Internal Revenue Bulletin 2009-40 (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
9-40
October 5, 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
Rev. Rul. 2009–33, page 447.
Federal rates; adjusted federal rates; adjusted federal
long-term rate and the long-term exempt rate.For pur-
poses of sections 382, 642, 1274, 1288, and other sections
of the Code, tables set forth the rates for October 2009.
T.D. 9463, page 442.
Final regulations under section 860G of the Code expand the
list of permitted modifications to include certain modifications
that are often made to commercial mortgages. Changes
to the regulations are necessary to better accommodate
evolving practices in the commercial-mortgage industry.
These changes will affect lenders, borrowers, servicers, and
sponsors of securitizations of mortgages in REMICs.
Notice 2009–78, page 452.
This notice announces rules that will be included in regulations
identifying stock that is not taken into account for purposes
of the ownership test of section 7874 of the Code. Stock
generally will not be taken into account for this purpose if,
subject to certain exceptions, it is issued in exchange for: (1)
cash or cash equivalents; (2) marketable securities; and (3)
any other property in a transaction with a principal purpose of
avoiding section 7874. This notice also includes provisions
regarding stock that is sold in a public offering.
Notice 2009–79, page 454.
This notice requests comments about whether additional guid-
ance related to modifications of commercial loans held by in-
vestment trusts similar to thechanges permitted under regu-
lations section 1.860G–2(b)(3) of the Code is appropriate and
the extent to which the requested changes are consistent with
the Service position under section 301.7701–4(c) as related
to fixed investment trusts. Additional comments must be sub-
mitted by November 14, 2009.
Notice 2009–81, page 455.
Extension of replacement period for livestock sold on
account of drought.This notice explains the circumstances
under which the 4-year replacement period under section
1033(e)(2) of the Code is extended for livestock sold on
account of drought. The Appendix to this notice contains a
list of the counties that experienced exceptional, extreme, or
severe drought during the preceding 12-month period ending
August 31, 2009. Taxpayers may use this list to determine if
an extension is available.
Rev. Proc. 2009–42, page 459.
This procedure describes the conditions under which a Regu-
lated Investment Company (RIC) that invests in a public-private
investment partnership (PPIP) is treated for purposes of the as-
set diversification test of section 851(b)(3) of the Code, as if it
directly invested in the assets held by the PPIP.
Rev. Proc. 2009–45, page 471.
This procedure describes the conditions under which modifica-
tions to the terms of certain commercial mortgage loans that
are at risk of default will not cause the Service to challenge
the tax status of certain securitization vehicles that hold the
loans or to assert that those modifications give rise to prohib-
ited transactions.
(Continued on the next page)
Announcements of Disbarments and Suspensions begin on page 475.
Finding Lists begin on page ii.

Announcement 2009–69, page 475.
This announcement includes changes to Revenue Procedure
2007–65. Specifically, the announcement expands the rights
of developers, investors, and related parties to enter into
agreements for the purchase of the wind farm, any property
included in the wind farm, or an interest in the project company
to permit a purchase price determined prior to exercise if the
parties reasonably believe that the price will not be less than
the fair market value of the property at the time the right may
be exercised. The announcement also clarifies how section
469 of the Code applies to credits generated by wind energy
facilities, clarifies that the revenue procedure only provides
safe harbor requirements, and makes conforming changes to
the revenue procedure to reflect these three changes. Rev.
Proc. 2007–65 modified.
EMPLOYEE PLANS
Notice 2009–77, page 449.
Weighted average interest rate update; corporate bond
indices; 30–year Treasury securities; segment rates.
This notice contains updates for the corporate bond weighted
average interest rate for plan years beginning in September
2009; the 24–month average segment rates; the funding
transitional segment rates applicable for September 2009;
and the minimum present value transitional rates for August
2009.
Rev. Proc. 2009–43, page 460.
Revocation of elections by multiemployer defined bene-
fit pension plans to freeze funded status under section
204 of WRERA.Section 204 of WRERA permits a plan to re-
voketheelectiontotreattheplanasbeingfundedattheprior
year’s certified level with the approval of the Service. This pro-
cedure provides that the Service will automatically approve a
revocation request if certain requirements are met, including
a deadline for making a decision to revoke; notice to employ-
ees and other interested parties; and consistent treatment of
participating employers during the plan year. The revenue pro-
cedure provides special rules for the automatic approval of re-
vocation requests that are made pursuant to the resolution of
arbitration. The revenue procedure also states that the Ser-
vice will consider revocation requests that do not satisfy the
standard for automatic approval if the requests are submitted
in accordance with our usual ruling letter procedures. Notices
2009–31 and 2009–42 amplified.
ADMINISTRATIVE
Rev. Proc. 2009–44, page 462.
This procedure updates Revenue Procedure 2002–44, which
formally established a mediation procedure for cases in the
Appeals administrative process. This procedures expands and
clarifies the types of cases that may be mediated in Appeals.
Generally, this program is available for cases in which a limited
number of legal and factual issues remain unresolved following
discussions in Appeals. Rev. Proc. 2002–44 superseded.
October 5, 20092009–40 I.R.B.

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.
2009–40 I.R.B.October 5, 2009

October 5, 20092009–40 I.R.B.
Place missing child here.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 42.—L
ow-Income
Housing Credi
t
The adjusted a
pplicable federal short-term, mid-
term, and long
-term rates are set forth for the month
of October 200
9. See Rev. Rul. 2009-33, page 447.
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term rates
are set forth for the month of October 2009. See Rev.
Rul. 2009-33, page 447.
Section 382.—Limitation
on Net Operating Loss
Carryforwa
rds and Certain
Built-In Losses Following
Ownership Change
The adjusted applicable federal long-term rate is
set forth for the month of October 2009. See Rev.
Rul. 2009-33, page 447.
Section 412.—Minimum
Funding Standards
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of October 2009. See Rev. Rul. 2009-33, page 447.
Section 467.—Certain
Payments for the Use of
Property or Services
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of October 2009. See Rev. Rul. 2009-33, page 447.
Section 468.—Special
Rules for Mining and Solid
Waste
Reclamation and
Closi
ng Costs
The ad
justed applicable federal short-term, mid-
term,
and long-term rates are set forth for the month
of Oct
ober 2009. See Rev. Rul. 2009-33, page 447.
Section 482.—
Allocation
of Income and D
eductions
Among Taxpaye
rs
Federal short
-term, mid-term, and long-term rates
are set forth f
or the month of October 2009. See Rev.
Rul. 2009-33
, page 447.
Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of October 2009. See Rev. Rul. 2009-33, page 447.
Section 642.—Special
Rules for C
redits and
Deduction
s
Federal sh
ort-term, mid-term, and long-term rates
are set fo
rth for the month of October 2009. See Rev.
