Internal Revenue Bulletin 2009-27 (PDF rendition): IRS Revenue Rulings

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

Bulletin No. 200
9-27
July 6, 2009
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
T.D. 9452, page 1.
Final regulations under section 904 of the Code provide guid-
ance relating to the application of section 904 to dividends
paid by a foreign corporation that is a noncontrolled section
902 corporation as defined in section 904(d)(2)(E). The regu-
lations also provide rules under section 964 for the election,
adoption, or change of a method of accounting or taxable year
on behalf of a foreign corporation by its controlling domestic
shareholders.
Rev. Proc. 2009–31, page 107.
This procedure provides guidance regarding the granting
or revocation of consent to treat intercompany transac-
tions on a separate entity basis under regulations section
1.1502–13(e)(3). Rev. Proc. 97–49 modified and super-
seded.
EMPLOYEE PLANS
Rev. Rul. 2009–18, page 1.
Tax-sheltered annuity contracts.This ruling notes that
a number of guidance documents had become outdated
due to numerous intervening statutory revisions enacted in
section 403(b) of the Code. Final regulations under sections
1.403(b)–1 thru 11 have been issued. Since these regulations
include and modify much of the IRS guidance relating to
section 403(b) issued between 1964 and 2004, the guidance
documents listed in this revenue ruling are obsoleted or
superseded in their entirety, with one partial exception (Notice
89–23).
ADMINISTRATIVE
Rev. Proc. 2009–30, page 27.
Electronic filing; 2009 form specifications.This proce-
dure contains updates and changes to Publication 1220,Spec-
ifications for Filing Forms 1098, 1099, 3921, 3922, 5498,
8935, and W-2G Electronically(revised 7–2009). Rev. Proc.
2008–38 superseded.
Finding Lists begin on page ii.

The IRS Mission
Provide Americ
a’s taxpayers top quality service by helping them
understand an
d meet their tax responsibilities and by applying
the tax law with
integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
July 6, 20092009–27 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 403.—Taxation of
Employee Annuities
26 CFR 1.403(b)–1 thru –11: Section 403(b) tax-
sheltered annuity contracts.
Tax-sheltered annuity contracts.This
ruling notes that a number of guidance
documents had become outdated due to
numerous intervening statutory revisions
enacted in section 403(b) of the Code. Fi-
nal regulations under sections 1.403(b)–1
thru 11 have been issued. Since these reg-
ulations include and modify much of the
IRS guidance relating to section 403(b) is-
sued between 1964 and 2004, the guidance
documents listed in this revenue ruling are
obsoleted or superseded in their entirety,
with one partial exception (Notice 89–23).
Rev. Rul. 2009–18
Treasury Decision 9340, published in
the Federal Register for July 26, 2007,
(T.D. 9340, 2007–2 C.B. 487 [72 FR
41128]), includes comprehensive final
regulations (under§§ 1.403(b)–1 thru
–11 of the Income Tax Regulations)re-
garding the exclusion provided under
§ 403(b)for employer contributions to
certain annuity contracts (as defined in
§ 1.403(b)–2(b)(2)). These regulations
generally apply after December 31, 2008.
See§ 1.403(b)–11.
In the “Effect of These Regulations on
Other Guidance” section of its preamble,
T.D. 9340 notes that since the prior set of
section 403(b) regulations were issued in
1964, a number of guidance documents
had become outdated due to numerous
intervening statutory revisions enacted in
section 403(b). In this section, the Internal
Revenue Service (IRS) listed a number
of documents that it proposed to obsolete
after these regulations became final. The
IRS received no comments regarding this
prior notice to obsolete these documents.
The revenue rulings listed below are ob-
solete.
Rev. Rul. 64–333 (1964–2 C.B. 114)
Rev. Rul. 65–200 (1965–2 C.B. 141)
Rev. Rul. 66–254 (1966–2 C.B. 125)
Rev. Rul. 66–312 (1966–2 C.B. 127)
Rev. Rul. 67–69 (1967–1 C.B. 93)
Rev. Rul. 67–78 (1967–1 C.B. 94)
Rev. Rul. 67–361 (1967–2 C.B. 153)
Rev. Rul. 67–387 (1967–2 C.B. 153)
Rev. Rul. 67–388 (1967–2 C.B. 153)
R
ev. Rul. 68–179 (1968–1 C.B. 179)
R
ev. Rul. 68–482 (1968–2 C.B. 186)
R
ev. Rul. 68–487 (1968–2 C.B. 187)
R
ev. Rul. 68–488 (1968–2 C.B. 188)
R
ev. Rul. 69–629 (1969–2 C.B. 101)
Re
v. Rul. 70–243 (1970–1 C.B. 107)
Re
v. Rul. 87–114 (1987–2 C.B. 116)
Re
v. Rul. 90–24 (1990–1 C.B. 97)
Th
e notices listed below are obsolete,
ex
cept to the extent described.
No
tice 90–73 (1990–2 C.B. 353)
No
tice 92–36 (1992–2 C.B. 364)
No
tice 89–23 (1989–1 C.B. 654) (ex-
ce
pt to the extent described in the last
pa
ragraph of the “Treatment of Controlled
Gr
oups that Include Tax-Exempt Entities”
se
ction of the preamble to Treasury De-
c
ision 9340 at 72 FR 41138, and 2007–2
C
.B. 499)
T
he announcement listed below is ob-
s
olete.
A
nnouncement 95–48 (1995–23 I.R.B.
1
3)
D
RAFTING INFORMATION
T
he principal author of this revenue
r
uling is Robert Architect of the Of-
f
ice of Division Commissioner (TE/GE).
F
or further information regarding this
r
evenue ruling, please contact the Em-
ployee Plans taxpayer assistance answer-
ing service at 1–877–829–5500 (a toll
free-number) or e-mail Mr. Architect at
RetirementPlanQuestions@irs.gov.
Section 904.—Limitation
on Credit
26 CFR 1.904–5: Look-through rules as applied to
controlled foreign corporations and other entities.
T.D. 9452
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Parts 1 and 602
Application of Separate
Limitations to Dividends from
Noncontrolled Section 902
Corporations
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations, temporary
regulations, and removal of temporary
regulations.
S
UMMARY: This document contains fi-
n
al regulations regarding the application
o
f separate foreign tax credit limitations
t
o dividends received from noncontrolled
s
ection 902 corporations. The American
Jobs Creation Act of 2004 (AJCA) modi-
fied the treatment of such dividends effec-
tive for taxable years beginning after De-
cember 31, 2002. The Gulf Opportunity
Zone Act of 2005 (GOZA) permits taxpay-
ers to elect to defer the effective date of the
AJCA amendments until taxable years be-
ginning after December 31, 2004. The fi-
nal regulations provide guidance needed to
comply with these changes and affect cor-
porations claiming foreign tax credits.
DATES:Effective Date:These regulations
are effective on June 11, 2009.
Applicability Dates:For dates
of applicability, see §§1.861–9(k),
1.861–12(c)(5), 1.902–1(g), 1.904–2
(h)(1) and (2), 1.904–4(n), 1.904–5(o)(2),
1.904–7(f)(10), 1.904(f)–12(g)(5), and
1.964–1(d).
FOR FURTHER INFORMATION
CONTACT: Richard Chewning at (202)
622–3850 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collections of information con-
tained in the final regulations have been
reviewed and approved by the Office
of Management and Budget in accor-
dance with the Paperwork and Reduction
Act (44 U.S.C. 3507(d)) under control
number 1545–2014. The collections of
information in the final regulations are in
§§1.904–7(f)(9)(ii)(C) and 1.964–1(c)(3).
This information is required, with respect
to §1.904–7(f)(9)(ii)(C), to notify the IRS
that taxpayer has made the election to
2009–27 I.R.B.1July 6, 2009

defer the applicability of the provisions
of section 403 of the AJCA. With re-
spect to §1.964–1(c)(3), this information
is required to notify the IRS and domes-
tic shareholders of a foreign corporation
of elections made to adopt or change a
method of accounting or taxable year of
the foreign corporation.
An agency may not conduct or sponsor,
and a person is not required to respond to, a
collection of information unless it displays
a valid control number.
Books or records relating to these col-
lections of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue law. Generally, tax returns and tax
return information are confidential, as re-
quired by 26 U.S.C. 6103.
Background
On April 20, 2006, a notice of pro-
posedrulemakingbycross-referenceto
temporary regulations (REG–144784–02,
2006–1 C.B. 1036) under sections 861,
902, 904, and 964 of the Code and tempo-
rary regulations (T.D. 9260, 2006–1 C.B.
1001) (the 2006 temporary regulations)
were filed with the Office of theFederal
Register. On April 25, 2006, the notice of
proposed rulemaking by cross-reference
to temporary regulations and the 2006
temporary regulations were published in
theFederal Register(REG–144784–02,
2006–1 C.B. 1036 [71 FR 24543] and T.D.
9260, 2006–1 C.B. 1001 [71 FR 24516],
respectively). Corrections to the 2006
temporary regulations were published on
August 21, 2006, and December 26, 2006,
in theFederal Register(Ann 2006–67,
2006–2 C.B. 509 [71 FR 48474] and Ann
2007–12, 2007–1 C.B. 465 [71 FR 77264]
respectively). Comments were received.
A public hearing was not requested and
none was held. After consideration of
the comments, the proposed regulations
are adopted as amended by this Treasury
decision.
Explanation and Summary of
Comments
The IRS and the Treasury Department
received written comments on the 2006
temporary regulations. Those comments
are discussed in this preamble. These new
regulations make several changes to the
2006 temporary regulations to take into ac-
count comments received, while adopting
without amendment most of the temporary
regulations. The significant comments and
revisions are described in this preamble.
I. Interest Expense Apportionment
A. Interest Expense of a 10/50 Corporation
Section 904(d)(4)(A), as amended by
the AJCA, provides that any dividend paid
by a noncontrolled section 902 corporation
(10/50 corporation) shall be treated as in-
come in a separate category based on the
separate category of the underlying earn-
ings and profits being distributed (look-
through treatment), effective for taxable
years beginning after December 31, 2002
(post-2002 taxable years), without regard
to when the distributed earnings were ac-
cumulated. For purposes of apportioning
interest expense of a 10/50 corporation in
order to apply the dividend look-through
rule, §1.861–9T(f)(4) of the 2006 tempo-
rary regulations generally applies the same
principles as §1.861–9T(f)(3) (apportion-
ment of interest expense of a controlled
foreign corporation). Under these rules,
interest expense of a 10/50 corporation
may be apportioned using either the as-
set method or the modified gross income
method. Regardless of the interest expense
apportionment methods used by its major-
ity domestic corporate shareholders, the
10/50 corporation (or the majority domes-
tic corporate shareholders on behalf of the
10/50 corporation) may elect to use any
of the methods described in §1.861–9T or
§1.861–9 (that is, the modified gross in-
come, tax book value, alternative tax book
value or fair market value method) to ap-
portion the 10/50 corporation’s interest ex-
pense.
Section 1.861–9T(j)(1) provides a rule
for “tiering up” the income of tiers of con-
trolled foreign corporations (CFCs) that
use the modified gross income method
to apportion interest expense. Under that
rule, the lowest-tier CFC’s interest ex-
pense is allocated and apportioned based
on its gross income, and its gross income
reduced by such allocated and apportioned
interest expense is then treated as gross
income of the next-higher-tier CFC for
purposes of apportioning the higher-tier
CFC’s interest expense. These steps are
then essentially repeated, moving up the
tiers. A commenter requested that the
IRS and the Treasury Department clarify
the mechanics of apportioning interest
expense when tiered corporations elect
different apportionment methods. This
commenter raises issues that are beyond
the scope of this regulation project and
therefore are not addressed in this docu-
ment.
B. Definition of “10 Percent Owned
Corporation”
Prior to revision by the 2006 temporary
regulations, §1.861–12T(c)(2) required an
affiliated group using the tax book value
method in apportioning its interest expense
to adjust the basis of stock in any “10 per-
cent owned corporation” that is held di-
rectly by members of the group to reflect
each member’s pro rata share of such 10
percent owned corporation’s earnings and
profits (or deficit inearnings and profits).
The rule, as revised by the 2006 temporary
regulations, applies to stock of a 10 per-
cent owned corporation not only where its
stock is held directly by members of the
affiliated group, but also where its stock
is held indirectly through a partnership or
other pass-through entity. The revision
was effective on April 25, 2006, and ap-
plied prospectively. The IRS and the Trea-
sury Department stated in the preamble to
the 2006 temporary regulations that the re-
vision was a clarification.
A commenter questioned why the reg-
ulations include a prospective, rather than
a retroactive, effective date, if the revision
clarified existing law. The IRS and the
Treasury Department maintain that the re-
vision is a clarification of existing law but
continue to believe a prospective effective
date is appropriate because the prior regu-
lations were ambiguous.
II. Carryover of unused foreign taxes
under section 904(c)
In the case of unused foreign taxes
attributable to dividends from a 10/50
corporation with respect to which the
taxpayer was no longer a qualifying share-
holder as of the first day of the taxpayer’s
first taxable year ending after the first day
of the 10/50 corporation’s first post-2002
taxable year, §1.904–2T(h)(1) provides
that the unused foreign taxes are allocated
among the taxpayer’s separate categories
July 6, 200922009–27 I.R.B.

in the same percentages as the earnings in
the 10/50 corporation’s non-look-through
pool or pre-1987 accumulated profits
“would have been assigned had they been
distributed in the last taxable year in which
the taxpayer was a domestic shareholder
in such corporation.” In response to a
comment, §1.904–2(h)(1) of the final
regulations clarifies that such taxes will
be allocated as if look-through treatment
applied in the year of the hypothetical
distribution.
III. Look-through Rules as Applied to
10/50 Corporations
A. General Application of Look-through
With respect to applying the
look-through rule to any dividend paid
by a 10/50 corporation in a post-2002
taxable year, §1.904–5T(c)(4)(iii) of the
2006 temporary regulations provides that
any dividends paid in a post-2002 tax-
able year to a domestic corporation by a
10/50 corporation with respect to which
the domestic corporation meets the stock
ownership requirements of section 902(a)
are treated as income in a separate cat-
egory in proportion to the ratio of the
portion of earnings and profits of the 10/50
corporation attributable to income in such
category to the total amount of earnings
and profits of the 10/50 corporation.
A commenter expressed concern that in
some cases, where a domestic shareholder
meets the stock ownership requirements
of section 902(a) but has a relatively small
ownership interest, the administrative bur-
den on both the taxpayer and the IRS of
applying look-through to earnings and
foreign taxes in a 10/50 corporation’s
look-through pools could be significant.
The commenter asserted that the process
of obtaining and analyzing multiple years
of historical financial data to ascertain the
exact portion of distributions that relate to
specific categories of income can be chal-
lenging, particularly where distributions
relate to earnings from certain historical
periods (for example, those during which
the taxpayer did not own stock in the 10/50
corporation). The commenter indicated
that the reconstruction and safe harbor
methods provided in §1.904–7T(f)(4)(i)
and (ii) of the 2006 temporary regula-
tions, respectively, reduce difficulties
in reconstructing historical accumulated
earnings and taxes accounts of a 10/50
corporation, but those rules apply only
to undistributed earnings and taxes accu-
mulated in non-look-through periods and
do not apply to distributions of earnings
accumulated in look-through pools. The
commenter suggested that the IRS and the
Treasury Department consider providing
an elective safe harbor approach for do-
mestic shareholders who own a relatively
small interest, such as 15 percent or less,
in the 10/50 corporation, which would
characterize a dividend paid by a 10/50
corporation as income in a separate cat-
egory by reference to the gross revenue
of the 10/50 corporation for the last three
years or a similar abbreviated period, with
anti-abuse rules to address distortions.
The IRS and the Treasury Department
recognize that in some circumstances a do-
mestic shareholder of a 10/50 corporation
(as well as a noncontrolling shareholder
of a controlled foreign corporation (CFC))
may face difficulties in substantiating ac-
cumulated earningsand taxes accounts of
the 10/50 corporation (or CFC) on a look-
through basis. However, the IRS and the
Treasury Department believe use of a safe
harbor is appropriate only as a limited rule
for reconstructing earnings and taxes ac-
cumulated during prior year periods when
the look-through rules did not apply to div-
idends from 10/50 corporations. An ongo-
ing safe harbor is not appropriate because
the statutory look-through rules, which ap-
ply to all domestic shareholders meeting
the stock ownership requirements of sec-
tion 902(a) (that is, 10 percent), gener-
ally require substantiation, and if the look-
through treatment of a dividend from a
10/50 corporation has not been adequately
substantiated, section 904(d)(4)(C)(ii) re-
quires that such dividend be treated as pas-
sive income. See also §1.904–5T(c)(4)(iii)
of the 2006 temporary regulations.
B. Substantiation of Look-through
Treatment
Section 1.904–5T(c)(4)(iii) of the 2006
temporary regulations provides that a divi-
dend from a 10/50 corporation is treated as
passive income if the look-through charac-
terization of the dividend is not substan-
tiated to the satisfaction of the Commis-
sioner.
A commenter expressed concern that if
a 10/50 corporation has high-taxed income
outside the general and passive categories
a taxpayer may intentionally fail to sub-
stantiate the look-through characterization
of a dividend from the 10/50 corporation in
order to achieve cross-crediting. The com-
menter suggested that the final regulations
include an anti-abuse rule for situations
where the Commissioner determines that a
taxpayer deliberately failed to substantiate
the look-through characterization of the
dividend. The commenter suggested that
the anti-abuse rule could provide that in
such a situation the earnings and associ-
ated taxes would be placed in a separate
sub-basket to prevent cross-crediting. Al-
ternatively, the commenter suggested that
the final regulations could apply rules sim-
ilar to the rules of section 907. Finally, the
commenter suggested that the inadequate
substantiation rule in §1.904–5T(c)(4)(iii)
should be revised to conform to the rule
in §1.904–7T(f)(4)(iii), which provides
that the Commissioner will allocate the
undistributed earnings and taxes in the
non-look-through pools to the foreign
corporation’s passive category only if
the Commissioner determines that the
look-through characterization of such
earnings and taxes cannot reasonably be
determined based on the available in-
formation. The IRS and the Treasury
Department agree with this latter sugges-
tion, and the rule in §1.904–5(c)(4)(iii) of
the final regulations adopts this comment.
C. Application of Section 904(h) to 10/50
Corporations
For purposes of the section 904 foreign
tax credit limitation, section 904(h) (sec-
tion 904(g) prior to redesignation in the
AJCA) provides that certain income de-
rived from a United States-owned foreign
corporation which would be treated as for-
eign source income under other Code pro-
visions is treated as U.S. source income.
This resourcing rule applies to certain pay-
ments of interest and dividends by a United
States-owned foreign corporation as well
as inclusions in gross income under sec-
tions 951(a) and 1293 to the extent the
payments or inclusions are attributable to
income of the United States-owned for-
eign corporation from sources within the
United States. Section 904(h)(6) gener-
ally defines a United States-owned foreign
corporation as any foreign corporation if
United States persons (as defined in sec-
2009–27 I.R.B.3July 6, 2009

tion 7701(a)(30)) hold 50 percent or more
of either the total combined voting power
of all classes of voting stock or the total
value of the stock.
Section 1.904–5(m) provides rules for
the resourcing of certain amounts received
or accrued (or treated as received or ac-
crued) by a United States shareholder (as
defined in section 951(b)) from a United
States-owned foreign corporation. Sec-
tion 1.904–5T(m)(1) of the 2006 tempo-
rary regulations clarified that the resourc-
ing rule applies not only to CFCs but also
to 10/50 corporations that meet the def-
inition of a United States-owned foreign
corporation, and §1.904–5T(m)(2)(ii) and
(4) provide rules for resourcing interest
and dividend payments from 10/50 corpo-
rations.
In the preamble to the 2006 temporary
regulations, the IRS and the Treasury De-
partment stated that this revision clarified
that the rules for resourcing interest and
dividends also apply to a 10/50 corpora-
tion that meets the definition of a United
States-owned foreign corporation.
A commenter suggested that the inclu-
sion of 10/50 corporations within the re-
sourcing rule of §1.904–5T(m) was not
simply a clarification and that the com-
bination of referring to this provision as
only a clarification and the prospective ap-
plication of the rule is confusing. In ad-
dition, the commenter requested guidance
on the appropriate treatment of dividends
from 10/50 corporations for 2003 through
2006 under section 904(h) (section 904(g)
as applicable for those years). The com-
menter suggested that §1.904–5T(m) be
made retroactive to 2003 (or 2005 for tax-
payers electing to apply the pre-AJCA sec-
tion 904(d) rules to assign dividends paid
by 10/50 corporations in their 2003 and
2004 taxable years to a single separate cat-
egory for dividends from all 10/50 cor-
porations) to match the retroactive effec-
tive date of the statutory changes to the
look-through rules for 10/50 corporations
and of the §1.904–7T rules for reconstruct-
ing non-look-through pools.
This comment is not adopted. The IRS
and the Treasury Department continue to
believe that the revision is a clarification of
existing law. A retroactive effective date is
unnecessary, however, because the statute
provides the applicable rule.
A commenter suggested that, because
section 904(h) applies exactly the same
rule to both section 951(a) and section
1293 inclusions, §1.904–5(m)(5) (other
than the special rules for related person
interest expense which are incorporated
by cross-reference) should also refer-
ence section 1293 inclusions from United
States-owned 10/50 corporations. The
IRS and the Treasury Department agree,
and §1.904–5(m)(5) of the final regula-
tions adopts this comment.
D. Treatment of Earnings and Taxes
Accumulated During a Non-look-through
Period
i. Reconstruction method
Section 1.904–7T(f)(2) of the 2006
temporary regulations provides that any
undistributed earnings and foreign income
taxes in the non-look-through pools of a
10/50 corporation that were accumulated
andpaidasoftheendofthe10/50corpora-
tion’s last pre-2003 taxable year are treated
as if they were accumulated and paid dur-
ing a period in which a distribution would
have been eligible for look-through treat-
ment. Section 1.904–7T(f)(4)(i) of the
2006 temporary regulations provides that
in order to substantiate the look-through
characterization of the earnings and taxes
in the non-look-through pools, the tax-
payer must make a reasonable, good-faith
effort to reconstruct the non-look-through
pools of earnings and taxes for each year
in the non-look-through period, begin-
ning with the first year in which earnings
were accumulated in the non-look-through
pool. Section 1.904–7T(f)(4)(i) further
provides that reconstruction will be based
on reasonably available books and records
and other relevant information, and must
take into account earnings distributed and
taxes deemed paid in the non-look-through
period as if they were distributed and
deemed paid pro rata from the amounts
that were added to the non-look-through
pools during the non-look-through period.
In recognition of the difficulty in re-
constructing the pools, the IRS and the
Treasury Department stated in the pream-
ble to the 2006 temporary regulations that
a reasonable approximation of the amounts
properly included in the look-through
pools, based on available records obtained
through reasonable, good-faith efforts by
the taxpayer, will adequately substantiate
the reconstruction required by the statute.
A commenter suggested that clarifi-
cation of what constitutes other relevant
information would be helpful. The IRS
and the Treasury Department do not adopt
this comment because the substantiation
requirement requires evaluation of the
facts and circumstances of each situation.
With respect to earnings accumulated
and foreign taxes paid in the 2003 through
2006 taxable years, a commenter sug-
gested that the rules in the 2006 temporary
regulations concerning the look-through
characterization and reconstruction of
earnings and taxes in the non-look-through
pools need to be clarified to provide that
taxpayers are required to determine the
sub-characterization of earnings and taxes,
if relevant. As an example, the commenter
stated that if a 10/50 corporation conducts
a financing business but does not itself
qualify as a financial services entity within
the meaning of §1.904–4(e)(3)(i), a quali-
fying shareholder of the 10/50 corporation
must (if the shareholder does not elect
the safe harbor method) determine what
portion of the non-look-through earn-
ings qualify as active financing income
as defined in §1.904–4(e)(2)(i). Such a
determination would be necessary in order
to determine whether the income would be
placed in the separatecategory for finan-
cial services income upon distribution to
an upper-tier financial services entity. The
IRS and the Treasury Department agree
with this comment that sub-characteriza-
tion of earnings and taxes is required, if
relevant, in determining the look-through
characterization ofearnings and taxes in
the non-look-through pools and in recon-
structing such pools. However, the IRS
and the Treasury Department believe that
the 2006 temporary regulations already
require reconstruction as if look-through
applied for all section 904 purposes, in-
cluding any relevant sub-characterization
of the earnings and taxes pools. Accord-
ingly, the final regulations adopt the rule
in the 2006 temporary regulations without
change.
ii. Safe harbor
Section 1.904–7T(f)(4)(ii) of the 2006
temporary regulations provides a safe har-
bor in reconstructing the non-look-through
pools under which a taxpayer may al-
locate the earnings and taxes in the
non-look-through pools ratably to the
July 6, 200942009–27 I.R.B.

look-through pools on the first day of the
10/50 corporation’s first post-2002 taxable
year in the same percentages as the tax-
payer (or the qualified group member that
owns the 10/50 corporation) properly char-
acterizes the stock of the 10/50 corporation
in the separate categories for purposes of
apportioning the taxpayer’s (or qualified
group member’s) interest expense in its
first taxable year ending after the first day
of the 10/50 corporation’s first post-2002
taxable year. If a taxpayer elects to use
the safe harbor method with respect to a
10/50 corporation that uses the modified
gross income method to apportion interest
expense for the 10/50 corporation’s first
post-2002 taxable year, earnings and taxes
in the non-look-through pools are allo-
cated to the look-through pools based on
an average of the 10/50 corporation’s mod-
ified gross income ratios for its taxable
years beginning in 2003 and 2004. The
IRS and the Treasury Department stated in
the preamble to the 2006 temporary regu-
lations that the two-year base period rule
is necessary to avoid potential distortions
associated with allocating earnings and
taxes from the non-look-through pool to
the look-through pools based on the 10/50
corporation’s modified gross income for
just one taxable year.
A commenter suggested that other po-
tential distortions are not addressed in
§1.904–7T(f)(4)(ii), such as instances in
which a material change in the foreign
corporation’s operations (or asset compo-
sition) would distort the characterization
of the non-look-through earnings and
taxes under the safe harbor method. The
commenter suggested that conditioning
the use of the safe harbor method on the
lack of any material change in the foreign
corporation’s operations, structure, as-
sets or income from the non-look-through
period would reduce the likelihood of a
distortion.
The IRS and the Treasury Department
acknowledge that the safe harbor method
does not address all potential distortions.
However, the purpose of the safe harbor
method is to provide certainty and to mini-
mize administrative burdens. The IRS and
the Treasury Department believe that re-
vising the safe harbor method to reflect the
commenter’s suggestion would diminish
these benefits of the safe harbor method.
A commenter also suggested that the
regulations should include guidance on
how the safe harbor method election is to
be made and the time frame for making
the election. The commenter suggested
that taxpayers should be allowed to elect
the safe harbor method retroactively, on
an amended return or during audit.
The IRS and the Treasury Department
agree with this comment. The final regula-
tions provide that taxpayers may choose to
use the safe harbor method on either timely
filed or amended tax returns or during au-
dit. However, if a taxpayer chooses to use
the safe harbor method on an amended re-
turn or in the course of an audit, the tax-
payer must make appropriate adjustments
to eliminate any duplicate benefits arising
from application of the safe harbor method
to taxable years that are not open for as-
sessment. A taxpayer’s choice to use the
safe harbor method is evidenced by simply
employing the method. No separate state-
ment need be filed.
In addition, the final regulations clar-
ify that the safe harbor method is only
available as a transition rule for taxpay-
ers who were required to characterize the
stock of the foreign corporation for pur-
poses of apportioning interest expense in
the taxpayer’s first taxable year ending af-
ter the first day of the foreign corpora-
tion’s first post-2002 taxable year. The
safe harbor is not available to determine
the look-through treatment of earnings ac-
cumulated by a foreign corporation that
did not have a shareholder that was entitled
to look-through treatment in such a year.
iii. Treatment of a Deficit Accumulated in
a Non-look-through Period
Section 1.904–7T(f)(5) of the 2006
temporary regulations provides that if
there is an accumulated deficit in the
non-look-through pool of a 10/50 cor-
poration or a CFC as of the end of the
foreign corporation’s last pre-2003 taxable
year, the deficit and associated taxes, if
any, are treated as if they had been accu-
mulated and paid during a look-through
period. The earnings and deficits in earn-
ings making up the accumulated deficit are
assigned to the look-through pools based
on where the foreign corporation’s income
and expenses or losses would have been
assigned had they been incurred during
a look-through period, or, if the taxpayer
uses the safe harbor method, the deficit is
allocated based on how the stock of the
foreign corporation is properly character-
ized for interest expense apportionment
purposes.
A commenter suggested that the regu-
lations should clarify that, for sharehold-
ers not using the safe harbor method, one
or more separate income categories could
have positive earnings, while one or more
separate income categories could have a
greater deficit. Thus, for example, if a
10/50 corporation had a $100 deficit ac-
cumulated in its non-look-through pool as
of the end of its last pre-2003 taxable year,
the deficit could consist of a $200 deficit in
general limitation income and $100 earn-
ings in the separate category for shipping
income.
The IRS and the Treasury Department
believe that §1.904–7T(f)(5) of the 2006
temporary regulations is clear that, as part
of reconstruction of a non-look-through
pool that contains an accumulated deficit,
one or more separate income categories
could have positive earnings, while one
or more separate income categories could
have a greater deficit, and that therefore,
the rule does not need to be revised to re-
flect the comment.
iv. Section 952(c) Recapture Accounts
In response to a comment,
§1.904–7(f)(7) of the final regulations
provides that section 952(c)(2) recapture
accounts maintained by a CFC with
respect to dividends received from a
10/50 corporation that were subject to
the earnings and profits limitation of
section 952(c)(1) are allocated to separate
categories in the same manner as the asso-
ciated post-1986 undistributed earnings.
v. GOZA Election
Conforming changes are made to the
transition rules at §1.904–7(f)(9) for tax-
payers electing to defer the applicability
of the look-through rules for two years to
reflect changes in response to comments
made with respect to the general transition
rules of §1.904–7(f)(7).
E. Pre-acquisition E&P
Section 904(d)(4)(C)(i)(II), as amended
by the AJCA, provides that the Secretary
may prescribe regulations regarding the
treatment of distributions out of earnings
2009–27 I.R.B.5July 6, 2009

and profits of a 10/50 corporation for pe-
riods before the taxpayer’s acquisition of
the stock to which the distributions relate
(pre-acquisition E&P). Such distributions
may be out of post-1986 undistributed
earnings accumulated by a 10/50 cor-
poration before the specific shareholder
acquired its stock or out of pre-1987 ac-
cumulated profits accumulated before
the 10/50 corporation had any qualifying
shareholder. The 2006 temporary reg-
ulations extend look-through treatment
to dividends out of earnings and profits
accumulated in non-look-through periods
during which a 10/50 corporation or a
CFC had no qualifying shareholder and
do not restrict look-through treatment of
dividends paid to a new qualifying share-
holder of an existing 10/50 corporation.
The preamble to the 2006 temporary regu-
lations stated that the IRS and the Treasury
Department believe that look-through
treatment of pre-acquisition earnings is the
more appropriate policy result than pas-
sive category treatment, if look-through
characterization can be adequately sub-
stantiated under §§1.904–5T(c)(4)(iii) and
1.904–7T(f)(4).
A commenter suggested that the exten-
sion of look-through treatment to pre-ac-
quisition E&P is inappropriate because the
liberalized cross-crediting of foreign taxes
permittedbythistreatmentmayencourage
tax-motivated acquisitions in order to traf-
fic in excess foreign taxes. The commenter
suggested that the IRS and the Treasury
Department exercise the regulatory author-
ity under section 904(d)(4)(C)(i)(II) to cre-
ate new separate categories for pre-acqui-
sition earnings and profits.
This comment is not adopted. The IRS
and the Treasury Department continue to
believe that look-through treatment of pre-
acquisition earnings, where the earnings
and taxes are substantiated, is the more ap-
propriate policy result. Moreover, deny-
ing look-through treatment to dividends
of earnings of a 10/50 corporation accu-
mulated prior to a specific shareholder’s
acquisition of stock entails unacceptable
administrative complexity associated with
maintaining multiple sets of look-through
pools starting on different dates for differ-
ent shareholders. Accordingly, the final
regulations adopt the rule in the 2006 tem-
porary regulations without change.
IV. Recapture of an Overall Foreign Loss
or Separate Limitation Loss Incurred in a
Separate Category for Dividends from a
10/50 Corporation
Section 1.904(f)–12T(g)(1) of the 2006
temporary regulations provides that where
a taxpayer had an overall foreign loss
(OFL) or separate limitation loss (SLL)
in a separate category for dividends from
a 10/50 corporation, the OFL or SLL ac-
count is recaptured in subsequent taxable
years out of income in the same separate
categories in which the stock of the 10/50
corporation is properly characterized for
purposes of apportioning the taxpayer’s
interest expense in its first taxable year in
which dividends from the 10/50 corpora-
tion are eligible for look-through treatment
(that is, its first taxable year ending after
the first day of the 10/50 corporation’s
first post-2002 taxable year).
A commenter suggested that a rule
providing for recapture of the OFL or
SLL from the other separate categories
in the same proportions that post-OFL or
SLL dividends from the 10/50 corpora-
tion would have been assigned to such
other separate categories had look-through
applied would be more consistent with
§1.904–2T(h)(1) and (2) (carryovers of
excess foreign taxes from 10/50 baskets)
and §1.904–7T(f)(2) and (3) (character-
ization of non-look-through pools as if
look-through had applied) that gener-
ally take the approach of following the
consequences that would have applied if
look-through had always been in effect.
This comment is not adopted. The IRS and
the Treasury Department stated in the pre-
amble to the 2006 temporary regulations
and continue to believe that recapturing
losses from income earned in subsequent
years is a forward-looking concept, and
that reallocating OFL and SLL accounts
based on the interest expense apportion-
ment ratio (as opposed to, for example,
reallocating losses based on reconstructed
non-look-through pools) is consistent with
that concept.
V. Regulations under Section 964
A. Tax Elections, Adoptions of Method of
Accounting or Taxable Year, and Changes
in Method of Accounting or Taxable
Year Made on Behalf of a CFC or 10/50
Corporation
The 2006 temporary regulations at
§1.964–1T(c)(2) and (3) provide rules
allowing the majority domestic corpo-
rate shareholders of a 10/50 corporation
to make an election, adopt a method of
accounting or taxable year, or change a
method of accounting or taxable year on
behalf of the 10/50 corporation. The 2006
temporary regulations also allow the con-
trolling United States shareholders of a
CFC to make an election, adopt a method
of accounting or taxable year, or change a
method of accounting or taxable year on
behalf of the CFC. Section 1.964–1T(c)(2)
provides that for the first taxable year of a
foreign corporation beginning after April
25, 2006, in which such foreign corpo-
ration first qualifies as a CFC or 10/50
corporation, any method of accounting or
taxable year allowable under this section
may be adopted or elected by such foreign
corporation or on its behalf notwithstand-
ing that, in previous years, its books or
financial statements were prepared on a
different basis, and notwithstanding that
such election is required by the Code or
regulations to be made in a prior taxable
year. Section 1.964–1T(c)(6) further pro-
vides that such actions may be deferred
until the first year in which the computa-
tion of the foreign corporation’s earnings
and profits is significant for U.S. tax pur-
poses, and includes a nonexclusive list of
significant events for taxable years begin-
ning after April 25, 2006.
Section 1.964–1T(c)(4) of the 2006
temporary regulations acknowledges that
a 10/50 corporation may have had a sig-
nificant event in taxable years beginning
on or before April 25, 2006, such as a
distribution with respect to which the
corporation’s shareholder could claim
a deemed-paid foreign tax credit under
section 902. In order to determine the
allowable foreign tax credit, at the time
of the distribution the 10/50 corporation’s
domestic corporate shareholder would
have had to compute the 10/50 corpora-
tion’s earnings and profits, even though no
procedure was then available for the con-
trolling domestic shareholders to adopt or
elect accounting methods on the 10/50 cor-
poration’s behalf. Section 1.964–1T(c)(4)
provides that in this situation the 10/50
corporation’s earnings and profits shall
July 6, 200962009–27 I.R.B.

be computed as if no accounting method
elections were made and any permissible
accounting method notrequiring an elec-
tion and reflected in the books of account
regularly maintained by the 10/50 corpo-
ration for purposes of accounting to its
shareholders had been adopted. There-
after, in taxable years beginning after April
25, 2006, the 10/50 corporation, or its
controlling domestic shareholders, must
obtain the consent of the Commissioner
in order to change a particular accounting
method or methods (or its taxable year)
pursuant to the applicable revenue pro-
cedure. A commenter suggested that in
post-2006 years the controlling domes-
tic shareholders of a 10/50 corporation
should be permitted to change accounting
methods on its behalf without obtaining
the consent of the Commissioner or mak-
ing adjustments to the 10/50 corporation’s
earnings and profits under the principles
of section 481 to prevent the duplication
or omission of amounts attributable to pre-
vious years. This comment is not adopted.
The IRS and the Treasury Department
believe that it would be inappropriate to
give the controlling domestic shareholders
of a 10/50 corporation this type of “fresh
start.”
A commenter recommended simpli-
fying the procedures in §1.964–1T(c)(3)
of the 2006 temporary regulations by
which controlling domestic sharehold-
ers may make an election or adopt or
change a method of accounting or taxable
year on behalf of a foreign corporation.
Specifically, the commenter suggested
that §1.964–1T(c)(3)(i) and (ii) be revised
to provide that where a United States
shareholder changes a method of account-
ingonbehalfofaCFCofwhichitisthe
sole shareholder, such shareholder need
file only the original Form 3115 with its
tax return, and need not file the statement
(described in §1.964–1T(c)(3)(ii)) that is
required to be filed with each controlling
domestic shareholder’s tax return. The
IRS and the Treasury Department agree
with the comment and believe it is equally
applicable to changes in the taxable year of
the CFC. Accordingly, §1.964–1(c)(3)(ii)
of the final regulations provides that in the
case of a controllingdomestic shareholder
that is the sole shareholder of a CFC, no
separate statement need be filed if the in-
formation described in §1.964–1(c)(3)(ii)
is included on Form 5471 (Information
Return of U.S. Persons With Respect To
Certain Foreign Corporations)andForm
3115 (Application for Change in Account-
ing Method) or Form 1128 (Application to
Adopt, Change, or Retain a Tax Year), as
applicable, filed with respect to the CFC
with the shareholder’s return for such tax-
able year.
B. Section 481(a) Adjustments
Prior to its expiration, §1.964–1T(g)(5)
provided that adjustments to the appropri-
ate separate category of earnings and prof-
its and income of the controlled foreign
corporation was required using the princi-
ples of section 481(a) to prevent any dupli-
cation or omission of amounts attributable
to previous years that would otherwise re-
sult from any election or adoption of a
method of accounting. This provision was
cross-referenced in §1.964–1T(c)(4) of the
2006 temporary regulations. Commenters
requested clarification regarding the me-
chanics of making theadjustments accord-
ing to the principles of section 481(a), such
as the period over which the section 481(a)
adjustment is spread and whether a cor-
relative section 481(a) adjustment should
be made at the domestic shareholder level
in order to capture an increased subpart F
inclusion that would have been generated
had earnings and profits initially been de-
termined using the method subsequently
elected or adopted. One commenter sug-
gested that the regulations state specifi-
cally that the applicable domestic princi-
ples should apply so that the section 481
adjustment would be taken into account in
determining the current earnings and prof-
its of the CFC or 10/50 corporation begin-
ning with the year of change and for the
same period as the adjustment is taken into
account for purposes of computing taxable
income.
In response to the comment,
§1.964–1(c)(2) of the final regulations
provides that adjustments to the appro-
priate separate category (as defined in
§1.904–5(a)(1)) of earnings and profits
and income of the foreign corporation
shall be required under section 481 to
prevent any duplication or omission of
amounts attributable to previous years that
would otherwise result from any change
in a method of accounting. The details
concerning the section 481 adjustment
are addressed in applicable revenue pro-
cedures. See, for example, Rev. Proc.
2008–52, 2008–36 I.R.B. 587.
C. Miscellaneo
us cross-references
The 2006 temporary regulations in-
cluded in §1.964–1T(c)(4) cross refer-
ences to expired §1.964–1T(g) that are
updated in the final regulations. In addi-
tion, §1.964–1(c)(2) of the final regula-
tions adds cross-references to §§1.985–5,
1.985–6, and 1.986–7, which provide that
a qualified business unit must make ad-
justments to its earnings and profits when
it changes its functional currency or be-
gins to use the dollar approximate separate
transactions method of accounting.
Section 1.964–1(b)(1)(v) includes
a cross-reference to“paragraph (d) of
this section.” Because of revisions to
§1.964–1, that cross-reference and a sim-
ilar cross-reference in §1.989(b)–1 were
no longer effective. The final regulations
replace the cross-references to paragraph
(d) with the appropriate cross-reference to
section 988 and the regulations under that
section.
Special Analyses
It has been determined that this Trea-
sury decision is not asignificant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It has also been determined
that section 553(b) of 5 U.S.C. chapter 5
does not apply to these regulations, and,
because the regulations do not impose a
collection of information on small entities,
the Regulatory Flexibility Act, 5 U.S.C.
chapter 6, does not apply. Pursuant to sec-
tion 7805(f) of the Code, the notice of pro-
posed rulemaking preceding this regula-
tion and temporary regulations were sub-
mitted to the Chief Counsel for Advocacy
of the Small Business Administration for
comment on their impact on small busi-
nesses.
Drafting Information
The principal authors of the final
regulations are Richard Chewning and
Jeffrey Parry of the Office of Associate
Chief Counsel (International). However,
other personnel from the Treasury
Department and the IRS participated in
their development.
*****
2009–27 I.R.B.7July 6, 2009

Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 602
are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority for part 1
continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.861–9 is amended by
removing paragraphs (h)(5)(iii) and (i)(4),
revising paragraphs (a), (b), (c), (d), (e),
(f), and (g)(1)(i), and adding paragraph (k),
to read as follows:
§1.861–9 Allocation and apportionment
of interest expense.
(a) through (f)(3)(i) [Reserved]. For
further guidance, see §1.861–9T(a)
through(f)(3)(i).
(f)(3)(ii)Manner of election.The
election shall be made by filing the state-
ment and providing the written notice
described in §1.964–1(c)(3)(ii) and (iii),
respectively, at the time and in the manner
described therein. For further guidance,
see §1.861–9T(f)(3)(ii).
(f)(3)(iii) and (iv) [Reserved]. For fur-
ther guidance, see §1.861–9T(f)(3)(iii) and
(iv).
(4)Noncontrolled section 902 corpo-
rations—(i)In general. For purposes
of computing earnings and profits of a
noncontrolled section 902 corporation (as
definedinsection904(d)(2)(E))forfed-
eral tax purposes, the interest expense of
a noncontrolled section 902 corporation
may be apportioned using either the asset
method described in §1.861–9T(g) or the
modified gross income method described
in §1.861–9T(j). A noncontrolled section
902 corporation that is not a controlled
foreign corporation may elect to use a
different method of apportionment than
that elected by one or more of its share-
holders. A noncontrolled section 902
corporation must use the same method
of apportionment with respect to all its
domestic corporate shareholders.
(ii)Manner of election. The elec-
tion to use the asset method described in
§1.861–9T(g) or the modified gross in-
come method described in §1.861–9T(j)
may be made either by the noncontrolled
section 902 corporation or by the majority
domestic corporate shareholders (as de-
fined in §1.964–1(c)(5)(ii)) on behalf of
the noncontrolled section 902 corporation.
The election shall be made by filing the
statement and providing the written notice
described in §1.964–1(c)(3)(ii) and (iii),
respectively, at the time and in the manner
described therein. For further guidance,
see §1.861–9T(f)(4)(ii).
(iii)Stock characterization.Ingen-
eral, the stock of a noncontrolled section
902 corporation shall be characterized in
the hands of any domestic corporation that
meets the ownership requirements of sec-
tion 902(a) with respect to the noncon-
trolled section 902 corporation, or in the
hands of any member of the same qualified
group as defined in section 902(b)(2), us-
ing the same method that the noncontrolled
section 902 corporation uses to apportion
its interest expense. Stock in a noncon-
trolled section 902 corporation shall be
characterized as a passive category asset in
the hands of any such shareholder that fails
to meet the substantiation requirements of
§1.904–5(c)(4)(iii), or in the hands of any
shareholder that is not eligible to compute
an amount of foreign taxes deemed paid
with respect to a dividend from the non-
controlled section 902corporation for the
taxable year. See §1.861–12(c)(4).
(f)(5) through (g)(1)(i) [Reserved]. For
further guidance, see §1.861–9T(f)(5)
through (g)(1)(i).
*****
(k)Effective/applicability date. Para-
graph (h)(5) of this section applies to tax-
able years beginning after December 31,
1989. Paragraph (i) of this section ap-
plies to taxable years beginning on or after
March 26, 2004. Paragraphs (f)(3)(ii) and
(4) of this section apply to taxable years of
shareholders ending on or after April 20,
2009. See 26 CFR §1.861–9T(f)(3)(ii)(last
sentence) and (4) (revised as of April 1,
2009) for rules applicable to taxable years
of shareholders ending after the first day
of the first taxable year of the noncon-
trolled section 902 corporation beginning
after December 31, 2002, and ending be-
fore April 20, 2009.
Par. 3. Section 1.861–9T is amended as
follows:
1. Remove paragraph (b)(6)(viii).
2. Revise the last sentence of paragraph
(f)(3)(ii) and paragraph (f)(4).
3. Add paragraph (k).
The revisions and additions read as fol-
lows:
§1.861–9T Allocation and apportionment
of interest expense (temporary).
*****
(f) * * *
(3) * * *
(ii)***Forguidancerelatingtothe
time and manner of this election, see
§1.861–9(f)(3)(ii).
*****
(4) * * * For further guidance, see
§1.861–9(f)(4).
*****
(k)Effective/applicability dates. Para-
graph (b)(6) of this section applies to
losses on any transaction described in
paragraph (b)(6)(i) of this section that was
entered into after September 14, 1988.
Paragraph (b)(6) of this section also ap-
plies to any gain that was realized on
any transaction described in paragraph
(b)(6)(i) of this section that was entered
into after August 11, 1989. Taxpayers
may also apply paragraph (b)(6) of this
section to any gain that was realized on
any transaction described in paragraph
(b)(6)(i) of this section that was entered
into after September 14, 1988, and on or
before August 11, 1989, if the taxpayer
can demonstrate to the satisfaction of the
Commissioner that substantially all of
the arrangements described in paragraph
(b)(6)(i) of this section to which the tax-
payer became a party during that interim
period were identified on the taxpayer’s
books and records with the liabilities of
the taxpayer in a substantially contem-
poraneous manner and that all losses and
expenses that are subject to the rules
of paragraph (b)(6) of this section were
treated in the same manner as interest
expense. For this purpose, arrangements
that were identified in a substantially con-
temporaneous manner with the taxpayer’s
assets shall be ignored. For further guid-
ance, see §1.861–9(k).
Par. 4. Section 1.861–12 is added as
follows:
July 6, 200982009–27 I.R.B.

