished. The
commenter also remarked that treating the
exchange as a reportable policy sale is not
necessary to serve any information collec-
tion purpose in the case of an exchange
involving a new, different carrier, because
the exchange must be reported to the IRS
and the policyholder on a Form 1099-R.
Additionally, the commenter suggested
that, even if an exchange were viewed
as potentially meeting the definition of
a reportable policy sale, the new carrier
should be viewed as having a substantial
business or financial relationship with the
insured, considering that the carrier just
issued a new policy on that individual’s
life.
The commenter suggested that, if there
are specific transactions involving section
1035 exchanges that fall outside the nor-
mal situation described by the comment-
er, and the Treasury Department and the
IRS determine that such atypical scenar-
ios might give rise to reportable policy
sales, the scope of any provision address-
ing those transactions should be limited
to those particular transactions, so that
doubt will not be cast on everyday policy
exchanges.
The reference in §1.101-1(e)(2) of the
proposed regulations to section 1035 ex-
changes was not intended to imply that the
transfer of a policy to an insurance com-
pany in a section 1035 exchange would
be a reportable policy sale. In response to
the comments received on section 1035
exchanges, §1.101-1(c)(2)(iv) of the final
regulations provides that the acquisition
of a life insurance contract by an insur-
ance company in an exchange pursuant to
section 1035 (such as the acquisition that
would result from the assignment by the
policyholder of the existing policy to the
insurance company in exchange for the is-
suance of a new life insurance contract) is
not a reportable policy sale.
The concern prompting the reference
in §1.101-1(e)(2) of the proposed regu-
lations to section 1035 exchanges related
to the possibility that a policy transferred
in a reportable policy sale subsequent-
ly could be exchanged for a new policy
in an exchange pursuant to section 1035
and that, absent the reference in §1.101-
1(e)(2), the death benefits paid under the
new policy might not be reported under
section 6050Y(c). Under the final regula-
tions, which adopt §1.101-1(e)(2) of the
proposed regulations as proposed, the is-
suance of a new life insurance contract to
a policyholder in an exchange pursuant to
section 1035 is a transfer of an interest in
a life insurance contract (the newly issued
life insurance contract) to the policyhold-
er, which results in a direct acquisition
of an interest in a life insurance contract
(the newly issued life insurance contract)
by the policyholder. See §1.101-1(e)(2)
and (3)(i) of the final regulations. The tax
treatment of the newly issued life insur-
ance contract under section 101 is not af-
fected by the tax treatment of the policy
for which it was exchanged. However, if
the policyholder’s acquisition of the new-
ly issued contract constitutes a reportable
policy sale, the rules generally applicable
to reportable policy sales under section
101 and the regulations thereunder apply
to determine the effect of the reportable
policy sale on the tax treatment of the
newly issued policy under section 101,
and the rules generally applicable to re-
portable policy sales under section 6050Y
and the regulations thereunder apply to
determine whether section 6050Y report-
ing is required with respect to the report-
able policy sale. The final regulations pro-
vide that the acquisition of a newly issued
life insurance contract by a policyholder
in an exchange pursuant to section 1035 is
not a reportable policy sale, if the policy-
holder has a substantial family, business,
or financial relationship with the insured,
apart from its interest in the life insurance
contract, at the time of the exchange. See
§1.101-1(c)(2)(v) of the final regulations.
If no such relationship exists at the time of
the section 1035 exchange, the exchange is
a reportable policy sale under §1.101-1(c)
(1) of the final regulations. The Treasury
Department and the IRS have determined
that no exception from the definition of
reportable policy sale should apply in this

Bulletin No. 2019–47 1059 November 18, 2019
situation. Based on comments received,
this situation should rarely arise due to
state law insurable interest requirements.
Should this situation arise, however,
the policyholder, as an acquirer, must fur-
nish the statement to the issuer required by
section 6050Y(a)(2) and §1.6050Y-2(d)
(2) of the final regulations (the report-
able policy sale statement or “RPSS”).
See §1.6050Y-2(f)(3) of the final regula-
tions. In this case, the statement must be
furnished to the issuer that issues the new
life insurance contract. See §1.6050Y-1(8)
(ii) of the final regulations. However, the
policyholder is not required to file the
information return required by section
6050Y(a)(1) and §1.6050Y-2(a) of the
final regulations. See §1.6050Y-2(f)(3).
Also, because the policyholder is not only
the acquirer, but is also the reportable pol-
icy sale payment recipient and the seller
with respect to the reportable policy sale,
the policyholder is not required to furnish
the statement generally required to be fur-
nished to the reportable policy sale pay-
ment recipient under §1.6050Y-2(d)(1) of
the final regulations. See §1.6050Y-1(a)
(15), (16), and (18) of the final regula-
tions; §1.6050Y-2(f)(3) of the final regu-
lations. Additionally, although the issuer
that issues the new life insurance con-
tract receives an RPSS, it is not required
to file a return or furnish a statement to
the seller under section 6050Y(b) and
§1.6050Y-3 because the seller does not
need the information that would be pro-
vided on the statement to properly report a
section 1035 exchange. See §1.6050Y-3(f)
(3) of the final regulations. However, if
the issuer makes a payment of reportable
death benefits under the newly issued life
insurance contract, the issuer must report
that payment under section 6050Y(c) and
§1.6050Y-4 of the final regulations, unless
an exception under §1.6050Y-4 applies.
C. Ordinary course trade or business
acquisitions
Several commenters on Notice 2018-
41 suggested that acquisitions of life in-
surance contracts, or interests therein,
in ordinary course business transactions
in which one trade or business acquires
another trade or business that owns life
insurance on the lives of former employ-
ees or directors should not be reportable
policy sales. The proposed regulations
include provisions that exclude certain of
these transactions from the definition of
reportable policy sales. These provisions
include the definition of substantial busi-
ness relationship in §1.101-1(d)(2) of the
proposed regulations, the special rule for
indirect acquisitions in §1.101-1(d)(4)(i)
of the proposed regulations, and the defi-
nition of the term “indirect acquisition of
an interest in a life insurance contract” in
§1.101-1(e)(3)(ii) of the proposed regula-
tions.
Two commenters on the proposed reg-
ulations suggested that ordinary course
business transactions (such as mergers
or acquisitions) involving businesses that
own life insurance contracts were not
intended by Congress to fall within the
meaning of a reportable policy sale and
noted that the rules describing a report-
able policy sale in the proposed regula-
tions are very helpful in confirming that
narrow intent. Another commenter stat-
ed that, although the legislative history
does not elaborate on the intent of section
101(a)(3)(A) (which limits the carryover
basis exception to transfers for value that
fall outside the definition of reportable
policy sale in section 101(a)(3)(B)), it is
widely understood to be aimed at ensuring
enforcement of the transfer for value rule
with respect to newer forms of speculative
transfers involving life insurance policies,
rather than imposing new restrictions on
legitimate business uses of life insurance.
The commenter asserted that the preamble
to the proposed regulations implicitly ac-
knowledges this by stating that some pro-
visions are meant to ensure that “certain
ordinary course business transactions”
will not be treated as reportable poli-
cy sales. In response to these comments
supporting the ordinary course exclusions
from the definition of reportable policy
sales in the proposed regulations, those
provisions are retained in the final regu-
lations.
One commenter on the proposed regu-
lations requested that the proposed regula-
tions be revised to provide that any transfer
of an interest in a life insurance contract as
part of a tax-free reorganization conduct-
ed in the ordinary course of business is
eligible for an exception to being treated
as a reportable policy sale under section
101(a)(3)(B), regardless of whether the
target survives the reorganization transac-
tion. In this regard, the commenter recom-
mended revising §1.101-1(e)(3)(ii) of the
proposed regulations, which defines the
term “indirect acquisition of an interest in
a life insurance contract,” to specifically
cover all transactions involving the acqui-
sition of a C corporation that qualify for
tax-free reorganization treatment unless,
immediately prior to the acquisition, more
than 50 percent of the gross value of the
assets of the C corporation consists of life
insurance contracts. The commenter also
recommended adding an example to illus-
trate this point. The commenter concluded
that §1.101-1(e)(3)(ii) of the proposed reg-
ulations applies in the case of acquisition
transactions in which the corporate exis-
tence of the target survives the acquisition
(for instance, a taxable stock sale with no
section 338 election, a reverse subsidiary
merger structured to qualify as a tax-free
reorganization under section 368(a)(2)(E),
or a tax-free reorganization under section
368(a)(1)(B)) and appears not to apply
in the case of acquisition transactions in
which the target corporation is merged
with and into the acquiring corporation
and the target’s separate corporate exis-
tence is terminated as of the merger date
(for instance, a tax-free reorganization
under section 368(a)(1)(A), (C), or (D) or
section 368(a)(2)(D)).
Under §1.101-1(e)(3)(ii) of the pro-
posed regulations, an indirect acquisition
of an interest in a life insurance contract
occurs when a person (acquirer) becomes
a beneficial owner of a partnership, trust,
or other entity that holds (whether directly
or indirectly) the interest in the life insur-
ance contract. However, for this purpose,
the term “other entity” does not include a
C corporation, unless more than 50 per-
cent of the gross value of the assets of the
C corporation consists of life insurance
contracts immediately before the indirect
acquisition. Accordingly, the acquisition
of ownership of a C corporation that owns
an interest in a life insurance contract is
not an indirect acquisition of such an in-
terest, and therefore is not a reportable
policy sale, if no more than 50 percent
of the gross value of the assets of the C
corporation consists of life insurance con-
tracts. The commenter thus is correct that
§1.101-1(e)(3)(ii) of the proposed regula-
tions applies only in the case of indirect

November 18, 2019 1060 Bulletin No. 2019–47
acquisitions of life insurance contracts
(which include a tax-free reorganization
in which the corporate existence of the tar-
get that holds an interest in a life insurance
contract survives the acquisition), and not
direct acquisitions of life insurance con-
tracts (which include a tax-free reorga-
nization in which the separate corporate
existence of a target that holds an interest
in a life insurance contract is terminated).
The commenter asserted that this
disparate treatment (between policies
transferred directly in tax-free asset re-
organizations and indirectly in stock re-
organizations) is inappropriate and not
warranted as a matter of good tax policy.
The commenter further asserted that all
tax-free reorganizations should be eligible
for an exception similar to the exception
provided in §1.101-1(e)(3)(ii) of the pro-
posed regulations. The commenter noted
that the proposed regulations provide cer-
tain exceptions that could apply to tax-
free mergers in which the target goes out
of existence and the surviving corporation
continues to hold the life insurance con-
tract, but asserted that having to determine
in these types of tax-free mergers whether
a particular exception applies on a con-
tract-by-contract basis is unduly complex
and a trap for the unwary. The commenter
further asserted that this burdensome ex-
ercise does not appear to serve the purpose
of the change in the statute, which is to
address abusive transactions and a failure
to report income when appropriate.
The final regulations do not adopt the
commenter’s recommendation regarding
amendments to §1.101-1(e)(3)(ii). The
exception in §1.101-1(e)(3)(ii) of the pro-
posed regulations is not targeted to acqui-
sitions of C corporation stock in tax-free
reorganizations, but instead is a relatively
broad exception that applies to the acqui-
sition of any interest in a C corporation,
provided that no more than 50 percent of
the C corporation’s gross asset value con-
sists of life insurance contracts. This ex-
ception is one of a number of exceptions
in the proposed regulations intended to
provide relief for indirect acquisitions in
which acquisition of the underlying life
insurance contract interest likely was not
a significant motivating factor for the ac-
quisition. The final regulations preserve
the different results for stock and asset
reorganizations because there are signifi-
cant differences between these two types
of reorganizations, and the Treasury De-
partment and the IRS have concluded
that those distinctions justify different
treatment for purposes of sections 101
and 6050Y. In addition, no exception is
provided in the final regulations that ex-
cludes reorganizations from the definition
of a reportable policy sale. Rather, there
are exclusions based on the application of
the definitions of substantial relationships
as mandated by the statute and exceptions
for certain indirect acquisitions that may
produce different results in different types
of reorganizations.
One reason for treating indirect and di-
rect acquisitions of life insurance contract
interests differently is that an acquirer of
an interest in an entity may have limited
ability to determine what types of assets
an entity owns, or to obtain from the en-
tity information necessary to report on
the entity’s assets. Thus, for example, the
proposed regulations provide a reportable
policy sale exception for the acquisition
of a small (five percent or less) interest in
any entity, unless more than 50 percent of
the entity’s gross asset value consists of
life insurance contracts. See §1.101-1(c)
(2)(iii)(B) of the proposed regulations. In
addition, in the case of a C corporation, a
corporate level income tax applies to cor-
porate earnings in addition to income tax
on distributions at the shareholder level.
As a result, C corporations are not fre-
quently used as vehicles for investing in
life insurance contracts covering insureds
with respect to which the corporation does
not have a substantial business, financial,
or family relationship at the time the con-
tract is issued. For this reason, the pro-
posed regulations provide a more gener-
ous exception for acquisitions of interests
in a C corporation, provided that no more
than 50 percent of the C corporation’s
gross asset value consists of life insurance
contracts, as determined under §1.101-
1(f)(4) of the proposed regulations. See
§1.101-1(e)(3)(ii) of the proposed regula-
tions.
4
After the TCJA amendments to sec-
tion 101, the fact that the transfer of a life
insurance contract occurs in a carryover
basis transaction qualifying under section
101(a)(2)(A) (such as a tax-free reorgani-
zation) is no longer sufficient to avoid the
limit on the amount of life insurance poli-
cy proceeds that are excludable from gross
income under the section 101(a)(1) trans-
fer for value rule. Rather, Congress pro-
vided that the carryover basis exception in
section 101(a)(2)(A) does not apply unless
the transferee also has a substantial family,
business, or financial relationship with the
insured. Under the proposed regulations,
in the case of life insurance contracts
transferred in an asset reorganization, the
surviving corporation could, for example,
establish that a substantial business rela-
tionship exists by determining that the life
insurance policies transferred in the re-
organization cover insureds who are key
persons of, or materially participate in, an
active trade or business of the acquirer as
owners, employees, or contractors. See
§1.101-1(d)(2)(i) of the proposed regu-
lations. The surviving corporation could
also establish that a substantial business
relationship exists by determining that
the life insurance contracts cover insureds
who either (i) are officers, directors or
employees of the business being acquired
immediately before the acquisition or (ii)
previously were directors, highly com-
pensated employees or highly compen-
sated individuals within the meaning of
section 101(j)(2)(A)(ii) and the surviving
corporation will have ongoing financial
obligations with respect to these individ-
uals after the acquisition (such as retire-
ment obligations). See §1.101-1(d)(2)(ii)
of the proposed regulations. Corporations
must track this data annually for purposes
of section 101(j) corporate owned life in-
surance (COLI) reporting obligations and
related recordkeeping, so it should not be
overly burdensome to obtain this informa-
tion. Additionally, in an asset reorganiza-
tion, it would in any case be necessary to
4
Section 1.101-1(f)(4) of the final regulations clarifies that the gross value of assets means, with respect to any entity, the fair market value of the entity’s assets, including assets beneficially
owned by the entity under §1.101-1(f)(1) of the final regulations as a beneficial owner of a partnership, trust, or other entity. Accordingly, the 50 percent test in §1.101-1(e)(3)(ii) of the final
regulations applies to a C corporation’s assets and the assets held by any partnership, trust, or other entity beneficially owned by the C corporation.

Bulletin No. 2019–47 1061 November 18, 2019
review the life insurance contracts directly
acquired on a contract-by-contract basis in
order to update insurance contract owner-
ship and beneficiary information with the
relevant insurance company.
It is possible that an asset acquisition
could result in the loss of the complete
exclusion of death benefits from income
with respect to some COLI policies that
cover insureds who are not employed by
the target immediately before the acquisi-
tion or employed by the acquirer after the
acquisition and with respect to whom the
acquirer has no ongoing obligations to pay
retirement or other benefits. However, the
Treasury Department and the IRS have
not identified any clear policy reason why
that tax benefit should carry over when
ownership of the insurance policy is trans-
ferred. The indirect transfer exceptions in
the proposed regulations that could permit
COLI benefits to be retained with respect
to some policies covering no-longer-con-
nected officers, directors, and employees
apply only when ownership of the insur-
ance policy is not transferred, such as in
a stock reorganization. These exceptions
reflect a weighing by the Treasury Depart-
ment and the IRS of information collec-
tion burdens versus potential for abuse in
indirect acquisition scenarios.
The commenter also recommended
modifying the language in Example 8 of
§1.101-1(g)(8) of the proposed regula-
tions to clarify that the example is intend-
ed only to illustrate application of the rule
under §1.101-1(d) of the proposed regu-
lations and is not intended to imply that,
without the insured’s current employment
by the acquired corporation, the trans-
action would be treated as a reportable
policy sale. Example 8 of §1.101-1(g)
(8) of the proposed regulations describes
a tax-free reorganization in which a cor-
poration transfers to an acquiring corpo-
ration its active trade or business and a
life insurance policy on the life of a cur-
rent employee that was acquired from the
employee. The example concludes that,
because the insured was an employee of
the target corporation at the time of the
tax-free reorganization, and the acquiring
corporation carries on the acquired trade
or business, the transfer in the tax-free
reorganization is not a reportable policy
sale because the acquirer has a substan-
tial business relationship with the insured
under §1.101-1(d)(2)(ii) of the proposed
regulations. The commenter observed that
the example suggests that the transfer of
the policy as part of the tax-free reorga-
nization described in the example would
not have qualified for an exception from
being treated as a reportable policy sale
under the proposed regulations absent the
existence of the substantial business rela-
tionship. The commenter’s understanding
of the example is correct. The substantial
business relationship is necessary for the
tax-free reorganization in the example to
avoid being treated as a reportable policy
sale. As discussed in this section of this
Summary of Comments and Explana-
tion of Revisions, the Treasury Depart-
ment and the IRS have not adopted the
commenter’s recommendation regarding
amendments to §1.101-1(e)(3)(ii), and
therefore have not revised the example in
the final regulations.
This commenter also recommended a
related change to §1.101-1(d)(4)(i) of the
proposed regulations. Under §1.101-1(d)
(4)(i) of the proposed regulations, an in-
direct acquirer is deemed to have a sub-
stantial business or financial relationship
with the insured if the direct holder of the
interest in the life insurance contract has a
substantial business or financial relation-
ship with the insured immediately before
and after the date the indirect acquirer ac-
quires its interest. Section 1.101-1(d)(4)
(i) of the proposed regulations provides
relief for acquirers who do not hold their
interest in the relevant life insurance con-
tracts directly, when the direct holder of
those interests has a substantial business
or financial relationship with the insured
before and after the acquisition. The De-
partment of Treasury and the IRS have
determined that it is not appropriate to
treat an indirect acquisition of an interest
in a life insurance contract as a report-
able policy sale when the direct owner of
the interest in the life insurance contract
does not change and the direct owner has
a substantial family, business, or finan-
cial relationship with the insured. The
commenter recommended modification
of §1.101-1(d)(4)(i) of the proposed reg-
ulations to eliminate what the commenter
describes as disparate treatment that arises
depending on the type of merger transac-
tion the acquirer undertakes or whether
after the merger the insured remains with
the company or retains the right to retire-
ment or other post-employment benefits.
First, the commenter observed that, in
a tax-free merger in which the target goes
out of existence, the direct holder of the
life insurance contract no longer exists,
and therefore would no longer have any
relationship with the insured. According-
ly, the acquirer cannot be deemed to have
a substantial business or financial rela-
tionship with the insured under §1.101-
1(d)(4)(i) of the proposed regulations.
However, in a tax-free merger in which
the target does not survive, §1.101-1(d)(4)
(i) of the proposed regulations would not
apply because the acquirer would own the
insurance contract directly. An acquirer
that holds its interest in the relevant life
insurance contract directly must deter-
mine whether it has a substantial family,
business, or financial relationship with the
insured under §1.101-1(d) of the proposed
regulations at the time of the acquisition.
Second, the commenter suggested that
there are situations in which the insured’s
employment with the target company is
terminated as a result of a merger or acqui-
sition, and the insured has no continuing
relationship with the surviving company
that retains the life insurance contract. The
commenter observed that, in such cases,
the “after the date of the acquisition”
prong of §1.101-1(d)(4)(i) of the proposed
regulations cannot be satisfied. The com-
menter recommended modifying §1.101-
1(d)(4)(i) of the proposed regulations to
provide that the acquirer of an interest in a
life insurance contract in a tax-free merger
is deemed to have a substantial business
or financial relationship with the insured
if the target has a substantial business or
financial relationship with the insured im-
mediately prior to the merger, provided
the acquirer does not otherwise transfer
any interest in the life insurance contract
in a transaction treated as a reportable pol-
icy sale. The commenter also recommend-
ed that the rule specifically state that the
fact that the surviving company continues
to hold, after the merger, the contract on
the life of an individual with whom the
target had a substantial financial or busi-
ness relationship is the determinative fac-
tor under this modified rule.
The proposed modification is not adopt-
ed because, although §1.101-1(d)(4)(i) of
the proposed regulations generally would

November 18, 2019 1062 Bulletin No. 2019–47
not apply to the situations referenced by the
commenter, the proposed regulations al-
ready include exceptions that may apply in
the situations referenced by the comment-
er. In a tax-free merger in which the target
does not survive, §1.101-1(d)(4)(i) of the
proposed regulations would not apply be-
cause the acquirer would have a direct ac-
quisition of any interest in a life insurance
contract acquired from the target. Howev-
er, the acquirer does not have a reportable
policy sale if the acquirer has a substantial
family, business, or financial relationship
with the insured. Under §1.101-1(d)(2)(ii)
of the proposed regulations, the surviving
company has a substantial business rela-
tionship with the insured, and therefore has
not acquired its interest in the life insurance
contract on the insured’s life in a reportable
policy sale, if: (1) the insured is an employ-
ee within the meaning of section 101(j)(5)
(A) of the acquired trade or business imme-
diately preceding the acquisition, and (2)
the surviving company either carries on the
acquired trade or business or uses a signifi-
cant portion of the acquired business assets
in an active trade or business that does not
include investing in interests in life insur-
ance contracts. Accordingly, the proposed
regulations already include a rule similar to
the one requested by the commenter that is
applicable to direct acquisitions of interests
in life insurance contracts (such as acqui-
sitions resulting from tax-free mergers in
which the target does not survive).
5. Comments and Changes Relating to
§1.101-1(d) of the Proposed Regulations
Section 1.101-1(d) of the proposed
regulations defines the terms substantial
family relationship, substantial business
relationship, and substantial financial re-
lationship, and provides special rules for
applying these definitions. This section of
this Summary of Comments and Explana-
tion of Revisions discusses comments that
generally relate to the definitions and spe-
cial rules in §1.101-1(d) of the proposed
regulations.
A. Beneficial owners with a combination
of substantial relationships
Under §1.101-1(d)(1) of the proposed
regulations, a substantial family relation-
ship exists between the insured and a
partnership, trust, or other entity if all of
the beneficial owners of that partnership,
trust, or other entity have a substantial
family relationship with the insured. A
partnership, trust, or other entity may it-
self have a substantial business or finan-
cial relationship with the insured under
§1.101-1(d)(2) or (3) of the proposed reg-
ulations.
One commenter on the proposed reg-
ulations recommended that a transfer to a
trust, partnership, or other entity not be a
reportable policy sale within the meaning
of section 101(a)(3) if all of the beneficial
owners of the trust, partnership, or other
entity have a substantial family, business,
or financial relationship with the insured.
The Treasury Department and the IRS
have determined it would be appropriate
to expand the definition of substantial
family, business, or financial relationship
to include the relationship between the in-
sured and a trust, partnership, or other en-
tity, every beneficial owner of which has
a substantial family, business, or financial
relationship with the insured. According-
ly, §1.101-1(d)(4)(iii) of the final regula-
tions provides this expanded definition.
The commenter also suggested that
the definition of “family member” under
§1.101-1(f)(3) should include charities to
which the insured has given substantial
financial support or significant volunteer
support. Another commenter suggested
that a trust with beneficiaries that include
both individual family members and a
charity with a substantial financial rela-
tionship to the insured should qualify as
a “family member.” Under §1.101-1(d)
(3)(iii) of the proposed regulations, a
substantial financial relationship exists
between the insured and acquirer if the
acquirer is an organization described in
sections 170(c), 2055(a), and 2522(a) that
previously received financial support in
a substantial amount or significant vol-
unteer support from the insured. Under
either of the approaches suggested by the
commenters, the acquisition of an interest
in a life insurance contract by a trust with
beneficiaries that include both individuals
who are family members of the insured
and a charity described in §1.101-1(d)(3)
(iii) of the proposed regulations would not
be a reportable policy sale. The Treasury
Department and the IRS agree that the ex-
istence of a trust beneficiary that is a char-
ity described in §1.101-1(d)(3)(iii) of the
proposed regulations should not cause a
transfer to that trust to be a reportable pol-
icy sale. However, rather than expanding
the definition of “family member” under
§1.101-1(f)(3) of the proposed regulations
as suggested by the commenters, the Trea-
sury Department and the IRS have adopt-
ed a more direct and expansive approach
to address the commenters’ concerns by
adding a new rule in the final regulations
providing that any combination of the de-
scribed substantial relationships between a
trust’s beneficiaries and the insured is suf-
ficient to qualify the transfer to that trust
for the reportable policy sale exclusion.
See §1.101-1(d)(4)(iii) of the final regu-
lations. As a result, under the final regu-
lations, there is no need to also expressly
treat a trust established and maintained for
the primary benefit of the insured or one or
more of the insured’s family members as a
family member of the insured. Therefore,
the final regulations do not include such a
trust in the definition of family member.
B. Substantial financial relationships
with charities
Under §1.101-1(d)(3)(iii) of the pro-
posed regulations, the acquirer of an in-
terest in a life insurance contract has a
substantial financial relationship with the
insured if the acquirer is an organization
described in sections 170(c), 2055(a), and
2522(a) that previously received financial
support in a substantial amount or signif-
icant volunteer support from the insured.
One commenter on the proposed regu-
lations suggested that this provision be
expanded to include any other such orga-
nization with which the insured has sub-
stantial personal ties, such as the donor or
a family member having benefitted from
the charitable organization’s services in
some manner. The commenter stated that
it is not uncommon for a donor to both
(i) contribute very modestly, if at all, to
a charity during life because the donor is
concerned about having sufficient retire-
ment income, and (ii) want to benefit the
charity when the donor no longer needs to
preserve retirement income sources. The
commenter also stated that donors often
benefit charities through either a split in-
terest trust described in section 170(f)(2)
or a bargain sale described in §1.1011-2.

Bulletin No. 2019–47 1063 November 18, 2019
The Treasury Department and IRS
have not adopted this suggestion in the
final regulations because it would be chal-
lenging to determine when personal ties
with a charity are substantial enough to
constitute a substantial financial relation-
ship with the insured, in the absence of a
significant donation of time or property.
Also, there generally will be little detri-
ment to a charity as a result of an acqui-
sition (whether gratuitous or for value)
of an interest in a life insurance contract
in a reportable policy sale. Nevertheless,
as discussed later in this section, the final
regulations provide that the category of
charities considered to have a substantial
financial relationship with an insured may
be expanded in the future in guidance pub-
lished in the Internal Revenue Bulletin.
Treating a gratuitous transfer of an in-
terest in a life insurance contract (or the
part of the transfer that is gratuitous, in
the case of a bargain sale) as a reportable
policy sale does not affect the amount
of proceeds excludable by the gratuitous
transferee. Section 1.101-1(b)(2)(i) of the
final regulations applies to all gratuitous
transfers of interests in life insurance
contracts and generally provides that the
transferee in a gratuitous transfer of an
interest in a life insurance contract steps
into the shoes of the transferor and may
exclude death benefits paid under the con-
tract from gross income to the same extent
that the transferor would have been able
to exclude the benefits, in addition to the
premiums and other amounts paid by the
transferee. Furthermore, treatment of a
gratuitous transfer as a reportable policy
sale does not result in reporting obliga-
tions for the gratuitous transferee because
the gratuitous transferor is not a report-
able policy sale payment recipient. See
§§1.6050Y-1(a)(16) and 1.6050Y-2(a) of
the final regulations.
Even if a charity purchased some or all
of its interest in a life insurance contract
for valuable consideration, a charity gen-
erally is not subject to Federal income tax
on its income (including insurance policy
proceeds) unless the income arises from
an unrelated trade or business. Thus, the
charity’s obligation in case of a purchase
generally would be limited to acquirer re-
porting under §1.6050Y-2, which merely
requires providing on Form 1099-LS in-
formation that should be readily available
to the charity. This reporting provides im-
portant information regarding the sale to
reportable policy sale payment recipients
and the IRS.
In response to the commenter’s con-
cerns, however, the final regulations pro-
vide that the IRS may publish guidance
in the Internal Revenue Bulletin (see
§601.601(d)(2) of this chapter) describing
other situations in which a substantial fi-
nancial relationship exists between the in-
sured and an acquirer that is an organiza-
tion described in sections 170(c), 2055(a),
and 2522(a). See §1.101-1(d)(3)(iii) of the
final regulations.
C. Substantial financial relationships and
BOLI pooling transactions
One commenter on the proposed reg-
ulations requested confirmation that a re-
portable policy sale will not arise when a
life insurance policy is involved in a trans-
action that pools bank-owned life insur-
ance (BOLI). The commenter explained
that businesses, such as banks, commonly
promise certain pre-and post-retirement
benefits to their employees, such as retir-
ee health care benefits, which can result
in substantial liabilities for the businesses
that must be reflected on their financial
statements. The commenter described
BOLI as permanent, cash value life insur-
ance coverage on the lives of a bank’s of-
ficers, directors, and employees purchased
by the bank to fund such obligations infor-
mally and to establish assets on its finan-
cial statements to offset liabilities for the
promised benefits. The commenter stated
that BOLI owners typically hold the pol-
icies until the death benefits become pay-
able and use the benefits to fund the costs
of the employee benefits or to recover
such costs after the fact. The commenter
described BOLI pooling transactions as
transactions that pool the BOLI policies of
multiple banks for the continued purpose
of funding each bank’s employee bene-
fits, but in a more effective, centralized
way. The commenter described the initial
step of a BOLI pooling transaction as the
transfer by multiple unrelated banks of
their pre-existing BOLI policies to a part-
nership, in return for which each bank re-
ceives a partnership interest proportional
to the value of its contributed policies. The
commenter explained that the partnership
holds and manages the contributed poli-
cies and distributes death benefits among
the bank-partners pro rata based on their
respective partnership interests, which
is expected to help normalize cash flows
from the policies.
The commenter asserted that BOLI
pooling transactions are ordinary course
business transactions that should not be
treated as reportable policy sales because
they are not speculative and can be dis-
tinguished from sales of policies to third
parties because the intent and result is to
pool the policies among all the original
policyholders for the continued purpose
of funding their employee benefit liabil-
ities. The commenter noted that the IRS
has issued private letter rulings that con-
firm, directly or indirectly, that the car-
ryover basis exception to the transfer for
value rule in section 101(a)(2) applies to
a bank’s contribution of BOLI policies to
the partnership in a BOLI pooling transac-
tion, thereby preserving the tax-free char-
acter of the death benefits when paid to
the partnership. These rulings pre-date the
addition of section 101(a)(3) to the Code.
The reportable policy sale rules of section
101(a)(3) are in addition to the carryover
basis exception of section 101(a)(2). As a
result, policy transfers are ineligible for
the carryover basis exception if no sub-
stantial family, business, or financial rela-
tionship exists between the acquirer of an
interest in a life insurance contract and the
insured under that contract at the time of
the acquisition.
The commenter asserted that the pro-
posed regulations support the requested
treatment of BOLI pooling transactions
because a substantial financial relation-
ship exists between the acquirer and in-
sured. A substantial financial relationship
exists under §1.101-1(d)(3)(ii) of the pro-
posed regulations if the acquirer maintains
the life insurance contract on the life of
the insured to provide funds to purchase
assets or satisfy liabilities following the
death of the insured. The commenter as-
serted that this provision applies in BOLI
pooling transactions with respect to both
the bank and the partnership as follows:
(1) the partnership has a direct acquisi-
tion of life insurance policies, which it
maintains to satisfy liabilities following
the death of the insured, namely, the em-
ployee benefit liabilities of the bank-part-