Rul. 2009
-33, page 447.
Section 807.—Rules for
Certain Reserves
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of October 2009. See Rev. Rul. 2009-33, page 447.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of October 2009. See Rev. Rul. 2009-33, page 447.
Sectio
n 860.—Deduction of
Defici
ency Dividends
26 CFR 1
.860A–1: Effective dates and transition
rules.
T.D. 9
463
DEPAR
TMENT OF THE
TREA
SURY
Inte
rnal Revenue Service
26 CF
RParts1and602
Modification
sofCommercial
Mortgage Loan
sHeldby
aRealEstate
Mortgage
Investment C
onduit (REMIC)
AGENCY: Inte
rnal Revenue Service
(IRS), Trea
sury.
ACTION: Fin
al Regulation.
SUMMARY: Thi
s document contains final
regulation
s that expand the list of permit-
ted loan mod
ifications to include certain
modificati
ons that are often made to com-
mercial mor
tgages. Changes to the regu-
lations ar
e necessary to better accommo-
date evolv
ing practices in the commercial-
mortgage i
ndustry. These changes will
affect len
ders, borrowers, servicers, and
sponsors
of securitizations of mortgages in
REMICs.
DATES:Ef
fective Date:These regulations
are effec
tive on or after September 16,
2009.
Applicab
ility Date:For date of applica-
bility, s
ee §1.860A–1(b).
FOR FURTH
ER INFORMATION
CONTACT:
Diana Imholtz or Susan
Thompso
n Baker at (202) 622–3930 (not
atoll-f
ree number).
SUPPLEM
ENTARY INFORMATION:
Paperwo
rk Reduction Act
The coll
ection of information con-
tained i
n this final regulation has been
reviewe
d and approved by the Office of
Managem
ent and Budget in accordance
with th
e Paperwork Reduction Act of
1995 (4
4 U.S.C. 3507(d)) under control
number
1545–2110. The collection of
inform
ation in this final regulation is in
§1.860
G–2(b)(7). This information is
requi
red in order to show that certain mod-
ifica
tions to mortgages permitted by this
final
regulation will not cause the modi-
fied m
ortgage to cease to be a qualified
mortg
age. The collection of information
is vol
untary to obtain a benefit.
2009–40 I.R.B.442October 5, 2009

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 OMB control number.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
Background
This document contains amendments
to 26 CFR part 1 under section 860G of
the Internal Revenue Code (Code). In
Notice 2007–17, 2007–1 C.B. 748 (March
19, 2007), the IRS and the Treasury
Department requested input on whether
the present REMIC regulations should
be amended to permit additional types
of modifications incurred in connection
with commercial mortgage loans. See
§601.601(d)(2)(ii)(b). The IRS and the
Treasury Department received several
comments in response to this request
(the Notice 2007–17 Comments). Af-
ter consideration of the Notice 2007–17
Comments, the IRS and the Treasury
Department published in theFederal Reg-
ister(72 FR 63523) on November 9, 2007,
proposed regulations (REG–127770–07,
2007–2 C.B. 1171) that would expand
the list of permitted loan modifications
to include certain modifications that are
often made to commercial mortgages. The
IRS and the Treasury Department received
additional comments in response to the
proposed regulations (the Proposed Regu-
lation Comments). A public hearing was
requested and was held on April 4, 2008
(Announcement 2008–24 I.R.B. 692
[73 FR 12041]). After consideration
of the Proposed Regulation Comments,
the proposed regulations are adopted as
revised by this Treasury decision.
Summary of Comments and
Explanation of Provisions
Except as specifically provided in
§1.860G–2(b)(3), if there is a significant
modification of an obligation that is held
by a REMIC, then the modified obligation
is treated as one that was newly issued in
exchange for the unmodified obligation
that it replaced. See §1.860G–2(b)(1). For
this purpose, the rules in §1.1001–3(e)
determine whether a modification is “sig-
nificant.” See §1.860G–2(b)(2). Because
of when it is treated as having been ac-
quired in the deemed exchange, a sig-
nificantly modified obligation generally
fails to be a qualified mortgage. Section
1.860G–2(b)(3), however, contains a list
of modifications that are expressly per-
mitted without regard to the section 1001
modification rules.
The final regulations expand this list of
permitted exceptions to include changes in
collateral, guarantees, and credit enhance-
ment of an obligation and changes to the
recourse nature of an obligation. These
changes are permitted so long as the obli-
gation continues to be principally secured
by an interest in real property. The final
regulations also clarify when a release of a
lien on real property securing a qualified
mortgage does not disqualify the mort-
gage.
The Proposed Regulation Comments
included requests for clarification and rec-
ommendations relating to the following:
(i) the lien release rule; (ii) the require-
ment to retest the collateral value; (iii)
the appraisal requirement; (iv) changes in
the nature of an obligation from nonre-
course to recourse; (v) investment trusts;
and (vi) other proposals set forth in the
Notice 2007–17 Comments that were not
included in the proposed regulations.
1.The Lien Release Rule
The proposed regulations would pro-
vide that a lien release pursuant to certain
changes in collateral would not cause a
qualified mortgage to cease to be a qual-
ified mortgage on the date the lien is
released. Commentators indicated that, as
drafted, the proposed regulations could be
interpreted to prohibit other types of lien
releases, including lien releases that are
occasioned by a default or reasonably fore-
seeable default under §1.860G–2(b)(3)(i)
and lien releases that are permitted pur-
suant to the terms of the mortgage loan
and are not modifications for purposes
of §1.1001–3. In response to these com-
ments, the final regulations clarify that a
release of a lien on real property that does
not result in a significant modification
under §1.1001–3 (for example, a release
or substitution of collateral pursuant to
the borrower’s unilateral option under the
terms of the mortgage loan) is not a release
that disqualifies a mortgage loan, so long
as the mortgage continues to be princi-
pally secured by real property after giving
effect to any releases, substitutions, addi-
tions, or other alterations to the collateral.
Similarly, the final regulations clarify that
a lien release occasioned by a default or
a reasonably foreseeable default is not a
release that disqualifies the mortgage, so
long as the principally-secured test contin-
ues to be satisfied.
2.The Requirement to Retest the
Collateral Value
Section 1.860G–2(a)(1) of the regula-
tions provides that an obligation is princi-
pally secured by an interest in real property
if the fair market value of the real property
that secures the obligation equals at least
80 percent of the adjusted issue price of
the obligation. The regulations require the
80-percent test to be satisfied either at the
time the obligation was originated or at the
time the sponsor contributes the obligation
to the REMIC. After the startup day, the
regulations do not require ongoing satis-
faction of the 80-percent test.