§1.861–12 Characterization rules and
adjustments for certain assets.
(a) through (c)(1) [Reserved]. For fur-
ther guidance, see §1.861–12T(a) through
(c)(1).
(2)Basis adjustment for stock in nonaf-
filiated 10 percent owned corporations—
(i)Taxpayers using the tax book value
method—(A)General rule. For purposes
of apportioning expenses on the basis of
the tax book value of assets, the adjusted
basis of any stock in a 10 percent owned
corporation owned by the taxpayer either
directly or, for taxable years beginning
after April 25, 2006, indirectly through a
partnership or other pass-through entity
shall be—
(1) Increased by the amount of the earn-
ings and profits of such corporation (and
of lower-tier 10 percent owned corpora-
tions) attributable to such stock and accu-
mulated during the period the taxpayer or
other members of its affiliated group held
10 percent or more of such stock; or
(2) Reduced (but not below zero) by
any deficit in earnings and profits of such
corporation (and of lower-tier 10 percent
owned corporations) attributable to such
stock for such period.
(c)(2)(i)(B) through (c)(3) [Re-
served] For further guidance, see
§1.861–12T(c)(2)(i)(B) through (c)(3).
(4)Characterization of stock of
noncontrolled section 902 corpora-
tions—(i)General rule. The principles
of §1.861–12T(c)(3) shall apply to stock
in a noncontrolled section 902 corpora-
tion (as defined in section 904(d)(2)(E)).
Accordingly, stock in a noncontrolled
section 902 corporation shall be char-
acterized as an asset in the various sep-
arate limitation categories on the basis
of either the asset method described in
§1.861–12T(c)(3)(ii) or the modified gross
income method described in §1.861–12T
(c)(3)(iii). Stock in a noncontrolled sec-
tion 902 corporation the interest expense
of which is apportioned on the basis
of assets shall be characterized in the
hands of its domestic shareholders (as de-
fined in §1.902–1(a)(1)) under the asset
method described in §1.861–12T(c)(3)(ii).
Stock in a noncontrolled section 902 cor-
poration the interest expense of which
is apportioned on the basis of gross
income shall be characterized in the
hands of its domestic shareholders under
the gross income method described in
§1.861–12T(c)(3)(iii).
(ii)Nonqualifying shareholders.Stock
in a noncontrolled section 902 corporation
shall be characterized as a passive cate-
gory asset in the hands of a shareholder
that is not eligible to compute an amount
of foreign taxes deemed paid with respect
to a dividend from the noncontrolled sec-
tion 902 corporation for the taxable year,
and in the hands of any shareholder with
respect to whom look-through treatment is
not substantiated. See§1.904–5(c)(4)(iii).
(5)Effective/applicability date. Para-
graphs (c)(2)(i)(A) and (4) of this section
apply to taxable years of shareholders
ending on or after April 20, 2009. See
26 CFR §1.861–12T(c)(2)(i) introductory
text, (2)(i)(A), (2)(i)(B), and (4) (revised
as of April 1, 2009) for rules applicable to
taxable years of shareholders ending after
the first day of the first taxable year of
the noncontrolled section 902 corporation
beginning after December 31, 2002, and
ending before April 20, 2009.
(d) through (j) [Reserved]. For further
guidance, see §1.861–12T(d) through (j).
Par. 5. Section 1.861–12T is amended
as follows:
1. Paragraph (c)(2)(i) introductory text
is removed.
2. Paragraph (c)(2)(i)(A) is revised.
3. Paragraph (c)(2)(i)(B) is removed.
4. A paragraph heading is added to
the undesignated text following paragraph
(c)(2), which is designated as new para-
graph (c)(2)(i)(B).
5. Paragraph (c)(4) is revised.
6. A new paragraph (c)(5) is added.
The revisions and additions read as fol-
lows:
§1.861–12T Characterization rules
and adjustments for certain assets
(temporary).
*****
(c) * * *
(2)(i)(A) [Reserved]. For further guid-
ance, see §1.861–12(c)(2)(i)(A).
(B)Computational rules.***
(4) [Reserved]. For further guidance,
see §1.861–12(c)(4).
(5) [Reserved]. For further guidance,
see §1.861–12(c)(5).
*****
Par. 6. Section 1.902–1 is amended
by revising paragraphs (a)(4)(ii), (a)(6),
(a)(7), (a)(8)(i), (c)(8), (d)(1), (d)(2)(i),
and (g) to read as follows:
§1.902–1 Credit for domestic corporate
shareholder of a foreign corporation for
foreign income taxes paid by the foreign
corporation.
(a) * * *
(4) * * *
(ii)Fourth-, fifth-, or sixth-tier corpo-
ration. In the case of dividends paid to a
third-, fourth-, or fifth-tier corporation by
a foreign corporation in a taxable year be-
ginning after August 5, 1997, the foreign
corporation is a fourth-, fifth-, or sixth-tier
corporation, respectively, if at the time the
dividend is paid, the corporation receiv-
ing the dividend owns at least 10 percent
of the foreign corporation’s voting stock,
the chain of foreign corporations that in-
cludes the foreign corporation is connected
through stock ownership of at least 10 per-
cent of their voting stock, the domestic
shareholder in the first-tier corporation in
such chain indirectly owns at least 5 per-
cent of the voting stock of the foreign cor-
poration through such chain, such corpora-
tion is a controlled foreign corporation (as
defined in section 957) and the domestic
shareholder is a United States shareholder
(as defined in section 951(b)) in the foreign
corporation. Taxes paid by a fourth-, fifth-,
or sixth-tier corporation shall be taken into
account in determining post-1986 foreign
income taxes only if such taxes are paid
with respect to taxable years beginning af-
ter August 5, 1997, in which the corpora-
tion was a controlled foreign corporation.
*****
(6)Upper- and lower-tier corporations.
In the case of a sixth-tier corporation, the
termupper-tier corporationmeans a first-,
second-, third-, fourth-, or fifth-tier corpo-
ration. In the case of a fifth-tier corpora-
tion, the term upper-tier corporation means
a first-, second-, third-, or fourth-tier cor-
poration. In the case of a fourth-tier cor-
poration, the term upper-tier corporation
means a first-, second-, or third-tier cor-
poration. In the case of a third-tier cor-
poration, the term upper-tier corporation
means a first- or second-tier corporation.
In the case of a second-tier corporation, the
term upper-tier corporation means a first-
tier corporation. In the case of a first-tier
corporation, the termlower-tier corpora-
tionmeans a second-, third-, fourth-, fifth-,
2009–27 I.R.B.9July 6, 2009

or sixth-tier corporation. In the case of
a second-tier corporation, the term lower-
tier corporation means a third-, fourth-,
fifth-, or sixth-tier corporation. In the case
of a third-tier corporation, the term lower-
tier corporation means afourth-, fifth-, or
sixth-tier corporation. In the case of a
fourth-tier corporation, the term lower-tier
corporation means a fifth- or sixth-tier cor-
poration. In the case of a fifth-tier corpora-
tion, the term lower-tier corporation means
a sixth-tier corporation.
(7)Foreign income taxes.Theterm
foreign income taxesmeans income, war
profits, and excess profits taxes as defined
in §1.901–2(a), and taxes included in the
term income, war profits, and excess prof-
its taxes by reason of section 903, that are
imposed by a foreign country or a posses-
sion of the United States, including any
such taxes deemed paid by a foreign corpo-
ration under this section. Foreign income,
war profits, and excess profits taxes shall
not include amounts excluded from the
definition of those taxes pursuant to sec-
tion 901 and the regulations under that sec-
tion. See section 901(f) and (i) and para-
graph (c)(5) of this section. Foreign in-
come, war profits, andexcess profits taxes
also shall not include taxes for which a
credit is disallowed under section 901 and
the regulations under section 901. See sec-
tion 901(j), (k), and (l), and paragraphs
(c)(4) and (8) of this section.
(8)Post-1986 foreign income taxes—(i)
In general. Except as provided in para-
graphs (a)(10) and (13) of this section,
the termpost-1986 foreign income taxes
of a foreign corporation means the sum
of the foreign income taxes paid, accrued,
or deemed paid in the taxable year of the
foreign corporation in which it distributes
a dividend plus the foreign income taxes
paid, accrued, or deemed paid in the for-
eign corporation’s prior taxable years be-
ginning after December 31, 1986, to the
extent the foreign taxes were not attribut-
able to dividends distributed to, or earn-
ings otherwise included (for example, un-
der section 304, 367(b), 551, 951(a), 1248,
or 1293) in the income of, a foreign or do-
mestic shareholder in prior taxable years.
Except as provided in paragraph (b)(4) of
this section, foreign taxes paid or deemed
paid by the foreign corporation on or with
respect to earnings that were distributed or
otherwise removed from post-1986 undis-
tributed earnings in prior post-1986 tax-
able years shall be removed from post-
1986 foreign income taxes regardless of
whether the shareholder is eligible to com-
pute an amount of foreign taxes deemed
paid under section 902, and regardless of
whether the shareholder in fact chose to
credit foreign income taxes under section
901 for the year of the distribution or in-
clusion. Thus, if an amount is distributed
or deemed distributed by a foreign corpo-
ration to a United States person that is not
a domestic shareholder within the mean-
ing of paragraph (a)(1) of this section (for
example, an individual or a corporation
that owns less than 10% of the foreign
corporation’s voting stock), or to a for-
eign person that does not meet the defi-
nition of an upper-tier corporation under
paragraph (a)(6) of this section, then al-
though no foreign income taxes shall be
deemed paid under section 902, foreign in-
come taxes attributable to the distribution
or deemed distribution that would have
been deemed paid had the shareholder met
the ownership requirements of paragraphs
(a)(1) through (4) of this section shall be
removed from post-1986 foreign income
taxes. Further, if a domestic shareholder
chooses to deduct foreign taxes paid or ac-
crued for the taxable year of the distribu-
tion or inclusion, it shall nonetheless be
deemed to have paid a proportionate share
of the foreign corporation’s post-1986 for-
eign income taxes under section 902(a),
and the foreign income taxes deemed paid
must be removed from post-1986 foreign
income taxes. In the case of a foreign cor-
poration the foreign income taxes of which
are determined based on an accounting pe-
riod of less than one year, the termyear
means that accounting period. See sec-
tions 441(b)(3) and 443.
*****
(c) * * *
(8)Effect of certain liquidations, re-
organizations, or similar transactions on
certain foreign taxes paid or accrued in
taxable years beginning on or before Au-
gust 5, 1997-(i)General rule. Notwith-
standing the effect of any liquidation, re-
organization, or similar transaction, for-
eign taxes paid or accrued by a member
of a qualified group (as defined in sec-
tion 902(b)(2)) shall not be eligible to be
deemed paid if they were paid or accrued
in a taxable year beginning on or before
August 5, 1997, by a corporation that was a
fourth-, fifth- or sixth-tier corporation with
respect to the taxpayer on the first day of
the corporation’s first taxable year begin-
ning after August 5, 1997.
(ii)Example. The following examples
illustrate the application of this paragraph
(c)(8):
Example. P, a domestic corporation, has owned
100 percent of the voting stock of foreign corporation
S at all times since January 1, 1987. Until June 30,
2002, S owned 100 percent of the voting stock of
foreign corporation T, T owned 100 percent of the
voting stock of foreign corporation U, and U owned
100 percent of the voting stock of foreign corporation
V. P, S, T, U, and V each use the calendar year as
their U.S. taxable year. Thus, beginning in 1998 V
was a fourth-tier controlled foreign corporation, and
its foreign taxes paid or accrued in 1998 and later
taxable years were eligible to be deemed paid. On
June 30, 2002, T was liquidated, causing S to acquire
100 percent of the stock of U. As a result, V became
a third-tier controlled foreign corporation. In 2003,
V paid a dividend to U. Under paragraph (c)(8) of
this section, foreign taxes paid by V in taxable years
beginning before 1998 arenot taken into account in
computing the foreign taxes deemed paid with respect
to the dividend paid by V to U.
(d)Dividends from controlled foreign
corporations and noncontrolled section
902 corporations—(1)General rule.If
a dividend is described in paragraphs
(d)(1)(i) through (iv) of this section, the
following rules apply. If a dividend is paid
out of post-1986 undistributed earnings or
pre-1987 accumulated profits of a foreign
corporation attributable to more than one
separate category, the amount of foreign
income taxes deemed paid by the domestic
shareholder or the upper-tier corporation
under section 902 and paragraph (b) of
this section shall be computed separately
with respect to the post-1986 undistributed
earnings or pre-1987 accumulated profits
in each separate category out of which the
dividend is paid. See §1.904–5(c)(4) and
(i), and paragraph (d)(2) of this section.
The separately computed deemed-paid
taxes shall be added to other taxes paid
by the domestic shareholder or upper-tier
corporation with respect to income in the
appropriate separate category. The rules
of this paragraph (d)(1) apply to dividends
received by —
(i) A domestic shareholder that is a
United States shareholder (as defined in
section 951(b) or section 953(c)) from a
first-tier corporation that is a controlled
foreign corporation;
(ii) A domestic shareholder from a first-
tier corporation that is a noncontrolled sec-
tion 902 corporation;
July 6, 2009102009–27 I.R.B.

(iii) An upper-tier controlled for-
eign corporation from a lower-tier con-
trolled foreign corporation if the corpo-
rations are related look-through entities
within the meaning of §1.904–5(i) (see
§1.904–5(i)(3)); or
(iv) A foreign corporation that is eligi-
ble to compute an amount of foreign taxes
deemed paid under section 902(b)(1), from
a controlled foreign corporation or a non-
controlled section 902corporation (that is,
both the payor and payee corporations are
members of the same qualified group as
defined in section 902(b)(2) (see §1.904–5
(i)(4)).
(2)Look-through—(i)Dividends.Any
dividend distribution by a controlled for-
eign corporation or noncontrolled section
902 corporation to a domestic shareholder
or a foreign corporation that is eligible
to compute an amount of foreign taxes
deemed paid under section 902(b)(1) shall
be deemed paidpro rataout of each sep-
arate category of income. Any dividend
distribution by a controlled foreign cor-
poration to a controlled foreign corpora-
tion that is a related look-through entity
within the meaning of §1.904–5(i)(3) shall
also be deemed to be paidpro rataout
of each separate category of income. See
§§1.904–5(c)(4) and (i), and 1.904–7. The
portion of the foreign income taxes at-
tributable to a particular separate category
that shall be deemed paid by the domestic
shareholder or upper-tier corporation must
be computed under the following formula:
Dividend amount attributable to
the separate category
Foreign taxes deemed paid by
domestic shareholder or upper-tier
corporation with respect to a
separate category
=
Post-1986 foreign income taxes of
first-tier or lower-tier corporation
allocated and apportioned to the
separate category under §1.904–6
x
Post-1986 undistributed earnings of
first-tier or lower-tier corporation
in the separate category
*****
(g)Effective/applicability dates.This
section applies to any distribution made
in and after a foreign corporation’s first
taxable year beginning on or after Jan-
uary 1, 1987, except that the provisions
of paragraphs (a)(4)(ii), (a)(6), (a)(7),
(a)(8)(i), and (c)(8) of this section and,
except as provided in §1.904–7(f)(9),
the provisions of paragraph (d) of this
section apply to distributions made in
taxable years of foreign corporations end-
ing on or after April 20, 2009. See 26
CFR §1.902–1T(a)(4)(ii), (a)(6), (a)(7),
(a)(8)(i), and (c)(8) (revised as of April 1,
2009) for rules applicable to distributions
made in taxable years of foreign corpora-
tions beginning after April 25, 2006, and
ending before April 20, 2009, and 26 CFR
§1.902–1T(d), except as provided in 26
CFR §1.904–7T(f)(9) (revised as of April
1, 2009), for rules applicable to distri-
butions made in taxable years of foreign
corporations beginning after December
31, 2002, and ending before April 20,
2009.
§1.902–1T [Removed]
Par. 7. Section 1.902–1T is removed.
Par. 8. Section 1.904–0 is amended by
revising the section heading and the en-
tries for §§1.904–5(m), (m)(5), and (n),
and 1.904–7(f) to read as follows:
§1.904–0 Outline of regulation provisions
for section 904.
*****
§1.904–5 Look-through rules as applied
to controlled foreign corporations and
other entities.
*****
(m) Application of section 904(h).
*****
(5)Treatment of inclusions under sec-
tions 951(a)(1)(A) and 1293.
*****
(n) Order of application of sections
904(d) and (h).
§1.904–7 Transition rules.
*****
(f) * * *
(1) Definition of non-look-through
pools.
(2) Treatment of non-look-through
pools of a noncontrolled section 902 cor-
poration.
(3) Treatment of non-look-through
pools of a controlled foreign corporation.
(4) Substantiation of look-through char-
acter of undistributed earnings and taxes in
a non-look-through pool.
(i) Reconstruction of earnings and taxes
pools.
(ii) Safe harbor method.
(iii) Inadequate substantiation.
(iv) Examples.
(5) Treatment of a deficit accumulated
in a non-look-through pool.
(6) Treatment of pre-1987 accumulated
profits.
(7) Treatment of post-1986 undis-
tributed earnings or a deficit of a controlled
foreign corporation attributable to divi-
dends from a noncontrolled section 902
corporation paid in taxable years begin-
ning before January 1, 2003.
(i) Look-through treatment of
post-1986 undistributed earnings at con-
trolled foreign corporation level.
(ii) Look-through treatment of deficit in
post-1986 undistributed earnings at con-
trolled foreign corporation level.
(iii) Substantiation required for look-
through treatment.
(8) Treatment of distributions received
by an upper-tier corporation from a lower-
tier noncontrolled section 902 corporation,
including when the corporations do not
have the same taxable years.
(i) Rule.
(ii) Example.
(9)Electiontoapplypre-AJCArulesto
2003 and 2004 taxable years.
(i) Definition.
(ii) Time, manner, and form of election.
(iii) Treatment of non-look-through
pools in taxable years beginning after De-
cember 31, 2004.
(iv) Carryover of unused foreign tax.
(v) Carryback of unused foreign tax.
2009–27 I.R.B.11July 6, 2009

(vi) Recapture of overall foreign loss or
separate limitation loss in the single cate-
gory for dividends from all noncontrolled
section 902 corporations.
(vii) Recapture of separate limitation
losses in other separate categories.
(viii) Treatment of undistributed earn-
ings in an upper-tier corporation-level sin-
gle category for dividends from lower-tier
noncontrolled section 902 corporations.
(ix) Treatment of a deficit in the sin-
gle category for dividends from lower-tier
noncontrolled section 902 corporations.
(10) Effective/applicability dates.
Par. 9. Section 1.904–2 is amended by
revising paragraphs (a) and (h) to read as
follows:
§1.904–2 Carryback and carryover of
unused foreign tax.
(a)Credit for foreign tax carryback or
carryover. A taxpayer who chooses to
claim a credit under section 901 for a tax-
able year is allowed a credit under that sec-
tion not only for taxes otherwise allow-
able as a credit but also for taxes deemed
paid or accrued in that year as a result of
a carryback or carryover of an unused for-
eign tax under section 904(c). However,
the taxes so deemed paid or accrued shall
not be allowed as a deduction under sec-
tion 164(a). Paragraphs (b) through (g) of
this section and §1.904–3, providing rules
for the computation of carryovers and car-
rybacks, do not reflect a number of in-
tervening statutory amendments, including
the redesignation of section 904(d) as sec-
tion 904(c) for taxable years beginning af-
ter 1975, amendments to sections 904(d)
and (f) regarding the application of sep-
arate limitations in taxable years begin-
ning after 1986, the limitation of the car-
ryback period to one year for unused for-
eign taxes arising in taxable years begin-
ning after October 22, 2004, and the ex-
tension of the carryover period to ten years
for unused foreign taxes that may be car-
ried to any taxable year ending after Oc-
tober 22, 2004. However, the principles
of paragraphs (b) through (g) of this sec-
tion and §1.904–3(b) through (g) shall ap-
ply in determining carrybacks and carry-
overs of unused foreign taxes, modified so
as to take into account the effect of statu-
tory amendments. For transition rules re-
lating to the carryover and carryback of un-
used foreign tax paid with respect to divi-
dends from noncontrolled section 902 cor-
porations, see paragraph (h) of this section.
For special rules regarding these compu-
tations in case of taxes paid, accrued, or
deemed paid with respect to foreign oil and
gas extraction income or foreign oil related
income, see section 907(f) and the regula-
tions under that section.
*****
(h)Transition rules for carryovers and
carrybacks of pre-2003 and post-2002
unused foreign tax paid or accrued with
respect to dividends from noncontrolled
section 902 corporations—(1)Carry-
over of unused foreign tax. Except
as provided in §§1.904–7(f)(9)(iv) and
1.904(f)–12(g)(3), the rules of this para-
graph (h)(1) apply to reallocate to the
taxpayer’s other separate categories any
unused foreign taxes (as defined in para-
graph (b)(2) of this section) that were
paid or accrued or deemed paid under sec-
tion 902 with respect to a dividend from
a noncontrolled section 902 corporation
paid in a taxable year of the noncontrolled
section 902 corporation beginning be-
fore January 1, 2003, which taxes were
subject to a separate limitation for divi-
dends from that noncontrolled section 902
corporation. To the extent any such un-
used foreign taxes are carried forward to
a taxable year of a domestic shareholder
beginning on or after the first day of the
noncontrolled section 902 corporation’s
first taxable year beginning after Decem-
ber 31, 2002, such taxes shall be allocated
among the taxpayer’s separate categories
in the same proportions as the related div-
idend would have been assigned had such
dividend been eligible for look-through
treatment when paid. Accordingly, the
taxes shall be allocated in the same per-
centages as the reconstructed earnings in
the noncontrolled section 902 corpora-
tion’s non-look-through pool and pre-1987
accumulated profitsthat were accumu-
lated in taxable years beginning before
January 1, 2003, out of which the dividend
was paid, in accordance with the rules of
§1.904–7(f), or, if the taxpayer uses the
safe harbor method of §1.904–7(f)(4)(ii),
in the same percentages as the taxpayer
properly characterizes the stock of the
noncontrolled section 902 corporation for
purposes of apportioning its interest ex-
pense in its first taxable year ending after
the first day of the noncontrolled section
902 corporation’s first taxable year be-
ginning after December 31, 2002. See
§1.904–7(f)(2) and (4). In the case of un-
used foreign taxes allocable to dividends
from a noncontrolled section 902 corpo-
ration with respect to which the taxpayer
was no longer a domestic shareholder (as
defined in §1.902–1(a)) as of the first day
of such taxable year, such taxes shall be
allocated among the taxpayer’s separate
categories in the same percentages as the
earnings in the noncontrolled section 902
corporation’s non-look-through pool or
pre-1987 accumulated profits would have
been assigned had they been distributed
and eligible for look-through treatment
in the last taxable year in which the tax-
payer was a domestic shareholder in such
corporation. The unused foreign taxes
that are carried forward shall be treated as
allocable to general limitation income to
the extent that such taxes would otherwise
have been allocable to passive income,
either on a look-through basis or as a re-
sult of inadequate substantiation under the
rules of §1.904–7(f)(4).
(2)Carryback of unused foreign tax.
The rules of this paragraph (h)(2) apply to
any unused foreign taxes that were paid or
accrued or deemed paid under section 902
with respect to a dividend from a noncon-
trolled section 902 corporation paid in a
taxable year of the noncontrolled section
902 corporation ending on or after April
20, 2009, which dividends were eligible
for look-through treatment. See 26 CFR
§1.904–2T(h)(2) (revised as of April 1,
2009) for rules applicable to such unused
foreign taxes with respect to a dividend
from a noncontrolled section 902 corpora-
tion paid in a taxable year of the noncon-
trolled section 902 corporation beginning
after December 31, 2002 and ending be-
fore April 20, 2009, which dividends were
eligible for look-through treatment. To the
extent any such unused foreign taxes are
carried back to a prior taxable year of a do-
mestic shareholder, a credit for such taxes
shall be allowed only to the extent of the
excess limitation in the same separate cat-
egory or categories to which the related
look-through dividend was assigned and
not in any separate category for dividends
from noncontrolled section 902 corpora-
tions.
*****
July 6, 2009122009–27 I.R.B.

Par. 10. Section 1.904–2T is amended
by revising paragraphs (a), (b), (c), (d), (e),
(f), (g), and (h) to read as follows:
§1.904–2T Carryback and carryover of
unused foreign tax (temporary).
(a)through(h)[Reserved].Forfurther
guidance, see §1.904–2(a) through (h).
*****
Par. 11. Section 1.904–4 is amended as
follows:
1. Remove parargraph (c)(2)(i).
2. Redesignate paragraphs (c)(2)(ii)(A)
and (c)(2)(ii)(B) as paragraphs (c)(2)(i)
and (c)(2)(ii), respectively.
3.Remove the language
“§1.904–6(a)(iii)” from the second
sentence in newly-designated para-
graph (c)(2)(i) and add the language
“§1.904–6(a)(1)(iii)” in its place.
4. Remove the language “paragraph
(c)(2)(ii)(B)” from the last sentence in
newly-designated paragraph (c)(2)(i) and
add the language “paragraph (c)(2)(ii)” in
its place.
5. Remove the language “paragraph
(c)(2)(ii)(A)” from the first sentence in
newly-designated paragraph (c)(2)(ii) and
add the language “paragraph (c)(2)(i)” in
its place.
6. Revise paragraphs (c)(3) and (c)(4)
introductory text.
7. Add paragraph (n).
The revisions and addition read as fol-
lows:
§1.904–4 Separate application of section
904 with respect to certain categories of
income.
*****
(c) * * *
(3)Amounts received or accrued by
United States persons. Except as other-
wise provided in paragraph (c)(5) of this
section, all passive income received by a
United States person shall be subject to
the rules of this paragraph (c)(3). How-
ever, subpart F inclusions that are passive
income, dividends from a controlled for-
eign corporation or noncontrolled section
902 corporation that are passive income,
and income that is earned by a United
States person through a foreign QBU that
is passive income shall be subject to the
rules of this paragraph only to the ex-
tent provided in paragraph (c)(4) of this
section. For purposes of this section, a
foreign QBU is a qualified business unit
(as defined in section 989(a)), other than
a controlled foreign corporation or non-
controlled section 902 corporation, that
has its principal place of business outside
the United States. These rules shall apply
whether the income is received from a
controlled foreign corporation of which
the United States person is a United States
shareholder, from a noncontrolled sec-
tion 902 corporation of which the United
States person is a domestic corporation
meeting the stock ownership requirements
of section 902(a), or from any other per-
son. For purposes of determining whether
passive income is high-taxed income, the
following rules apply:
(i) All passive income received during
the taxable year that is subject to a with-
holding tax of fifteen percent or greater
shall be treated as one item of income.
(ii) All passive income received during
the taxable year that is subject to a with-
holding tax of less than fifteen percent (but
greater than zero) shall be treated as one
item of income.
(iii) All passive income received during
the taxable year thatis subject to no with-
holding tax or other foreign tax shall be
treated as one item of income.
(iv) All passive income received dur-
ing the taxable year that is subject to no
withholding tax but is subject to a foreign
tax other than a withholding tax shall be
treated as one item of income.
(4)Dividends and inclusions from con-
trolled foreign corporations, dividends
from noncontrolled section 902 corpo-
rations, and income of foreign QBUs.
Except as provided in paragraph (c)(5) of
this section, all dividends and all amounts
included in gross income of a United
States shareholder under section 951(a)(1)
with respect to the foreign corporation
that (after application of the look-through
rules of section 904(d)(3) and §1.904–5)
are attributable to passive income re-
ceived or accrued by a controlled foreign
corporation, all dividends from a non-
controlled section 902 corporation that
are received or accrued by a domestic
corporate shareholder meeting the stock
ownership requirements of section 902(a)
that (after application of the look-through
rules of section 904(d)(4) and §1.904–5)
are treated as passive income, and all
amounts of passive income received or
accrued by a United States person through
a foreign QBU shall be subject to the
rules of this paragraph (c)(4). This para-
graph (c)(4) shall be applied separately
to dividends and inclusions with respect
to each controlled foreign corporation
of which the taxpayer is a United States
shareholder and to dividends with respect
to each noncontrolled section 902 corpo-
ration of which the taxpayer is a domestic
corporate shareholder meeting the stock
ownership requirements of section 902(a).
This paragraph (c)(4) also shall be ap-
plied separately to income attributable to
each foreign QBU of a controlled foreign
corporation, noncontrolled section 902
corporation, or any other look-through en-
tity as defined in §1.904–5(i), except that
if the entity subject to the look-through
rules is a United States person, then this
paragraph (c)(4) shall be applied sepa-
rately only to each foreign QBU of that
United States person.
*****
(n)Effective/applicability dates.For
purposes of determining whether passive
income is high-taxed income, the group-
ing rules of paragraphs (c)(3) and (4) of
this section apply in taxable years end-
ing on or after April 20, 2009. See 26
CFR §1.904–4T(c)(3) and (4) (revised
as of April 1, 2009) for grouping rules
applicable to taxable years beginning
after December 31, 2002, and ending be-
fore April 20, 2009. For corresponding
rules applicable to taxable years begin-
ning before January 1, 2003, see 26 CFR
§1.904–4(c)(2)(i) (revised as of April 1,
2006).
Par. 12. Section 1.904–4T is amended
by revising paragraphs (c), (d), (e), (f), (g),
(h)(1), and (h)(2) to read as follows:
§1.904–4T Separate application of section
904 with respect to certain categories of
income (temporary).
*****
(c) through (h)(2) [Reserved]. For fur-
ther guidance, see §1.904–4(c) through
(h)(2).
*****
Par. 13. Section 1.904–5 is amended by
revising paragraphs (a) introductory text,
(a)(1), (a)(4), (b), (c)(2)(iii), (c)(4)(iii),
(i)(1), (i)(3), (i)(4), (i)(5)Examples 4and
2009–27 I.R.B.13July 6, 2009

5, (m)(1), (m)(2)(ii), (m)(4)(i), (m)(5)(i),
(n), and (o)(2) to read as follows:
§1.904–5 Look-through rules as applied
to controlled foreign corporations and
other entities.
(a)Definitions. For purposes of section
904(d)(3) and (4) and the regulations un-
der section 904, the following definitions
apply:
(1) The termseparate categorymeans,
as the context requires, any category of
income described in section 904(d)(1)(A)
and (B) (or section 904(d)(1)(A), (B),
(C), (D), (F), (G), (H), or (I) for taxable
years beginning before January 1, 2007)
and in §1.904–4T(b) (or §1.904–4(e) for
taxable years beginning before January 1,
2007)), any category of income described
in §1.904–4(m), or any category of earn-
ings and profits to which income described
in such provisions is attributable.
*****
(4) The termnoncontrolled section 902
corporationmeans any foreign corpora-
tion with respect to which the taxpayer
meets the stock ownership requirements
of section 902(a), or, with respect to a
lower-tier foreign corporation, the tax-
payer meets the requirements of section
902(b). Except as provided in section 902
and the regulations under that section and
paragraphs (i)(3) and (i)(4) of this section,
a controlled foreign corporation shall not
be treated as a noncontrolled section 902
corporation with respect to any distribu-
tions out of its earnings and profits for
periods during which it was a controlled
foreign corporation. In the case of a part-
nership owning a foreign corporation, the
determination of whether a taxpayer meets
the ownership requirements of section
902(a) or (b) will be made with respect
to the taxpayer’s indirect ownership, and
not the partnership’s direct ownership,
in the foreign corporation. See section
902(c)(7).
(b)In general. Except as otherwise
provided in section 904(d)(3) and (4) and
this section, dividends, interest, rents, and
royalties received or accrued by a taxpayer
from a controlled foreign corporation in
which the taxpayer is a United States
shareholder shall be treated as general cat-
egory income. See paragraph (c)(4)(iii) of
this section for the treatment of dividends
received by a domestic corporation from a
noncontrolled section 902 corporation in
which the domestic corporation meets the
stock ownership requirements of section
902(a).
(c) * * *
(2) * * *
(iii)Allocating and apportioning ex-
penses of a noncontrolled section 902
corporation. Expenses of a noncontrolled
section 902 corporation shall be allocated
and apportioned in the same manner as ex-
penses of a controlled foreign corporation
under paragraph (c)(2)(ii) of this section,
except that the related person interest rule
of paragraphs (c)(2)(ii)(C) and (D) of this
section shall not apply.
*****
(4) * * *
(iii)Look-through rule for dividends
from noncontrolled section 902 corpora-
tions. Except as otherwise provided in this
paragraph (c)(4)(iii), any dividend that is
distributed by a noncontrolled section 902
corporation and received or accrued by a
domestic corporation that meets the stock
ownership requirements of section 902(a)
shall be treated as income in a separate
categoryinproportiontotheratioofthe
portion of earnings and profits attribut-
able to income in such category to the
total amount of earnings and profits of the
noncontrolled section 902 corporation. A
dividend distributed by a noncontrolled
section 902 corporation shall be treated as
passive income if the Commissioner de-
termines that the look-through characteri-
zation of such dividend cannot reasonably
be determined based on the available in-
formation, or if such dividend is received
or accrued by a shareholder that is nei-
ther a domestic corporation meeting the
stock ownership requirements of section
902(a) nor a foreign corporation meet-
ing the requirements of section 902(b).
See paragraph (i)(4) of this section. See
§1.904–7 for transition rules concerning
the treatment of undistributed earnings
(or a deficit) of a noncontrolled section
902 corporation thatwere accumulated in
taxable years beginning before January 1,
2003.
*****
(i)Application of look-through rules to
related entities—(1)In general. Except as
provided in paragraphs (i)(2), (3), and (4)
of this section, the principles of this section
shall apply to distributions and payments
that are subject to the look-through rules
of section 904(d)(3) and this section from
a controlled foreign corporation or other
entity otherwise entitled to look-through
treatment (a “look-through entity”) under
this section to a related look-through en-
tity. A noncontrolled section 902 corpo-
ration shall be considered a look-through
entity only to the extent provided in para-
graph (i)(4) of this section. Two look-
through entities shall be considered to be
related to each other if one owns, directly
or indirectly, stock possessing more than
50 percent of the total voting power of all
classes of voting stock of the other en-
tity or more than 50 percent of the total
value of such entity. In addition, two look-
through entities are related if the same
United States shareholders own, directly or
indirectly, stock possessing more than 50
percent of the total voting power of all vot-
ing classes of stock (in the case of a corpo-
ration) or more than 50 percent of the total
value of each look-through entity. In the
case of a corporation, value shall be deter-
mined by taking into account all classes of
stock. In the case of a partnership, value
shall be determined under the rules in para-
graph (h)(4) of this section. For purposes
of this section, indirect ownership shall be
determined under section 318 and the reg-
ulations under that section.
*****
(3)Special rule for dividends between
controlled foreign corporations.Solely
for purposes of dividend payments be-
tween controlled foreign corporations, two
controlled foreign corporations shall be
considered related look-through entities if
the same United States shareholder owns,
directly or indirectly, at least 10 percent
of the total voting power of all classes
of stock of each foreign corporation. If
two controlled foreign corporations are
not considered related look-through enti-
ties for purposes of this section because
a United States shareholder does not sat-
isfy the ownership requirement set forth
in this paragraph (i)(3), the dividend
payment will be characterized under the
look-through rules of section 904(d)(4)
and this section if the requirements set
forth in paragraph (i)(4) of this section are
satisfied.
(4)Payor and recipient of dividend
are members of the same qualified group.
Solely for purposes of dividend payments
July 6, 2009142009–27 I.R.B.

in taxable years beginning after Decem-
ber 31, 2002, between controlled for-
eign corporations, noncontrolled section
902 corporations, or a controlled foreign
corporation and a noncontrolled section
902 corporation, the payor and recipient
corporations shall be considered related
look-through entities if the corporations
are members of the same qualified group
asdefinedinsection902(b)(2)andthere-
cipient corporation iseligible to compute
foreign taxes deemed paid with respect to
the dividend under section 902(b)(1).
(5) * * *
Example 4. P, a domestic corporation, owns all
of the voting stock of S, a controlled foreign corpora-
tion. S owns 5 percent of the voting stock of T, a con-
trolled foreign corporation. The remaining 95 percent
of the stock of T is owned by P. In 2006, T pays a
$50 dividend to S and a $950 dividend to P. The div-
idend to S is not eligible for look-through treatment
under paragraph (i)(4) of this section, and S is not el-
igible to compute an amount of foreign taxes deemed
paid with respect to the dividend from T, because S
and T are not members of the same qualified group
(S owns less than 10 percent of the voting stock of
T). See section 902(b) and §1.902–1(a)(3). However,
the dividend is eligible for look-through treatment un-
der paragraph (i)(3) of this section because P owns at
least 10 percent of the voting power of all classes of
stock of both S and T. The dividend is subpart F in-
come of S that is taxable to P.
Example 5. P, a domestic corporation, owns 50
percent of the voting stock of S, a controlled foreign
corporation. S owns 10 percent of the voting stock
of T, a controlled foreign corporation. The remain-
ing50percentofthestockofSandtheremaining90
percent of the stock of T are owned, respectively, by
X and Y. X and Y are each United States sharehold-
ers of T but are not related to P, S, or each other. In
2006, T pays a $100 dividend to S. The dividend is not
eligible for look-through treatment under paragraph
(i)(3) of this section because no United States share-
holder owns at least 10 percent of the voting power
of all classes of stock of both S and T (P and X each
own only 5 percent of T). However, the dividend is
eligible for look-through treatment under paragraph
(i)(4) of this section, and S is eligible to compute an
amount of foreign taxes deemed paid with respect to
the dividend from T, because S and T are members
of the same qualified group. See section 902(b) and
§1.902–1(a)(3). The dividend is subpart F income of
S that is taxable to P and X.
*****
(m)Application of section 904(h)—(1)
In general. This paragraph (m) applies to
certain amounts derived from controlled
foreign corporations and noncontrolled
section 902 corporations that are treated
as United States-owned foreign corpora-
tions as defined in section 904(h)(6). For
purposes of determining the portion of
an interest payment that is allocable to
income earned or accrued by a controlled
foreign corporation or noncontrolled sec-
tion 902 corporation from sources within
the United States under section 904(h)(3),
the rules in paragraph (m)(2) of this section
apply. For purposes of determining the
portion of a dividend (or amount treated as
a dividend, including amounts described
in section 951(a)(1)(B)) paid or accrued
by a controlled foreign corporation or non-
controlled section 902 corporation that is
treated as from sources within the United
States under section 904(h)(4), the rules
in paragraph (m)(4) of this section apply.
For purposes of determining the portion
of an amount included in gross income
under section 951(a)(1)(A) or 1293 that
is attributable to income of the controlled
foreign corporation or noncontrolled sec-
tion 902 corporation from sources within
the United States under section 904(h)(2),
the rules in paragraph (m)(5) of this sec-
tion apply. In order to determine whether
section 904(h) applies, section 904(h)(5)
(exception if a United States-owned for-
eign corporation has ade minimisamount
of United States source income) shall be
applied to the total amount of earnings and
profits of a controlled foreign corporation
or noncontrolled section 902 corporation
for a taxable year without regard to the
characterization of those earnings under
section 904(d).
(2) * * *
(ii)Interest payments from noncon-
trolled section 902 corporations.Ifinter-
est is received or accrued by a shareholder
from a noncontrolled section 902 corpora-
tion (where the shareholder is a domestic
corporation that meets the stock ownership
requirements of section 902(a)), the rules
of paragraph (m)(2)(i) of this section apply
in determining the portion of the interest
payment that is from sources within the
United States, except that the related party
interest rules of paragraph (c)(2)(ii)(C) of
this section shall not apply.
*****
(4)Treatment of dividend pay-
ments—(i)Rule. Any dividend or dis-
tribution treated as a dividend under this
section (including an amount included in
gross income under section 951(a)(1)(B))
that is received or accrued by a United
States shareholder from a controlled for-
eign corporation, or any dividend that
is received or accrued by a domestic
corporate shareholder meeting the stock
ownership requirements of section 902(a)
from a noncontrolled section 902 corpo-
ration, shall be treated as income in a
separate category derived from sources
within the United States in proportion
to the ratio of the portion of the earn-
ings and profits of the controlled foreign
corporation or noncontrolled section 902
corporation in the corresponding separate
category from United States sources to
the total amount of earnings and profits
of the controlled foreign corporation or
noncontrolled section 902 corporation in
that separate category.
*****
(5)Treatment of inclusions under sec-
tions 951(a)(1)(A) and 1293—(i)Rule.
Any amount included in the gross income
of a United States shareholder of a con-
trolled foreign corporation under section
951(a)(1)(A) or in the gross income of
domestic corporate shareholders that meet
the stock ownership requirements of sec-
tion 902(a) with respect to a noncontrolled
section 902 corporation that is a qualified
electing fund under section 1293 shall be
treated as income subject to a separate
limitation that is derived from sources
within the United States to the extent such
amount is attributable to income of the
controlled foreign corporation or qualified
electing fund, respectively, in the corre-
sponding category of income from sources
within the United States. In order to de-
termine a controlled foreign corporation’s
taxable income and earnings and profits
from sources within the United States in
each separate category, the principles of
paragraph (m)(4)(ii) of this section shall
apply. In order to determine a qualified
electing fund’s earnings and profits from
sources within the United States in each
separate category, the principles of para-
graph (m)(4)(ii) of this section shall apply,
except that the related person interest rule
of paragraph (m)(2) of this section shall
not apply.
*****
(n)Order of application of section
904(d) and (h). In order to apply the rules
of this section, section 904(d)(1) shall
first be applied to the controlled foreign
corporation or noncontrolled section 902
corporation to determine the amount of in-
come and earnings and profits derived by
the controlled foreign corporation or non-
controlled section902 corporation in each
2009–27 I.R.B.15July 6, 2009

separate category. The income and earn-
ings and profits in each separate category
that are from United States sources shall
then be determined. Section 904(d)(3),
(d)(4), and (h), and this section shall then
be applied for purposes of characterizing
and sourcing income received, accrued, or
included by a United States shareholder
in the controlled foreign corporation or a
domestic corporate shareholder that meets
the stock ownership requirements of sec-
tion 902(a) with respect to a noncontrolled
section 902 corporation that is attributable
or allocable to income or earnings and
profits of the foreign corporation.
(o) * * *
(2)Rules for noncontrolled section
902 corporations. Paragraphs (a), (a)(1),
(a)(4), (b), (c)(2)(iii), (c)(4)(iii), (i)(1),
(i)(3), (i)(4), (i)(5),Examples 4and5,
(m)(1), (m)(2)(ii), (m)(4)(i), (m)(5)(i), and
(n) of this section apply to distributions
from a noncontrolled section 902 corpo-
ration that are paid in taxable years of
the noncontrolled section 902 corporation
ending on or after April 20, 2009. See
26 CFR §1.904–5T(a), (a)(1), (a)(4), (b),
(c)(2)(iii), (c)(4)(iii), (i)(1), (i)(3), (i)(4),
(i)(5),Examples 4and5,and26CFR
§1.904–7T(f)(9) (revised as of April 1,
2009) for rules applicable to distributions
from a noncontrolled section 902 corpo-
ration that are paid in taxable years of
the noncontrolled section 902 corporation
beginning after December 31, 2002, and
ending before April 20, 2009. See 26 CFR
§1.904–5T(m)(1), (m)(2)(ii), (m)(4)(i),
and (n) (revised as of April 1, 2009) for
rules applicable to distributions from a
noncontrolled section 902 corporation
paid in taxable years of such corporation
beginning after April 25, 2006, and ending
before April 20, 2009. For corresponding
rules applicable to taxable years begin-
ning before January 1, 2003, see 26 CFR
§1.904–5 (revised as of April 1, 2006).
Par. 14. Section 1.904–5T is amended
by revising paragraphs (a), (b), (c), (d), (e),
(f), (g), (h)(1), (h)(2), (i), (j), (k), (l), (m),
(n), (o)(1), and (o)(2) to read as follows:
§1.904–5T Look-through rules as applied
to controlled foreign corporations and
other entities (temporary).
(a) through (h)(2) [Reserved]. For fur-
ther guidance, see §1.904–5(a) through
(h)(2).
*****
(i) through (o)(2). [Reserved]. For
further guidance, see §1.904–5(i) through
(o)(2).
*****
Par. 15. Section 1.904–7 is amended by
revising paragraph (f) to read as follows:
§1.904–7 Transition rules.
*****
(f)Treatment of non-look-through pools
of a noncontrolled section 902 corpora-
tion or a controlled foreign corporation
in post-2002 taxable years—(1)Defini-
tion of non-look-through pools.Theterm
non-look-through poolsmeans the pools
of post-1986 undistributed earnings (as
defined in §1.902–1(a)(9)) that were ac-
cumulated, and post-1986 foreign income
taxes (as defined in §1.902–1(a)(8)) paid,
accrued, or deemed paid, in and after the
first taxable year in which the foreign
corporation had a domestic shareholder
(as defined in §1.902–1(a)(1)) but be-
fore any such shareholder was eligible
for look-through treatment with respect to
dividends from the foreign corporation.
(2)Treatment of non-look-through
pools of a noncontrolled section 902 cor-
poration. Any undistributed earnings
in the non-look-through pool that were
accumulated in taxable years beginning
before January 1, 2003, by a noncon-
trolled section 902 corporation as of the
last day of the corporation’s last taxable
year beginning before January 1, 2003,
shall be treated in taxable years beginning
after December 31, 2002, as if they were
accumulated during aperiod when a div-
idend paid by the noncontrolled section
902 corporation to a domestic shareholder
would have been eligible for look-through
treatment under section 904(d)(4) and
§1.904–5. Post-1986 foreign income taxes
paid, accrued or deemed paid with re-
spect to such earnings shall be treated
as if they were paid, accrued or deemed
paid during a period when the related
earnings were eligible for look-through
treatment. Any such earnings and taxes
in the non-look-through pools shall con-
stitute the opening balance of the non-
controlled section 902corporation’s pools
of post-1986 undistributed earnings and
post-1986 foreign income taxes on the
first day of the foreign corporation’s first
taxable year beginning after December
31, 2002, in accordance with the rules of
paragraph (f)(4) of this section.
(3)Treatment of non-look-through
pools of a controlled foreign corporation.
A controlled foreign corporation may
have non-look-through pools of post-1986
undistributed earnings and post-1986 for-
eign income taxes that were accumulated
and paid in a taxable year beginning be-
fore January 1, 2003, in which it was a
noncontrolled section 902 corporation.
Any such undistributed earnings in the
non-look-through pool as of the last day
of the controlled foreign corporation’s last
taxable year beginning before January 1,
2003, shall be treated in taxable years
beginning on or after January 1, 2003, as
if they were accumulated during a period
when a dividend paid by the controlled
foreign corporation out of such earnings,
or an amount included in the gross in-
come of a United States shareholder under
section 951 that is attributable to such
earnings, would have been eligible for
look-through treatment. Any post-1986
foreign income taxes paid, accrued, or
deemed paid with respect to such earnings
shall be treated in taxable years beginning
on or after January 1, 2003, as if they were
paid, accrued, or deemed paid during a
period when a dividend or inclusion out
of such earnings would have been eligi-
ble for look-through treatment. Any such
undistributed earnings and taxes in the
non-look-through pools shall be added to
the pools of post-1986 undistributed earn-
ings and post-1986 foreign income taxes
of the controlled foreign corporation in the
appropriate separatecategories on the first
day of the controlled foreign corporation’s
first taxable year beginning after Decem-
ber 31, 2002, in accordance with the rules
of paragraph (f)(4) of this section. Similar
rules shall apply to characterize any previ-
ously-taxed earnings and profits described
in section 959(c)(1)(A) that are attribut-
able to earnings in the non-look-through
pool.
(4)Substantiation of look-through
character of undistributed earnings and
taxes in a non-look-through pool—(i)Re-
construction of earnings and taxes pools.
In order to substantiate the look-through
characterization of undistributed earnings
and taxes in a non-look-through pool under
section 904(d)(4) and §1.904–5, the tax-
payer shall make a reasonable, good-faith
effort to reconstruct the non-look-through
July 6, 2009162009–27 I.R.B.

