rp-09-50.pdf

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Part III

Administrative, Procedural, and Miscellaneous

26 CFR 601.602: Tax forms and instructions.
(Also Part I, §§ 1, 23, 24, 25A, 32, 42, 59, 62, 63, 132, 135, 137, 146, 147, 148, 151,
170, 179, 213, 220, 221, 512, 513, 877, 877A, 911, 2032A, 2503, 2523, 4161, 6033,
6039F, 6323, 6334, 6601, 7430, 7702B; 1.148-3, 1.148-5.)

Rev. Proc. 2009-50

Table of Contents
SECTION 1. PURPOSE
SECTION 2. CHANGES
SECTION 3. 2010 ADJUSTED ITEMS
Code Section

.01 Tax Rate Tables 1(a)-(e)
.02 Unearned Income of Minor Children Taxed as if Parent’s 1(g)
Income ("Kiddie Tax")
.03 Adoption Credit 23
.04 Child Tax Credit 24
.05 Hope Scholarship, American Opportunity, and Lifetime 25A
Learning Credits

.06 Earned Income Credit 32
.07 Rehabilitation Expenditures Treated as Separate New Building 42(e)

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.08 Low-Income Housing Credit 42(h)
.09 Alternative Minimum Tax Exemption for a Child Subject to the 59(j)
“Kiddie Tax”
.10 Transportation Mainline Pipeline Construction Industry Optional 62(c)
Expense Substantiation Rules for Payments to Employees under
Accountable Plans
.11 Standard Deduction 63
.12 Qualified Transportation Fringe 132(f)
.13 Income from United States Savings Bonds for Taxpayers Who 135
Pay Qualified Higher Education Expenses
.14 Adoption Assistance Programs 137
.15 Private Activity Bonds Volume Cap 146(d)
.16 Loan Limits on Agricultural Bonds 147(c)(2)
.17 General Arbitrage Rebate Rules 148(f)
.18 Safe Harbor Rules for Broker Commissions on Guaranteed 148
Investment Contracts or Investments Purchased for a Yield
Restricted Defeasance Escrow
.19 Personal Exemption 151
.20 Election to Expense Certain Depreciable Assets 179
.21 Eligible Long-Term Care Premiums 213(d)(10)
.22 Medical Savings Accounts 220
.23 Interest on Education Loans 221
.24 Treatment of Dues Paid to Agricultural or Horticultural 512(d)
Organizations
.25 Insubstantial Benefit Limitations for Contributions Associated 513(h)
with Charitable Fund-Raising Campaigns

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.26 Expatriation to Avoid Tax 877
.27 Tax Responsibilities of Expatriation 877A
.28 Foreign Earned Income Exclusion 911
.29 Valuation of Qualified Real Property in Decedent's Gross Estate 2032A
.30 Annual Exclusion for Gifts 2503 & 2523
.31 Tax on Arrow Shafts 4161
.32 Reporting Exception for Certain Exempt Organizations with 6033(e)(3)
Nondeductible Lobbying Expenditures
.33 Notice of Large Gifts Received from Foreign Persons 6039F
.34 Persons Against Whom a Federal Tax Lien Is Not Valid 6323
.35 Property Exempt from Levy 6334
.36 Interest on a Certain Portion of the Estate Tax Payable 6601(j)
in Installments
.37 Attorney Fee Awards 7430
.38 Periodic Payments Received under Qualified Long-Term Care 7702B(d)
Insurance Contracts or under Certain Life Insurance Contracts
SECTION 4. EFFECTIVE DATE
SECTION 5. DRAFTING INFORMATION

SECTION 1. PURPOSE
This revenue procedure sets forth inflation adjusted items for 2010.
SECTION 2. CHANGES
.01 Section 1003 of the American Recovery and Reinvestment Tax Act of 2009, Tit.
I of Div. B of Pub. L. No. 111-5, 123 Stat. 155 (ARRTA), amended § 24(d)(4) of the