Because certain types of modifications
permitted by the proposed regulations
could affect the value of the collateral
securing the mortgage loan, the proposed
regulations would require the 80-percent
test to be satisfied at the time the mortgage
loan is modified with respect to changes
in collateral, guarantees, and credit en-
hancement of an obligation or with respect
to changes to the recourse nature of an
obligation. Commentators indicated that
retesting should be required only when
the modification could cause a decrease
in the value of real property collateral rel-
ative to the mortgage loan amount. For
this reason, commentators further indi-
cated that changes in guarantees, credit
enhancements or the recourse nature of an
obligation, as well as the addition of col-
lateral, do not have the effect of decreasing
the value of the real property securing the
mortgage loan and, therefore, these types
of changes should not require retesting.
To ensure that a modified mortgage
loan continues to be principally secured by
an interest in real property, the IRS and the
Treasury Department continue to believe
that it is appropriate to retest at the time
of the modification. Accordingly, the final
October 5, 20094432009–40 I.R.B.

regulations retain the retesting require-
ment, but amend the proposed standards
for satisfying the principally secured test
as described in section 3 in this preamble.
In addition, to provide a more flexible
standard for changes that do not decrease
the value of real property securing the
mortgage loan, the final regulations pro-
vide an alternative method for satisfying
the principally secured test.
For these types of changes (for ex-
ample, a change from recourse to nonre-
course, or vice versa), the final regulations
provide that a modified mortgage loan
continues to be principally secured by real
property if the fair market value of the in-
terest in real property that secures the loan
immediately after the modification equals
or exceeds the fair market value of the
interest in real property that secured the
loan immediately before the modification.
This alternative test is consistent with the
general rule that a decline in the value of
collateral does not cause a mortgage loan
to cease to be principally secured by real
property. The final regulations provide
an example to illustrate the application of
this alternative method for satisfying the
principally secured test.
The final regulations also require retest-
ing with respect to a lien release that is
not a significant modification for purposes
of §1.1001–3 (for example, a release of
real property collateral pursuant to the bor-
rower’s unilateral option under the terms
of the mortgage loan). Here as well, the
principally secured test is satisfied if either
the 80-percent test is satisfied based on the
current value of the real property securing
the mortgage or the value of the real prop-
erty collateral after the modification is no
less than the value of the real property col-
lateral immediately before.
For purposes of retesting with respect to
alterations to real property collateral, the
transaction causing the alteration is looked
at in its entirety in determining the value
of the real property collateral. For exam-
ple, if, as part of an overall plan to make
improvements to real property collateral
that secures a mortgage loan, a borrower
demolishes an existing building and con-
structs a new building on that real property,
the fair market value of the real property
collateral is determined by taking into ac-
count both the demolition of the existing
building and the construction of the new
building.
3.The Appraisal Requirement
Forpurposesofretestingasofthedate
of modification, the proposed regulations
would require a current appraisal deter-
mined by an independent appraiser. Sev-
eral commentators indicated that requir-
ing a formal appraisal in connection with
a loan modification is a stricter standard
than is currently required for satisfying the
80-percent test at the startup day. See
§1.860G–2(a)(3). For a number of busi-
ness reasons, commentators indicated that
servicers need more flexibility in comply-
ing with this retesting requirement and,
therefore, requested that the proposed reg-
ulations be amended to permit servicers
to use other types of reasonable valuation
methods.
In response to these comments and to
make the retesting requirement more con-
sistent with the current rules for satisfy-
ing the 80-percent test at the startup day,
the final regulations provide that the prin-
cipally-secured test will be satisfied if the
servicer reasonably believes that the modi-
fied mortgage loan satisfies the 80-percent
test at the time of the modification. The fi-
nal regulations provide that a servicer must
base a reasonable belief upon a commer-
cially reasonable valuation method. The
final regulations set forth a nonexclusive
list of commercially reasonable valuation
methods that can be used by servicers for
retesting purposes. These same commer-
cially reasonable methods can be used un-
der the alternative test to establish that the
value of the real property collateral im-
mediately after the modification is no less
than the value of the real property collat-
eral immediately before it.
4.Changes in the Nature of an Obligation
from Nonrecourse to Recourse
The final regulations clarify that
changes in the nature of an obligation from
nonrecourse (or substantially all nonre-
course) to recourse (or substantially all
recourse)arepermittedsolongastheobli-
gation continues to be principally secured
by an interest in real property.
5.Investment Trusts
Section 301.7701–4(c) of the Procedure
and Administration Regulations provides
that an investment trust is not classified as
a trust if there is a power under the trust
agreement to vary the investment of the
certificate holders. The IRS and the Trea-
sury Department understand that changes
to the terms of commercial mortgage loans
held by investment trusts may raise is-
sues as to whether a “power to vary” is
present, and commentators recommended
that the scope of the regulation project
be expanded to permit investment trusts
to modify commercial mortgage loans in
the same manner as REMICs. To avoid
a significant delay inthe publication of
these final regulations, their scope has not
been expanded to include modifications of
mortgage loans held by investment trusts.
In a separate notice to be published in the
Internal Revenue Bulletin contemporane-
ously with these final regulations, the IRS
and the Treasury Department intend to re-
quest comments on this issue.
6.Other Proposals Set Forth in the Notice
2007–17 Comments
In the Proposed Regulation Comments,
commentators requested that the IRS and
the Treasury Department reconsider other
proposed loan modifications that were set
forth in the Notice 2007–17 Comments
but that were not included in the proposed
regulations. For the reasons indicated in
the preamble to the proposed regulations,
the IRS and the Treasury Department de-
termined that the remaining changes re-
quested by commentators should not be in-
cluded in the final regulations.
Special Analysis
It has been determined that this Trea-
sury decision is not asignificant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It has also been determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply to this regulation.
It is hereby certified that the collec-
tion of information requirement in this reg-
ulation will not have a significant eco-
nomic impact on a substantial number of
small business entities. This certification
is based on the fact that the REMICs af-
fected by this regulation will not be clas-
sified as small business entities. Accord-
ing to the Small Business Administration
definition of a “small business,” 13 C.F.R.
121.201, a REMIC is classified under Sec-
tor 52 (Finance and Insurance), Subsector
2009–40 I.R.B.444October 5, 2009

525 (Funds, Trusts and Other Financial Ve-
hicles) under the category “Other Finan-
cial Vehicle”, NAICS code 525990, and is
only considered a small business entity if it
accumulates less than 6.5 million dollars in
annual receipts. REMICs affected by this
regulation generally hold pools of com-
mercial mortgage loans with an average
loan size of 18.1 million dollars, and have
greater than 6.5 million dollars in annual
receipts. Therefore, a Regulatory Flexibil-
ity Analysis under the Regulatory Flexibil-
ity Act (5 U.S.C. chapter 6) is not required.