November 18, 2019 1064 Bulletin No. 2019–47
ners for which they originally purchased
the policies; (2) the bank has an indirect
acquisition of life insurance policies con-
tributed by other banks to the partnership;
and (3) the bank maintains its indirect in-
terest in those policies to continue funding
the same employee benefit liabilities. The
commenter recommended clarification of
the regulations to confirm this treatment,
either by adding additional language to
the definition of substantial financial re-
lationship, or by adding an example that
applies that provision to the BOLI pooling
transaction. Alternatively, the commenter
suggested a separate exception to the re-
portable policy sale definition.
The final regulations do not adopt the
commenter’s requested changes because
the changes would be inconsistent with
the statute. The proposed regulations do
not support, and were not intended to
support, the requested treatment of BOLI
pooling transactions.
First, the partnership described by the
commenter does not have a substantial
family, business, or financial relation-
ship with the insureds under the proposed
regulations. Specifically, it does not have
a substantial financial relationship with
any insured under §1.101-1(d)(3)(ii) of
the proposed regulations because it does
not maintain the life insurance contract
on the life of the insured to provide funds
for the partnership to purchase assets or
satisfy liabilities following the insured’s
death. As described by the commenter,
the partnership maintains the life insur-
ance contracts to provide its partners, the
banks, with funds to satisfy the banks’
employee benefit liabilities. Accordingly,
the partnership’s acquisition of the life
insurance contracts in the circumstances
described is a reportable policy sale that
must be reported under section 6050Y and
§1.6050Y-2 of the proposed regulations.
Second, the definition of a substantial
financial relationship in §1.101-1(d)(3)
(ii) of the proposed regulations was not
intended to cover relationships as tenu-
ous as those existing between the indirect
acquirers (the banks) and the insureds in
the BOLI pooling transactions described
by the commenter. Section 1.101-1(d)(3)
(ii) of the proposed regulations was in-
tended to cover situations in which the
life insurance contract is held to provide
funds to purchase assets or satisfy liabili-
ties, when the need for the asset purchases
or liability payments results from the in-
sured’s death. In the situation described by
the commenter, a bank does not have this
kind of relationship with the insureds un-
der life insurance contracts contributed to
the partnership by other banks. However,
in the circumstances described, because
the partnership acquires the life insurance
contracts in a reportable policy sale that
must be reported under section 6050Y(a)
and §1.6050Y-2 of the proposed regula-
tions, the bank’s indirect acquisition of
the life insurance contracts is not a report-
able policy sale, provided the partnership
complies with the reporting requirements.
See §1.101-1(c)(2)(iii)(A) of the proposed
regulations.
D. Substantial financial relationships
under §1.101-1(d)(3)(ii)
A substantial financial relationship ex-
ists under §1.101-1(d)(3)(ii) of the pro-
posed regulations if the acquirer maintains
the life insurance contract on the life of
the insured to provide funds to purchase
assets or satisfy liabilities following the
death of the insured. As described in sec-
tion 5.C of this Summary of Comments
and Explanation of Revisions, this defini-
tion was intended to apply in situations in
which the life insurance contract is held
to provide funds to purchase assets or sat-
isfy liabilities following the death of the
insured, when the need for the asset pur-
chases or liability payments results from
the insured’s death. Accordingly, §1.101-
1(d)(3)(ii) of the final regulations revises
the definition to provide that a substantial
financial relationship exists between the
acquirer and insured if the acquirer main-
tains the life insurance contract on the life
of the insured to provide funds to purchase
assets of or to satisfy liabilities of the in-
sured or the insured’s estate, heirs, lega-
tees, or other successors in interest, or to
satisfy other liabilities arising upon or by
reason of the death of the insured.
6. Comments and Changes Relating to
§1.101-1(a) of the Proposed Regulations
The proposed regulations would re-
move the second sentence of §1.101-1(a)
(1) of the existing regulations, which
states: “Death benefit payments having
the characteristics of life insurance pro-
ceeds payable by reason of death under
contracts, such as workmen’s compensa-
tion insurance contracts, endowment con-
tracts, or accident and health insurance
contracts, are covered by this provision.”
As noted in the preamble to the proposed
regulations, this update reflects the addi-
tion of section 7702 to the Code in 1984.
See 84 FR 11015.
One commenter stated that it is import-
ant that no changes be made with respect
to the second sentence because the ben-
efits described therein were written into
older policies, some of which are still in
effect, and changing the rules would neg-
atively impact policyholders who have
long relied on the appropriate exclusion
of these death benefits from income. The
commenter further stated that there is a
longstanding and extensive body of court
decisions and IRS rulings that establish
the conditions under which such benefits
qualify for treatment as life insurance pro-
ceeds.
In response to these comments, the fi-
nal regulations revise, rather than remove,
the second sentence of §1.101-1(a)(1) of
the existing regulations to clarify that the
sentence only applies to contracts issued
on or before December 31, 1984, the ef-
fective date of section 7702.
7. Comments and Changes Relating to
§1.6050Y-1 of the Proposed Regulations
Section 1.6050Y-1(a) of the proposed
regulations provides definitions for terms
used in §§1.6050Y-1 through -4 of the
proposed regulations. This section of this
Summary of Comments and Explanation
of Revisions discusses comments received
that generally relate to §1.6050Y-1(a) of
the proposed regulations.
A. Definition of issuer
Section 6050Y(d)(3) defines issuer to
mean any life insurance company that
bears the risk with respect to a life insur-
ance contract on the date any return or
statement is required to be made under
section 6050Y. The definition of issuer
under the proposed regulations depends
on the context in which the term is used.
In general, the term “issuer” means, on
any date, with respect to any interest in

Bulletin No. 2019–47 1065 November 18, 2019
a life insurance contract, any person that
bears any part of the risk with respect to
the life insurance contract on that date
and any person responsible on that date
for administering the contract, including
collecting premiums and paying death
benefits. See §1.6050Y-1(a)(8)(i) of the
proposed regulations. For instance, if a
reinsurer reinsures on an indemnity ba-
sis all or a portion of the risks that the
original issuer (and continuing contract
administrator) might otherwise have in-
curred with respect to a life insurance
contract, both the reinsurer and the orig-
inal issuer of the contract are issuers of
the life insurance contract.
One commenter noted that this defini-
tion of issuer in the proposed regulations
appears to be a reversal of position from
a statement in Notice 2018-41 that, ac-
cording to the commenter, appropriately
proposed to exclude a “reinsurer in an in-
demnity contract covering all or a portion
of the risks that the original issuer (and
continuing contract administrator) might
otherwise have incurred with respect to a
life insurance contract.” In Notice 2018-
41, the Treasury Department and the IRS
announced the intent to limit the informa-
tion reporting obligations imposed under
§6050Y(b) to the life insurance company
that is responsible for administering the
contract, including paying death benefits
under the life insurance contract to reduce
the burden on reporting life insurance
companies and prevent duplicative report-
ing. Notice 2018-41 indicated that, under
the proposed regulations, the reporting
obligations would not apply, for instance,
to a reinsurer in an indemnity contract
covering all or a portion of the risks that
the original issuer (and continuing con-
tract administrator) might otherwise have
incurred with respect to a life insurance
contract.
Under the proposed regulations, al-
though the definition of issuer is broad
enough that information reporting obli-
gations could apply to a reinsurer, report-
ing obligations in practice will generally
be limited to the life insurance company
that is responsible for administering the
life insurance contract, or its designee.
The proposed regulations facilitate this
result by providing relief for an issuer
that is subject to reporting obligations,
but is not responsible for administer-
ing the contract. For purposes of infor-
mation reporting by the acquirer under
section 6050Y(a) and §1.6050Y-2 of the
proposed regulations, the “6050Y(a) is-
suer” to which the acquirer must furnish
an RPSS is the issuer responsible for ad-
ministering the life insurance contract,
including collecting premiums and pay-
ing death benefits under the contract, on
the date of the reportable policy sale.
See §1.6050Y-1(a)(8)(ii) of the proposed
regulations. For purposes of information
reporting by the issuer under section
6050Y(b) and §1.6050Y-3 of the proposed
regulations, reporting is required by any
“6050Y(b) issuer” that receives an RPSS
or notice of a transfer to a foreign person,
or its designee. See §1.6050Y-1(a)(8)(iii)
(A) and (B) of the proposed regulations.
Accordingly, with respect to reportable
policy sales, 6050Y(b) issuers responsi-
ble for reporting under section 6050Y(b)
and §1.6050Y-3 of the proposed regula-
tions will generally be issuers responsi-
ble for administering the life insurance
contracts. No other issuer should receive
an RPSS. Also, with respect to a transfer
to a foreign person, if any issuer other
than the issuer responsible for adminis-
tering the life insurance contract receives
notice of the transfer, it will not be con-
sidered a 6050Y(b) issuer if it provides
the 6050Y(b) issuer responsible for ad-
ministering the life insurance contract
with notice of the transfer and any avail-
able information necessary to accomplish
reporting under section 6050Y(b) and
§1.6050Y-3 of the proposed regulations.
See §1.6050Y-1(a)(8)(iii)(B) of the pro-
posed regulations. The final regulations
clarify that an issuer other than the issuer
responsible for administering the life in-
surance contract will not be considered a
6050Y(b) issuer if it received notice of a
transfer to a foreign person from the issu-
er responsible for administering the life
insurance contract. See §1.6050Y-1(a)
(8)(iii)(B) of the final regulations. Ad-
ditionally, a 6050Y(b) issuer’s reporting
obligation is deemed satisfied if the in-
formation required by section 6050Y(b)
and §1.6050Y-3 of the final regulations
is timely reported by any other 6050Y(b)
issuer. See §1.6050Y-3(b) of the final
regulations.
The commenter recommended that
the definition of issuer expressly exclude
a reinsurer in an indemnity contract cov-
ering all or a portion of the risks that the
original issuer (or its continuing contract
administrator) might otherwise have in-
curred with respect to a life insurance
contract. The commenter stated that in
most instances of indemnity reinsurance
transactions, the original insurer con-
tinues to administer the life insurance
contracts, some or all of the underlying
risks of which the reinsurer may have
assumed, or alternatively, the parties se-
lect a third-party contract administrator
who assumes such a role, which includes
managing ownership changes and other
functions relating to contract administra-
tion and interfacing with policyholders.
The commenter asserted that if the ap-
proach in the proposed regulations is due
to any presumption that a reinsurer in an
indemnity reinsurance transaction may
be or may become privy to any informa-
tion relating to transfers to domestic or
foreign persons, such presumptions are
misplaced.
The final regulations do not adopt
the commenter’s proposal because a re-
insurer in an indemnity contract bears
risk with respect to the life insurance
contracts reinsured, and is therefore an
issuer under section 6050Y(d). It is thus
not appropriate to completely exclude an
indemnity reinsurer from the possibility
of being an issuer for reporting purposes.
However, the definition of 6050Y(b) is-
suer under the proposed and final regula-
tions is narrower than the definition of is-
suer in section 6050Y(d) and, consistent
with the intent expressed in Notice 2018-
41 to limit the information reporting obli-
gations imposed under section 6050Y(b)
to the life insurance company that is re-
sponsible for administering the contract,
will generally exclude a reinsurer in an
indemnity contract from reporting obli-
gations, as the commenter acknowledg-
es. Furthermore, §1.6050Y-1(a)(8)(iii)
(B) of the final regulations provides any
reinsurer in an indemnity contract that
is not the issuer responsible for admin-
istering the life insurance contract, but
nonetheless falls within the definition
of 6050Y(b) issuer, with a mechanism
to avoid that designation (by providing
notice and relevant information to the
6050Y(b) issuer responsible for adminis-
tering the contract).

November 18, 2019 1066 Bulletin No. 2019–47
B. Definition of notice of a transfer to a
foreign person
Section 6050Y(b) and §1.6050Y-3 of
the proposed regulations generally re-
quire reporting by an issuer upon notice
of a transfer of a life insurance contract
to a foreign person. The proposed regu-
lations define “notice of a transfer to a
foreign person” to mean any notice of a
transfer of a life insurance contract (that
is, a transfer of title to, possession of, or
legal ownership of the life insurance con-
tract) received by a 6050Y(b) issuer. See
§1.6050Y-1(a)(10) of the proposed regu-
lations. The proposed regulations further
provide that notice of a transfer to a for-
eign person includes information provid-
ed for nontax purposes, such as a change
of address notice for purposes of sending
statements or for other purposes, and in-
formation relating to loans, premiums, or
death benefits with respect to the contract,
unless the 6050Y(b) issuer knows that no
transfer of the contract has occurred or
knows the transferee is a United States
person. Id. For this purpose, a 6050Y(b)
issuer may rely on a Form W-9, “Request
for Taxpayer Identification Number and
Certification” or a valid substitute form
that meets the requirements of §1.1441-
1(d)(2) (substituting “6050Y(b) issuer”
for “withholding agent”), that indicates
the transferee is a United States person.
Id.
One commenter expressed apprecia-
tion that the proposed regulations exclude
from the definition of notice of a transfer
to a foreign person situations in which the
issuer knows that no transfer has occurred
or that the transferee is a United States
person. The commenter requested that the
definition be modified so that the obliga-
tion for an issuer to report under section
6050Y(b) and §1.6050Y-3 of the proposed
regulations is not triggered unless the is-
suer receives notice of a transfer of a life
insurance contract to a foreign person that
includes foreign indicia. Such foreign
indicia may include information provid-
ed for nontax purposes such as a change
of address notice to a foreign residence
or mailing address for purposes of send-
ing statements or for other purposes. The
commenter noted that section 6050Y(b)
requires issuers to identify transfers to
foreign persons to capture transfers that
may escape section 6050Y(a)(2) reporting
in the event that a foreign acquirer does
not comply with section 6050Y(a)(2) and
suggested that the foreign indicia require-
ment furthers this purpose by allowing
an issuer to identify a foreign acquirer as
foreign based on information the acquirer
provides to the issuer. This recommenda-
tion is adopted in §1.6050Y-1(a)(10) of
the final regulations.
C. Definition of estimate of investment in
the contract
Informal comments were received re-
garding the definition of the term “estimate
of investment in the contract” in the pro-
posed regulations. The commenter asked
whether the estimate of investment in the
contract with respect to a person includes
any amount paid by the person for the life
insurance contract or interest therein other
than premiums (such as, for example, the
amount paid for the contract or interest
therein in a transfer for value) and wheth-
er information about any other payments
must be provided to issuers and payors re-
porting the estimate of investment in the
contract. The definition in §1.6050Y-1(a)
(7)(ii) of the proposed regulations, which
is adopted without modification by the fi-
nal regulations, provides that the estimate
of investment in the contract is the aggre-
gate amount of premiums paid for the con-
tract by that person before that date, less
the aggregate amount received under the
contract by that person before that date to
the extent such information is known to or
can reasonably be estimated by the issuer
or payor. Accordingly, the only amounts
paid by a person that are included in the
estimate of investment in the contract with
respect to that person are the premiums
paid for the contract by that person. Issuers
and payors of reportable death benefits do
not need information about other amounts
paid for a life insurance contract or inter-
est therein to determine the estimate of
investment in the contract. Under section
6050Y(a)(2)(B) and §1.6050Y-2(d)(2)(i)
(A) of the final regulations, an acquirer
is not required to provide an issuer with
the amount of any reportable policy sale
payment when fulfilling its reporting obli-
gations under section 6050Y(a).
D. Definition of reportable policy sale
payments
Under section 6050Y(a) and
§1.6050Y-2(a) of the proposed regula-
tions, as a general matter, every person
that is an acquirer in a reportable policy
sale during any calendar year must file a
separate information return with the IRS
for each reportable policy sale payment
recipient, including any seller that is a
reportable policy sale payment recipient.
A reportable policy sale payment recipi-
ent is defined in §1.6050Y-1(a)(16) of the
proposed regulations as any person that
receives a reportable policy sale payment
in a reportable policy sale, as well as any
broker or other intermediary that retains a
portion of the cash or other consideration
transferred in a reportable policy sale. Un-
der section 6050Y(d)(1), the term “pay-
ment” means, with respect to any report-
able policy sale, the amount of cash and
the fair market value of any consideration
transferred in the sale. A reportable policy
sale payment is defined by §1.6050Y-1(a)
(15) of the proposed regulations as the to-
tal amount of cash and the fair market val-
ue of any other consideration transferred,
or to be transferred in a reportable policy
sale, including any amount of a reportable
policy sale payment recipient’s debt as-
sumed by the acquirer in a reportable pol-
icy sale. The final regulations clarify that
consideration in this case means consider-
ation reducible to a money value, which
is the standard used in §1.101-1(f)(5) of
the proposed and final regulations for de-
termining whether a transfer of an interest
in a life insurance contract is a transfer for
valuable consideration. See §1.6050Y-1(a)
(15) of the final regulations.
The preamble to the proposed regu-
lations requested information about the
types and timing of payments made by
acquirers in reportable policy sales, in-
cluding the types of ancillary costs and ex-
penses paid in reportable policy sales, the
recipients of those payments, and existing
reporting requirements applicable to those
payments. See 84 FR 11009, 11019. One
commenter on the proposed regulations
described ancillary payments made by an
acquirer in connection with the acquisi-
tion of a life insurance policy as including
escrow agent fees and expenses, fees and

Bulletin No. 2019–47 1067 November 18, 2019
expenses of securities intermediaries, fees
paid to companies that assist the acquirer
in evaluating a life insurance policy, fees
for policy services, origination fees, fees
to life expectancy report providers, mis-
cellaneous other administrative costs such
as mailing and courier charges, and legal
fees. The commenter asserted that these
are all normal and customary transaction
costs paid by the acquirer in the ordinary
course of its business in connection with
the routine process of acquiring a life in-
surance policy and that the aggregate of
such costs in each transaction is relatively
small in contrast to the aggregate amount
of the consideration paid to the seller of
the policy and the seller’s broker, if any.
The commenter stated that these minor
costs and expenses are primarily admin-
istrative in nature, and the IRS is already
receiving information regarding the pay-
ment of fees in connection with existing
reporting required under section 6041.
The commenter recommended that such
ancillary costs be specifically excluded
from the definition of reportable policy
sale payments.
Another commenter also recommend-
ed excluding ancillary fees from the defi-
nition of reportable policy sale payments.
Alternatively, the commenter suggested
that recipients of such ancillary fees could
be excluded from the definition of report-
able policy sale payment recipients. The
commenter stated that the sale of a single
life insurance contract from the insured
individual to a purchaser on the second-
ary market may involve several transfers
and implicate several potential recipients
of a reportable policy sale payment, as
that term is defined by the proposed reg-
ulations. The commenter described the
parties that commonly receive ancillary
fees in connection with the sale of a life
insurance contract as including securities
intermediaries, escrow agents (including
separate sub-escrow agents), policy ser-
vicers, and other service providers. The
commenter asserted that these ancillary
fees already should be otherwise reported
to the IRS under other provisions of the
Code and Treasury Regulations and that
including these fees as reportable policy
sale payments adds a significant adminis-
trative burden to acquirers given the mul-
titude of potential reportable policy sale
payment recipients.
The definition of “payment” in section
6050Y(d)(4) is broad, and the legislative
history does not suggest that this term was
intended to exclude any payment made
in a reportable policy sale, such as the
ancillary fees described by the comment-
ers. Accordingly, the recommendations to
exclude ancillary fees from the definition
of reportable policy sale payments or ex-
clude recipients of ancillary fees from the
definition of reportable policy sale pay-
ment recipients are not adopted. However,
after consideration of these comments, the
Treasury Department and the IRS have
determined that an acquirer that reports a
reportable policy sale payment made to a
person other than the seller under section
6041 or section 6041A will be deemed to
have satisfied its reporting requirements
under section 6050Y(a) and §1.6050Y-
2 of the final regulations with respect to
that payment. See §1.6050Y-2(f)(2) of the
final regulations. The Treasury Depart-
ment and the IRS have also determined to
exclude from the definition of reportable
policy sale payment recipient any person,
other than the seller, that receives aggre-
gate payments of less than $600 with re-
spect to that reportable policy sale. See
§1.6050Y-1(a)(16)(ii) of the final regula-
tions.
8. Comments and Changes Relating to
§1.6050Y-2 of the Proposed Regulations
Section 6050Y(a) requires reporting
of payments made by an acquirer in a re-
portable policy sale. Section 1.6050Y-2(a)
of the proposed regulations sets forth the
requirement of information reporting ap-
plicable to acquirers in reportable policy
sales under section 6050Y(a)(1) and de-
scribes the information that must be re-
ported. This section of this Summary of
Comments and Explanation of Revisions
discusses comments that generally relate
to §1.6050Y-2 of the proposed regula-
tions.
A. Requests to limit the definition of
acquirer or expand unified reporting
option
Under §1.6050Y-1(a)(1) of the pro-
posed regulations, an “acquirer” is any
person that acquires an interest in a life
insurance contract (through a direct or in-
direct acquisition of the interest) in a re-
portable policy sale. Section 1.6050Y-1(a)
(6) of the proposed regulations adopts by
cross-reference the definition of “interest
in a life insurance contract” set forth in
§1.101-1(e) of the proposed regulations.
Section 6050Y(a) imposes reporting re-
quirements on an acquirer in a reportable
policy sale.
One commenter on Notice 2018-41
recommended that the definition of ac-
quirer be limited to any person who ac-
quires a direct or indirect economic in-
terest in a life insurance contract and not
include any person who acquires title to a
life insurance contract as an agent or in-
termediary for another person and whose
sole economic interest in the life insur-
ance contract is security for the payment
of a fee to act as an agent or intermedi-
ary. For this purpose, the commenter not-
ed, a partnership or a trust (other than a
grantor trust) would not be treated as an
agent or intermediary. The commenter
observed that, in many transactions that
will be treated as reportable policy sales,
title to the life insurance contract is held in
the name of a securities intermediary, but
beneficial ownership of the policy is held
by an investor. The commenter asserted
that, although the securities intermedi-
ary may, in a given case, have a portion
of the information required to be reported
by section 6050Y, burdening the securities
intermediary with a reporting obligation is
beyond the scope of its duties.
Commenting on the proposed regula-
tions, this commenter again recommended
that securities intermediaries should not be
deemed to be acquirers in life settlement
transactions because they are not likely to
know, among other things, the purchase
price paid to the seller, fees paid to a life
settlement broker, or ancillary fees paid in
connection with the acquisition of a poli-
cy. The commenter suggested that, if secu-
rities intermediaries are deemed acquirers,
the regulations could instead provide for
elective, substitute reporting by the ben-
eficial owner of the life insurance policy
under a securities account agreement. In
other words, for a transaction in which a
securities intermediary is involved, either
the securities intermediary as the legal ti-
tle holder or the beneficial owner of the
life insurance policy under the securities
account agreement could be responsi-

November 18, 2019 1068 Bulletin No. 2019–47
ble for the reporting required by section
6050Y(a) and §1.6050Y-2 of the proposed
regulations.
In response to these comments,
§1.6050Y-2(b) of the final regulations
expands the situations in which acquir-
ers may use unified reporting. Under
§1.6050Y-2(b) of the proposed regu-
lations, the reporting requirement in
§1.6050Y-2(a) of the proposed regulations
applies to each acquirer in a series of pre-
arranged transfers of an interest in a life in-
surance contract. However, §1.6050Y-2(b)
of the proposed regulations provides for
“unified reporting.” In a series of prear-
ranged transfers, an acquirer’s reporting
obligation is deemed satisfied if the infor-
mation required by §1.6050Y-2(a) of the
proposed regulations with respect to that
acquirer is timely reported on behalf of
that acquirer in a manner that is consistent
with forms, instructions, and other IRS
guidance by one or more other acquirers or
by a third party information reporting con-
tractor. One commenter expressed support
for the concept set forth in §1.6050Y-2(b)
of the proposed regulations that authoriz-
es but does not mandate unified reporting
in certain situations. The final regulations
retain this approach of authorizing, but
not mandating, unified reporting in cer-
tain situations. Additionally, in response
to comments requesting elective, substi-
tute reporting by the beneficial owner of
the life insurance policy under a securities
account agreement for a securities inter-
mediary with reporting obligations, the
final regulations expand the applicability
of this provision to include acquirers in si-
multaneous transfers, as well as acquirers
in a series of prearranged transfers.
Another commenter recommended that
the definition of acquirer be narrowed to
include only those acquirers that will ulti-
mately hold beneficial ownership of a life
insurance contract after a transfer, thus
excluding transitory interest holders from
the definition of acquirer. The commenter
stated that, under a plain reading of §1.101-
1(e)(1) of the proposed regulations, bene-
ficial owners as well as nominees and any
other person that holds legal title to any part
of a beneficial interest in any life insurance
contract for any amount of time during the
course of the transaction would be subject
to the acquirer reporting requirements of
the proposed regulations. The comment-
er suggested that the definition may be
over-inclusive given the realities of the life
settlement industry including, for instance,
the fact that service providers and their re-
spective securities intermediaries may tran-
sitorily hold legal title to a life insurance
contract during the course of a transaction.
Acknowledging that the proposed regula-
tions provide a unified reporting option, the
commenter objected to each such transitory
legal title holder being subject to the report-
ing requirements described in §1.6050Y-2
of the proposed regulations, despite likely
not having access to all the information re-
quired to sufficiently discharge its report-
ing obligations. This recommendation is
not adopted in the final regulations because
the option of unified reporting is available
in the situations described by the comment-
er and it should be feasible, as part of the
acquisition transaction, to assign section
6050Y reporting responsibilities to a par-
ty with the information needed to satisfy
the reporting requirements described in
§1.6050Y-2 of the final regulations.
B. Request to reduce or eliminate
reporting on tertiary market transactions
One commenter asked that the Treasury
Department and the IRS consider whether
reporting requirements imposed under sec-
tion 6050Y are appropriate to transactions
in the tertiary market (that is, with respect
to sales of life insurance contract interests
between investors, after the contract has
been purchased from the original policy-
holder). The commenter asserted that the
parties (that is, the acquirers and sellers)
involved in tertiary transactions in the life
settlement industry are already highly reg-
ulated, and the reporting requirements un-
der section 6050Y are unduly cumbersome
given that the tax information sought by the
IRS is already included in such parties’ au-
dited financial statements. This request to
eliminate or reduce reporting obligations
under section 6050Y with respect to tertia-
ry market transactions is not adopted in the
final regulations. Section 6050Y requires
reporting with respect to reportable policy
sales. That term is broadly defined by sec-
tion 101(a)(3) as the acquisition of an inter-
est in a life insurance contract, directly or
indirectly, if the acquirer has no substantial
family, business, or financial relationship
with the insured apart from the acquirer’s
interest in such life insurance contract.
Tertiary market transactions generally fall
within this definition, and therefore are re-
quired to be reported.
This commenter also suggested that in
the tertiary market, beneficial ownership of
a life insurance policy may be transferred
between different beneficial owners under
separate securities account agreements with
the same securities intermediary, without
any ownership or beneficiary changes on
the books and records of the issuer, so the
securities intermediary might be both the
seller and the acquirer of the policy interest
for purposes of section 6050Y reporting.
However, even though the securities inter-
mediary does not transfer its interest in the
life insurance contract as the legal title hold-
er in the transfer described, the previous
beneficial owner transfers its interest to the
new beneficial owner. Under the final reg-
ulations, as under the proposed regulations,
the new beneficial owner is the acquirer of
an interest in the life insurance contract un-
der §1.101-1(e)(3)(i) and §1.6050Y-1(a)(1)
and (3), and the previous beneficial owner
is the seller under §1.6050Y-1(a)(18)(i),
which defines “seller” to include any per-
son that holds an interest in a life insurance
contract and transfers that interest, or any
part of that interest, to an acquirer in a re-
portable policy sale.
C. Request to allow good faith effort
reporting
One commenter on the proposed
regulations observed that a situation
could arise in which a person acquires a
non-controlling interest in an entity that
holds direct interests in life insurance con-
tracts, and such entity has neither the ob-
ligation nor the willingness to provide the
indirect acquirer with information neces-
sary for the indirect acquirer to determine
whether it is subject to the reporting re-
quirements or to satisfy any reporting ob-
ligations. The commenter suggested that
this problem is exacerbated when there
are tiers of entities between the indirect
acquirer and the entity holding direct in-
terests in life insurance contracts. The
commenter recommended that an indirect
acquirer be considered to have complied
with the reporting requirements of section
6050Y(a) and §1.6050Y-2 of the proposed
regulations if it demonstrates that it has in

Bulletin No. 2019–47 1069 November 18, 2019
good faith requested information required
to comply with the reporting requirements
from the relevant entity or entities and
was unable to obtain such information by
providing to the IRS: (i) the information it
does have, (ii) a statement of its efforts to
collect any missing data, and (iii) the iden-
tifying information on the entity through
which it acquired an indirect interest in a
life insurance contract or contracts.
Sections 1.6050Y-2(g)(1) and (2)
cross-reference section 6724(a) and
§301.6724-1 for the waiver of a penalty
for failure to file timely a correct informa-
tion return or furnish a correct statement
under section 6050Y and §1.6050Y-2 if
the failure is due to reasonable cause and
is not due to willful neglect. The penalty
may be waived if the filer establishes there
are significant mitigating factors with re-
spect to the failure (such as the fact that
the filer had not previously had this filing
obligation, or has a history of complying
with information reporting obligations),
or that the failure was due to events be-
yond the filer’s control. Events beyond the
filer’s control may include the actions of
a third party who has information needed
by the filer. The filer must show that the
failure was due to the failure of another
person, who is required to provide infor-
mation to the filer that is necessary for the
filer to comply with information reporting
requirements, to provide information or to
provide correct information. In addition, a
filer seeking a waiver based on reasonable
cause must establish that it acted in a re-
sponsible manner both before and after the
failure. The filer must exercise reasonable
care in determining its filing obligations,
including requesting extensions to prevent
failures, preventing impediments to fail-
ures, and rectifying failures when discov-
ered. These penalty relief procedures are
available to acquirers and may apply to
acquirers in the situation described by the
commenter. Accordingly, the final regula-
tions do not adopt the change suggested
by the commenter.
9. Comments Relating to §1.6050Y-3 of
the Proposed Regulations
Section 6050Y(b) imposes reporting
requirements on an issuer of a life insur-
ance contract upon the receipt of a written
statement furnished by an acquirer under
section 6050Y(a)(2), or upon any notice
of the transfer of a life insurance contract
to a foreign person. Section 1.6050Y-3
of the proposed regulations sets forth the
requirement of information reporting ap-
plicable to issuers under section 6050Y(b)
and describes the information that must be
reported. This section of this Summary of
Comments and Explanation of Revisions
discusses comments that generally relate
to §1.6050Y-3 of the proposed regula-
tions.
Section 1.6050Y-3(d)(1) of the pro-
posed regulations requires an issuer to
furnish a statement to a seller. Section
1.6050Y-3(d)(2) of the proposed regula-
tions provides that such statement gener-
ally must be furnished on or before Febru-
ary 15 of the year following the calendar
year in which the reportable policy sale or
transfer to a foreign person occurred. This
due date was adopted in response to com-
ments on Notice 2018-41. The proposed
regulations also provide that if a 6050Y(b)
issuer does not receive notice of a trans-
fer to a foreign person until after January
31 of the calendar year following the year
in which the transfer occurred, the state-
ment generally must be furnished by the
date thirty days after the date notice is re-
ceived. See §1.6050Y-3(d)(2) of the pro-
posed regulations.
One commenter expressed apprecia-
tion regarding the adoption of the Febru-
ary 15 due date and the relief provided to
6050Y(b) issuers that do not receive no-
tice of a transfer to a foreign person until
after January 31 of the calendar year fol-
lowing the year in which the transfer oc-
curred. The commenter asked that a sim-
ilar thirty-day period be provided if the
6050Y(b) issuer does not receive an RPSS
until after January 31 of the calendar year
following the year in which the reportable
policy sale occurred. If a 6050Y(b) issuer
that receives an RPSS after the January 31
due date and before the February 15 due
date is unable to furnish the required state-
ment to the seller by the February 15 due
date because of this delay, the 6050Y(b)
issuer generally may request, before the
February 15 due date, an extension of time
to furnish the statement, pursuant to IRS
procedures. For example, procedures for
requesting such an extension are currently
described in the “General Instructions for
Certain Information Returns.” Additional-
ly, the late furnishing of an RPSS by an
acquirer to a 6050Y(a) issuer would gen-
erally constitute an event beyond the is-
suer’s control for purposes of determining
whether the issuer is eligible for penalty
relief for failure, as a 6050Y(b) issuer,
to timely furnish a statement to the seller
named in the RPSS. See §§1.6050Y-3(g)
(2), 301.6722-1, and 301.6724-1. There-
fore, the Treasury Department and the IRS
have determined not to adopt this recom-
mendation.
10. Comments and Changes Relating to
§1.6050Y-4 of the Proposed Regulations
Section 6050Y(c) imposes reporting
requirements on every person who makes
a payment of reportable death benefits
during any taxable year. Section 1.6050Y-
4 of the proposed regulations sets forth the
requirement of information reporting ap-
plicable to payors of reportable death ben-
efits under section 6050Y(c) and describes
the information that must be reported.
This section of this Summary of Com-
ments and Explanation of Revisions dis-
cusses comments that generally relate to
§1.6050Y-4 of the proposed regulations.
A. Gratuitous transfers
As discussed in section 2.B of this
Summary of Comments and Explanation
of Revisions, one commenter requested
an exception from the definition of report-
able policy sale for any gratuitous transfer
of an interest in a life insurance contract.
The commenter asserted that treating gra-
tuitous transfers as reportable policy sales
creates unnecessary and confusing report-
ing requirements under section 6050Y for
gift transfers. The change requested by
the commenter is not adopted in the final
regulations because the reporting required
under section 6050Y for gift transfers is
limited under the proposed and final reg-
ulations. However, in response to these
comments, the reporting required under
section 6050Y for gift transfers is further
limited by the addition of §1.6050Y-4(e)
(3) of the final regulations, which provides
that a payor of reportable death benefits is
not required to file an information return
under §1.6050Y-4(a) of the final regula-
tions with respect to the reportable death
benefits if the payor never received, and