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Internal Revenue Code to provide a temporary increase in the refundable portion of the
child tax credit. Under § 24(d)(1)(B)(i), a taxpayer is allowed a refundable credit equal
to 15 percent of earned income in excess of $10,000, adjusted annually for inflation.
Section 24(d)(4) provides that, for taxable years beginning in 2009 or 2010, the dollar
amount in effect under § 24(d)(1)(B)(i) is $3,000. (See section 3.04 of this revenue
procedure.)
.02 Section 1004 of ARRTA added to the Code new § 25A(i) (the American
Opportunity Tax Credit) to provide temporary increases in the amount of the Hope
Scholarship Credit and the threshold phaseout amounts for the credit. Section 25A(i)(1)
provides that, for taxable years beginning in 2009 or 2010, the American Opportunity
Tax Credit is equal to 100 percent of the amount of qualified tuition and related
expenses not in excess of $2,000, plus 25 percent of those expenses that exceed
$2,000 but do not exceed $4,000. Section 25A(i)(4) provides that, for taxable years
beginning in 2009 or 2010, the amount of the American Opportunity Tax Credit begins
to phase out for taxpayers whose modified adjusted gross income exceeds $80,000
($160,000 for married taxpayers filing a joint return). The credit is completely phased
out at $90,000 ($180,000 for married taxpayers filing a joint return). (See section 3.05
of this revenue procedure.)
.03 Section 1002 of ARRTA added § 32(b)(3) to the Code to provide a temporary
increase in the earned income credit for certain taxpayers. Under § 32(b)(3)(A), for
taxable years beginning in 2009 or 2010, the maximum amount of the earned income
credit for taxpayers with three or more qualifying children is 45 percent of the earned

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income amount for the taxable year. For taxable years beginning in 2009, under
§ 32(b)(3)(B)(i) the amount added to the threshold phaseout amounts and the
completed phaseout amounts for married taxpayers filing joint returns is $5,000. For
taxable years beginning in 2010, the $5,000 amount under § 32(b)(3)(B)(i) is adjusted
for inflation. (See section 3.06 of this revenue procedure.)
.04 Section 3003 of the Housing and Economic Recovery Act of 2008, Pub. L. No.
110-289, 122 Stat. 2654 (HERA), amended § 42(e)(3) of the Code to increase the per
low-income unit qualified basis amount under § 42(e)(3)(A)(ii)(II) to $6,000 for
rehabilitation expenditures to qualify for treatment as a separate new building for the
low-income housing credit. For calendar years beginning in 2010, the $6,000 amount
under § 42(e)(3)(A)(ii)(II) is, pursuant to § 42(e)(3)(D), adjusted for inflation. (See
section 3.07 of this revenue procedure.)
.05 Section 3001 of HERA added § 42(h)(3)(I) to the Code to provide for temporary
increases in certain amounts used to calculate the State housing credit ceiling under
§ 42(h)(3)(C)(ii)(I) and (II), after any adjustments for inflation to those amounts under
§ 42(h)(3)(H). The temporary increases apply only to calendar years 2008 and 2009.
Accordingly, for calendar years after 2009, the inflation adjusted amounts under
§ 42(h)(3)(C)(ii)(I) and (II) are determined without the temporary increases. (See
section 3.08 of this revenue procedure.)
.06 The overall limitation on itemized deductions under § 68 does not apply to any
taxable year beginning after December 31, 2009, and before January 1, 2011.
Accordingly, the overall limitation on itemized deductions is not included in this revenue