pools of post-1986 undistributed earn-
ings and post-1986 foreign income taxes
(and previously-taxed earnings and prof-
its, if any) on a look-through basis for
each year in the non-look-through period,
beginning with the first taxable year in
which post-1986 undistributed earnings
were accumulated in the non-look-through
pool. Reconstruction shall be based on
reasonably available books and records
and other relevant information, and it
must account for earnings distributed and
taxes deemed paid in these years as if
they were distributed and deemed paid
pro rata from the amounts that were added
to the non-look-through pools during the
non-look-through period.
(ii)Safe harbor method. A taxpayer
that was eligible for look-through treat-
ment with respect to a distribution from the
foreign corporation in the taxpayer’s first
taxable year ending after the first day of the
foreign corporation’s first taxable year be-
ginning after December 31, 2002, may al-
locate the undistributed earnings and taxes
in the non-look-through pools to the for-
eign corporation’s look-through pools of
post-1986 undistributed earnings and post-
1986 foreign income taxes in other sepa-
rate categories on the first day of the for-
eign corporation’s first taxable year begin-
ning after December 31, 2002, in the same
percentages as the taxpayer properly char-
acterizes the stock of the foreign corpora-
tion in the separate categories for purposes
of apportioning the taxpayer’s interest ex-
pense in its first taxable year ending after
the first day of the foreign corporation’s
first taxable year beginning after Decem-
ber 31, 2002, under §1.861–12T(c)(3) or
§1.861–12(c)(4), as the case may be. If the
modified gross income method described
in §1.861–9T(j) is used to apportion inter-
est expense of the foreign corporation in
its first taxable year beginning after De-
cember 31, 2002, the taxpayer must allo-
cate the undistributed earnings and taxes
in the non-look-through pools to the for-
eign corporation’s look-through pools of
post-1986 undistributed earnings and post-
1986 foreign income taxes based on an av-
erage of the foreign corporation’s modified
gross income ratios for the foreign corpo-
ration’s taxable years beginning in 2003
and 2004. A taxpayer may also use the safe
harbor method described in this paragraph
(f)(4)(ii) to allocate to separate categories
any previously-taxed earnings and profits
described in section 959(c)(1)(A) that are
attributable to the non-look-through pool.
A taxpayer may choose to use the safe
harbor method on either a timely filed or
amended tax return or during an audit.
However, a taxpayer that uses the safe har-
bor method on an amended return or in
the course of an audit must make appropri-
ate adjustments to eliminate any duplicate
benefits arising from application of the
safe harbor method to taxable years that
are not open for assessment. A taxpayer’s
choice to use the safe harbor method is evi-
denced by employing the method. The tax-
payer need not file any separate statement.
(iii)Inadequate substantiation.Ifa
taxpayer does not use, or is ineligible to
use, the safe harbor method described in
paragraph (f)(4)(ii) of this section and
the Commissioner determines that the
look-through characterization of earnings
and taxes in the non-look-through pools
cannot reasonably be determined based
on the available information, the Com-
missioner shall allocate the undistributed
earnings and taxes in the non-look-through
pools to the foreign corporation’s passive
category.
(iv)Examples. The following examples
illustrate the application of this paragraph
(f)(4):
Example 1. P, a domestic corporation, has owned
50 percent of the voting stock of S, a foreign corpo-
ration, at all times since January 1, 1987, and S has
been a noncontrolled section 902 corporation with re-
spect to P since that date. P and S use the calen-
dar year as their U.S. taxable year. The first year in
which post-1986 undistributed earnings were accu-
mulated in the non-look-through pool of S was 1987.
As of December 31, 2002, S had 200u of post-1986
undistributed earnings and $100 of post-1986 for-
eign income taxes in its non-look-through pools. P
does not use the safe harbor method under paragraph
(f)(4)(ii) of this section to allocate the earnings and
taxes in the non-look-through pools to S’s other sep-
arate categories and does not attempt to substanti-
ate the look-through characterization of S’s non-look-
through pools. The Commissioner, however, reason-
ably determines, based on information used to char-
acterize S’s stock for purposes of apportioning P’s in-
terest expense in P’s 2003 and 2004 taxable years,
that 100u of the earnings and all $100 of the taxes
in the non-look-through pools are properly assigned
on a look-through basis to the general limitation cat-
egory, and 100u of earnings and no taxes are prop-
erly assigned on a look-through basis to the passive
category. Therefore, in accordance with the Commis-
sioner’s look-through characterization of the earnings
and taxes in S’s non-look-through pools, on January
1, 2003, S has 100u of post-1986 undistributed earn-
ings and $100 of post-1986 foreign income taxes in
the general limitation category and 100u of post-1986
undistributed earnings and no post-1986 foreign in-
come taxes in the passive category.
Example 2. ThefactsarethesameasinExam-
ple 1, except that the Commissioner cannot reason-
ably determine, based on the available information,
the proper look-through characterization of the 200u
of undistributed earnings and $100 of taxes in S’s
non-look-through pools. Accordingly, the Commis-
sioner will assign such earnings and taxes to the pas-
sive category, so that as of January 1, 2003, S has
200u of post-1986 undistributed earnings and $100
of post-1986 foreign income taxes in the passive cat-
egory, and the Commissioner will treat S as a passive
category asset for purposes of apportioning P’s inter-
est expense.
(5)Treatment of a deficit accumulated
in a non-look-through pool.Anydeficit
in the non-look-through pool of a non-
controlled section902 corporation or a
controlled foreign corporation as of the
end of its last taxable year beginning be-
fore January 1, 2003, shall be treated in
taxable years beginning after December
31, 2002, as if the deficit had been ac-
cumulated during a period in which a
dividend paid by the foreign corporation
would have been eligible for look-through
treatment. In the case of a noncontrolled
section 902 corporation, the deficit and
taxes, if any, in the non-look-through pools
shall constitute the opening balance of the
look-through pools of post-1986 undis-
tributed earnings and post-1986 foreign
income taxes of the noncontrolled section
902 corporation in the appropriate sepa-
rate categories on the first day of its first
taxable year beginning after December 31,
2002. In the case of a controlled foreign
corporation, the deficit and taxes, if any,
in the non-look-through pools shall be
added to the balance of the look-through
pools of post-1986 undistributed earnings
and post-1986 foreign income taxes of
the controlled foreign corporation in the
appropriate separatecategories on the first
day of its first taxable year beginning after
December 31, 2002. The taxpayer must
substantiate the look-through characteriza-
tion of the deficit and taxes in accordance
with the rules of paragraph (f)(4) of this
section. If a taxpayer does not use the
safe harbor method described in paragraph
(f)(4)(ii) of this section and the Commis-
sioner determines that the look-through
characterization of the deficit and taxes
cannot reasonably be determined based on
the available information, the Commis-
sioner shall allocate the deficit and taxes,
if any, in the non-look-through pools to the
foreign corporation’s passive category. If,
2009–27 I.R.B.17July 6, 2009

as of the end of a taxable year beginning
after December 31, 2002, in which it pays
a dividend, the foreign corporation has
zero or a deficit in post-1986 undistributed
earnings (taking into account any earnings
or a deficit accumulated in taxable years
beginning before January 1, 2003), the
deficit in post-1986 undistributed earnings
shall be carried back to reduce pre-1987
accumulated profits, if any, on a last-in
first-out basis. See §1.902–2(a)(1). If, as
of the end of a taxable year beginning after
December 31, 2002, in which the foreign
corporation pays a dividend out of current
earnings and profits, it has zero or a deficit
in post-1986 undistributed earnings (tak-
ing into account any earnings or a deficit
accumulated in taxable years beginning
before January 1, 2003), and the sum of
current plus accumulated earnings and
profits is zero or less than zero, no foreign
taxes shall be deemed paid with respect to
the dividend. See §1.902–1(b)(4).
(6)Treatment of pre-1987 accumulated
profits. Any pre-1987 accumulated prof-
its (as defined in §1.902–1(a)(10)) of a
controlled foreign corporation or noncon-
trolled section 902 corporation shall be
treated in taxable years beginning after De-
cember 31, 2002, as if they were accumu-
lated during a period in which a dividend
paid by the foreign corporation would have
been eligible for look-through treatment.
Any pre-1987 foreign income taxes (as
defined in §1.902–1(a)(10)(iii)) shall be
treated as if they were paid, accrued or
deemed paid during a year when a div-
idend out of the related pre-1987 accu-
mulated profits would have been eligible
for look-through treatment. The taxpayer
must substantiate the look-through char-
acterization of the pre-1987 accumulated
profits and pre-1987 foreign income taxes
in accordance with the rules of paragraph
(f)(4) of this section. If a taxpayer does not
use, or is ineligible to use, the safe harbor
method described in paragraph (f)(4)(ii) of
this section and the Commissioner deter-
mines that the look-through characteriza-
tion of the pre-1987 accumulated profits
and pre-1987 foreign income taxes can-
not reasonably be determined based on the
available information, the pre-1987 accu-
mulated profits and pre-1987 foreign in-
come taxes shall be allocated to the foreign
corporation’s passive category.
(7)Treatment of post-1986 undis-
tributed earnings or a deficit of a con-
trolled foreign corporation attributable
to dividends from a noncontrolled section
902 corporation paid in taxable years
beginning before January 1, 2003—(i)
Look-through treatment of post-1986
undistributed earnings at controlled for-
eign corporation level. Dividends paid
by a noncontrolled section 902 corpora-
tion to a controlled foreign corporation
in post-1986 taxable years of the noncon-
trolled section 902 corporation beginning
before January 1, 2003, were assigned to
a separate category for dividends from
that noncontrolled section 902 corpora-
tion. Beginning on the first day of the
controlled foreign corporation’s first tax-
able year beginning on or after the first
day of the lower-tier corporation’s first
taxable year beginning after December
31, 2002, any post-1986 undistributed
earnings, or previously-taxed earnings
and profits described in section 959(c)(1)
or (2), of the controlled foreign corpo-
rationinsuchaseparatecategoryshall
be treated as if they were accumulated
during a period when a dividend paid by
the noncontrolled section 902 corporation
would have been eligible for look-through
treatment. Any post-1986 foreign income
taxes in such a separate category shall
also be treated as if they were paid, ac-
crued or deemed paid during a period
when such a dividend would have been
eligible for look-through treatment. Any
such post-1986 undistributed earnings
and post-1986 foreign income taxes in
a separate category for dividends from
a noncontrolled section 902 corporation
shall be added to the opening balance
of the controlled foreign corporation’s
look-through pools of post-1986 undis-
tributed earnings and post-1986 foreign
income taxes in the appropriate separate
categories on the first day of the con-
trolled foreign corporation’s first taxable
year beginning on or after the first day of
the lower-tier corporation’s first taxable
year beginning after December 31, 2002.
Any section 952(c)(2) recapture account
with respect to such a separate category
shall be allocated in the same manner as
the associated post-1986 undistributed
earnings. The taxpayer must substantiate
the look-through characterization of such
earnings and taxes in accordance with the
rules of paragraph (f)(7)(iii) of this sec-
tion.
(ii)Look-through treatment of deficit in
post-1986 undistributed earnings at con-
trolled foreign corporation level. If a con-
trolled foreign corporation has a deficit in
a separate category for dividends from a
lower-tier noncontrolled section 902 cor-
poration that is a member of the controlled
foreign corporation’s qualified group as
defined in section 902(b)(2), such deficit
shall be treated in taxable years of the up-
per-tier corporation beginning on or after
the first day of the lower-tier corporation’s
first taxable year beginning after Decem-
ber 31, 2002, as if the deficit had been
accumulated during a period in which a
dividend from the lower-tier corporation
would have been eligible for look-through
treatment. Any post-1986 foreign income
taxes in the separate category for dividends
from the noncontrolled section 902 cor-
poration shall also be treated as if they
were paid, accrued or deemed paid dur-
ing a period when the dividends were el-
igible for look-through treatment. The
deficit and related post-1986 foreign in-
come taxes, if any, shall be added to the
opening balance of the controlled foreign
corporation’s look-through pools of post-
1986 undistributed earnings and post-1986
foreign income taxes in the appropriate
separate categories on the first day of the
controlled foreign corporation’s first tax-
able year beginning on or after the first day
of the lower-tier corporation’s first taxable
year beginning after December 31, 2002.
The taxpayer must substantiate the look-
through characterization of the deficit and
taxes in accordance with the rules of para-
graph (f)(7)(iii) of this section.
(iii)Substantiation required for look-
through treatment. The taxpayer must sub-
stantiate the look-through characterization
of post-1986 undistributed earnings, pre-
viously-taxed earnings and profits, or a
deficit in post-1986 undistributed earnings
in a separate category for dividends paid
by a noncontrolled section 902 corpora-
tion in taxable years beginning before Jan-
uary 1, 2003, by making a reasonable,
good-faith effort to reconstruct the earn-
ings (or deficit) and taxes in the separate
category at the level of the controlled for-
eign corporation on a look-through basis,
in accordance with the principles of para-
graph (f)(4)(i) of this section. Alterna-
tively, the taxpayer may allocate the earn-
ings (or deficit) and taxes to the controlled
foreign corporation’s look-through pools
July 6, 2009182009–27 I.R.B.

under the safe harbor method described
in paragraph (f)(4)(ii) of this section at
the level of the controlled foreign corpo-
ration. If the taxpayer uses the safe harbor
method, the earnings (or deficit) and taxes
shall be allocated tothe controlled foreign
corporation’s look-through pools in the ap-
propriate separate categories on the first
day of the controlled foreign corporation’s
first taxable year beginning on or after
the first day of the lower-tier corporation’s
first taxable year beginning after Decem-
ber 31, 2002. The allocation shall be made
in the same percentages as the controlled
foreign corporation would properly char-
acterize the stock of the lower-tier noncon-
trolled section 902 corporation in the sep-
arate categories for purposes of apportion-
ing the controlled foreign corporation’s in-
terest expense in its first taxable year end-
ing after the first day of the noncontrolled
section 902 corporation’s first taxable year
beginning after December 31, 2002. Un-
der §1.861–12T(c)(3), the apportionment
ratios properly used by the controlled for-
eign corporation arein turn based on the
apportionment ratios properly used by the
noncontrolled section 902 corporation to
apportion its interest expense in its first
taxable year beginning after December 31,
2002. In the case of a taxpayer that uses
the safe harbor method where the lower-
tier noncontrolled section 902 corporation
uses the modified gross income method
described in §1.861–9T(j) to apportion in-
terest expense for its first taxable year be-
ginning after December 31, 2002, earn-
ings (or a deficit) and taxes in the sepa-
rate category for dividends from the non-
controlled section 902corporation shall be
allocated to the look-through pools based
on the average of the noncontrolled section
902 corporation’s modified gross income
ratios for its taxable years beginning in
2003 and 2004. In the case of a controlled
foreign corporation that has in its qualified
group a chain of lower-tier noncontrolled
section 902 corporations, the safe harbor
applies first to characterize the stock of the
third-tier corporation and then to charac-
terize the stock of the second-tier corpora-
tion. Where a taxpayer uses the safe harbor
method with respect to a lower-tier non-
controlled section 902corporation with re-
spect to which the taxpayer did not meet
the requirements of section 902(a) as of
the end of the upper-tier controlled foreign
corporation’s last taxable year beginning
before January 1, 2003, the earnings (or
deficit) and taxes in the separate category
for dividends from the lower-tier corpora-
tion shall be allocated to the upper-tier cor-
poration’s look-through pools in the sep-
arate categories in the same percentages
as the stock of the lower-tier corporation
would have been characterized for pur-
poses of apportioning the upper-tier cor-
poration’s interest expense in the last year
the taxpayer met the ownership require-
ments of section 902(a) with respect to the
lower-tier corporation if the look-through
rules had applied in that year. If a taxpayer
does not use the safe harbor method de-
scribed in this paragraph (f)(7)(iii), and the
Commissioner determines that the look-
through characterization of the earnings
(or deficit) and taxes cannot reasonably be
determined based on the available infor-
mation, the Commissioner shall allocate
the earnings (or deficit) and associated for-
eign income taxes to thecontrolled foreign
corporation’s passive category.
(8)Treatment of distributions received
by an upper-tier corporation from a
lower-tier noncontrolled section 902 cor-
poration, including when the corporations
do not have the same taxable years—(i)
Rule. In the case of dividends paid by
a lower-tier noncontrolled section 902
corporation to an upper-tier corporation
where both are members of the same qual-
ified group as defined in section 902(b)(2),
the following rules apply. Dividends paid
by the lower-tier corporation in taxable
years beginning before January 1, 2003,
are assigned to a separate category for div-
idends from that corporation, regardless of
whether the corresponding taxable year of
the recipient corporation began after De-
cember 31, 2002. Post-1986 undistributed
earnings, previously-taxed earnings and
profits, and post-1986 foreign income
taxes in such a separate category shall
be treated, beginning on the first day of
the upper-tier corporation’s first taxable
year beginning on or after the first day
of the lower-tier corporation’s first tax-
able year beginning after December 31,
2002, as if they were accumulated dur-
ing a period when a dividend paid by the
lower-tier corporation would have been
eligible for look-through treatment under
section 904(d)(4) and §1.904–5. Divi-
dends paid by a lower-tier corporation in
taxable years beginning after December
31, 2002, are eligible for look-through
treatment when paid, without regard to
whether the corresponding taxable year of
the recipient upper-tier corporation began
after December 31, 2002.
(ii)Example. The following example
illustrates the application of paragraph (f)
of this section:
Example. M, a domestic corporation, has directly
owned 50 percent of the stock of foreign corporation
X, and X has directly owned 50 percent of the stock of
foreign corporation Y, at all times since X and Y were
organized on January 1, 1990. Accordingly, X and Y
are noncontrolled section 902 corporations with re-
spect to M, and X and Y are members of the same
qualified group. M and Y use the calendar year as
their U.S. taxable year, and X uses a taxable year be-
ginning on July 1. Under §1.904–4(g) and paragraph
(f)(10) of this section, a dividend paid to M by X
on January 15, 2003 (during X’s last pre-2003 tax-
able year) is not eligible for look-through treatment
in 2003. However, under §1.861–12(c)(4), M will
characterize the stock of X on a look-through basis
for purposes of interest expense apportionment in its
2003 taxable year. Under §1.904–2(h)(1), any unused
foreign taxes in M’s separate category for dividends
from X will be carried over to M’s other separate cat-
egories on a look-through basis for M’s taxable years
beginning on and after January 1, 2004. Under para-
graph (f)(2) of this section, any undistributed earn-
ings and taxes in X’s non-look-through pools will be
allocated to X’s other separate categories on July 1,
2003. Under §1.904–5(i)(4) and paragraphs (f)(8)(i)
and (f)(10) of this section, a dividend paid to X by Y
on January 15, 2003 (during Y’s first post-2002 tax-
able year) is eligible for look-through treatment when
paid, notwithstanding that it is received in a pre-2003
taxable year of X.
(9)Election to apply pre-AJCA rules to
2003 and 2004 taxable years—(i)Defini-
tion.Thetermsingle category for divi-
dends from all noncontrolled section 902
corporationsmeans the separate category
described in section 904(d)(1)(E) as in ef-
fect for taxable years beginning after De-
cember 31, 2002, and prior to its repeal by
the American Jobs Creation Act (AJCA),
Public Law 108–357, 118 Stat. 1418 (Oc-
tober 22, 2004).
(ii)Time, manner, and form of election.
A taxpayer may elect not to apply the pro-
visions of section 403 of the AJCA and
to apply the rules of this paragraph (f)(9)
to taxable years of noncontrolled section
902 corporations beginning after Decem-
ber 31, 2002, and before January 1, 2005,
without regard to whether the correspond-
ing taxable years of the taxpayer or any up-
per-tier corporation begin before or after
such dates. A taxpayer shall be eligible to
make such an election provided that—
(A) The taxpayer’s tax liability as
shownonanoriginaloramendedtaxre-
turn for each of its affected taxable years
2009–27 I.R.B.19July 6, 2009

is consistent with the rules of this para-
graph (f)(9), the guidance set forth in
Notice 2003–5, 2003–1 C.B. 294, (see
§601.601(d)(2) of this chapter), and the
principles of §1.861–12(c)(4) for each
such year for which the statute of limi-
tations does not preclude the filing of an
amended return;
(B) The taxpayer makes appropriate ad-
justments to eliminate any duplicate ben-
efits arising from the application of this
paragraph (f)(9) to taxable years that are
not open for assessment; and
(C) The taxpayer attaches a statement
to its next tax return for which the due date
(with extensions) is more than 90 days af-
ter April 25, 2006, indicating that the tax-
payer elects not to apply the provisions of
section 403 of the AJCA to taxable years of
its noncontrolled section 902 corporations
beginning in 2003 and 2004, and that the
taxpayer has filed original returns or will
file amended returns reflecting tax liabili-
ties for each affected year that satisfy the
requirements described in this paragraph
(f)(9)(ii).
(iii)Treatment of non-look-through
pools in taxable years beginning af-
ter December 31, 2004. Undistributed
earnings (or a deficit) and taxes in the
non-look-through pools of a controlled
foreign corporation or a noncontrolled
section 902 corporation as of the end of its
last taxable year beginning before January
1, 2005, shall be treated in taxable years
beginning after December 31, 2004, as
if they were accumulated and paid dur-
ing a period in which a distribution out
of earnings in the non-look-through pool
would have been eligible for look-through
treatment. Such earnings (or deficit)
and taxes shall be added to the foreign
corporation’s pools of post-1986 undis-
tributed earnings and post-1986 foreign
income taxes in the appropriate separate
categories on the first day of the foreign
corporation’s first taxable year beginning
after December 31, 2004. In accordance
with the principles of paragraph (f)(4)
of this section, the taxpayer must recon-
struct the non-look-through pools or, if the
taxpayer chooses to use the safe harbor
method, allocate the earnings and taxes
in the non-look-through pools to the for-
eign corporation’s look-through pools in
the appropriate separate categories on the
first day of the foreign corporation’s first
taxable year beginning after December 31,
2004. Under the safe harbor method, this
allocation is made in the same percentages
as the taxpayer properly characterized
the stock of the foreign corporation for
purposes of apportioning the taxpayer’s
interest expense in the taxpayer’s first
taxable year ending after the first day of
the foreign corporation’s first taxable year
beginning after December 31, 2002. See
§1.861–12T(c)(3) and §1.861–12(c)(4).
If a taxpayer does not use the safe harbor
method described in paragraph (f)(4)(ii) of
this section and the Commissioner deter-
mines that the look-through characteriza-
tion of the earnings (or deficit) and taxes
cannot reasonably be determined based on
the available information, the earnings (or
deficit) and taxes shall be allocated to the
foreign corporation’s passive category.
(iv)Carryover of unused foreign tax.
To the extent that a taxpayer has unused
foreign taxes in the single category for
dividends from all noncontrolled section
902 corporations, such taxes shall be car-
ried forward to the appropriate separate
categories in the taxpayer’s taxable years
beginning on or after the first day of the
relevant noncontrolled section 902 corpo-
ration’s first taxable year beginning after
December 31, 2004. Such unused taxes
shall be carried forward in the same man-
ner as §1.904–2(h)(1) provides that unused
foreign taxes in the separate categories
for dividends from each noncontrolled
section 902 corporation are carried over
to taxable years beginning on or after the
first day of the noncontrolled section 902
corporation’s first taxable year beginning
after December 31, 2002, in the case of a
taxpayer that does not make the election
under this paragraph (f)(9). The electing
taxpayer shall determine which noncon-
trolled section 902 corporations paid the
dividends to which the unused foreign
taxes are attributable and assign the taxes
to the appropriate separate categories as
if such dividends had been eligible for
look-through treatment when paid. Ac-
cordingly, the taxpayer must substantiate
the look-through characterization of the
unused foreign taxes in accordance with
paragraph (f)(4) of this section by recon-
structing the non-look-through pools or, if
the taxpayer uses the safe harbor method,
by allocating the unused foreign taxes
to other separate categories in the same
percentages as the taxpayer properly char-
acterized the stock of the noncontrolled
section 902 corporation for purposes of
apportioning the taxpayer’s interest ex-
pense for its first taxable year ending after
the first day of the noncontrolled section
902 corporation’s first taxable year be-
ginning after December 31, 2002. The
rule described in this paragraph (f)(9)(iv)
shall apply only to unused foreign taxes
attributable to dividends out of earnings
that were accumulated by noncontrolled
section 902 corporations in taxable years
of such corporations beginning before
January 1, 2003, because only unused
foreign taxes attributable to distributions
out of pre-2003 earnings are included in
the single category for dividends from
all noncontrolled section 902 corpora-
tions. To the extent that unused foreign
taxes carried forward to the single cate-
gory for dividends from all noncontrolled
section 902 corporations under the rules
of Notice 2003–5 were either absorbed
by low-taxed dividends paid by noncon-
trolled section 902 corporations out of the
non-look-through pool in taxable years
of such corporations beginning in 2003
or 2004, or expired unused, the amount
of taxes carried forward to the separate
categories on a look-through basis will
be smaller than the aggregate amount of
taxes initially carried forward to the single
category for dividends from all noncon-
trolled section 902 corporations. In this
case, the unused foreign taxes arising in
each taxable year shall be deemed attrib-
utable to each noncontrolled section 902
corporationinthesameratioasthediv-
idends included in the separate category
that were paid by such corporation in such
year bears to all such dividends paid by
all noncontrolled section 902 corporations
in such year. Unused foreign taxes carried
forward from the separate categories for
dividends from each noncontrolled section
902 corporation to the single category for
dividends from all noncontrolled section
902 corporations will similarly be deemed
to have been utilized on a pro rata basis.
The remaining unused foreign taxes are
then assigned to the appropriate separate
categories under the rules of paragraph
(f)(4) of this section. Unused foreign taxes
shall be treated as allocable to general
category income to the extent that such
taxes would otherwise have been allocable
to passive income (based on reconstructed
pools or the safe harbor method), or to the
extent that, under paragraph (f)(4)(iii) of
July 6, 2009202009–27 I.R.B.

this section, the Commissioner determines
that the look-through characterization can-
not reasonably be determined based on the
available information.
(v)Carryback of unused foreign tax.
To the extent that a taxpayer has unused
foreign taxes attributable to a dividend
paid by a noncontrolled section 902 cor-
poration that was eligible for look-through
treatment under section 904(d)(4) and
§1.904–5, any such unused foreign taxes
shall be carried back to prior taxable years
within the same separate category and not
to the single category for dividends from
all noncontrolled section 902 corporations
or any separate category for dividends
from a noncontrolled section 902 corpora-
tion. See Notice 2003–5 for rules relating
to the carryback of unused foreign taxes in
the single category for dividends from all
noncontrolled section 902 corporations.
(vi)Recapture of overall foreign loss or
separate limitation loss in the single cate-
gory for dividends from all noncontrolled
section 902 corporations. To the extent
that a taxpayer has a balance in a separate
limitation loss or overall foreign loss ac-
count in the single category for dividends
from all noncontrolled section 902 corpo-
rations under section 904(d)(1)(E) (prior
to its repeal by the AJCA), at the end of
the taxpayer’s last taxable year beginning
before January 1, 2005 (or a later taxable
year in which the taxpayer received a div-
idend subject to the separate limitation for
dividends from all noncontrolled section
902 corporations), the amount of such bal-
ance shall be allocated on the first day
of the taxpayer’s next taxable year to the
taxpayer’s other separate categories. The
amount of such balance that is attributable
to each noncontrolled section 902 corpo-
ration shall be allocated in the same per-
centages as the taxpayer properly charac-
terized the stock of such corporation for
purposes of apportioning the taxpayer’s in-
terest expense for its first taxable year end-
ing after the first day of such corporation’s
first taxable year beginning after Decem-
ber 31, 2002, under §1.861–12T(c)(3) or
§1.861–12(c)(4), as the case may be. To
the extent that a taxpayer has a balance in
a separate limitation loss account for the
single category for dividends from all non-
controlled section 902 corporations with
respect to another separate category, and
the separate limitation loss account would
otherwise be assigned to that other cate-
gory under this paragraph (f)(9)(vi), such
balance shall be eliminated.
(vii)Recapture of separate limitation
losses in other separate categories.Tothe
extent that a taxpayer has a balance in any
separate limitation loss account in a sep-
arate category with respect to the single
category for dividends from all noncon-
trolled section 902 corporations at the end
of the taxpayer’s last taxable year with or
within which ends the last taxable year of
the relevant noncontrolled section 902 cor-
poration beginning before January 1, 2005,
such loss shall be recaptured in subsequent
taxable years as income in the appropri-
ate separate category. The separate limi-
tation loss account shall be deemed attrib-
utable on a pro rata basis to those noncon-
trolled section 902 corporations that paid
dividends out of earnings accumulated in
taxable years beginning before January 1,
2003, in the years in which the separate
limitation loss in the other separate cate-
gory arose. The ratable portions of the sep-
arate limitation loss account shall be re-
captured as income in the taxpayer’s sep-
arate categories in the same percentages
as the taxpayer properly characterized the
stock of the relevant noncontrolled section
902 corporation for purposes of apportion-
ing the taxpayer’s interest expense in its
first taxable year ending after the first day
of such corporation’s first taxable year be-
ginning after December 31, 2002, under
§1.861–12T(c)(3) or §1.861–12(c)(4), as
the case may be. To the extent that a tax-
payer has a balance in any separate lim-
itation loss account in any separate cate-
gory that would have been recaptured as
income in that same category under this
paragraph (f)(9)(vii), such balance shall be
eliminated.
(viii)Treatment of undistributed earn-
ings in an upper-tier corporation-level sin-
gle category for dividends from lower-tier
noncontrolled section 902 corporations.
Where a controlled foreign corporation
or noncontrolled section 902 corporation
has a single category for dividends from
all noncontrolled section 902 corpora-
tions containing earnings attributable to
dividends paid by one or more lower-tier
corporations, the following rules apply.
The post-1986 undistributed earnings,
previously-taxed earnings and profits de-
scribed in section 959(c)(1) or (2), if any,
and associated post-1986 foreign income
taxes shall be allocated to the upper-tier
corporation’s other separate categories in
the same manner as earnings and taxes in a
separate category for dividends from each
noncontrolled section 902 corporation
maintained by the upper-tier corpora-
tion are allocated under paragraph (f)(7)
of this section. Accordingly, post-1986
undistributed earnings, previously-taxed
earnings and profits, if any, and post-1986
foreign income taxes in the single category
for dividends from all noncontrolled sec-
tion 902 corporations shall be treated as if
they were accumulated and paid, accrued
or deemed paid during a period when a
dividend paid by each lower-tier corpo-
ration that paid dividends included in the
single category would have been eligible
for look-through treatment. If the taxpayer
uses the safe harbor method described in
paragraph (f)(7)(iii) of this section, the
earnings and taxes shall be allocated based
on the apportionment ratios properly used
by the lower-tier corporation to apportion
its interest expense for its first taxable
year beginning after December 31, 2002.
Any section 952(c)(2) recapture account
with respect to the single category shall
be allocated in the same manner as the
associated post-1986undistributed earn-
ings. The taxpayer must substantiate the
look-through characterization of the earn-
ings and taxes in accordance with the rules
of paragraph (f)(7)(iii) of this section. If
the taxpayer does not use the safe harbor
method and the Commissioner determines
that the look-through characterization of
the earnings cannot reasonably be deter-
mined based on the available information,
the earnings and taxes shall be assigned to
the upper-tier corporation’s passive cate-
gory.
(ix)Treatment of a deficit in the single
category for dividends from lower-tier
noncontrolled section 902 corporations.
Where a controlled foreign corporation
or noncontrolled section 902 corporation
had an aggregate deficit in the single cate-
gory for dividends from all noncontrolled
section 902 corporations as of the end of
the upper-tier corporation’s last taxable
year beginning before January 1, 2005,
such deficit and the associated post-1986
foreign income taxes, if any, shall be allo-
cated to the upper-tier corporation’s other
separate categories in the same percent-
ages in which the non-look-through pools
of each lower-tier corporation to which the
deficit is attributable were assigned to such
2009–27 I.R.B.21July 6, 2009

corporation’s other separate categories in
its first taxable year beginning after De-
cember 31, 2002. If the taxpayer uses the
safe harbor method described in paragraph
(f)(7)(iii) of this section, the deficit and
taxes shall be allocated based on how the
taxpayer properly characterized the stock
of the lower-tier noncontrolled section
902 corporation for purposes of apportion-
ing the upper-tier corporation’s interest
expense for the upper-tier corporation’s
first taxable year ending after the first
day of the lower-tiercorporation’s first
taxable year beginning after December
31, 2002. The taxpayer must substanti-
ate the look-through characterization of
the deficit and taxes in accordance with
the rules of paragraph (f)(7)(iii) of this
section. If the taxpayer does not use the
safe harbor method and the Commissioner
determines that the look-through charac-
terization of the deficit cannot reasonably
be determined based on the available in-
formation, the deficit and taxes shall be
assigned to the upper-tier corporation’s
passive category.
(10)Effective/applicability dates.This
paragraph (f) shall apply to dividends from
a noncontrolled section 902 corporation
that are paid in taxable years of the non-
controlled section 902 corporation ending
on or after April 20, 2009. See 26 CFR
§1.904–7T(f) (revised as of April 1, 2009)
for rules applicable, except in the case of
a taxpayer that makes the election under
paragraph (f)(9) of that section, to divi-
dends from a noncontrolled section 902
corporation that are paid in taxable years
of the noncontrolled section 902 corpora-
tion beginning after December 31, 2002,
and ending before April 20, 2009. See
26 CFR §1.904–7T(f) (revised as of April
1, 2009) for rules applicable, in the case
of a taxpayer that makes the election un-
der paragraph (f)(9) ofthat section, to div-
idends from a noncontrolled section 902
corporation that are paid in taxable years
of the noncontrolled section 902 corpora-
tion beginning after December 31, 2004,
and ending before April 20, 2009. How-
ever, taxpayers may choose to apply para-
graph (f) of this section in its entirety in
lieu of 26 CFR §1.904–7T(f) to all divi-
dends paid in periods covered by the tem-
porary regulations, provided that appropri-
ate adjustments are made to eliminate du-
plicate benefits arising from application of
paragraph (f) to taxable years that are not
open for assessment.
Par. 16. Section 1.904–7T is amended
by revising paragraphs (a), (b), (c), (d), (e),
and (f) to read as follows:
§1.904–7T Transition rules (temporary).
(a)through(f)[Reserved]. Forfurther
guidance, see §1.904–7(a) through (f).
*****
Par. 17. Section 1.904(f)–0 is
amendedbyaddingtheentriesfor
§1.904(f)–12(g)(1), (g)(2), (g)(3), (g)(4),
and (g)(5) as follows:
§1.904(f)–0 Outline of regulation
provisions.
*****
§1.904(f)–12 Transition rules.
*****
(g) * * *
(1) Recapture of separate limitation loss
or overall foreign loss in a separate cat-
egory for dividends from a noncontrolled
section 902 corporation.
(2) Recapture of separate limitation loss
in another separate category.
(3) Exception.
(4) Examples.
(5) Effective/applicability date.
*****
Par. 18. Section 1.904(f)–12 is
amended by revising paragraph (g) to read
as follows:
§1.904(f)–12 Transition rules.
*****
(g)Recapture in years beginning after
December 31, 2002, of separate limitation
losses and overall foreign losses incurred
in years beginning before January 1, 2003,
with respect to the separate category for
dividends from a noncontrolled section
902 corporation—(1)Recapture of sepa-
rate limitation loss or overall foreign loss
in a separate category for dividends from
a noncontrolled section 902 corporation.
To the extent that a taxpayer has a balance
in any separate limitation loss or overall
foreign loss account in a separate cate-
gory for dividends from a noncontrolled
section 902 corporation under section
904(d)(1)(E) (prior to its repeal by Public
Law 108–357, 118 Stat. 1418 (October
22, 2004)) at the end of the taxpayer’s last
taxable year beginning before January 1,
2003 (or a later taxable year in which the
taxpayer received a dividend subject to a
separate limitation for dividends from that
noncontrolled section 902 corporation),
the amount of such balance shall be al-
located on the first day of the taxpayer’s
next taxable year to the taxpayer’s other
separate categories. The amount of such
balance shall be allocated in the same
percentages as the taxpayer properly char-
acterized the stock of the noncontrolled
section 902 corporation for purposes of
apportioning the taxpayer’s interest ex-
pense for its first taxable year ending
after the first day of such corporation’s
first taxable year beginning after Decem-
ber 31, 2002, under §1.861–12T(c)(3)
or §1.861–12(c)(4), as the case may be.
To the extent a taxpayer has a balance
in any separate limitation loss account in
a separate category for dividends from
a noncontrolled section 902 corporation
with respect to another separate category,
and the separate limitation loss would oth-
erwise be assigned to that other category
under this paragraph (g)(1), such balance
shall be eliminated.
(2)Recapture of separate limitation
loss in another separate category.To
the extent that a taxpayer has a balance
in any separate limitation loss account
in a separate category with respect to a
separate category for dividends from a
noncontrolled section 902 corporation
under section 904(d)(1)(E) (prior to its
repeal by Public Law 108–357, 118 Stat.
1418 (October 22, 2004)) at the end of the
taxpayer’s last taxable year with or within
which ends the last taxable year of the
noncontrolled section 902 corporation be-
ginning before January 1, 2003, such loss
shall be recaptured in subsequent taxable
years as income in the appropriate sep-
arate categories. The separate limitation
loss shall be recaptured as income in other
separate categories in the same percent-
ages as the taxpayer properly characterizes
the stock of the noncontrolled section 902
corporation for purposes of apportioning
the taxpayer’s interest expense in its first
taxable year ending after the first day of
the foreign corporation’s first taxable year
beginning after December 31, 2002, under
§1.861–12T(c)(3) or §1.861–12(c)(4), as
the case may be. To the extent a taxpayer
has a balance in a separate limitation loss
July 6, 2009222009–27 I.R.B.