November 18, 2019 1070 Bulletin No. 2019–47
has no knowledge of any issuer having re-
ceived, a related RPSS.
The commenter asserted that the re-
porting requirements under section 6050Y
will result in an acquirer having to send a
Form 1099-LS for transfers that are mere
gifts, and that this will be confusing to the
parties involved, making it appear that the
transfer will have taxable consequences to
both the donor, who will receive a Form
1099-SB, and the gift recipient, who will
receive a Form 1099-R (when a death ben-
efit is paid).
However, with respect to a gratuitous
transfer, there is no requirement to provide
a Form 1099-SB to the donor. Section
1.6050Y-2(a) of the proposed regulations
requires the acquirer (the gratuitous trans-
feree in a gratuitous transfer) to undertake
reporting with respect to any reportable
policy sale payment recipient, including
any seller that is a reportable policy sale
payment recipient. A gratuitous transfer-
or will not receive any reportable policy
sale payment and therefore will not be a
reportable policy sale payment recipient.
Accordingly, a gratuitous transferee will
not be required to file a Form 1099-LS
with respect to the gratuitous transferor, to
furnish a statement to the gratuitous trans-
feror, or to furnish an RPSS to the issuer.
See §1.6050Y-2(a) and (d) of the proposed
regulations. Because a gratuitous trans-
feree is not required to furnish an RPSS
to the issuer, the issuer should not be re-
quired to file a Form 1099-SB or furnish a
statement to the “seller” (in this case, the
gratuitous transferor) as a result of a gra-
tuitous transfer. See §1.6050Y-3(a) of the
proposed regulations.
Because amounts paid by reason of the
death of the insured under a life insurance
contract that are attributable to an inter-
est in the contract that was transferred
in a reportable policy sale are reportable
death benefits under §1.6050Y-1(a)(12)
of the proposed regulations, the proposed
regulations technically would require
reporting under section 6050Y(c) when
death benefits are paid with respect to an
interest in a life insurance contract that
was transferred in a gratuitous reportable
policy sale. See 1.6050Y-4(a) and (c).
The issuer therefore could be required
under the proposed regulations to provide
the gratuitous transferee with a statement
(for instance, a copy of the Form 1099-R)
if the gratuitous transferee is the report-
able death benefits payment recipient.
See 1.6050Y-4(c). The commenter as-
serted that this would confuse the Form
1099-R recipient, who now possesses a
Form 1099-R reporting a gross distribu-
tion amount that indicates a possible tax-
able distribution when none exists. The
commenter also asserted that inclusion of
the estimate of investment in the contract
on the Form 1099-R will further confuse
the gift recipient because it would indi-
cate to a taxpayer that they have a taxable
gain based on the difference between the
gross distribution amount and the basis
amount reported on the form.
However, the distribution to the gift
recipient may be taxable. Under §1.101-
1(b)(2)(i) of the proposed regulations, the
amount of the proceeds attributable to the
interest that is excludable from gross in-
come under section 101(a)(1) is limited
to the sum of the amount of the proceeds
attributable to the gratuitously transferred
interest that would have been excludable
by the transferor if the transfer had not
occurred, and the premiums and other
amounts subsequently paid by the trans-
feree with respect to the interest. Thus, for
example, if an interest in a life insurance
contract was transferred for value in a re-
portable policy sale, and then transferred
again as a gift, the death benefit exclusion
would be limited to the consideration paid
in the reportable policy sale, plus subse-
quent premiums paid.
As a practical matter, however, if the
only reportable policy sale of an interest
in a life insurance contract is a gratuitous
reportable policy sale, and the issuer does
not receive an RPSS, the issuer would
not know that the death benefits are at-
tributable to an interest in a life insurance
contract transferred in a reportable policy
sale, and thus would not be on notice to
do the reporting technically required un-
der §1.6050Y-4(a) and (c) of the proposed
regulations. Accordingly, in response to
these comments, §1.6050Y-4(e)(3) of
the final regulations provides that a pay-
or of reportable death benefits is not re-
quired to file an information return under
§1.6050Y-4(a) of the final regulations
with respect to the reportable death bene-
fits if the payor never received, and has no
knowledge of any issuer having received,
a related RPSS.
B. Other comments relating to
§1.6050Y-4
Section 1.6050Y-4(a)(4) of the pro-
posed regulations requires that “the gross
amount of payments made to the report-
able death benefits payment recipient
during the taxable year” be reported by
the payor. One commenter requested that
“payments made” be replaced by “report-
able death benefits paid” to clarify that
“gross amount of payments” are death
benefit payments. The commenter assert-
ed that the broader term “payments made”
could be confused to include items such
as interest paid on delayed claims, which
is reportable on Form 1099-INT, “Inter-
est Income,” or a payment to the policy
owner resulting from a partial surrender in
the same year as the insured’s death. This
recommendation is adopted in the final
regulations.
Section 1.6050Y-4(d) of the proposed
regulations requires a payor of reportable
death benefits that files a return or fur-
nishes a statement reporting the payment
of the reportable death benefits to file a
corrected return or furnish a corrected
statement after receiving notice of rescis-
sion of the reportable policy sale. The
commenter indicated that, if a payor has
already paid the death benefit pursuant to
the change in ownership, the payor may
not be contractually required, or may not
attempt to, reclaim such benefit after a
rescission. The commenter asserted that
payors of death benefits generally do not
file corrected Forms 1099-R in similar in-
stances because the payment was, in fact,
made to the initial recipient. The com-
menter recommended that §1.6050Y-4(d)
of the proposed regulations be modified to
provide that the payor is required to cor-
rect the Form 1099-R only if the report-
able death benefit payment was returned
to the payor. In response to this comment,
§1.6050Y-4(d) of the final regulations re-
quires a payor of reportable death benefits
that files a return or furnishes a statement
reporting the payment of the reportable
death benefits to file a corrected return or
furnish a corrected statement within 15
days after recovering any portion of the
reportable death benefits payment from
the reportable death benefits payment re-
cipient as the result of the rescission of a
reportable policy sale.

Bulletin No. 2019–47 1071 November 18, 2019
The commenter also requested that the
final regulations clarify that the reportable
death benefits paid to a foreign person
should be reported on Form 1042-S, “For-
eign Person’s U.S. Source Income Sub-
ject to Withholding,” instead of on Form
1099-R. Under §1.6050Y-4(e)(1) of the
proposed regulations, a payor generally
is not required to report reportable death
benefits paid to a foreign person on Form
1099-R if the payor obtains documenta-
tion in accordance with §1.1441-1(e)(1)
(ii) upon which the payor may rely to treat
the reportable death benefits payment re-
cipient as a foreign beneficial owner of the
reportable death benefits. However, this
exception does not apply if a 6050Y(b) is-
suer obtains a Form W-8ECI, “Certificate
of Foreign Person’s Claim that Income
is Effectively Connected with the Con-
duct of a Trade or Business in the Unit-
ed States.” Accordingly, if the payment
of reportable death benefits to a foreign
beneficial owner is income effectively
connected with the foreign person’s trade
or business in the United States, the payor
may be required to report the payment on
both the Form 1042-S in accordance with
§1.1461-1(c) and the Form 1099-R in ac-
cordance with §1.6050Y-4 of the proposed
regulations. In response to this comment,
therefore, §1.6050Y-4(e)(1) of the final
regulations does not include the limitation
on the use of the exception for reportable
death benefits that are income effectively
connected with the conduct of a trade or
business in the United States, but instead
references other due diligence or reporting
requirements that may apply to a payor
that relies on the exception, including re-
porting requirements under §1.1461-1(c).
As a result, the final regulations do not
require reportable death benefits paid to
a foreign person that must be reported on
Form 1042-S to also be reported on Form
1099-R.
11. Comments and Changes Relating to
Penalties
Sections 1.6050Y-2(g), 1.6050Y-3(g),
and 1.6050Y-4(f) of the proposed regu-
lations cross-reference sections 6721 and
6722 and the regulations thereunder for
provisions relating to the penalties provid-
ed for failure to file timely a correct infor-
mation return or furnish timely a correct
information return required under section
6050Y and §§1.6050Y-2, 1.6050Y-3, or
1.6050Y-4 of the proposed regulations.
Sections 1.6050Y-2(g), 1.6050Y-3(g), and
1.6050Y-4(f) of the proposed regulations
also cross-reference §301.6724-1 for the
waiver of a penalty if the failure is due to
reasonable cause and is not due to willful
neglect.
One commenter asked for permanent
penalty relief for issuers unable to meet
the filing due date for reasons beyond
the control of the issuer. The commenter
stated that such relief is available under
section 6724(a), which allows for waivers
for reasonable cause for reporting fail-
ures. The commenter suggested that the
requested relief could be accomplished
through guidance that designates late re-
ceipt of a Form 1099-LS (serving as an
RPSS) as establishing reasonable cause
for purposes of section 6724. To identify
reports eligible for such relief, the com-
menter suggested that a check box could
be added to Form 1099-SB for “late re-
ceipt of Form 1099-LS,” thereby avoiding
the inefficiencies and costs associated with
waiver and abatement procedures. The
commenter did not provide any reason
to anticipate that many acquirers will fail
to timely furnish statements to 6050Y(a)
issuers as required by section 6050Y(a)
and §1.6050Y-2(d)(2). Accordingly, the
Treasury Department and the IRS have
determined that the normal penalty relief
procedures, as described in section 9 of
this Summary of Comments and Explana-
tion of Revisions, should be sufficient and
have not adopted the commenter’s recom-
mendation.
Applicability Dates
Section 1 of this Summary of Com-
ments and Explanation of Revisions de-
scribes the applicability dates for §1.101-
1(b) through (g) of the final regulations
and §§1.6050Y-1 through 1.6050Y-4 of
the final regulations.
As described in section 1 of this Sum-
mary of Comments and Explanation of Re-
visions, the final regulations provide tran-
sition relief as set forth in §1.6050Y-1(b)
of the proposed regulations, with some
modifications. For reportable policy
sales and payments of reportable death
benefits occurring after December 31,
2018, and on or before October 31, 2019,
§1.6050Y-1(b) of the final regulations
provides transition relief as follows:
(1) Statements required to be furnished
to issuers under section 6050Y(a)(2) and
§1.6050Y-2(d)(2)(i) must be furnished
by the later of the applicable deadline set
forth in §1.6050Y-2(d)(2)(ii) or December
30, 2019.
(2) Statements required to be fur-
nished to reportable policy sale payment
recipients under section 6050Y(a)(2) and
§1.6050Y-2(d)(1)(i) must be furnished
by the later of the applicable deadline set
forth in §1.6050Y-2(d)(1)(ii) or February
28, 2020.
(3) Statements required to be furnished
to sellers under section 6050Y(b)(2) and
§1.6050Y-3(d)(1) must be furnished by
the later of the applicable deadline set
forth in §1.6050Y-3(d)(2) or February 28,
2020.
(4) Statements required to be furnished
to reportable death benefits payment re-
cipients under section 6050Y(c)(2) and
§1.6050Y-4(c)(1) must be furnished by
the later of the applicable deadline set
forth in §1.6050Y-4(c)(2) or February 28,
2020.
(5) Returns required to be filed under
section 6050Y(a)(1) and §1.6050Y-2(a),
section 6050Y(b)(1) and §1.6050Y-3(a),
and section 6050Y(c)(1) and §1.6050Y-4
must be filed by the later of the applica-
ble deadline set forth in §1.6050Y-2(c),
§1.6050Y-3(c), and §1.6050Y-4(b) or
February 28, 2020.
Special Analyses
This regulation is not subject to review
under section 6(b) of Executive Order
12866 pursuant to the Memorandum of
Agreement (April 11, 2018) between the
Treasury Department and the Office of
Management and Budget regarding re-
view of tax regulations.
Paperwork Reduction Act
The collection of information con-
tained in the final regulations has been
reviewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under OMB
Control Numbers 1545-0119, 1545-1621,

November 18, 2019 1072 Bulletin No. 2019–47
and 1545-2281. In general, the collec-
tion of information in the final regula-
tions is required under section 6050Y
of the Code: (1) The requirement under
§1.6050Y-2 of the final regulations for
an acquirer to report certain information
about payments made in reportable policy
sales is required under section 6050Y(a);
(2) the requirement under §1.6050Y-3 of
the final regulations for an issuer to report
certain information about transferors of
life insurance contracts is required under
section 6050Y(b); and (3) the requirement
under §1.6050Y-4 of the final regulations
for a payor to report certain information
about payments of reportable death ben-
efits is required under section 6050Y(c).
Section 1.6050Y-3(a)(3) of the final regu-
lations also requires the issuer to report to
the seller and the IRS the amount the sell-
er would have received if the seller had
surrendered the life insurance contract on
the date of the reportable policy sale. This
information is necessary to allow the sell-
er and the IRS to determine the character
(capital or ordinary) of all or a portion of
the seller’s taxable income from the sale
of the life insurance contract. Section
1.6050Y-3(f)(1) of the final regulations
contains reporting exceptions for certain
foreign beneficial owners. To determine
qualification for these reporting excep-
tions, §1.6050Y-3(f)(1) of the final regu-
lations requires that certain foreign ben-
eficial owners provide a Form W-8ECI
to the 6050Y(b) issuer. This information
is necessary to document whether the re-
porting exception in §1.6050Y-3(f)(1) of
the final regulations applies in a particular
situation.
For purposes of the Paperwork Re-
duction Act, the burden associated with
the collection of information contained
in section 6050Y(a) and §1.6050Y-2 of
the final regulations is reflected in the
IRS Form 1099-LS (OMB control num-
ber 1545-2281). For purposes of the
Paperwork Reduction Act, the burden
associated with the collection of informa-
tion contained in section 6050Y(b) and
§1.6050Y-3 of the final regulations is re-
flected in the IRS Form 1099-SB (OMB
control number 1545-2281). For purposes
of the Paperwork Reduction Act, the bur-
den associated with the collection of in-
formation contained in section 6050Y(c)
and §1.6050Y-4 of the final regulations is
reflected in the IRS Form 1099-R (OMB
Control Number 1545-0119). For purpos-
es of the Paperwork Reduction Act, the
burden associated with the collection of
information contained in §1.6050Y-3(f)
(1) of the final regulations will be reflected
in the IRS Form W-8ECI (OMB Control
Number 1545-1621), when the burden is
revised to reflect the additional collection
of information in §1.6050Y-3(f)(1) of the
final regulations.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless it dis-
plays a valid control number assigned by
the Office of Management and Budget.
Books and records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
Regulatory Flexibility Act
It is hereby certified that this rule will
not have a significant economic impact
on a substantial number of small entities
pursuant to the Regulatory Flexibility Act
(5 U.S.C. chapter 6). Section 13520 of the
TCJA added section 6050Y to chapter 61
(Information and Returns) of the Code.
Section 6050Y imposes information re-
porting obligations related to certain life
insurance contract transactions, including
reportable policy sales and payments of
reportable death benefits. Section 6050Y
provides that each of the returns required
by section 6050Y is to be made “at such
time and in such manner as the Secretary
shall prescribe.” The final regulations
under section 6050Y implement section
6050Y by specifying the manner in which
and time at which the information report-
ing obligations must be satisfied. Because
the regulations are limited in scope to time
and manner of information reporting and
definitional information, the economic
impact of the regulations is expected to
be minimal. In addition, the IRS and Trea-
sury expect that the reporting burden will
fall primarily on financial and insurance
firms with annual receipts greater than
$38.5 million and, therefore, will not af-
fect a substantial number of small entities.
See 13 CFR 121.201, sector 52 (finance
and insurance).
Although the reporting burden falls
primarily on larger entities, some small
entities under the size threshold may be
subject to a one-time reporting require-
ment that includes information that is
readily available to the entities. This one-
time reporting is unlikely to present a sig-
nificant economic burden on any small
entities affected.
Pursuant to section 7805(f) of the
Code, the notice of proposed rulemaking
preceding the final regulations was sub-
mitted to the Chief Counsel for Advocacy
of the Small Business Administration for
comment on its impact on small business,
and no comments were received.
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 2018, that threshold is approximately
$150 million. This rule does not include
any Federal mandate that may result in ex-
penditures by state, local, or tribal govern-
ments, or by the private sector in excess of
that threshold.
Executive Order 13132: Federalism
Executive Order 13132 (titled “Feder-
alism”) prohibits an agency from publish-
ing any rule that has federalism implica-
tions if the rule either imposes substantial,
direct compliance costs on state and lo-
cal governments, and is not required by
statute, or preempts state law, unless the
agency meets the consultation and fund-
ing requirements of section 6 of the Exec-
utive Order. This final rule does not have
federalism implications and does not im-
pose substantial direct compliance costs
on state and local governments or preempt
state law within the meaning of the Exec-
utive Order.

Bulletin No. 2019–47 1073 November 18, 2019
Drafting Information
The principal author of these regula-
tions is Kathryn M. Sneade, Office of As-
sociate Chief Counsel (Financial Institu-
tions and Products), IRS. However, other
personnel from the Treasury Department
and the IRS participated in their develop-
ment.
Availability of IRS Documents
The IRS notice cited in this preamble is
published in the Internal Revenue Bulletin
and is available from the Superintendent
of Documents, U.S. Government Publish-
ing Office, Washington, DC 20402, or by
visiting the IRS website at www.irs.gov.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Adoption of 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 adding entries for
§§1.6050Y-2, 1.6050Y-3, and 1.6050Y-4
in numerical order to read in part as fol-
lows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
Section 1.6050Y-2 also issued under 26
U.S.C. 6050Y(a).
Section 1.6050Y-3 also issued under 26
U.S.C. 6050Y(b).
Section 1.6050Y-4 also issued under 26
U.S.C. 6050Y(c).
* * * * *
Par. 2. Section 1.101-1 is amended by:
1. Revising the second sentence of para-
graph (a)(1), removing the third sen-
tence of paragraph (a)(1), and adding
a sentence at the end of paragraph (a)
(1).
2. Revising paragraphs (b)(1) through
(3).
3. Removing paragraphs (b)(4) and (5).
4. Adding paragraphs (c) through (g).
The revisions and additions read as fol-
lows:
§1.101-1 Exclusion from gross income
of proceeds of life insurance contracts
payable by reason of death.
(a)(1) * * * Death benefit payments
having the characteristics of life insurance
proceeds payable by reason of death under
contracts, such as workmen’s compensation
insurance contracts, endowment contracts,
or accident and health insurance contracts,
issued on or before December 31, 1984, are
covered by this provision. * * * If the life
insurance contract is an employer-owned
life insurance contract within the definition
of section 101(j)(3), the amount to be ex-
cluded from gross income may be affected
by the provisions of section 101(j).
* * * * *
(b) * * * (1) Transfer of an interest
in a life insurance contract for valuable
consideration—(i) In general. In the case
of a transfer of an interest in a life insur-
ance contract for valuable consideration,
including a reportable policy sale for
valuable consideration, the amount of the
proceeds attributable to the interest that
is excludable from gross income under
section 101(a)(1) is limited under section
101(a)(2) to the sum of the actual value
of the consideration for the transfer paid
by the transferee and the premiums and
other amounts subsequently paid by the
transferee with respect to the interest. For
exceptions to this general rule for certain
transfers for valuable consideration that
are not reportable policy sales, see para-
graph (b)(1)(ii) of this section. The appli-
cation of section 101(d), (f) or (j), which is
not addressed in paragraph (b) of this sec-
tion, may further limit the amount of the
proceeds excludable from gross income.
(ii) Exceptions—(A) Exception for
carryover basis transfers. The limitation
described in paragraph (b)(1)(i) of this
section does not apply to the transfer of
an interest in a life insurance contract for
valuable consideration if each of the fol-
lowing requirements are satisfied. First,
the transfer is not a reportable policy sale.
Second, the basis of the interest, for the
purpose of determining gain or loss with
respect to the transferee, is determinable
in whole or in part by reference to the basis
of the interest in the hands of the transfer-
or (see section 101(a)(2)(A)). Third, para-
graph (b)(1)(ii)(B) of this section does not
apply. In the case of a transfer described
in this paragraph (b)(1)(ii)(A), the amount
of the proceeds attributable to the inter-
est that is excludable from gross income
under section 101(a)(1) is limited to the
sum of the amount that would have been
excludable by the transferor if the trans-
fer had not occurred and the premiums
and other amounts subsequently paid by
the transferee with respect to the interest.
The preceding sentence applies without
regard to whether the interest previously
has been transferred and the nature of any
prior transfer of the interest.
(B) Exception for transfers to certain
persons—(1) In general. The limitation
described in paragraph (b)(1)(i) of this
section does not apply to the transfer of
an interest in a life insurance contract for
valuable consideration if both of the fol-
lowing requirements are satisfied. First,
the transfer is not a reportable policy sale
and the interest was not previously trans-
ferred for valuable consideration in a re-
portable policy sale. Second, the interest
is transferred to the insured, a partner of
the insured, a partnership in which the
insured is a partner, or a corporation in
which the insured is a shareholder or offi-
cer (see section 101(a)(2)(B)).
(2) Transfers to certain persons subse-
quent to a reportable policy sale. Except
as provided in paragraph (b)(1)(ii)(B)(3)
of this section, if a transfer of an interest
in a life insurance contract would be de-
scribed in paragraph (b)(1)(ii)(B)(1) of
this section, but for the fact that the inter-
est previously was transferred for valuable
consideration in a reportable policy sale
(whether in the immediately preceding
transfer or an earlier transfer), then the
amount of the proceeds attributable to the
interest that is excludable from gross in-
come under section 101(a)(1) is limited to
the sum of—
(i) The higher of the amount that would
have been excludable by the transferor if
the transfer had not occurred or the actual
value of the consideration for the transfer
paid by the transferee; and
(ii) The premiums and other amounts
subsequently paid by the transferee with
respect to the interest.

November 18, 2019 1074 Bulletin No. 2019–47
(3) Transfers to the insured subsequent
to a reportable policy sale—(i) Except
as provided in paragraph (b)(1)(ii)(B)(3)
(ii) of this section, to the extent that an in-
terest (or portion of an interest) in a life
insurance contract that was transferred
for valuable consideration in a reportable
policy sale subsequently is transferred to
the insured for valuable consideration, the
limitations described in paragraph (b)(1)
(i) of this section and paragraph (b)(1)(ii)
(B)(2) of this section do not apply. To the
extent that fair market value is not paid by
the insured for the transferred interest, the
transfer of the portion of the interest with
a value in excess of the consideration paid
will be treated as a gift under the bargain
sale rule in paragraph (b)(2)(iii) of this
section.
(ii) This paragraph (b)(1)(ii)(B)(3)
(ii) applies with respect to an interest de-
scribed in paragraph (b)(1)(ii)(B)(3)(i) of
this section (or portion of such an interest)
that subsequently is transferred by the in-
sured to any other person. If all subsequent
transfers of the interest (or portion of the
interest) are gratuitous transfers that are
not reportable policy sales, the amount of
the proceeds excluded from gross income
is determined under paragraph (b)(2)(i) of
this section, taking into account the appli-
cation of paragraph (b)(1)(ii)(B)(3)(i) of
this section to the insured’s acquisition of
the interest. If any subsequent transfer of
the interest (or portion of the interest) is
for valuable consideration or is a report-
able policy sale, the amount of the policy
proceeds excludable from gross income is
determined in accordance with paragraph
(b) of this section; if the amount that would
have been excludable from gross income
by the insured following the transaction
described in paragraph (b)(1)(ii)(B)(3)(i)
of this section if no subsequent transfer
had occurred is relevant, that amount is
determined under paragraph (b)(1)(ii)(B)
(2) of this section. Paragraph (g)(8) (Ex-
ample 8) of this section and paragraph (g)
(9) (Example 9) of this section illustrate
the application of this paragraph (b)(1)(ii)
(B)(3)(ii).
(2) Other transfers—(i) Gratuitous
transfer of an interest in a life insurance
contract. To the extent that a transfer of
an interest in a life insurance contract is
gratuitous, including a reportable policy
sale that is not for valuable consideration,
the amount of the proceeds attributable to
the interest that is excludable from gross
income under section 101(a)(1) is limited
to the sum of the amount of the proceeds
attributable to the gratuitously transferred
interest that would have been exclud-
able by the transferor if the transfer had
not occurred and the premiums and other
amounts subsequently paid by the trans-
feree with respect to the interest. Howev-
er, if an interest in a life insurance contract
is transferred gratuitously to the insured,
and that interest has not previously been
transferred for value in a reportable policy
sale, the entire amount of the proceeds at-
tributable to the interest transferred to the
insured is excludable from gross income.
(ii) Partial transfers. When only part
of an interest in a life insurance contract
is transferred, the transferor’s exclusion
is ratably apportioned between or among
the several parts. If multiple parts of an in-
terest are transferred, the transfer of each
part is treated as a separate transaction,
with each transaction subject to the rule
under paragraph (b) of this section that is
applicable to the type of transfer involved.
(iii) Bargain sales. When the transfer
of an interest in a life insurance contract
is in part a transfer for valuable consider-
ation and in part a gratuitous transfer, the
transfer of each part is treated as a separate
transaction for purposes of determining
the amount of the proceeds attributable to
the interest that is excludable from gross
income under section 101(a)(1). Each
separate transaction is subject to the rule
under paragraph (b) of this section that is
applicable to the type of transfer involved.
(3) Determination of amounts paid by
the transferee. For purposes of paragraphs
(b)(1) and (2) of this section, in determin-
ing the amounts, if any, of consideration
paid by the transferee for the transfer of
an interest in a life insurance contract
and premiums and other amounts subse-
quently paid by the transferee with respect
to that interest, the amounts paid by the
transferee are reduced, but not below zero,
by amounts received by the transferee un-
der the life insurance contract that are not
received as an annuity, to the extent ex-
cludable from gross income under section
72(e).
(c) Reportable policy sale—(1) In gen-
eral. Except as provided in paragraph (c)
(2) of this section, a reportable policy sale
for purposes of this section and section
6050Y is any direct or indirect acquisition
of an interest in a life insurance contract
if the acquirer has, at the time of the ac-
quisition, no substantial family, business,
or financial relationship with the insured
apart from the acquirer’s interest in the
life insurance contract.
(2) Exceptions. None of the following
transactions is a reportable policy sale:
(i) A transfer of an interest in a life in-
surance contract between entities with the
same beneficial owners, if the ownership
interest of each beneficial owner in the
transferor entity does not vary by more
than a 20 percent ownership interest from
that beneficial owner’s ownership inter-
est in the transferee entity. In a series of
transfers, the prior sentence is applied by
comparing the beneficial owners’ owner-
ship interest in the first transferor entity
and the last transferee entity. For purposes
of this paragraph (c)(2)(i), each beneficial
owner of a trust is deemed to have an own-
ership interest determined by the broadest
possible exercise of a trustee’s discretion
in that beneficial owner’s favor. Paragraph
(g)(13) (Example 13) of this section pro-
vides an illustration of the application of
this paragraph (c)(2)(i).
(ii) A transfer between corporations
that are members of an affiliated group (as
defined in section 1504(a)) that files a con-
solidated U.S. income tax return for the
taxable year in which the transfer occurs.
(iii) The indirect acquisition of an in-
terest in a life insurance contract by a per-
son if—
(A) A partnership, trust, or other enti-
ty in which an ownership interest is being
acquired directly or indirectly holds the
interest in the life insurance contract and
acquired that interest before January 1,
2019, or acquired that interest in a report-
able policy sale reported in compliance
with section 6050Y(a) and §1.6050Y-2; or
(B) Immediately before the acquisi-
tion, no more than 50 percent of the gross
value of the assets (as determined under
paragraph (f)(4) of this section) of the
partnership, trust, or other entity that di-
rectly or indirectly holds the interest in
the life insurance contract, and in which
an ownership interest is being directly
acquired, consists of life insurance con-
tracts, provided that, after the acquisition,
with respect to that partnership, trust, or