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procedure.
.07 Section 1151 of ARRTA amended § 132(f)(2) of the Code to provide a temporary
increase in the amount excludable from gross income for certain employer-provided
transportation fringe benefits. For months beginning after February 17, 2009, and
before January 1, 2011, the monthly limitation under § 132(f)(2)(A) for transportation in
a commuter highway vehicle and any transit pass is the same as the amount in effect
under § 132(f)(2)(B) for qualified parking. (See section 3.12 of this revenue procedure.)
.08 The phaseout of the personal exemption amount under § 151(d)(3) does not apply
to any taxable year beginning after December 31, 2009, and before January 1, 2011.
Accordingly, the exemption amount for taxpayers with adjusted gross income in excess
of the maximum phaseout amount and the maximum adjusted gross income phaseout
amounts are not included in this revenue procedure.
.09 Section 1202 of ARRTA amended § 179(b)(7) of the Code to extend to taxable
years beginning in 2009 the temporary increases to the dollar limitations under
§ 179(b)(1) and (2) that applied to taxable years beginning in 2008. Because the
temporary increases do not apply to taxable years beginning after December 31, 2009,
the dollar limitations under § 179(b)(1) and (2) provided in this revenue procedure are
determined without regard to § 179(b)(7). (See section 3.20 of this revenue procedure.)
.10 The passenger air transportation excise taxes imposed under § 4261(b) and (c),
as extended by § 2(b)(1) of the Fiscal Year 2010 Federal Aviation Administration
Extension Act , Pub. L. No. 111-69, 123 Stat. 2054 (2009), apply to transportation taken
through December 31, 2009, and to amounts paid on or before December 31, 2009, for

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transportation beginning after that date. Accordingly, the amounts in § 4261(b) and (c)
are not included in this revenue procedure.
SECTION 3. 2010 ADJUSTED ITEMS
.01 Tax Rate Tables. For taxable years beginning in 2010, the tax rate tables under
§ 1 are as follows:
TABLE 1 - Section 1(a) - Married Individuals Filing Joint Returns and Surviving
Spouses
If Taxable Income Is: The Tax Is:
Not over $16,750 10% of the taxable income
Over $16,750 but $1,675 plus 15% of
not over $68,000 the excess over $16,750
Over $68,000 but $9,362.50 plus 25% of
not over $137,300 the excess over $68,000
Over $137,300 but $26,687.50 plus 28% of
not over $209,250 the excess over $137,300
Over $209,250 but $46,833.50 plus 33% of
not over $373,650 the excess over $209,250
Over $373,650 $101,085.50 plus 35% of
the excess over $373,650
TABLE 2 - Section 1(b) – Heads of Households
If Taxable Income Is
: The Tax Is:
Not over $11,950 10% of the taxable income
Over $11,950 but $1,195 plus 15% of
not over $45,550 the excess over $11,950
Over $45,550 but $6,235 plus 25% of
not over $117,650 the excess over $45,550

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Over $117,650 but $24,260 plus 28% of
not over $190,550 the excess over $117,650
Over $190,550 but $44,672 plus 33% of
not over $373,650 the excess over $190,550
Over $373,650 $105,095 plus 35% of
the excess over $373,650
TABLE 3 - Section 1(c) – Unmarried Individuals (other than Surviving Spouses and
Heads of Households)
If Taxable Income Is
: The Tax Is:
Not over $8,375 10% of the taxable income
Over $8,375 but $837.50 plus 15% of
not over $34,000 the excess over $8,375
Over $34,000 but $4,681.25 plus 25% of
not over $82,400 the excess over $34,000
Over $82,400 but $16,781.25 plus 28% of
not over $171,850 the excess over $82,400
Over $171,850 but $41,827.25 plus 33% of
not over $373,650 the excess over $171,850
Over $373,650 $108,421.25 plus 35% of
the excess over $373,650
TABLE 4 - Section 1(d) – Married Individuals Filing Separate Returns
If Taxable Income Is
: The Tax Is:
Not over $8,375 10% of the taxable income
Over $8,375 but $837.50 plus 15% of
not over $34,000 the excess over $8,375
Over $34,000 but $4,681.25 plus 25% of
not over $68,650 the excess over $34,000
Over $68,650 but $13,343.75 plus 28% of