account in a separatecategory that would
have been recaptured as income in that
same category under this paragraph (g)(2),
such balance shall be eliminated.
(3)Exception. Where a taxpayer for-
merly met the stock ownership require-
ments of section 902(a) with respect to a
foreign corporation, but did not meet the
requirements of section 902(a) on Decem-
ber 20, 2002 (or on the first day of the
taxpayer’s first taxable year beginning af-
ter December 31, 2002, in the case of a
transaction that was the subject of a bind-
ing contract in effect on December 20,
2002), if the taxpayer has a balance in
any separate limitation loss or overall for-
eign loss account for a separate category
for dividends from that foreign corpora-
tion under section 904(d)(1)(E) (prior to
its repeal by Public Law 108–357, 118
Stat. 1418 (October 22, 2004)) at the
end of the taxpayer’s last taxable year be-
ginning before January 1, 2003, then the
amount of such balance shall not be sub-
ject to recapture under section 904(f) and
this section. If a separate limitation loss or
overall foreign loss account for such cate-
gory is not subject to recapture under this
paragraph (g)(3), the taxpayer cannot carry
over any unused foreign taxes in such sep-
arate category to any other limitation cate-
gory. However, a taxpayer may elect to re-
capture the balances ofall separate limita-
tion loss and overall foreign loss accounts
for all separate categories for dividends
from such formerly-owned noncontrolled
section 902 corporations under the rules of
paragraphs (g)(1) and (2) of this section.
If a taxpayer so elects, it may carry over
any unused foreign taxes in these separate
categories to the appropriate separate cat-
egories as provided in §1.904–2(h).
(4)Examples. The following examples
illustrate the application of this paragraph
(g):
Example 1. X is a domestic corporation that
meets the ownership requirements of section 902(a)
with respect to Y, a foreign corporation the stock
of which X owns 50 percent. Therefore, Y is a
noncontrolled section 902 corporation with respect
to X. Both X and Y use the calendar year as their
taxable year. As of December 31, 2002, X had a
$100 balance in its separate limitation loss account
for the separate category for dividends from Y, of
which $60 offset general limitation income and $40
offset passive income. For purposes of apportioning
X’s interest expense for its 2003 taxable year, X
properly characterized the stock of Y as a multiple
category asset (80% general and 20% passive). Un-
der paragraph (g)(1) of this section, on January 1,
2003, $80 ($100 x 80/100) of the $100 balance in
the separate limitation loss account is assigned to the
general limitation category. Of this $80 balance, $32
($80 x 40/100) is with respect to the passive category,
and $48 ($80 x 60/100) is with respect to the general
limitation category and therefore is eliminated. The
remaining $20 balance ($100 x 20/100) of the $100
balance is assigned to the passive category. Of this
$20 balance, $12 ($20 x 60/100) is with respect to the
general limitation category, and $8 ($20 x 40/100) is
with respect to the passive category and therefore is
eliminated.
Example 2. The facts are the same as inExample
1, except that as of December 31, 2002, X had a $30
balance in its separate limitation loss account in the
general limitation category, and a $20 balance in its
separate limitation loss account in the passive cate-
gory, both of which offset income in the separate cat-
egory for dividends from Y. Under paragraph (g)(2)
of this section, the separate limitation loss accounts
in the general limitation and passive categories with
respect to the separate category for dividends from
Y will be recaptured on and after January 1, 2003,
from income in other separate categories, as follows.
Of the $30 balance in X’s separate limitation loss ac-
count in the general category with respect to the sepa-
rate category for dividends from Y, $6 ($30 x 20/100)
is with respect to the passive category, and $24 ($30
x 80/100) is with respect to the general limitation cat-
egory and therefore is eliminated. Of the $20 bal-
ance in X’s separate limitation loss account in the pas-
sive category with respect to the separate category for
dividends from Y, $16 ($20 x 80/100) will be recap-
tured out of general limitation income, and $4 ($20 x
20/100) would otherwise be recaptured out of passive
income and therefore is eliminated.
(5)Effective/applicability date.This
paragraph (g) applies to taxable years end-
ing on or after April 20, 2009. See 26 CFR
§1.904(f)–12T(g) (revised as of April 1,
2009) for rules applicable to taxable years
beginning after December 31, 2002, and
ending before April 20, 2009.
Par. 19. Section 1.904(f)–12T is
amended by revising paragraphs (a), (b),
(c), (d), (e), (f), and (g) to read as follows:
§1.904(f)–12T Transition rules
(temporary).
(a) through (g) [Reserved]. For further
guidance, see §1.904(f)–12(a) through (g).
*****
Par. 20. Section 1.964–1 is amended as
follows:
1. Revise paragraph (a)(1).
2. Remove the last sentence of para-
graph (a) (2).
3.Revise paragraphs (b)(1)(v),
(c)(1)(v), (c)(2), (c)(3), (c)(4), (c)(5),
(c)(6).
4. Remove and reserve (c) (8).
5. Add new paragraphs (a)(3) and (d).
6. Designate the undesignated text pre-
ceding paragraph (c)(1)(v) as paragraph
(c)(1)(vi) and revise it.
The revisions and additions read as fol-
lows:
§1.964–1 Determination of the earnings
and profits of a foreign corporation.
(a)(1)In general. For rules for deter-
mining the earnings and profits (or deficit
in earnings and profits) of a foreign corpo-
ration for taxable years beginning before
January 1, 1987, for purposes of sections
951 through 964, see 26 CFR §1.964–1(a)
(revised as of April 1, 2006). For taxable
years beginning after December 31, 1986,
except as otherwise provided in the Code
and regulations, the earnings and profits
(or deficit in earnings and profits) of a for-
eign corporation for its taxable year shall
be computed for all federal income tax pur-
poses substantially as if such corporation
were a domestic corporation by—
*****
(3)Translation into dollars. In the case
of a foreign corporation with a functional
currency other than the United States dol-
lar (dollar), see sections 986(b) and 989(b)
for rules regarding the time and manner
of translating distributions or inclusions
of the foreign corporation’s earnings and
profits into dollars.
(b) * * *
(1) * * *
(v)Foreign currency. If transactions
effected in a foreign currency other than
that in which the books of the corporation
are kept are translated into the foreign cur-
rency reflected in the books, such transla-
tion shall be made in a manner substan-
tially similar to that as prescribed in sec-
tion 988 and the regulations under that sec-
tion for the translation of foreign currency
amounts into United States dollars.
*****
(c) * * *
(1) * * *
(v)Taxable years. The period for com-
putation of taxable income and earnings
and profits known as the taxable year shall
reflect the provisions of section 441 and
the regulations under that section.
(vi)Applicable requirements. Except as
provided in paragraphs (c)(2) and (c) (3) of
this section, any requirements imposed by
2009–27 I.R.B.23July 6, 2009

the Code or applicable regulations with re-
spect to making an election or adopting or
changing a method of accounting or tax-
able year must be satisfied by or on behalf
of the foreign corporation just as though it
were a domestic corporation if such elec-
tion or such adoption or change of method
or taxable year is to be taken into account
in the computation of its earnings and prof-
its.
(2)Adoption or change of method or
taxable year. For the first taxable year of a
foreign corporation beginning after April
25, 2006, in which such foreign corpora-
tion first qualifies as a controlled foreign
corporation (as defined in section 957 or
953) or a noncontrolled section 902 corpo-
ration (as defined in section 904(d)(2)(E)),
any method of accounting or taxable
year allowable under this section may be
adopted, and any election allowable under
this section may be made, by such foreign
corporation or on its behalf notwithstand-
ing that, in previous years, its books or
financial statements were prepared on a
different basis, andnotwithstanding that
such election is required by the Code or
regulations to be made in a prior taxable
year. Any allowable methods adopted
or elections made shall be reflected in
the computation of the foreign corpora-
tion’s earnings and profits for such taxable
year, prior taxable years, and (unless
the Commissioner consents to a change)
subsequent taxable years. However, see
section 898 for the rules regarding the
taxable year of a specified foreign corpo-
ration as defined in section 898(b). Any
allowable method of accounting or elec-
tion that relates to events that first arise in
a subsequent taxable year may be adopted
or made by or on behalf of the foreign
corporation for such year. Adjustments
to the appropriate separate category (as
defined in §1.904–5(a)(1)) of earnings and
profits and income of the foreign corpo-
ration shall be required under section 481
to prevent any duplication or omission of
amounts attributable to previous years that
would otherwise result from any change
in a method of accounting. See paragraph
(c)(3) of this section for the manner in
which a method of accounting or a taxable
year may be adopted or changed on behalf
of the foreign corporation. See paragraph
(c)(4) of this section for applicable rules
if the amount of the foreign corporation’s
earnings and profitsbecame significant
for United States tax purposes before a
method of accounting or taxable year was
adopted by the foreign corporation or on
its behalf in accordance with the rules
of paragraph (c)(3) of this section. See
paragraph (c)(6) of this section for special
rules postponing the time for taking action
by or on behalf of a foreign corporation
until the amount of its earnings and profits
becomes significant for U.S. tax purposes.
See also §§1.985–5, 1.985–6, and 1.985–7
relating to adjustments to earnings and
profits of a QBU required when the QBU
changes its functional currency or begins
to use the dollar approximate separate
transactions method of accounting.
(3)Action on behalf of corporation—(i)
In general. An election shall be deemed
made, or an adoption or change in method
of accounting or taxable year deemed ef-
fectuated, on behalf of the foreign corpora-
tion only if its controlling domestic share-
holders (as defined in paragraph (c)(5) of
this section)—
(A) Satisfy for such corporation any re-
quirements imposed by the Internal Rev-
enue Code or applicable regulations with
respect to such election or such adoption
or change in method or taxable year (in-
cluding the provisions of sections 442 and
446 and the regulations under those sec-
tions, as well as any operative provisions),
such as the filing of forms, the execution
of consents, securing the permission of the
Commissioner, or maintaining books and
records in a particular manner. For pur-
poses of this paragraph (c)(3)(i)(A), the
books of the foreign corporation shall be
considered to be maintained in a particular
manner if the controlling domestic share-
holders or the foreign corporation regu-
larly keep the records and accounts re-
quired by section 964(c) and the regula-
tions under that section in that manner;
(B) File the statement described in para-
graph (c)(3)(ii) of this section, at the time
and in the manner prescribed therein; and
(C) Provide the written notice required
by paragraph (c)(3)(iii) of this section at
the time and in the manner prescribed
therein.
(ii)Statement required to be filed with
ataxreturn. The statement required by
this paragraph (c)(3)(ii) shall set forth
the name, country of organization, and
U.S. employer identification number (if
applicable) of the foreign corporation, the
name, address, stock interests, and U.S.
employer identification number of each
controlling domestic shareholder (or, if
applicable, the shareholder’s common par-
ent) approving the action, and the names,
addresses, U.S. employer identification
numbers, and stock interests of all other
domestic shareholders notified of the ac-
tion taken. Such statement shall describe
the nature of the action taken on behalf
of the foreign corporation and the taxable
year for which made, and identify a desig-
nated shareholder who retains a jointly ex-
ecuted consent confirming that such action
has been approved by all of the controlling
domestic shareholders and containing the
signature of a principal officer of each
such shareholder (or its common parent).
Each controlling domestic shareholder (or
its common parent) shall file the statement
with, and on or before the due date (in-
cluding extensions) of, its own tax return
(or information return, if applicable) for
its taxable year with or within which ends
the taxable year of the foreign corporation
for which the election is made or for which
the method of accounting or taxable year
is adopted or changed. In the case of a
controlling domestic shareholder that is
the sole shareholder of a controlled foreign
corporation, no separate statement need be
filed if the information described in this
paragraph (c)(3)(ii) is included on Form
5471 and Form 3115 or 1128, as appli-
cable, filed with respect to the controlled
foreign corporation with the shareholder’s
return for such taxable year.
(iii)Notice. On or before the filing date
described in paragraph (c)(3)(ii) of this
section, the controlling domestic share-
holders shall provide written notice of the
election made or the adoption or change
of method or taxable year effected to all
other persons known by them to be do-
mestic shareholders who own (within the
meaning of section 958(a)) stock of the
foreign corporation. Such notice shall set
forth the name, country of organization
and U.S. employer identification number
(ifapplicable)oftheforeigncorpora-
tion, and the names, addresses, and stock
interests of the controlling domestic share-
holders. Such noticeshall describe the
nature of the action taken on behalf of the
foreign corporation and the taxable year
for which made, and identify a designated
shareholder who retains a jointly executed
consent confirming that such action has
been approved by all of the controlling
July 6, 2009242009–27 I.R.B.

domestic shareholders and containing the
signature of a principal officer of each
such shareholder (or its common parent).
However, the failure of the controlling do-
mestic shareholders to provide such notice
toapersonrequiredtobenotifiedshall
not invalidate the election made or the
adoption or change of method or taxable
year effected.
(4)Effect of action or inaction by con-
trolling domestic shareholders—(i)In
general. Any election, or adoption or
change of method of accounting or taxable
year made by the controlling domestic
shareholders on behalf of the foreign cor-
poration pursuant to paragraph (c)(3) of
this section or any other provision of the
regulations (for example, §1.985–2(c)(2)
or (3)) shall be reflected in the compu-
tation of the earnings and profits of such
corporation under this section to the extent
that it bears upon the federal income tax
liability of the domestic shareholders of
the foreign corporation. Anysuchaction
shall bind both the foreign corporation
and its domestic shareholders as to the
computation of the foreign corporation’s
earnings and profits for the taxable year
of the foreign corporation for which the
election is made or for which the method
of accounting or taxable year is adopted or
changed and in subsequent taxable years
unless the Commissioner consents to a
change. The preceding sentence shall ap-
ply regardless of—
(A) When the action was taken;
(B) Whether the foreign corporation
was a controlled foreign corporation or a
noncontrolled section 902 corporation at
the time the action was taken;
(C) When ownership was acquired; or
(D) Whether the domestic shareholder
received the written notice required by
paragraph (c)(3)(iii) of this section.
(ii)Inaction or untimely action.Inthe
event that action by or on behalf of the for-
eign corporation is not undertaken by the
time specified in paragraph (c)(6) of this
section and such failure is shown to the sat-
isfaction of the Commissioner to be due
to reasonable cause, such action may be
undertaken during any period of at least
30 days occurring after such showing is
made which the Commissioner may spec-
ify as appropriate for this purpose. In the
event that action by or on behalf of the
foreign corporation is not undertaken by
the time specified in paragraph (c)(6) of
this section and such failure is not shown
to the satisfaction of the Commissioner to
be due to reasonable cause, earnings and
profits shall be computed as if no elec-
tions had been made and any permissible
accounting methods not requiring an elec-
tion and reflected inthe books of account
regularly maintained by the foreign cor-
poration for the purpose of accounting to
its shareholders had been adopted. Ac-
cordingly, if the earnings and profits of a
noncontrolled section 902 corporation be-
came significant for United States income
tax purposes in a taxable year beginning on
or before April 25, 2006, the corporation’s
earnings and profits shall be computed as
if no elections had been made and any per-
missible accounting methods not requiring
an election and reflected in the books of ac-
count regularly maintained by the foreign
corporation for purposes of accounting to
its shareholders had been adopted. There-
after, any change in a particular accounting
method or methods or taxable year may be
made by, or on behalf of, the foreign corpo-
ration only with the Commissioner’s con-
sent.
(iii)Computation of earnings and prof-
its by a minority shareholder prior to
majority election or significant event.A
shareholder of a foreign corporation may
be required to compute the foreign cor-
poration’s earnings and profits before the
foreign corporation or its controlling do-
mestic shareholders make, or are required
under this section to make, an election
or adopt a method of accounting for fed-
eral income tax purposes. In such a case,
the shareholder must compute earnings
and profits in accordance with this sec-
tion. Such computation shall be made as
if no elections had been made and any
permissible accounting methods not re-
quiring an election and reflected in the
books of account regularly maintained by
the foreign corporation for the purpose of
accounting to its shareholders had been
adopted. However, a later, properly filed,
and timely election or adoption of method
by, or on behalf of, the foreign corporation
shall not be treated as a change in account-
ing method.
(5)Controlling domestic sharehold-
ers—(i)Controlled foreign corporations.
For purposes of this paragraph (c), the
controlling domestic shareholders of a
controlled foreign corporation shall be its
controlling United States shareholders.
The controlling UnitedStates shareholders
of a controlled foreign corporation shall
be those United States shareholders (as
defined in section 951(b) or 953(c)) who,
in the aggregate, own (within the meaning
of section 958(a)) more than 50 percent
of the total combined voting power of
all classes of the stock of such foreign
corporationentitledtovoteandwhoun-
dertake to act on its behalf. In the event
that the United States shareholders of the
controlled foreign corporation do not, in
the aggregate, own (within the meaning of
section 958(a)) more than 50 percent of the
total combined voting power of all classes
of the stock of such foreign corporation
entitled to vote, the controlling United
States shareholders of the controlled for-
eign corporation shall be all those United
States shareholders who own (within the
meaning of section 958(a)) stock of such
corporation.
(ii)Noncontrolled section 902 corpo-
rations. For purposes of this paragraph
(c), the controlling domestic shareholders
of a noncontrolled section 902 corporation
that is not a controlled foreign corpora-
tion shall be its majority domestic corpo-
rate shareholders. The majority domestic
corporate shareholders of a noncontrolled
section 902 corporation shall be those do-
mestic corporations that meet the owner-
ship requirements of section 902(a) with
respect to the noncontrolled section 902
corporation (or to a first-tier foreign corpo-
ration that is a member of the same quali-
fied group (as defined in section 902(b)(2))
as the noncontrolled section 902 corpora-
tion) that, in the aggregate, own directly
or indirectly more than 50 percent of the
combined voting power of all of the vot-
ing stock of the noncontrolled section 902
corporation that is owned directly or in-
directly by all domestic corporations that
meet the ownership requirements of sec-
tion 902(a) with respect to the noncon-
trolled section 902 corporation (or a rele-
vant first-tier foreign corporation).
(6)Action not required until significant.
Notwithstanding any other provision of
this paragraph, action by or on behalf of a
foreign corporation (other than a foreign
corporation subject to tax under section
882) to make an election or to adopt a
taxable year or method of accounting
shall not be required until the due date
(including extensions) of the return for a
controlling domestic shareholder’s first
2009–27 I.R.B.25July 6, 2009

taxable year with or within which ends
the foreign corporation’s first taxable year
in which the computation of its earnings
and profits is significant for United States
tax purposes with respect to its control-
ling domestic shareholders (as defined in
§1.964–1(c)(5)). The filing of the infor-
mation return required by section 6038
shall not itself constitute a significant
event. For taxable years beginning after
April 25, 2006, events that cause a foreign
corporation’s earnings and profits to have
United States tax significance include,
without limitation:
(A) A distribution from the foreign cor-
poration to its shareholders with respect to
their stock.
(B) An amount is includible in gross
income with respect to such corporation
under section 951(a).
(C) An amount is excluded from sub-
part F income of the foreign corporation
or another foreign corporation by reason of
section 952(c).
(D) Any event making the foreign cor-
poration subject to tax under section 882.
(E) The use by the foreign corporation’s
controlling domestic shareholders of the
tax book value (or alternative tax book
value) method of allocating interest ex-
pense under section 864(e)(4).
(F) A sale or exchange of the foreign
corporation’s stock of the controlling do-
mestic shareholders that results in the
recharacterization of gain under section
1248.
*****
(d)Effective/applicability dates. Para-
graphs (c)(1)(v) through (c)(6) of this
section apply to taxable years ending on
or after April 20, 2009. See 26 CFR
§1.964–1T(c)(1)(v) through (c)(6) (re-
vised as of April 1, 2009) for rules applica-
ble to taxable years beginning after April
25, 2006, and ending before April 20,
2009. However, taxpayers may choose to
apply paragraphs (c)(1)(v) through (c)(6)
of this section in their entirety in lieu of 26
CFR §1.964–1T(c)(1)(v) through (c)(6)
for periods covered by the temporary
regulations, provided that appropriate ad-
justments are made to eliminate duplicate
benefits arising from the application of
paragraphs (c)(1)(v) through (c)(6) of this
section to taxable years that are not open
for assessment.
§1.964–1T [Removed]
Par. 21. Section 1.964–1T is removed.
§1.989 (b)–1 [Amended]
Par. 22. Section 1.989(b)–1 is
amended by removing the language
“within the meaning of §1.964–1(d)(5)”
and adding the language “described in
§1.988–1(d)(1)” in its place.
PART 602—OMB CONTROL
NUMBERS UNDER THE PAPERWORK
REDUCTION ACT
Par. 23. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 24. In §602.101, paragraph (b)
is amended by removing the entry for
“§1.964–1T” and adding the following
entries in numerical order to the table to
read as follows:
CFR part or section where
identified and described
Current OMB
control No.
*****
1.904–7...........................................................
1545–2104
*****
1.964–1...........................................................
1545–2104
*****
Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.
Approved March 24, 2009.
Bernard Knight,
Acting General
Counsel of the Treasury.
(Filed by the Office of the Federal Register on June 10, 2009,
8:45 a.m., and published in the issue of the Federal Register
for June 11, 2009, 74 F.R. 27867)
July 6, 2009262009–27 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Use this Revenue Procedure to prepare Tax Year2009and prior year information returns for submission to Internal Revenue Service
(IRS) using electronic filing.
Caution to filers:
Please read this publication carefully. Persons or businesses required to file information returns electronically may
be subject to penalties for failure to file or include correctinformation if they do not follow the instructions in this
Revenue Procedure.
IMPORTANT NOTES:
IRS/ECC-MTB Internet connection is athttp://fire.irs.govfor electronic filing. The Filing Information Returns
Electronically (FIRE) System will be down from 2 p.m. ESTDec. 22, 2009, through Jan. 4, 2010 for upgrading. It is
not operational during this time.In addition, the FIRE System may be down every Wednesday 3:00 a.m. to 5:00 a.m.
EST for maintenance.
The FIRE System does not provide fill-in forms for information returns.
The Form 4419 is subject to review before the approval to transmit electronically is granted and may require additional
documentation at the request of the IRS.If a determination is made concerning the validity of the documents transmitted
electronically, IRS has the authority torevoketheTransmitterControlCode(TCC)andterminatethereleaseofthefiles.
Rev. Proc. 2009–30
TABLE OF CONTENTS
Part A. General
SEC. 1. PURPOSE.................................................................................................. 29
SEC. 2. NATURE OF CHANGES—CURRENT YEAR (TAX YEAR2009)................................................... 30
SEC. 3. WHERE TO FILE AND HOW TO CONTACT THE IRS, ENTERPRISE COMPUTING CENTER —
MARTINSBURG
........................................................................................ 31
SEC. 4. FILING REQUIREMENTS................................................................................... 33
SEC. 5. VENDOR LIST.............................................................................................. 33
SEC. 6. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS ELECTRONICALLY......................... 34
SEC. 7. RETENTION REQUIREMENT
S AND DUE DATES
...........................................
................... 34
SEC. 8. CORRECTED RETURNS..................................................................................... 35
SEC. 9. EFFECT ON PAPER RETURNS AND STATEMENTS TO RECIPIENTS............................................ 39
SEC. 10. COMBINED FEDERAL/STATE FILING PROGRAM............................................................ 39
SEC. 11. PENALTIES ASSOCIATED WITH INFORMATION RETURNS................................................... 41
SEC. 12. STATE ABBREVIATIONS................................................................................... 41
Part B. Electronic Filing Specifications
SEC. 1. GENERAL................................................................................................. 42
2009–27 I.R.B.27July 6, 2009

SEC. 2. ELECTRONIC FILING APPROVAL PROCEDURE.............................................................. 43
SEC. 3. TEST FILES................................................................................................ 43
SEC. 4. ELECTRONIC SUBMISSIONS................................................................................ 44
SEC. 5. PIN REQUIREMENTS....................................................................................... 44
SEC. 6. ELECTRONIC FILING SPECIFICATIONS..................................................................... 44
SEC. 7. CONNECTING TO THE FIRE SYSTEM........................................................................ 45
SEC. 8. COMMON PROBLEMS AND QUESTIONS..................................................................... 47
Part C. Record Format Specifications and Record Layouts
SEC. 1. FILE LAYOUT DIAGRAM.................................................................................... 49
SEC. 2. GENERAL.................................................................................................. 49
SEC. 3. TRANSMITTER “T” RECORD — GENERAL FIELD DESCRIPTIONS............................................. 49
SEC. 4. TRANSMITTER “T” RECORD — RECORD LAYOUT........................................................... 52
SEC. 5. PAYER “A” RECORD — GENERAL FIELD DESCRIPTIONS..................................................... 53
SEC. 6. PAYER “A” RECORD — RECORD LAYOUT................................................................... 63
SEC. 7. PAYEE “B” RECORD — GENERAL FIELD DESCRIPTIONS AND RECORD LAYOUTS............................. 63
(1)Payee“B”Record—RecordLayoutPositions544–750forForm1098............................................ 70
(2)Payee“B”Record—RecordLayoutPositions544–750forForm1098-C.......................................... 71
(3)Payee“B”Record—RecordLayoutPositions544–750forForm1098-E.......................................... 72
(4)Payee“B”Record—RecordLayoutPositions544–750forForm1098-T.......................................... 73
(5)Payee“B”Record—RecordLayoutPositions544–750forForm1099-A.......................................... 73
(6)Payee“B”Record—RecordLayoutPositions544–750forForm1099-B.......................................... 74
(7)Payee“B”Record—RecordLayoutPositions544–750forForm1099-C.......................................... 76
(8)Payee“B”Record—RecordLayoutPositions544–750forForm1099-CAP....................................... 77
(9)Payee“B”Record—RecordLayoutPositions544–750forForm1099-DIV ....................................... 78
(10)Payee“B”Record—RecordLayoutPositions544–750forForm1099-G.......................................... 79
(11)Payee“B”Record—RecordLayoutPositions544–750forForm1099-H.......................................... 80
(12)Payee“B”Record—RecordLayoutPositions544–750forForm1099-INT........................................ 80
(13)Payee“B”Record—RecordLayoutPositions544–750forForm1099-LTC ....................................... 81
(14)Payee“B”Record—RecordLayoutPositions544–750forForm1099-MISC...................................... 83
(15)Payee“B”Record—RecordLayoutPositions544–750forForm1099-OID ....................................... 84
(16)Payee“B”Record—RecordLayoutPositions544–750forForm1099-PATR...................................... 85
(17)Payee“B”Record—RecordLayoutPositions544–750forForm1099-Q.......................................... 86
(18)Payee“B”Record—RecordLayoutPositions544–750forForm1099-R.......................................... 87
(19)Payee“B”Record—RecordLayoutPositions544–750forForm1099-S.......................................... 91
(20)Payee“B”Record—RecordLayoutPositions544–750forForm1099-SA......................................... 92
(21) Payee “B” Record — Record Layout Positions 544–750 for Form 3921............................................ 93
(22) Payee “B” Record — Record Layout Positions 544–750 for Form 3922............................................ 94
(23)Payee“B”Record—RecordLayoutPositions544–750forForm5498............................................ 94
(24)Payee“B”Record—RecordLayoutPositions544–750forForm5498-ESA....................................... 96
(25)Payee“B”Record—RecordLayoutPositions544–750forForm5498-SA......................................... 96
(26) Payee “B” Record — Record Layout Positions 544–750 for Form 8935............................................ 97
(27)Payee“B”Record—RecordLayoutPositions544–750forFormW-2G........................................... 97
SEC. 8. END OF PAYER “C” RECORD — GENERAL FIELD DESCRIPTIONS AND RECORD LAYOUT..................... 99
SEC. 9. STATE TOTALS “K” RECORD — GENERAL FIELD DESCRIPTIONS AND RECORD LAYOUT..................... 101
July 6, 2009282009–27 I.R.B.

SEC. 10. END OF TRANSMISSION “F” RECORD —GENERAL FIELD DESCRIPTIONS AND RECORD
LAYOUT
............................................................................................. 102
Part D. Extensions of Time and Waivers
SEC. 1. GENERAL — EXTENSIONS................................................................................. 103
SEC. 2. SPECIFICATIONS FOR FILING EXTENSIONS OF TIME ELECTRONICALLY................................... 104
SEC. 3. RECORD LAYOUT — EXTENSION OF TIME................................................................. 105
SEC. 4. EXTENSION OF TIME FOR RECIPIENT COPIES OF INFORMATION RETURNS................................. 106
SEC. 5. FORM 8508, REQUEST FOR WAIVERFROM FILING INFORMATION RETURNS
ELECTRONICALLY
................................................................................... 107
Part A. General
Revenue Procedures are generally revised annually to reflect legislative and form changes. Comments concerning this Revenue
Procedure, or suggestions for making it more helpful, can be addressed to:
Internal Revenue Service
Enterprise Computing Center — Martinsburg
Attn: Information Reporting Program
230 Murall Drive
Kearneysville, WV 25430
Sec. 1. Purpose
.01The purpose of this Revenue Procedure is to provide the specifications for filing Forms 1098, 1099,3921, 3922, 5498,8935,
and W-2G with IRS electronically through the IRS FIRE System. This Revenue Procedure must be used for the preparation of Tax
Year2009information returns and information returns for tax years prior to2009filedbeginning January 1, 2010.Specifications
for filing the following forms are contained in this Revenue Procedure.
(1)Form 1098, Mortgage Interest Statement
(2)Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes
(3)Form 1098-E, Student Loan Interest Statement
(4)Form 1098-T, Tuition Statement
(5)Form 1099-A, Acquisition or Abandonment of Secured Property
(6)Form 1099-B, Proceeds From Broker and Barter Exchange Transactions
(7)Form 1099-C, Cancellation of Debt
(8)Form 1099-CAP, Changes in Corporate Control and Capital Structure
(9)Form 1099-DIV, Dividends and Distributions
(10)Form 1099-G, Certain Government Payments
(11)Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments
(12)Form 1099-INT, Interest Income
(13)Form 1099-LTC, Long-Term Care and Accelerated Death Benefits
(14)Form 1099-MISC, Miscellaneous Income
(15)Form 1099-OID, Original Issue Discount
(16)Form 1099-PATR, Taxable Distributions Received From Cooperatives
(17)Form 1099-Q, Payments From Qualified Education Programs (Under Sections 529 & 530)
(18)Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
(19)Form 1099-S, Proceeds From Real Estate Transactions
(20)Form 1099-SA, Distributions From an HSA,Archer MSA, or Medicare Advantage MSA
(21)Form 3921, Exercise of a Qualified Incentive Stock Option Under Section 442(b)
(22)Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c)
(23)Form 5498, IRA Contribution Information
(24)Form 5498-ESA, Coverdell ESAContribution Information
(25)Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information
(26)Form 8935, Airline Payments Report
(27)Form W-2G, Certain Gambling Winnings
2009–27 I.R.B.29July 6, 2009

.02All data received at IRS/ECC-MTB for processing will be given the same protection as individual income tax returns (Form
1040). IRS/ECC-MTB will process the data and determine if the records are formatted and coded according to this Revenue Procedure.
.03Specifications for filing Forms W-2, Wageand Tax Statements, electronically areonlyavailable from the Social Security
Administration (SSA). Filers can call 1–800–SSA–6270 to obtainthe telephone number of the SSA Employer Service Liaison Officer
for their area.
.04IRS/ECC-MTB doesnotprocess Forms W-2. Paperorelectronic filing of Forms W-2 must be sent to SSA. IRS/ECC-MTB
does, however, process waiver requests (Form 8508) and extension of time to file requests (Form 8809) for Forms W-2 as well as
requests for an extension of time to provide the employee copies of Forms W-2.
.05Generally, the box numbers on the paper forms correspond with the amount codes used to file electronically; however, if
discrepancies occur, the instructions in this Revenue Procedure must be followed.
.06This Revenue Procedure also provides the requirements and specifications for electronic filing under the Combined Fed-
eral/State Filing Program.
.07The following Revenue Procedures and publications provide moredetailed filing procedures for certain information returns:
(a)2009 General Instructions for Forms 1099, 1098, 3921, 3922, 5498, and W-2Gand individual form instructions.
(b)Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 3921, 3922, 5498, 8935, W-2G,
and 1042-S.
(c)Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allocated
Tips, Electronically.
(d)Publication 1187, Specifications for Filing Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding,
Electronically.
.08This Revenue Procedure supersedes Rev. Proc. 2008–30 published as Publication 1220 (Rev. 07/2008), Specifications for
Filing Forms 1098, 1099, 5498, and W-2G Electronically.
Sec. 2. Nature of Changes—Current Year (Tax Year2009)
.01In this publication, all pertinent changes for Tax Year2009are emphasized by the use ofitalics. Portions of text that require
special attention are in boldface text. Filers are always encouraged to read the publication in its entirety.
a. General
(1)Three new forms added. Forms 3921, 3922 and 8935. Form 3921, Exercise of a Qualified Incentive Stock Option Under
Section 442(b), Form 3922, Transfer of Stock Acquired Through An Employee Stock Plan Under Section 423(c), and Form
8935, Airline Payments Report.
(2)Form 1099-R renamed distribution code E to Distributions under Employee Plans Compliance System (EPCRS), formerly
Excess Annual Additions under Section 415/Certain Excess Amounts Under Section 403(b) Plans.
(3)See Part A, Sec. 8 for changes in correction procedures. Incorrect TIN, payee name and/or address requires a two step
correction.
(4)Technical security standards added to Part B, Sec. 7 .06 for the FIRE System.
(5)Stricter edits to Combined Federal StateFiling processing were put in place which could cause files to be rejected if not
properly coded under the guidelines of Part A, Section 10.Test files are recommended for all filers in the program.
(6)Form 4419 Application for Filing Information Returns Electronically (FIRE), Box 3 must contain an Employer Identifica-
tion Number (EIN). IRS will no longer issue Tranmitter Control Codes (TCC) to a social security number.
b. Programming Changes
(1)For all Forms, Payment Year, Field Positions 2–5, for the Transmitter “T” Record, Payer “A” Record and Payee “B” Record
must be incremented to update the four-digit reportingyear (2008 to 2009), unless reporting prior year data.
(2)In the Payee “B” Record, two amount fields added, Payment Amount F in field positions 223–234, and Payment Amount
G in field positions 235–246.
(3)In the End of Payer “C” Record and State Totals “K” Record, two amount fields added, Control Total F in field positions
268–285, and Control Total G in field positions 286–303.
(4)For Form 3921 in the Payer “A” Record, added “N” to Type of Return codes to field position 27.
(5)For Form 3921 in the Payer “A” Record, added Amount Code indicators “3” for Exercise price per share and “4” for Fair
market value of share on exercise date in field positions 28–41.
(6)For the Form 3921 in the Payee “B” Record, added Date Option Granted, field positions 547–554, formatted as YYYYM-
MDD, added Date Option Exercised field positions 555–562, formatted as YYYYMMDD, added Number of Shares Trans-
ferred field positions 563–570, right justify, zero fill, and added Other than Transferor Information field positions 575–614,
right justify, blank fill.
July 6, 2009302009–27 I.R.B.

(7)For Form 3922 in the Payer “A” Record, added “Z” to Type of Return codes to field position 27.
(8)For Form 3922 in the Payer “A” Record, added Amount Code indicators “3” for Fair market value per share on grant date,
“4” for Fair market value per share on exercise date, and “5” for Exercise price per share in field positions 28–41.
(9)For Form 3922 in the Payee “B” Record, added Date Option Granted to Transferor, field positions 547–554, formatted as
YYYYMMDD, added Date Option Exercised by Transferor, field positions 555–562, formatted as YYYYMMDD, added
Number of Shares Transferred , field positions 563–570, right-justify and zero fill, and added Date Legal Title Transferred
by Transferor, field positions 571–578, formatted as YYYYMMDD.
(10)For Form 8935 in the Payer “A” Record, added “U” to Type of Return codes to field position 27.
(11)For Form 8935 in the Payer “A” Record, added Amount Code indicators “1” for Total amount reported, “2” for First year of
reported payments, “3” for Second year of reported payments, “4” for Third year of reported payments, “5” for Fourth year
of reported payments, and “6” for Fifth year of reported payments in field positions 28–41. Amounts reported for codes
2–6 should equal the amount reported for code “1”.
(12)For Form 8935 in the Payee “B” Record, added Year of First Payment, field positions 547–550, Year of Second Payment,
field positions 551–554, Year of Third Payment, field positions 555–558, Year of Fourth Payment, field positions 559–562,
Year of Fifth Payment, field positions 563–566. All years are formatted as YYYY.
(13)For the Form 1099-C in the Payee “B” Record, added PersonalLiability Indicator in field position 595. Use only a value
of “1” if the borrower is personally liable for repayment or a blank if not personally liable.
(14)For Form 1099-G in the Payer “A” Record, added Amount Code indicator “9” for Market gain commodity credit corp loans
repaid on or after Jan. 1, 2007 in field positions 28–41.
(15)For Form 1099-R in the Payee “B” Record field positions 545–546added Distribution Code “U” for Distribution from an
ESOP under Section 404(k). Code“U” can be paired with code “B.”
(16)For Form W-2G in the Payee “B” Record, changed Field Position 547 Type of Wager code “8” to Poker winnings and added
code “9” for Any Other Type of Gambling Winnings.
(17)For Form 5498 in the Payer “A” Record, added Amount Code indicator “B” for RMD amount, “C” for Postponed contri-
bution, “D” for Repayments and “E” for Other contributions in field positions 28–41.
(18)For Form 5498 in the Payee “B” Record changed field positions 552–555 to Year of Postponed Contribution formatted as
YYYY, 556–557 to Postponed Contribution Code, 558–559 to Repayment Code, 560–561 to Bankruptcy Code and 562–569
to RMD Date.
(19)For Form 1098-E in the Payee “B” Record change in field position 547 to enter a 1 if the amount reported in payment
amountdoes notinclude loan origination feesand/or capitalized interest.
Sec. 3. Where To File and How to Contact the IRS, Enterprise Computing Center — Martinsburg
.01All information returns filed electronically are processed at IRS/ECC-MTB. General inquiries concerning the filing of infor-
mation returns should be sent to the following address:
IRS-Enterprise Computing Center — Martinsburg
Information Reporting Program
230 Murall Drive
Kearneysville, WV 25430
.02All requests for an extension of time to file information returns with IRS/ECC-MTB filed on Form 8809 or requests for an
extension to provide recipient copies, and requests for undue hardship waivers filed on Form 8508 should be sent to the following
address:
IRS-Enterprise Computing Center — Martinsburg
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430
.03The telephone numbers and web addresses for questionsabout specifications for electronic submissions are:
2009–27 I.R.B.31July 6, 2009

Information Reporting Program Customer Service Section
TOLL-FREE 1–866–455–7438 or outside the U.S. 1–304–263–8700
1–304–579–4827 — TDD
(Telecommunication Device for the Deaf)
Fax Machine
Toll-free within the U.S. — 1–877–477–0572
Outside the U.S. — 304–579–4105
Electronic Filing — FIRE system
http://fire.irs.gov
TO OBTAIN FORMS:
1–800–TAX–FORM (1–800–829–3676)
w
ww.irs.gov—IRS website access to forms (See Note.)
Note: Because paper forms are scanned during processing, youcannot use forms printed from the IRS website to file Form
1096, and Copy A of Forms 1098, 1099, 3921, 3922 or 5498 with the IRS.
.04The2009 General Instructions for Forms 1099, 1098, 3921, 3922, 5498, and W-2Gare included in the Publication 1220 for
your convenience. Form 1096 is used only to transmit Copy A ofpaperForms 1099, 1098, 3921, 3922, 5498, and W-2G. If filing
paper returns, follow the mailing instructions on Form 1096 and submit the paper returns to the appropriate IRS Service Center.
.05Make requests for paper Forms 1096, 1098, 1099, 3921, 3922, 5498, and W-2G, and publications related to electronic filing by
calling the IRS toll-free number1–800–TAX–FORM (1–800–829–3676) or ordering online from the IRS website atw
ww.irs.gov.
.06Questions pertaining to electronic filing of Forms W-2mustbe directed to the Social Security Administration (SSA). Filers
can call 1–800–772–6270 to obtain the telephone number of theSSA Employer Service Liaison Officer for their area.
.07Payersshould notcontact IRS/ECC-MTB if they have received a penaltynotice and need additional information or are re-
questing an abatement of the penalty. A penalty notice contains an IRS representative’s name and/or telephone number for contact
purposes; or the payer may be instructed to respond inwriting to the address provided. IRS/ECC-MTB doesnotissue penalty no-
tices and doesnothave the authority to abate penalties. For penaltyinformation, refer to the Penalties section of the2009 General
Instructions for Forms 1099, 1098, 3921, 3922, 5498, and W-2G.
.08A taxpayer or authorized representative may request a copy of a taxreturn, including Form W-2 filed with a return, by submitting
Form 4506, Request for Copy of Tax Return, to IRS. This form may be obtained by calling1–800–TAX–FORM (1–800–829–3676).
For questions regarding this form, call 1–800–829–1040.
.09Electronic Products and Services Support,Information Reporting Branch, Customer Service Section (IRB/CSS), answers elec-
tronic, paper filing, and tax law questions from the payer community relating to the correct preparation and filing of business informa-
tion returns (Forms 1096, 1098, 1099, 3921, 3922, 5498, 8027, 8935 and W-2G). IRB/CSS also answers questions about the electronic
filing of Forms 1042-S and the tax law and paper filing instructions for Forms W-2 and W-3. Inquiries pertaining to Notices CP2100
and 972CG, backup withholding and reasonable cause requirements due to missing and incorrect taxpayer identification numbers
(TINs) are also addressed by IRB/CSS. Assistance is available year-round to payers, transmitters, andemployers nationwide, Monday
through Friday, 8:30 a.m. to 4:30 p.m. Eastern Standard Time, by calling toll-free1–866–455–7438.IRB/CSS also offers an e-mail
address for transmitters and electronic filers of information returns. The address ismccirp@irs.gov.When sending e-mails concerning
specific file information, you must include the company name and the electronic filename or Transmitter Control Code. Pleasedo
notsubmit TINs or attachments, because electronic mail is not secure and the information may be compromised. The Telecommuni-
cations Device for the Deaf(TDD)toll number is1–304–579–4827. Call as soon as questions arise to avoid the busy filing seasons
at the end of January and February. Recipients of information returns (payees) should continue to contact 1–800–829–1040 with any
questions on how to report the information returns data on their tax returns.
.10IRB/CSS cannot advise filers where to send state copies of paper forms. Filers must contact the Tax Department in the state
where the recipient resides to obtain thecorrect address and filing requirements.
.11Form 4419, Application for Filing Information Returns Electronically, Form 8809, Application for Extension of Time to File
Information Returns, and Form 8508, Request for Waiver From Filing Information Returns Electronically, may be faxed to IRS/ECC-
MTB toll-free at1–877–477–0572.
July 6, 2009322009–27 I.R.B.

Sec. 4. Filing Requirements
.01The regulations under section 6011(e)(2)(A) of the Internal Revenue Code provide that any person, including a corporation,
partnership, individual, estate, and trust, who is required to file250 or more information returns must file such returns electronic
ally.
The 250* or more requirement applies separately for each typeof return and separately to each type of corrected return.
*Even though filers may submit up to 249 information returns onpaper, IRS encourages filers to transmit those information
returns electronically.
.02All filing requirements that follow apply individually to each reporting entity as defined by its separate Taxpayer Identificati
on
Number (TIN). For example, if a corporation with several branches or locations uses thesameEIN,thecorporationmustaggregate
the total volume of returns to be filed for that EIN and apply the filing requirements toeach type of return accordingly.
.03The following requirements apply separately to both originals and corrections filed electronically:
1098
1098-C
1098-E
1098-T
1099-A
1099-B
1099-C
1099-CAP
1099-DIV
1099-G
1099-H
1099-INT
1099-LTC
1099-MISC
1099-OID
1099-PATR
1099-Q
1099-R
1099-S
1099-SA
3921
3922
5498
5498-ESA
5498-SA
W-2G
250ormoreofanyof these forms requires electronic filing with IRS. These are stand-alone documents
and are not to be aggregated for purposes of determining the 250 threshold. For example, if you must
file 100 Forms 1099-B and 300 Forms 1099-INT, Forms 1099-B need not be filed electronically since
they do not meet the threshold of 250. However, Forms 1099-INT must be filed electronically since
they meet the threshold of 250.
.04The above requirements do not apply if the payer establishes undue hardship (See Part D, Sec. 5).
Sec. 5. Vendor List
.01IRS/ECC-MTB prepares a publication of vendors who support electronic filing. Publication 1582, Information Returns Vendor
List, contains the names of service bureaus that will produce or submit files for electronic filing. Italso contains the names of vendors
who provide software packages for payers whowish to produce electronic files on their own computer systems. This list is compiled
as a courtesy and in no way implies IRS/ECC-MTB approval or endorsement.
.02If filers engage a service bureau to prepare files on their behalf, the filers must not also report this data, as it will create a
duplicate filing situation which may cause penalty notices to be generated.
.03The Vendor List, Publication 1582, is updated periodically. The most recent revision is available on the IRS website at
w
ww.irs.gov. For an additional list of software providers, log on towww.irs.govandgototheBusiness e-file Providerslink.
.04A vendor, who offers a software package, or has the capability to electronically file information returns for customers, and who
would like to be included in Publication 1582 must submit a letter or e-mail to IRS/ECC-MTB. The request should include:
(a)Company name
(b)Address (include city, state, and ZIP code)
(c)Telephone and FAX number (include area code)
(d)E-mail address
(e)Contact person
(f)Website
(g)Type(s) of service provided (e.g.,service bureau and/or software)
2009–27 I.R.B.33July 6, 2009

(h)Method of filing (only electronic filing is acceptable)
(i)Type(s) of return(s)
Sec. 6. Form 4419, Application for FilingInformation Returns Electronically
.01Transmitters are required to submit Form 4419, Application forFiling Information Returns Electronically, to request autho-
rization to file information returns with IRS/ECC-MTB. A single Form 4419 should be filed no matter how many types of returns the
transmitter will be submitting electronically. For example, if a transmitter plans to file Forms 1099-INT, one Form 4419 should be
submitted. If, at a later date, another type of form (Forms 1098, 1099, 3921, 3922, 5498, 8935 and W-2G) will be filed, the transmitter
should not submit a new Form 4419. The Form 4419 is subject to reviewbefore the approval to transmit electronically is granted and
may require additional documentation at the request of the IRS. If a determination is made concerning the validity of the documents
transmitted electronically, IRS has the authority to revoke the Transmitter Control Code (TCC) and terminate the release of files.
Note: EXCEPTIONS — An additional Form 4419 is required for filing each of the following types of returns: Form 1042-S,
Foreign Person’s U.S. Source Income Subject to Withholding and Form 8027, Employer’s Annual Information Return of Tip
Income and Allocated Tips. See the back of Form 4419 for detailed instructions.
.02Electronically filed returns may not be submitted to IRS/ECC-MTB until the application has been approved. Please read the
instructions on the back of Form 4419 carefully. Form 4419 is included in the Publication 1220 for the filer’s use. This form may be
photocopied. Additional forms may be obtained by calling1–800–TAX–FORM (1–800–829–3676). The form is also available on
the IRS website atw
ww.irs.gov.
.03Upon approval, a five-character alpha/numeric Transmitter Control Code (TCC) will be assigned and included in an approval
letter. The TCCmustbe coded in the Transmitter “T” Record. IRS/ECC-MTB uses the TCC to identify payers/transmitters and to
track their files through the processing system.
.04IRS/ECC-MTB encourages transmitters who file for multiple payers to submit one application and to use the assigned TCC for
all payers. While not encouraged, multiple TCCs can be issued to payers with multiple TINs. Transmitters cannot use more than one
TCC in a file. Each TCC must be reported in separate transmissions.
.05If a payer’s files are prepared by a service bureau, the payer may not need to submit an application to obtain a TCC. Some
service bureaus will produce files, code their own TCC in the file, and send it to IRS/ECC-MTB for the payer. Other service bureaus
will prepare the file and return the file to the payer for submission to IRS/ECC-MTB. These service bureaus may require the payer to
obtain a TCC, which is coded in the Transmitter “T” Record. Payers should contact their service bureau for further information.
.06Form 4419 may be submitted anytime during the year; however, itmustbe submitted to IRS/ECC-MTB at least 30 days before
the due date of the return(s) for current year processing. This allows IRS/ECC-MTB the time necessary to process and respond to
applications. Form 4419 may be faxed to IRS/ECC-MTB toll-free at877–477–0572. In the event that computer equipment or software
is not compatible with IRS/ECC-MTB, a waiver may be requested to file returns on paper documents (See Part D, Sec. 5).
.07Once a transmitter is approved to file electronically, it is not necessary to reapplyunless:
(a)The payer has discontinued filing electronically for two consecutive years. The payer’s TCC may have been reassigned by
IRS/ECC-MTB. Payers who know that the assigned TCC will no longer be used, are requested to notify IRS/ECC-MTB
so these numbers may be reassigned.
(b)The payer’s files were transmitted in the past by a service bureau using the service bureau’s TCC, but now the payer has
computer equipment compatible with that of IRS/ECC-MTB and wishes to prepare his or her own files. The payer must
request a TCC by filing Form 4419.
.08In accordance with Regulations section 1.6041–7(b), payments by separate departments of a health carecarrier to providers
of medical and health care services may be reported on separate returns filed electronically. In this case, the headquarters will be
considered the transmitter, and the individual departments of thecompany filing reports will be considered payers. A single Form
4419 covering all departments filingelectronically should be submitted. One TCC may be used for all departments.
.09Copies of Publication 1220 can be obtained by downloading from the IRS website atw
ww.irs.gov.
.10Ifanyof the information (name, TIN or address) on Form 4419 changes, please notify IRS/ECC-MTB in writing by fax or
mail so the IRS/ECC-MTB database can be updated. The transmitter should include the TCC in all correspondence.
.11Approval to file does not imply endorsementby IRS/ECC-MTB of any computer software or of the quality of tax preparation
services provided by a service bureau or software vendor.
Sec. 7. Retention Requirements and Due Dates
.01 Payers should retain a copy of the information returns filed with IRS or have the ability to reconstruct the data for at
least 3 years from the reporting due date, except:
(a)Retain for 4 years all information returns when backup withholding is imposed.
(b)A financial entity must retain a copy of Form 1099-C, Cancellation of Debt, or have the ability to reconstruct the data
required to be included on the return, for at least 4 years from the date such return is required to be filed.
July 6, 2009342009–27 I.R.B.