Bulletin No. 2019–47 1075 November 18, 2019
other entity, the person indirectly acquir-
ing the interest in the life insurance con-
tract and his or her family members own,
in the aggregate—
(1) With respect to an S corporation,
stock possessing 5 percent or less of the
total combined voting power of all classes
of stock entitled to vote and 5 percent or
less of the total value of shares of all class-
es of stock of the S corporation;
(2) With respect to a trust or decedent’s
estate, 5 percent or less of the corpus and
5 percent or less of the annual income
(taking into account, for the purpose of
determining any person’s ownership inter-
est, the maximum amount of income and
corpus that could be distributed to or held
for the benefit of that person); or
(3) With respect to a partnership or oth-
er entity that is not a corporation or a trust,
5 percent or less of the capital interest and
5 percent or less of the profits interest.
(iv) The acquisition of a life insurance
contract by an insurance company that
issues a life insurance contract in an ex-
change pursuant to section 1035.
(v) The acquisition of a life insurance
contract by a policyholder in an exchange
pursuant to section 1035, if the policy-
holder has a substantial family, business,
or financial relationship with the insured,
apart from its interest in the life insurance
contract, at the time of the exchange.
(d) Substantial relationship—(1) Sub-
stantial family relationship. For purposes
of this section, a substantial family rela-
tionship means the relationship between
an individual and any family member of
that individual as defined in paragraph (f)
(3) of this section. In addition, a substan-
tial family relationship exists between an
individual and his or her former spouse
with regard to the transfer of an interest in
a life insurance contract to (or in trust for
the benefit of) that former spouse incident
to divorce.
(2) Substantial business relationship.
For purposes of this section, a substantial
business relationship between the insured
and the acquirer exists in each of the fol-
lowing situations:
(i) The insured is a key person (as de-
fined in section 264) of, or materially par-
ticipates (within the meaning of section
469) in, an active trade or business as an
owner, employee, or contractor, and at
least 80 percent of that trade or business
is owned (directly or indirectly, through
one or more partnerships, trusts, or other
entities) by the acquirer or the beneficial
owners of the acquirer.
(ii) The acquirer acquires an active
trade or business and acquires the interest
in the life insurance contract either as part
of that acquisition or from a person own-
ing significant property leased to the ac-
quired trade or business or life insurance
policies held to facilitate the succession of
the ownership of the business if—
(A) The insured—
(1) Is an employee within the meaning
of section 101(j)(5)(A) of the acquired
trade or business immediately preceding
the acquisition; or
(2) Was a director, highly compensated
employee, or highly compensated individ-
ual within the meaning of section 101(j)
(2)(A)(ii) of the acquired trade or busi-
ness, and the acquirer, immediately af-
ter the acquisition, has ongoing financial
obligations to the insured with respect to
the insured’s employment by the trade or
business (for example, the life insurance
contract is maintained by the acquirer to
fund current or future retirement, pension,
or survivorship obligations based on the
insured’s relationship with the entity or to
fund a buy-out of the insured’s interest in
the acquired trade or business); and
(B) The acquirer either carries on the
acquired trade or business or uses a sig-
nificant portion of the acquired business
assets in an active trade or business that
does not include investing in interests in
life insurance contracts.
(3) Substantial financial relationship.
For purposes of this section, a substantial
financial relationship between the insured
and the acquirer exists in each of the fol-
lowing situations:
(i) The acquirer (directly or indirectly,
through one or more partnerships, trusts,
or other entities of which it is a beneficial
owner) has, or the beneficial owners of the
acquirer have, a common investment (oth-
er than the interest in the life insurance
contract) with the insured and a buy-out
of the insured’s interest in the common
investment by the co-investor(s) after the
insured’s death is reasonably foreseeable.
(ii) The acquirer maintains the life in-
surance contract on the life of the insured
to provide funds to purchase assets of or
to satisfy liabilities of the insured or the
insured’s estate, heirs, legatees, or other
successors in interest, or to satisfy other
liabilities arising upon or by reason of the
death of the insured.
(iii) The acquirer is an organization
described in sections 170(c), 2055(a), and
2522(a) that previously received from the
insured either financial support in a sub-
stantial amount or significant volunteer
support or that meets other requirements
prescribed in guidance published in the In-
ternal Revenue Bulletin (see § 601.601(d)
(2) of this chapter) for establishing that
a substantial financial relationship exists
between the insured and the organization.
(4) Special rules. Paragraphs (d)(4)(i),
(ii), and (iii) of this section apply for pur-
poses of determining whether a substan-
tial relationship (whether family, business,
or financial) exists under paragraph (d)(1),
(2), or (3) of this section, respectively.
(i) Indirect acquisitions. The acquirer
of an interest in a life insurance contract in
an indirect acquisition is deemed to have a
substantial business or financial relation-
ship with the insured if the direct holder
of the interest in the life insurance contract
has a substantial business or financial re-
lationship with the insured immediately
before and after the date the acquirer ac-
quires its interest.
(ii) Acquisitions by certain persons.
The sole fact that an acquirer is a partner
of the insured, a partnership in which the
insured is a partner, or a corporation in
which the insured is a shareholder or of-
ficer, is not sufficient to establish a sub-
stantial business or financial relationship
with the insured. In addition, an acquirer
need not be a partner of the insured, a part-
nership in which the insured is a partner,
or a corporation in which the insured is a
shareholder or officer to have a substantial
business or financial relationship with the
insured.
(iii) Acquisitions by those with differ-
ing types of substantial relationships. A
substantial family, business, or financial
relationship exists between the insured
and a partnership, trust, or other entity if
each beneficial owner of that partnership,
trust, or other entity has a substantial fam-
ily, business, or financial relationship with
the insured. For example, a substantial
family, business, or financial relationship
exists between the insured and a trust if
each trust beneficiary is a family member

November 18, 2019 1076 Bulletin No. 2019–47
of the insured or an organization described
in paragraph (d)(3)(iii) of this section.
(e) Interest in a life insurance con-
tract—(1) Definition. For purposes of this
section and section 6050Y, the term inter-
est in a life insurance contract means the
interest held by any person that has taken
title to or possession of the life insurance
contract (also referred to as a life insurance
policy), in whole or part, for state law pur-
poses, including any person that has taken
title or possession as nominee for another
person, and the interest held by any person
that has an enforceable right to receive all
or a part of the proceeds of a life insurance
contract or to any other economic benefits
of the policy as described in §20.2042-1(c)
(2) of this chapter, such as the enforceable
right to designate a contract beneficiary.
Any person named as the owner in the life
insurance contract generally is the owner
(or an owner) of the contract and holds an
interest in the contract.
(2) Transfer of an interest in a life in-
surance contract. For purposes of this sec-
tion and section 6050Y, the term transfer
of an interest in a life insurance contract
means the transfer of any interest in the life
insurance contract, including any transfer
of title to, possession of, or legal or bene-
ficial ownership of the life insurance con-
tract itself. The creation of an enforceable
right to receive all or a part of the proceeds
of a life insurance contract constitutes the
transfer of an interest in the life insurance
contract. The following events are not a
transfer of an interest in a life insurance
contract: the revocable designation of a
beneficiary of the policy proceeds (until
the designation becomes irrevocable other
than by reason of the death of the insured);
the pledging or assignment of a policy as
collateral security; and the issuance of a
life insurance contract to a policyholder,
other than the issuance of a policy in an
exchange pursuant to section 1035.
(3) Acquisition of an interest in a life
insurance contract. For purposes of this
section and section 6050Y, the acquisition
of an interest in a life insurance contract
may be direct or indirect.
(i) Direct acquisition of an interest in
a life insurance contract. For purposes of
this section and section 6050Y, the trans-
fer of an interest in a life insurance con-
tract results in the direct acquisition of the
interest by the transferee (acquirer).
(ii) Indirect acquisition of an interest
in a life insurance contract. For purpos-
es of this section and section 6050Y, an
indirect acquisition of an interest in a life
insurance contract occurs when a person
(acquirer) becomes a beneficial owner of a
partnership, trust, or other entity that holds
(whether directly or indirectly) the inter-
est (whether legal or beneficial) in the life
insurance contract. For purposes of this
paragraph (e)(3)(ii), the term other entity
does not include a C corporation, unless
more than 50 percent of the gross value
of the assets of the C corporation consists
of life insurance contracts (as determined
under paragraph (f)(4) of this section) im-
mediately before the indirect acquisition.
(f) Definitions. The following defini-
tions apply for purposes of this section:
(1) Beneficial owner. A beneficial own-
er of a partnership, trust, or other entity
is an individual or C corporation with an
ownership interest in that entity. The in-
terest may be held directly or indirectly,
through one or more other partnerships,
trusts, or other entities. For instance, an
individual that directly owns an interest
in a partnership (P1), which directly owns
an interest in another partnership (P2),
is an indirect beneficial owner of P2 and
any assets or other entities owned by P2
directly or indirectly. For purposes of this
paragraph (f)(1), the beneficial owners of
a trust include those who may receive cur-
rent distributions of trust income or corpus
and those who could receive distributions
if the trust were to terminate currently.
(2) C corporation. The term C corpo-
ration has the meaning given to it in sec-
tion 1361(a)(2).
(3) Family member. With respect to any
individual, the term family member refers
to any person described in paragraphs (f)
(3)(i) through (vi) of this section. For pur-
poses of this paragraph (f)(3), full effect is
given to a legal adoption, and a step-child
is deemed to be a descendant. The family
members of an individual include:
(i) The individual;
(ii) The individual’s spouse or a person
with whom the individual is in a registered
domestic partnership, civil union, or oth-
er similar relationship established under
state law;
(iii) Any parent, grandparent, or
great-grandparent of the individual or of
the person described in paragraph (f)(3)
(ii) of this section and any spouse of such
parent, grandparent, or great-grandparent,
or person with whom the parent, grand-
parent, or great-grandparent is in a reg-
istered domestic partnership, civil union,
or other similar relationship established
under state law;
(iv) Any lineal descendant of the indi-
vidual or of any person described in para-
graph (f)(3)(ii) or (iii) of this section;
(v) Any spouse of a lineal descendant
described in paragraph (f)(3)(iv) of this
section and any person with whom such a
lineal descendant is in a registered domes-
tic partnership, civil union, or other sim-
ilar relationship established under state
law; and
(vi) Any lineal descendant of a person
described in paragraph (f)(3)(v) of this
section.
(4) Gross value of assets—(i) Determi-
nation of gross value of assets. Except as
provided in paragraph (f)(4)(ii) or (iii) of
this section, for purposes of paragraphs (c)
(2)(iii)(B) and (e)(3)(ii) of this section, the
term gross value of assets means, with re-
spect to any entity, the fair market value of
the entity’s assets, including assets benefi-
cially owned by the entity under paragraph
(f)(1) of this section as a beneficial owner
of a partnership, trust, or other entity.
(ii) Determination of gross value of as-
sets of publicly traded entity. For purposes
of determining the gross value of assets
of an entity that is publicly traded, if the
entity’s annual Form 10-K filed with the
United States Securities and Exchange
Commission (or equivalent annual filing if
the entity is publicly traded in a non-U.S.
jurisdiction) for the period immediate-
ly preceding a person’s acquisition of an
ownership interest in the entity does not
contain information demonstrating that
more than 50 percent of the gross value
of the entity’s assets consists of life insur-
ance contracts, that person may assume
that no more than 50 percent of the gross
value of the entity’s assets consists of life
insurance contracts, unless that person has
actual knowledge or reason to know that
more than 50 percent of the gross value
of the entity’s assets consists of life insur-
ance contracts.
(iii) Safe harbor definition of gross
value of assets. An entity may choose to
determine the gross value of all the enti-
ty’s assets for purposes of this section us-

Bulletin No. 2019–47 1077 November 18, 2019
ing the following alternative definition of
gross value of assets:
(A) In the case of assets that are life
insurance policies or annuity or endow-
ment contracts that have cash values, the
cash surrender value as defined in section
7702(f)(2)(A); and
(B) In the case of assets not described
in paragraph (f)(4)(iii)(A) of this section,
the adjusted bases (within the meaning of
section 1016) of such assets.
(5) Transfer for valuable consider-
ation. A transfer for valuable consider-
ation means any transfer of an interest in
a life insurance contract for cash or other
consideration reducible to a money value.
(g) Examples. The application of this
section is illustrated by the following ex-
amples. Each example assumes that the
transferee did not receive any amounts
under the life insurance contract other
than the amounts described in the exam-
ples. With the exception of paragraph (g)
(7) (Example 7) of this section, the bargain
sale rules set forth in paragraph (b)(2)(iii)
of this section do not apply in the exam-
ples because the consideration paid for the
policy transferred is fair market value:
(1) Example 1. A is the initial policyholder of
a $100,000 insurance policy on A’s life. A sells the
policy to B, A’s child, for $6,000, its fair market
value. B is not a partner in a partnership in which
A is a partner. B receives the proceeds of $100,000
upon the death of A. Because the transfer to B was
for valuable consideration, and none of the excep-
tions in paragraph (b)(1)(ii) of this section applies,
the amount of the proceeds B may exclude from
B’s gross income under this section is limited under
paragraph (b)(1)(i) of this section to $6,000 plus any
premiums and other amounts paid by B with respect
to the policy subsequent to the transfer.
(2) Example 2. The facts are the same as in Ex-
ample 1 in paragraph (g)(1) of this section except
that, before A’s death, B gratuitously transfers the
policy back to A. A’s estate receives the proceeds of
$100,000 on A’s death. Because the transfer from B
to A is a gratuitous transfer to the insured, and the
preceding transfer from A to B was not a reportable
policy sale, the amount of the proceeds A’s estate
may exclude from gross income under this section
is not limited by paragraph (b)(2)(i) of this section.
(3) Example 3. The facts are the same as in Ex-
ample 1 in paragraph (g)(1) of this section except
that, before A’s death, B sells the policy back to A for
its fair market value. A’s estate receives the proceeds
of $100,000 on A’s death. The transfer from A to B
is not a reportable policy sale because the acquirer B
has a substantial family relationship with the insured,
A. The transfer from B to A also is not a reportable
policy sale because the acquirer A has a substantial
family relationship with the insured, A. Accordingly,
paragraph (b)(1)(ii)(B)(1) of this section applies to
the transfer to A, and the amount of the proceeds A’s
estate may exclude from gross income is not limited
by paragraph (b) of this section.
(4) Example 4. A is the initial policyholder of a
$100,000 insurance policy on A’s life. A transfers the
policy for $6,000, its fair market value, to an individ-
ual, C, who does not have a substantial family, busi-
ness, or financial relationship with A. The transfer
from A to C is a reportable policy sale. C receives the
proceeds of $100,000 on A’s death. The amount of
the proceeds C may exclude from C’s gross income
under this section is limited under paragraph (b)(1)
(i) of this section to $6,000 plus any premiums and
other amounts paid by C with respect to the policy
subsequent to the transfer.
(5) Example 5. The facts are the same as in Ex-
ample 4 in paragraph (g)(4) of this section, except
that before A’s death, C transfers the policy to D, a
partner of A who co-owns real property with A, for
$8,000, the policy’s fair market value. D receives
the proceeds of $100,000 on A’s death. The transfer
from C to D is not a reportable policy sale because
the acquirer D has a substantial financial relationship
with the insured, A. However, because that transfer
follows a reportable policy sale (the transfer from A
to C), the amount of the proceeds that D may exclude
from gross income under this section is limited by
paragraph (b)(1)(ii)(B)(2) of this section to the sum
of—
(i) The higher of the amount C could have ex-
cluded had the transfer to D not occurred ($6,000
plus any premiums and other amounts paid by C with
respect to the policy subsequent to the transfer to C,
as described in Example 4 in paragraph (g)(4) of this
section) or the actual value of the consideration for
that transfer paid by D ($8,000); and
(ii) Any premiums and other amounts paid by D
with respect to the policy subsequent to the transfer
to D.
(6) Example 6. The facts are the same as in Ex-
ample 4 in paragraph (g)(4) of this section, except
that before A’s death, C transfers the policy back
to A for $8,000, its fair market value. A’s estate
receives the proceeds of $100,000 on A’s death.
The transfer from C to A is not a reportable policy
sale because the acquirer A has a substantial fam-
ily relationship with the insured, A. Although the
transfer follows a reportable policy sale (the initial
transfer from A to C), A’s estate may exclude all
of the policy proceeds from gross income because
paragraph (b)(1)(ii)(B)(3)(i) of this section applies
and, therefore, the amount of the proceeds that A
may exclude from gross income is not limited by
paragraph (b)(1)(i) of this section or (b)(1)(ii)(B)
(2) of this section.
(7) Example 7. The facts are the same as in Exam-
ple 6 in paragraph (g)(6) of this section, except that C
transfers the policy back to A for $4,000, rather than
its fair market value of $8,000. A’s estate receives the
proceeds of $100,000 on A’s death. Because A did
not pay fair market value for the policy, the transfer
is bifurcated and treated as a bargain sale under para-
graph (b)(2)(iii) of this section. A therefore is treated
as having purchased 50% of the policy interest for
valuable consideration equal to fair market value and
as having received 50% of the policy interest in a
gratuitous transfer. The transfer from C to A is not a
reportable policy sale because the acquirer, A, has a
substantial family relationship with the insured, A,
but the transfer from C to A follows a reportable pol-
icy sale (the transfer from A to C).
(i) Treatment of policy interest purchased by A.
A’s estate may exclude from income all of the poli-
cy proceeds related to the 50% policy interest trans-
ferred for valuable consideration ($50,000) because,
under paragraph (b)(1)(ii)(B)(3)(i) of this section,
the amount of the proceeds that may be excluded
from gross income is not limited by paragraph (b)(1)
(i) of this section or (b)(1)(ii)(B)(2) of this section.
(ii) Treatment of policy interest gratuitously
transferred to A. The amount of the policy proceeds
related to the 50% policy interest transferred gratu-
itously that A’s estate may exclude from income is
limited under paragraph (b)(2)(i) of this section to
the sum of the amount C could have excluded with
respect to 50% of the policy had the transfer back
to A not occurred (that is, 50% of the $6,000 that C
paid A for the policy, plus 50% of any premiums and
other amounts paid by C with respect to the policy
subsequent to the transfer to C), plus 50% of any pre-
miums and other amounts paid by A with respect to
the policy subsequent to the transfer to A.
(8) Example 8. The facts are the same as in Ex-
ample 6 in paragraph (g)(6) of this section, except
that, before A’s death, A gratuitously transfers 50%
of the policy interest to B, A’s child, and sells 50%
of the policy interest for its fair market value to an
individual, E, who does not have a substantial fam-
ily, business, or financial relationship with A. B and
E each receive $50,000 of the proceeds on A’s death.
Paragraph (b)(1)(ii)(B)(3)(ii) of this section applies
to determine the amount of the proceeds that B and E
may exclude from gross income because the policy
interests transferred to B and E were first transferred
for valuable consideration in a reportable policy sale
(the transfer by A to C) and then transferred to the
insured, A, for fair market value.
(i) Treatment of policy interest transferred to
B. With respect to the portion of the policy interest
transferred to B, because the transfer to B was the
only transfer subsequent to the transfer to A and the
transfer to B was gratuitous and not a reportable pol-
icy sale, under paragraph (b)(1)(ii)(B)(3)(ii) of this
section, the amount of the policy proceeds exclud-
able from gross income by B is determined under
paragraph (b)(2)(i) of this section, taking into ac-
count the application of paragraph (b)(1)(ii)(B)(3)(i)
of this section to A’s acquisition of the interest. Under
paragraph (b)(2)(i) of this section, the amount of the
proceeds B may exclude is limited to the sum of the
amount A could have excluded had the transfer to B
not occurred, and any premiums and other amounts
paid by B with respect to the policy subsequent to the
transfer to B. As described in Example 6 in paragraph
(g)(6) of this section, under paragraph (b)(1)(ii)(B)
(3)(i) of this section, the amount of the proceeds that
A may exclude from gross income is not limited by
paragraph (b)(1)(i) of this section or (b)(1)(ii)(B)(2)
of this section. Accordingly, the amount of the pro-
ceeds that B may exclude from gross income is not
limited by paragraph (b) of this section.
(ii) Treatment of policy interest transferred to
E. With respect to the portion of the policy inter-
est transferred to E, because the transfer to E was
not gratuitous and was a reportable policy sale,
under paragraph (b)(1)(ii)(B)(3)(ii) of this section,
the amount of the policy proceeds excludable from

November 18, 2019 1078 Bulletin No. 2019–47
gross income by E is determined in accordance with
paragraph (b) of this section. Accordingly, because
the transfer to E was for valuable consideration, the
amount excludable from gross income by E is lim-
ited by paragraph (b)(1)(i) of this section unless an
exception in paragraph (b)(1)(ii) of this section ap-
plies. Because the transfer from A to E is a reportable
policy sale, none of the exceptions in paragraph (b)
(1)(ii) of this section apply. Therefore, the amount
of the proceeds E may exclude from gross income
under this section is limited by paragraph (b)(1)(i) of
this section to the sum of the consideration paid by E
and the premiums and other amounts paid by E with
respect to the policy subsequent to the transfer to E.
(9) Example 9. The facts are the same as in Exam-
ple 8 in paragraph (g)(8) of this section, except that,
before A’s death, B transfers B’s policy interest to
Partnership F, whose partners are A and other family
members of A, in exchange for a partnership interest
in Partnership F. Partnership F receives $50,000 of
the proceeds on A’s death. With respect to the policy
interest transferred to Partnership F, paragraph (b)(1)
(ii)(B)(3)(ii) of this section applies to determine the
amount of the proceeds that Partnership F may ex-
clude from gross income for the reasons described in
Example 8 in paragraph (g)(8) of this section.
(i) Treatment of policy interest transferred to
Partnership F. The transfer to Partnership F was not
a reportable policy sale. However, because the trans-
fer to Partnership F was not gratuitous, the amount
of the policy proceeds excludable from gross income
by Partnership F is determined in accordance with
paragraph (b) of this section as if the amount that
would have been excludable from gross income
by A following the transfer to A, if no subsequent
transfer had occurred, was determined under para-
graph (b)(1)(ii)(B)(2) of this section. Because B’s
transfer to Partnership F was a transfer for valuable
consideration to a partnership in which the insured
is a partner that was preceded by a reportable policy
sale (the transfer to C), the amount of the proceeds
Partnership F may exclude from gross income under
this section is limited under paragraph (b)(1)(ii)(B)
(2) of this section to the higher of the amount that
would have been excludable by B if the transfer to
Partnership F had not occurred or the actual value
of the consideration for the policy paid by Partner-
ship F, plus any premiums and other amounts paid by
Partnership F with respect to the policy subsequent
to the transfer to Partnership F.
(ii) Amount that B could have excluded. Because
the transfer from A to B was a gratuitous transfer,
the amount of the proceeds B could have excluded
from gross income under this section if the transfer
to Partnership F had not occurred is limited under
paragraph (b)(2)(i) of this section to the sum of the
amount A could have excluded had the transfer to B
not occurred, and any premiums and other amounts
paid by B with respect to the policy subsequent to
the transfer to B.
(iii) Amount that A could have excluded. As
described in paragraph (g)(9)(i) of this section, the
amount of the proceeds A could have excluded un-
der this section if the transfer to B had not occurred
must be determined under paragraph (b)(1)(ii)(B)
(2) of this section in accordance with paragraph (b)
(1)(ii)(B)(3)(ii) of this section. Under paragraph (b)
(1)(ii)(B)(2) of this section, the amount that would
have been excludable by A is limited to the higher
of the amount that would have been excludable by
C if the transfer to A had not occurred ($6,000 plus
premiums and other amounts subsequently paid by
C) or the actual value of the consideration for the
policy paid by A ($8,000), plus any premiums and
other amounts paid by A with respect to the policy
subsequent to the transfer to A.
(10) Example 10. A is the initial policyholder of a
$100,000 insurance policy on A’s life. A contributes
the policy to Corporation X in exchange for stock.
Corporation X’s basis in the policy is determinable
in whole or in part by reference to A’s basis in the
policy. Corporation X conducts an active trade or
business that it wholly owns, and A materially par-
ticipates in that active trade or business as an em-
ployee of Corporation X. Corporation X receives the
proceeds of $100,000 on A’s death. A’s contribution
of the policy to Corporation X is not a reportable
policy sale because Corporation X has a substantial
business relationship with A under paragraph (d)(2)
(i) of this section. Although Corporation X’s basis
in the policy is determinable in whole or in part by
reference to A’s basis in the policy, paragraph (b)(1)
(ii)(A) of this section does not apply because the in-
sured, A, is a shareholder of Corporation X and the
other requirements under paragraph (b)(1)(ii)(B) of
this section are satisfied. Accordingly, paragraph (b)
(1)(ii)(B) of this section applies, and paragraph (b)
(1)(ii)(A) of this section is inapplicable. Under para-
graph (b)(1)(ii)(B)(1) of this section, Corporation
X’s exclusion is not limited by paragraph (b) of this
section.
(11) Example 11. The facts are the same as in
Example 10 in paragraph (g)(10) of this section,
except that Corporation X transfers its active trade
or business and the policy on A’s life to Corporation
Y in a tax-free reorganization at a time when A is
still employed by Corporation X, but is no longer a
shareholder of Corporation X. Corporation Y’s basis
in the policy is determinable in whole or in part by
reference to Corporation X’s basis in the policy, and
Corporation Y carries on the trade or business ac-
quired from Corporation X. Corporation Y receives
the proceeds of $100,000 on A’s death. The transfer
from Corporation X to Corporation Y is not a report-
able policy sale because Corporation Y has a sub-
stantial business relationship with A under paragraph
(d)(2)(ii) of this section. The amount of the proceeds
that Corporation Y may exclude from gross income
is limited under paragraph (b)(1)(ii)(A) of this sec-
tion to the sum of the amount that would have been
excludable by Corporation X had the transfer to
Corporation Y not occurred, plus any premiums and
other amounts paid by Corporation Y with respect
to the policy subsequent to the transfer. Accordingly,
because Corporation X’s exclusion is not limited by
paragraph (b) of this section, as described in Exam-
ple 10 in paragraph (g)(10) of this section, Corpora-
tion Y’s exclusion is not limited by paragraph (b) of
this section.
(12) Example 12. A is the initial policyholder of a
$100,000 insurance policy on A’s life. A contributes
the policy to a C corporation, Corporation W, in ex-
change for stock. After the acquisition, A owns less
than 20% of the outstanding stock of Corporation W
and owns stock possessing less than 20 % of the total
combined voting power of all stock of Corporation
W and is therefore not a key person with respect to
Corporation W under section 264(e)(3). Corporation
W’s basis in the policy is determinable in whole or
in part by reference to A’s basis in the policy. How-
ever, no substantial family, business, or financial re-
lationship exists between A and Corporation W, so
A’s contribution of the policy to Corporation W is
a reportable policy sale. Corporation W receives the
proceeds of $100,000 on A’s death. Under paragraph
(b)(1)(i) of this section, the amount of the proceeds
Corporation W may exclude from gross income is
limited to the actual value of the stock exchanged
for the policy, plus any premiums and other amounts
paid by Corporation W with respect to the policy
subsequent to the transfer. The exceptions in para-
graph (b)(1)(ii) of this section do not apply because
the transfer to Corporation W is a reportable policy
sale.
(13) Example 13. Partnership X and Partnership
Y are owned by individuals A, B, and C. A holds 40%
of the capital and profits interest of Partnership X
and 20% of the capital and profits interest of Partner-
ship Y. B holds 35% of the capital and profits interest
of Partnership X and 40% of the capital and profits
interest of Partnership Y. C holds 25% of the capital
and profits interest of Partnership X and 40% of the
capital and profits interest of Partnership Y. Partner-
ship X is the initial policyholder of a $100,000 insur-
ance policy on the life of A. Partnership Y purchases
the policy from Partnership X. Under paragraph (c)
(2)(i) of this section, this transfer is not a reportable
policy sale because the ownership interest of each
beneficial owner in Partnership X does not vary from
that owner’s interest in Partnership Y by more than
a 20% ownership interest. A’s ownership varies by a
20% interest, B’s ownership varies by a 5% interest,
and C’s ownership varies by a 15% interest.
(14) Example 14. Partnership X conducts an ac-
tive trade or business and is the initial policyhold-
er of a $100,000 insurance policy on the life of its
full-time employee, A. A materially participates in
Partnership X’s active trade or business in A’s ca-
pacity as an employee. Individual B acquires a 10%
profits interest in Partnership X in exchange for a
cash payment of $1,000,000. Under paragraphs (d)
(1) through (3) of this section, B does not have a
substantial family, business, or financial relationship
with A. Under paragraph (d)(4)(i) of this section,
however, B is deemed to have a substantial business
relationship with A because, under paragraph (d)(2)
(i) of this section, Partnership X (the direct policy-
holder) has a substantial business relationship with
A. Accordingly, although the acquisition of the 10%
partnership interest by B is an indirect acquisition of
a 10% interest in the insurance policy covering A’s
life, the acquisition is not a reportable policy sale.
(15) Example 15. The facts are the same as in Ex-
ample 14 in paragraph (g)(14) of this section, except
that A is no longer an employee of Partnership X, and
Partnership X has no substantial family, business, or
financial relationship with A, when B acquires the
profits interest in Partnership X. Also, B acquires
only a 5% profits interest in exchange for a cash
payment of $500,000. Partnership X does not own
an interest in any other life insurance policies, and
the gross value of its assets is $10 million. Although
neither Partnership X nor B has a substantial family,
business, or financial relationship with A at the time

Bulletin No. 2019–47 1079 November 18, 2019
of B’s indirect acquisition of an interest in the policy
covering A’s life, because B’s profits interest in Part-
nership X does not exceed 5%, and because no more
than 50% of Partnership X’s asset value consists of
life insurance contracts, the exception in paragraph
(c)(2)(iii)(B) of this section applies, and B’s indirect
acquisition of an interest in the policy covering A’s
life is not a reportable policy sale.
(16) Example 16. A is the initial policyholder of
a $100,000 insurance policy on A’s life. A sells the
policy for its fair market value. As a result of the sale,
Bank X holds legal title to the life insurance contract
as the nominee of Partnership B, and Partnership B
has the enforceable right to designate the contract
beneficiary. Under paragraphs (d)(1) through (4) of
this section, neither Bank X nor Partnership B has a
substantial family, business, or financial relationship
with the insured, A, at the time of the sale. Accord-
ingly, the transfer of legal title to the policy to Bank
X is a reportable policy sale under paragraph (c)(1)
of this section, unless an exception set forth in para-
graph (c)(2) of this section applies. The same is true
of the transfer of the economic benefits of the policy
to Partnership B. At a later date, Partnership B sells
its economic interest in the policy to Partnership C
for fair market value. Bank X continues to hold le-
gal title to the life insurance contract, but now holds
it as Partnership C’s nominee. Partnership C has no
substantial family, business, or financial relationship
with the insured, A, under paragraphs (d)(1) through
(4) of this section at the time of the transfer. Accord-
ingly, Partnership C’s acquisition of the economic in-
terest in the policy from Partnership B is a reportable
policy sale under paragraph (c)(1) of this section,
unless an exception set forth in paragraph (c)(2) of
this section applies.
Par. 3. Section 1.101-6 is amended by
revising paragraph (b) to read as follows:
§1.101-6 Effective date.
* * * * *
(b) Notwithstanding paragraph (a) of
this section, for purposes of determining
whether a transfer of an interest in a life
insurance contract is a reportable poli-
cy sale or a payment of death benefits is
a payment of reportable death benefits
subject to the reporting requirements of
section 6050Y and §§1.6050Y-1 through
1.6050Y-4, §1.101-1(b) through (g) ap-
ply to reportable policy sales made after
December 31, 2018, and to reportable
death benefits paid after December 31,
2018. For any other purpose, including
for purposes of determining the amount
of the proceeds of life insurance contracts
payable by reason of death excluded from
gross income under section 101, §1.101-
1(b) through (g) apply to amounts paid by
reason of the death of the insured under a
life insurance contract, or interest therein,
transferred after October 31, 2019. How-
ever, under section 7805(b)(7), a taxpayer
may apply the rules set forth in §1.101-
1(b) through (g) of the final regulations, in
their entirety, with respect to all amounts
paid by reason of the death of the insured
under a life insurance contract, or interest
therein, transferred after December 31,
2017, and on or before October 31, 2019.
Par. 4. Section 1.6050Y-1 is added to
read as follows:
§1.6050Y-1 Information reporting for
reportable policy sales, transfers of life
insurance contracts to foreign persons,
and reportable death benefits.
(a) Definitions. The following defini-
tions apply for purposes of this section
and §§1.6050Y-2 through 1.6050Y-4:
(1) Acquirer. The term acquirer means
any person that acquires an interest in a
life insurance contract (through a direct
acquisition or indirect acquisition of the
interest) in a reportable policy sale.
(2) Buyer. The term buyer means, with
respect to any interest in a life insurance
contract that has been transferred in a re-
portable policy sale, the person that was
the most recent acquirer of that interest in
a reportable policy sale as of the date re-
portable death benefits are paid under the
contract.
(3) Direct acquisition of an interest in
a life insurance contract. The term direct
acquisition of an interest in a life insur-
ance contract has the meaning given to it
in §1.101-1(e)(3)(i).
(4) Foreign person. The term foreign
person means a person that is not a Unit-
ed States person, as defined in section
7701(a)(30).
(5) Indirect acquisition of an interest
in a life insurance contract. The term in-
direct acquisition of an interest in a life
insurance contract has the meaning given
to it in §1.101-1(e)(3)(ii).
(6) Interest in a life insurance con-
tract. The term interest in a life insurance
contract has the meaning given to it in
§1.101-1(e)(1).
(7) Investment in the contract—(i)
Definition of investment in the contract.
With respect to the original policyhold-
er of a life insurance contract, the term
investment in the contract on any date
means that person’s investment in the con-
tract under section 72(e)(6) on that date.
With respect to any other person, the term
investment in the contract on any date
means the estimate of investment in the
contract on that date.
(ii) Definition of estimate of investment
in the contract. The term estimate of in-
vestment in the contract with respect to
any person, other than the original policy-
holder, means, on any date, the aggregate
amount of premiums paid for the contract
by that person before that date, less the
aggregate amount received under the con-
tract by that person before that date to the
extent such information is known to or can
reasonably be estimated by the issuer or
payor.
(8) Issuer—(i) In general. Except as
provided in paragraph (a)(8)(ii) or (iii)
of this section, the term issuer generally
means, on any date, with respect to any
interest in a life insurance contract, any
person that bears any part of the risk with
respect to the contract on that date and
any person responsible on that date for
administering the contract, including col-
lecting premiums and paying death bene-
fits. For instance, if a reinsurer reinsures
on an indemnity basis all or a portion of
the risks that the original issuer (and con-
tinuing contract administrator) of the con-
tract might otherwise have incurred with
respect to the contract, both the reinsurer
and the original issuer of the contract are
issuers of the contract for purposes of this
paragraph (a)(8)(i). Any designee of an
issuer of a contract is also considered an
issuer of the contract for purposes of this
paragraph (a)(8)(i).
(ii) 6050Y(a) issuer. For purposes
of information reporting under section
6050Y(a) and §1.6050Y-2, the 6050Y(a)
issuer is the issuer that is responsible for
administering the life insurance contract,
including collecting premiums and pay-
ing death benefits under the contract, on
the date of the reportable policy sale. In
the case of the issuance of a life insurance
contract to a policyholder in an exchange
pursuant to section 1035, the 6050Y(a) is-
suer is the issuer that issues the new con-
tract.
(iii) 6050Y(b) issuer. For purposes
of information reporting under section
6050Y(b) and §1.6050Y-3, a 6050Y(b)
issuer is:
(A) Any person that receives an RPSS
with respect to a life insurance contract or