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not over $104,625 the excess over $68,650
Over $104,625 but $23,416.75 plus 33% of
not over $186,825 the excess over $104,625
Over $186,825 $50,542.75 plus 35% of
the excess over $186,825
TABLE 5 - Section 1(e) – Estates and Trusts
If Taxable Income Is
: The Tax Is:
Not over $2,300 15% of the taxable income
Over $2,300 but $345 plus 25% of
not over $5,350 the excess over $2,300
Over $5,350 but $1,107.50 plus 28% of
not over $8,200 the excess over $5,350
Over $8,200 but $1,905.50 plus 33% of
not over $11,200 the excess over $8,200
Over $11,200 $2,895.50 plus 35% of
the excess over $11,200
.02 Unearned Income of Minor Children Taxed as if Parent's Income (the "Kiddie
Tax"). For taxable years beginning in 2010, the amount in § 1(g)(4)(A)(ii)(I), which is
used to reduce the net unearned income reported on the child's return that is subject to
the "kiddie tax," is $950. This amount is the same as the $950 standard deduction
amount provided in section 3.11(2) of this revenue procedure. The same $950 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 parent'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

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times that amount; thus, a child's gross income for 2009 must be more than $950 but
less than $9,500.
.03 Adoption Credit. For taxable years beginning in 2010, under § 23(a)(3) the credit
allowed for an adoption of a child with special needs is $12,170. For taxable years
beginning in 2010, under § 23(b)(1) the maximum credit allowed for other adoptions is
the amount of qualified adoption expenses up to $12,170. The available adoption credit
begins to phase out under § 23(b)(2)(A) for taxpayers with modified adjusted gross
income in excess of $182,520 and is completely phased out for taxpayers with modified
adjusted gross income of $222,520 or more. (See section 3.14 of this revenue
procedure for the adjusted items relating to adoption assistance programs.)
.04 Child Tax Credit
. For taxable years beginning in 2010, the value used in
§ 24(d)(1)(B)(i) to determine the amount of credit under § 24 that may be refundable is
$3,000.
.05 Hope Scholarship, American Opportunity, and Lifetime Learning Credits
.
(1) For taxable years beginning in 2010, the Hope Scholarship Credit under
§ 25A(b)(1), as increased under § 25A(i) (the American Opportunity Tax Credit), is an
amount equal to 100 percent of qualified tuition and related expenses not in excess of
$2,000, plus 25 percent of those expenses that exceed $2,000 but do not exceed
$4,000. Accordingly, the maximum Hope Scholarship Credit allowable under
§ 25A(b)(1) for taxable years beginning in 2010 is $2,500.
(2) For taxable years beginning in 2010, a taxpayer's modified adjusted gross
income in excess of $80,000 ($160,000 for a joint return) is used to determine the

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reduction under § 25A(d)(2) in the amount of the Hope Scholarship Credit otherwise
allowable under § 25A(a)(1). For taxable years beginning in 2010, a taxpayer's
modified adjusted gross income in excess of $50,000 ($100,000 for a joint return) is
used to determine the reduction under § 25A(d)(2) in the amount of the Lifetime
Learning Credit otherwise allowable under § 25A(a)(2).
.06 Earned Income Credit.
(1) In general
. For taxable years beginning in 2010, 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)(3)(B)(i), as adjusted for inflation for taxable years beginning in 2010.
Number of Qualifying Children

Item
One Two Three or More None
Earned Income $8,970 $12,590 $12,590 $5,980
Amount
Maximum Amount
of Credit $3,050 $5,036 $5,666 $457
Threshold Phaseout $16,450 $16,450 $16,450 $7,480
Amount (Single,

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Surviving Spouse, or
Head of Household)

Completed Phaseout $35,535 $40,363 $43,352 $13,460
Amount (Single,
Surviving Spouse, or
Head of Household)
Threshold Phaseout $21,460 $21,460 $21,460 $12,490
Amount (Married Filing
Jointly)

Completed Phaseout $40,545 $45,373 $48,362 $18,470
Amount (Married Filing
Jointly)