.02Filing of information returns is on a calendar year basis, except for Forms 5498 and 5498-ESA, which are used to report amounts
contributed during or after the calendar year (but no later than April 15). The following due dates will apply:
Due Dates
Forms 1098, 1099,3921, 3922, and W-2GRecipient Copy — January 31 (*see exceptions below)
IRS Paper Filing — February 28
IRS Electronic Filing — March 31
•*February 15, for Forms 1099-B and 1099-S
•*February 15, for Forms 1099-MISC if substitute payments
are reported in box 8 or gross proceeds paid to an attorney
are reported in box 14. If no such payments are reported,
January 31, remains the due date for furnishing Copy B to
recipients.
Forms 5498*, 5498-SA and 5498-ESA
Forms 5498 and 5498-SA
Form 5498-ESA
ParticipantCopy—May31*
IRSCopy—May31
Participant Copy — April 30
* Participants’ copies of Forms 5498 to furnish FMV/RMD
information — January 31
Form 8935IRS Copy — Due 90 days from date of payment
Note: If any due date falls on a Saturday, Sunday, or legal holiday, the return or statement is considered timely if filed
or furnished on the next day that is not a Saturday, Sunday, or legal holiday.
Sec. 8. Corrected Returns
•Acorrectionis an information return submitted by the transmitter to correct an information return that was previously submit-
ted to and successfully processed by IRS/ECC-MTB, but contained erroneous information.
•Whileweencourageyoutofileyourcorrections electronically, you may file up to 249 paper corrections even though your
originals were filed electronically.
•DO NOT SEND YOUR EN
TIRE FILE AGAIN. Only correct the information returns which were erroneous.
•Information returns omitted from the original filemust notbe coded as corrections. Submit these returns under a separate
Payer “A” Record asoriginal returns.
•Be sure to use the same payee account number that was used onthe original submission. The account number is used to match
a correction record to the original information return.
•Before creating your correction file, review the correction guidelines chart carefully.
.01The electronic filing requirement of information returns of 250 or more applies separately to both original and corrected returns.
E
X
A
M
P
L
E
If a payer has 100 Forms 1099-A to be corrected, they can be filed on paper because they fall under the 250
threshold. However, if the payer has 300 Forms 1099-B to be corrected, they must be filed electronically
because they meet the 250 threshold. If for some reasona payer cannot file the 300 corrections electronically,
to avoid penalties, a request for a waiver must be submitted before filing on paper. If a waiver is approved for
original documents, any corrections for the same type of return will be covered under this waiver.
.02Corrections should be filedas soon as possible. Corrections filed after August 1 may be subject to the maximum penalty of
$50 per return. Corrections filed by August 1 may be subject to a lesser penalty. (For information on penalties, refer to the Penalties
section of the2009 General Instructions for Forms 1099, 1098, 3921, 3922, 5498, and W-2G.) However, if payers discover errors after
2009–27 I.R.B.35July 6, 2009

August 1, they should file corrections, as a prompt correction is a factor considered in determining whether the intentional disregard
penalty should be assessed or whether a waiver of the penalty for reasonable cause may be granted. All fields must be completed with
the correct information, not just the data fields needing correction.Submit corrections only for the returns filed in error, not the entire
file. Furnish corrected statementsto recipients as soon as possible.
Note: Do NOT resubmit your entire file as corrections. This willresult in duplicate filing and erroneous notices may be sent
to payees. Submit only those returns which require correction.
.03There are numerous types of errors, and in some cases, more than one transaction may be required to correct the initial error.
If the original return was filed as an aggregate, the filers must consider this in filing corrected returns.
.04The payee’s account number should be included onallcorrection records. This is especially important when more than one
information return of the same type is reported for a payee. Theaccount number is used to determine which information return is
being corrected. It is vital that each information return reported for a payee have a unique account number. See Part C, Sec.6, Payer’s
Account Number For Payee.
.05Corrected returns may be included on the same transmission as original returns; however, separate “A” Records are required. If
filers discover that certain information returns were omitted on their original file, they mustnotcode these documents as corrections.
The file must be coded and submitted as originals.
.06If a payer realizes duplicate reporting has occurred, IRS/ECC-MTB should be contactedimmediatelyfor instructions on how
to avoid notices. The standard correction process will not resolve duplicate reporting.
.07If a payer discovers errors that affect a large number of payees, in addition to sending IRS the corrected returns and notifying the
payees, IRS/ECC-MTB underreporter section should be contacted toll-free 1–866–455–7438 for additional requirements. Corrections
must be submitted on actual information return documents or filed electronically.
.08Prior year data, original and corrected,mustbe filed according to the requirementsof this Revenue Procedure. When submit-
ting prior year data, use the record format for the current year. Eachtax year must be electronically filed in separate transmissions.
However, use the actual year designation of the data in field positions 2–5 of the “T”, “A”, and “B” Records. Field position 6, Prior
Year Data Indicator, in the Transmitter “T” Record must contain a “P.” If filing electronically, a separate transmission must be made
for each tax year.
.09In general, filers should submit corrections for returns filed within the last 3 calendar years (4 years if the payment is a reportable
payment subject to backup withholding under section 3406 of the Code and also for Form 1099-C, Cancellation of Debt).
.10All paper returns, whether original or corrected, must be filed with the appropriate service center.IRS/ECC-MTB does not
process paper returns.
.11If a payer discovers an error(s) in reporting thepayer (not recipient)name and/or TIN, write a letter to IRS/ECC-MTB (See
Part A, Sec. 3) containing the following information:
(a)Name and address of payer
(b)Type of error (please include the incorrect payer name/TIN that was reported)
(c)Tax year
(d)Payer TIN
(e)TCC
(f)Type of return
(g)Number of payees
(h)Filing method, paper or electronic
(i)Was Federal income tax withheld
.12The “B” Record provides a 20-position field for a unique Payer’s Account Number for Payee.If a payee has more than one
reporting of the same document type, it is vital that each reporting is assigned a unique accountnumber. This number will help
identify the appropriate incorrect return if morethan one return is filed for a particular payee.Do not enter a TIN in this field.A
payer’s account number for the payee may be a checking account number, savings account number, serial number, or any other number
assigned to the payee by the payer that will distinguish the specific account. This numbershould appear on the initial return and on
the corrected return in order to identify and process the correction properly.
.13The record sequence for filing correctionsisthesameasfororiginalreturns.
.14Review the chart that follows. Errors normally fall under oneof the two categories listed. Next to each type of error is a list of
instructions on how to file the corrected return.
July 6, 2009362009–27 I.R.B.

Guidelines for Filing Corrected Returns Electronically
One transaction is required to make the following corrections properly. (See Note 4.)
Error Made on the Original ReturnHow To File the Corrected Return
ERRORTYPE1CORRECTION
1.
Original return was filed with one or more of the
following errors:
A.
Prepare a new file. The first record on the file will be
the Transmitter “T” Record.
B.Make a separate “A” Record for each type of return
and each payer being reported. Payer information in
the “A” Record must be the same as it was in the
original submission.
C.
The Payee “B” Records must show the correct record
information as well as a Corrected Return Indicator
Code of “G” in field position 6.
D.Corrected returns using“G” coded “B” Records may
be on the same file as those returns submitted without
the “G” coded “B” Records; however, separate “A”
Records are required.
E.Prepare a separate “C” Record for each type of return
and each payer being reported.
(a)Incorrect payment amount codes in the Payer “A”
Record
(b)Incorrect payment amounts in the Payee “B”
Record
(c)Incorrect code in the distribution code field in
Payee “B” Record
(d)Incorrect payee indicator(See Note 1.)
(e)Return should not have been filed
Note 1: Payee indicators are non-money amount
indicator fields located in the specific form record
layouts of the Payee “B” Record between field
positions 544–748.
Note 2: To correct a TIN, payee name and/or payee
address follow the instructions under Error Type 2.
F.The last record on the file will be the End of
Transmission “F” Record.
File layoutonestep corrections
Transmitter
“T”
Record
Payer
“A”
Record
“G”
coded
Payee “B”
Record
“G”
coded
Payee “B”
Record
End of Payer
“C”
Record
End of
Transmission
“F” Record
2009–27 I.R.B.37July 6, 2009

Guidelines for Filing Corrected Returns Electronically (Continued)
Two (2) separate transactions are required to make the following corrections properly. Follow the directions for both
Transactions 1 and 2. (See Note 4.) DO NOT use the two step correction process to correct money amounts.
Error Made on the Original ReturnHow To File the Corrected Return
ERRORTYPE2CORRECTION
1.
Original return was filed with one or more of the
following errors:
Transaction 1:Identify incorrect returns.
A.
Prepare a new file. The first record on the file will be
the Transmitter “T” Record.
B.Make a separate “A” Record for each type of return
and each payer being reported. The information in the
“A” Record will beexactlythe same as it was in the
original submission.(See Note 3.)
(a)No payee TIN (SSN, EIN, ITIN, QI-EIN)
(b)Incorrect payee TIN
(c)Incorrect payee name
(d)Incorrect payee address
(e)Wrong type of return indicator
Note 3: The Record Sequence Number will be
different since this is a counter number and is
unique to each file. For Form 1099-R corrections, if
the corrected amounts are zeros, certain indicators
will not be used.
C.
The Payee “B” Records must containexactly the
sameinformation as submitted previously,except,
insert a Corrected Return Indicator Code of “G” in
field position 6 of the “B” Records, and enter “0”
(zeros) in all payment amounts.(See Note 3.)
D.Corrected returns using“G” coded “B” Records may
be on the same file as those returns submitted with
a“C”code;however, separate “A” Records are
required.
E.Prepare a separate “C” Record for each type of return
and each payer being reported.
F.Continue with Transaction 2 to complete the
correction.
E
RRORTYPE2CORRECTION
Transaction 2:Report the correct information.
A.
Make a separate “A” Record for each type of return
and each payer being reported.
B.The Payee “B” Records must show the correct
information as well as a Corrected Return Indicator
Code of “C” in field position 6. Corrected returns
submitted to IRS/ECC-MTB using “C” coded “B”
Records may be on the same file as those returns
submitted with “G” codes;however, separate “A”
Records are required.
C.
Prepare a separate “C” Record for each type of return
and each payer being reported.
D.The last record on the file will be the End of
Transmission “F” Record.
Note 4: See the2009 General Instructions for Forms 1099, 1098, 3921, 3922, 5498, and W-2Gfor additional information on
regulations affecting corrections and related penalties.
July 6, 2009382009–27 I.R.B.

File layouttwostep corrections
Transmitter
“T”
Record
Payer
“A”
Record
“G”
coded
Payee “B”
Record
“G”
coded
Payee “B”
Record
End of Payer
“C”
Record
Payer
“A”
Record
“C”
coded
Payee “B”
Record
“C”
coded
Payee “B”
Record
End of Payer
“C”
Record
End of
Transmission
“F” Record
Note 5: If a filer is reporting “G” coded, “C” coded, and/or “Non-coded” (original) returns onthe same file, each category
must be reported under separate “A” Records.
Sec. 9. Effect on Paper Returns and Statements to Recipients
.01Electronic reporting of information returns eliminates the need to submit paper documents to the IRS.CAUTION: Do not send
Copy A of the paper forms to IRS/ECC-MTB for any forms filed electronically.This will result in duplicate filing; therefore,
erroneous notices could be generated.
.02Payers are responsible for providing statements to the payees as outlined in the2009 General Instructions for Forms 1099,
1098, 3921, 3922, 5498, and W-2G. Refer to those instructions for filing information returns on paper with the IRS and furnishing
statements to recipients.
.03Statements to recipients should be clear and legible. If the official IRS form is not used, the filer must adhere to the specifications
and guidelines in Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 3921, 3922, 5498, 8935,
W-2G and 1042-S.
Sec. 10. Combined Federal/State Filing Program
•Through the Combined Federal/State Filing (CF/SF) Program, IRS/ECC-MTB will forward original and corrected information
returns filed electronically to participating states for approved filers.
•For approval, the filer must submit a test file coded for this program. See Part B, Sec. 3, Test Files.
•Approved filers are sent Form 6847, Consent for Internal Revenue Service to Release Tax Information, which must be com-
pleted and returned to IRS/ECC-MTB. A separate form is required for each payer. This form does not have to be filed every
year, only when payer information changes.
.01The Combined Federal/State Filing (CF/SF) Program was established to simplify information returns filing for the taxpayer.
IRS/ECC-MTB will forward this information to participating states free of charge for approved filers. Separate reporting to those
states is not required. The following information returns may be filed under theCombined Federal/State Filing Program:
Form 1099-DIVDividends and Distributions
Form 1099-GCertain Government Payments
Form 1099-INTInterest Income
Form 1099-MISCMiscellaneous Income
Form 1099-OIDOriginal Issue Discount
Form 1099-PATRTaxable Distributions Received From Cooperatives
Form 1099-RDistributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs,
Insurance Contracts, etc.
Form 5498
IRA Contribution Information
.02To request approval to participate, an electronic test file coded for this programmustbe submitted to IRS/ECC-MTB between
November 1, 2009,andFebruary 15, 2010.
2009–27 I.R.B.39July 6, 2009

.03If the test file is coded for the Combined Federal/State Filing Program and is acceptable, anapproval letter and Form 6847,
Consent for Internal Revenue Service to Release Tax Information, will be sent to the filer.
.04Form 6847, Consent for Internal Revenue Service to Release Tax Information,mustbe completed and signed by the payer, and
returned to IRS/ECC-MTB before any tax information can be released to the state. Filers must write their TCC on Form 6847.
.05While a test file is only required for the first year when a filer applies to participate in the Program, it is highly recommended
that a test be sent every year you participate in the Combined Federal/State Filing program. Each record, both in the test and the actual
data file, must conform to the current Revenue Procedure.
.06Within 1–2 days after your file has been sent, you will be notified via e-mail as to the acceptability of your file if you provide a
valid e-mail address on the “Verify Your FilingInformation” screen. If you are using e-mailfiltering software, configure your software
to accept e-mail fromfire@irs.govandirs.e-helpmail@irs.gov. If the file is bad, the filer must return tohttp://fire.irs.govto determine
what the errors are in the file by clickingon CHECK FILE STATUS. If the test file was unacceptable a new file can be transmitted up
to February 15, 2010.
.07A separate Form 6847 isrequiredfor each payer. A transmitter may not combine payers on one Form 6847 even if acting as
Attorney-in-Fact for several payers. Form6847 may be computer-generated as long as it includes all information on the original form,
or it may be photocopied. If Form 6847 is signed by an Attorney-in-Fact, the written consent from the payer must clearly indicate that
the Attorney-in-Fact is empowered to authorize release of the information.
.08Only code the records for participating states and for those payers who have submitted Form 6847.
.09If a payee has a reporting requirement for more than one state,separate “B” Records must be created for each state. Payers
must prorate the amounts to determinewhat should be reported to each state. Donotreport the total amount to each state. This will
cause duplicate reporting.
.10Some participating states require separate notification thatthepayerisfilinginthismanner. SinceIRS/ECC-MTBactsasa
forwarding agent only, it is the payer’s responsibility tocontact the appropriate states for further information.
.11All corrections properly coded for the Combined Federal/State Filing Program will be forwarded to the participating states.
Only send corrections which affect Federal or affect Federal and State reporting. Errors which apply only to the state filing requirement
should be sent directly to the state.
.12Participating states and corresponding valid state codes are listed inTable 1of this section. The appropriate state codemust
be entered for those documents that meet the state filing requirements;do not use state abbreviations.
.13Each state’s filing requirements are subject to change by the state. It is the payer’s responsibility to contact the participating
states to verify their criteria.
.14Upon submission of the actual files, the transmittermustbe sure of the following:
(a)All records are coded exactly as required by this Revenue Procedure.
(b)A State Total “K” Record(s) for each state(s)being reported follows the “C” Record.
(c)Payment amount totals and the valid participating statecode are included in the State Totals “K” Record(s).
(d)The last “K” Record is followed by an “A” Record or an End of Transmission “F” Record (if this is the last record of the
entire file).
Table 1. Participating States and Their Codes *
StateCodeStateCodeStateCode
Alabama01Indiana18Nebraska31
Arizona04Iowa19NewJersey34
Arkansas
05
Kansas20New Mexico
35
California06Louisiana22North Carolina37
Colorado07Maine23North Dakota38
Connecticu
t
08Maryland24Ohio39
Delaware10Massachusetts
25
South Carolina
45
District of Columbia11Minnesota27Utah49
Georgia13Mississippi28Virginia
51
Hawaii
15
Missouri29Wisconsin
55
Idaho16Montana30
* The codes listed above are correct for the IRS Combined Federal/State Filing Program and may not correspond to the
state codes of other agencies or programs.
July 6, 2009402009–27 I.R.B.

Sample File Layout for Combined Federal/State Filer
Transmitter
“T”
Record
Payer
“A”
Record coded
with 1 in
position 26
Payee “B”
Record with
statecode15
in positions
747–748
Payee “B”
Record with
statecode06
in positions
747–748
Payee “B”
Record, no
state code
End of Payer
“C” Record
State Total “K” Record
for “B” records coded 15.
“K” record coded 15 in positions
747–748.
State Total “K” Record
for “B” records coded 06.
“K” record coded 06 in positions
747–748.
End of Transmission “F”
Record
Sec. 11. Penalties Associated With Information Returns
.01The following penalties generally apply to the person requiredto file information returns. The penalties apply to electronic
filers as well as to paper filers.
.02 Failure To File Correct Information Returns by the Due Date (Section 6721).If you fail to file a correct information return
by the due date and you cannot show reasonable cause, you may be subject to a penalty. The penalty applies if you fail to file timely,
you fail to include all information required to be shown on a return, or you include incorrect information on a return. The penalty also
applies if you file on paper when you were required to file electronically, you report an incorrect TIN or fail to report a TIN, or you
fail to file paper forms that are machine readable.
The amount of the penalty is based on when you file the correct information return. The penalty is:
•$15per information return if you correctly file within 30 days of the due date of the return (See Part A, Sec. 7 .02); maximum
penalty $75,000 per year ($25,000 for small businesses).
•$30per information return if you correctly file more than 30 days after the due date but by August 1; maximum penalty $150,000
per year ($50,000 for small businesses).
•$50per information return if you file after August 1 or you do not file required information returns; maximum penalty $250,000
per year ($100,000 for small businesses).
.03A late filing penalty may be assessed for areplacement file which is not transmitted by the required date. See Part B, Sec. 4
.06, for more information on replacement files.
.04 Intentional disregard of filing requirements.If failure to file a correct information return is due to intentional disregard of
the filing or correct information requirements, the penalty isat least $100 per information return with no maximum penalty.
.05 Failure To Furnish Correct Payee Statements (Section 6722).For information regarding penalties which may apply to
failure to furnish correct payee statements, see2009 General Instructions for Forms 1099, 1098, 3921, 3922, 5498, and W-2G.
Sec. 12. State Abbreviations
.01The following state and U.S. territory abbreviations are to be used when developing the state code portion of address fields. This
table provides state and territory abbreviations only, and does not represent those states participating in the Combined Federal/State
Filing Program.
2009–27 I.R.B.41July 6, 2009

StateCodeStateCodeStateCode
AlabamaALKentuckyKYNo. Mariana IslandsMP
AlaskaAKLouisianaLAOhioOH
American SamoaASMaineMEOklahomaOK
ArizonaAZMarshall IslandsMHOregonOR
ArkansasARMarylandMDPennsylvaniaPA
CaliforniaCAMassachusettsMAPuerto RicoPR
ColoradoCOMichiganMIRhode IslandRI
ConnecticutCTMinnesotaMNSouth Caroli
na
SC
DelawareDEMississippiMSSouth DakotaSD
District of ColumbiaDCMissouriMOTennesseeTN
Federated States of Micronesia FMMontanaMTTexasTX
FloridaFLNebraskaNEUtahUT
GeorgiaGANevadaNVVermontVT
GuamGUNew Hampsh
ire
NHVirginiaVA
HawaiiHINew JerseyNJ(U.S.) Virgin IslandsVI
IdahoIDNew MexicoNMWashingtonWA
IllinoisILNew YorkNYWest VirginiaWV
IndianaINNorth CarolinaNCWisconsinWI
IowaIANorth DakotaNDWyomingWY
KansasKS
.02Filers must adhere to the city, state, and ZIP Code format for U.S. addresses in the “B” Record. This also includes American
Samoa, Federated States of Micronesia, Guam, Marshall Islands, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands.
.03For foreign country addresses, filers may use a 51 position free format which should include city, province or state, postal code,
and name of country in this order. This is allowable only if a “1” (one) appears in the Foreign Country Indicator, Field Position 247,
of the “B” Record.
.04When reporting APO/FPO addresses, use the following format:
EXAMPLE:
Payee NamePVT Willard J. Doe
Mailing AddressCompany F, PSC Box 100
167 Infantry REGT
Payee CityAPO (or FPO)
Payee S
tate
AE, AA,
or AP*
Payee ZIP Code098010100
*AE is the designation for ZIPs beginning with 090–098, AA for ZIP 340, and AP for ZIPs 962–966.
Part B. Electronic Filing Specifications
Note 1: The FIRE System DOES NOT provide fill-in forms, except for Form 8809, Application for Extension of Time to File
Information Returns. Filers must program files according to theRecord Layout Specifications contained in this publication.
For a list of software providers, log on tow
ww.irs.govandgototheApproved IRS e-file for Business Providerslink. Also, see
Part A, Sec. 5 .03.
Note 2: The FIRE System may be down every Wednesday from 3:00 a.m. to 5:00 a.m. EST for maintenance.
Sec. 1. General
.01Electronic filing of Forms 1098,1099, 3921, 3922, 5498, and W-2G information returns, originals, corrections, and replace-
ments is the method of filing for payers who meet the 250 returns filing requirement. Payers whoare under the filing threshold
requirement, are encouraged to file electronically. Form 8953, Airline PaymentReport, may also be filed electronically.
July 6, 2009422009–27 I.R.B.

.02All electronic filing of information returns are received at IRS/ECC-MTB via the FIRE (Filing Information Returns Elec-
tronically) System. To connect to the FIRE System, point your browser toh
ttp://fire.irs.gov. The system is designed to support the
electronic filing of information returns only.
.03The electronic filing of information returns is not affiliated with any other IRS electronic filing programs. Filers must obtain
separate approval to participate in each program. Only inquiries concerning electronic filing of information returns should be directed
to IRS/ECC-MTB.
.04Files submitted to IRS/ECC-MTB electronically must be in standard ASCII code. Do not send paper forms with the same
information as electronically submittedfiles. This would create duplicate reporting resulting in penalty notices.
.05See Part C, Record Format Specifications and Record Layouts for the proper record format.
.06Form 8809, Application for Extension of Time To File Information Returns, is available as a fill-in form via the FIRE System.
If you do not already have a User ID and password refer to Section 7. At the Main Menu, click “Extension of Time Request” and
then click “Fill-in Extension Form”. This option is only used to request an automatic 30-day extension and must be completed by the
due date of the return for each payer requesting an extension. Printthe approval page foryour records. Refer to Part D for additional
details.
Sec. 2. Electronic Filing Approval Procedure
.01Filers must obtain a Transmitter Control Code (TCC) prior to submitting files electronically. Refer to Part A, Sec. 6, for
information on how to obtain a TCC.
.02Once a TCC is obtained, electronic filers create their own user ID, password and PIN (Personal Identification Number) and do
not need prior or special approval. See Part B, Sec. 5, for more information on the PIN.
.03If a filer is submitting files for more than one TCC, it isnotnecessary to create a separate user ID and password for each TCC.
.04For all passwords, it is the user’s responsibility to rememberthe password and not allow the password to be compromised.
Passwords are user created at first logon and must be 8 alpha/numerics containing at least 1 uppercase, 1 lowercase, and 1 numeric.
However, filers who forget their password or PIN, can calltoll-free 1–866–455–7438for assistance. The FIRE System may require
users to change their passwords periodically. Users can changetheir passwords at any time from the Main Menu. Prior passwords
cannot be used.
Sec. 3. Test Files
.01Filers are not required to submit a test file; however, the submission of a test file is encouraged for all new electronic filers to
test hardware and software. If filers wish to submit an electronic test file for Tax Year2009(returns to be filed in2010), itmustbe
submitted to IRS/ECC-MTBno earlier thanNovember 1,2009,andno later thanFebruary 15,2010.
.02IRS/ECC-MTB encourages first time electronic filers to submit a test. Test files arerequiredfor filers wishing to participate
in the Combined Federal/State Filing Program. See Part A, Sec. 10,for further information on the Combined Federal/State Filing
Program.
.03The test filemustconsist of a sample of each type of record:
(a)Transmitter “T” Record (all fields marked required must include transmitter information)
(b)Payer “A” Record
(c)Multiple Payee “B” Records(at least 11 “B” Records per each “A” Record)
(d)End of Payer “C” Record
(e)State Totals “K” Record, if participating in the Combined Federal/State Filing Program
(f)End of Transmission “F” Record (See Part C for record formats.)
.04Use the Test Indicator “T” in Field Position 28 of the “T” Record to show this is a test file.
.05IRS/ECC-MTB will check the file to ensure it meets the specifications of this Revenue Procedure. For current filers, sending
a test file will provide the opportunity to ensure their software reflects any programming changes.
.06Filers who encounter problems while transmitting the electronic test file can contact IRS/ECC-MTBtoll-free 1–866–455–7438
for assistance.
.07Within 1–2 days after your file has been sent, you will be notified via e-mail as to the acceptability of your file if you provide a
valid e-mail address on the “Verify Your FilingInformation” screen. If you are using e-mailfiltering software, configure your software
to accept e-mail fromfire@irs.govandirs.e-helpmail@irs.gov. If the file is bad, the filer must return tohttp://fire.irs.govto determine
what the errors are in the file by clicking on CHECK FILE STATUS. If your results indicate:
(a)“Good, Federal Reporting” — Your test file is good for federal reporting only. Click on the filename for additional details.
(b)“Good, Federal/State Reporting” — Your file is good for the Combined Federal and State Filing Program (see Part A,
Section 10 for further details). Click on the filename for additional details.
(c)“Bad” — This means that your test file contained errors. Click on the filename for a list of the errors. If you want to send
another test file, send it as a test (not a replacement, original or correction).
2009–27 I.R.B.43July 6, 2009

(d)“Not Yet Processed” — The file has been received, but we do not have results available yet. Please allow another day for
results.
Sec. 4. Electronic Submissions
.01Electronically filed information may be submitted to IRS/ECC-MTB 24 hours a day, 7 days a week. Technical assistance is
available Monday through Friday between 8:30 a.m. and 4:30 p.m. EST by callingtoll-free 1–866–455–7438.
.02 The FIRE System will be down from 2 p.m. EST December 22, 2009, through January 4, 2010.This allows IRS/ECC-
MTB to update its system to reflect current year changes.In addition,the FIRE System may be down every Wednesday from 3:00 a.m.
to 5:00 a.m. EST for maintenance.
.03If you are sending files larger than 10,000 records electronically, data compression is encouraged. When transmitting files
larger than 5 million records, please contact IRS/ECC-MTB for additional information. WinZipand PKZIP are the only acceptable
compression packages. IRS/ECC-MTB cannot accept self-extracting zip files or compressed files containing multiple files. The time
required to transmit information returns electronically will vary depending upon the type of connection to the Internet and if data
compression is used.The time required to transmit a file can be reduced up to 95 percent by using compression.
.04The FIRE System can accept multiple files forthe same type of return providing duplicate data is not transmitted. For example,
if your company has several branches issuing 1099-INT forms, it is not necessary to consolidate all the forms into one transmission.
Each file may be sent separately,providing duplicate data is not transmitted.
.05Transmitters may create files using self assigned filename(s). Files submitted electronicallywill be assigned a new unique
filename by the FIRE System. The filename assigned by the FIRE System will consist of submission type (TEST, ORIG [original],
CORR [correction], and REPL [replacement]), the filer’s TCC and a four-digit number sequence. The sequence number will be
incremented for every file sent. For example, if it is your first original file for the calendar year and your TCC is 44444, the IRS
assigned filename would be ORIG.44444.0001.Record the file name.This information will be needed by IRS/ECC-MTB to identify
the file, if assistance is required.
.06If a file submitted timely is bad, the filer will have up to 60 days from the day the file was transmitted to submit an acceptable
replacementfile. If an acceptable replacement file isnot received within 60 days, the payer could be subject to late filing penalties.
This only applies to files originally submitted electronically.
.07The following definitions have been provided to help distinguish between a correction and a replacement:
•Acorrectionis an information return submitted by the transmitter to correct an information return that was previously submit-
ted to and processed by IRS/ECC-MTB, but contained erroneous information.(See Note.)
Note:Corrections should only be made torecords that have been submitted incorrectly, not the entire file.
•Areplacementis an information return file sent by the filer because the CHECK FILE STATUS option on the FIRE System
indicated the original/correction file wasbad. After the necessary changes have been made, the file must be transmitted through
the FIRE System. (See Note.)
Note: Filers should never transmit anything to IRS/ECC-MTB as a “Replacement” file unless the CHECK FILE STATUS
option on the FIRE System indicates a previous file is bad.
Sec. 5. PIN Requirements
.01The user will be prompted to create
a PIN consisting of 10 numeric characters when establishing their initial User ID name and
password.
.02The PIN is required each time an ORI
GINAL, CORRECTION, or REPLACEMENT file is sent electronically and is permission
to release the file. It is not needed fo
r a TEST file. An authorized agent may enter theirPIN; however, the payer is responsible for the
accuracy of the returns. The payer wi
ll be liable for penalties for failure to comply with filing requirements. If you forget your PIN,
please calltoll-free 1–866–455–74
38for assistance.
.03If the file is good, it is released
for mainline processing after 10calendar days from receipt. Contact ustoll-free 1–866–455–7438
within this 10-day period if there is
a reason the file should not be released for further processing. If the file is bad, follow normal
replacement procedures.
Sec. 6. Electronic Filing Specifications
.01The FIRE System is designed exclusively for the filing of Forms 1042-S, 1098, 1099,3921,3922, 5498, 8027,8935and W-2G.
.02A transmitter must have a TCC (see Part A,Sec. 6) before a file can be transmitted.
.03After 1–2 business days, the results of the electronic transmission will be e-mailed to you providing you provide an accurate
e-mail address on the “Verify Your Filing Information” screen. If you are using e-mail filtering software, configure your software to
July 6, 2009442009–27 I.R.B.

accept e-mail fromfire@irs.govandirs.e-helpmail@irs.gov. If after receiving the e-mail it indicates that your file is bad, you must
logintotheFIRESystemandgototheCHECKFILESTATUSareaofthe FIRE System to determine what the errors are in your file.
Sec. 7. Connecting to the FIRE System
.01Before connecting, have your TCC and TIN available.
.02Filers should turn off pop-up blocking software before transmitting their files.
.03Your browser must support the security standards listed below.
.04Your browser must be set to receive “cookies.” Cookies are used to preserve your User ID status.
.05Point your browser tohttp://fire.irs.govto connect to the FIRE System.
.06FIRE Internet Security Technical Standards are:
HTTP 1.1 Specification (http://www.w3.org/Protocols/rfc2616/rfc2616.txt)
SSL 3.0 or TLS 1.0. SSL and TLS are implemented using SHA and RSA 1024 bits during the asymmetric handshake.
SSL 3.0 Specifications (http://wp/netscape.com/eng/ssl3)
TLS 1.0 Specifications (http://www.ief.org/rfc/rfc2246.txt)
The filer can use one of the following encryption algorithms, listed in order of priority, using SSL or TLS:
*AES 256-bit (FIPS–197)
*AES 128-bit (FIPS–197)
TDES 168-bit (FIPS–46–3)
**RC4 128-bit
*IRS intends to start offering this sometime during the period of this publication. If you plan to use it, please
contact us to see if it is available.
** IRS intends to drop this non-FIPS algorithm during the period of this publication after the Service starts
offering AES.
F
irsttimeconnectiontotheFIRESystem(If you have logged on previously, skip to Subsequent Connections to the FIRE
System.)
Click“Create New Account.”
Fill out the registration form and click“Submit.”
Create yourUser ID
Create and verify yourpassword(the password is user created and must be 8 alpha/numerics,
containing at least 1 uppercase, 1 lowercase and 1 numeric). FIRE will require you to change
the password periodically.
Click“Create.”
If you receive the message“Account Created,”click“OK.”
Create and verify your 10-digit self-assigned PIN (Personal Identification Number).
Click“Submit.”
If you receive the message“Your PIN has been successfully created!,”click“OK.”
Read the bulletin(s) and/or “Click here to continue.”
S
ubsequentconnectionstotheFIRESystem
Click“Log On.”
Enter yourUser ID.
Enter yourpassword(the password is case sensitive).
Read the bulletin(s) and/or “Click here to continue.”
U
ploadingyourfiletotheFIRESystem
At Menu Options:
Click“Send Information Returns”
Enter yourTCC:
Enter yourTIN:
2009–27 I.R.B.45July 6, 2009

Uploadingyourf
iletotheFIRESystem
Click“Submit.”
The system will then display the company name, address, city, state, ZIP code, telephone
number, contact and e-mail address. This information will be used to e-mail the transmitter
regarding their transmission. Update as appropriate and/or Click“Accept.”
Note: Please ensure that the e-mail address is accurate so that the correct person receives
the e-mail and it does not return to us undeliverable. If you are using SPAM filtering
software, configure it to allow an e-mail fromfire@irs.govandirs.e-helpmail@irs.gov.
Click one of the following:
Original File
Correction File
Test File(This option will only be available from 11/1/2009 — 02/15/2010.)
Replacement File
•Electroni
c Replacement(file was originally transmitted on this system)
Click the f
ile to be replaced.
•Mag Media Replacement(file was originally sent on some type of mag-
netic media) Enter the alpha character from the letter (L–2494) that was
returned. It is located on the top right on the letter under “Refer Reply
To:” For example, if the letter indicates TCC 44444A, the alpha code that
would be entered is “A.” Click“Submit.”
Enter you
r 10-digit PIN (not prompted for this if a test is being sent).
Click“Submit.”
Click“Browse”to locate the file and open it.
Click“Upload.”
When the upload is complete, the screenwill display the total bytes received and tell you the name of the file you just
uploaded. Print this pageand keep it for your records.
If you have more files to upload for that TCC:
Click“File Another?;”otherwise,
Click“Main Menu.”
It is your responsibility to check the acceptability of your file; therefore, be sure to check back into the system in 1–2
business days using the CHECK FILE STATUS option.
Chec
kingyourFILESTATUS
If th
e correct e-mail address was provided on the “Verify Your Filing Information” screen when the file was sent, an e-mail will be
sent
regarding your FILE STATUS. If the results in the e-mail indicate “Good, not Released” and you agree with the “Count of
Paye
es”, then you are finished with this file. If you have any other results, please follow the instructions below.
At the Main Menu:
Cli
ck“Check File Status.”
Enter yourTCC:
Enter yourTIN:
Click“Search.”
July 6, 2009462009–27 I.R.B.

If “Results” indicate:
“Good, Not Rele
ased”— and you agree with the “Count of Payees”, you
are finished wi
th this file. The file will automatically be released after 10
calendar days
unless you contact us within this timeframe.
“Good, Released”— File has been released to our mainline processing.
“Bad”— Click on filename to view error message(s). Correct the errors and
timely resubmit the file as a “replacement”.
“Not yet proc
essed”— File has been received, but we do not have results
available ye
t. Please check back in a few days.
Click on the d
esired file for a detailed report of your transmission.
When you are finished, click onMain Menu.
Click“Log Out.”
Close your Web Browser.
Sec. 8. Common Problems and Questions
IRS/ECC-MTB encourages filers to verify the format and content of each type of record to ensure the accuracy of the data. This
may eliminate the need for IRS/ECC-MTB to request replacement files. This may be important for those payers who have either had
their files prepared by a service bureau orwho have purchased software packages.
Filers who engage a service bureau to transmit files on their behalf should be careful not to report duplicate data, which
may generate penalty notices.
This section lists some of the problems most frequently encountered with electronic files submitted to IRS/ECC-MTB. These
problems may result in IRS/ECC-MTB requesting replacement files.
1. Discrep
ancy Between IRS/ECC-MTB Totals and Totals in Payer “C” Records
The “C” Record is a summary record for a type of return for agiven payer. IRS compares the total number of payees and
payment amounts in the “B” records with totals in the “C” Records. The two totalsmustagree. DoNOTenter negative amounts
except when reporting Forms 1099-B or 1099-Q. Money amounts must be all numeric, right-justified and zero (0) fill unused
positions.Do Not Use Blanks.
2. Missing Correction Indicator in Payee “B” Record.
When a fil
e is submitted as a correction file, there must be a correction indicator, “G” or “C” in position 6 of the Payee “B”
record. S
ee Part A, Sec. 8.
3. Incorrect TIN in Payer “A” Record.
The Payer’s TIN reported in positions 12–20 of the “A” record must be a nine-digit number.(Do Not Enter Hyphens.)The
TINandtheFirstPayerNameLineprovided in the “A” record must correspond.
4. Incorrect Tax Year in the Transmitter “T” Record, Payer “A” Record and the Payee “B” Records.
The tax year in the transmitter, payer and payee records should reflect the tax year of the information return being reported. For
prior tax year data, there must be a “P” in position 6 of the Transmitter “T” record. This position must be blank for current
tax year data.
5. Incor
rect use of Test Indicator.
When sending a test file, position 28 of the Transmitter “T” recordshould contain a “T”, otherwise blank fill. Do not populate this
field with a “T” if sending an original, replacement or correction file.
6. Incorrect Format for TINs in the Payee “B” Record.
TINs entered in positions 12–20 of the Payee “B” record must consist of nine numerics only.(Do Not Enter Hyphens.) Incorrect
formatting of TINs may result in a penalty.
2009–27 I.R.B.47July 6, 2009

7. Distribution Codes for Form 1099-R reported incorrectly.
For Form 1099-R, there must be valid Distribution Code(s) in positions 545–546 of the Payee “B” record. For valid codes (and
combinations), see Guide to Distribution Codes in Part C. If onlyone distribution code is required, it must be entered in position
545 and position 546 must be blank. A blank in position 545 is not acceptable.
8. The Payment A
mount Fields in the “B” Record Do Not Correspond to the Amount Codes in the “A” Record.
The Amount Codes used in the “A” recordMUSTcorrespond with the payment amount fields used in the “B” records. The amount
codes must be left-justified, in ascendingorder with the unused positions blank. For Example: If the “B” records show payment
amounts in payment amount fields 2, 4, and 7, then the “A” Record must correspond with 2, 4, and 7 in the amount codes field.
N
ON-FORMATERRORS
1. SPAM filters are not set to receive e-mail fromfire@irs.govandirs.e-helpmail@irs.gov.
Ifyouwanttor
eceive e-mails concerning your files, processing results, reminders and notices, set your SPAM filter to receive
e-mail fromfi
re@irs.govandirs.e-helpmail@irs.gov.
2. Incorrect e-mail address provided.
When the “Verify Your Filing Information” screen is displayed,make sure your correct e-mail address is listed. If not, please
update with the correct e-mail address.
3. Transmitter does not check the FIRE Systemtodeterminewhythefileisbad.
The results of your file transfer are posted to the FIRE System within two business days. If the correct e-mail address was provided
on the “Verify Your Filing Information” screen when the file was sent, an e-mail will be sent regarding your FILE STATUS. If the
results in the e-mail indicate “Good, not Released” and you agreewith the “Count of Payees”, then you are finished with this file.
If you have any other results, please follow the instructions in the Check File Status option. If the file contains errors, you can get
an online listing of the errors. Date received and number of payee records are also displayed. If the file is good, but you do not
want the file processed, you must contact IRS/ECC-MTB within 10 calendar days from the transmission of your file.
4.Incorrect file is not replaced timely.
If your file is bad, correct the file and timely resubmit as a replacement.
5. Transmitter sends an original file that is good, and then sends a correction file for the entire file even though there are
only a few changes.
The correction file, containing the proper coding, should only contain the records needing correction, not the entire file.
6. Transmit
ter sends a file and CHECK FILE STATUS indicates thatthe file is good, but the transmitter wants to send a
replacemen
t or correction file to replace the original/correction/replacement file.
Once a file has been transmitted, you cannot send a replacement file unless CHECK FILE STATUS indicates the file is bad
(1–2 business days after file was transmitted). If you do not want us to process the file, you must first contact ustoll-free
1–866–455–7438to see if this is a possibility.
7. Transmitter compresses several files into one.
Only compr
ess one file at a time. For example, if you have 10 uncompressed files to send, compress each file separately and
send 10 sep
arate compressed files.
8. File is formatted as EBCDIC.
All files submitted electronicallymust be in standard ASCII code.
9. Transmitter has one TCC number, but is filing for multiple companies, which TIN should be used when sending the file?
When sending the file electronically, youwill need to enter the TIN of the company assigned to the TCC. When you upload the
file, it will contain the TINs of the other companies for which you are filing. This is the information that will be passed forward.
10. Transmitter sent the wrong file, what should be done?
Call us as soon as possible toll-free at1–866–455–7438.We may be able to stop the file before it has been processed.Please do
not send a replacement for a file that is marked as a good file.
July 6, 2009482009–27 I.R.B.