November 18, 2019 1080 Bulletin No. 2019–47
interest therein (or, in the case of a des-
ignee, receives notice that the issuer for
whom it serves as designee received an
RPSS), and is or was, on or before the
date of receipt of the RPSS, an issuer with
respect to the contract; or
(B) Any person that receives notice of
a transfer to a foreign person of a life in-
surance contract, provided that the person
is or was, on the date of transfer or on the
date of receipt of the notice, an issuer with
respect to the contract, and provided that
the information is not received from the
issuer responsible for administering the
contract (or its designee), unless:
(1) That person (or, in the case of a des-
ignee, the issuer for whom it serves as des-
ignee) is not responsible for administering
the contract, including collecting premi-
ums and paying death benefits under the
contract, on the date the notice of a trans-
fer to a foreign person is received; and
(2) That person, or its designee, pro-
vides the issuer that is responsible on that
date for administering the contract, in-
cluding collecting premiums and paying
death benefits under the contract, with
such notice and with any available infor-
mation necessary to accomplish reporting
under section 6050Y(b) and §1.6050Y-3.
(iv) Designee. A person is treated as
the designee of an issuer for purposes of
this paragraph (a)(8) only if so designated
in writing, including electronically. The
designation must be signed and acknowl-
edged, in writing or electronically, by the
person named as designee, or that person’s
representative, and by the issuer making
the designation, or its representative.
(9) Life insurance contract. The term
life insurance contract has the meaning
given to it in section 7702(a). A life insur-
ance contract may also be referred to as a
life insurance policy.
(10) Notice of a transfer to a foreign
person. The term notice of a transfer to
a foreign person means any notice of a
transfer of title to, possession of, or legal
ownership of a life insurance contract re-
ceived by a 6050Y(b) issuer that includes
foreign indicia, including information
provided for nontax purposes such as a
change of address notice for purposes of
sending statements or for other purposes,
and information relating to loans, pre-
miums, or death benefits with respect to
the contract, unless the 6050Y(b) issuer
knows that no transfer of the contract has
occurred or knows that the transferee is
a United States person. For this purpose,
a 6050Y(b) issuer may rely on a Form
W-9, Request for Taxpayer Identification
Number and Certification, or a valid sub-
stitute form that meets the requirements of
§1.1441-1(d)(2) (substituting “6050Y(b)
issuer” for “withholding agent”), that in-
dicates the transferee is a United States
person. For instance, a change of address
notice that changes the address to a for-
eign address or other updates to the infor-
mation relating to the payment of premi-
ums that includes foreign banking or other
foreign financial institution information
is notice of a transfer to a foreign person
unless the 6050Y(b) issuer knows that no
transfer has occurred or the transferee is a
United States person.
(11) Payor. The term payor means any
person making a payment of reportable
death benefits.
(12) Reportable death benefits. The
term reportable death benefits means
amounts paid by reason of the death of the
insured under a life insurance contract that
are attributable to an interest in the con-
tract that was transferred in a reportable
policy sale.
(13) Reportable death benefits payment
recipient. The term reportable death ben-
efits payment recipient means any person
that receives reportable death benefits as a
beneficiary under a life insurance contract
or as the holder of an interest in a life in-
surance contract.
(14) Reportable policy sale. The term
reportable policy sale has the meaning
given to it in §1.101-1(c).
(15) Reportable policy sale payment.
The term reportable policy sale payment
generally means the total amount of cash
and the fair market value of any other
consideration reducible to a money val-
ue transferred, or to be transferred, in
a reportable policy sale, including any
amount of a reportable policy sale pay-
ment recipient’s debt assumed by the
acquirer in a reportable policy sale. In
the case of an indirect acquisition of an
interest in a life insurance contract that
is a reportable policy sale, the reportable
policy sale payment is the total amount
of cash and the fair market value of any
other consideration reducible to a money
value transferred, or to be transferred, for
the ownership interest in the entity, in-
cluding the amount of any debt assumed
by the acquirer, that is appropriately allo-
cable to the interest in the life insurance
contract held by the entity.
(16) Reportable policy sale payment
recipient—(i) Except as provided in para-
graph (a)(16)(ii) of this section, the term
reportable policy sale payment recipient
means any person that receives a report-
able policy sale payment in a reportable
policy sale. A broker or other intermediary
that retains a portion of the cash or other
consideration transferred in a reportable
policy sale is also a reportable policy sale
payment recipient.
(ii) A person other than the seller is not
a reportable policy sale payment recipient
with respect to a reportable policy sale if
that person receives aggregate payments
of less than $600 with respect to that re-
portable policy sale.
(17) Reportable policy sale statement.
The term reportable policy sale state-
ment (RPSS) means a statement furnished
by an acquirer to an issuer under section
6050Y(a)(2) and §1.6050Y-2(d)(2)(i).
(18) Seller. The term seller means any
person that—
(i) Holds an interest in a life insurance
contract and transfers that interest, or any
part of that interest, to an acquirer in a re-
portable policy sale; or
(ii) Owns a life insurance contract and
transfers title to, possession of, or legal
ownership of that contract to a foreign
person.
(19) Transfer of an interest in a life in-
surance contract. The term transfer of an
interest in a life insurance contract has the
meaning given to it in §1.101-1(e)(2).
(20) United States person. The term
United States person has the meaning giv-
en to it in section 7701(a)(30).
(b) Applicability date. This section and
§§1.6050Y-2 through 1.6050Y-3 apply to
reportable policy sales made after Decem-
ber 31, 2018. This section and §1.6050Y-
4 apply to reportable death benefits paid
after December 31, 2018. However, for
reportable policy sales and payments of
reportable death benefits occurring after
December 31, 2018, and on or before Oc-
tober 31, 2019, transition relief is provid-
ed as follows:
(1) Statements required to be furnished
to issuers under section 6050Y(a)(2) and

Bulletin No. 2019–47 1081 November 18, 2019
§1.6050Y-2(d)(2)(i) must be furnished
by the later of the applicable deadline set
forth in §1.6050Y-2(d)(2)(ii) or December
30, 2019.
(2) Statements required to be fur-
nished to reportable policy sale payment
recipients under section 6050Y(a)(2) and
§1.6050Y-2(d)(1)(i) must be furnished
by the later of the applicable deadline set
forth in §1.6050Y-2(d)(1)(ii) or February
28, 2020.
(3) Statements required to be furnished
to sellers under section 6050Y(b)(2) and
§1.6050Y-3(d)(1) must be furnished by
the later of the applicable deadline set
forth in §1.6050Y-3(d)(2) or February 28,
2020.
(4) Statements required to be furnished
to reportable death benefits payment re-
cipients under section 6050Y(c)(2) and
§1.6050Y-4(c)(1) must be furnished by
the later of the applicable deadline set
forth in §1.6050Y-4(c)(2) or February 28,
2020.
(5) Returns required to be filed under
section 6050Y(a)(1) and §1.6050Y-2(a),
section 6050Y(b)(1) and §1.6050Y-3(a),
and section 6050Y(c)(1) and §1.6050Y-4
must be filed by the later of the applica-
ble deadline set forth in §1.6050Y-2(c),
§1.6050Y-3(c), and §1.6050Y-4(b) or
February 28, 2020.
Par. 5. Section 1.6050Y-2 is added to
read as follows:
§1.6050Y-2 Information reporting by
acquirers for reportable policy sale
payments.
(a) Requirement of reporting. Except
as provided in paragraph (f) of this sec-
tion, every person that is an acquirer in
a reportable policy sale during any cal-
endar year must file a separate informa-
tion return with the Internal Revenue
Service (IRS) in the form and manner as
required by the IRS for each reportable
policy sale payment recipient, includ-
ing any seller that is a reportable policy
sale payment recipient. Each return must
include the following information with
respect to the seller or other reportable
policy sale payment recipient to which
the return relates:
(1) The name, address, and taxpayer
identification number (TIN) of the acquir-
er;
(2) The name, address, and TIN of the
seller or other reportable policy sale pay-
ment recipient to which the return relates;
(3) The date of the reportable policy
sale;
(4) The name of the 6050Y(a) issuer
of the life insurance contract acquired and
the policy number of the life insurance
contract;
(5) The aggregate amount of reportable
policy sale payments made, or to be made,
to the seller or other reportable policy sale
payment recipient to which the return re-
lates with respect to the reportable policy
sale; and
(6) Any other information that is re-
quired by the form or its instructions.
(b) Unified reporting. The information
reporting requirement of paragraph (a) of
this section applies to each acquirer in a
series of prearranged transfers of an inter-
est in a life insurance contract, as well as
each acquirer in a simultaneous transfer
of different interests in a single life insur-
ance contract. In either case, an acquirer’s
reporting obligation is deemed satisfied
if the information required by paragraph
(a) of this section with respect to that ac-
quirer is timely reported on behalf of that
acquirer in a manner that is consistent
with forms, instructions, and other IRS
guidance by one or more other acquirers
or by a third party information reporting
contractor.
(c) Time and place for filing. Returns
required to be made under paragraph (a)
of this section must be filed with the In-
ternal Revenue Service Center designated
on the prescribed form or in its instruc-
tions on or before February 28 (March 31
if filed electronically) of the year follow-
ing the calendar year in which the report-
able policy sale occurred. However, see
§1.6050Y-1(b)(5) for transition rules.
(d) Requirement of and time for fur-
nishing statements—(1) Statements to re-
portable policy sale payment recipients—
(i) Requirement of furnishing statement.
Every person required to file an infor-
mation return under paragraph (a) of this
section with respect to a reportable policy
sale payment recipient must furnish in the
form and manner prescribed by the IRS to
the reportable policy sale payment recipi-
ent whose name is set forth in that return a
written statement showing the information
required by paragraph (a) of this section
with respect to the reportable policy sale
payment recipient and the name, address,
and phone number of the information con-
tact of the person furnishing the written
statement. The contact information of the
person furnishing the written statement
must provide direct access to a person that
can answer questions about the statement.
The statement is not required to include
information with respect to any other re-
portable policy sale payment recipient in
the reportable policy sale or information
about reportable policy sale payments to
any other reportable policy sale payment
recipient.
(ii) Time for furnishing statement. Each
statement required by paragraph (d)(1)
(i) of this section to be furnished to any
reportable policy sale payment recipient
must be furnished on or before February
15 of the year following the calendar year
in which the reportable policy sale oc-
curred. However, see §1.6050Y-1(b)(2)
for transition rules.
(2) Statements to 6050Y(a) issuers—(i)
Requirement of furnishing RPSS—(A) In
general. Except as provided in paragraph
(d)(2)(i)(B) of this section, every person
required to file a return under paragraph
(a) of this section must furnish in the form
and manner prescribed by the IRS to the
6050Y(a) issuer whose name is required
to be set forth in the return an RPSS with
respect to each reportable policy sale pay-
ment recipient that is also a seller. Each
RPSS must show the information required
by paragraph (a) of this section with re-
spect to the seller named therein, except
that the RPSS is not required to set forth
the amount of any reportable policy sale
payment. Each RPSS must also show the
name, address, and phone number of the
information contact of the person furnish-
ing the RPSS. This contact information
must provide direct access to a person that
can answer questions about the RPSS.
(B) Exception from reporting. An
RPSS is not required to be furnished to the
6050Y(a) issuer by an acquirer acquiring
an interest in a life insurance contract in
an indirect acquisition.
(ii) Time for furnishing RPSS. Except
as provided in this paragraph (d)(2)(ii),
each RPSS required by paragraph (d)
(2)(i) of this section to be furnished to a
6050Y(a) issuer must be furnished by the
later of 20 calendar days after the report-

November 18, 2019 1082 Bulletin No. 2019–47
able policy sale, or 5 calendar days after
the end of the applicable state law rescis-
sion period. However, if the later date is
after January 15 of the year following
the calendar year in which the reportable
policy sale occurred, the RPSS must be
furnished by January 15 of the year fol-
lowing the calendar year in which the re-
portable policy sale occurred. However,
see §1.6050Y-1(b)(1) for transition rules.
(3) Unified reporting. The information
reporting requirements of paragraphs (d)
(1)(i) and (d)(2)(i) of this section apply to
each acquirer in a series of prearranged
transfers of an interest in a life insurance
contract, as well as each acquirer in a si-
multaneous transfer of different interests
in a single life insurance contract, as de-
scribed in paragraph (b) of this section.
In either case, an acquirer’s obligation to
furnish statements is deemed satisfied if
the information required by paragraphs
(d)(1)(i) and (d)(2)(i) of this section with
respect to that acquirer is timely report-
ed on behalf of that acquirer consistent
with forms, instructions, and other IRS
guidance by one or more other acquirers
or by a third party information reporting
contractor.
(e) Notice of rescission of a reportable
policy sale. Any person that has filed a
return required by section 6050Y(a)(1)
and this section with respect to a report-
able policy sale must file a corrected re-
turn within 15 calendar days of the receipt
of notice of the rescission of the report-
able policy sale. Any person that has fur-
nished a written statement under section
6050Y(a)(2) and this section with respect
to the reportable policy sale must furnish
the recipient of that statement with a cor-
rected statement within 15 calendar days
of the receipt of notice of the rescission of
the reportable policy sale.
(f) Exceptions to requirement to file—
(1) An acquirer that is a foreign person is
not required to file an information return
under paragraph (a) of this section with re-
spect to a reportable policy sale unless—
(i) The life insurance contract (or inter-
est therein) transferred in the sale is on the
life of an insured who is a United States
person at the time of the sale; or
(ii) The sale is subject to the laws of
one or more States of the United States
that pertain to acquisitions or sales of life
insurance contracts (or interests therein).
(2) An acquirer is not required to file
an information return under paragraph (a)
of this section with respect to a reportable
policy sale payment to a reportable poli-
cy sale payment recipient other than the
seller if the reportable policy sale payment
is reported by the acquirer under section
6041 or 6041A.
(3) An acquirer is not required to file
an information return under paragraph (a)
of this section with respect to the issuance
of a life insurance contract in an exchange
pursuant to section 1035. However, the ac-
quirer is required to furnish the 6050Y(a)
issuer with the statement required under
paragraph (d)(2) of this section as if the
acquirer were required to file an infor-
mation return under paragraph (a) of this
section.
(g) Cross-reference to penalty provi-
sions—(1) Failure to file correct infor-
mation return. For provisions relating
to the penalty provided for failure to
file timely a correct information return
required under section 6050Y(a)(1)
and this section, see section 6721 and
§301.6721-1 of this chapter. See section
6724(a) and §301.6724-1 of this chapter
for the waiver of a penalty if the failure is
due to reasonable cause and is not due to
willful neglect.
(2) Failure to furnish correct statement.
For provisions relating to the penalty pro-
vided for failure to furnish timely a correct
statement to identified persons under sec-
tion 6050Y(a)(2) and this section, see sec-
tion 6722 and §301.6722-1 of this chapter.
See section 6724(a) and §301.6724-1 of
this chapter for the waiver of a penalty if
the failure is due to reasonable cause and
is not due to willful neglect.
Par. 6. Section 1.6050Y-3 is added to
read as follows:
§1.6050Y-3 Information reporting by
6050Y(b) issuers for reportable policy
sales and transfers of life insurance
contracts to foreign persons.
(a) Requirement of reporting. Except
as provided in paragraph (f) of this sec-
tion, each 6050Y(b) issuer that receives
an RPSS or any notice of a transfer to a
foreign person must file an information
return with the Internal Revenue Service
(IRS) with respect to each seller in the
form and manner prescribed by the IRS.
The return must include the following in-
formation with respect to the seller:
(1) The name, address, and taxpayer
identification number (TIN) of the seller;
(2) The investment in the contract with
respect to the seller;
(3) The amount the seller would have
received if the seller had surrendered the
life insurance contract on the date of the
reportable policy sale or the transfer of
the contract to a foreign person, or if the
date of the transfer to a foreign person is
not known to the 6050Y(b) issuer, the date
the 6050Y(b) issuer received notice of the
transfer; and
(4) Any other information that is re-
quired by the form or its instructions.
(b) Unified reporting. Each 6050Y(b)
issuer subject to the information report-
ing requirement of paragraph (a) of this
section must satisfy that requirement, but
a 6050Y(b) issuer’s reporting obligation
is deemed satisfied if the information re-
quired by paragraph (a) of this section with
respect to that 6050Y(b) issuer is timely
reported on behalf of that 6050Y(b) issuer
in a manner that is consistent with forms,
instructions, and other IRS guidance by
one or more other 6050Y(b) issuers or by
a third party information reporting con-
tractor.
(c) Time and place for filing. Except
as provided in this paragraph (c), returns
required to be made under paragraph (a)
of this section must be filed with the Inter-
nal Revenue Service Center designated on
the prescribed form or in its instructions
on or before February 28 (March 31 if
filed electronically) of the year following
the calendar year in which the reportable
policy sale or the transfer to a foreign per-
son occurred. If the 6050Y(b) issuer does
not receive notice of a transfer to a for-
eign person until after January 31 of the
calendar year following the year in which
the transfer occurred, returns required to
be made under paragraph (a) of this sec-
tion must be filed by the later of February
28 (March 31 if filed electronically) of the
calendar year following the year in which
the transfer occurred or thirty days after
the date notice is received. However, see
§1.6050Y-1(b)(5) for transition rules.
(d) Requirement of and time for fur-
nishing statements—(1) Requirement of
furnishing statement. Every 6050Y(b) is-
suer filing a return required by paragraph

Bulletin No. 2019–47 1083 November 18, 2019
(a) of this section must furnish to each
seller that is a reportable policy sale pay-
ment recipient or makes a transfer to a for-
eign person and whose name is required
to be set forth in the return a written state-
ment showing the information required by
paragraph (a) of this section with respect
to that seller and the name, address, and
phone number of the information contact
of the person filing the return. This contact
information must provide direct access to
a person that can answer questions about
the statement.
(2) Time for furnishing statement. Ex-
cept as provided in this paragraph (d)(2),
each statement required by paragraph (d)
(1) of this section to be furnished to any
seller must be furnished on or before Feb-
ruary 15 of the year following the calendar
year in which the reportable policy sale or
transfer to a foreign person occurred. If a
6050Y(b) issuer does not receive notice
of a transfer to a foreign person until after
January 31 of the calendar year following
the year in which the transfer occurred,
each statement required to be made un-
der paragraph (d) of this section must
be furnished by the date thirty days after
the date notice is received. However, see
§1.6050Y-1(b)(3) for transition rules.
(3) Unified reporting. Each 6050Y(b)
issuer subject to the information reporting
requirement of paragraph (d)(1) of this
section must satisfy that requirement, but
a 6050Y(b) issuer’s reporting obligation
is deemed satisfied if the information re-
quired by paragraph (d)(1) of this section
with respect to that 6050Y(b) issuer is
timely reported on behalf of that 6050Y(b)
issuer consistent with forms, instructions,
and other IRS guidance by one or more
other 6050Y(b) issuers or by a third party
information reporting contractor.
(e) Notice of rescission of a reportable
policy sale or transfer of an insurance con-
tract to a foreign person. Any 6050Y(b)
issuer that has filed a return required by
section 6050Y(b)(1) and this section with
respect to a reportable policy sale or trans-
fer of an insurance contract to a foreign
person must file a corrected return within
15 calendar days of the receipt of notice of
the rescission of the reportable policy sale
or transfer of the insurance contract to a
foreign person. Any 6050Y(b) issuer that
has furnished a written statement under
section 6050Y(b)(2) and this section with
respect to the reportable policy sale or
transfer of the insurance contract to a for-
eign person must furnish the recipient of
that statement with a corrected statement
within 15 calendar days of the receipt of
notice of the rescission of the reportable
policy sale or transfer of the insurance
contract to a foreign person.
(f) Exceptions to requirement to file. A
6050Y(b) issuer is not required to file an
information return under paragraph (a) of
this section if paragraph (f)(1), (2), or (3)
of this section applies.
(1) Except as provided in this para-
graph (f)(1), the 6050Y(b) issuer obtains
documentation upon which it may rely to
treat a seller of a life insurance contract
or interest therein as a foreign beneficial
owner in accordance with §1.1441-1(e)(1)
(ii), applying in such case the provisions
of §1.1441-1 by substituting the term
“6050Y(b) issuer” for the term “with-
holding agent” and without regard to the
fact that that these provisions apply only
to amounts subject to withholding under
chapter 3 of subtitle A of the Internal Rev-
enue Code. A 6050Y(b) issuer may also
obtain from a seller that is a partnership
or trust, in addition to documentation es-
tablishing the entity’s foreign status, a
written certification from the entity that
no beneficial owner of any portion of the
proceeds of the sale is a United States per-
son. In such a case, the issuer may rely
upon the written certification to treat the
partnership or trust as a foreign beneficial
owner for purposes of this paragraph (f)
(1) provided that the seller does not have
actual knowledge that a United States
person is the beneficial owner of all or a
portion of the proceeds of the sale. See
§1.1441-1(c)(6)(ii) for the definition of
beneficial owner that applies for purposes
of this paragraph (f)(1). Additionally, for
certifying its status as a foreign beneficial
owner (as applicable) for purposes of this
paragraph (f)(1), a seller that is required to
report any of the income from the sale as
effectively connected with the conduct of
a trade or business in the United States un-
der section 864(b) is required to provide
to the 6050Y(b) issuer a Form W-8ECI,
Certificate of Foreign Person’s Claim that
Income is Effectively Connected with the
Conduct of a Trade or Business in the
United States. If a 6050Y(b) issuer obtains
a Form W-8ECI from a seller with respect
to the sale or has reason to know that in-
come from the sale is effectively connect-
ed with the conduct of a trade or business
in the United States under section 864(b),
the exception to reporting described in
this paragraph (f)(1) does not apply.
(2) The 6050Y(b) issuer receives no-
tice of a transfer to a foreign person, but
does not receive an RPSS with respect to
the transfer, provided that, at the time the
notice is received—
(i) The 6050Y(b) issuer is not a United
States person;
(ii) The life insurance contract (or in-
terest therein) transferred is not on the life
of a United States person; and
(iii) The 6050Y(b) issuer has not clas-
sified the seller as a United States person
in its books and records.
(3) The RPSS received by the 6050Y(b)
issuer is with respect to the 6050Y(b) issu-
er’s issuance of a life insurance contract to
a policyholder in an exchange pursuant to
section 1035.
(g) Cross-reference to penalty provi-
sions—(1) Failure to file correct informa-
tion return. For provisions relating to the
penalty provided for failure to file time-
ly a correct information return required
under section 6050Y(b)(1) and this sec-
tion, see section 6721 and §301.6721-1
of this chapter. See section 6724(a) and
§301.6724-1 of this chapter for the waiver
of a penalty if the failure is due to reason-
able cause and is not due to willful neglect.
(2) Failure to furnish correct statement.
For provisions relating to the penalty pro-
vided for failure to furnish timely a correct
statement to identified persons under sec-
tion 6050Y(b)(2) and this section, see sec-
tion 6722 and §301.6722-1 of this chapter.
See section 6724(a) and §301.6724-1 of
this chapter for the waiver of a penalty if
the failure is due to reasonable cause and
is not due to willful neglect.
Par. 7. Section 1.6050Y-4 is added to
read as follows:
§1.6050Y-4 Information reporting by
payors for reportable death benefits.
(a) Requirement of reporting. Except as
provided in paragraph (e) of this section,
every person that is a payor of reportable
death benefits during any calendar year
must file a separate information return for
such calendar year with the Internal Rev-

November 18, 2019 1084 Bulletin No. 2019–47
enue Service (IRS) for each reportable
death benefits payment recipient in the
form and manner prescribed by the IRS.
The return must include the following in-
formation with respect to the reportable
death benefits payment recipient to which
the return relates:
(1) The name, address, and taxpayer
identification number (TIN) of the payor;
(2) The name, address, and TIN of the
reportable death benefits payment recipi-
ent;
(3) The date of the payment;
(4) The gross amount of reportable
death benefits paid to the reportable death
benefits payment recipient during the tax-
able year;
(5) The payor’s estimate of investment
in the contract with respect to the buy-
er, limited to the payor’s estimate of the
buyer’s investment in the contract with
respect to the interest for which the report-
able death benefits payment recipient was
paid; and
(6) Any other information that is re-
quired by the form or its instructions.
(b) Time and place for filing. Returns
required to be made under this section
must be filed with the Internal Revenue
Service Center designated in the instruc-
tions for the form on or before February
28 (March 31 if filed electronically) of the
year following the calendar year in which
the payment of reportable death benefits
was made. However, see §1.6050Y-1(b)
(5) for transition rules.
(c) Requirement of and time for fur-
nishing statements—(1) Requirement of
furnishing statement. Every person re-
quired to file an information return under
paragraph (a) of this section must furnish
to each reportable death benefits payment
recipient whose name is required to be
set forth in that return a written statement
showing the information required by para-
graph (a) of this section with respect to
that reportable death benefits payment re-
cipient and the name, address, and phone
number of the information contact of the
payor. This contact information must pro-
vide direct access to a person that can an-
swer questions about the statement.
(2) Time for furnishing statement.
Each statement required by paragraph (c)
(1) of this section to be furnished to any
reportable death benefits payment recipi-
ent must be furnished on or before Janu-
ary 31 of the year following the calendar
year in which the payment of reportable
death benefits was made. However, see
§1.6050Y-1(b)(4) for transition rules.
(d) Notice of rescission of a reportable
policy sale. Any person that has filed a
return required by section 6050Y(c) and
this section with respect to a payment of
reportable death benefits must file a cor-
rected return within 15 calendar days of
recovering any portion of the reportable
death benefits payment from the report-
able death benefits payment recipient as
a result of the rescission of the report-
able policy sale. Any person that has fur-
nished a written statement under section
6050Y(c)(2) and this section with respect
to a payment of reportable death benefits
must furnish the recipient of that state-
ment with a corrected statement within 15
calendar days of recovering any portion
of the reportable death benefits payment
from the reportable death benefits pay-
ment recipient as a result of the rescission
of the reportable policy sale.
(e) Exceptions to requirement to file. A
payor is not required to file an information
return under paragraph (a) of this section
with respect to a payment of reportable
death benefits if paragraph (e)(1), (2), or
(3) of this section applies.
(1) Except as provided in this paragraph
(e)(1), the payor obtains documentation in
accordance with §1.1441-1(e)(1)(ii) upon
which it may rely to treat the reportable
death benefits payment recipient as a for-
eign beneficial owner of the reportable
death benefits, applying in such case the
provisions of §1.1441-1 by substituting
the term “payor” for the term “withhold-
ing agent” and without regard to the fact
that the provisions apply only to amounts
subject to withholding under chapter 3 of
subtitle A of the Internal Revenue Code. A
payor may also obtain from a partnership
or trust that is a reportable death benefits
recipient, in addition to documentation
establishing the entity’s foreign status, a
written certification from the entity that no
beneficial owner of any portion of the re-
portable death benefits payment is a Unit-
ed States person. In such a case, a payor
may rely upon the written certification to
treat the partnership or trust as a foreign
beneficial owner for purposes of this para-
graph (e)(1) provided that the payor does
not have actual knowledge that a United
States person is the beneficial owner of all
or a portion of the reportable death ben-
efits payment. See §1.1441-1(c)(6)(ii) for
the definition of beneficial owner that ap-
plies for purposes of this paragraph (e)(1).
Other due diligence or reporting require-
ments may, however, apply to a payor that
relies on the exception set forth in this
paragraph (e)(1). See §1.1441-5(c) and
(e) (determination of payees of foreign
partnerships and certain foreign trusts
for amounts subject to withholding under
§1.1441-2(a)) and §1.1461-1(b) and (c)
(amounts subject to reporting for chapter
3 purposes).
(2) The buyer obtained the life insur-
ance contract (or interest therein) un-
der which reportable death benefits are
paid in a reportable policy sale to which
the exception to reporting described in
§1.6050Y-3(f)(2) applies.
(3) The payor never received, and has
no knowledge of any issuer having re-
ceived, an RPSS with respect to the inter-
est in a life insurance contract with respect
to which the reportable death benefits are
paid.
(f) Cross-reference to penalty provi-
sions—(1) Failure to file correct informa-
tion return. For provisions relating to the
penalty provided for failure to file time-
ly a correct information return required
under section 6050Y(c)(1) and this sec-
tion, see section 6721 and §301.6721-1
of this chapter. See section 6724(a) and
§301.6724-1 of this chapter for the waiver
of a penalty if the failure is due to reason-
able cause and is not due to willful neglect.
(2) Failure to furnish correct statement.
For provisions relating to the penalty pro-
vided for failure to furnish timely a correct
statement to identified persons under sec-
tion 6050Y(c)(2) and this section, see sec-
tion 6722 and §301.6722-1 of this chapter.
See section 6724(a) and §301.6724-1 of
this chapter for the waiver of a penalty if
the failure is due to reasonable cause and
is not due to willful neglect.
Sunita Lough,
Deputy Commissioner for Services
and Enforcement.
Approved: October 15, 2019.