The instructions for the Form 1040 series provide tables showing the amount of the
earned income credit for each type of taxpayer.
(2) Excessive investment income
. For taxable years beginning in 2010, the earned
income tax credit is not allowed under § 32(i) if the aggregate amount of certain
investment income exceeds $3,100.
.07 Rehabilitation Expenditures Treated as Separate New Property
. For calendar
year 2010, the per low-income unit qualified basis amount under § 42(e)(3)(A)(ii)(II) is
$6,000.
.08 Low-Income Housing Credit
. For calendar year 2010, the amount used under
§ 42(h)(3)(C)(ii) to calculate the State housing credit ceiling for the low-income housing
credit is the greater of (1) $2.10 multiplied by the State population, or (2) $2,430,000.
.09 Alternative Minimum Tax Exemption for a Child Subject to the "Kiddie Tax
." For
taxable years beginning in 2010, for a child to whom the § 1(g) "kiddie tax" applies, the
exemption amount under §§ 55 and 59(j) for purposes of the alternative minimum tax

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under § 55 may not exceed the sum of (1) the child's earned income for the taxable
year, plus (2) $6,700.
.10 Transportation Mainline Pipeline Construction Industry Optional Expense
Substantiation Rules for Payments to Employees under Accountable Plans. For
calendar year 2010, an eligible employer may pay certain welders and heavy equipment
mechanics an amount of up to $16 per hour for rig-related expenses that is deemed
substantiated under an accountable plan if paid in accordance with Rev. Proc. 2002-41,
2002-1 C.B. 1098. If the employer provides fuel or otherwise reimburses fuel expenses,
up to $10 per hour is deemed substantiated if paid under Rev. Proc. 2002-41.
.11 Standard Deduction
.
(1) In general
. For taxable years beginning in 2010, the standard deduction
amounts under § 63(c)(2) are as follows:
Filing Status
Standard Deduction
Married Individuals Filing Joint Returns $11,400
and Surviving Spouses (§ 1(a))
Heads of Households (§ 1(b)) $8,400
Unmarried Individuals (other than Surviving Spouses $5,700
and Heads of Households) (§ 1(c))
Married Individuals Filing Separate $5,700
Returns (§ 1(d))
(2) Dependent
. For taxable years beginning in 2010, the standard deduction
amount under § 63(c)(5) for an individual who may be claimed as a dependent by
another taxpayer cannot exceed the greater of (1) $950, or (2) the sum of $300 and the
individual's earned income.

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(3) Aged or blind
. For taxable years beginning in 2010, the additional standard
deduction amount under § 63(f) for the aged or the blind is $1,100. These amounts are
increased to $1,400 if the individual is also unmarried and not a surviving spouse.
.12 Qualified Transportation Fringe
. For taxable years beginning in 2010, the monthly
limitation under § 132(f)(2)(A), regarding the aggregate fringe benefit exclusion amount
for transportation in a commuter highway vehicle and any transit pass, and under
§ 132(f)(2)(B), regarding the fringe benefit exclusion amount for qualified parking, is
$230.
.13 Income from United States Savings Bonds for Taxpayers Who Pay Qualified
Higher Education Expenses. For taxable years beginning in 2010, the exclusion under
§ 135, regarding income from United States savings bonds for taxpayers who pay
qualified higher education expenses, begins to phase out for modified adjusted gross
income above $105,100 for joint returns and $70,100 for other returns. The exclusion is
completely phased out for modified adjusted gross income of $135,100 or more for joint
returns and $85,100 or more for other returns.
.14 Adoption Assistance Programs
. For taxable years beginning in 2010, under
§ 137(a)(2) the amount that can be excluded from an employee’s gross income for the
adoption of a child with special needs is $12,170. For taxable years beginning in 2010,
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
expenses furnished pursuant to an adoption assistance program for other adoptions by
the employee is $12,170. The amount excludable from an employee’s gross income