Part C. Record Format Specification and Record Layouts
Sec. 1. File Layout Diagram
Sec. 2. General
.01The specifications contained in this part of the Revenue Procedure define the required formation and contents of the records to
be included in the electronic files.
.02A provision is made in the “B” Records for entries which are optional. If the field is not used, enter blanks to maintain a fixed
record length of 750 positions. Each field descriptionexplains the intended use of specific field positions.
Sec. 3. Transmitter “T” Record — General Field Descriptions
.01The Transmitter “T” Record identifies the entity transmitting the electronic file and contains information which is critical if it
is necessary for IRS/ECC-MTB to contact the filer.
.02The Transmitter “T” Record is the first record on each file and is followed by a Payer “A” Record. A file format diagram is
located at the beginning of Part C. A replacement file will berequested by IRS/ECC-MTB if the “T” Record is not present.
.03For all fields marked“Required,”the transmitter must provide the information described under Description and Remarks.
For those fields not marked“Required,”a transmitter must allow for the field but may be instructed to enter blanks or zeros in the
indicated field positions and for the indicated length.
.04All records must be a fixed length of 750 positions.
.05All alpha characters entered in the “T” Record must be upper-case, except e-mail addresses which may be case sensitive.Do
notuse punctuation in the name and address fields.
2009–27 I.R.B.49July 6, 2009

Record Name: Transmitter “T” Record
Field
Position
Field Title
Length
Description and Remarks
1Record Type1
Required. Enter “T.”
2–5
Payment Year4
Required.Enter “2009.” If reporting prior year data report the year which
applies (2007, 2008, etc.) and set the Prior Year Data Indicator in field position 6.
6Prior Year Data
Indicator
1
Required.Enter “P”onlyif reporting prior year data; otherwise, enter blank.
Do not enter a “P” if tax year is2009.(See Note.)
Note: Electronic files SENT December 21 or later must be coded with a “P.” Current year processing ends in December and
programs are converted for the next processing year.
7–15
Transmitter’s TIN9
Required. Enter the transmitter’s nine-digit Taxpayer Identification Number
(TIN).
16–20Transmitter Control
Code
5Required.Enter the five-character alpha/numeric Transmitter Control Code
(TCC) assigned by IRS/ECC-MTB. A TCCmust be obtained to file data with
this program.
21–27Blank7Enter blanks.
28Test File
Indicator
1
Required for test files only.Enter a “T” if this is a test file; otherwise, enter
a blank.
29Foreign Entity
Indicator
1Enter a “1” (one) if the transmitter is a foreign entity. If the transmitter is not a
foreign entity, enter a blank.
30–69Transmitter Name40
Required.Enter the name of the transmitter in the manner in which it is used in
normal business. Left-justify and fill unused positions with blanks.
70–109Transmitter Name
(Continuation)
40
Required.Enter any additional information that may be part of the name.
Left-justify information and fill unused positions with blanks.
110–149Company Name40
Required.Enter the name of the company associated with the address where
correspondence should be sent.
150–189
Company Name
(Continuation)
40Enter any additional information that may be part of the name of the company
where correspondence should be sent.
190–229Company Mailing
Address
40
Required.Enter the mailing address where correspondence should be sent.
Note: Any correspondence relating to problem electronic files will be sent to this address.
For U.S. addresses, the payer city, state, and ZIP Code must be reported as a 40, 2, and 9-position field, respectively.Filers must
adhere to the correct format for the payer city, state, and ZIP Code.
For foreign addresses,filers may use the payer city, state, and ZIP Code as acontinuous 51-position field. Enter information
inthefollowingorder:city,provinceorstate,postalcode,and the name of the country. When reporting a foreign address, the
Foreign Entity Indicator in position 29 must contain a “1” (one).
230–269Company
City
40
Required.Enter the city, town, or post office where correspondence should
be sent.
270–271Company
State
2
Required.Enter the valid U.S. Postal Service state abbreviation. Refer to the
chart for valid state codes in Part A, Sec. 12.
272–280Company
ZIP Code
9
Required. Enter the valid nine-digit ZIP Code assigned by the U.S. Postal
Service. If only the first five-digits are known, left-justify information and fill
unused positions with blanks.
281–295
Blank
15
Enter blanks.
July 6, 2009502009–27 I.R.B.

Record Name: Transmitter“T” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
296–303Total Number of
Payees
8Enter the total number of Payee "B" Records reported in the file. Right-justify
information and fill unused positions with zeros.
304–343Contact Name40
Required.Enter the name of the person to be contacted if IRS/ECC-MTB
encounters problems with the file or transmission.
344–358
Contact Telephone
Number &
Extension
15Required.Enter the telephone number of the person to contact regarding
electronic files. Omit hyphens. If no extension is available, left-justify
information and fill unused positions with blanks.
For example, the IRS/ECC-MTB Customer Service Section telephone number
of866–455–7438with an extension of52345would be866455743852345.
359–408
Contact E-mail
Address
50Required if available.Enter the e-mail address of the person to contact
regarding electronic files. Left-justify information. If no e-mail address is
available, enter blanks.
409–499Blank91Enter blanks.
500–507
Record Sequence
Number
8
Required.Enter the number of the record as it appears within your file. The
record sequence number for the “T” Record will always be “1” (one), since it
is the first record on your file andyou can have only one “T” Record in a file.
Each record, thereafter, must be incremented by one in ascending numerical
sequence,i.e., 2, 3, 4, etc. Right-justify numbers with leading zeros in the field.
For example, the “T” Record sequence number would appear as “00000001”
in the field, the first “A” Record would be “00000002,” the first “B” Record,
“00000003,” the second “B” Record, “00000004” and so on until you reach the
final record of the file, the “F” Record.
508–517
Blank10Enter blanks.
518
Vendor Indicator1
Required. Enter the appropriate code from the table below to indicate if your
software was provided by a vendor or produced in-house.
Indicator
Usage
VYour software was purchased from a
vendor or other source.
IYour software was produced by
in-house programmers.
Note: In-house programmer is defined as an employee or a hired contract programmer. If your software is produced
in-house, the following Vendor information fields are not required.
519–558
Vendor Name40
Required. Enter the name of the company from whom you purchased your
software.
559–598
Vendor Mailing
Address
40
Required.Enter the mailing address.
ForU.S.addresses, the vendor city, state, and ZIP Code must be reported as a 40, 2, and 9-position field, respectively.Filers
must adhere to the correct format for the payer city, state, and ZIP Code.
For foreign addresses,filers may use the payer city, state, and ZIP Code as a continuous 51-position field. Enter information in
the following order: city, province or state, postal code, and the name of the country.
599–638
Vendor City40
Required.Enter the city, town, or post office.
639–640Vendor State2
Required.Enter the valid U.S. Postal Service state abbreviation. Refer to the
chart of valid state codes in Part A, Sec. 12.
2009–27 I.R.B.51July 6, 2009

Record Name: Transmitter“T” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
641–649Vendor ZIP Code9
Required.Enter the valid nine-digit ZIP Code assigned by the U.S. Postal
Service. If only the first five-digits are known, left-justify information and fill
unused positions with blanks.
650–689
Vendor Contact Name40
Required.Enter the name of the person whocan be contacted concerning any
software questions.
690–704Vendor Contact
Telephone Number &
Extension
15Required.Enter the telephone number of the person to contact concerning
software questions. Omit hyphens. If no extension is available, left-justify
information and fill unused positions with blanks.
705-739
Blank
35
Enter Blanks.
740Vendor Foreign
Entity Indicator
1Enter a “1” (one) if the vendor is a foreign entity. Otherwise, enter a blank.
741–748Blank8Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed characters (CR/LF).
Sec. 4. Transmitter “T” Record — Record Layout
Record
Type
Payment
Year
Prior Year
Data
Indicator
Transmitter’s
TIN
Transmitter
Control
Code
Blank
1
2–5
6
7–15
16–2021–27
Test File
Indicator
Foreign
Entity
Indicator
Transmitter
Name
Transmitter
Name
(Continuation)
Company
Name
Company
Name
(Continuation)
282930–6970–109110–149
150–189
Company
Mailing
Address
Company
City
Company
State
Company
ZIP
Code
BlankTotal
Number
of Payees
Contact
Name
190–229230–269270–271272–280
281–295
296–303304–343
Contact
Phone
Number &
Extension
Contact
e-mail
Address
BlankRecord
Sequence
Number
BlankVendor
Indicator
344–358359–408
409–499
500–507508–517518
Vendor
Name
Vendor
Mailing
Address
Vendor
City
Vendor
State
Vendor ZIP
Code
Vendor
Contact
Name
519–558559–598599–638
639–640641–649
650–689
July 6, 2009522009–27 I.R.B.

Vendor
Contact
Phone
Number &
Extension
BlankVendor
Foreign
Entity
Indicator
BlankBlank
or CR/LF
690–704
705–739
740741–748
749–750
Sec. 5. Payer “A” Record — General Field Descriptions
.01The Payer “A” Record identifies the person making payments, a recipient of mortgage or student loan interest payments, an
educational institution, a broker, a person reporting a real estate transaction, a barter exchange, a creditor, a trustee or issuer of any
IRA or MSA plan, and a lender who acquires an interest in secured property or who has a reason to know that the property has been
abandoned. The payer will be held responsible for the completeness, accuracy, andtimely submission of electronic files.
.02The second record on the file must be an “A” Record. A transmitter may include Payee “B” Records for more than one payer
in a file. However,each groupof “B” Records must be preceded by an “A” Record and followed by an End of Payer “C” Record. A
single file may contain different types of returns but the types of returnsmust notbe intermingled. A separate “A” Record is required
for each payer and each type of return being reported.
.03The number of “A” Records depends on the number of payers and the different types of returns being reported. Do not submit
separate “A” Records for each payment amount being reported. For example, if a payer is filing Form 1099-DIV to report Amount
Codes 1, 2, and 3, all three amount codes should be reported under one “A” Record, not three separate “A” Records.
.04The maximum number of “A” Records allowed on a file is 90,000.
.05All records must be a fixed length of 750 positions.
.06All alpha characters entered inthe “A” Record must be upper case.
.07For all fields marked“Required,”the transmitter must provide the information described under Description and Remarks.
For those fields not marked“Required,”a transmitter must allow for the field, but may be instructed to enter blanks or zeros in the
indicated field position(s)and for the indicated length.
Record Name: Payer “A” Record
Field
Position
Field Title
Length
Description and Remarks
1Record Type1
Required.Enter an “A.”
2–5
Payment Year4
Required.Enter“2009.” If reporting prior year data report the year which applies
(2007, 2008, etc.).
6–11Blank6Enter blanks.
12–20Payer’s
Taxpayer
Identification
Number (TIN)
9
Required.Must be the valid nine-digit Taxpayer Identification Number assigned to
the payer.Do not enter blanks, hyphens, or alpha characters.All zeros, ones,
twos, etc., will have the effect of an incorrect TIN.
Note:For foreign entities that are not required to have a TIN,this field must be blank. However, the Foreign Entity
Indicator, position 52 of the “A”Record, must be set to “1” (one).
21–24Payer Name
Control
4The Payer Name Control can be obtained only from the mail label on the Package
1096 that is mailed to most payers eachDecember. If a Package 1096 has not been
received, you can determine your name control using the following simple rules or
you can leave the field blank. For a business,use the first four significant characters
of the business name. Disregard the word “the” when it is the first word of the name,
unless there are only two words in the name. A hyphen (-) and an ampersand (&) are
the only acceptable special characters.Names of less than four (4) characters should
be left-justified, filling the unused positions with blanks.
25
Last Filing
Indicator
1Enter a “1” (one) if this is thelast yearthis payer name and TIN will file information
returns electronically or on paper; otherwise, enter blank.
2009–27 I.R.B.53July 6, 2009

Record Name: Payer “A” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
26Combined
Federal/State
Filer
1
Required for the Combined Federal/State Filing Program.Enter“1”(one)if
approved or submitting a test to participate in the Combined Federal/State Filing
Program; otherwise, enter a blank.
Note 1:If the Payer “A” Record is coded for Combined Federal/State Filing Program there must be coding in the Payee
“B” Records and the State Totals “K” Records.
Note 2: If you entered “1” (one) in this field position, be sure to code the Payee “B” Records with the appropriate state
code. Refer to Part A, Sec. 10,for further information.
27Type of Return1
Required. Enter the appropriate code from the table below:
TypeofReturnCode
10983
1098-CX
1098-E2
1098-T8
1099-A4
1099-BB
1099-C
5
1099-CAPP
1099-DIV1
1099-GF
1099-HJ
1099-INT6
1099-LTCT
1099-MISCA
1099-OIDD
1099-P
ATR
7
1099-QQ
1099-R9
1099-SS
1099-SAM
3921N
3922Z
5498
L
5498-ESA
V
5498-SA
K
8935U
W-2GW
28–41Amount Codes
(See Note.)
14
Required. Enter the appropriate amount codes for the type of return being reported.
In most cases, the box numbers on paper information returns correspond with the
amount codes used to file electronically. However, if discrepancies occur, this
Revenue Procedure governs for filing electronically. Enter the amount codes in
ascending sequence; numeric characters followed by alphas. Left-justify, and fill
unused positions with blanks.
Note: A type of return and an amount code must be present in every Payer “A” Record even if no money amounts are
being reported. For a detailed explanation of the information to be reported in each amount code, refer to the appropriate
paper instructions for each form.
July 6, 2009542009–27 I.R.B.

Record Name: Payer “A” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
Amount CodesForm 1098—Mortgage
Interest Statement
For Reporting Mortgage Interest Received From Payers/Borrowers (Payer of
Record) on Form 1098:
AmountCodeAmountType
1Mortgage interest received from
payer(s)/borrower(s)
2Pointspaidonp
urchase of principal
residence
3Refund (or credit) of overpaid interest
4Mortgage Insurance Premiums
5
Blank (Filer’s use)
Amount CodesForm 1098-C—
Contributions of Motor Vehicles, Boats,
and Airplanes
For Reporting Gross Proceeds From Sales on Form 1098-C:
A
mountCodeAmountType
4Gross proceeds from sales
6Value of goods or services in exchange for
vehicle
Amount CodeForm 1098-E—Student
Loan Interest
For Reporting Interest on Student Loans on Form 1098-E:
A
mountCodeAmountType
1Student loan interest received by lender
Amount CodesForm 1098-T— Tuition
Statement
For Reporting Tuition Payments on Form 1098-T:
A
mountCodeAmountType
1Payments received forqualified tuition and
related expenses
2Amounts bi
lled for qualified tuition and
related ex
penses
3Adjustments made for prior year
4Scholarships or grants
5
Adjustmentstoscholarshipsorgrantsfor
a prior year
7Reimbursements or refunds of qualified
tuition and related expenses from an
insurance contract
Note 1: For Amount Codes 1 and 2 enter either payments received OR amounts billed. DO NOT report both.
Note 2: A
mount Codes 3 and 5 are assumed to be negative. It is not necessary to code with an over punch or dash
to indic
ate a negative reporting.
Amount CodesForm 1099-A—
Acquisition or Abandonment of Secured
Property
For Reporting the Acquisition or Abandonment of Secured Property on Form
1099-A:
A
mountCodeAmountType
2Balance of principal outstanding
4Fair market value of property
2009–27 I.R.B.55July 6, 2009

Record Name: Payer “A” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
For Reporting Payments on Form 1099-B:
Amount CodesForm 1099-B— Proceeds
From Broker and Barter Exchange
TransactionsA
mountCodeAmountType
2Stocks, bonds, etc. (For forward contracts,
See Note 1.)
3Bartering (Do not report negative amounts.)
4Federal income tax withheld (backup
withholding) (Do not report negative
amounts.)
6
Profit (or lo
ss) realized in2009(See Note
2.)
7Unrealized profit (or loss) on open contracts
—12/31/2007(See Note 2.)
8Unrealized profit (or loss) on open contracts
—12/31/2009(See Note 2.)
9
Aggregate profit (or loss) (See Note 2.)
Note 1: The payment amount field associated with Amount Code 2 may be used to report a loss from a closing transaction
on a forward contract. Refer to the "B" Record – General Field Descriptions and RecordLayouts, Payment Amount
Fields, for instructions on reporting negative amounts.
Note 2: Payment Amount Fields 6, 7, 8, and 9 are to be used for the reporting of regulatedfutures or foreign currency
contracts.
For Reporting Payments on Form 1099-C:
Amount CodesForm 1099-C —
Cancellation of Debt
A
mountCodeAmountType
2Amount of debt canceled
3Interest, if included in Amount Code 2
7
Fair market value of property (See Note.)
Note: Use Amount Code 7 only if a combined Form 1099-A and 1099-C is being filed.
For Reporting Payments on Form 1099-CAP:
Amount CodeForm 1099-CAP—
Changes in Corporate Control and Capital
StructureA
mountCodeAmountType
2Aggregate amount received
For Reporting Payments on Form 1099-DIV:
Amount CodesForm 1099-DIV—
Dividends and Distributions
A
mountCodeAmountType
1Total ordinary dividends
2Qualified dividends
3Total capital gain distribution
6
Unreca
ptured Section 1250 gain
7Section 1202 gain
8Colle
ctibles (28%) rate gain
9Nondividend distributions
AFederal income tax withheld
BInvestment expenses
CForeign tax paid
DCash liquidation distributions
ENon
-cash liquidation distributions
July 6, 2009562009–27 I.R.B.

Record Name: Payer “A” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
For Reporting Payments on Form 1099-G:
Amount CodesForm 1099-G— Certain
Government Payments
A
mountCodeAmountType
1Unemployment compensation
2State or local income tax refunds, credits,
or offsets
4Federal income
tax withheld (backup
withholding or
voluntary withholding
on unemploymen
t compensation or
Commodity Cre
dit Corporation Loans, or
certain crop d
isaster payments)
5
Alternative Trade Adjustment Assistance
(ATAA) Payments
6Taxable grants
7Agriculture
payments
9Market Gain Commodity Credit Loans
Repaid on or after January 1, 2007.
For Reporting Payments on Form 1099-H:
Amount CodesForm 1099-H— Health
Coverage Tax Credit (HCTC) Advance
PaymentsA
mountCodeAmountType
1Gross amount of health insurance advance
payments
2Amount of advance payment for January
3Amount of advance payment for February
4Amount of advance payment for March
5
Amount of a
dvance payment for April
6Amount of advance payment for May
7Amount of advance payment for June
8Amount of
advance payment for July
9Amount of advance payment for August
AAmount of advance payment for September
BAmount o
f advance payment for October
CAmount of advance payment for November
DAmount of advance payment for December
For Reporting Payments on Form 1099-INT:
Amount C
odesForm 1099-INT—
Interes
t Income
A
mountC
ode
AmountT
ype
1Interes
t income not included in Amount
Code 3
2Early withdrawal penalty
3Interest on U.S. Savings Bonds and
Treasury obligations
4Federal income tax withheld (backup
withholding)
5
Investment expenses
6Foreign tax paid
8Tax-e
xempt interest
9Specified Private Activity Bond Interest
2009–27 I.R.B.57July 6, 2009

Record Name: Payer “A” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
For Reporting Payments on Form 1099-LTC:
Amount CodesForm 1099-LTC—
Long-Term Care and Accelerated Death
BenefitsA
mountCodeAmountType
1Gross long-term care benefits paid
2Accelerated death benefits paid
For Reporting Payments on Form 1099-MISC:
Amount CodesForm 1099-MISC—
Miscellaneous Income
(SeeNote1.)A
mountCodeAmountType
1Rents
2
Royalties(See Note 2.)
3Other income
4Federal income tax withheld (backup
withholding or withholding on Indian
gaming profits)
5
Fishing boat
proceeds
6Medical and health care payments
7Nonemployee compensation
8Substitute payments in lieu of dividends or
interest
ACropinsur
ance proceeds
BExcess golden parachute payments
CGross proceeds paid to an attorney in
connection with legal services
DSection 409A Deferrals
ESection
409A Income
Note 1: If reporting a direct sales indicatoronly, use Type of Return “A” in Field Position 27, and Amount Code 1 in Field
Position 28 of the Payer “A” Record. All payment amount fields in the Payee “B” Record will contain zeros.
Note 2: D
o not report timber royalties under a “pay-as-cut”contract; these must be reported on Form 1099-S.
Amount CodesForm 1099-OID—
Original Issue Discount
For Repo
rting Payments on Form 1099-OID:
A
mountCodeAmountType
1Original issue discount for2009
2Other periodic interest
3Earlyw
ithdrawal penalty
4Federal income tax withheld (backup
withholding)
6Original issue discount on U.S. Treasury
Obligations
7Investment expenses
For Reporting Payments on Form 1099-PATR:
Amount CodesForm 1099-PATR—
Taxable Distributions Received From
CooperativesA
mountCodeAmountType
1Patronage dividends
2Nonpatronage distributions
3Per-unit retain allocations
July 6, 2009582009–27 I.R.B.

Record Name: Payer “A” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
AmountCodeAmountType
4Federal income tax withheld (backup
withholding)
5
Redemption of nonqualified notices and
retain allocations
6Deduction for qualified production
activities income
Pass-Through Credits
7Investment credit
8Work opportunity credit
9Patron’s alternative minimum tax (AMT)
adjustment
AFor filer’s use for pass-through credits and
deductions
For Reporting Payments on a Form 1099-Q:
Amount CodesForm 1099-Q—
Payments From Qualified Education
Programs (Under Sections 529 and 530)A
mountCodeAmountType
1Gross distribution
2Earnings
3Basis
For Reporti
ng Payments on Form 1099-R:
Amount CodesForm 1099-R—
Distributions From Pensions, Annuities,
Retirement or Profit-Sharing Plans, IRAs,
Insurance Contracts, etc.A
mountCodeAmountType
1Gross distribution
2
Taxable amount(See Note 1.)
3Capital gain (included in Amount Code 2)
4Federal income tax withheld
5
Employe
e contributions or insurance
premium
s
6Net unrealized appreciation in employer’s
securities
8Other
9Total employee contributions
ATraditional IRA/SEP/SIMPLE distribution
or Roth conversion(See Note 2.)
Note 1: If the taxable amount cannot be determined, enter a “1” (one) in position 547 of the “B” Record. Payment
Amount 2 must contain zeros.
Note 2
: For Form 1099-R, report the Roth conversion or total amount distributed from an IRA, SEP, or SIMPLE in
Payme
nt Amount Field A (IRA/SEP/SIMPLE distribution or Roth conversion) of the Payee “B” Record, and generally,
the sa
me amount in Payment Amount Field 1 (Gross Distribution). The IRA/SEP/SIMPLE indicator should be set to
“1” (
one) in Field Position 548 of the Payee “B” Record.
2009–27 I.R.B.59July 6, 2009

Record Name: Payer “A” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
For Reporting Payments on Form 1099-S:
Amount CodesForm 1099-S— Proceeds
From Real Estate Transactions
A
mountCodeAmountType
2
Gross proceeds(See Note.)
5
Buyer’s part of real estate tax
Note: Include p
ayments of timber royalties made under a “pay-as-cut” contract, reportable under IRC section 6050N. If
timber royalti
es are being reported, enter “TIMBER” in the description field of the “B” Record.
For Reporting D
istributions on Form 1099-SA:
Amount CodesForm 1099-SA—
Distributions From an HSA, Archer MSA,
or Medicare Advantage MSAA
mountCodeAmountType
1Gross distribution
2Earnings on excess contributions
4Fair market value of the account on date
of death
For Reporting Information on Form 3921:Amount CodesForm 3921— Exercise of
a Qualified Incentive Stock Option Under
Section 442(b)A
mountCodeAmountType
3Exercise price per share
4Fair market value of share on exercise date
For Reporting Information on Form 3922:Amount CodesForm 3922— Transfer
of Stock Acquired Through an Employee
Stock Purchase Plan Under Section 423(c)A
mountCodeAmountType
3Fair market value per share on grant date
4Fairmarket
value on exercise date
5Exercise price per share
For Reporting Information on Form 5498:Amount CodesForm 5498—IRA
Contribution Information
A
mountCodeAmountType
1IRA contributions (other than amounts in
Amount Codes 2, 3, 4, 8, 9, and A)(See
Notes 1 and 2.)
2Rollover contributions
3Roth conversion amount
4Recharac
terized contributions
5
Fair market value of account
6Life insurance cost included in Amount
Code 1
8SEP contributions
9SIMPLEc
ontributions
ARoth IRA contributions
BRMD amount
CPostponed Contribution
DRepayments
EOther Contributions
Note 1: If reporting IRA contributions fora participant in a military operation, see2009 Instructions for Forms 1099-R
and 5498.
Note 2: Also include employee contributions to an IRA under a SEP plan but not salary reduction contributions. D
O
NOTincludeEMPLOYERcontributions; these are included in Amount Code 8.
July 6, 2009602009–27 I.R.B.

Record Name: Payer “A” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
For Reporting Information on Form 5498-ESA:Amount CodesForm 5498-ESA—
Coverdell ESA Contribution Information
A
mountCodeAmountType
1Coverdell ESA contributions
2Rollover contributions
For Reporting I
nformation on Form 5498-SA:
Amount CodesFo
rm 5498-SA—HSA,
Archer MSA, or M
edicare Advantage
MSA Informatio
n
A
mountCodeAmountType
1Employeeorsel
f-employed person’s
Archer MSA cont
ributions made in 2009
and 2010 for 20
09
2Total contributions made in 2009 (See
current 2009 Instructions.)
3Total HSA/MSA contributions made in
2010 for 2009
4
Rollover contributions(See Note.)
5
Fair market v
alue of HSA, Archer MSA or
Medicare Adv
antage MSA
Note:ThisistheamountofanyrollovermadetothisMSAin2009after a distribution from another MSA. For detailed
information on reporting, see the2009 Instructions for Forms 1099-SA and 5498-SA.
For Reporting Information on Form
8935
Amount CodesForm 8935- Airline
Payments Report
A
mountCodeAmountType
1Total amount reported
2First year of reported payments
3Second year of reported payments
4Third year of reported payments
5Fourthye
ar of reported payments
6
Fifth year of reported payments
Amount CodesForm W-2G—Certain
Gambling Winnings
For Reporting Payments on Form W-2G:
A
mountCodeAmountType
1Grosswinnings
2Federal income tax withheld
7Winnings from identical wagers
42–51
Blank10 Enter blanks.
52
Foreign
Entity
Indicat
or
1Entera“
1” (one) if the payer is a foreign entity and income is paid by the foreign
entity t
o a U.S. resident. Otherwise, enter a blank.
53–92
First Pa
yer
Name Lin
e
40
Required. Enter the name of the payer whose TIN appears in positions 12–20 of the
“A” Record. Any extraneous information must be deleted. Left-justify information,
and fill unused positions with blanks. (Filers should not enter a transfer agent’s
name in this field. Any transfer agent’s name should appear in the Second Payer
Name Line Field.)
93–132Second Payer
Name Line
40 If the Transfer (or Paying) Agent Indicator (position 133) contains a “1” (one),
this field must contain the name of the transfer (or paying) agent. If the indicator
contains a “0” (zero), this field may contain either a continuation of the First Payer
Name Line or blanks. Left-justify information and fill unused positions with blanks.
2009–27 I.R.B.61July 6, 2009

Record Name: Payer “A” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
133Transfer
Agent Indicator
1
Required. Identifies the entity in the Second Payer Name Line Field.
CodeMeaning
1The entity in the Second Payer Name Line
Field is the transfer (or paying) agent.
0 (zero)The entity shown isnotthe transfer (or
paying) agent (i.e., the Second Payer Name
Line Field contains either a continuation of
the First Payer Name Line Field or blanks).
134–173Payer
Shipping
Address
40
Required.Ifth
e Transfer Agent Indicator in position 133 is a “1” (one), enter the
shipping addr
ess of the transfer (or paying) agent. Otherwise, enter theactual
shipping addr
ess of the payer. The street address should include number, street,
apartment or s
uite number, or PO Box if mail is not delivered to a street address.
Left-justify
information, and fill unused positions with blanks.
For U.S. addresses, the payer city, state, and ZIP Code must be reported as a 40, 2, and 9-position field, respectively.Filers must
adhere to the correct format for the payer city, state, and ZIP Code.
For foreign addresses,filers may use the payer city, state, and ZIP Code as acontinuous 51-position field. Enter information
inthefollowingorder:city,provinceorstate,postalcode,and the name of the country. When reporting a foreign address, the
Foreign Entity Indicator in position 52 must contain a “1” (one).
174–213Payer City40
Required.If
the Transfer Agent Indicator in position 133 is a “1” (one), enter the
city, town, o
r post office of the transfer agent. Otherwise, enter the city, town, or post
office of the
payer.Left-justify information, and fill unused positions with blanks.
Do not enter
state and ZIP Code information in this field.
214–215
Payer State2
Required. Enter the valid U.S. Postal Service state abbreviations. Refer to the chart
of valid state abbreviations in Part A, Sec.12.
216–224Payer ZIP Code 9
Required. Enter the valid nine-digit ZIP Code assigned by the U.S. Postal Service.
If only the first five-digits are known, left-justify information and fill the unused
positions with blanks. For foreign countries, alpha characters are acceptable as long
as the filer has entered a “1” (one) in the Foreign Entity Indicator, located in Field
Position 52 of the “A” Record.
225–239
Payer’s Phone
Number &
Extension
15
Enter the payer’s telephone number and extension. Omit hyphens. Left-justify
information and fill unused positions with blanks.
240–499Blank260Enter blanks.
500–507
Record
Sequence
Number
8
Required.
Enter the number of the record as it appears within your file. The record
sequence n
umber for the “T” Record will always be “1” (one), since it is the first
record on
your file and you can have only one “T”Record in a file. Each record,
thereaft
er, must be incremented by one in ascending numerical sequence, i.e., 2, 3,
4, etc. Ri
ght-justify numbers with leading zeros in the field. For example, the “T”
Record se
quence number would appear as "00000001" in the field, the first “A”
Record wo
uld be “00000002,” the first “B” Record, “00000003,” the second “B”
Record,
“00000004” and so on untilyou reach the final record of the file, the “F”
Record.
508–748
Blank241Enter bl
anks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
July 6, 2009622009–27 I.R.B.

Sec. 6. Payer “A” Record — Record Layout
Record
Type
Payment
Year
BlankPayer
TIN
Payer Name
Control
Last Filing
Indicator
1
2–5
6–1112–2021–24
25
Combined
Federal/State
Filer
Type
of
Return
Amount
Codes
BlankForeign
Entity
Indicator
First
Payer Name
Line
262728–41
42–515253–92
Second Payer
Name
Line
Transfer
Agent
Indicator
Payer
Shipping
Address
Payer
City
Payer
State
Payer
ZIP
Code
93–132133134–173174–213
214–215
216–224
Payer’s Phone
Number and
Extension
BlankRecord
Sequence
Number
BlankBlank
or CR/LF
225–239
240–499
500–507508–748749–750
Sec. 7. Payee “B” Record — General Field Descriptions and Record Layouts
.01The “B” Record contains the payment information from the information returns. The record layout for field positions 1 through
543 is the same for all types of returns. Field positions 544 through 750 vary for each type of return toaccommodate special fields for
individual forms. In the “B” Record, the filermustallow for allfourteenPaymentAmountFields.For those fields not used, enter
“0s” (zeros).
.02The following specifications include a field in the payee records called “NameControl” in which the first four characters of
the payee’s surname are to be entered by the filer:
(a)If filers are unable to determine the first four characters of the surname, the Name Control Field may be left blank. Com-
pliance with the following will facilitate IRS computer programs in identifying the correct name control:
(1)The surname of the payee whose TIN is shown in the “B” Recordshould always appear first. If, however, the records
have been developed using the first name first, the filer must leave a blank space between the first and last names.
(2)In the case of multiple payees, the surname of the payee whose TIN (SSN, EIN, ITIN, or ATIN) is shown in the “B”
Record must be present in the First Payee Name Line. Surnames of any other payees may be entered in the Second
Payee Name Line.
.03For all fields marked“Required,”the transmitter must provide the information described under “Description and Remarks”.
For those fields not marked“Required,”the transmitter must allow for the field, but may be instructed to enter blanks or zeros in the
indicated field position(s)and for the indicated length.
.04All records must be a fixed length of 750 positions.
.05A field is also provided in these specifications for Special DataEntries. This field may be used torecord information required
by state or local governments, or for the personal use of the filer. IRS does not use the data provided in the Special Data Entries Field;
therefore, the IRS program does not check the content or format ofthe data entered in this field. Itis the filer’s option to use the
Special Data Entry Field.
.06Following the Special Data Entries Field in the “B” Record, payment fields have been allocatedfor State Income Tax Withheld
and Local Income Tax Withheld. These fields are for the convenience of the filers. The information will not be used by IRS/ECC-
MTB.
.07Those payers participating in the Combined Federal/State Filing Program must adhere to all of the specifications in Part A,
Sec. 10, to participate in this program.
.08All alpha characters in the “B” Record must be uppercase.
.09 Do notuse decimal points (.) to indicate dollars and cents. Payment Amount Fields must be all numeric characters.
2009–27 I.R.B.63July 6, 2009

Record Name: Payee “B” Record
Field
Position
Field Title
Length
Description and Remarks
1Record Type1
Required. Enter “B.”
2–5
Payment Year4
Required.Enter“2009.” If reporting prior year data report the year
which applies (2007, 2008, etc.).
6Corrected Return
Indicator
(See Note.)
1
Required for corrections only.Indicates a corrected return.
CodeDefinition
GIf this is a one-transactioncorrectionorthefirstof
a two-transaction correction
CIf this is the second transaction of a two-transaction
correction
BlankIf this is not a return being submitted to correct
information already processed by IRS
Note: C, G, and non-coded records must be reported using separate Payer “A” Records. Refer to Part A, Sec. 8, for
specific instructions on how to file corrected returns.
7–10Name Control4If determinable, enter the first four characters of the surname of the
person whose TIN is being reported in positions 12–20 of the “B”
Record; otherwise,enter blanks. This usually is the payee. If the
name that corresponds to the TIN is not included in the first or sec-
ond payee name line and the correctname control is not provided,
a backup withholding notice may be generated for the record. Sur-
names of less than four characters should be left-justified, filling
the unused positions with blanks. Special characters and imbedded
blanks should be removed. In the case of a business, other than a sole
proprietorship, use the first four significant characters of the business
name. Disregard the word “the” when it is the first word of the name,
unless there are only two words in the name. A hyphen (-) and an
ampersand (&) are the only acceptable special characters. Surname
prefixes are considered,e.g., for Van Elm, the name control would be
VANE. For a sole proprietorship, use the name of the owner to create
the name control and report the owner’s name in positions 248–287,
First Payee Name Line.
Note:Imbedded blanks, extraneous words, titles, and special characters (i.e., Mr., Mrs., Dr., period [.], apostrophe [’])
should be removed from the Payee Name Lines. A hyphen (-) and an ampersand (&) are the only acceptable special
characters.
The following examples may be helpful to filers in developing the Name Control:
N
ame
NameControl
Individuals:
JaneB
rownBROW
John A.L
eeLEE*
James P.E
n,Sr.EN*
JohnO
’Neil
ONEI
MaryV
anBurenVANB
JuanD
eJesusDEJE
Gloria A.E
l-RoyEL-R
Mr. Joh
nS
mith
SMIT
JoeM
cCarthy
MCCA
Pedro
T
orres-Lopes**
TORR
July 6, 2009642009–27 I.R.B.

Record Name: Payee “B” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
MariaLopez Moreno**LOPE
Binh ToLaLA*
Nhat ThiP
hamPHAM
Corporations:
TheF
irstNationalBank
FIRS
T
heHideawayTHEH
A
&BCafe
A&BC
1
1THStreet In
c.
11TH
Sole Proprietor:
MarkH
emlock
DBA The Sunshine Club
HEML
MarkD
’Alles
andro
DALL
Partnership
:
RobertA
spen
and Bess Willow
ASPE
HaroldF
ir,
Bruce Elm,
and Joyce Sp
ruce et al Ptr
FIR*
Estate:
FrankW
hiteEstate
WHIT
Estate of SheilaB
lueBLUE
Trusts and Fiduciaries:
D
aisy Corporation Employee
Benefit Trust
DAIS
Trust FBO The
C
herryblossom
Society
CHER
Exempt Organizations:
L
aborer’s Union, AFL-CIOLABO
S
t.Bernard’s Methodist
Church Bldg. Fund
STBE
*Name Controls of less than four significant characters must be left-justified and blank-filled.
**For Hispanic names, when two last names are shown for an individual, derive the name control from the first last name.
11Type of TIN1This field is used to identify the Taxpayer Identification Number
(TIN) in positions 12–20 as eitheran Employer Identification Num-
ber (EIN), a Social Security Number (SSN), an Individual Taxpayer
Identification Number (ITIN) or an Adoption Taxpayer Identification
Number (ATIN). Enter the appropriate code from the following table:
CodeTypeofTINTypeofAccount
1EINA business, organization, some
sole proprietors, or other entity
2SSNAn individual, including some sole
proprietors
2ITINAn individual required to have a
taxpayer identification number,
but who is not eligible to obtain an
SSN
2009–27 I.R.B.65July 6, 2009

Record Name: Payee “B” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
CodeTypeofTINTypeofAccount
2ATINAn adopted individual prior to the
assignment of a social security
number
BlankN/AIf the type of TIN is not deter-
minable, enter a blank.
12–20Payee’s Taxpayer Identification
Number (TIN)
9
Required. Enter the nine-digit Taxpayer Identification Number of
the payee (SSN, ITIN, ATIN, or EIN). If an identification number
has been applied for but not received, enter blanks.Do not enter
hyphens or alpha characters.All zeros, ones, twos, etc., will have
the effect of an incorrect TIN. If the TIN is not available, enter blanks.
Note: If you are required to report payments made through Foreign Intermediaries and Foreign Flow-Through Entities on
Form 1099, see the2009 General Instructions for Forms 1099, 1098, 3921, 3922, 5498, and W-2Gfor reporting requirements.
21–40Payer’s Account Number For
Payee
20
Required if submitting more than one information return of the
same type for the same payee.Enter any number assigned by the
payer to the payee that can be used by the IRS to distinguish between
information returns. This number must be unique for each informa-
tion return of the same type for the same payee. If a payee has more
than one reporting of the same document type, it is vital that each re-
porting have a unique account number. For example, if a payer has
3 separate pension distributionsfor the same payee and 3 separate
Forms 1099-R are filed, 3 separate unique account numbers are re-
quired.
A payee’s account number may be given a unique sequencing num-
ber, such as 01, 02 or A, B, etc., to differentiate each reported infor-
mation return. Do not use the payee’s TIN since this will not make
each record unique. This information is critical when corrections are
filed. This number will be provided with the backup withholding no-
tification and may be helpful in identifying the branch or subsidiary
reporting the transaction. The account number can be any combi-
nation of alpha, numeric or special characters. If fewer than twenty
characters are used, filers may either left or right-justify, filling the
remaining positions with blanks.
41–44Payer’s Office
Code
4Enter office code of payer; otherwise, enter blanks. For payers with
multiple locations, this field may be used to identify the location of
the office submitting the information return. This code will also ap-
pear on backup withholding notices.
July 6, 2009662009–27 I.R.B.

Record Name: Payee “B” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
45–54
Blank10Enter blanks.
Payment
Amount Fields
(Must be
numeric)
Required. Filers should allow for all payment amounts. For
those not used, enter zeros.Each payment field must contain 12
numeric characters. Each payment amount must contain U.S. dollars
and cents. The right-most two positions represent cents in the pay-
ment amount fields. Do not enter dollar signs, commas, decimal
points, or negative payments, except those items that reflect a loss
on Form 1099-B or 1099-Q.Positive and negative amounts are in-
dicated by placing a “+” (plus) or “-” (minus) sign in the left-most
position of the payment amount field. A negative over punch in the
unit’s position may be used, instead of a minus sign, to indicate a
negative amount. If a plus sign, minus sign, or negative over punch
is not used, the number is assumed to be positive. Negative over
punch cannot be used in PC created files. Payment amounts must be
right-justified and unused positions must be zero filled.
55–66
Payment
Amount 1*
12The amount reported in this field represents payments for Amount
Code 1 in the “A” Record.
67–78Payment
Amount 2*
12The amount reported in this field represents payments for Amount
Code 2 in the “A” Record.
79–90Payment
Amount 3*
12The amount reported in this field represents payments for Amount
Code 3 in the “A” Record.
91–102Payment
Amount 4*
12The amount reported in this field represents payments for Amount
Code 4 in the “A” Record.
103–114 Payment
Amount 5*
12The amount reported in this field represents payments for Amount
Code 5 in the “A” Record.
115–126
Payment
Amount 6*
12The amount reported in this field represents payments for Amount
Code 6 in the “A” Record.
127–138 Payment
Amount 7*
12The amount reported in this field represents payments for Amount
Code 7 in the “A” Record.
139–150
Payment
Amount 8*
12The amount reported in this field represents payments for Amount
Code 8 in the “A” Record.
151–162
Payment
Amount 9*
12The amount reported in this field represents payments for Amount
Code 9 in the “A” Record.
163–174 Payment
Amount A*
12The amount reported in this field represents payments for Amount
Code A in the “A” Record.
175–186
Payment
Amount B*
12The amount reported in this field represents payments for Amount
Code B in the “A” Record.
187–198 Payment
Amount C*
12The amount reported in this field represents payments for Amount
Code C in the “A” Record.
199–210 Payment
Amount D*
12The amount reported in this field represents payments for Amount
Code D in the “A” Record.
211–222 Payment
Amount E*
12The amount reported in this field represents payments for Amount
Code E in the “A” Record.
223–234 Payment
Amount F*
12The amount reported in this field represents payments for Amount
Code F in the “A” Record.
2009–27 I.R.B.67July 6, 2009

Record Name: Payee “B” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
235–246
Payment
Amount G*
12The amount reported in this field represents payments for Amount
Code G in the “A” Record.
*If there are discrepancies between the payment amount fields and the boxes on the paper forms, the instructions in this
Revenue Procedure must be followed for electronic filing.
247Foreign
Country
Indicator
1
If the address of the payee is in a foreign country, enter a “1”
(one) in this field; otherwise, enter blank. When filers use this in-
dicator, they may use a free format for the payee city, state, and ZIP
Code. Enter information in the following order: city, province or
state, postal code, and the name of the country. Address information
must not appear in the First or Second Payee Name Line.
248–287 First Payee
Name Line
40
Required.Enter the name of the payee (preferably surname first)
whose Taxpayer Identification Number (TIN) was provided in posi-
tions 12–20 of the Payee “B” Record. Left-justify and fill unused
positions with blanks. If more space is required for the name, use
theSecondPayeeNameLineField. If reporting information for a
sole proprietor, the individual’s name must always be present on the
First Payee Name Line. The use of the business name is optional
in the Second Payee Name Line Field. End the First Payee Name
Line with a full word. Extraneouswords, titles, and special charac-
ters (i.e., Mr., Mrs., Dr., period, apostrophe) should be removed from
the Payee Name Lines. A hyphen (-) and an ampersand (&) are the
only acceptable special characters for First and Second Payee Name
Lines.
Note: If you are required to report payments made through Foreign Intermediaries and Foreign Flow-Through Entities on
Form 1099, see the2009 General Instruction for Forms 1099, 1098, 3921, 3922, 5498, and W-2Gfor reporting requirements.
288–327 Second Payee
Name Line
40If there are multiple payees (e.g., partners, joint owners, or spouses),
use this field for those names not associated with the TIN provided in
positions 12–20 of the “B” Record, or if not enough space was pro-
vided in the First Payee Name Line, continue the name in this field.
Left-justify information and fill unused positions with blanks.Do
not enter address information.It is important that filers provide as
much payee information to IRS/ECC-MTB as possible to identify the
payee associated with the TIN. Left-justify and fill unused positions
with blanks.SeeNoteaboveinFirstPayeeNameLine.
328–367 Blank40Enter blanks.
368–407 Payee Mailing
Address
40
Required. Enter mailing address of payee. Street address should
include number, street, apartment or suite number, or PO Box if mail
is not delivered to street address. This fieldmust notcontain any
data other than the payee’s mailing address.
408–447 Blank40Enter blanks.
448–487 Payee City40
Required.Enter the city, town or post office. Left-justify informa-
tion and fill the unused positions with blanks. Enter APO or FPO if
applicable. Do not enter state and ZIP Code information in this field.
488–489 Payee State2
Required. Enter the valid U.S. Postal Service state abbreviations for
states or the appropriate postal identifier (AA, AE, or AP) described
in Part A, Sec. 12.
July 6, 2009682009–27 I.R.B.