Bulletin No. 2019–47 1085 November 18, 2019
David J. Kautter,
Assistant Secretary of the Treasury
(Tax Policy).
(Filed by the Office of the Federal Register on Oc-
tober 25, 2019, 4:15 p.m., and published in the issue
of the Federal Register for October 31, 2019, 84 F.R.
58460)

26 CFR 1.385-2 [Removed]
TD 9880
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Removal of Section 385
Documentation Regulations
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document removes
final regulations setting forth minimum
documentation requirements that ordi-
narily must be satisfied in order for cer-
tain related-party interests in a corporation
to be treated as indebtedness for Federal
tax purposes. This document also adopts
conforming amendments to other final
regulations to reflect the removal of the
documentation regulations. The final reg-
ulations removed or amended by this doc-
ument generally affect corporations that
issue purported indebtedness to related
corporations or partnerships.
DATES: These regulations are effective
November 4, 2019.
FOR FURTHER INFORMATION CON-
TACT: Austin Diamond-Jones, (202)
317-5363 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act (44 U.S.C. 3501-3521),
approval for the information collection
included in these regulations had been re-
quested under control number 1545-2267.
Because of the removal of the final doc-
umentation regulations, the information
burden has been removed and control
number 1545-2267 is no longer needed.
Background
I. Overview
Section 385(a) of the Internal Reve-
nue Code (Code) authorizes the Secretary
to “prescribe such regulations as may be
necessary or appropriate to determine
whether an interest in a corporation is to
be treated for purposes of [the Code] as
stock or indebtedness (or as in part stock
and in part indebtedness).” Section 385(b)
requires such regulations to “set forth fac-
tors which are to be taken into account in
determining with respect to a particular
factual situation whether a debtor-creditor
relationship exists or a corporation-share-
holder relationship exists.” Section
385(b) also enumerates a nonexclusive
list of factors potentially to be included in
those regulations.
On October 21, 2016, the Department
of the Treasury (Treasury Department)
and the IRS published final and temporary
regulations (T.D. 9790) under section 385
in the Federal Register (81 FR 72858).
The final and temporary regulations under
section 385 (Section 385 Regulations) in-
clude rules set forth in §1.385-2, which es-
tablish minimum documentation require-
ments that ordinarily must be satisfied
in order for purported debt obligations
among related parties to be treated as debt
for Federal tax purposes (Documentation
Regulations). The Section 385 Regula-
tions also include §§1.385-3, 1.385-3T,
and 1.385-4T, which treat as stock certain
debt that is issued by a corporation to a
controlling shareholder in a distribution
or in another related-party transaction that
achieves an economically similar result
(Distribution Regulations).
The Documentation Regulations, as
proposed, would have been applicable
with respect to interests issued or deemed
issued on or after the date of finalization.
However, commenters expressed concern
that, if the Documentation Regulations
were to be applicable as of that date,
taxpayers would lack adequate time to
prepare for compliance with the require-
ments set forth in those regulations. To
assist taxpayers in their preparation for the
Documentation Regulations, the Treasury
Department and the IRS made the regu-
lations applicable with respect to interests
issued or deemed issued after January 1,
2018. See §§1.385-1(f), 1.385-2(d)(2)
(iii), and 1.385-2(i).
II. Executive Order 13789
Executive Order 13789 (E.O. 13789),
issued on April 21, 2017, instructed the
Secretary to review all significant tax
regulations issued on or after January 1,
2016, and to take concrete action to al-
leviate the burdens of regulations that (i)
impose an undue financial burden on U.S.
taxpayers; (ii) add undue complexity to
the Federal tax laws; or (iii) exceed the
statutory authority of the IRS. E.O. 13789
further instructed the Secretary to submit
to the President within 60 days a report
(First Report) that identifies regulations
that meet these criteria. Notice 2017-38
(2017-30 I.R.B. 147 (July 24, 2017)) in-
cluded the Section 385 Regulations in a
list of eight regulations identified by the
Secretary in the First Report as meeting at
least one of the first two criteria specified
in E.O. 13789. In addition, E.O. 13789
instructed the Secretary to submit to the
President a second report (Second Report)
that recommended specific actions to mit-
igate the burden imposed by regulations
identified in the First Report.
III. Additional Delay in Application of
Documentation Regulations
As noted in Part I of this Background
section, the Treasury Department and the
IRS had originally delayed the applicabil-
ity date of the Documentation Regulations
to help taxpayers prepare for compliance
with those rules. Taxpayers, however,
continued to express concern regarding
the timing and potential application of the
Documentation Regulations. Based on
those continued concerns, and in light of
the contemplated additional action regard-
ing the Section 385 Regulations that re-
sulted from E.O. 13789 review, the Trea-
sury Department and the IRS determined
that a further delay in the application of
the Documentation Regulations would

November 18, 2019 1086 Bulletin No. 2019–47
be appropriate. Accordingly, in Notice
2017-36 (2017-33 I.R.B. 208 (August
14, 2017)), the Treasury Department and
the IRS announced their intent to amend
the Documentation Regulations to delay
the applicability of the regulations for 12
months, making the regulations applicable
only to interests issued or deemed issued
on or after January 1, 2019.
IV. Proposed Removal of Documentation
Regulations
The Second Report announced that the
Treasury Department and the IRS were
considering a proposal to revoke the fi-
nalized Documentation Regulations. See
Executive Order 13789—Second Report
to the President on Identifying and Re-
ducing Tax Regulatory Burdens, 82 FR
48013, 48016 (October 16, 2017). On
September 24, 2018, the Treasury Depart-
ment and the IRS published a notice of
proposed rulemaking (REG-130244-17)
in the Federal Register (83 FR 48265)
that proposed removing the Documenta-
tion Regulations and adopting conforming
amendments to other final regulations to
reflect the removal of the Documentation
Regulations (Proposed Regulations). The
preamble to the Proposed Regulations
provided that “taxpayers may rely on these
proposed regulations, in their entirety, un-
til the date a Treasury decision adopting
these regulations as final regulations is
published in the Federal Register” (Reli-
ance Provision). Proposed Regulations,
83 FR at 48267.
Summary of Comments
The Treasury Department and the IRS
received three written comments regard-
ing the Proposed Regulations. Two of
the comments supported removal of the
Documentation Regulations, while one
comment opposed removal. In connec-
tion with the Proposed Regulations, the
Treasury Department and the IRS also
received a written comment addressing
solely the Distribution Regulations.
The single commenter that opposed re-
moval of the Documentation Regulations
argued that the Proposed Regulations
would hamper the ability of the IRS to
counter earnings stripping, and result in
significant decreases in Federal revenue.
In addition, the commenter asserted that
the removal likely would reduce the over-
all perceived legitimacy of the U.S. tax
system, and consequently reduce volun-
tary compliance. The commenter further
argued that removal of the Documentation
Regulations would prove unnecessary be-
cause of (i) the delayed applicability date
provided by Notice 2017-36 and (ii) sub-
stantial, taxpayer-favorable modifications
included in the finalized Documentation
Regulations.
The two commenters that supported
removal of the Documentation Regula-
tions contended that the regulations fail
to balance appropriately (i) the burdens
imposed on taxpayers with (ii) the ex-
pected benefits to the Federal govern-
ment described in the preceding para-
graph. Both commenters expressed their
appreciation for the Reliance Provision,
and emphasized that application of the
Documentation Regulations would have
imposed onerous compliance burdens
and costs on taxpayers. One commenter
also asserted that the Reliance Provision
appropriately reduced administrative
burdens on the IRS.
The Treasury Department and the IRS
have considered each of the competing
arguments and concerns set forth by the
commenters and have determined that
the burdens imposed on taxpayers by the
Documentation Regulations outweigh the
regulations’ intended benefits. As a result,
this document adopts the Proposed Regu-
lations with no change as final regulations.
The Treasury Department and the IRS,
however, continue to consider the issues
addressed by the Documentation Regula-
tions.
After this further review, the Treasury
Department and the IRS may propose a
modified version of the Documentation
Regulations. In any modified version, the
Treasury Department and the IRS would
substantially simplify and streamline the
proposal to minimize taxpayer burdens,
while ensuring the collection of sufficient
documentation and other information nec-
essary for tax administration purposes.
The Treasury Department and the IRS
welcome comments regarding approach-
es that would most effectively achieve
that balance. Any modified version of
the Documentation Regulations would be
proposed with a prospective effective date
to allow sufficient lead-time for taxpayers
to design and implement systems to com-
ply with those regulations.
Effective Date
The removal of §1.385-2 and the con-
forming modifications are effective as of
November 4, 2019.
Statement of Availability of IRS
Documents
IRS Notices cited in this document are
published in the Internal Revenue Bulletin
and are available from the Superintendent
of Documents, U.S. Government Publish-
ing Office, Washington, DC 20402, or by
visiting the IRS website at http://www.irs.
gov.
Special Analyses
I. Regulatory Planning and Review –
Economic Analysis
Executive Order 13777 directs agen-
cies to alleviate unnecessary regulatory
burdens placed on the American people
by managing the costs associated with
the governmental imposition of private
expenditures required to comply with
Federal regulations. Executive Orders
13771, 13563, and 12866 direct agencies
to prudently manage the cost of planned
regulations by assessing costs and bene-
fits of available regulatory alternatives
and, if regulation is necessary, to select
regulatory approaches that maximize net
benefits (including potential economic,
environmental, public health and safety
effects, distributive impacts, and equity).
Executive Order 13563 emphasizes the
importance of quantifying both costs and
benefits, of reducing costs, of harmoniz-
ing rules, and of promoting flexibility.
The final regulations have been desig-
nated as subject to review under Execu-
tive Order 12866 pursuant to the Memo-
randum of Agreement (April 11, 2018)
between the Treasury Department and
the Office of Management and Budget
(OMB) regarding review of tax regula-
tions. OMB has determined that the final
regulations are not a significant regulatory
action. This final rule is an Executive Or-
der 13771 deregulatory action.

Bulletin No. 2019–47 1087 November 18, 2019
A. Background
On October 21, 2016, the Treasury De-
partment and the IRS published final and
temporary regulations (T.D. 9790) under
section 385 in the Federal Register (81
FR 72858). The final and temporary reg-
ulations under section 385 include rules
set forth in §1.385-2, which establish min-
imum documentation requirements that
ordinarily must be satisfied in order for
purported debt obligations among related
parties to be treated as debt for Federal tax
purposes (that is, the Documentation Reg-
ulations).
These final regulations withdraw the
Documentation Regulations, and thereby
remove the requirements set forth in those
regulations on taxpayers with respect to
certain transactions related to debt issu-
ance. If applicable, the Documentation
Regulations would have prescribed the
nature of the documentation necessary
to substantiate the Federal income tax
treatment of related-party interests as
indebtedness, including documentation
of factors analogous to those found in
third-party loan agreements. In general,
to comply with the Documentation Reg-
ulations, taxpayers would have needed
to provide or otherwise establish the fol-
lowing: (1) evidence of an unconditional
and binding obligation to make interest
and principal payments on certain fixed
dates; (2) that the holder of the loan had
the rights of a creditor, including rights su-
perior to shareholders in the case of disso-
lution; (3) a reasonable expectation of the
borrower’s ability to repay the loan; and
(4) evidence of conduct consistent with
a debtor-creditor relationship. The Doc-
umentation Regulations would have ap-
plied to relevant intercompany debt issued
by U.S. borrowers beginning in 2019, and
would have required that the taxpayer’s
documentation for a given tax year be pre-
pared by the time the borrower’s Federal
income tax return is filed.
Since the issuance of the Documen-
tation Regulations, Congress enacted
the Tax Cuts and Jobs Act, Public Law
115-97, 131 Stat. 2054 (2017) (TCJA).
While the final regulations do not im-
plement any provisions of the TCJA, the
final regulations would interact with the
TCJA. There are several provisions of
the TCJA that reduced the tax advantages
of conducting activity as part of a foreign
controlled domestic corporation (FCDC)
rather than in a domestically controlled
company (DCC), and thus may affect the
economic efficiency of the Documenta-
tion Regulations and, analogously, the
removal of those regulations. First, for
taxable years beginning after December
31, 2017, the TCJA reduced the statuto-
ry corporate tax rate from 35 percent to
21 percent, which lowers the effective
tax rate for DCCs more than for FCDCs.
Second, the ability of FCDCs to strip
earnings out of the United States through
the use of deductions for interest expense
was significantly reduced by the TCJA
through amendments to section 163(j) of
the Internal Revenue Code. See section
13301(a) of the TCJA, 131 Stat. 2054,
2117-21. Specifically, the TCJA amend-
ments to section 163(j) (1) eliminated the
debt-equity ratio safe harbor, (2) reduced
the maximum net interest deductions’
share of adjusted taxable income from
50 percent to 30 percent, (3) limited all,
rather than just related-party, interest de-
ductions, and (4) eliminated the carryfor-
ward of excess limitation under pre-TC-
JA section 163(j). The TCJA’s Base
Erosion Anti-abuse Tax (BEAT) further
reduces the tax advantage to deducting
interest expense. See section 14401(a)
of the TCJA, 131 Stat. 2054, 2226-32.
Thus, the benefits of the Documentation
Regulations in reducing foreign acquisi-
tions of U.S. assets and interest stripping
were reduced by the TCJA.
B. Need for the final regulations
These final regulations implement the
fifth deregulatory action identified for fur-
ther consideration in the Second Report
issued pursuant to E.O. 13789. Accord-
ingly, the final regulations are needed to
remove the Documentation Regulations.
C. Overview of the final regulations
These final regulations remove the
Documentation Regulations, which set
forth minimum documentation require-
ments that ordinarily must be satisfied in
order for certain related-party interests in
a corporation to be treated as indebted-
ness for Federal tax purposes. In addition,
the final regulations adopt conforming
amendments to other final regulations to
reflect the removal of the Documentation
Regulations.
D. Economic analysis
1. Baseline
The Treasury Department and the
IRS have assessed the benefits and costs
of these final regulations compared to a
no-action baseline that reflects anticipated
Federal income tax-related behavior in the
absence of these final regulations.
2. Summary of economic effects
These final regulations provide compli-
ance cost savings for some taxpayers by
eliminating the need to document relevant
transactions in a prescribed manner. The
behavior of taxpayers that nevertheless
continue to document such transactions
would not be changed to any measurable
degree. While the removal of the Docu-
mentation Regulations may lead to an in-
crease in investment in the United States,
this effect is likely to be small given that
a body of other regulations continue to
cover the terms of that investment. The
final regulations may increase costs of
the IRS in administering the Distribution
Regulations and potentially lead to more
noncompliance by some taxpayers.
An analysis discussing the anticipated
economic effects of these regulations was
included in the preamble to the Proposed
Regulations. See Proposed Regulations,
83 FR at 48267-69. The Treasury De-
partment and the IRS received no sub-
stantive comments regarding that analysis
in response to the Proposed Regulations.
The analysis included herein presents the
analysis set forth in those Proposed Reg-
ulations.
3. Number of affected taxpayers
The Treasury Department and the IRS
project that approximately 6,300 large C
corporations are likely to be affected by
these regulations. This estimate is based
on the number of corporations that have
sufficient assets ($100 million) or revenue
($50 million) or are publicly traded such
that they would have been required to doc-
ument the relevant transactions.

November 18, 2019 1088 Bulletin No. 2019–47
4. Monetized estimates of compliance
burden effects from Documentation
Regulations
The Treasury Department and the IRS
estimate that removal of the Documen-
tation Regulations will reduce taxpayer
compliance costs by $924 million over the
period 2019-2028 (undiscounted nominal
total). The net present value of the com-
pliance cost savings is $773 million and
$685 million ($2018) using real discount
rates of 3 percent and 7 percent, respective-
ly. These amounts are $90.6 million and
$97.5 million on an annualized basis, again
based on 3 percent and 7 percent real rates,
respectively. See below the “Change in
Annual Compliance Costs” table.
These estimates include an ongoing
reduction in compliance costs and a re-
duction in the start-up cost equal to four
times the annual ongoing compliance cost
savings. In addition, the analysis includes
a sensitivity analysis in which the compli-
ance costs are estimated for a 90-percent
interval around our best estimate. First, the
distributional characteristics of critical pa-
rameters used to produce the estimate are
evaluated. Then, Monte Carlo simulations
are used to vary the parameter values. Fi-
nally, alternative high and low estimates
are computed based on parameter values at
either end of the 90-percent range.
Table. Change in Annual Compliance Costs
Estimated change in annual compliance
costs (annualized value, $2018 million)
Fiscal Years 2019 to 2028
(3% real discount rate)
Fiscal Years 2019 to 2028
(7% real discount rate)
Central estimate-$90.6-$97.5
High estimate-$113.3-$121.9
Low estimate-$68.0-$73.1
Technical note: In this rulemaking, the Treasury Department made technical adjustments relative to the Documentation Regu-
lations in calculating the annualized compliance cost estimates. The cost stream in this rulemaking is in 2018 dollars, reflects a
two-year delay in effective date (relative to the previous estimates), and applies real discount rates of 3 percent and 7 percent.
Technical adjustments account for part of the difference in the estimates between the rulemakings.
5. Higher tax administrative costs for the
IRS
The reduced loan documentation re-
quired of large corporations as a result of
the removal of the Documentation Regu-
lations will reduce the ability of the IRS
to more effectively administer the tax
laws by making it more difficult for the
IRS to evaluate whether purported loans
are properly treated as debt for Federal
tax purposes. This will raise the cost of
auditing and evaluating the tax returns of
companies engaged in these transactions.
6. Other economic effects
a. Reduced tax compliance
As a result of the final regulations,
taxpayers will not be required to com-
ply with the Documentation Regulations.
Therefore, such taxpayers will not need
to satisfy the documentation requirements
with respect to relevant transactions for-
merly addressed by the Documentation
Regulations. That lack of documentation
likely will slightly reduce voluntary com-
pliance by taxpayers to report accurately
the Federal income tax consequences of
such transactions. The resulting expect-
ed revenue reduction is $407 million over
the period 2019 to 2028 (undiscounted
nominal total). The annualized value of
the revenue reduction is $35.4 million and
$34.5 million ($2018) using real discount
rates of 3 percent and 7 percent, respec-
tively. The revenue effects were estimat-
ed using the methodology described in the
preamble to the Section 385 Regulations,
although the estimate presented herein
covers 2019 to 2028 and reflects factors
that changed as a result of the TCJA as
well as other technical adjustments.
b. Efficiency and growth effects
The removal of the Documentation
Regulations will increase, to some extent,
the tax advantage some foreign owners
have over some domestic owners of U.S.
assets, and consequently may increase the
propensity for foreign acquisitions and
ownership of U.S. assets that are moti-
vated by tax considerations rather than
economics. By increasing the ability to
undertake tax-motivated acquisitions or
ownership structures, removal of the Doc-
umentation Regulations may slightly re-
duce the incentive for assets to be owned
or managed by those most capable of put-
ting the assets to their highest-valued use.
Moreover, removal of the Documentation
Regulations may put purely domestic U.S.
firms on less even tax footing than their
foreign-owned competitors operating in
the United States.
On the other hand, removal of the Doc-
umentation Regulations may slightly re-
duce the effective tax rate and compliance
costs on investment in the United States.
While the magnitude of this reduction
is small, to the extent that the reduction
increases new capital investment in the
United States its effects would be efficien-
cy enhancing.
II. Regulatory Flexibility Act
As described in more detail in this sec-
tion, pursuant to the Regulatory Flexibili-
ty Act (5 U.S.C. chapter 6), the Treasury
Department and the IRS hereby certify
that these final regulations will not have a
significant economic impact on a substan-
tial number of small entities.
The Documentation Regulations, as
finalized, were made applicable with re-
spect to interests issued or deemed issued
on or after January 1, 2018. See Back-

Bulletin No. 2019–47 1089 November 18, 2019
ground section, part I. In Notice 2017-
36, the Treasury Department and the IRS
further delayed the applicability of the
Documentation Regulations by making
the regulations applicable only to interests
issued or deemed issued on or after Janu-
ary 1, 2019. See Background section, part
III. Because of the Reliance Provision,
the Documentation Regulations are not
applicable to any interests issued by any
taxpayer, unless such taxpayer chooses
to apply the regulations despite the Reli-
ance Provision. See Background section,
part IV.
The Documentation Regulations ap-
ply to large corporate groups (specifical-
ly, those that are publicly traded, or have
assets exceeding $100 million or annual
total revenue exceeding $50 million in its
expanded group), thus limiting the scope
of small entities affected. The Documen-
tation Regulations apply to financial insti-
tutions, which are considered small enti-
ties under the Regulatory Flexibility Act
if they have less than $550 million in as-
sets. See 13 CFR 121.201. The Treasury
Department and the IRS believe that the
Documentation Regulations do not affect
a substantial number of small entities oth-
er than small financial institutions. Even
if the Documentation Regulations affected
a substantial number of small entities in
that sector, the economic impact of this
rule would be minimal because the final
regulations adopt the Proposed Regula-
tions, which remove the Documentation
Regulations and permit taxpayers not to
apply such regulations until adoption of
these final regulations. Accordingly, this
final rule will not have a significant eco-
nomic impact on a substantial number of
small entities.
Pursuant to section 7805(f), the pro-
posed regulations preceding these final
regulations were submitted to the Chief
Counsel for Advocacy of the Small Busi-
ness Administration for comment on their
impact on small business and no com-
ments were received.
III. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 requires that agencies
assess anticipated costs and benefits and
take certain other actions before issuing a
final rule that includes any Federal man-
date that may result in expenditures in any
one year by a state, local, or tribal govern-
ment, in the aggregate, or by the private
sector, of $100 million in 1995 dollars,
updated annually for inflation. In 2019,
that threshold is approximately $164 mil-
lion. This final rule does not include any
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 author of the final regula-
tions is Austin Diamond-Jones, Office of
the Associate Chief Counsel (Corporate).
However, other personnel from the Trea-
sury Department and the IRS participated
in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Adoption of 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 for §1.385-2 to read, in
part, as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.385-1 is amended by:
1. Revising paragraph (a), the last sen-
tence of paragraph (c), the last sen-
tence of paragraph (c)(4)(iv), para-
graph (d)(1)(i), the first sentence of
paragraph (d)(1)(ii), and paragraphs
(d)(1)(iii) and (d)(1)(iv)(A); and
2. Removing and reserving paragraph
(d)(2)(i).
The revisions read as follows:
§1.385-1 General provisions.
(a) Overview of section 385 regu-
lations. This section and §§1.385-3
through 1.385-4T (collectively, the sec-
tion 385 regulations) provide rules under
section 385 to determine the treatment of
an interest in a corporation as stock or
indebtedness (or as in part stock and in
part indebtedness) in particular factual
situations. Paragraph (b) of this section
provides the general rule for determin-
ing the treatment of an interest based
on provisions of the Internal Revenue
Code and on common law, including the
factors prescribed under common law.
Paragraphs (c), (d), and (e) of this section
provide definitions and rules of general
application for purposes of the section
385 regulations. Section 1.385-3 sets
forth additional factors that, when pres-
ent, control the determination of whether
an interest in a corporation that is held by
a member of the corporation’s expanded
group is treated (in whole or in part) as
stock or indebtedness.
* * * * *
(c) * * * For additional definitions that
apply for purposes of their respective sec-
tions, see §§1.385-3(g) and 1.385-4T(e).
* * * * *
(4) * * *
(iv) * * * For purposes of the section
385 regulations, a corporation is a mem-
ber of an expanded group if it is described
in this paragraph (c)(4)(iv) immediately
before the relevant time for determining
membership (for example, immediately
before the issuance of a debt instrument
(as defined in §1.385-3(g)(4)) or immedi-
ately before a distribution or acquisition
that may be subject to §1.385-3(b)(2) or
(3)).
* * * * *
(d) * * *
(1) * * *

November 18, 2019 1090 Bulletin No. 2019–47
(i) In general. If a debt instrument (as
defined in §1.385-3(g)(4)) is deemed to
be exchanged under the section 385 regu-
lations, in whole or in part, for stock, the
holder is treated for all Federal tax purpos-
es as having realized an amount equal to
the holder’s adjusted basis in that portion
of the debt instrument as of the date of the
deemed exchange (and as having basis in
the stock deemed to be received equal to
that amount), and, except as provided in
paragraph (d)(1)(iv)(B) of this section, the
issuer is treated for all Federal tax purposes
as having retired that portion of the debt in-
strument for an amount equal to its adjust-
ed issue price as of the date of the deemed
exchange. In addition, neither party ac-
counts for any accrued but unpaid qualified
stated interest on the debt instrument or any
foreign exchange gain or loss with respect
to that accrued but unpaid qualified stated
interest (if any) as of the deemed exchange.
This paragraph (d)(1)(i) does not affect
any rules in Title 26 of the United States
Code that otherwise apply to the debt in-
strument prior to the date of the deemed
exchange (for example, this paragraph (d)
(1)(i) does not affect the issuer’s deduction
of accrued but unpaid qualified stated in-
terest otherwise deductible prior to the date
of the deemed exchange). Moreover, the
stock issued in the deemed exchange is not
treated as a payment of accrued but unpaid
original issue discount or qualified stated
interest on the debt instrument for Federal
tax purposes.
(ii) * * * Notwithstanding the first sen-
tence of paragraph (d)(1)(i) of this section,
the rules of §1.988-2(b)(13) apply to re-
quire the holder and the issuer of a debt
instrument that is deemed to be exchanged
under the section 385 regulations, in
whole or in part, for stock to recognize
any exchange gain or loss, other than any
exchange gain or loss with respect to ac-
crued but unpaid qualified stated interest
that is not taken into account under para-
graph (d)(1)(i) of this section at the time
of the deemed exchange. * * *
(iii) Section 108(e)(8). For purposes of
section 108(e)(8), if the issuer of a debt
instrument is treated as having retired all
or a portion of the debt instrument in ex-
change for stock under paragraph (d)(1)(i)
of this section, the stock is treated as hav-
ing a fair market value equal to the adjust-
ed issue price of that portion of the debt
instrument as of the date of the deemed
exchange.
(iv) * * *
(A) A debt instrument that is issued by
a disregarded entity is deemed to be ex-
changed for stock of the regarded owner
under §1.385-3T(d)(4);
* * * * *
§1.385-2 [Removed]
Par. 3. Section 1.385-2 is removed.
Par. 4. Section 1.385-3 is amended by
revising paragraph (g)(4) to read as fol-
lows:
§1.385-3 Transactions in which debt
proceeds are distributed or that have a
similar effect.
* * * * *
(g) * * *
(4) Debt instrument. The term debt
instrument means an interest that would,
but for the application of this section, be
treated as a debt instrument as defined in
section 1275(a) and §1.1275-1(d).
* * * * *
Par. 5. Section 1.1275-1 is amended by
revising the last sentence of paragraph (d)
to read as follows:
§1.1275–1 Definitions.
* * * * *
(d) * * * See §1.385–3 for rules that
treat certain instruments that otherwise
would be treated as indebtedness as stock
for Federal tax purposes.
* * * * *
Sunita Lough,
Deputy Commissioner for Services
and Enforcement.
Approved: September 30, 2019.
David J. Kautter,
Assistant Secretary of the Treasury
(Tax Policy).
(Filed by the Office of the Federal Register on Octo-
ber 31, 2019, 4:15 p.m., and published in the issue of
the Federal Register for November 4, 2019, 84 F.R.
59297)

Bulletin No. 2019–47 1091 November 18, 2019
Part III
2020 Limitations Adjusted
As Provided in Section
415(d), etc.
Notice 2019-59
Section 415 of the Internal Revenue
Code (the Code) provides for dollar lim-
itations on benefits and contributions un-
der qualified retirement plans. Section
415(d) requires that the Secretary of the
Treasury annually adjust these limits for
cost-of-living increases. Other limitations
applicable to deferred compensation plans
are also affected by these adjustments un-
der § 415. Under § 415(d), the adjustments
are to be made under adjustment proce-
dures similar to those used to adjust ben-
efit amounts under § 215(i)(2)(A) of the
Social Security Act.
Cost-of-Living Adjusted Limits for
2020
Effective January 1, 2020, the limita-
tion on the annual benefit under a defined
benefit plan under § 415(b)(1)(A) is in-
creased from $225,000 to $230,000.
For a participant who separated from
service before January 1, 2020, the partic-
ipant’s limitation under a defined benefit
plan under § 415(b)(1)(B) is computed by
multiplying the participant’s compensa-
tion limitation, as adjusted through 2019,
by 1.0176.
The limitation for defined contribution
plans under § 415(c)(1)(A) is increased in
2020 from $56,000 to $57,000.
The Code provides that various other
dollar amounts are to be adjusted at the
same time and in the same manner as the
dollar limitation of § 415(b)(1)(A). After
taking into account the applicable round-
ing rules, the amounts for 2020 are as fol-
lows:
The limitation under § 402(g)(1) on
the exclusion for elective deferrals
described in § 402(g)(3) is increased
from $19,000 to $19,500.
The annual compensation limit under
§§ 401(a)(17), 404(l), 408(k)(3)(C),
and 408(k)(6)(D)(ii) is increased from
$280,000 to $285,000.
The dollar limitation under § 416(i)
(1)(A)(i) concerning the definition
of “key employee” in a top-heavy
plan is increased from $180,000 to
$185,000.
The dollar amount under § 409(o)(1)
(C)(ii) for determining the maximum
account balance in an employee stock
ownership plan subject to a 5-year
distribution period is increased from
$1,130,000 to $1,150,000, while the
dollar amount used to determine the
lengthening of the 5-year distribution
period is increased from $225,000 to
$230,000.
The limitation used in the definition
of “highly compensated employee”
under § 414(q)(1)(B) is increased
from $125,000 to $130,000.
The dollar limitation under § 414(v)
(2)(B)(i) for catch-up contributions
to an applicable employer plan oth-
er than a plan described in § 401(k)
(11) or § 408(p) for individuals aged
50 or over is increased from $6,000
to $6,500. The dollar limitation under
§ 414(v)(2)(B)(ii) for catch-up con-
tributions to an applicable employ-
er plan described in § 401(k)(11) or
§ 408(p) for individuals aged 50 or
over remains unchanged at $3,000.
The annual compensation limitation
under § 401(a)(17) for eligible partic-
ipants in certain governmental plans
that, under the plan as in effect on
July 1, 1993, allowed cost-of-living
adjustments to the compensation lim-
itation under the plan under § 401(a)
(17) to be taken into account, is in-
creased from $415,000 to $425,000.
The compensation amount under §
408(k)(2)(C) regarding simplified
employee pensions (SEPs) remains
unchanged at $600.
The limitation under § 408(p)(2)(E)
regarding SIMPLE retirement ac-
counts is increased from $13,000 to
$13,500.
The limitation on deferrals under §
457(e)(15) concerning deferred com-
pensation plans of state and local
governments and tax-exempt organi-
zations is increased from $19,000 to
$19,500.
The limitation under § 664(g)(7) con-
cerning the qualified gratuitous trans-
fer of qualified employer securities
to an employee stock ownership plan
remains unchanged at $50,000.
The compensation amount under §
1.61-21(f)(5)(i) of the Income Tax
Regulations concerning the definition
of “control employee” for fringe ben-
efit valuation purposes is increased
from $110,000 to $115,000. The com-
pensation amount under § 1.61-21(f)
(5)(iii) is increased from $225,000 to
$230,000.
The dollar limitation on premiums
paid with respect to a qualifying
longevity annuity contract under §
1.401(a)(9)-6, A-17(b)(2)(i) of the
Income Tax Regulations is increased
from $130,000 to $135,000.
1
The Code provides that the
$1,000,000,000 threshold used to deter-
mine whether a multiemployer plan is a
systemically important plan under § 432(e)
(9)(H)(v)(III)(aa) is adjusted using the
cost-of-living adjustment provided under
§ 432(e)(9)(H)(v)(III)(bb). After taking
the applicable rounding rule into account,
the threshold used to determine whether a
multiemployer plan is a systemically im-
portant plan under § 432(e)(9)(H)(v)(III)
(aa) is increased from $1,097,000,000 to
$1,135,000,000.
The Code also provides that several
retirement-related amounts are to be ad-
justed using the cost-of-living adjustment
under § 1(f)(3). After taking the applicable
rounding rules into account, the amounts
for 2020 are as follows:
The adjusted gross income limitation
under § 25B(b)(1)(A) for determin-
ing the retirement savings contribu-
tions credit for married taxpayers
1
Notice 2017-64, 2017-45 I.R.B. 486, raised this limit from $125,000 to $130,000 although § 1.401(a)(9)6, A-17(d)(2) provides for increases of the $125,000 limitation only in multiples of
$10,000. Notice 2018-83, 2018-47 I.R.B. 774, indicated that this limit would remain at $130,000 until it would be adjusted to $135,000 pursuant to § 1.401(a)(9)-6, A-17(d)(2), and would be
adjusted only in increments of $10,000 after that adjustment. Accordingly, future adjustments to this limit (which has been raised to $135,000 for 2020) will be made in increments of $10,000.