Pursuant to section 7805(f) of the Inter-
nal Revenue Code, the notice of proposed
rulemaking preceding this regulation was
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administration
for comment on its impact on small busi-
ness.
Drafting Information
The principal author of these regula-
tions is Diana Imholtz of the Office of As-
sociate Chief Counsel (Financial Institu-
tions and Products). Other personnel from
the IRS and the Treasury Department par-
ticipated, however, intheir development.
*****
Adoption of the Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 602
are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding entries in nu-
merical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.860A–0 also issued under
26 U.S.C. 860G(e).
Section 1.860G–2 also issued under
26 U.S.C. 860G(e). * * *
Par. 2. Section 1.860A–0 is amended
by revising the entry for §1.860G–2(a)(8)
and adding an entry for §1.860G–2(b)(7)
to read as follows:
§1.860A–0 Outline of REMIC provisions.
*****
§1.860G–2 Other rules.
(a) * * *
(8) Release of a lien on an interest in
real property securing a qualified mort-
gage; defeasance.
*****
(b) * * *
(7) Test for determining whether an
obligation continues to be principally
secured following certain types of modifi-
cations.
*****
Par. 3. Section 1.860A–1 is amended
by adding paragraph (b)(6) to read as fol-
lows:
§1.860A–1 Effective dates and transition
rules.
*****
(b) * * *
(6)Exceptions forcertain modi-
fied obligations. Paragraphs (a)(8)(i),
(b)(3)(v), (b)(3)(vi), and (b)(7) of
§1.860G–2 apply to modifications made
to the terms of an obligation on or after
September 16, 2009.
Par. 4. Section 1.860G–2 is amended
by:
1.Revising paragraphs (a)(8),
(b)(3)(iii) and (b)(3)(iv).
2.Adding paragraphs (b)(3)(v),
(b)(3)(vi) and (b)(7).
The additions and revisions read as fol-
lows:
§1.860G–2 Other rules.
(a) * * *
(8)Release of a lien on an interest in
real property securing a qualified mort-
gage; defeasance. If a REMIC releases its
lien on an interest in real property that se-
cures a qualified mortgage, that mortgage
ceases to be a qualified mortgage on the
date the lien is released unless—
(i) The REMIC releases its lien in a
modification that—
(A) Either is not a significant modifica-
tion as defined in paragraph (b)(2) of this
section or is one of the listed exceptions
set forth in paragraph (b)(3) of this section;
and
(B) Following that modification, the
obligation continues to be principally se-
curedbyaninterestinrealpropertyas
determined by paragraph (b)(7) of this
section; or
(ii) The mortgage is defeased in the fol-
lowing manner—
(A) The mortgagor pledges substitute
collateral that consists solely of govern-
ment securities (as defined in section
2(a)(16) of the Investment Company Act
of 1940 as amended(15 U.S.C. 80a–1));
(B) The mortgage documents allow
such a substitution;
(C) The lien is released to facilitate the
disposition of the property or any other
customary commercial transaction, and
not as part of an arrangement to collater-
alize a REMIC offering with obligations
that are not real estate mortgages; and
(D) The release is not within 2 years of
the startup day.
*****
(b) * * *
(3) * * *
(iii)Waiverofadue-on-saleclauseora
due-on-encumbrance clause;
(iv) Conversion of an interest rate by a
mortgagor pursuant to the terms of a con-
vertible mortgage;
(v) A modification that releases, substi-
tutes, adds, or otherwise alters a substan-
tial amount of the collateral for, a guar-
antee on, or other form of credit enhance-
ment for, a recourse or nonrecourse obli-
gation, so long as the obligation continues
to be principally secured by an interest in
real property following the release, substi-
tution, addition, or other alteration as de-
termined by paragraph (b)(7) of this sec-
tion; and
(vi) A change in the nature of the obli-
gation from recourse (or substantially all
recourse) to nonrecourse (or substantially
all nonrecourse), or from nonrecourse (or
substantially all nonrecourse) to recourse
(or substantially all recourse), so long as
the obligation continues to be principally
secured by an interest in real property fol-
lowing such a change as determined by
paragraph (b)(7) of this section.
*****
(7)Test for determining whether an
obligation continues to be principally
secured following certain types of modi-
fications. (i)Forpurposesofparagraphs
(a)(8)(i), (b)(3)(v), and (b)(3)(vi) of this
section, the obligation continues to be
principally secured by an interest in real
property following the modification only
if, as of the date of the modification,
the obligation satisfies either paragraph
(b)(7)(ii) or paragraph (b)(7)(iii) of this
section.
October 5, 20094452009–40 I.R.B.

(ii) The fair market value of the inter-
est in real property securing the obligation,
determined as of the date of the modifica-
tion, must be at least 80 percent of the ad-
justed issue price ofthe modified obliga-
tion, determined as of the date of the mod-
ification. If, as of the date of the modifica-
tion, the servicer reasonably believes that
the obligation satisfies the criterion in the
preceding sentence, then the obligation is
deemed to do so. A reasonable belief does
not exist if the servicer actually knows, or
has reason to know, that the criterion is not
satisfied. For purposes of this paragraph
(b)(7)(ii), a servicermust base a reasonable
belief on—
(A) A current appraisal performed by an
independent appraiser;
(B) An appraisal that was obtained in
connection with the origination of the obli-
gation and, if appropriate, that has been up-
dated for the passage of time and for any
other changes that might affect the value
of the interest in real property;
(C) The sales price of the interest in
real property in the case of a substantially
contemporary sale in which the buyer as-
sumes the seller’s obligations under the
mortgage; or
(D) Some other commercially reason-
able valuation method.
(iii) If paragraph (b)(7)(ii) of this sec-
tion is not satisfied, the fair market value of
the interest in real property that secures the
obligation immediately after the modifica-
tion must equal or exceed the fair market
value of the interest in real property that
secured the obligation immediately before
the modification. The criterion in the pre-
ceding sentence must be established by a
current appraisal, an original (and updated)
appraisal, or some other commercially rea-
sonable valuation method; and the servicer
must not actually know, or have reason to
know, that the criterion in the preceding
sentence is not satisfied.
(iv)Example. The following exam-
ple illustrates the rules of this paragraph
(b)(7).