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begins to phase out under § 137(b)(2)(A) for taxpayers with modified adjusted gross
income in excess of $182,520 and is completely phased out for taxpayers with modified
adjusted gross income of $222,520 or more. (See section 3.03 of this revenue
procedure for the adjusted items relating to the adoption credit.)
.15 Private Activity Bonds Volume Cap. For calendar year 2010, the amounts used
under § 146(d)(1) to calculate the State ceiling for the volume cap for private activity
bonds is the greater of (1) $90 multiplied by the State population, or (2) $273,775,000.
.16 Loan Limits for Agricultural Bonds
. For calendar year 2010, the loan limit amount
on agricultural bonds under § 147(c)(2)(A) for first-time farmers is $470,100.
.17 General Arbitrage Rebate Rules. For bond years ending in 2010, the amount of
the computation credit determined under § 1.148-3(d)(4) of the proposed Income Tax
Regulations is $1,500.
.18 Safe Harbor Rules for Broker Commissions on Guaranteed Investment Contracts
or Investments Purchased for a Yield Restricted Defeasance Escrow. For calendar
year 2010, under § 1.148-5(e)(2)(iii)(B)(1), a broker’s commission or similar fee for the
acquisition of a guaranteed 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) $35,000, 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) the issuer does not treat more than $100,000 in brokers’
commissions or similar fees as qualified administrative costs for all guaranteed
investment contracts and investments for yield restricted defeasance escrows

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purchased with gross proceeds of the issue.
.19 Personal Exemption
. For taxable years beginning in 2010, the personal
exemption amount under § 151(d) is $3,650.
.20 Election to Expense Certain Depreciable Assets
. For taxable years beginning in
2010, under § 179(b)(1) the aggregate cost of any § 179 property a taxpayer may elect
to treat as an expense cannot exceed $134,000. Under § 179(b)(2), the $134,000
limitation is reduced (but not below zero) by the amount by which the cost of § 179
property placed in service during the 2010 taxable year exceeds $530,000.
.21 Eligible Long-Term Care Premiums
. For taxable years beginning in 2010, the
limitations under § 213(d)(10), regarding eligible long-term care premiums includible in
the term "medical care," are as follows:
Attained Age Before the Close of the Taxable Year
Limitation on Premiums
40 or less $330
More than 40 but not more than 50 $620
More than 50 but not more than 60 $1,230
More than 60 but not more than 70 $3,290
More than 70 $4,110
.22 Medical Savings Accounts
.
(1) Self-only coverage. For taxable years beginning in 2010, the term "high
deductible health plan" as defined in § 220(c)(2)(A) means, for self-only coverage, a
health plan that has an annual deductible that is not less than $2,000 and not more than
$3,000, and under which the annual out-of-pocket expenses required to be paid (other

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than for premiums) for covered benefits do not exceed $4,050.
(2) Family coverage
. For taxable years beginning in 2010, the term "high deductible
health plan" means, for family coverage, a health plan that has an annual deductible
that is not less than $4,050 and not more than $6,050, and under which the annual out-
of-pocket expenses required to be paid (other than for premiums) for covered benefits
do not exceed $7,400.
.23 Interest on Education Loans
. For taxable years beginning in 2010, 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 adjusted gross income in
excess of $60,000 ($120,000 for joint returns), and is completely phased out for
taxpayers with modified adjusted gross income of $75,000 or more ($150,000 or more
for joint returns).
.24 Treatment of Dues Paid to Agricultural or Horticultural Organizations
. For taxable
years beginning in 2010, 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 $146.
.25 Insubstantial Benefit Limitations for Contributions Associated with Charitable
Fund-Raising Campaigns.
(1) Low cost article. For taxable years beginning in 2010, the unrelated business
income of certain exempt organizations under § 513(h)(2) does not include a "low cost
article" of $9.60 or less.
(2) Other insubstantial benefits
. For taxable years beginning in 2010, the $5, $25,

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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 disregarding the value of insubstantial benefits received by a donor in return
for a fully deductible charitable contribution under § 170, are $9.60, $48, and $96,
respectively.
.26 Expatriation to Avoid Tax. For calendar year 2010, an individual with “average
annual net income tax” of more than $145,000 for the five taxable years ending before
the date of the loss of United States citizenship under § 877(a)(2)(A) is a covered
expatriate for purposes of § 877A(g)(1).
.27 Tax Responsibilities of Expatriation
. For taxable years beginning in 2010, 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 $627,000.
.28 Foreign Earned Income Exclusion
. For taxable years beginning in 2010, the
foreign earned income exclusion amount under § 911(b)(2)(D)(i) is $91,500.
.29 Valuation of Qualified Real Property in Decedent's Gross Estate
. For an estate of
a decedent dying in calendar year 2010, if the executor elects to use the special 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 cannot exceed $1,000,000.
.30 Annual Exclusion for Gifts.
(1) For calendar year 2010, the first $13,000 of gifts to any person (other than gifts
of future interests in property) are not included in the total amount of taxable gifts under