November 18, 2019 1092 Bulletin No. 2019–47
filing a joint return is increased from
$38,500 to $39,000; the limitation
under § 25B(b)(1)(B) is increased
from $41,500 to $42,500; and the
limitation under §§ 25B(b)(1)(C)
and 25B(b)(1)(D) is increased from
$64,000 to $65,000.
The adjusted gross income limitation
under § 25B(b)(1)(A) for determin-
ing the retirement savings contribu-
tions credit for taxpayers filing as
head of household is increased from
$28,875 to $29,250; the limitation
under § 25B(b)(1)(B) is increased
from $31,125 to $31,875; and the
limitation under §§ 25B(b)(1)(C)
and 25B(b)(1)(D) is increased from
$48,000 to $48,750.
The adjusted gross income limitation
under § 25B(b)(1)(A) for determin-
ing the retirement savings contribu-
tions credit for all other taxpayers is
increased from $19,250 to $19,500;
the limitation under § 25B(b)(1)(B) is
increased from $20,750 to $21,250;
and the limitation under §§ 25B(b)
(1)(C) and 25B(b)(1)(D) is increased
from $32,000 to $32,500.
The deductible amount under §
219(b)(5)(A) for an individual mak-
ing qualified retirement contributions
remains unchanged at $6,000.
The applicable dollar amount under
§ 219(g)(3)(B)(i) for determining the
deductible amount of an IRA contri-
bution for taxpayers who are active
participants filing a joint return or as
a qualifying widow(er) is increased
from $103,000 to $104,000. The ap-
plicable dollar amount under § 219(g)
(3)(B)(ii) for all other taxpayers who
are active participants (other than
married taxpayers filing separate re-
turns) is increased from $64,000 to
$65,000. If an individual or the indi-
vidual’s spouse is an active partici-
pant, the applicable dollar amount un-
der § 219(g)(3)(B)(iii) for a married
individual filing a separate return is
not subject to an annual cost-of-living
adjustment and remains $0. The ap-
plicable dollar amount under § 219(g)
(7)(A) for a taxpayer who is not an
active participant but whose spouse is
an active participant is increased from
$193,000 to $196,000.
Accordingly, under § 219(g)(2)(A),
the deduction for taxpayers making
contributions to a traditional IRA is
phased out for single individuals and
heads of household who are active
participants in a qualified plan (or
another retirement plan specified in
§ 219(g)(5)) and have adjusted gross
incomes (as defined in § 219(g)(3)
(A)) between $65,000 and $75,000,
increased from between $64,000 and
$74,000. For married couples filing
jointly, if the spouse who makes the
IRA contribution is an active partic-
ipant, the income phase-out range
is between $104,000 and $124,000,
increased from between $103,000
and $123,000. For an IRA contrib-
utor who is not an active participant
and is married to someone who is an
active participant, the deduction is
phased out if the couple’s income is
between $196,000 and $206,000, in-
creased from between $193,000 and
$203,000. For a married individual
filing a separate return who is an ac-
tive participant, the phase-out range
is not subject to an annual cost-of-
living adjustment and remains $0 to
$10,000.
The adjusted gross income limitation
under § 408A(c)(3)(B)(ii)(I) for de-
termining the maximum Roth IRA
contribution for married taxpayers
filing a joint return or for taxpayers
filing as a qualifying widow(er) is in-
creased from $193,000 to $196,000.
The adjusted gross income limita-
tion under § 408A(c)(3)(B)(ii)(II)
for all other taxpayers (other than
married taxpayers filing separate
returns) is increased from $122,000
to $124,000. The applicable dollar
amount under § 408A(c)(3)(B)(ii)
(III) for a married individual filing
a separate return is not subject to an
annual cost-of-living adjustment and
remains $0.
Accordingly, under § 408A(c)(3)(A),
the adjusted gross income phase-out
range for taxpayers making contri-
butions to a Roth IRA is $196,000
to $206,000 for married couples fil-
ing jointly, increased from $193,000
to $203,000. For singles and heads
of household, the income phase-out
range is $124,000 to $139,000, in-
creased from $122,000 to $137,000.
For a married individual filing a
separate return, the phase-out range
is not subject to an annual cost-of-
living adjustment and remains $0 to
$10,000.
Drafting Information
The principal author of this notice is
Tom Morgan of the Office of the Associ-
ate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the IRS participated in the development
of this guidance. For further information
regarding this notice, contact Mr. Morgan
at 202-317-6700 or John Heil at 443-853-
5519 (not toll-free numbers).

Bulletin No. 2019–47 1093 November 18, 2019
26 CFR 601.602: Tax forms and instructions.
(Also Part I, §§ 1, 23, 24, 25A, 32, 36B, 42, 45R, 55, 59, 62, 63, 125, 132(f),135, 137, 146, 147, 148, 152, 179, 199A, 213, 220, 221, 448, 461, 512, 513, 642, 831,
877, 877A, 911, 1274A, 2010, 2032A, 2503, 2523, 4161, 4261, 6033, 6039F, 6323, 6334, 6601, 6651, 6652, 6695, 6698, 6699, 6721, 6722, 7345, 7430, 7702B, 9831;
1.148-5.)
Rev. Proc. 2019-44
Table of Contents
SECTION 1. PURPOSE
SECTION 2. CHANGES
SECTION 3. 2020 ADJUSTED ITEMS
Code Section
.01 Tax Rate Tables 1(j)(2) (A)-(D)
.02 Unearned Income of Minor Children (“Kiddie Tax”) 1(g)
.03 Maximum Capital Gains Rate 1(h)
.04 Adoption Credit 23
.05 Child Tax Credit 24
.06 Lifetime Learning Credit 25A
.07 Earned Income Credit 32
.08 Refundable Credit for Coverage Under a Qualified Health Plan 36B(f)(2)(B)
.09 Rehabilitation Expenditures Treated as Separate New Building 42(e)
.10 Low-Income Housing Credit 42(h)
.11 Employee Health Insurance Expense of Small Employers 45R
.12 Exemption Amounts for Alternative Minimum Tax 55
.13 Alternative Minimum Tax Exemption for a Child Subject to the “Kiddie Tax” 59(j)
.14 Certain Expenses of Elementary and Secondary School Teachers 62(a)(2)(D)
.15 Transportation Mainline Pipeline Construction Industry Optional 62(c)
Expense Substantiation Rules for Payments to Employees Under
Accountable Plans
.16 Standard Deduction 63
.17 Cafeteria Plans 125
.18 Qualified Transportation Fringe Benefit 132(f)
.19 Income from United States Savings Bonds for Taxpayers Who 135
Pay Qualified Higher Education Expenses
.20 Adoption Assistance Programs 137
.21 Private Activity Bonds Volume Cap 146(d)
.22 Loan Limits on Agricultural Bonds 147(c)(2)
.23 General Arbitrage Rebate Rules 148(f)
.24 Safe Harbor Rules for Broker Commissions on Guaranteed 148
Investment Contracts or Investments Purchased for a Yield
Restricted Defeasance Escrow
.25 Gross Income Limitation for a Qualifying Relative 152(d)(1)(B)
.26 Election to Expense Certain Depreciable Assets 179
.27 Qualified Business Income 199A
.28 Eligible Long-Term Care Premiums 213(d)(10)
.29 Medical Savings Accounts 220
.30 Interest on Education Loans 221
.31 Limitation on Use of Cash Method of Accounting 448
.32 Threshold for Excess Business Loss 461(l)
.33 Treatment of Dues Paid to Agricultural or Horticultural Organizations 512(d)
.34 Insubstantial Benefit Limitations for Contributions Associated 513(h)
With Charitable Fund-Raising Campaigns
.35 Special Rules for Credits and Deductions 642
.36 Tax on Insurance Companies Other than Life Insurance Companies 831

November 18, 2019 1094 Bulletin No. 2019–47
.37 Expatriation to Avoid Tax 877
.38 Tax Responsibilities of Expatriation 877A
.39 Foreign Earned Income Exclusion 911
.40 Debt Instruments Arising Out of Sales or Exchanges 1274A
.41 Unified Credit Against Estate Tax 2010
.42 Valuation of Qualified Real Property in Decedent’s Gross Estate 2032A
.43 Annual Exclusion for Gifts 2503; 2523
.44 Tax on Arrow Shafts 4161
.45 Passenger Air Transportation Excise Tax 4261
.46 Reporting Exception for Certain Exempt Organizations with 6033(e)(3)
Nondeductible Lobbying Expenditures
.47 Notice of Large Gifts Received from Foreign Persons 6039F
.48 Persons Against Whom a Federal Tax Lien Is Not Valid 6323
.49 Property Exempt from Levy 6334(a)
.50 Exempt Amount of Wages, Salary, or Other Income 6334(d)
.51 Interest on a Certain Portion of the Estate Tax Payable in Installments 6601(j)
.52 Failure to File Tax Return 6651
.53 Failure to File Certain Information Returns, Registration 6652
Statements, etc.
.54 Other Assessable Penalties With Respect to the 6695
Preparation of Tax Returns for Other Persons
.55 Failure to File Partnership Return 6698
.56 Failure to File S Corporation Return 6699
.57 Failure to File Correct Information Returns 6721
.58 Failure to Furnish Correct Payee Statements 6722
.59 Revocation or Denial of Passport in Case of Certain 7345
Tax Delinquencies
.60 Attorney Fee Awards 7430
.61 Periodic Payments Received Under Qualified Long-Term Care 7702B(d)
Insurance Contracts or Under Certain Life Insurance Contracts
.62 Qualified Small Employer Health Reimbursement Arrangement 9831
SECTION 4. EFFECTIVE DATE
SECTION 5. DRAFTING INFORMATION

Bulletin No. 2019–47 1095 November 18, 2019
SECTION 1. PURPOSE
This revenue procedure sets forth inflation-adjusted items
for 2020 for various provisions of the Internal Revenue Code of
1986 (Code) as amended as of November 18, 2019. To the extent
amendments to the Code are enacted for 2020 after November
18, 2019, taxpayers should consult additional guidance to deter-
mine whether these adjustments remain applicable for 2020.
SECTION 2. CHANGES
.01 Section 3201 of the Taxpayer First Act of 2019, Pub.
L. 116-25, increased the amount of the additional tax under
§ 6651(a) for failure to file a tax return within 60 days of the
due date of such return (determined with regard to any exten-
sions of time for filing). For returns required to be filed after
December 31, 2019, the amount of the addition to tax shall not
be less than the lesser of $330 (increased from $205) or 100
percent of the amount required to be shown as tax on such re-
turns. Accordingly, the $330 is adjusted for inflation in accor-
dance with § 6651.
SECTION 3. 2020 ADJUSTED ITEMS
.01 Tax Rate Tables. For taxable years beginning in 2020, the
tax rate tables under § 1 are as follows:
TABLE 1 - Section 1(j)(2)(A) - Married Individuals Filing Joint Returns and Surviving Spouses
If Taxable Income Is: The Tax Is:
Not over $19,750 10% of the taxable income
Over $19,750 but $1,975 plus 12% of
not over $80,250 the excess over $19,750
Over $80,250 but $9,235 plus 22% of
not over $171,050 the excess over $80,250
Over $171,050 but $29,211 plus 24% of
not over $326,600 the excess over $171,050
Over $326,600 but $66,543 plus 32% of
not over $414,700 the excess over $326,600
Over $414,700 but $94,735 plus 35% of
not over $622,050 the excess over $414,700
Over $622,050 $167,307.50 plus 37% of
the excess over $622,050
TABLE 2 - Section 1(j)(2)(B) – Heads of Households
If Taxable Income Is: The Tax Is:
Not over $14,100 10% of the taxable income
Over $14,100 but $1,410 plus 12% of
not over $53,700 the excess over $14,100
Over $53,700 but $6,162 plus 22% of
not over $85,500 the excess over $53,700
Over $85,500 but $13,158 plus 24% of
not over $163,300 the excess over $85,500
Over $163,300 but $31,830 plus 32% of
not over $207,350 the excess over $163,300
Over $207,350 but $45,926 plus 35% of
not over $518,400 the excess over $207,350
Over $518,400 $154,793.50 plus 37% of
the excess over $518,400

November 18, 2019 1096 Bulletin No. 2019–47
TABLE 3 - Section 1(j)(2)(C) – Unmarried Individuals (other than Surviving Spouses and Heads of Households)
If Taxable Income Is: The Tax Is:
Not over $9,875 10% of the taxable income
Over $9,875 but $987.50 plus 12% of
not over $40,125 the excess over $9,875
Over $40,125 but $4,617.50 plus 22% of
not over $85,525 the excess over $40,125
Over $85,525 but $14,605.50 plus 24% of
not over $163,300 the excess over $85,525
Over $163,300 but $33,271.50 plus 32% of
not over $207,350 the excess over $163,300
Over $207,350 but $47,367.50 plus 35% of
not over $518,400 the excess over $207,350
Over $518,400 $156,235 plus 37% of
the excess over $518,400
TABLE 4 - Section 1(j)(2)(D) – Married Individuals Filing Separate Returns
If Taxable Income Is: The Tax Is:
Not over $9,875 10% of the taxable income
Over $9,875 but $987.50 plus 12% of
not over $40,125 the excess over $9,875
Over $40,125 but $4,617.50 plus 22% of
not over $85,525 the excess over $40,125
Over $85,525 but $14,605.50 plus 24% of
not over $163,300 the excess over $85,525
Over $163,300 but $33,271.50 plus 32% of
not over $207,350 the excess over $163,300
Over $207,350 but $47,367.50 plus 35% of
not over $311,025 the excess over $207,350
Over $311,025 $83,653.75 plus 37% of
the excess over $311,025
TABLE 5 - Section 1(j)(2)(E) – Estates and Trusts
If Taxable Income Is: The Tax Is:
Not over $2,600 10% of the taxable income
Over $2,600 but $260 plus 24% of
not over $9,450 the excess over $2,600
Over $9,450 but $1,904 plus 35% of
not over $12,950 the excess over $9,450
Over $12,950 $3,129 plus 37% of
the excess over $12,950
.02 Unearned Income of Minor Chil-
dren (the “Kiddie Tax”). For taxable
years beginning in 2020, the amount in
§ 1(g)(4)(A)(ii)(I), which is used to re-
duce the net unearned income reported
on the child’s return that is subject to
the “kiddie tax,” is $1,100. This $1,100
amount is the same as the amount pro-
vided in § 63(c)(5)(A), as adjusted for
inflation. The same $1,100 amount is
used for purposes of § 1(g)(7) (that is, to
determine whether a parent may elect to
include a child’s gross income in the par-
ent’s gross income and to calculate the
“kiddie tax”). For example, one of the
requirements for the parental election is
that a child’s gross income is more than
the amount referenced in § 1(g)(4)(A)(ii)
(I) but less than 10 times that amount;
thus, a child’s gross income for 2020
must be more than $1,100 but less than
$11,000.
.03 Maximum Capital Gains Rate. For
taxable years beginning in 2020, the Max-

Bulletin No. 2019–47 1097 November 18, 2019
imum Zero Rate Amount under § 1(h)(1)
(B)(i) is $80,000 in the case of a joint re-
turn or surviving spouse ($40,000 in the
case of a married individual filing a sep-
arate return), $53,600 in the case of an
individual who is a head of household
(§ 2(b)), $40,000 in the case of any other
individual (other than an estate or trust),
and $2,650 in the case of an estate or trust.
The Maximum 15-percent Rate Amount
under § 1(h)(1)(C)(ii)(l) is $496,600 in the
case of a joint return or surviving spouse
($248,300 in the case of a married individ-
ual filing a separate return), $469,050 in
the case of an individual who is the head
of a household (§ 2(b)), $441,450 in the
case of any other individual (other than an
estate or trust), and $13,150 in the case of
an estate or trust.
.04 Adoption Credit. For taxable years
beginning in 2020, under § 23(a)(3) the
credit allowed for an adoption of a child
with special needs is $14,300. For taxable
years beginning in 2020, under § 23(b)
(1) the maximum credit allowed for oth-
er adoptions is the amount of qualified
adoption expenses up to $14,300. The
available adoption credit begins to phase
out under § 23(b)(2)(A) for taxpayers with
modified adjusted gross income in excess
of $214,520 and is completely phased out
for taxpayers with modified adjusted gross
income of $254,520 or more. (See sec-
tion 3.20 for the adjusted items relating to
adoption assistance programs.)
.05 Child Tax Credit. For taxable
years beginning in 2020, the value used in
§ 24(d)(1)(A) to determine the amount of
credit under § 24 that may be refundable
is $1,400.
.06 Lifetime Learning Credit. For tax-
able years beginning in 2020, a taxpayer’s
modified adjusted gross income in excess
of $59,000 ($118,000 for a joint return)
is used to determine the reduction under
§ 25A(d)(2) in the amount of the Lifetime
Learning Credit otherwise allowable un-
der § 25A(a)(2).
.07 Earned Income Credit.
(1) In general. For taxable years be-
ginning in 2020, the following amounts
are used to determine the earned income
credit under § 32(b). The “earned income
amount” is the amount of earned income
at or above which the maximum amount
of the earned income credit is allowed.
The “threshold phaseout amount” is the
amount of adjusted gross income (or, if
greater, earned income) above which the
maximum amount of the credit begins
to phase out. The “completed phaseout
amount” is the amount of adjusted gross
income (or, if greater, earned income)
at or above which no credit is allowed.
The threshold phaseout amounts and the
completed phaseout amounts shown in
the table below for married taxpayers
filing a joint return include the increase
provided in § 32(b)(2)(B), as adjusted
for inflation for taxable years beginning
in 2020.
Number of Qualifying Children
ItemOneTwo Three or MoreNone
Earned Income Amount$10,540$14,800$14,800$7,030
Maximum Amount of Credit$3,584$5,920$6,660$538
Threshold Phaseout Amount (Single, Surviving Spouse, or
Head of Household)
$19,330$19,330$19,330$8,790
Completed Phaseout Amount (Single, Surviving Spouse,
or Head of Household)
$41,756$47,440$50,954$15,820
Threshold Phaseout Amount (Married Filing Jointly)$25,220$25,220$25,220$14,680
Completed Phaseout Amount (Married Filing Jointly)$47,646$53,330$56,844$21,710
The instructions for the Form 1040 series
provide tables showing the amount of the
earned income credit for each type of tax-
payer.
(2) Excessive Investment Income.
For taxable years beginning in 2020, the
earned income tax credit is not allowed
under § 32(i) if the aggregate amount
of certain investment income exceeds
$3,650.
.08 Refundable Credit for Coverage
Under a Qualified Health Plan. For tax-
able years beginning in 2020, the limita-
tion on tax imposed under § 36B(f)(2)(B)
for excess advance credit payments is de-
termined using the following table:
If the household income
(expressed as a percent
of poverty line) is:
The limitation amount for
unmarried individuals
(other than surviving
spouses and heads of
household) is:
The limitation amount for
all other taxpayers is:
Less than 200%$325$650
At least 200% but less than 300%$800$1,600
At least 300% but less than 400%$1,350$2,700

November 18, 2019 1098 Bulletin No. 2019–47
.09 Rehabilitation Expenditures Treat-
ed as Separate New Building. For calen-
dar year 2020, the per low-income unit
qualified basis amount under § 42(e)(3)
(A)(ii)(II) is $7,100.
.10 Low-Income Housing Credit. For
calendar year 2020, the amount used un-
der § 42(h)(3)(C)(ii) to calculate the State
housing credit ceiling for the low-income
housing credit is the greater of (1) $2.8125
multiplied by the State population, or (2)
$3,217,500.
.11 Employee Health Insurance Ex-
pense of Small Employers. For taxable
years beginning in 2020, the dollar amount
in effect under § 45R(d)(3)(B) is $27,600.
This amount is used under § 45R(c) for
limiting the small employer health insur-
ance credit and under § 45R(d)(1)(B) for
determining who is an eligible small em-
ployer for purposes of the credit.
.12 Exemption Amounts for Alternative
Minimum Tax. For taxable years begin-
ning in 2020, the exemption amounts un-
der § 55(d)(1) are:
Joint Returns or Surviving
Spouses
$113,400
Unmarried Individuals
(other than Surviving
Spouses)
$72,900
Married Individuals Filing
Separate Returns
$56,700
Estates and Trusts$25,400
For taxable years beginning in 2020,
under § 55(b)(1), the excess taxable in-
come above which the 28 percent tax rate
applies is:
Married Individuals Filing
Separate Returns
$98,950
Joint Returns, Unmarried
Individuals (other than sur-
viving spouses), and Es-
tates and Trusts
$197,900
For taxable years beginning in 2020,
the amounts used under § 55(d)(2) to de-
termine the phaseout of the exemption
amounts are:
Joint Returns or Surviv-
ing Spouses
$1,036,800
Unmarried Individuals
(other than Surviving
Spouses)
$518,400
Married Individuals Fil-
ing Separate Returns
$518,400
Estates and Trusts$84,800
.13 Alternative Minimum Tax Exemp-
tion for a Child Subject to the “Kiddie
Ta x.” For taxable years beginning in
2020, for a child to whom the § 1(g) “kid-
die tax” applies, the exemption amount
under §§ 55(d) and 59(j) for purposes of
the alternative minimum tax under § 55
may not exceed the sum of (1) the child’s
earned income for the taxable year, plus
(2) $7,900.
.14 Certain Expenses of Elementa-
ry and Secondary School Teachers. For
taxable years beginning in 2020, under §
62(a)(2)(D) the amount of the deduction
allowed under § 162 that consists of ex-
penses paid or incurred by an eligible ed-
ucator in connection with books, supplies
(other than nonathletic supplies for cours-
es of instruction in health or physical ed-
ucation), computer equipment (including
related software and services) and other
equipment, and supplementary materials
used by the eligible educator in the class-
room is $250.
.15 Transportation Mainline Pipeline
Construction Industry Optional Expense
Substantiation Rules for Payments to Em-
ployees Under Accountable Plans. For
calendar year 2020, an eligible employer
may pay certain welders and heavy equip-
ment mechanics an amount up to $18
per hour for rig-related expenses that are
deemed substantiated under an account-
able plan if paid in accordance with Rev.
Proc. 2002-41, 2002-1 C.B. 1098. If the
employer provides fuel or otherwise reim-
burses fuel expenses, an amount up to $11
per hour is deemed substantiated if paid
under Rev. Proc. 2002-41.
.16 Standard Deduction.
(1) In general. For taxable years be-
ginning in 2020, the standard deduction
amounts under § 63(c)(2) are as follows:
Filing StatusStandard
Deduction
Married Individuals Filing
Joint Returns and Surviv-
ing Spouses (§ 1(j)(2)(A))
$24,800
Heads of Households
(§ 1(j)(2)(B))
$18,650
Unmarried Individuals
(other than Surviving
Spouses and Heads of
Households) (§ 1(j)(2)(C))
$12,400
Married Individuals Filing
Separate Returns (§ 1(j)
(2)(D))
$12,400
(2) Dependent. For taxable years be-
ginning in 2020, the standard deduction
amount under § 63(c)(5) for an individual
who may be claimed as a dependent by
another taxpayer cannot exceed the great-
er of (1) $1,100, or (2) the sum of $350
and the individual’s earned income.
(3) Aged or blind. For taxable years
beginning in 2020, the additional standard
deduction amount under § 63(f) for the
aged or the blind is $1,300. The addition-
al standard deduction amount is increased
to $1,650 if the individual is also unmar-
ried and not a surviving spouse.
.17 Cafeteria Plans. For taxable years
beginning in 2020, the dollar limitation
under § 125(i) on voluntary employee sal-
ary reductions for contributions to health
flexible spending arrangements is $2,750.
.18 Qualified Transportation Fringe
Benefit. For taxable years beginning
in 2020, the monthly limitation under
§ 132(f)(2)(A) regarding the aggregate
fringe benefit exclusion amount for trans-
portation in a commuter highway vehicle
and any transit pass is $270. The monthly
limitation under § 132(f)(2)(B) regarding
the fringe benefit exclusion amount for
qualified parking is $270.
.19 Income from United States Savings
Bonds for Taxpayers Who Pay Qualified
Higher Education Expenses. For taxable
years beginning in 2020, the exclusion un-
der § 135, regarding income from United
States savings bonds for taxpayers who
pay qualified higher education expenses,
begins to phase out for modified adjusted

Bulletin No. 2019–47 1099 November 18, 2019
gross income above $123,550 for joint
returns and $82,350 for all other returns.
The exclusion is completely phased out
for modified adjusted gross income of
$153,550 or more for joint returns and
$97,350 or more for all other returns.
.20 Adoption Assistance Programs.
For taxable years beginning in 2020, un-
der § 137(a)(2), the amount that can be
excluded from an employee’s gross in-
come for the adoption of a child with spe-
cial needs is $14,300. For taxable years
beginning in 2020, under § 137(b)(1) the
maximum amount that can be excluded
from an employee’s gross income for the
amounts paid or expenses incurred by an
employer for qualified adoption expens-
es furnished pursuant to an adoption as-
sistance program for other adoptions by
the employee is $14,300. The amount
excludable from an employee’s gross in-
come begins to phase out under § 137(b)
(2)(A) for taxpayers with modified adjust-
ed gross income in excess of $214,520
and is completely phased out for taxpay-
ers with modified adjusted gross income
of $254,520 or more. (See section 3.04
of this revenue procedure for the adjusted
items relating to the adoption credit.)
.21 Private Activity Bonds Volume
Cap. For calendar year 2020, the amounts
used under § 146(d) to calculate the State
ceiling for the volume cap for private
activity bonds is the greater of (1) $105
multiplied by the State population, or (2)
$321,775,000.
.22 Loan Limits on Agricultural Bonds.
For calendar year 2020, the loan lim-
it amount on agricultural bonds under
§ 147(c)(2)(A) for first-time farmers is
$552,500.
.23 General Arbitrage Rebate Rules.
For bond years ending in 2020, the amount
of the computation credit determined un-
der § 1.148-3(d)(4) of the Income Tax
Regulations is $1,760.
.24 Safe Harbor Rules for Broker
Commissions on Guaranteed Investment
Contracts or Investments Purchased for a
Yield Restricted Defeasance Escrow. For
calendar year 2020, under § 1.148-5(e)
(2)(iii)(B)(1), a broker’s commission or
similar fee for the acquisition of a guar-
anteed investment contract or investments
purchased for a yield restricted defeasance
escrow is reasonable if (1) the amount of
the fee that the issuer treats as a qualified
administrative cost does not exceed the
lesser of (A) $41,000, and (B) 0.2 percent
of the computational base (as defined in
§ 1.148-5(e)(2)(iii)(B)(2)) or, if more,
$4,000; and (2) for any issue, the issuer
does not treat more than $117,000 in bro-
kers’ commissions or similar fees as quali-
fied administrative costs for all guaranteed
investment contracts and investments for
yield restricted defeasance escrows pur-
chased with gross proceeds of the issue.
.25 Gross Income Limitation for a
Qualifying Relative. For taxable years
beginning in 2020, the exemption amount
referenced in § 152(d)(1)(B) is $4,300.
.26 Election to Expense Certain De-
preciable Assets. For taxable years be-
ginning in 2020, under § 179(b)(1), the
aggregate cost of any § 179 property that
a taxpayer elects to treat as an expense
cannot exceed $1,040,000 and under
§ 179(b)(5)(A), the cost of any sport util-
ity vehicle that may be taken into account
under § 179 cannot exceed $25,900. Un-
der § 179(b)(2), the $1,040,000 limita-
tion is reduced (but not below zero) by
the amount the cost of § 179 property
placed in service during the 2020 taxable
year exceeds $2,590,000.
.27 Qualified Business Income. For
taxable years beginning in 2020, the
threshold amount under § 199A(e)(2) is
$326,600 for married filing joint returns,
$163,300 for married filing separate re-
turns, and $163,300 for all other returns.
.28 Eligible Long-Term Care Premi-
ums. For taxable years beginning in 2020,
the limitations under § 213(d)(10), regard-
ing eligible long-term care premiums in-
cludible in the term “medical care,” are as
follows:
Attained Age Before the
Close of the Taxable
Year
Limitation on
Premiums
40 or less$430
More than 40 but not
more than 50
$810
More than 50 but not
more than 60
$1,630
More than 60 but not
more than 70
$4,350
More than 70$5,430
.29 Medical Savings Accounts.
(1) Self-only coverage. For taxable
years beginning in 2020, the term “high
deductible health plan” as defined in
§ 220(c)(2)(A) means, for self-only cov-
erage, a health plan that has an annual de-
ductible that is not less than $2,350 and
not more than $3,550, and under which the
annual out-of-pocket expenses required to
be paid (other than for premiums) for cov-
ered benefits do not exceed $4,750.
(2) Family coverage. For taxable
years beginning in 2020, the term “high
deductible health plan” means, for family
coverage, a health plan that has an annual
deductible that is not less than $4,750 and
not more than $7,100, and under which the
annual out-of-pocket expenses required to
be paid (other than for premiums) for cov-
ered benefits do not exceed $8,650.
.30 Interest on Education Loans. For
taxable years beginning in 2020, the
$2,500 maximum deduction for interest
paid on qualified education loans under
§ 221 begins to phase out under § 221(b)
(2)(B) for taxpayers with modified ad-
justed gross income in excess of $70,000
($140,000 for joint returns), and is com-
pletely phased out for taxpayers with mod-
ified adjusted gross income of $85,000 or
more ($170,000 or more for joint returns).
.31 Limitation on Use of Cash Method
of Accounting. For taxable years begin-
ning in 2020, a corporation or partnership
meets the gross receipts test of § 448(c)
for any taxable year if the average annual
gross receipts of such entity for the 3-tax-
able-year period ending with the taxable
year which precedes such taxable year
does not exceed $26,000,000.
.32 Threshold for Excess Business
Loss. For taxable years beginning in
2020, in determining a taxpayer’s excess
business loss, the amount under § 461(l)
(3)(A)(ii)(II) is $259,000 ($518,000 for
joint returns).
.33 Treatment of Dues Paid to Agri-
cultural or Horticultural Organizations.
For taxable years beginning in 2020, the
limitation under § 512(d)(1), regarding
the exemption of annual dues required to
be paid by a member to an agricultural or
horticultural organization, is $171.
.34 Insubstantial Benefit Limitations
for Contributions Associated with Chari-
table Fund-Raising Campaigns.