Example. (i) S services mortgage loans that are
held by R, a REMIC. Borrower B is the issuer of one
of the mortgage loans held by R. The original amount
of B’s mortgage loan was $100,000, and the loan was
secured by real property X. At the time the loan was
contributed to R, property X had a fair market value
of $90,000. Sometime after the loan was contributed
to R, B experienced financial difficulties such that it
was reasonably foreseeable that B might default on
the loan if the loan was not modified. Accordingly,
S altered various terms of B’s loan to substantially
reduce the risk of default. The alterations included
the release of the lien on property X and the substi-
tution of real property Y for property X as collateral
for the loan. At the time the loan was modified, its
adjusted issue price was $100,000. The fair market
value of property X immediately before the modifi-
cation (as determined by a commercially reasonable
valuation method) was $70,000, and the fair market
value of property Y immediately after the modifi-
cation (as determined by a commercially reasonable
valuation method) was $75,000.
(ii) The alterations to B’s loan are a significant
modification within the meaning of §1.1001–3(e).
The modification, however, is described in para-
graphs (a)(8)(i) and (b)(3) of this section. Accord-
ingly, the modified loan continues to be a qualified
mortgage if, immediately after the modification, the
modified loan continues to be principally secured
by an interest in real property, as determined by
paragraph (b)(7) of this section.
(iii) Because the modification includes the release
of the lien on property X and substitution of prop-
erty Y for property X, the modified loan must satisfy
paragraph (b)(7)(i) of this section (which requires sat-
isfaction of either paragraph (b)(7)(ii) or paragraph
(b)(7)(iii) of this section). The modified loan does
not satisfy paragraph (b)(7)(ii) of this section because
property Y is worth less than $80,000 (the amount
equal to 80 percent of the adjusted issue price of the
modified mortgage loan). The modified loan, how-
ever, satisfies paragraph (b)(7)(iii) of this section be-
cause the fair market value of the interest in real estate
(real property Y) that secures the obligation imme-
diately after the modification ($75,000) exceeds the
fair market value of the interest in real estate (real
property X) that secured the obligation immediately
before the modification ($70,000). Accordingly, the
modified loan satisfies paragraph (b)(7)(i) of this sec-
tion and continues to be principally secured by an in-
terest in real property.
*****
PART 602—OMB CONTROL
NUMBERS UNDER THE PAPERWORK
REDUCTION ACT
Par. 5. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 6. Section 602.101, paragraph (b)
isamendedbyaddingtheentryinnumeri-
cal order to the table to read as follows:
§602.101 OMB Control numbers.
*****
(b) * * *
CFR part or section where
identified and described
Current OMB
control No.
*****
1.860G–2...........................................................
1545–2110
*****
Linda M. Kroening,
Acting Deputy Commissioner
for Services and Enforcement.
Approved September 9, 2009.
Michael Mundaca,,
Acting Assistant Secretary
oftheTreasury(TaxPolicy).
Section 860G.—Other
Definitions and Special
Rules
Whether additional guidance related to mod-
ifications of commercial loans held by invest-
ment trusts similar to the changes permitted under
§1.860G–2(b)(3) is appropriate and the extent to
which the requested changes are consistent with
Service position under §301.7701–4(c), relating to
fixed investment trusts. See T.D. 9463, page 442.
See Notice 2009-79, page 454.
Section 1001.—Deter-
mination of Amount and
RecognitionofGainorLoss
26 CFR 1.1001–3: Modifications of debt instruments.
This revenue procedure describes the conditions
under which modifications to the terms of certain
commercial mortgage loans that are at risk of default
will not cause the IRS to challenge the tax status of
certain securitization vehicles that hold the loans or to
assert that those modifications give rise to prohibited
transactions. See Rev. Proc. 2009-45, page 471.
2009–40 I.R.B.446October 5, 2009

Section 1274.—Determi-
nation of Issue Price in the
Case of Certain Debt Instru-
ments Issued for Property
(Also Sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872.)
Federal rates; adjusted federal rates;
adjusted federal long-term rate and the
long-term exempt rate.For purposes of
sections 382, 642, 1274, 1288, and other
sections of the Code, tables set forth the
rates for October 2009.
Rev. Rul. 2009–33
This revenue ruling provides various
prescribed rates for federal income tax
purposes for October 2009 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month
for purposes of section 1274(d) of the
Internal Revenue Code. Table 2 contains
the short-term, mid-term, and long-term
adjusted applicable federal rates (adjusted
AFR) for the current month for purposes
of section 1288(b). Table 3 sets forth the
adjusted federal long-term rate and the
long-term tax-exempt rate described in
section 382(f). Table 4 contains the ap-
propriate percentages for determining the
low-income housing credit described in
section 42(b)(1) for buildings placed in
service during the current month. How-
ever, under section 42(b)(2), the applicable
percentage for non-federally subsidized
new buildings placed in service after July
30, 2008, and before December 31, 2013,
shall not be less than 9%. Finally, Table
5 contains the federal rate for determining
the present value of an annuity, an interest
for life or for a term of years, or a remain-
der or a reversionary interest for purposes
of section 7520.
REV. RUL. 2009–33 TABLE 1
Applicable Federal Rates (AFR) for October 2009
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR
.75%.75%.75%.75%
110% AFR.83%.83%.83%.83%
120% AFR.90%.90%.90%.90%
130% AFR.98%.98%.98%.98%
Mid-term
AFR2.66%2.64%2.63%2.63%
110% AFR2.92%2.90%2.89%2.88%
120% AFR3.20%3.17%3.16%
3.15%
130% AFR3.46%3.43%3.42%3.41%
150% AFR
4.00%3.96%3.94%3.93%
175% AFR
4.67%4.62%
4.59%4.58%
Long-term
AFR4.10%4.06%4.04%4.03%
110% AFR
4.52%
4.47%
4.45%
4.43%
120% AFR4.93%4.87%4.84%4.82%
130% AFR
5.35%5.28%5.25%5.22%
REV. RUL. 2009–33 TABLE 2
Adjusted AFR for October 2009
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-
term adjusted
AFR
.82%.82%.82%.82%
Mid-term adjusted AFR2.04%2.03%2.02%2.02%
Long-term adjusted
AFR
4.16%4.12%4.10%4.09%
October 5, 20094472009–40 I.R.B.

REV. RUL. 2009–33 TABLE 3
Rates Under Section 382 for October 2009
Adjusted federal long-term rate for the current month4.16%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted
federal long-term rates for the current month and the prior two months.)4.48%
REV. RUL. 2009–33 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for October 2009
Note: Under Section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July
30, 2008, and before December 31, 2013, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit7.78%
Appropriate percentage for the 30% present value low-income housing credit3.33%
REV. RUL. 2009–33 TABLE 5
Rate Under Sec
tion 7520 for October 2009
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,
or a remainder or reversionary interest3.2%
Section 1288.
—Treatment
of Original I
ssue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of October 2009. See Rev. Rul. 2009-33, page 447.