Record Name: Payee “B” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
490–498 Payee ZIP
Code
9
Required.Enter the valid ZIP Code (nine or five-digit) assigned
by the U.S. Postal Service. If only the first five-digits are known,
left-justify information and fill the unused positions with blanks. For
foreign countries, alpha characters are acceptable as long as the filer
has entered a “1” (one) in the Foreign Country Indicator, located in
position 247 of the “B” Record.
499Blank1Enter blank.
500–507
Record
Sequence
Number
8
Required.Enter the number of the record as it appears within your
file. The record sequence number for the “T” Record will always be
“1” (one), since it is the first record on your file and you can have only
one “T” Record in a file. Each record, thereafter, must be incremented
by one in ascending numerical sequence,i.e.,2,3,4,etc. Right-
justify numbers with leading zeros in the field. For example, the
“T” Record sequence number would appear as “00000001” in the
field, the first “A” Record would be “00000002,” the first “B” record,
“00000003,” the second “B” Record, “00000004” and so on until you
reach the final record of the file, the “F” Record.
508–543
Blank36Enter blanks.
Standard Payee “B” Record Format For All Types of Returns, Positions 1–543
Record
Type
Payment
Year
Corrected
Return
Indicator
Name
Control
Type of
TIN
Payee’s
TIN
Payer’s
Account
Number For
Payee
1
2–5
67–101112–2021–40
Payer’s
Office Code
BlankPayment
Amount
1
Payment
Amount
2
Payment
Amount
3
Payment
Amount
4
Payment
Amount
5
41–44
45–5455–66
67–7879–9091–102103–114
Payment
Amount
6
Payment
Amount
7
Payment
Amount
8
Payment
Amount
9
Payment
Amount
A
Payment
Amount
B
115–126
127–138
139–150151–162
163–174
175–186
Payment
Amount C
Payment
Amount D
Payment
Amount E
Payment
Amount F
Payment
Amount G
Foreign
Country
Indicator
First Payee
Name
Line
187–198199–210211–222223–234
235–246
247248–287
2009–27 I.R.B.69July 6, 2009

Second Payee
Name
Line
BlankPayee
Mailing
Address
BlankPayee
City
288–327328–367368–407408–447448–487
Payee
State
Payee
ZIP Code
BlankRecord
Sequence
Number
Blank
488–489490–498499
500–507508–543
The following sections define the field positions for the different types of returns in the Payee “B” Record (positions
544–750):
(1) Form 1098
(2) Form 1098-C
(3) Form 1098-E
(4) Form 1098-T
(5)
Form 1099-A
(6) Form 1099-B
(7) Form 1099-C
(8) Form 1099-CAP
(9) Form 1099-DIV*
(10) Form 1099-G*
(11) Form 1099-H
(12) Form 1099-INT*
(13) Form 1099-LTC
(14) Form 1099-MISC*
(15)
Form 1099-OID*
(16) Form 1099-PATR*
(17) Form 1099-Q
(18) Form 1099-R*
(19) Form 1099-S
(20) Form 1099-SA
(21) Form 3921
(22) Form 3922
(23)
Form 5498*
(24)
Form 5498-ESA
(25) Form 5498-SA
(26)
Form 8935
(27) Form W-2G
* These forms may be filed through the Combined Federal/State Filing Program. IRS/ECC-MTB will forward these records to
participating states for filers who have been approved for theprogram. See Part A, Sec. 10, for information about the program,
including specific codesfor the record layouts.
(1) Payee “B” Record — Record LayoutPositions 544–750 for Form 1098
Field
Position
Field Title
Length
Description and Remarks
544–662
Blank119Enter blanks.
663–722 Special Data Entries60This portion of the “B” Record may be used to record information for
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
July 6, 2009702009–27 I.R.B.

(1) Payee “B” Record — Record Layout Positions 544–750 for Form 1098 (Continued)
Field
Position
Field Title
Length
Description and Remarks
723–748 Blank26Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record LayoutPositions 544–750 for Form 1098
BlankSpecial
Data
Entries
BlankBlank
or CR/LF
544–662
663–722723–748
749–750
(2) Payee “B” Record — Record Layout Positions 544–750 for Form 1098-C
Field
Position
Field Title
Length
Description and Remarks
544–545
Blank2Enter blanks.
546
Transaction Indicator1Enter “1” (one) ifthe amount reported in Payment Amount Field
4 is an arm’s length transaction to an unrelated party. Otherwise,
enter a blank.
547
Transfer After Improvements
Indicator
1Enter “1” (one) if the vehicle will not be transferred for money, other
property, or services before completion of material improvements or
significant intervening use. Otherwise, enter a blank.
548
Transfer Below Fair Market Value
Indicator
1Enter “1” (one) if the vehicle is transferred to a needy individual for
significantly below fair market value. Otherwise, enter a blank.
549–587
Make, Model, Year39Enter the make, model and year of vehicle. Left-justify and fill un-
used positions with blanks.
588–612
Vehicle or Other Identification
Number
25
Enter the vehicle or other identification number of the donated vehi-
cle. Left-justify and fill unused positions with blanks.
613–651
Vehicle Description39Enter a description of material improvements or significant interven-
ing use and duration of use. Left-justify and fill unused positions with
blanks.
652–659
Date of Contribution8Enter the date the contribution was made to an organization, in the
format YYYYMMDD (e.g., January 5, 2009, would be 20090105).
Do not enter hyphens or slashes.
660Donee Indicator1Enter the appropriate indicator from the following table to report if
the donee of the vehicle providesgoods or services in exchange for
the vehicle.
Indicator
Usage
1Donee provided goods or services
2Donee did not provide goods or
services
661Intangible Religious Benefits
Indicator
1Enter a “1” (one) if only intangible religious benefits were provided
in exchange for the vehicle;otherwise, leave blank.
662
Deduction $500 or Less Indicator
1Enter a “1” (one) if under law donor cannot claim a deduction of more
than $500 for the vehicle; otherwise, leave blank.
2009–27 I.R.B.71July 6, 2009

(2) Payee “B” Record — Record Layout Positions 544–750 for Form 1098-C (Continued)
Field
Position
Field Title
Length
Description and Remarks
663–722 Special Data Entries60This portion of the “B” Record may be used to record information for
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for the
filing requirements. If this field is not utilized, enter blanks.
723–730 Date of Sale8
Enter the date of sale, in the format YYYYMMDD (e.g., January 5,
2009, would be 20090105).Do not enter hyphens or slashes.
731–748 Goods and Services18Enter adescription of any goods and services received for the vehicle;
otherwise, leave blank. Left-justify and fill unused positions with
blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1098-C
BlankTransaction
Indicator
Transfer After
Improvements
Indicator
Transfer
Below Fair
Market Value
Indicator
Make,
Model, Year
Vehicle or
Other
Identification
Number
Vehicle
Description
544–545546547548549–587588–612613–651
Date of
Contribution
Donee
Indicator
Intangible
Religious
Benefits
Indicator
Deduction
$500 or
Less
Indicator
Special
Data
Entries
Date of
Sale
Goods and
Services
Blank
or CR/LF
652–659
660661662663–722723–730731–748
749–750
(3) Payee “B” Record — Record Layout Positions 544–750 for Form 1098-E
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter blanks.
547
Origination Fees/Capitalized
Interest Indicator
1Enter “1” (one) if the amount reported in Payment Amount Field 1
does not include loan origination fees and/or capitalized interest.
Otherwise, enter a blank.
548–662
Blank
115
Enter blanks.
663–722 Special
Data Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for the
filing requirements. If this field is not utilized, enter blanks.
723–748 Blank26Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
July 6, 2009722009–27 I.R.B.

Payee “B” Record — Record Layout Positions 544–750 for Form 1098-E
BlankOrigination
Fees/Capitalized
Interest Indicator
BlankSpecial Data
Entries
BlankBlank
or CR/LF
544–546547548–662
663–722723–748
749–750
(4) Payee “B” Record — Record Layout Positions 544–750 for Form 1098-T
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter blanks.
547
Half-time Student
Indicator
1Enter “1” (one) if the student was at least a half-time student during
any academic period that began in 2009. Otherwise, enter a blank.
548
Graduate Student
Indicator
1Enter “1” (one) if the student is enrolled exclusively in a graduate
level program. Otherwise, enter a blank.
549
Academic Period
Indicator
1Enter “1” (one) if the amount in Payment Amount Field 1 or
Payment Amount Field 2 includes amounts for an academic period
beginning January through March2009. Otherwise, enter a blank.
550
Method of Reporting 2008
Amounts Indicator
1
Required.Enter “1” (one) if the method of reporting has changed
from the previous year. Otherwise, enter a blank.
551–662
Blank112Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for the
filing requirements. If this field is not utilized, enter blanks.
723–748 Blank26Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1098-T
BlankHalf-time
Student
Indicator
Graduate
Student
Indicator
Academic Period
Indicator
Method of
Reporting 2008
Amounts
Indicator
544–546547548549550
BlankSpecial
Data
Entries
BlankBlank
or CR/LF
551–662
663–722723–748
749–750
2009–27 I.R.B.73July 6, 2009

(5) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-A
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter blanks.
547
Personal Liability
Indicator
1Enter the appropriate indicator from the table below:
Indicator
Usage
1Borrower was personally liable
for repayment of the debt.
BlankBorrower was not personally
liable for repayment of the debt.
548–555
Date of Lender’s
Acquisition or
Knowledge of
Abandonment
8Enter the acquisition date of thesecured property or the date the
lender first knew or had reason to know the property was abandoned,
in the format YYYYMMDD (e.g., January 5, 2009, would be
20090105).Do not enter hyphens or slashes.
556–594
Description of
Property
39Enter a brief description of the property. For real property, enter
the address, or, if the address does not sufficiently identify the
property, enter the section, lot and block. For personal property,
enter the type, make and model (e.g., Car-1999 Buick Regal or
Office Equipment). Enter “CCC” for crops forfeited on Commodity
Credit Corporation loans. If fewer than 39 positions are required,
left-justify information and fill unused positions with blanks.
595–662
Blank68Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for the
filing requirements. If this field is not utilized, enter blanks.
723–748 Blank26Enter blanks.
749–750
Blank2Enter blanks, or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1099-A
BlankPersonal Liability
Indicator
Date of Lender’s
Acquisition or
Knowledge of
Abandonment
Description
of
Property
Blank
544–546547548–555556–594595–662
Special
Data
Entries
BlankBlank
or CR/LF
663–722723–748
749–750
July 6, 2009742009–27 I.R.B.

(6) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-B
Field
Position
Field Title
Length
Description and Remarks
544
Second TIN
Notice
(Optional)
1Enter “2” (two) to indicate notification by IRS twice within three
calendar years that the payee provided an incorrect name and/or
TIN combination; otherwise, enter a blank.
545–546
Blank2Enter blanks.
547
Gross Proceeds
Indicator
1Enter the appropriate indicator from the following table, to identify
the amount reported in Amount Code 2; otherwise, enter a blank.
IndicatorUsage
1Gross proceeds
2Gross proceeds less commissions and options
premiums
548–555
Date of Sale or
Exchange
8For broker transactions, enter the trade date of the transaction.
For barter exchanges, enter the date when cash, property, a
credit, or scrip is actually or constructively received in the format
YYYYMMDD (e.g., January 5, 2009, would be 20090105). Enter
blanks if this is an aggregate transaction.Do not enter hyphens
or slashes.
556–568
CUSIP Number13For broker transactions only, enter the CUSIP (Committee on
Uniform Security Identification Procedures)numberoftheitem
reported for Amount Code 2 (stocks, bonds, etc.). Enter blanks if
this is an aggregate transaction.Enter“0s”(zeros)ifthenumberis
not available. Right-justify information and fill unused positions
with blanks.
569–607
Description39For broker transactions, enter a brief description of the disposition
item (e.g., 100 shares of XYZ Corp). For regulated futures and
forward contracts, enter “RFC” or other appropriate description. For
bartering transactions, show the services or property provided. If
fewer than 39 characters are required, left-justify information and
fill unused positions with blanks.
608–615
Number of
Shares
Exchanged
8Enter the number of shares of the corporation’s stock which
were exchanged in the transaction. Report whole number only.
Right-justify information and fill unused positions with zeros.
616–625
Classes of
Stock
Exchanged
10Enter the class of stock that was exchanged. Left-justify the
information and fill unused positions with blanks.
626Recipient
Indicator
1Enter a “1” (one) if recipient is unable to claim a loss on their tax
return. Otherwise, enter a blank.
627–662 Blank36Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue
departments for filing requirements. If this field is not utilized, enter
blanks.(See Note.)
723–734 State Income
Tax Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting statetax withheld, this field may be used
as a continuation of the Special Data Entries Field.
2009–27 I.R.B.75July 6, 2009

(6) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-B (Continued)
Field
Position
Field Title
Length
Description and Remarks
735–746
Local Income
Tax Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries field.
747–748 Blank2Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Note: Report the Corporation’s Name, Address, City, State, and ZIP in the Special Data Entry field.
Payee “B” Record — Record Layout Positions 544–750 for Form 1099-B
Second
TIN Notice
(Optional)
BlankGross
Proceeds
Indicator
Date
of Sale
or Exchange
CUSIP
Number
DescriptionNumber of
Shares
Exchanged
544545–546547548–555556–568569–607608–615
Classes of
Stock
Exchanged
Recipient
Indicator
BlankSpecial
Data Entries
State
Income
Tax
Withheld
Local
Income
Tax
Withheld
BlankBlank
or CR/LF
616–625
626627–662663–722723–734
735–746
747–748
749–750
(7) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-C
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter blanks.
547
Bankruptcy
Indicator
1Enter “1” (one) to indicate the debt was discharged in bankruptcy, if
known. Otherwise, enter a blank.
548–555
Date Canceled8Enter the date the debt was canceled in the format of YYYYMMDD
(e.g., January 5, 2009, would be 20090105).Do not enter hyphens
or slashes.
556–594
Debt
Description
39Enter a description of the origin of the debt, such as student loan,
mortgage, or credit card expenditure. If a combined Form 1099-C
and 1099-A is being filed, also enter a description of the property.
595Personal Liability Indicator1Enter a “1” (one) if the borrower is personally liable for repayment
or leave blank if not personally liable for repayment.
596–662
Blank67Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
July 6, 2009762009–27 I.R.B.

(7) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-C (Continued)
Field
Position
Field Title
Length
Description and Remarks
723–748 Blank26Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1099-C
BlankBankruptcy
Indicator
Date
Canceled
Debt
Description
Personally Liable
Indicator
Blank
544–546547548–555556–594
595
596–662
Special
Data
Entries
BlankBlank
or CR/LF
663–722723–748
749–750
(8) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-CAP
Field
Position
Field Title
Length
Description and Remarks
544–547
Blank4Enter blanks.
548–555
Date of Sale or Exchange8Enter the date the stock was exchanged for cash, stock in the
successor corporation, or otherproperty received in the format
YYYYMMDD (e.g., January 5, 2009, would be 20090105).Do
not enter hyphens or slashes.
556–607
Blank
52
Enter blanks.
608–615
Number of
Shares
Exchanged
8Enter the number of shares of the corporation’s stock which
were exchanged in the transaction. Report whole number only.
Right-justify information and fill unused positions with zeros.
616–625
Classes of Stock
Exchanged
10Enter the class of stock that was exchanged. Left- justify the
information and fill unused positions with blanks.
626–662 Blank37Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
723–748 Blank26Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1099-CAP
BlankDate of Sale or
Exchange
BlankNumber of Shares
Exchanged
Classes of Stock
Exchanged
544–547548–555556–607608–615616–625
2009–27 I.R.B.77July 6, 2009

BlankSpecial Data EntriesBlankBlank
or CR/LF
626–662663–722723–748
749–750
(9) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-DIV
Field
Position
Field Title
Length
Description and Remarks
544
Second TIN
Notice
(Optional)
1Enter “2” (two) to indicate notification by IRS twice within three
calendar years that the payee provided an incorrect name and/or
TIN combination; otherwise, enter a blank.
545–546
Blank2Enter blanks.
547–586
Foreign Country
or U.S.
Possession
40Enter the name of the foreign country or U.S. possession to which
the withheld foreign tax (Amount Code C) applies. Otherwise, enter
blanks.
587–662
Blank76Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
723–734 State Income
Tax Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting statetax withheld, this field may be used
as a continuation of the Special Data Entries Field.
735–746
Local Income
Tax Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748 Combined
Federal/State
Code
2If this payee record is to be forwardedtoastateagencyaspartof
the Combined Federal/State Filing Program enter the valid state
code from Part A, Sec. 10, Table 1. For those payers or states not
participating in this program, enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1099-DIV
Second
TIN
Notice
(Optional)
BlankForeign
Country
or U.S.
Possession
BlankSpecial
Data Entries
544545–546547–586587–662
663–722
State Income Tax
Withheld
Local Income Tax
Withheld
Combined
Federal/State
Code
Blank
or CR/LF
723–734
735–746
747–748
749–750
July 6, 2009782009–27 I.R.B.

(10) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-G
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter blanks.
547
Trade or
Business
Indicator
1Enter “1” (one) to indicate the state or local income tax refund,
credit, or offset (Amount Code 2) is attributable to income tax that
applies exclusively to income from a trade or business.
IndicatorUsage
1Income tax refund applies exclusively to a trade
or business.
BlankIncome tax refundis a general tax refund.
548–551
Tax Year of
Refund
4Enter the tax year for which the refund, credit, or offset (Amount
Code 2) was issued.The tax year must reflect the tax year for
which the refund payment was made, not the tax year of Form
1099-G. The tax year must be in the four-position format of
YYYY (e.g., 2008). The valid range of years for the refund is 1999
through 2008.
Note: This data is not considered prior year data since it is required to be reported in the current tax year. Do NOT enter
“P” in field position 6 of theTransmitter “T” Record.
552–662
Blank111Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. You may enter your routing and transit number
(RTN) here. If this field is not utilized, enter blanks.
723–734 State Income
Tax Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting statetax withheld, this field may be used
as a continuation of the Special Data Entries Field.
735–746
Local Income
Tax Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748 Combined
Federal/State
Code
2If this payee record is to be forwardedtoastateagencyaspartof
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 10, Table 1. For those payers or states not
participating in this program, enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1099-G
BlankTrade or
Business
Indicator
Tax Year
of
Refund
BlankSpecial
Data
Entries
State
Income
Tax
Withheld
544–546547548–551552–662
663–722723–734
2009–27 I.R.B.79July 6, 2009

Local Income
Tax Withheld
Combined
Federal/State
Code
Blank
or CR/LF
735–746
747–748
749–750
(11) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-H
Field
Position
Field Title
Length
Description and
Remarks
544–546
Blank3Enter blanks.
547–548
Number of
Months Eligible
2
Required.Enter the total number of months recipient is eligible for
health insurance advance payments. Right-justify and blank fill
any remaining positions.
549–662
Blank114Enter blanks.
663–722 Special Data
Entries
60This portion of
the “B” Record may be used to record information for
state or local g
overnment reporting or for the filer’s own purposes.
Payers should c
ontact the state or local revenue departments for
filing require
ments. If this field is not utilized, enter blanks.
723–748 Blank26Enter blanks.
749–750
Blank2Enter blanks or
carriage return/line feed(CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1099-H
BlankNumber of
Months
Eligible
BlankSpecial Data
Entries
BlankBlank
or CR/LF
544–546547–548549–662
663–722723–748
749–750
(12) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-INT
Field
Position
Field Title
Length
Description and Remarks
544
Second TIN
Notice
(Optional)
1Enter “2” (two) to indicate notification by IRS twice within three
calendar years that the payee provided an incorrect name and/or
TIN combination; otherwise, enter a blank.
545–546
Blank2Enter blanks.
547–586
Foreign Country
or U.S.
Possession
40Enter the name of t
he foreign country or U.S. possession to which
the withheld fore
ign tax (Amount Code 6) applies. Otherwise, enter
blanks.
587–662
Blank76Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. You may enter your routing and transit number
(RTN) here. If this field is not utilized, enter blanks.
July 6, 2009802009–27 I.R.B.

(12) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-INT (Continued)
Field
Position
Field Title
Length
Description and Remarks
723–734 State Income
Tax Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting statetax withheld, this field may be used
as a continuation of the Special Data Entries Field.
735–746
Local Income
Tax Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748 Combined
Federal/State
Code
2If this payee record is to be forwardedtoastateagencyaspartof
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 10, Table 1. For those payers or states not
participating in this program, enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1099-INT
Second
TIN
Notice
(Optional)
BlankForeign
Country
or U.S.
Possession
BlankSpecial
Data
Entries
State Income
Tax Withheld
544545–546547–586587–662
663–722723–734
Local
Income
Tax
Withheld
Combined
Federal/State
Code
Blank
or CR/LF
735–746
747–748
749–750
(13) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-LTC
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter blanks.
547
Type of
Payment
Indicator
1Enter the appropriate indicator from the following table; otherwise,
enter blanks.
IndicatorUsage
1Per diem
2Reimbursed amount
548–556
Social Security
Number of
Insured
9
Required.Enter the Social Security Number of the insured.
557–596
Name of
Insured
40
Required.Enter the name of the insured.
2009–27 I.R.B.81July 6, 2009

(13) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-LTC (Continued)
Field
Position
Field Title
Length
Description and Remarks
597–636
Address of
Insured
40
Required.Enter the address of the insured. Street address should
include number, street, apartment or suite number (or PO Box if
mail is not delivered to street address). Left-justify information and
fill unused positions with blanks. This fieldmust notcontain any
data other than payee’s address.
ForU.S.addresses, the payee city, state, and ZIP Code must be reported as a 40, 2, and 9-position field, respectively.Filers
must adhere to the correct format for the insured’s city, state, and ZIP Code.
For foreign addresses,filers may use the insured’s city, state, and ZIP Codeas a continuous 51-positionfield. Enter information
inthefollowingorder:city,provinceorstate,postalcode,and the name of the country. When reporting a foreign address, the
Foreign Country Indicator in position 247 must contain a “1” (one).
637–676 City of Insured40
Required.Enter the city, town, or post office. Left-justify
information and fill the unused positions with blanks. Enter APO
or FPO, if applicable. Do not enter state and ZIP Code information
in this field.
677–678 State of Insured2
Required.Enter the valid U.S. Postal Service state abbreviations
for states or the appropriate postal identifier (AA, AE, or AP)
described in Part A, Sec. 12.
679–687 ZIP Code of
Insured
9
Required.Enter the valid nine-digit ZIP Code assigned by the U.S.
Postal Service. If only the first five-digits are known, left-justify
information and fill the unused positions with blanks. For foreign
countries, alpha characters areacceptable as long as the filer has
entered a “1” (one) in the Foreign Country Indicator, located in
position 247 of the “B” Record.
688Status of Illness
Indicator
(Optional)
1Enter the appropriate code from the table below to indicate the status
of the illness of the insured; otherwise, enter blank.
IndicatorUsage
1Chronically ill
2Terminally ill
689–696 Date Certified
(Optional)
8Enter the latest date of a doctor’scertification of the status of the
insured’s illness. The format of the date is YYYYMMDD (e.g.,
January 5, 2009, would be 20090105).Do not enter hyphens or
slashes.
697Qualified
Contract
Indicator
(Optional)
1Enter a “1” (one) if benefits werefrom a qualified long-term care
insurance contract; otherwise, enter blank.
698–722 Blank
25
Enter blanks.
723–734 State Income
Tax Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled.
735–746
Local Income
Tax Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled.
747–748 Blank2Enter blanks.
July 6, 2009822009–27 I.R.B.

(13) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-LTC (Continued)
Field
Position
Field Title
Length
Description and Remarks
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1099-LTC
BlankType of
Payment
Indicator
SSN of
Insured
Name of
Insured
Address
of Insured
City of
Insured
State of
Insured
ZIP Code
of Insured
544–546547548–556557–596597–636
637–676677–678679–687
Status of
Illness
Indicator
(Optional)
Date
Certified
(Optional)
Qualified
Contract
Indicator
(Optional)
BlankState
Income
Tax
Withheld
Local
Income
Tax
Withheld
BlankBlank
or CR/LF
688689–696697698–722723–734
735–746
747–748
749–750
(14) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-MISC
Field
Position
Field Title
Length
Description and Remarks
544
Second TIN
Notice
(Optional)
1Enter “2” (two) to indicate notification by IRS twice within three
calendar years that the payee provided an incorrect name and/or
TIN combination; otherwise, enter a blank.
545–546
Blank2Enter blanks.
547
Direct Sales
Indicator
(See Note.)
1
Enter a “1” (one) to indicate sales of $5,000 or more of consumer
products to a person on a buy-sell, deposit-commission, or any other
commission basis for resale anywhere other than in a permanent
retail establishment. Otherwise, enter a blank.
Note: If reporting a direct sales indicatoronly, use Type of Return “A” in Field Position 27, and Amount Code 1 in Field
Position 28 of the Payer “A” Record. All payment amount fields in the Payee “B” Record will contain zeros.
548–662
Blank
115
Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not used, enter blanks.
723–734 State Income
Tax Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting statetax withheld, this field may be used
as a continuation of the Special Data Entries Field.
735–746
Local Income
Tax Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
2009–27 I.R.B.83July 6, 2009

(14) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-MISC (Continued)
Field
Position
Field Title
Length
Description and Remarks
747–748 Combined
Federal/State
Code
2If this payee record is to be forwardedtoastateagencyaspartof
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 10, Table 1. For those payers or states not
participating in this program, enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1099-MISC
Second
TIN
Notice
(Optional)
BlankDirect
Sales
Indicator
BlankSpecial
Data
Entries
State Income
Tax
Withheld
Local
Income
Tax
Withheld
544545–546547548–662
663–722723–734
735–746
Combined
Federal/State
Code
Blank
or CR/LF
747–748
749–750
(15) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-OID
Field
Position
Field Title
Length
Description and Remarks
544
Second TIN
Notice
(Optional)
1Enter “2” (two) to indicate notification by IRS twice within three
calendar years that the payee provided an incorrect name and/or
TIN combination; otherwise, enter a blank.
545–546
Blank2Enter blanks.
547–585
Description39
Required.Enter the CUSIP number, if any. If there is no CUSIP
number, enter the abbreviation for the stock exchange and issuer,
the coupon rate, and year (must be 4-digit year)ofmaturity(e.g.,
NYSE XYZ 12/2009). Show the name of the issuer if other than
the payer. If fewer than 39 characters are required, left-justify
information and fill unused positions with blanks.
586–662
Blank77Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
723–734 State Income
Tax Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting statetax withheld, this field may be used
as a continuation of the Special Data Entries Field.
July 6, 2009842009–27 I.R.B.

(15) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-OID (Continued)
Field
Position
Field Title
Length
Description and Remarks
735–746
Local Income
Tax Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748 Combined
Federal/State
Code
2If this payee record is to be forwardedtoastateagencyaspartof
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 10, Table l. For those payers or states not
participating in this program, enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1099-OID
Second
TIN
Notice
(Optional)
BlankDescriptionBlankSpecial
Data
Entries
State
Income
Tax
Withheld
544545–546547–585586–662
663–722723–734
Local
Income
Tax
Withheld
Combined
Federal/State
Code
Blank
or CR/LF
735–746
747–748
749–750
(16) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-PATR
Field
Position
Field Title
Length
Description and Remarks
544
Second
TIN
Notice
(Optional)
1Enter “2” (two) to indicate notification by IRS twice within three
calendar years that the payee provided an incorrect name and/or
TIN combination; otherwise, enter a blank.
545–662
Blank118Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If field is not utilized, enter blanks
723–734 State Income
Tax Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting statetax withheld, this field may be used
as a continuation of the Special Data Entries Field.
2009–27 I.R.B.85July 6, 2009

(16) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-PATR (Continued)
Field
Position
Field Title
Length
Description and Remarks
735–746
Local Income
Tax Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748 Combined
Federal/State
Code
2If this payee record is to be forwardedtoastateagencyaspartof
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 10, Table 1. For those payers or states not
participating in this program, enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for 1099-PATR
Second
TIN
Notice
(Optional)
BlankSpecial
Data
Entries
State Income
Tax
Withheld
Local
Income Tax
Withheld
Combined
Federal/State
Code
Blank
or CR/LF
544545–662
663–722723–734
735–746
747–748
749–750
(17) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-Q
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter blanks.
547
Trustee to
Trustee
Transfer
Indicator
1
Required.Enter a “1” (one) if reporting atrustee to trustee transfer;
otherwise, enter blank.
548
Type of
Tuition
Payment
1
Required.Enter the appropriate code from the table below to
indicate the type of tuition payment; otherwise, leave blank.
IndicatorUsage
1Private program payment
2State program payment
3Coverdell ESA contribution
549
Designated
Beneficiary
1
Required.Enter a “1” (one) if the recipient is not the designated
beneficiary; otherwise, enter a blank.
550–662
Blank113Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
723–748 Blank26Enter blanks.
July 6, 2009862009–27 I.R.B.

(17) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-Q (Continued)
Field
Position
Field Title
Length
Description and Remarks
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1099-Q
BlankTrustee to
Trustee
Transfer
Indicator
Type of
Tuition
Payment
Designated
Beneficiary
BlankSpecial
Data Entries
BlankBlank
or CR/LF
544–546547548549550–662
663–722723–748
749–750
(18) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-R
Field
Position
Field Title
Length
Description and Remarks
544
Blank1Enter a blank.
545–546
Distribution Code
(For a detailed explanation of
distribution codes, see the2009
Instructions for Forms 1099-R and
5498.)
See chart at the end of this record
layout for a diagram of valid
combinations of Distribution
Codes.
2
Required.Enter at least one distribution code from the table below.
More than one code may apply. If only one code is necessary, it
must be entered in position 545 and position 546 will be blank.
When using Code P for an IRA distribution under section 408(d)(4)
of the Internal Revenue Code, the filer may also enter Code 1,
2, 4, B or J if applicable. Only three numeric combinations are
acceptable, Codes 8 and 1, 8 and 2, and 8 and 4, on one return.
These three combinations can be used only if both codes apply to
the distribution being reported. If more than one numeric code is
applicable to different parts of a distribution, report two separate
“B”Records.DistributionCodes3,5,6,9,E,F,N,Q,R,SandT
cannot be used with any other codes. Distribution Code G may be
used with Distribution Code 4 only if applicable.
CodeCategory
1*Early distribution, no known exception (in most
cases, under age 59
1
/2)
2*Early distribution, exception applies (Under age
59
1
/2)
3*Disability
4*Death
5
*Prohibited transaction
6
Section 1035 exchange (a tax-free exchange of life
insurance, annuity, or endowment contracts)
7*Normal distribution
8*Excess contributions plus earnings/excess
deferrals (and/or earnings) taxable in2009
9Cost of current life insurance protection (premiums
paid by a trustee or custodian for current insurance
protection)
2009–27 I.R.B.87July 6, 2009

(18) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-R (Continued)
Field
Position
Field Title
Length
Description and Remarks
CodeCategory
AMay be eligible for 10-year tax option
BDesignated Roth account distribution
D*Excess contributions plus earnings/excess
deferrals taxable in2007
EDistributions under employee plans compliance
system (EPCRS)
FCharitable gift annuity
GDirect rollover and rollover contribution
HDirect rollover of distribution from a designated
Roth account to a Roth IRA
JEarly distribution from a Roth IRA. (This code may
be used with Code 8 or P.)
LLoans treated as deemed distributions under section
72(p)
NRecharacterized IRA contribution made for2009
P*Excess contributions plus earnings/excess
deferrals taxable in2008
QQualified distribution from a Roth IRA.
(Distribution from a Roth IRA when the 5-year
holding period has been met, and the recipient has
reached 59
1
/2, has died, or is disabled.)
RRecharacterized IRA contribution made for2008
(See Note.)
S*EarlydistributionfromaSIMPLEIRAinfirst2
years, no known exception
TRoth IRA distribution, exception applies because
participant has reached 59
1
/2, died or is disabled,
but it is unknown if the 5-year period has been met.
UDistribution from ESOP under Section 404(k).
*If reporting a traditional IRA, SEP, or SIMPLE distribution or a Roth conversion, use the IRA/SEP/SIMPLE Indicator
of “1” (one) in position 548 of the Payee “B” Record.
Note: The trustee of the first IRA must report the recharacterization as a distribution on Form 1099-R (and the original
contribution and its character on Form 5498).
547
Taxable Amount
Not Determined
Indicator
1Enter “1” (one) only if the taxable amount of the payment entered
for Payment Amount Field 1 (Gross distribution) of the “B” Record
cannot be computed; otherwise, enter blank. (If Taxable Amount
Not Determined Indicator is used, enter “0s” [zeros] in Payment
Amount Field 2 of the Payee “B” Record.) Please make every effort
to compute the taxable amount.
July 6, 2009882009–27 I.R.B.

(18) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-R (Continued)
Field
Position
Field Title
Length
Description and Remarks
548
IRA/SEP/SIMPLE
Indicator
1Enter “1” (one) for a traditional IRA, SEP, or SIMPLE distribution
or Roth conversion; otherwise, enter a blank. (See Note.)Ifthe
IRA/SEP/SIMPLE Indicator is used, enter the amount of the Roth
conversion or distribution in Payment Amount Field A of the Payee
“B” Record.Do not use the indicator for a distribution from a
Roth or for an IRA recharacterization.
Note: For Form 1099-R, generally, report the Roth conversion or total amount distributed from a traditional IRA, SEP,
or SIMPLE in Payment Amount Field A (traditional IRA/SEP/SIMPLE distribution or Roth conversion), as well as
Payment Amount Field 1 (Gross Distribution) of the “B” Record. Refer to the2009 Instructions for Forms 1099-R and
5498forexceptions(Box2ainstructions).
549
Total Distribution
Indicator
(See Note.)
1Enter a “1” (one) only if the payment shown for Distribution
Amount Code 1 is a total distribution that closed out the account;
otherwise, enter a blank.
Note: A total distribution is one or more distributions within one tax year in which the entire balance of the account is
distributed. Any distribution that does not meet this definition is not a total distribution.
550–551
Percentage of Total
Distribution
2Use this field when reporting a total distribution to more than
one person, such as when a participant is deceased and a payer
distributes to two or more beneficiaries. Therefore, if the percentage
is 100, leave this field blank. If the percentage is a fraction, round
off to the nearest whole number (for example, 10.4 percent will be
10 percent; 10.5 percent will be 11 percent). Enter the percentage
received by the person whose TIN is included in positions 12–20
of the “B” Record. This field must be right-justified, and unused
positions must be zero-filled. If not applicable, enter blanks. Filers
are not required to enter this information for any IRA distribution or
for direct rollovers.
552–555
First Year of Designated Roth
Contribution
4Enter the first year a designated Roth contribution was made in
YYYY format. If the date is unavailable, enter blanks.
556–662
Blank107Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
723–734 State Income Tax
Withheld
12State income tax withheld is for the convenience of the filer. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting statetax withheld, this field may be used
as a continuation of the Special Data Entries Field.
735–746
Local Income Tax
Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748 Combined
Federal/State
Code
2If this payee record is to be forwardedtoastateagencyaspartof
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 10, Table 1. For those payers or states not
participating in this program, enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
2009–27 I.R.B.89July 6, 2009

Payee “B” Record — Record Layout Positions 544–750 for Form 1099-R
BlankDistribution
Code
Taxable
Amount Not
Determined
Indicator
IRA/SEP/
SIMPLE
Indicator
Total
Distribution
Indicator
Percentage
of Total
Distribution
544545–546547548549550–551
First Year
of
Designate
dRoth
Contributi
on
BlankSpecial
Data Entri
es
State Inco
me
Tax
Withheld
Local
Income
Tax
Withheld
Combined
Federal/S
tate
Code
Blank
or CR/LF
552–555556–662
663–722723–734
735–746
747–748
749–750
July 6, 2009902009–27 I.R.B.

(19) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-S
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter blanks.
547
Property or
Services
Indicator
1
Required.Enter “1” (one) if the transferor received or will receive
property (other than cash and consideration treated as cash in
computing gross proceeds) or services as part of the consideration
for the property transferred. Otherwise, enter a blank.
548–555
Date of Closing8
Required. Enter the closing date in the format YYYYMMDD (e.g.,
January 5, 2009, would be 20090105).Do not enter hyphens or
slashes.
556–594
Address or Legal
Description
39
Required. Enter the address of the property transferred (including
city, state, and ZIP Code). If the address does not sufficiently
identify the property, also enter alegal description, such as section,
lot, and block. For timber royalties, enter “TIMBER.” If fewer than
39 positions are required, left-justify information and fill unused
positions with blanks.
595–662
Blank68Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
723–734 State Income Tax
Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting statetax withheld, this field may be used
as a continuation of the Special Data Entries Field.
735–746
Local Income
Tax
Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748 Blank2Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 1099-S
BlankProperty
or Services
Indicator
Date of
Closing
Address
or Legal
Description
BlankSpecial
Data
Entries
544–546547548–555556–594595–662
663–722
State Income
Tax Withheld
Local Income
Tax Withheld
BlankBlank
or CR/LF
723–734
735–746
747–748
749–750
2009–27 I.R.B.91July 6, 2009

(20) Payee “B” Record — Record Layout Positions 544–750 for Form 1099-SA
Field
Position
Field Title
Length
Description and Remarks
544
Blank1Enter a blank.
545
Distribution
Code
1
Required.Enter the applicable code to indicate the type of payment.
CodeCategory
1Normal distribution
2Excess contribution
3Disability
4Death distribution otherthan code 6 (This includes
distributions to a spouse, nonspouse, or estate
beneficiary in the year of death and to an estate
after the year of death.)
5
Prohibited transaction
6
Death distributionafteryearofdeathto a
nonspouse beneficiary. (Do not use for distribution
to an estate.)
546
Blank1Enter a blank.
547
Medicare
Advantage
MSA
Indicator
1Enter “1” (one) if distributions are from a Medicare Advantage
MSA. Otherwise, enter a blank.
548
HSA Indicator1Enter “1” (one) if distributions are from a HSA.Otherwise, enter
a blank.
549
Archer MSA
Indicator
1Enter “1” (one) if distributions are from an Archer MSA. Otherwise,
enter a blank.
550–662
Blank113Enter blanks.
663–722 Special Data
Entries
60This portion of the “B” Record maybeusedtorecordinformationfor
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
723–734 State Income
Tax Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting statetax withheld, this field may be used
as a continuation of the Special Data Entries Field.
735–746
Local Income
Tax Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748 Blank2Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
July 6, 2009922009–27 I.R.B.

Payee “B” Record — Record Layout Positions 544–750 for Form 1099-SA
BlankDistribution
Code
BlankMedicare
Advantage
MSA
Indicator
HSA
Indicator
Archer
MSA
Indicator
BlankSpecial
Data
Entries
544545546547548549550–662
663–722
State
Income Tax
Withheld
Local
Income
Tax
Withheld
BlankBlank
or CR/LF
723–734
735–746
747–748
749–750
(21) Payee “B” Record — Record Layout Positions 544–750 for Form 3921
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter Blanks.
547–554 Date Option Granted8Enter date option granted as YYYYMMDD (e.g. January 5, 2009,
would be 20090105). Otherwise, enter blanks.
555–562
Dated Option Exercised8Enter date option exercised as YYYYMMDD (e.g. January, 2009,
would be 20090105). Otherwise, enter blanks.
563–570
Number of Shares Transferred8Enter Number of Shares Transferred. Right-justify, zero fill.
Otherwise, enter blanks.
571–574 Blank4Enter blanks.
575–614
If Other Than Transferor
Information
40Enter Other Information, left justify and blank fill. Otherwise, enter
blanks.
615–662
Blank48Enter blanks.
663–722
Special Data Entry Field
60
This portion of the “B” Record may be used to record information for
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
723–748 Blank
26
Enter blanks.
749–750 Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record LayoutPositions 544–750 for Form 3921
BlankDate Option
Granted
Date Option
Exercised
Number of Shares
Transferred
Blank
544–546
547–554
555–562563–570
571–574
2009–27 I.R.B.93July 6, 2009

If Other Than
Transferor
Information
BlankSpecial Data Entry
Field
BlankBlank
or CR/LF
575–614615–662663–722
723–748749–750
(22) Payee “B” Record — Record Layout Positions 544–750 for Form 3922
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter blanks.
547–554 Date Option Granted to Transferor 8Enter date option was granted to transferor as YYYYMMDD (e.g.
January 5, 2009 as 20090105). Otherwise, enter blanks.
555–562
Date Option Exercised by
Transferor
8Enter date option exercised by transferor as YYYYMMDD (e.g.
January 5, 2009, as 20090105). Otherwise, enter blanks.
563–570
Number of Shares Transferred8Enter Number of Shares Transferred. Right-justify and zero fill.
Otherwise, enter blanks.
571–578 Date Legal Title Transferred by
Tranferor
8Enter the Date legal title transferred by transferor as YYYYMMDD
(e.g. January 5, 2009 as 20090105). Otherwise, enter blanks.
579–662
Blank84Enter blanks.
663–722
Special Data Entry Field
60
This portion of the “B” Record may be used to record information for
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
723–748 Blank
26
Enter blanks.
749–750 Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record LayoutPositions 544–750 for Form 3922
BlankDate Option
Granted to
Transferor
Date Option
Exercised by
Transferor
Number of Shares
Transferred
Date Legal Title
Transferred by
Transferor
544–546
547–554
555–562563–570
571–578
BlankSpecial Data Entry
Fields
BlankBlank
or CR/LF
579–662663–722
723–748749–750
(23) Payee “B” Record — Record Layout Positions 544–750 for Form 5498
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter blanks.
547IRAIndicator (Individual
RetirementAccount)
1
Required, if applicable.Enter “1” (one) if reporting a rollover
(Amount Code 2) or Fair Market Value (Amount Code 5) for an
IRA. Otherwise, enter a blank.
July 6, 2009942009–27 I.R.B.

(23) Payee “B” Record — Record Layout Positions 544–750 for Form 5498 (Continued)
Field
Position
Field Title
Length
Description and Remarks
548SEPIndicator (Simplified
EmployeePension)
1
Required, if applicable.Enter “1” (one) if reporting rollover
(Amount Code 2) or Fair Market Value (Amount Code 5) for a SEP.
Otherwise, enter a blank.
549SIMPLE Indicator(Savings
IncentiveMatchPlan for
Employees)
1
Required, if applicable.Enter “1” (one) if reporting a rollover
(Amount Code 2) or Fair Market Value (Amount Code5)fora
SIMPLE. Otherwise, enter a blank.
550Roth IRAIndicator
1
Required, if applicable.Enter “1” (one) if reporting a rollover
(Amount Code 2) or Fair Market Value (Amount Code5)foraRoth
IRA. Otherwise, enter a blank.
551
RMD Indicator1
Required. Enter “1” (one) if reporting RMD for2010.Otherwise,
enter a blank.
552–555 Year of Postponed Contribution4Enter the year in YYYY format. Otherwise, enter blanks.
556–557
Postponed Contribution2Enter the two-digit alpha Postponed Contribution Code. Otherwise,
enter blanks.
558–559 Repayment Code2Enter the two-digit alpha Repayment Code. Otherwise, enter blanks.
560–561
Bankruptcy Code2Enter the two-digit alpha Bankruptcy Code. Otherwise, enter blanks.
562–569
RMD Date8Enter the date by which the RMD amount must be distributed to
avoid the 50% excise tax. Format the date as YYYYMMDD (e.g.
January 5, 2009 as 20090105). Otherwise, enter blanks.
570–662
Blank93Enter blanks.
663–722 Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue
departments for filing requirements. If this field is not utilized, enter
blanks.(See Note.)
Note: For delayed contributions for U.S. Armed Forces, usethe Special Data Entry field to report the year for which the
contribution was made, the amount of the contribution and one of the indicators as outlined in the current Instructions for
Forms 1099-R and 5498.
723–746 Blank24Enter blanks.
747–748 Combined Federal/State Code2If this payee record is to be forwarded to a state agency as part of
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 10, Table 1. For those payers or states not
participating in this program, enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record LayoutPositions 544–750 for Form 5498
BlankIRA
Indicator
SEP
Indicator
SIMPLE
Indicator
Roth IRA
Indicator
RMD
Indicator
544–546547548549550551
2009–27 I.R.B.95July 6, 2009

Year of Postponed
Contribution
Postponed
Contribution Code
Repayment CodeBankruptcy CodeRMD Date
552–555
556–557558–559560–561562–569
BlankSpecial Data
Entries
BlankCombined
Federal/State
Code
Blank
or CR/LF
570–662
663–722723–746747–748
749–750
(24) Payee “B” Record — Record Layout Positions 544–750 for Form 5498-ESA
Field
Position
Field Title
Length
Description and Remarks
544–662
Blank119Enter blanks.
663–722 Special Data Entries60This portion of the “B” Record may be used to record information for
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
723–748 Blank26Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form 5498-ESA
BlankSpecial Data
Entries
BlankBlank
or CR/LF
544–662
663–722723–748
749–750
(25) Payee “B” Record — Record Layout Positions 544–750 for Form 5498-SA
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter blanks.
547
Medicare Advantage MSA
Indicator
1Enter “1” (one) for Medicare Advantage MSA. Otherwise, enter
ablank.
548
HSA Indicator1Enter “1” (one) for HSA. Otherwise, enter a blank.
549
Archer MSA Indicator1Enter “1” (one) for Archer MSA. Otherwise, enter a blank.
550–662
Blank113Enter blanks.
663–722 Special Data Entries60This portion of the “B” Record may be used to record information for
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
723–748 Blank26Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
July 6, 2009962009–27 I.R.B.