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§ 2503 made during that year.
(2) For calendar year 2010, the first $134,000 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.
.31 Tax on Arrow Shafts. For calendar year 2010, 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 manufacture of certain arrows is $0.45 per shaft.
.32 Reporting Exception for Certain Exempt Organizations with Nondeductible
Lobbying Expenditures. For taxable years beginning in 2010, the annual per person,
family, or entity dues limitation to qualify for the reporting exception under § 6033(e)(3)
(and section 5.05 of Rev. Proc. 98-19, 1998-1 C.B. 547), regarding certain exempt
organizations with nondeductible lobbying expenditures, is $101 or less.
.33 Notice of Large Gifts Received from Foreign Persons
. For taxable years
beginning in 2010, recipients of gifts from certain foreign persons may be required to
report these gifts under § 6039F if the aggregate value of gifts received in a taxable
year exceeds $14,165.
.34 Persons Against Whom a Federal Tax Lien Is Not Valid
. For calendar year 2010,
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 $1,380, or (2) a mechanic's
lienor under § 6323(b)(7) that repaired or improved certain residential property if the
contract price with the owner is not more than $6,890.

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.35 Property Exempt from Levy
. For calendar year 2010, the value of property
exempt from levy under § 6334(a)(2) (fuel, provisions, furniture, and other household
personal effects, as well as arms for personal use, livestock, and poultry) cannot exceed
$8,250. The value of property exempt from levy under § 6334(a)(3) (books and tools
necessary for the trade, business, or profession of the taxpayer) cannot exceed $4,120.
.36 Interest on a Certain Portion of the Estate Tax Payable in Installments
. For an
estate of a decedent dying in calendar year 2010, 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 $1,340,000.
.37 Attorney Fee Awards
. For fees incurred in calendar year 2010, the attorney fee
award limitation under § 7430(c)(1)(B)(iii) is $180 per hour.
.38 Periodic Payments Received under Qualified Long-Term Care Insurance
Contracts or under Certain Life Insurance Contracts. For calendar year 2010, the
stated dollar amount of the per diem limitation under § 7702B(d)(4), regarding periodic
payments received under a qualified 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 $290.
SECTION 4. EFFECTIVE DATE
.01 General Rule
. Except as provided in section 4.02, this revenue procedure applies
to taxable years beginning in 2010.
.02 Calendar Year Rule. This revenue procedure applies to transactions or events
occurring in calendar year 2010 for purposes of sections 3.07 (rehabilitation

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expenditures treated as separate new property), 3.08 (low-income housing credit), 3.10
(transportation mainline pipeline construction industry optional expense substantiation
rules for payments to employees under accountable plans), 3.15 (private activity bonds
volume cap), 3.16 (loan limits on agricultural bonds), 3.17 (general arbitrage rebate
rules), 3.18 (safe harbor rules for broker commissions on guaranteed investment
contracts or investments purchased for a yield restricted defeasance escrow), 3.26
(expatriation to avoid tax), 3.29 (valuation of qualified real property in decedent's gross
estate), 3.30 (annual exclusion for gifts), 3.31 (tax on arrow shafts), 3.34 (persons
against whom a federal tax lien is not valid), 3.35 (property exempt from levy), 3.36
(interest on a certain portion of the estate tax payable in installments), 3.37 (attorney fee
awards), and 3.38 (periodic payments received under qualified long-term care insurance
contracts or under certain life insurance contracts).
SECTION 5. DRAFTING INFORMATION
The principal author of this revenue procedure is Christina M. Glendening of the
Office of Associate Chief Counsel (Income Tax & Accounting). For further information
regarding this revenue procedure, contact Ms. Glendening at (202) 622-4920 (not a toll-
free call).