November 18, 2019 1100 Bulletin No. 2019–47
(1) Low cost article. For taxable years
beginning in 2020, for purposes of defin-
ing the term “unrelated trade or business”
for certain exempt organizations under
§ 513(h)(2), “low cost articles” are articles
costing $11.20 or less.
(2) Other insubstantial benefits. For
taxable years beginning in 2020, under
§ 170, the $5, $25, and $50 guidelines in
section 3 of Rev. Proc. 90-12, 1990-1 C.B.
471 (as amplified by Rev. Proc. 92-49,
1992-1 C.B. 987, and modified by Rev.
Proc. 92-102, 1992-2 C.B. 579), for the
value of insubstantial benefits that may be
received by a donor in return for a con-
tribution, without causing the contribution
to fail to be fully deductible, are $11.20,
$56 and $112, respectively.
.35 Special Rules for Credits and De-
ductions. For taxable years beginning in
2020, the amount of the deduction under
§ 642(b)(2)(C)(i) is $4,300.
.36 Tax on Insurance Companies Oth-
er than Life Insurance Companies. For
taxable years beginning in 2020, under
§ 831(b)(2)(A)(i) the amount of the limit
on net written premiums or direct writ-
ten premiums (whichever is greater) is
$2,350,000 to elect the alternative tax for
certain small companies under § 831(b)
(1) to be taxed only on taxable investment
income.
.37 Expatriation to Avoid Tax. For
calendar year 2020, under § 877A(g)(1)
(A), unless an exception under § 877A(g)
(1)(B) applies, an individual is a covered
expatriate if the individual’s “average
annual net income tax” under § 877(a)
(2)(A) for the five taxable years ending
before the expatriation date is more than
$171,000.
.38 Tax Responsibilities of Expatria-
tion. For taxable years beginning in 2020,
the amount that would be includible in the
gross income of a covered expatriate by
reason of § 877A(a)(1) is reduced (but not
below zero) by $737,000.
.39 Foreign Earned Income Exclusion.
For taxable years beginning in 2020, the
foreign earned income exclusion amount
under § 911(b)(2)(D)(i) is $107,600.
.40 Debt Instruments Arising Out of
Sales or Exchanges. For calendar year
2020, a qualified debt instrument under
§ 1274A(b) has stated principal that does
not exceed $6,039,100, and a cash meth-
od debt instrument under § 1274A(c)(2)
has stated principal that does not exceed
$4,313,600.
.41 Unified Credit Against Estate Tax.
For an estate of any decedent dying in
calendar year 2020, the basic exclusion
amount is $11,580,000 for determining
the amount of the unified credit against
estate tax under § 2010.
.42 Valuation of Qualified Real Prop-
erty in Decedent’s Gross Estate. For an
estate of a decedent dying in calendar year
2020, if the executor elects to use the spe-
cial use valuation method under § 2032A
for qualified real property, the aggregate
decrease in the value of qualified real
property resulting from electing to use
§ 2032A for purposes of the estate tax can-
not exceed $1,180,000.
.43 Annual Exclusion for Gifts.
(1) For calendar year 2020, the first
$15,000 of gifts to any person (other than
gifts of future interests in property) are
not included in the total amount of taxable
gifts under § 2503 made during that year.
(2) For calendar year 2020, the first
$157,000 of gifts to a spouse who is not
a citizen of the United States (other than
gifts of future interests in property) are
not included in the total amount of taxable
gifts under §§ 2503 and 2523(i)(2) made
during that year.
.44 Tax on Arrow Shafts. For calen-
dar year 2020, the tax imposed under
§ 4161(b)(2)(A) on the first sale by the
manufacturer, producer, or importer of
any shaft of a type used in the manufac-
ture of certain arrows is $0.52 per shaft.
.45 Passenger Air Transportation Ex-
cise Tax. For calendar year 2020, the tax
under § 4261(b)(1) on the amount paid
for each domestic segment of taxable air
transportation is $4.30. For calendar year
2020, the tax under § 4261(c)(1) on any
amount paid (whether within or without
the United States) for any international air
transportation, if the transportation begins
or ends in the United States, generally is
$18.90. Under § 4261(c)(3), however, a
lower amount applies under § 4261(c)(1)
to a domestic segment beginning or end-
ing in Alaska or Hawaii, and the tax ap-
plies only to departures. For calendar year
2020, the rate is $9.50.
.46 Reporting Exception for Certain
Exempt Organizations with Nondeduct-
ible Lobbying Expenditures. For taxable
years beginning in 2020, the annual per
person, family, or entity dues limitation
to qualify for the reporting exception un-
der § 6033(e)(3) (and section 5.05 of Rev.
Proc. 98-19, 1998-1 C.B. 547), regarding
certain exempt organizations with nonde-
ductible lobbying expenditures, is $119 or
less.
.47 Notice of Large Gifts Received from
Foreign Persons. For taxable years begin-
ning in 2020, § 6039F authorizes the Trea-
sury Department and the Internal Revenue
Service to require recipients of gifts from
certain foreign persons to report these gifts
if the aggregate value of gifts received in
the taxable year exceeds $16,649.
.48 Persons Against Whom a Federal
Tax Lien Is Not Valid. For calendar year
2020, a federal tax lien is not valid against
(1) certain purchasers under § 6323(b)
(4) who purchased personal property in
a casual sale for less than $1,620, or (2)
a mechanic’s lien or under § 6323(b)(7)
who repaired or improved certain residen-
tial property if the contract price with the
owner is not more than $8,100.
.49 Property Exempt from Levy. For
calendar year 2020, the value of property
exempt from levy under § 6334(a)(2) (fuel,
provisions, furniture, and other household
personal effects, as well as arms for per-
sonal use, livestock, and poultry) cannot
exceed $9,690. The value of property ex-
empt from levy under § 6334(a)(3) (books
and tools necessary for the trade, business,
or profession of the taxpayer) cannot ex-
ceed $4,850.
.50 Exempt Amount of Wages, Salary,
or Other Income. For taxable years be-
ginning in 2020, the dollar amount used
to calculate the amount determined under
§ 6334(d)(4)(B) is $4,300.
.51 Interest on a Certain Portion of the
Estate Tax Payable in Installments. For an
estate of a decedent dying in calendar year
2020, the dollar amount used to determine
the “2-percent portion” (for purposes of
calculating interest under § 6601(j)) of the
estate tax extended as provided in § 6166
is $1,570,000.
.52 Failure to File Tax Return. In the
case of any return required to be filed in
2021, the amount of the addition to tax
under § 6651(a) for failure to file a tax re-
turn within 60 days of the due date of such
return (determined with regard to any ex-
tensions of time for filing) shall not be less
than the lesser of $330 or 100 percent of

Bulletin No. 2019–47 1101 November 18, 2019
the amount required to be shown as tax on
such returns.
.53 Failure to File Certain Information
Returns, Registration Statements, etc. For
returns required to be filed in 2021, the
penalty amounts under § 6652(c) are:
(1) for failure to file a return required
under § 6033(a)(1) (relating to returns
by exempt organization) or § 6012(a)(6)
(relating to returns by political organiza-
tions):
ScenarioDaily Penalty Maximum Penalty
Organization (§ 6652(c)(1)(A))$20Lessor of $10,500 or 5% of
gross receipts of the organiza-
tion for the year.
Organization with gross receipts exceeding $1,084,000 (§ 6652(c)(1)(A))$105$54,000
Managers (§ 6652(c)(1)(B))$10$5,000
Public inspection of annual returns and reports (§ 6652(c)(1)(C))$20$10,500
Public inspection of applications for exemption and notice of status
(§ 6652(c)(1)(D))
$20No Limits
(2) for failure to file a return required
under § 6034 (relating to returns by cer-
tain trust) or § 6043(b) (relating to termi-
nations, etc., of exempt organizations):
ScenarioDaily PenaltyMaximum Penalty
Organization or trust (§ 6652(c)(2)(A))$10$5,000
Managers (§ 6652(c)(2)(B))$10$5,000
Split-Interest Trust (§ 6652(c)(2)(C)(ii))$20$10,500
Any trust with gross income exceeding $271,000 (§ 6652(c)(2)(C)(ii))
$105$54,000
(3) for failure to file a disclosure re-
quired under § 6033(a)(2):
ScenarioDaily PenaltyMaximum Penalty
Tax–exempt entity (§ 6652(c)(3)(A))$105$54,000
Failure to comply with written demand (§ 6652(c)(3)(B)(ii))$105$10,500
.54 Other Assessable Penalties With
Respect to the Preparation of Tax Returns
for Other Persons. In the case of any fail-
ure relating to a return or claim for refund
filed in 2021, the penalty amounts under
§ 6695 are:
ScenarioPer Return or Claim for
Refund
Maximum
Penalty
Failure to furnish copy to taxpayer (§ 6695(a))$50$27,000
Failure to sign return (§ 6695(b))$50$27,000
Failure to furnish identifying number (§ 6695(c))$50$27,000
Failure to retain copy or list (§ 6695(d))$50$27,000
Failure to file correct information returns (§ 6695(e))$50 per return and item
in return
$27,000
Negotiation of check (§ 6695(f))$540 per checkNo limit
Failure to be diligent in determining eligibility for head of household filing sta-
tus, child tax credit, American opportunity tax credit, and earned income credit
(§ 6695(g))
$540 per failureNo limit

November 18, 2019 1102 Bulletin No. 2019–47
.55 Failure to File Partnership Return.
In the case of any return required to be
filed in 2021, the dollar amount used to
determine the amount of the penalty under
§ 6698(b)(1) is $210.
.56 Failure to File S Corporation Re-
turn. In the case of any return required to
be filed in 2021, the dollar amount used to
determine the amount of the penalty under
§ 6699(b)(1) is $210.
.57 Failure to File Correct Information
Returns. In the case of any failure relating
to a return required to be filed in 2021, the
penalty amounts under § 6721 are:
(1) for persons with average annual
gross receipts for the most recent three
taxable years of more than $5,000,000, for
failure to file correct information returns:
ScenarioPenalty Per ReturnCalendar Year Maximum
General Rule (§ 6721(a)(1))$280$3,392,000
Corrected on or before 30 days after required filing date (§ 6721(b)(1))$50$565,000
Corrected after 30
th
day but on or before August 1 (§ 6721(b)(2))$110$1,696,000
(2) for persons with average annual
gross receipts for the most recent three
taxable years of $5,000,000 or less, for
failure to file correct information returns:
ScenarioPenalty Per ReturnCalendar Year Maximum
General Rule (§ 6721(d)(1)(A))$280$1,130,500
Corrected on or before 30 days after required filing date (§ 6721(d)(1)(B))$50$197,500
Corrected after 30
th
day but on or before August 1 (§ 6721(d)(1)(C))$110$565,000
(3) for failure to file correct informa-
tion returns due to intentional disregard of
the filing requirement (or the correct in-
formation reporting requirement):
ScenarioPenalty Per ReturnCalendar Year Maximum
Return other than a return required to be filed
under §§ 6045(a), 6041A(b), 6050H, 6050I,
6050J, 6050K, or 6050L (§ 6721(e)(2)(A))
Greater of (i) $560, or (ii) 10% of aggregate
amount of items required to be reported correct-
ly
No limit
Return required to be filed under §§ 6045(a),
6050K, or 6050L (§ 6721(e)(2)(B))
Greater of (i) $560, or (ii) 5% of aggregate
amount of items required to be reported correct-
ly
No limit
Return required to be filed under § 6050I(a)
(§ 6721(e)(2)(C))
Greater of (i) $28,260, or (ii) amount of cash
received up to $113,000
No limit
Return required to be filed under § 6050V
(§ 6721(e)(2)(D))
Greater of (i) $560, or (ii) 10% of the value of
the benefit of any contract with respect to which
information is required to be included on the
return
No limit
.58 Failure to Furnish Correct Pay-
ee Statements. In the case of any failure
relating to a statement required to be fur-
nished in 2021, the penalty amounts under
§ 6722 are:
(1) for persons with average annual
gross receipts for the most recent three
taxable years of more than $5,000,000,
for failure to file correct information re-
turns:
ScenarioPenalty Per ReturnCalendar Year Maximum
General Rule (§ 6722(a)(1))$280$3,392,000
Corrected on or before 30 days after required filing date (§ 6722(b)(1))$50$565,000
Corrected after 30
th
day but on or before August 1 (§ 6722(b)(2))$110$1,696,000

Bulletin No. 2019–47 1103 November 18, 2019
(2) for persons with average annual
gross receipts for the most recent 3 taxable
years of $5,000,000 or less, for failure to
file correct information returns:
ScenarioPenalty Per ReturnCalendar Year Maximum
General Rule (§ 6722(d)(1)(A))$280$1,130,500
Corrected on or before 30 days after required filing date (§ 6722(d)
(1)(B))
$50$197,500
Corrected after 30
th
day but on or before August 1 (§ 6722(d)(1)(C))$110$565,000
(3) for failure to file correct payee
statements due to intentional disregard of
the requirement to furnish a payee state-ment (or the correct information reporting
requirement):
ScenarioPenalty Per ReturnCalendar Year Maximum
Statement other than a statement required un-
der §§ 6045(b), 6041A(e) (in respect of a return
required under § 6041A(b)), 6050H(d), 6050J(e),
6050K(b), or 6050L(c) (§ 6722(e)(2)(A))
Greater of (i) $560, or (ii) 10% of ag-
gregate amount of items required to be
reported correctly
No limit
Payee statement required under §§ 6045(b),
6050K(b), or 6050L(c) (§ 6722(e)(2)(B))
Greater of (i) $560, or (ii) 5% of aggregate
amount of items required to be reported
correctly
No limit
.59 Revocation or Denial of Passport
in Case of Certain Tax Delinquencies. For
calendar year 2020, the amount of a se-
rious delinquent tax debt under § 7345 is
$53,000.
.60 Attorney Fee Awards. For fees in-
curred in calendar year 2020, the attorney
fee award limitation under § 7430(c)(1)
(B)(iii) is $210 per hour.
.61 Periodic Payments Received Un-
der Qualified Long-Term Care Insurance
Contracts or Under Certain Life Insur-
ance Contracts. For calendar year 2020,
the stated dollar amount of the per diem
limitation under § 7702B(d)(4), regarding
periodic payments received under a qual-
ified long-term care insurance contract or
periodic payments received under a life
insurance contract that are treated as paid
by reason of the death of a chronically ill
individual, is $380.
.62 Qualified Small Employer Health
Reimbursement Arrangement. For tax-
able years beginning in 2020, to qualify
as a qualified small employer health reim-
bursement arrangement under § 9831(d),
the arrangement must provide that the
total amount of payments and reimburse-
ments for any year cannot exceed $5,250
($10,600 for family coverage).
SECTION 4. EFFECTIVE DATE
.01 General Rule. Except as provided
in section 4.02, this revenue procedure ap-
plies to taxable years beginning in 2020.
.02 Calendar Year Rule. This reve-
nue procedure applies to transactions or
events occurring in calendar year 2020
for purposes of sections 3.09 (rehabil-
itation expenditures treated as separate
new building), 3.10 (low-income hous-
ing credit), 3.15 (transportation mainline
pipeline construction industry optional
expense substantiation rules for payments
to employees under accountable plans),
3.21 (private activity bonds volume cap),
3.22 (loan limits on agricultural bonds),
3.23 (general arbitrage rebate rules), 3.24
(safe harbor rules for broker commissions
on guaranteed investment contracts or in-
vestments purchased for a yield restricted
defeasance escrow), 3.37 (expatriation
to avoid taxes), 3.40 (debt instruments
arising out of sales or exchanges), 3.41
(unified credit against estate tax), 3.42
(valuation of qualified real property in
decedent’s gross estate), 3.43 (annual
exclusion for gifts), 3.44 (tax on arrow
shafts), 3.45 (passenger air transportation
excise tax), 3.48 (persons against whom a
federal tax lien is not valid), 3.49 (proper-
ty exempt from levy), 3.51 (interest on a
certain portion of the estate tax payable in
installments), 3.59 (revocation or denial of
passport in case of certain tax delinquen-
cies), 3.60 (attorney fee awards), and 3.61
(periodic payments received under quali-
fied long-term care insurance contracts or
under certain life insurance contracts).
SECTION 5. DRAFTING
INFORMATION
The principal author of this revenue
procedure is William Ruane of the Office
of Associate Chief Counsel (Income Tax
& Accounting). For further information
regarding this revenue procedure, contact
Mr. Ruane at (202) 317-4718 (not a toll-
free number).

November 18, 2019 1104 Bulletin No. 2019–47
Part IV
Advance Notice of
Proposed Rulemaking
REG-123112-19
The Treatment of Certain Interests in
Corporations as Stock or Indebtedness
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Advance notice of proposed
rulemaking.
SUMMARY: This document announces
that the Department of the Treasury (Trea-
sury Department) and the IRS intend to
issue proposed regulations regarding the
treatment of certain interests in corpora-
tions as stock or indebtedness and requests
comments from the public regarding the
contemplated rules. This document also
announces that, following the expiration
of the 2016 Temporary Regulations (de-
scribed in the Background section of this
advance notice of proposed rulemaking),
a taxpayer may rely on the 2016 Proposed
Regulations (also described in the Back-
ground) until further notice is given in
the Federal Register, provided that the
taxpayer consistently applies the rules in
the 2016 Proposed Regulations in their
entirety.
DATES: Written or electronic comments
must be received by February 3, 2020.
ADDRESSES: Submit electronic submis-
sions via the Federal eRulemaking Portal
at https://www.regulations.gov (indicate
IRS and REG-123112-19) by following
the online instructions for submitting
comments. Once submitted to the Feder-
al eRulemaking Portal, comments cannot
be edited or withdrawn. The Treasury De-
partment and the IRS will publish for pub-
lic availability any comment received to
its public docket, whether submitted elec-
tronically or in hard copy. Send hard copy
submissions to: CC:PA:LPD:PR (REG-
123112-19), Room 5203, Internal Reve-
nue Service, P.O. Box 7604, Ben Franklin
Station, Washington, DC 20044.
FOR FURTHER INFORMATION CON-
TACT: Concerning the proposals, Azeka
J. Abramoff at (202) 317-6938; concern-
ing submissions of comments, Regina
Johnson at (202) 317-6901 (not toll-free
numbers).
SUPPLEMENTARY INFORMATION:
Background
I. Overview
Section 385 authorizes the Secretary
of the Treasury or his delegate (Secretary)
to prescribe rules to determine whether
an interest in a corporation is treated as
stock or indebtedness (or as in part stock
and in part indebtedness). On October 21,
2016, the Treasury Department and the
IRS published T.D. 9790 in the Federal
Register (81 FR 72858), which included
final regulations under section 385 and
temporary regulations under section 385
(Temporary Regulations). On the same
date, the Treasury Department and the
IRS also published a notice of proposed
rulemaking (REG-130314-16) in the Fed-
eral Register (81 FR 72751) (2016 Pro-
posed Regulations) by cross-reference to
the Temporary Regulations, which include
§§1.385-3T and 1.385-4T. Technical cor-
rections to the final regulations and the
Temporary Regulations were published
in the Federal Register (82 FR 8169) on
January 24, 2017.
The final regulations under section
385, the Temporary Regulations, and the
2016 Proposed Regulations address the
classification of certain related-party debt
as debt or equity for Federal tax purposes.
Treasury Decision 9790 included rules set
forth in §1.385-2, which establish min-
imum documentation requirements that
ordinarily must be satisfied in order for
debt obligations among related parties to
be treated as debt for Federal tax purposes
(Documentation Regulations). Treasury
Decision 9790 also included §§1.385-3,
1.385-3T, and 1.385-4T, which treat as
stock certain debt that is issued by a cor-
poration to a controlling shareholder in
a distribution or in another related-party
transaction that achieves an economically
similar result (the Distribution Regula-
tions). The Distribution Regulations are
applicable for taxable years ending on or
after January 19, 2017.
The Temporary Regulations set forth
rules regarding the treatment under the
Distribution Regulations of certain qual-
ified short-term debt instruments, trans-
actions involving controlled partnerships,
and transactions involving consolidated
groups. The Temporary Regulations apply
to taxable years ending on or after Janu-
ary 19, 2017. The Temporary Regulations
expired on October 13, 2019. See section
7805(e); §1.385-3T(l); §1.385-4T(h).
The 2016 Proposed Regulations
cross-referencing the Temporary Regu-
lations are proposed to apply to taxable
years ending on or after January 19, 2017;
in contrast to the Temporary Regulations,
the 2016 Proposed Regulations do not ex-
pire.
II. Executive Order 13789
Executive Order 13789 (E.O. 13789),
issued on April 21, 2017, instructed the
Secretary to review all significant tax
regulations issued on or after January 1,
2016, and to take concrete action to al-
leviate the burdens of regulations that (i)
impose an undue financial burden on U.S.
taxpayers; (ii) add undue complexity to
the Federal tax laws; or (iii) exceed the
statutory authority of the IRS. E.O. 13789
further instructed the Secretary to submit
to the President within 60 days a report
(First Report) that identifies regulations
that meet these criteria. Notice 2017-38,
2017-30 I.R.B. 147, which was published
on July 24, 2017, included the final sec-
tion 385 regulations in a list of eight reg-
ulations identified by the Secretary in the
First Report as meeting at least one of the
first two criteria specified in E.O. 13789.
E.O. 13789 further instructed the Sec-
retary to submit to the President a report
(Second Report) that recommended spe-
cific actions to mitigate the burden im-
posed by regulations identified in the First
Report. On October 16, 2017, the Secre-

Bulletin No. 2019–47 1105 November 18, 2019
tary published in the Federal Register the
Second Report (82 FR 48013), which stat-
ed that (i) the Treasury Department and the
IRS were considering a proposal to revoke
the Documentation Regulations as issued
and (ii) the Treasury Department will re-
assess the distribution regulations in light
of impending tax reform and the Treasury
Department and the IRS may then propose
more streamlined and targeted regula-
tions. On September 24, 2018, the Trea-
sury Department and the IRS issued pro-
posed regulations that, if finalized, would
remove the Documentation Regulations
from the Code of Federal Regulations. See
83 FR 48265 (September 24, 2018). The
Treasury Department and the IRS are pub-
lishing in the Rules section of this issue of
the Federal Register final regulations that
remove the Documentation Regulations.
Some taxpayers submitted comments in
response to E.O. 13789 and the September
2018 proposed regulations recommending
that the Treasury Department and the IRS
revoke the Distribution Regulations in ad-
dition to the Documentation Regulations,
while another comment recommended
that the Treasury Department and the IRS
issue more streamlined and targeted Dis-
tribution Regulations. This advance no-
tice of proposed rulemaking announces
that the Treasury Department and the IRS
intend to propose more streamlined and
targeted Distribution Regulations.
III. The Distribution Regulations
Under the Distribution Regulations’
general rule, the issuance of a debt instru-
ment by a member of an expanded group
to another member of the same expanded
group in a distribution, or an economi-
cally similar transaction, may result in
the treatment of the debt instrument as
stock. See §1.385-3(b)(2). The Distribu-
tion Regulations include a funding rule
that treats as stock a debt instrument that
is issued as part of a series of transactions
that achieves a result similar to a distribu-
tion of a debt instrument. See §1.385-3(b)
(3)(i). Specifically, §1.385-3(b) treats as
stock a debt instrument that was issued
in exchange for property, including cash,
to fund a distribution to an expanded
group member or another transaction that
achieves an economically similar result.
Id. Furthermore, the Distribution Regula-
tions include a per se rule, which treats a
debt instrument as funding a distribution
to an expanded group member or other
transaction with a similar economic effect
if it was issued in exchange for property
during the period beginning 36 months
before and ending 36 months after the is-
suer of the debt instrument made the dis-
tribution or undertook a transaction with a
similar economic effect. See §1.385-3(b)
(3)(iii). The Distribution Regulations also
include several exceptions limiting their
scope. See, e.g., §1.385-3(c).
The Distribution Regulations address
debt instruments that do not finance any
new investment in the operations of the
borrower and therefore have the potential
to create significant Federal tax benefits,
including interest deductions that erode
the U.S. tax base, without having mean-
ingful non-tax significance. The Treasury
Department and the IRS are cognizant that
a complete withdrawal of the Distribution
Regulations could restore incentives for
multinational corporations to generate ad-
ditional interest deductions without new
investment. Accordingly, the Treasury
Department and the IRS have determined
that the Distribution Regulations continue
to be necessary at this time.
Explanation of Contemplated
Regulations
Pursuant to E.O. 13789, the Treasury
Department and the IRS intend to issue
proposed regulations modifying the Dis-
tribution Regulations. To make the Dis-
tribution Regulations more streamlined
and targeted, the Treasury Department
and the IRS intend to issue proposed
regulations substantially modifying the
funding rule, including by withdrawing
the per se rule. The Treasury Department
and the IRS intend that the proposed reg-
ulations would not treat a debt instrument
as funding a distribution or economically
similar transaction solely because of their
temporal proximity; rather, the proposed
regulations would apply the funding rule
to a debt instrument only if its issuance
has a sufficient factual connection to a
distribution to a member of the taxpay-
er’s expanded group or an economically
similar transaction (for example, when
the funding transaction and distribution or
economically similar transaction are pur-
suant to an integrated plan). Thus, under
the proposed regulations, a debt instru-
ment issued without such a connection to
a distribution or similar transaction would
not be treated as stock. As a result, the
proposed distribution regulations would
be more streamlined and targeted while
continuing to deter tax-motivated uneco-
nomic activity. As part of the intended re-
visions of the funding rule, the Treasury
Department and the IRS also are consid-
ering substantial revisions to, or removal
of, certain exceptions in the regulations,
consistent with the revised standard. The
proposed distribution regulations would
not alter materially the definition of a cov-
ered member (defined in §1.385-1(c)(2) as
a member of an expanded group that is a
domestic corporation).
Proposed Applicability Date
The Treasury Department and the IRS
intend to provide that the proposed regu-
lations would apply to taxable years be-
ginning on or after the date of publication
of the Treasury decision adopting those
rules as final regulations in the Federal
Register.
Reliance on the 2016 Proposed
Regulations
For periods after October 13, 2019 (the
expiration date of the Temporary Regu-
lations), a taxpayer may rely on the 2016
Proposed Regulations until further notice
is given, provided that the taxpayer con-
sistently applies the rules in the 2016 Pro-
posed Regulations in their entirety.
Request for Comments
The Treasury Department and the IRS
request comments on all aspects of the
rules described in part III of this advance
notice of proposed rulemaking. In par-
ticular, the Treasury Department and the
IRS request comments on the appropriate
standard for determining the existence of
a connection between a debt instrument
and a distribution or economically similar
transaction under the funding rule. For ex-
ample, the funding rule could apply solely
in cases in which a debt instrument is is-
sued as part of an overall plan to fund the
distribution or economically similar trans-

November 18, 2019 1106 Bulletin No. 2019–47
action. The Treasury Department and the
IRS also request comments on whether the
proposed regulations should include partic-
ular factors that indicate when the funding
rule applies and factors that indicate when
the funding rule does not apply. The Trea-
sury Department and the IRS also request
comments on what additional guidance, if
any, should be issued (or which provisions
should be eliminated from the final regula-
tions) to reduce the compliance burdens as-
sociated with the Distribution Regulations.
The Treasury Department and the IRS also
request comments on how the Distribution
Regulations may affect small businesses.
All comments will be available at http://
www.regulations.gov or upon request.
Effect on Other Documents
Notice 2019-58, 2019-44 I.R.B. 1022
(October 28, 2019), which addresses the
status of the 2016 Proposed Regulations
after October 13, 2019, is obsoleted.
Statement of Availability
IRS Notices and other guidance cit-
ed in this document are published in the
Internal Revenue Bulletin and are avail-
able from the Superintendent of Doc-
uments, U.S. Government Publishing
Office, Washington, DC 20402, or by
visiting the IRS website at https://www.
irs.gov.
Drafting Information
The principal author of this advance
notice of proposed rulemaking is Azeka J.
Abramoff of the Office of Associate Chief
Counsel (International). However, other
personnel from the Treasury Department
and the IRS participated in its develop-
ment.
Sunita Lough,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register on Oc-
tober 31, 2019, 4:15 p.m., and published in the issue
of the Federal Register for November 11, 2019, 84
F.R. 59318)

Drafting Information
The principal author of this advance
notice of proposed rulemaking is Azeka J.
Abramoff of the Office of Associate Chief
Counsel (International). However, other
personnel from the Treasury Department
and the IRS participated in its develop-
ment.
Sunita Lough,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register on Oc-
tober 31, 2019, 4:15 p.m., and published in the issue
of the Federal Register for November 11, 2019, 84
F.R. 59318)
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.
Bulletin No. 2019–47 i November 18, 2019

Numerical Finding List
1
Bulletin 2019–47
AOD:
2019-02, 2019-41 I.R.B. 806
2019-03, 2019-42 I.R.B. 934
Announcements:
2019-07, 2019-27 I.R.B. 62
2019-08, 2019-32 I.R.B. 621
2019-10, 2019-46 I.R.B. 1049
Notices:
2019-12, 2019-27 I.R.B. 57
2019-40, 2019-27 I.R.B. 59
2019-41, 2019-28 I.R.B. 256
2019-42, 2019-29 I.R.B. 352
2019-27, 2019-31 I.R.B. 484
2019-43, 2019-31 I.R.B. 487
2019-24, 2019-31 I.R.B. 489
2019-45, 2019-32 I.R.B. 593
2019-48, 2019-36 I.R.B. 678
2019-46, 2019-37 I.R.B. 695
2019-49, 2019-37 I.R.B. 699
2019-50, 2019-37 I.R.B. 700
2019-47, 2019-39 I.R.B. 731
2019-51, 2019-41 I.R.B. 866
2019-52, 2019-41 I.R.B. 869
2019-54, 2019-42 I.R.B. 935
2019-55, 2019-42 I.R.B. 937
2019-58, 2019-44 I.R.B. 1022
2019-56, 2019-45 I.R.B. 1046
2019-59, 2019-47 I.R.B. 1091
Proposed Regulations:
REG-105476-18, 2019-27 I.R.B. 63
REG-106282-18, 2019-28 I.R.B. 259
REG-101828-19, 2019-29 I.R.B. 412
REG-106877-18, 2019-30 I.R.B. 441
REG-121508-18, 2019-30 I.R.B. 456
REG-105474-18, 2019-31 I.R.B. 493
REG-118425-18, 2019-31 I.R.B. 539
REG-130700-14, 2019-36 I.R.B. 681
REG-101378-19, 2019-37 I.R.B. 702
REG-104554-18, 2019-39 I.R.B. 737
REG-104870-18, 2019-39 I.R.B. 754
REG-102508-16, 2019-40 I.R.B. 777
REG-125710-18, 2019-40 I.R.B. 785
REG-106808-19, 2019-41 I.R.B. 912
REG-136401-18, 2019-42 I.R.B. 960
REG-104223-18, 2019-43 I.R.B. 989
REG-118784-18, 2019-44 I.R.B. 1024
REG-128246-18, 2019-44 I.R.B. 1037
REG-123112-19, 2019-47 I.R.B. 1104
Revenue Rulings:
2019-16, 2019-28 I.R.B. 96
2019-17, 2019-32 I.R.B. 583
2019-18, 2019-35 I.R.B. 668
2019-19, 2019-36 I.R.B. 674
2019-20, 2019-36 I.R.B. 675
2019-21, 2019-38 I.R.B. 708
2019-22, 2019-40 I.R.B. 776
2019-23, 2019-41 I.R.B. 807
2019-24, 2019-44 I.R.B. 1004
2019-25, 2019-45 I.R.B. 1042
Revenue Procedures:
2019-24, 2019-29 I.R.B. 353
2019-28, 2019-32 I.R.B. 596
2019-29, 2019-32 I.R.B. 620
2019-30, 2019-33 I.R.B. 638
2019-31, 2019-33 I.R.B. 643
2019-32, 2019-33 I.R.B. 659
2019-33, 2019-34 I.R.B. 662
2019-34, 2019-35 I.R.B. 669
2019-23, 2019-38 I.R.B. 725
2019-36, 2019-38 I.R.B. 729
2019-37, 2019-39 I.R.B. 731
2019-35, 2019-41 I.R.B. 870
2019-38, 2019-42 I.R.B. 942
2019-39, 2019-42 I.R.B. 945
2019-40, 2019-43 I.R.B. 982
2019-41, 2019-44 I.R.B. 1022
2019-44, 2019-47 I.R.B. 1093
Treasury Decisions:
9863, 2019-27 I.R.B. 1
9864, 2019-27 I.R.B. 6
9865, 2019-27 I.R.B. 27
9867, 2019-28 I.R.B. 98
9868, 2019-28 I.R.B. 252
9866, 2019-29 I.R.B. 261
9861, 2019-30 I.R.B. 433
9869, 2019-30 I.R.B. 438
9862, 2019-31 I.R.B. 477
9872, 2019-32 I.R.B. 585
9871, 2019-33 I.R.B. 624
9873, 2019-33 I.R.B. 630
9874, 2019-41 I.R.B. 809
9875, 2019-41 I.R.B. 856
9876, 2019-44 I.R.B. 1005
9877, 2019-44 I.R.B. 1007
9878, 2019-45 I.R.B. 1044
9879, 2019-47 I.R.B. 1052
9880, 2019-47 I.R.B. 1085
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.
November 18, 2019 ii Bulletin No. 2019–47

Bulletin No. 2019–47 iii November 18, 2019
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2019–47
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.

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