Payee “B” Record — Record Layout Positions 544–750 for Form 5498-SA
BlankMedicare
Advantage
MSA
Indicator
HSA
Indicator
Archer
MSA
Indicator
BlankSpecial
Data
Entries
BlankBlank
or CR/LF
544–546547548549550–662
663–722723–748
749–750
(26) Payee “B” Record — Record Layout Positions 544–750 for Form 8935
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter blanks.
547–550 Year of First Payment4Enter the year of first payment as YYYY. Otherwise, enter blanks.
551–554 Year of Second Payment4Enter the year of second payment as YYYY. Otherwise, enter blanks.
555–558 Year of Third Payment4Enter the year of third payment as YYYY. Otherwise, enter blanks.
559–562
Year of Fourth Payment4Enter the year of fourth payment as YYYY. Otherwise, enter blanks.
563–566
Year of Fifth Payment4Enter the year of fifth payment as YYYY. Otherwise, enter blanks.
567–662
Blank
96
Enter blanks.
663–722
Special Data Entries
60
This portion of the “B” Record may be used to record information for
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
723–748 Blank
26
Enter blanks.
749–750 Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record LayoutPositions 544–750 for Form 8935
BlankYear of First
Payment
Year of Second
Payment
Year of Third
Payment
Year of Fourth
Payment
544–546
547–550551–554555–558
559–562
Year of Fifth
Payment
BlankSpecial Data
Entries
BlankBlank
or CR/LF
563–566567–662663–722
723–748749–750
(27) Payee “B” Record — Record Layout Positions 544–750 for Form W-2G
Field
Position
Field Title
Length
Description and Remarks
544–546
Blank3Enter blanks.
2009–27 I.R.B.97July 6, 2009

(27) Payee “B” Record — Record Layout Positions 544–750 for Form W-2G (Continued)
Field
Position
Field Title
Length
Description and Remarks
Required. Enter the applicable type of wager code from the table
below.
CodeCategory
1Horse race track (or off-track betting of a horse
track nature)
2Dog race track (or off-track betting of a dog track
nature)
3Jai-alai
4State-conducted lottery
5
Keno
6Bingo
7Slot machines
8Poker Winnings
547
Type of Wager Code1
9Any other type of gambling winnings
548–555
Date Won8
Required.Enter the date of the winning transaction in the format
YYYYMMDD (e.g., January 5, 2009, would be 20090105).Do not
enter hyphens or slashes. This is not the date the money was paid,
if paid after the date of the race (or game).
556–570
Transaction
15Required.For state-conducted lotteries, enter the ticket or other
identifying number. For keno, bingo, and slot machines, enter the
ticket or card number (and color, if applicable), machine serial
number, or any other information that will help identify the winning
transaction. For all others, enter blanks.
571–575
Race
5
If applicable, enter the race (or game) relating to the winning ticket;
otherwise, enter blanks.
576–580
Cashier
5
If applicable, enter the initials or number of the cashier making the
winning payment; otherwise, enter blanks.
581–585
Window
5
If applicable, enter the window number or location of the person
paying the winning payment; otherwise, enter blanks.
586–600
First ID
15
For other than state lotteries, enter the first identification number of
the person receiving the winning payment; otherwise, enter blanks.
601–615
Second ID
15
For other than state lotteries, enter the second identification number
of the person receiving the winnings; otherwise, enter blanks.
616–662 Blank47Enter blanks.
663–722 Special Data Entries60This portion of the “B” Record may be used to record information for
state or local government reporting or for the filer’s own purposes.
Payers should contact the state or local revenue departments for
filing requirements. If this field is not utilized, enter blanks.
723–734 State Income Tax Withheld12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting state tax withheld, this field may be used
as a continuation of the Special Data Entries field.
July 6, 2009982009–27 I.R.B.

(27) Payee “B” Record — Record Layout Positions 544–750 for Form W-2G (Continued)
Field
Position
Field Title
Length
Description and Remarks
735–746
Local Income Tax Withheld12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be used
as a continuation of the Special Data Entries field.
747–748 Blank2Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750 for Form W-2G
BlankType of
Wager
Code
Date
Won
TransactionRaceCashierWindowFirst ID
544–546547548–555556–570571–575576–580581–585586–600
Second IDBlankSpecial Data
Entries
State Income
Tax
Withheld
Local
Income
Tax
Withheld
BlankBlank
or CR/LF
601–615
616–662663–722723–734
735–746
747–748
749–750
Sec. 8. End of Paye
r “C” Record — General Field Descriptions and Record Layout
.01The “C” Record
consists of the total number of payees and the totals ofthe payment amount fields filed for each payer and/or
particular type o
f return. The “C” Record must follow the last “B” Record for each type of return for each payer.
.02For each “A” Re
cord and group of “B” Records on the file, there must be a corresponding “C” Record.
.03The End of Paye
r “C” Record is a fixed length of 750 positions. Thecontrol fields are each 18positions in length.
Record Name: End of Payer “C” Record
Field
Position
Field Title
Length
Description and Re
marks
1Record Type1
Required.Enter “C.”
2–9Number of
Payees
8
Required.Enter the total number of “B” Records covered by the
preceding “A” Record. Right-justify information and fill unused
positions with zeros.
10–15
Blank6Enter blanks.
2009–27 I.R.B.99July 6, 2009

Record Name: End of Payer “C” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
16–33Control Total 118
34–51
Control Total 218
52–69
Control Total 318
70–87Control Total 418
88–105Control Total 5
18
106–123 Control Total 618
124–141 Control Total 718
142–159
Control Total 818
160–177 Control Total 918
178–195
Control Total A18
196–213 Control Total B18
214–231 Control Total C18
232–249 Control Total D18
250–267
Control Total E18
268–285
Control Total F18
286–303
Control Total G18
Required.Accumulate totals of any payment amount fields in the
“B” Records into the appropriate control total fields of the “C”
Record.Control totals must be right-justified and unused control
total fields zero-filled.All control total fields are 18 positions in
length. Each payment amount must contain U.S. dollars and cents.
The right-most two positions represent cents in the payment amount
fields. Do not enter dollar signs, commas, decimal points, or
negative payments, except thoseitems that reflect a loss on Form
1099-B or 1099-Q.Positive and negative amounts are indicated by
placing a “+” (plus) or “-” (minus) sign in the left-most position of
the payment amount field.
304–499 Blank
196
Enter blanks.
500–507
Record Sequence
Number
8
Required.Enter the number of the record as it appears within
your file. The record sequencenumber for the“T” Record will
always be “1” (one), since it is the first record on your file and you
can have only one “T” Record in a file. Each record, thereafter,
must be incremented by one inascending numerical sequence,
i.e., 2, 3, 4, etc. Right-justify numbers with leading zeros in the
field. For example, the “T” Record sequence number would
appear as “00000001” in the field, the first “A” Record would be
“00000002,” the first “B” record, “00000003,” the second “B”
Record, “00000004” and so on until you reach the final record of
the file, the “F” Record.
508–748
Blank241Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
End of Payer “C” Record — Record Layout
Record
Type
Number of
Payees
BlankControl
Total
1
Control
Total
2
Control
Total
3
Control
Total
4
Control
Total
5
Control
Total
6
12–9
10–15
16–33
34–5152–69
70–87
88–105
106–123
Control
Total
7
Control
Total
8
Control
Total
9
Control
Total
A
Control
Total
B
Control
Total
C
Control
Total
D
Control
Total
E
Control
Total
F
124–141
142–159
160–177
178–195
196–213214–231232–249
250–267268–285
Control
Total
G
BlankRecord
Number
Sequence
BlankBlank
or CR/LF
286–303
304–499
500–507508–748749–750
July 6, 20091002009–27 I.R.B.

Sec. 9. State Totals “K” Record — GeneralField Descriptions and Record Layout
.01The State Totals “K” Record is a summary for a given payer and agiven state in the Combined Federal/State Filing Program,
usedonlywhen state-reporting approval has been granted.
.02The “K” Record will contain the total number of payees and thetotal of the payment amount fields filed by a given payer for
a given state. The “K” Record(s) must be written after the “C” Record for the related “A”Record. A file format diagram is located
at the beginning of Part C.
.03The “K” Record is a fixed length of 750 positions. The control total fields are each18 positions in length.
.04In developing the “K” Record, for example, if a payer usedAmount Codes 1, 3, and 6 in the “A” Record, the totals from the
“B” Records coded for this statewould appear in Control Totals 1, 3, and 6 of the “K” Record.
.05There must be a separate “K” Record foreach statebeing reported.
.06Refer to Part A, Sec. 10, for the requirements and conditions thatmustbe met to file via this program.
Record Name: State Totals “K” Record — RecordLayout Forms 1099-DIV, 1099-G, 1099-INT,
1099-MISC, 1099-OID, 1099-PATR, 1099-R, and 5498
Field
Position
Field Title
Length
Description and Remarks
1Record
Type
1
Required.Enter “K.”
2–9Number of
Payees
8
Required.Enter the total number of “B” Records being coded for
this state. Right-justify information and fill unused positions with
zeros.
10–15
Blank6Enter blanks.
16–33Control Total 118
34–51
Control Total 218
52–69
Control Total 318
70–87Control Total 418
88–105Control Total 5
18
106–123 Control Total 618
124–141 Control Total 718
142–159
Control Total 818
160–177 Control Total 918
178–195
Control Total A18
196–213 Control Total B18
214–231 Control Total C18
232–249 Control Total D18
250–267
Control Total E18
268–285
Control Total F18
286–303
Control Total G18
Required.Accumulate totals of any payment amount fields in
the “B” Records for each state being reported into the appropriate
control total fields of the appropriate “K” Record. Each payment
amount must contain U.S. dollarsand cents. The right-most two
positions represent cents in the payment amount fields. Control
totals must be right-justified and unused control total fields
zero-filled.All control total fields are 18 positions in length.
304–499 Blank
196
Enter blanks.
500–507
Record Sequence Number8
Required.Enter the number of the record as it appears within
your file. The record sequencenumber for the“T” Record will
always be “1” (one), since it is the first record on your file and you
can have only one “T” Record in a file. Each record, thereafter,
must be incremented by one inascending numerical sequence,
i.e., 2, 3, 4, etc. Right-justify numbers with leading zeros in the
field. For example, the “T” Record sequence number would
appear as “00000001” in the field, the first “A” record would be
“00000002,” the first “B” Record, “00000003,” the second “B”
Record, “00000004” and so on until you reach the final record of
the file, the “F” Record.
508–706
Blank199Enter blanks.
707–724 State Income Tax Withheld Total 18State income tax withheld total is for the convenience of the filers.
Aggregate totals of thestate income tax withheld field in the Payee
“B” Records; otherwise, enter blanks.
2009–27 I.R.B.101July 6, 2009

Record Name: State Totals “K” Record — RecordLayout Forms 1099-DIV, 1099-G, 1099-INT,
1099-MISC, 1099-OID, 1099-PATR, 1099-R, and 5498 (Continued)
Field
Position
Field Title
Length
Description and Remarks
725–742
Local Income Tax Withheld Total 18Local income tax withheld total is for the convenience of the filer.
Aggregate totals of the local income tax withheld field in the Payee
“B” Records; otherwise, enter blanks.
743–746 Blank4Enter blanks.
747–748 Combined Federal/State Code2
Required. Enter the code assigned tothe state which is to receive
the information. (Refer to Part A, Sec. 10, Table l.)
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
State Totals “K” Record — Record Layout Forms 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-OID, 1099-PATR,
1099-R, and 5498
Record
Type
Number of
Payees
BlankControl
Total
1
Control
Total
2
Control
Total
3
Control
Total
4
Control
Total
5
Control
Total
6
12–9
10–15
16–33
34–5152–69
70–87
88–105
106–123
Control
Total
7
Control
Total
8
Control
Total
9
Control
Total
A
Control
Total
B
Control
Total
C
Control
Total
D
Control
Total
E
Control
Total
F
124–141
142–159
160–177
178–195
196–213214–231232–249
250–267268–285
Control
Total
G
BlankRecord
Number
Sequence
BlanksState
Income Tax
Withheld
Total
Local
Income Tax
Withheld
Total
BlankCombined
Federal/State
Code
Blank
or CR/LF
286–303
304–499
500–507508–706
707–724
725–742
743–746747–748
749–750
Sec. 10. End of Transmission “F” Record — General Field Descriptions and Record Layout
.01The End of Transmission “F” Record is a summary ofthe number of payers/payees in the entire file.
.02The “F” Record is a fixed record length of 750 positions.
.03This record must be written after the last “C” Record (or last “K” Record, when applicable) of the entire file.
Record Name: End of Transmission “F” Record
Field
Position
Field Title
Length
Description and Remarks
1Record Type1
Required.Enter “F.”
2–9Number of “A” Records8Enter the total number of Payer “A” Records in the entire file
(right-justify and zero-fill) or enter all zeros.
10–30Zero21Enter zeros.
31–49Blank19Enter blanks.
July 6, 20091022009–27 I.R.B.

Record Name: End of Transmission “F” Record (Continued)
Field
Position
Field Title
Length
Description and Remarks
50–57
Total Number of
Payees
8Enter the total number of Payee “B” Records reported in the file.
Right-justify information and fill unused positions with zeros. If
you have entered this total in the “T” Record, you may leave this
field blank.
58–499
Blank442Enter blanks.
500–507
Record Sequence Number8
Required.Enter the number of the record as it appears within
your file. The record sequencenumber for the“T” Record will
always be “1” (one), since it is the first record on your file and you
can have only one “T” Record in a file. Each record, thereafter,
must be incremented by one inascending numerical sequence,
i.e., 2, 3, 4, etc. Right-justify numbers with leading zeros in the
field. For example, the “T” Record sequence number would
appear as “00000001” in the field, the first “A” Record would be
“00000002,” the first “B” Record, “00000003,” the second “B”
Record, “00000004” and so on until you reach the final record of
the file, the “F” Record.
508–748
Blank241Enter blanks.
749–750
Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
End of Transmission “F” Record — Record Layout
Record
Type
Number of
“A”
Records
ZeroBlankTotal
Number
of Payees
BlankRecord
Sequence
Number
BlankBlank
or CR/LF
12–910–3031–49
50–5758–499500–507508–748749–750
Part D. Extensions of Time and Waivers
Sec. 1. General — Extensions
.01An extension of time to file may be requested for Forms 1098,1099, 3921, 3922, 5498, 5498-SA, 5498-ESA, W-2G, W-2
series, 8027 and 1042-S.
Note: IRS encourages the payer/transmitter community to utilize the online fill-in form in lieu of the paper Form 8809. No
TCC required.
.02The fill-in Form 8809 may be completed online via the FIRE System. (See Part B, Sec. 7, for instructions on connecting to the
FIRE System.) At the Main Menu, click “Extension of Time Request” and then click “Fill-in Extension Form”. This option is only
used to request an automatic 30-day extension. Extension requests completed online via the FIRE System receive an instant response
if completed properly and timely. If you are requesting an additional extension, you must submit a paper Form 8809. Requests for an
additional extension of time to file information returns are not automatically granted. Requests for additional time are granted only in
cases of extreme hardship or catastrophic event. The IRS will only send a letter of explanation approving or denying your additional
extension request. (Refer to .12 of this Section.)
.03A paper Form 8809, Application for Extension of Time To File Information Returns, may be submitted to IRS/ECC-MTB at
the address listed in .09 of this section. This form may be used to request an extension of time to file information returns submitted
on paper or electronically to the IRS. Use a separate Form 8809 for each method offiling information returns you intend to use,i.e.,
electronically or paper.
2009–27 I.R.B.103July 6, 2009

.04To be considered, an extension request must be postmarked, transmitted or completed online by the due date of the returns;
otherwise, the request will be denied. (See Part A, Sec. 7, for due dates.)Ifrequestinganextensionof time to file several types of
forms, use one Form 8809; however, Form 8809 or file must be submitted no later than the earliest due date. For example, if requesting
an extension of time to file both Forms 1099-INT and 5498, submit Form 8809 on or before February 28.
.05 As soon as it is apparentthat a 30-day extension of time to file is needed, an extension request should be submitted. It may take
up to 30 days for IRS/ECC-MTB to respond to an extension request.IRS/ECC-MTB does not begin processing extension requests
until January.Extensions completed online via the FIRE System receive instant results.
.06Under certain circumstances, a request for an extension of time may be denied. When a denial letter is received, any additional
or necessary information may be resubmitted within 20 days.
.07Requesting an extension of time for multiple payers (10 or less) may be done by completing the online fill-in form via the
FIRE System or mailing Form 8809 and attaching a list of the payer names and associated TINs (EIN or SSN). Each payer must be
completed online or included in the listing to ensure an extensionis recorded for all payers. Form 8809 may be computer-generated
or photocopied. Be sure to use the most recently updated version and include all the pertinent information.
.08Payers/transmitters requesting an extension of time to file formore than 10payers arerequiredto submit the extensions online
via the fill-in form or in a file electronically (see Sec. 3, for the record layout).
.09All requests for an extension of time filed on Form 8809 must be sent using the following address:
IRS-Enterprise Computing Center — Martinsburg
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430
Note: Due to the large volume of mail received by IRS/ECC-MTB and the time factor involved in processing Extension of
Time (EOT) requests, it is imperative that the attention line be present on all envelopes or packages containing Form 8809.
.10Requests for extensions of time to file postmarked by the United States Postal Service on or before the due date of the returns,
and delivered by United States mail to IRS/ECC-MTB after the due date, are treated astimely under the “timely mailing as timely
filing” rule. A similar rule applies to designated private delivery services (PDSs). Notice 97–26, 1997–1 C.B. 413, provides rules for
determining the date that is treated as the postmark date. For itemsdelivered by a non-designated Private Delivery Service (PDS),
the actual date of receipt by IRS/ECC-MTB will be used as the filing date. For items delivered bya designated PDS, but through a
type of service not designated in Notice2004–83, 2004–52 C.B. 1030 the actual date of receipt by IRS/ECC-MTB will be used as the
filing date. The timely mailing rule also applies to furnishing statements to recipients and participants.
.11Transmitters requesting an extension oftime via an electronic file will receive anapproval or denial letter, accompanied by a
list of payers covered under that approval/denial.
.12If an additional extension of time is needed, a second Form 8809 or file must be filed by the initial extended due date. Check
line 7 on the form to indicate that an additional extension is being requested. A second 30-day extension will be approved only in
cases of extreme hardship or catastrophic event.If requesting a second 30-day extension of time, submit the information return
files as soon as prepared. Do not wait for IRS/ECC-MTB’s response to your second extension request.
.13If an extension request is approved, the approval notification should be kept on file.DO NOTsend the approval notification
or copy of the approval notification to IRS/ECC-MTB or to the service center where the paper returns are filed.
.14Request an extension for only the current tax year.
.15A signature is not required when requesting an automatic 30-day extension. If a second 30-day extension is requested, the Form
8809MUSTbe signed. Failure to properly complete and sign Form 8809 may cause delays in processing the request or result in a
denial. Carefully read and follow the instructions on the back of Form 8809.
.16Form 8809 may be obtained by calling1–800–TAX–FORM (1–800–829–3676). The form is also available atw
ww.irs.gov.A
copy of Form 8809 is also provided in the back of Publication 1220.
Sec. 2. Specifications for Filing Extensions of Time Electronically
.01The specifications in Sec. 3 include the required 200-byte record layout for extensions of time to file requests submitted elec-
tronically. Also included are the instructions forthe information that is to be entered in the record.Filers are advised to read this
section in its entirety to ensure proper filing.
.02If a filer does not have an IRS/ECC-MTB assigned Transmitter Control Code (TCC), Form 4419, Application for Filing In-
formation Returns Electronicallymustbe submitted to obtain a TCC. This numbermustbe used to submit an extension request
electronically. (See Part A, Sec. 6.)
.03For extension requests filed via an electronic file, the transmitter must fax Form 8809 the same day as the transmission. If you
are requesting an additional extension, you must fax a signed Form 8809 the same day as the transmission. Be sure to include the
reason an additional extension is needed.
July 6, 20091042009–27 I.R.B.

.04 Transmitters submitting an extension of time via an electronic file should not submit a list of payer names and TINs
with Form 8809 since this information is included in the electronic file. However, Line 6 of Form 8809 must be completed. The
fill-in Form 8809cannotbe used in lieu of the paper Form 8809 for electronic files.
.05Do not submit tax year 2009 extension requests filed electronically beforeJanuary 4, 2010.
Sec. 3. Record Layout — Extension of Time
.01Positions 6 through 188 of the following record should contain information about thepayerfor whom the extension of time to
file is being requested. Do not enter transmitter information in these fields.OnlyoneTCCmaybepresentinafile.
Record Layout for Extension of Time
Field
Position
Field Title
Length
Description and Remarks
1–5
Transmitter
Control Code
5Required. Enter the five-character alpha/numeric Transmitter
Control Code (TCC) issued by IRS.Only one TCC per file is
acceptable.
6–14Payer TIN9
Required. Must be the valid nine-digit EIN/SSN assigned to the
payer.Do not enter blanks, hyphens or alpha characters.All
zeros, ones, twos, etc., will have the effect of an incorrect TIN. For
foreign entities that are not requiredtohaveaTIN,thisfieldmay
be blank; however, the Foreign Entity Indicator, position 187,must
be set to “X.”
15–54
Payer Name40
Required. Enter the name of the payer whose TIN appears in
positions 6–14. Left-justify information and fill unused positions
with blanks.
55–94
Second Payer
Name
40If additional space is needed, this field may be used to continue
name line information (e.g., c/o First National Bank); otherwise,
enter blanks.
95–134
Payer Address40
Required. Enter the payer’s address. Street address should include
number, street, apartment or suite number (or PO Box if mail is
not delivered to a street address).
135–174
Payer City40
Required. Enter the payer’s city, town, or post office.
175–176
Payer State2
Required.Enter the payer’s valid U.S. Postal Service state
abbreviation. (Refer to Part A, Sec. 12.)
177–185
Payer ZIP Code9
Required. Enter the payer’s ZIP Code. If using a five-digit ZIP
Code, left-justify information and fill unused positions with blanks.
186Document Indicator
(See Note.)
1
Required. Enter the appropriate document code that indicates the
form for which you are requesting an extension of time.
CodeDocument
1W-2
21098, 1098-C, 1098-E, 1098-T, 1099-A, 1099-B,
1099-C, 1099-CAP, 1099-DIV, 1099-G, 1099-H,
1099-INT, 1099-LTC, 1099-MISC, 1099-OID,
1099-PATR, 1099-Q, 1099-R, 1099-S, 1099-SA,
3921, 3922or W-2G
3
5498
41042-S
6
5498-SA
7
5498-ESA
2009–27 I.R.B.105July 6, 2009

Record Layout for Extension of Time (Continued)
Field
Position
Field Title
Length
Description and Remarks
Note: Do not enter any other values in this field. Submit aseparate record for each document. For example, if you are
requesting an extension for Form 1099-INT and Form 5498 for the same payer, submit one record with “2” coded in this
field and another record with “3” coded in this field. If you are requesting an extension for Form 1099-DIV and Form
1099-MISC for the same payer, submit one record with “2” coded in this field.
187Foreign
Entity
Indicator
1Enter “X” if the payer is a foreign entity.
188Recipient Request Indicator1Enter “X” if the extension request is to furnish statements to the
recipients of the information return.
Note: A separate file is required for this type of extension request. A file must either contain all blanks or all Xs in this field.
189–198 Blank10Enter blanks.
199–200 Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Extension of Time Record Layout
Transmitter
Control
Code
Payer
TIN
Payer
Name
Second
Payer
Name
Payer
Address
Payer
City
Payer
State
1–5
6–14
15–5455–9495–134135–174175–176
Payer
ZIP
Code
Document
Indicator
Foreign
Entity
Indicator
Recipient
Request
Indicator
BlankBlank
or CR/LF
177–185
186187188189–198199–200
Sec. 4. Extension of Time for Recipient Copies of Information Returns
.01Request anextension of time to furnish the statements to recipientsof Forms 1098, 1099 series, 3921, 3922, 5498 series,
W-2G, W-2 series, and 1042-S by submitting a letter to IRS/ECC-MTB at the address listed in Part D, Sec. 1.09. The letter should
contain the following information:
(a)Payer name
(b)TIN
(c)Address
(d)Type of return
(e)Specify that the extension request isto provide statements to recipients
(f)Reason for delay
(g)Signature of payer or duly authorized person
.02Requests for an extension of time to furnish statements to recipients of Forms 1098, 1099 series, 3921, 3922, 5498 series, W-2G,
W-2 series, and 1042-S are not automatically approved; however, if approved,generally an extension will allow aMAXIMUMof 30
additional days from the due date. The request must be postmarked by the date on which the statements are due to the recipients.
.03Generally, only the payer may sign the letter requesting the extension for recipient copies. A transmitter must have a contractual
agreement with the filers to submit extension requests on their behalf. This should be stated in your letter of request for recipient copy
extensions.
.04Requests for arecipientextension of time to file for more than10 payersarerequiredto be submitted electronically. (See
Sec. 3, for the record layout.)
.05 The fill-in Form 8809 extension option cannot be used to request an extension to furnish statements to recipients.
July 6, 20091062009–27 I.R.B.

Sec. 5. Form 8508, Request for Waiver From Filing Information Returns Electronically
.01If a payer is required to file electronically but fails to do so and does not have an approved waiver on record, the payer will
be subject to a penalty of $50 per return in excess of 250. (Forpenalty information, refer to the Penalty Section of the2009 General
Instructions for Forms 1099, 1098, 3921, 3922, 5498, and W-2G.)
.02If payers are required to file original or corrected returns electronically, but such filing would create an undue hardship, they may
request a waiver from these filing requirements by submitting Form 8508, Request for Waiver From Filing Information Returns Elec-
tronically, to IRS/ECC-MTB. Form 8508 can be obtained on the IRS website atw
ww.irs.govor by calling toll-free 1–800–829–3676.
.03Even though a payer may submit as many as 249 corrections on paper, IRS encourages electronic filing of corrections. Once the
250 threshold has been met, filers are required to submit any returns of 250 or more electronically. However, if a waiver for original
documents is approved, any corrections for the sametype of returns will be covered under that waiver.
.04Generally, only the payer may sign Form 8508. A transmitter maysign if given power-of -attorney; however, a letter signed
by the payer stating this fact must be attached to Form 8508.
.05A transmitter must submit a separate Form 8508 for each payer. Do not submit a list of payers.
.06All information requested on Form 8508 must be provided to IRS/ECC-MTB for the request to be processed.
.07The waiver, if approved, will provide exemption from the electronic filing requirement for the current tax year only. Payers
may not apply for a waiver for more than one tax year at a time.
.08Form 8508 may be photocopied or computer-generated as long as itcontains all the information requested on the original form.
.09Filers are encouraged to submit Form 8508 to IRS/ECC-MTB at least 45 days before the due date of the returns. IRS/ECC-MTB
does not process waiver requests until January. Waiver requests received prior to January are processed on a first come, first serve
basis.
.10All requests for a waiver should be sent using the following address:
IRS-Enterprise Computing Center — Martinsburg
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430
.11 File Form 8508 for the W-2 series of forms with IRS/ECC-M
TB, not SSA.
.12Waivers are evaluated on a case-by-case basis and are app
roved or denied based on criteria set forth in the regulations under
section 6011(e) of the Internal Revenue Code. The transmit
ter must allow a minimum of 30 days for IRS/ECC-MTB to respond to a
waiver request.
.13If a waiver request is approved, keep the approval lette
ronfile.DO NOTsend a copy of the approved waiver to the service
center where the paper returns are filed.
.14An approved waiver only applies to the requirement for f
iling information returns electronically. The payer must still timely
file information returns on the official IRS paper forms o
r an acceptable substitute form withthe appropriate service center.
26 CFR 601.201: Rulings and determination letters.
(Also: §§ 1502, 1.1502–13.)
Rev. Proc. 2009–31
SECTION 1. PURPOSE
T
his revenue procedure provides the
p
rocedures by which a taxpayer may (1)
obtain the consent of the Internal Revenue
Service (the “Service”) to treat some or all
intercompany transactions on a separate
entity basis under §1.1502–13(e)(3) of the
Income Tax Regulations, (2) revoke such
consent, or have such consent revoked by
the Service, and (3) obtain the Service’s
consent to change from separate entity
reporting to single entity reporting where
a valid consent from the Service to report
intercompany transactions on a separate
entity basis was not previously obtained.
This revenue procedure modifies and
supersedes Rev. Proc. 97–49, 1997–2
C.B. 523.
SECTION 2. BACKGROUND
.01 The consolidated return regula-
tions generally require that intercompany
transactions be treated in a manner that
produces the effect of transactions be-
tween divisions of a single corporation
(that is, the regulations treat intercompany
transactions on a “single entity basis.”).
The single entity approach for intercom-
pany transactions is an integral part of the
overall tax treatment of affiliated groups
filing consolidated returns (“consolidated
groups”) under §1502 of the Internal
Revenue Code. Treating intercompany
transactions on a single entity basis is
required to clearly reflect consolidated
taxable income (“CTI”) and consolidated
tax liability (“CTL”). However, in certain
circumstances, the Service may exer-
cise discretion and grant consent, under
§1.1502–13(e)(3), to a consolidated group
to treat some or all intercompany trans-
actions (other than intercompany transac-
tions with respect to stock or obligations
of members of a consolidated group) on a
separate entity basis (that is, without the
application of §1.1502–13). Consent un-
der §1.1502–13(e)(3) may require changes
in the methods of accounting for inter-
company transactions of members of a
consolidated group.
.02 Section 4 sets forth the time and
manner in which requests for consent un-
der §1.1502–13(e)(3) must be filed.
2009–27 I.R.B.107July 6, 2009

.03 Section 5 provides a checklist which
is substantially similar to the checklist set
forth in Rev. Proc. 97–49 to facilitate
the filing and handling of requests under
§ 1.1502–13(e)(3) by specifying the infor-
mation that should be included so that ap-
plications will be as complete as possible
when originally filed. The sole revision to
such checklist is the reference to CTL in
addition to CTI. However, because the in-
formation necessary to rule on a particu-
lar case depends upon all the facts and cir-
cumstances, information in addition to that
listed in this revenue procedure may be re-
quested by the Service prior to determining
whether consent will be granted.
.04 Section 6 sets forth certain fac-
torsandguidelinesusedbytheService
in considering requests for consent under
§ 1.1502–13(e)(3). This section has been
revised to include a reference to CTL in
addition to CTI. Additionally, the thresh-
old for determining “Effect on CTI or
CTL”, as defined in section 5, has been
reduced from 10 percent to 5 percent.
.05 Section 7 sets forth the effect of
receiving the Service’s consent under
§ 1.1502–13(e)(3).
.06 Section 8 describes the procedures
applicable to the revocation of consent un-
der § 1.1502–13(e)(3). Section 8.01, as
revised, provides that consent to treat in-
tercompany transactions on a separate en-
tity basis under § 1.1502–13(e)(3) is re-
voked automatically for any taxable year
in which the effect on CTI or CTL, when
averaged with the effect on CTI or CTL for
each of the two preceding taxable years,
is greater than 5 percent. In addition, sec-
tion 8.03, as revised, provides that the fac-
tors and guidelines in section 6, which are
used in considering the request for con-
sent, will also be considered in determin-
ing whether to revoke consent where such
consent is not automatically revoked under
section 8.01.
.07 Section 9 sets forth the manner in
which requests for consent to change from
separate entity reporting to single entity re-
porting must be filed in cases where a valid
consent from the Service to report inter-
company transactionson a separate entity
basis was not previously obtained.
.08 The authority and general proce-
dures with respect to the issuance of ad-
vance rulings are set forth in Rev. Proc.
2009–1, 2009–1 I.R.B. 1, or its succes-
sor, and are applicable to requests under
§ 1.1502–13(e)(3).
SECTION 3. APPLICATION
This revenue procedure applies to (1)
all requests to obtain the Service’s consent
to treat some or all intercompany trans-
actions on a separate entity basis under
§ 1.1502–13(e)(3), (2) all revocations of
such consent, whether the revocation is
made by the consolidated group or by the
Service, and (3) all requests to obtain the
Service’s consent to change from separate
entity reporting to single entity reporting in
cases where a valid consent from the Ser-
vice to report intercompany transactions
on a separate entity basis was not previ-
ously obtained.
SECTION 4. TIME AND MANNER IN
WHICH REQUESTS FOR CONSENT
UNDER SECTION 1.1502–13(e)(3)
MUST BE FILED
.01 Requests for consent under
§ 1.1502–13(e)(3) must be filed with the
Serviceonorbeforetheduedateofthe
consolidated return (not including exten-
sions of time) for the first taxable year
for which the consent would apply (the
“consent year”). These requests for con-
sent must be submitted as a private letter
ruling request, and not as a request for
change in method of accounting, pursuant
to Rev. Proc. 2009–1, or its successor. All
applicable items of information listed in
section 5 must be included in the request.
.02 The filing requirement of
§ 1.1502–13(e)(3) will be deemed sat-
isfied where the request for consent is
timely filed with the Service and contains
all available information. The request
must provide an explanation of any omit-
ted information, and state that the omitted
information will be submitted not later
than the earlier of the following two dates:
(1) 90 days after the original due date of
the return, or (2) the date the consolidated
return is filed with the Service Center.
SECTION 5. INFORMATION TO
BE INCLUDED IN REQUESTS
FOR CONSENT UNDER SECTION
1.1502–13(e)(3)
.01 Each of the items of information
requested in this section 5 must be ad-
dressed in the request for consent under
§ 1.1502–13(e)(3). Ifan item is not appli-
cable, the letters “N.A.” should be inserted
after that item. The presentation of the in-
formation should follow the format of this
revenue procedure as closely as possible.
.02 Information needed in order to
make a determination regarding a request
for consent to treat some or all intercom-
pany transactions on a separate entity
basis:
(1)The date the consolidated group
elected to file consolidated re-
turns.
(2)The taxable year used by the
consolidated group.
(3)A calculation of the difference,
for the consent year and for
each of the two taxable years
preceding the consent year, be-
tween (a) CTI and CTL com-
putedbytreatingallintercom-
pany transactions on a single
entity basis and (b) CTI and
CTL, respectively, computed
by treating those intercompany
transactions for which consent
is requested, and those inter-
company transactions for which
consent has previously been
obtained, on a separate entity
basis. For any taxable year, the
percentage difference between
(a) and (b) in the preceding sen-
tence is hereinafter referred to
as the “Effect on CTI or CTL.”
(4)An analysis of all intercompany
transactions for the consent year
and for each of the two tax-
able years preceding the con-
sent year. This analysis must in-
clude the number and a descrip-
tion of all intercompany trans-
actions and the dollar amounts
thereof.
(5)An analysis of the effect of
treating those intercompany
transactions for which consent
is requested on a separate entity
basis on the following items for
the consent year:
(a)Net operating loss carry-
overs.
(b)Capital loss carryovers.
(c)Tax credits (for example, for-
eign tax credits) in the con-
sent year as well as carry-
overs to the consent year.
July 6, 20091082009–27 I.R.B.

With respect to any carryover
referred to in items (a) through
(c) above, the analysis should
include amounts for each of the
carryover years and the date the
losses or credits expire.
(6)An analysis of whether any
sales of property for which con-
sent is requested between mem-
bers of the consolidated group
that would be depletable or de-
preciable property in the hands
of the buying member would
result in long-term capital gain
to the selling member, taking
into account the provisions of
§§ 1239, 1245, and 1250, relat-
ingtogainfromdispositionsof
certain depreciable property or
certain depreciable realty.
(7)An analysis of whether any of
the members involved in those
intercompany transactions for
which consent is requested
are subject to the separate re-
turn limitation year rules or
thechangeofownershiprules
under §§ 382 or 383, and a cal-
culation of any amounts subject
to limitation under those rules.
(8)A description of the types of
property to which the consent
would apply.
(9)An analysis of the frequency
of those intercompany trans-
actions for which consent is
requested, whether they oc-
cur in the ordinary course of
the consolidated group’s busi-
ness, and whether the amounts
or prices charged in connec-
tion with these intercompany
transactions are for fair mar-
ket value based on arm’s-length
bargaining, providing examples
thereof. Also include a dis-
cussion of whether gains from
these intercompany transactions
have resulted from arm’s-length
charges or prices.
(10)An explanation as to why the
consent is being requested, why
the consolidated group believes
it should not be required to treat
these intercompany transactions
on a single entity basis, and how
treating such transactions on a
separate entity basis will clearly
reflect CTI under § 446 and
CTL.
SECTION 6. FACTORS AND
GUIDELINES USED BY THE SERVICE
IN CONSIDERING REQUESTS
FOR CONSENT UNDER SECTION
1.1502–13(e)(3)
.01 Whether it is difficult for the con-
solidated group to account for those in-
ter-company transactions for which con-
sent is requested when they are treated on
a single entity basis and, if so, why it is dif-
ficult to do so.
.02 Whether the Effect on CTI or CTL
for the consent year or the average of the
Effect on CTI or CTL for the consent year
and each of the preceding two taxable
years is greater than 5 percent. Con-
sent under § 1.1502–13(e)(3) will not be
granted in cases where either (a) the Effect
on CTI or CTL is greater than 5 percent
for the consent year or (b) the average of
the Effect on CTI or CTL for the consent
year and each of the two preceding taxable
years is greater than 5 percent. However,
consent will generally be granted in cases
where (a) the Effect on CTI is less than 5
percent for the consent year and the aver-
age of the Effect on CTI for the consent
year and each of the two preceding taxable
years is less than 5 percent and (b) the
Effect on CTL is less than 5 percent for
the consent year and the average of the
Effect on CTL for the consent year and
each of the two preceding taxable years is
less than 5 percent.
.03 Whether the consolidated group
will secure the benefit of any deduction,
credit, or other allowance that it would
not otherwise secure if consent to treat
those intercompany transactions for which
consent is requested on a separate entity
basis were not granted.
.04 Whether the gains that are the sub-
ject of the consent to treat intercompany
transactions on a separate entity basis
have resulted from arm’s-length charges
or prices.
SECTION 7. EFFECT OF THE
CONSENT UNDER SECTION
1.1502–13(e)(3)
.01 A consent under § 1.1502–13(e)(3)
shall, unless revoked pursuant to section 8,
apply to all members of the consolidated
group for the consent year and all subse-
quent taxable years ending prior to the first
taxable year for which the group does not
file a consolidated return.
.02 Section 446(e) consent is granted
under § 1.1502–13(e)(3)(iii) for any
changes in methods of accounting for in-
tercompany transactions that are necessary
solely to conform a member’s methods to
a consent obtained pursuant to this revenue
procedure, provided the changes are made
in the consent year. Any such changes
in methods are effected on a cut-off basis
(that is, no § 481(a) adjustment will be
made). For any subsequent taxable year,
§ 446(e) consent must be separately re-
quested under Rev. Proc. 97–27, 1997–1
C.B. 680, or its successor, if a member has
failed to conform its accounting practices
to the treatment of intercompany trans-
actions required as a result of obtaining
a consent pursuant to this revenue pro-
cedure. Any such changes in methods
are effected on a cut-off basis (that is, no
§ 481(a) adjustment will be made).
.03 A consent shall not preclude the ap-
plication of § 482 to members of a consol-
idated group.
.04 A consent granted under
§1.1502–13(e)(3) to treat intercompany
transactions on a separate entity basis
does not apply for purposes of taking into
account losses and deductions deferred
under § 267(f).
SECTION8. REVOCATIONOF
CONSENT UNDER SECTION
1.1502–13(e)(3)
.01 Consent to treat intercompany
transactions on a separate entity basis
under § 1.1502–13(e)(3) is revoked auto-
matically for any taxable year in which
the Effect on CTI or CTL, when aver-
aged with the Effect on CTI or CTL for
each of the two preceding taxable years, is
greater than 5 percent. The consolidated
group must attach a statement to its orig-
inal return for the taxable year in which
the consent is revoked, indicating that the
2009–27 I.R.B.109July 6, 2009

consent under § 1.1502–13(e)(3) has been
revoked pursuant to this section 8.01.
.02 The Service’s consent under
§ 1.1502–13(e)(3) is granted for any
consolidated group to revoke a valid con-
sent received from the Service under
§ 1.1502–13(e)(3) to treat intercompany
transactions on a separate entity basis, and
thus treat intercompany transactions on a
single entity basis, provided a statement is
attached to the consolidated group’s orig-
inal return for the taxable year in which
the revocation is to be effective indicating
its revocation of the consent pursuant to
this section 8.02. In cases where a valid
consent from the Service to report inter-
company transactionson a separate entity
basis was not previously obtained and the
consolidated group wants to change from
separate entity reporting to single entity
reporting, see section 9.
.03 Notwithstanding that the Ser-
vice has granted consent under
§ 1.1502–13(e)(3) and that such consent
has not been revoked pursuant to section
8.01 or 8.02, the Director of Field Opera-
tions may, upon examination of tax returns
for years subsequent to the consent year,
recommend that the ruling granting such
consent be modified or revoked if the con-
ditions and circumstances under which the
ruling was granted have changed substan-
tially and it is determined that single entity
reporting is necessary in order to clearly
reflect CTI under § 446 or CTL under
§ 1502. If the Director of Field Operations
recommends that the ruling granting such
consent be modified or revoked, the Di-
rector of Field Operations will forward the
matter to the national office for consider-
ation before any further action is taken.
Such a referral to the national office will
be treated as a request for technical advice,
and the provisions of Rev. Proc, 2009–2,
2009–1 I.R.B. 87, or its successor, will be
followed.
In determining whether the conditions
and circumstances under which the ruling
was granted have changed substantially,
the Service will consider the factors and
guidelines under section 6 (with the ex-
ception of section 6.02 which is addressed
in section 8.01) of this revenue procedure,
and may also consider other factors that
may be relevant to clearly reflect the CTI
and CTL of the consolidated group.
.04Whenconsentunder
§ 1.1502–13(e)(3) is revoked pursuant to
section 8.01, 8.02 or 8.03, each member of
the consolidated group must report those
intercompany transactions for which con-
sent has been revoked on a single entity
basis for the taxable year of the revocation
and all subsequent taxable years (ending
prior to the first taxable year for which the
group does not file a consolidated return)
unless consent is received pursuant to a
new request submitted under section 4.
05. Section 446(e) consent is granted
under § 1.1502–13(e)(3)(iii) for any
changes in methods of accounting for in-
tercompany transactions that are necessary
solely to conform a member’s methods
to a revocation of consent made pursuant
to this revenue procedure, provided the
changes are made in the taxable year for
which the revocation is made. Any such
changes in methods are effected on a
cut-off basis (that is, no § 481(a) adjust-
ment will be made). For any subsequent
taxable year, § 446(e) consent must be
separately requested under Rev. Proc.
97–27, or its successor, if a member has
failed to conform its accounting practices
to the treatment of intercompany transac-
tions required as a result of a revocation
made pursuant to this revenue procedure.
Any such changes in methods are effected
on a cut-off basis (that is, no § 481(a)
adjustment will be made).
SECTION 9. REQUESTS FOR
CONSENT TO CHANGE FROM
SEPARATE ENTITY REPORTING TO
SINGLE ENTITY REPORTING IN
CASES WHERE A VALID CONSENT
FROM THE SERVICE TO REPORT
INTERCOMPANY TRANSACTIONS
ON A SEPARATE ENTITY BASIS WAS
NOT PREVIOUSLY OBTAINED
Requests for consent to change from
separate entity reporting to single entity
reporting, where a valid consent from the
Service to report intercompany transac-
tions on a separate entity basis was not
previously obtained, must be separately
requested as a change in method of ac-
counting under Rev. Proc. 97–27, or its
successor. Any such changes in methods
of accounting are effected on a cut-off
basis (that is, no § 481(a) adjustment will
be made).
SECTION 10. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 97–49 is modified and su-
perseded.
SECTION 11. EFFECTIVE DATE
This revenue procedure is effective for
taxable years ending on or after July 6,
2009.
SECTION 12. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Bruce A. Decker of the Office
of Associate Chief Counsel (Corporate).
For further information regarding this rev-
enue procedure, contact Bruce A. Decker
at (202) 622–7550 (not a toll-free call).
July 6, 20091102009–27 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2009–27 I.R.B.iJuly 6, 2009

Numerical Finding List
1
Bulletin 2009–27
Revenue Procedures:
2009-30, 2009-27 I.R.B.27
2009-31, 2009-27 I.R.B.107
Revenue Rulings:
2009-18, 2009-27 I.R.B.1
Treasury Decisions:
9452, 2009-27 I.R.B.1
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2009–1 through 2009–26 is in Internal Revenue Bulletin
2009–26, dated June 29, 2009.
July 6, 2009ii2009–27 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletin 2009–27
Revenue Procedures:
97-49
Modified and superseded by
Rev. Proc. 2009-31, 2009-27 I.R.B.107
2008-38
Superseded by
Rev. Proc. 2009-30, 2009-27 I.R.B.27
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2009–1 through 2009–26 is in Internal Revenue Bulletin 2009–26, dated June 29, 2009.
2009–27 I.R.B.iiiJuly 6, 2009

July 6, 20092009–27 I.R.B.

2009–27 I.R.B.July 6, 2009

July 6, 20092009–27 I.R.B.

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