Section 7520.—Valuation
Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of October 2009. See Rev. Rul. 2009-33, page 447.
Section 7701.—Definitions
26 CFR 301.7
701–4: Trusts.
This revenu
e procedure describes the conditions
under which
modifications to the terms of certain
commercial mortgage loans that are at risk of default
will not cause the IRS to challenge the tax status of
certain securitization vehicles that hold the loans or to
assert that those modifications give rise to prohibited
transactions. See Rev. Proc. 2009-45, page 471.
Section 7872
.—Treatment
of Loans With
Below-Market
Interest Rat
es
The adjusted
applicable federal short-term, mid-
term, and lo
ng-term rates are set forth for the month
of October 2
009. See Rev. Rul. 2009-33, page 447.
2009–40 I.R.B.448October 5, 2009

Part III. Administrative, Procedural, and Miscellaneous
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2009–77
This notice provides guidance as to the
corporate bond weighted average interest
rate and the permissible range of interest
rates specified under § 412(b)(5)(B)(ii)(II)
of the Internal Revenue Code as in ef-
fect for plan years beginning before 2008.
It also provides guidance on the corpo-
rate bond monthly yield curve (and the
corresponding spot segment rates), the
24-month average segment rates, and
the funding transitional segment rates
under § 430(h)(2). In addition, this no-
tice provides guidance as to the interest
rate on 30-year Treasury securities un-
der § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008, the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I), and the min-
imum present value segment rates under
§ 417(e)(3)(D) as in effect for plan years
beginning after 2007.
CORPORATE BOND WEIGHTED
AVERAGE INTEREST RATE
Sections412(b)(5)(B)(ii)and
412(l)(7)(C)(i), as amended by the Pen-
sion Funding Equity Act of 2004 and by
the Pension Protection Act of 2006 (PPA),
provide that the interest rates used to cal-
culate current liability and to determine
the required contribution under § 412(l)
for plan years beginning in 2004 through
2007 must be within a permissible range
based on the weighted average of the rates
of interest on amounts invested conser-
vatively in long term investment grade
corporate bonds during the 4-year period
ending on the last day before the beginning
of the plan year.
Notice 2004–34, 2004–1 C.B. 848, pro-
vides guidelines for determining the cor-
porate bond weighted average interest rate
and the resulting permissible range of in-
terest rates used to calculate current liabil-
ity. That notice establishes that the corpo-
rate bond weighted average is based on the
monthly composite corporate bond rate de-
rived from designated corporate bond in-
dices. The methodology for determining
the monthly composite corporate bond rate
as set forth in Notice 2004–34 continues to
apply in determining that rate. See Notice
2006–75, 2006–2 C.B. 366.
The composite corporate bond rate for
August 2009 is 6.03 percent. Pursuant
to Notice 2004–34, the Service has de-
termined this rate as the average of the
monthly yields for the included corporate
bond indices for that month.
The following corporate bond weighted
average interest rate was determined for
plan years beginning in the month shown
below.
For Plan Years
Beginning inPermissible Range
MonthYear
Corporate
Bond Weighted
Average90%to100%
September20096.47
5.83
6.47
YIELD CURVE AND SEGMENT
RATES
Generally for plan years beginning
after 2007 (except for delayed effective
dates for certain plans under sections 104,
105, and 106 of PPA), § 430 of the Code
specifies the minimum funding require-
ments that apply to single employer plans
pursuant to § 412. Section 430(h)(2) spec-
ifies the interest rates that must be used
to determine a plan’s target normal cost
and funding target. Under this provision,
present value is generally determined us-
ing three 24-month average interest rates
(“segment rates”), each of which applies
to cash flows during specified periods.
However, an election may be made under
§ 430(h)(2)(D)(ii) to use the monthly yield
curve in place of the segment rates. For
plan years beginning in 2008 and 2009, a
transitional rule under § 430(h)(2)(G) pro-
vides that the segment rates are blended
with the corporate bond weighted average
as specified above. An election may be
made under § 430(h)(2)(G)(iv) to use the
segment rates without applying the transi-
tional rule.
Notice 2007–81, 2007–2 C.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, the
24-month average corporate bond seg-
ment rates, and the funding transitional
segment rates used to compute the tar-
get normal cost and the funding target.
Pursuant to Notice 2007–81, the monthly
corporate bond yield curve derived from
August 2009 data is in Table I at the end
of this notice. The spot first, second, and
third segment rates for the month of Au-
gust 2009 are, respectively, 3.08, 5.94,
and 6.21. The three 24-month average
corporate bond segment rates applicable
for September 2009 under the election of
§ 430(h)(2)(G)(iv) are as follows:
First
Segment
Second
Segment
Third
Segment
5.03
6.736.82
October 5, 20094492009–40 I.R.B.

The transitional segment rates under
§ 430(h)(2)(G) applicable for September
2009, taking intoaccount the corporate
bond weighted average of 6.47 stated
above, are as follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
2008
5.996.566.59
2009
5.51
6.646.70
The transitional rule of § 430(h)(2)(G)
does not apply to plan years starting in
2010. Therefore, for a plan year starting in
2010 using a lookback month of Septem-
ber 2009, the funding segment rates are the
three 24-month average corporate bond
segment rates applicable for September
2009, listed above without blending for
the transitional period.
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 417(e)(3)(A)(ii)(II) (prior to
amendment by PPA) defines the appli-
cable interest rate, which must be used
for purposes of determining the minimum
present value of a participant’s benefit
under § 417(e)(1) and (2), as the annual
rate of interest on 30-year Treasury se-
curities for the month before the date
of distribution or such other time as the
Secretary may by regulations prescribe.
Section 1.417(e)–1(d)(3) of the Income
Tax Regulations provides that the applica-
bleinterestrateforamonthistheannual
rate of interest on 30-year Treasury secu-
rities as specified by the Commissioner
for that month in revenue rulings, notices
or other guidance published in the Internal
Revenue Bulletin.
The rate of interest on 30-year Treasury
securities for August 2009 is 4.37 percent.
The Service has determined this rate as the
average of the yield on the 30-year Trea-
sury bond maturing in May 2039 deter-
mined each day through August 12, 2009,
and the yield on the 30-year Treasury bond
maturing in August 2039 determined each
day for the balance of the month.
Generally for plan years beginning
after 2007, § 431 specifies the mini-
mum funding requirements that apply to
multiemployer plans pursuant to § 412.
Section 431(c)(6)(B) specifies a minimum
amount for the full-funding limitation
described in section 431(c)(6)(A), based
on the plan’s current liability. Section
431(c)(6)(E)(ii)(I) provides that the inter-
est rate used to calculate current liability
for this purpose must be no more than 5
percent above and no more than 10 percent
below the weighted average of the rates of
interest on 30-year Treasury securities dur-
ing the four-year period ending on the last
day before the beginning of the plan year.
Notice 88–73, 1988–2 C.B. 383, provides
guidelines for determining the weighted
average interest rate. The following rates
were determined for plan years beginning
in the month shown below.
For Plan Years
Beginning inPermissible Range
MonthYear
30-Year
Treasury
Weighted
Average
90%to
105%
September20094.39
3.95
4.61
MINIMUM P
RESENT VALUE
SEGMENT R
ATES
Generall
y for plan years beginning
after De
cember 31, 2007, the applicable
interes
t rates under § 417(e)(3)(D) are
segment
rates computed without regard to
a 24-mont
h average. For plan years begin-
ning in 20
08 through 2011, the applicable
interest
rates are the monthly spot seg-
ment rate
s blended with the applicable rate
under § 4
17(e)(3)(A)(ii)(II) as in effect
for plan
years beginning in 2007. Notice
2007–81
provides guidelines for determin-
ing the mi
nimum present value segment
rates. Pu
rsuant to that notice, the mini-
mum prese
nt value transitional segment
rates det
ermined for August 2009, tak-
ing into
account the August 2009 30-year
Treasur
y rate of 4.37 stated above, are as
follows
:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
20084.114.684.74
2009
3.855.005.11
20103.60
5.315.47
DRAFTI
NG INFORMATION
The pri
ncipal author of this notice is
Tony Mo
ntanaro of the Employee Plans,
Tax Exe
mpt and Government Entities Di-
vision
. Mr. Montanaro may be e-mailed at
Retire
mentPlanQuestions@irs.gov.
2009–40 I.R.B.450October 5, 2009

Table I
Monthly Yield Cu
rve for August 2009
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.5
1.48
20.5
6.30
40.5
6.20
60.5
6.18
80.5
6.16
1.0
1.91
21.0
6.29
41.06.2061.06.1781.06.16
1.5
2.32
21.5
6.28
41.5
6.20
61.5
6.17
81.5
6.16
2.02.7022.06.2842.0
6.19
62.06.1782.06.16
2.5
3.04
22.5
6.27
42.5
6.19
62.5
6.17
82.5
6.16
3.03.3523.06.2743.0
6.19
63.06.1783.06.16
3.5
3.63
23.5
6.26
43.5
6.19
63.5
6.17
83.5
6.16
4.0
3.90
24.0
6.25
44.0
6.19
64.06.1784.06.16
4.5
4.14
24.56.2544.5
6.19
64.5
6.17
84.5
6.16
5.0
4.37
25.06.2545.0
6.19
65.0
6.17
85.0
6.16
5.54.5825.5
6.24
45.5
6.19
65.5
6.17
85.5
6.16
6.04.7826.06.2446.0
6.19
66.06.1786.06.16
6.5
4.96
26.5
6.23
46.5
6.19
66.5
6.17
86.5
6.16
7.0
5.13
27.06.2347.0
6.19
67.06.1787.06.16
7.5
5.29
27.5
6.23
47.5
6.19
67.5
6.17
87.5
6.16
8.0
5.43
28.06.2348.0
6.19
68.06.1788.06.16
8.55.5628.5
6.23
48.5
6.19
68.5
6.17
88.5
6.16
9.0
5.68
29.0
6.22
49.06.1969.0
6.17
89.0
6.16
9.5
5.78
29.56.2249.56.1969.56.1789.56.16
10.0
5.88
30.06.22
50.0
6.1870.06.17
90.0
6.16
10.5
5.96
30.5
6.22
50.5
6.18
70.5
6.1790.56.16
11.06.0331.06.22
51.0
6.1871.06.17
91.0
6.16
11.5
6.09
31.5
6.22
51.5
6.18
71.5
6.1791.56.16
12.06.1532.06.2152.06.1872.06.17
92.0
6.16
12.5
6.19
32.5
6.21
52.5
6.18
72.5
6.1792.56.16
13.06.2333.06.21
53.0
6.1873.06.17
93.0
6.16
13.5
6.26
33.5
6.21
53.5
6.18
73.5
6.1793.56.16
14.06.2834.06.21
54.0
6.1874.06.17
94.0
6.16
14.5
6.30
34.5
6.21
54.5
6.18
74.5
6.1794.56.16
15.06.3135.06.2155.06.1875.06.1795.06.16
15.5
6.32
35.5
6.21
55.5
6.18
75.5
6.1795.56.16
16.06.3236.06.21
56.0
6.1876.06.17
96.0
6.16
16.5
6.33
36.5
6.20
56.5
6.18
76.5
6.1796.56.16
17.06.3337.06.20
57.0
6.1877.06.17
97.0
6.16
17.5
6.33
37.5
6.20
57.5
6.18
77.5
6.1797.56.16
18.06.3238.06.2058.06.1878.06.17
98.0
6.16
18.5
6.32
38.5
6.20
58.5
6.18
78.5
6.1798.56.16
19.0
6.31
39.0
6.2059.06.18
79.0
6.16
99.0
6.16
19.56.3139.56.2059.56.1879.56.1699.56.16
20.06.3040.06.2060.06.1880.06.16100.06.16
October 5, 20094512009–40 I.R.B.

Treatment of Certain Stock
of the Foreign Acquiring
Corporation — Section 7874
Notice 2009–78
SECTION 1. OVERVIEW
The Internal Revenue Service (IRS)
and the Treasury Department (Treasury)
intend to issue regulations under section
7874 of the Internal Revenue Code (Code)
incorporating the rules described in this
notice that will identify certain stock of
a foreign corporation that is disregarded
for determining ownership of the for-
eign corporation for purposes of section
7874(a)(2)(B)(ii). In general, and as de-
scribed below, the regulations to be issued
pursuant to this notice shall apply to acqui-
sitions completed on or after September
17, 2009.
SECTION 2. BACKGROUND
Section 7874 provides rules for expa-
triated entities and their surrogate foreign
corporations. An expatriated entity is a
domestic corporation (or domestic partner-
ship) with respect to which a foreign cor-
poration (which includes certain publicly
traded foreign partnerships) is a surrogate
foreign corporation, and any United States
person related to such domestic corpora-
tion (or domestic partnership) (within the
meaning of sections 267(b) or 707(b)(1)).
Section 7874(a)(2)(A).
A foreign corporation constitutes a
surrogate foreign corporation if three con-
ditions are satisfied. First, the foreign
corporation completes, after March 4,
2003, the direct or indirect acquisition
of substantially all of the properties held
directly or indirectly by a domestic corpo-
ration. Section 7874(a)(2)(B)(i). Second,
after the acquisition at least 60 percent of
the stock of the foreign corporation (by
vote or value) is held by former share-
holders of the domestic corporation by
reason of holding stock in the domestic
corporation (the Ownership Condition).
Section 7874(a)(2)(B)(ii). Third, after the
acquisition the expanded affiliated group
(defined in section 7874(c)(1)) that in-
cludes the foreign corporation does not
have substantial business activities in the
foreign country in which, or under the law
of which, the foreign corporation is cre-
ated or organized, when compared to the
total business activities of the expanded af-
filiated group. Section 7874(a)(2)(B)(iii).
Similar provisions apply if a foreign cor-
poration acquires substantially all of the
properties constituting a trade or business
of a domestic partnership.
Under section 7874(c)(2), certain stock
of the foreign corporation is not taken into
account in determining whether the Own-
ership Condition is satisfied: (1) stock
of the foreign corporation held by mem-
bers of the expanded affiliated group that
includes the foreign corporation, and (2)
stock of the foreign corporation sold in a
public offering related to the acquisition
describedinsection7874(a)(2)(B)(i).
Regulations addressing the Ownership
Condition were published in the Federal
Register on May 20, 2008, and June 12,
2009 (T.D. 9399, 2008–1 C.B. 1157 [73
FR 29054]; T.D. 9453, 2009–28 I.R.B. 114
[74 FR 27920]).
Under section 7874(c)(4) a transfer of
properties or liabilities (including by con-
tribution or distribution) shall be disre-
garded if such transfer is part of a plan a
principal purpose of which is to avoid the
purposes of section 7874.
Section 7874(g) grants the Secretary
broad authority to provide regulations nec-
essary to carry out section 7874, including
regulations adjusting the application of
section 7874 as necessary to prevent the
avoidance of the purposes of section 7874.
More specifically, section 7874(c)(6)
grants the Secretary authority to prescribe
regulations as may be appropriate to deter-
mine whether a corporation is a surrogate
foreign corporation, including regulations
to treat stock as not stock.
In T.D. 9453, the IRS and Treasury
modified §1.7874–2T(e)(5),Example 3,to
eliminate an unintended implication as to
the scope or application of the public of-
fering rule of section 7874(c)(2)(B). The
T.D. 9453 preamble states that the IRS and
Treasury are considering issuing guidance
concerning the scope and application of
the public offering rule and request com-
ments in this regard.
SECTION 3. TRANSACTIONS AT
ISSUE
The IRS and Treasury have become
aware of transactions intended to avoid the
application of section 7874 that involve
a transfer of cash (or certain other assets)
to the foreign corporation in a transaction
related to the acquisition described in sec-
tion 7874(a)(2)(B)(i), thereby minimizing
the former shareholders’ ownership in
the foreign corporation for purposes of
the Ownership Condition. In one such
transaction, for example, the shareholders
of a domestic corporation (DC) transfer
all their DC stock to a newly-formed for-
eign corporation (New FCo) in exchange
for 79 percent of the stock of New FCo
and, in a related transaction, an investor
transfers cash to New FCo in exchange
for the remaining 21 percent of the New
FCo stock. The parties to the transaction
take the position that the New FCo stock
issued to the investor is not “sold in a
public offering” and thus not subject to
section 7874(c)(2)(B). The parties also
assert that the transfer of cash from the in-
vestor to New FCo was not part of a plan a
principal purpose of which is to avoid the
purposes of section 7874 such that section
7874(c)(4) does not apply to disregard the
investor’s transfer of cash to New FCo in
exchange for New FCo stock.
Under these positions, the parties as-
sert that the investor’s New FCo stock
would be taken into account for purposes
of the Ownership Condition. Thus, the for-
mer shareholders of DC would hold only
79 percent of the stock of New FCo by
reason of holding stock of DC, in which
case section 7874(a)(1) would apply to DC
(and any other expatriated entity) but sec-
tion 7874(b) would not apply to treat New
FCo as a domestic corporation for pur-
poses of the Code. The IRS and Trea-
sury understand that similar transactions
may be structured with respect to the ac-
quisition of a domestic corporation in a ti-
tle 11 or similar case (as defined in sec-
tion 368(a)(3)) or a domestic partnership.
These transactions are inconsistent with
the purposes of section 7874.
The IRS and Treasury also understand
that taxpayers are concerned the public of-
fering rule of section 7874(c)(2)(B) ap-
plies to all public issuances of stock by a
foreign corporation, regardless of the prop-
erty exchanged for the stock. For example,
assume that, pursuant to a business com-
bination, the shareholders of a publicly-
traded foreign corporation (FT) and a pub-
licly-traded domesticcorporation (DT) in-
tend to transfer their FT and DT stock, re-
spectively, to a newly-formed foreign cor-
2009–40 I.R.B.452October 5, 2009

poration (FA) that will be publicly-traded.
To effectuate the transaction, as part of
a plan FA acquires all of the FT and the
DT stock, respectively, from the FT and
DT shareholders in exchange solely for
newly-issued FA stock. If the FA stock is-
sued to the FT shareholders is considered
“sold in a public offering” and thus subject
to section 7874(c)(2)(B), the former share-
holders of DT would be treated as owning
100 percent of the stock of FA for purposes
of the Ownership Condition, and FA would
therefore be treated as a domestic corpora-
tion for purposes of the Code under section
7874(b). A similar result would occur if
instead FT merged with and into FA and
the FT shareholders exchanged their FT
stock for FA stock pursuant to the merger.
The IRS and Treasury believe that such
a result could be inappropriate in certain
cases.
SECTION 4. REGULATIONS TO BE
ISSUED
To address certain transactions, includ-
ing those described in Section 3 of this
notice, the IRS and Treasury intend to is-
sue regulations identifying stock of the for-
eign corporation that is not taken into ac-
count for purposes of the Ownership Con-
dition. The regulations will identify stock
of the foreign corporation that shall not
be taken into account for purposes of the
Ownership Condition, even if such stock
may not otherwise be described in section
7874(c)(2)(B). The regulations will also
clarify that certain stock, which may be
described in section 7874(c)(2)(B), shall
nonetheless be taken into account for pur-
poses of the Ownership Condition.
The regulations issued pursuant to this
notice shall provide that stock of the for-
eign corporation issued in exchange for
“nonqualified property” in a transaction
related to the acquisition described in
section 7874(a)(2)(B)(i) is not taken into
account for purposes of the Ownership
Condition, without regard to whether such
stockispubliclytradedonthedateof
issuance or otherwise. Subject to certain
exceptions, the term “nonqualified prop-
erty” shall generally mean: (1) cash or
cash equivalents; (2) marketable securities
as defined in section 453(f)(2); and (3) any
other property acquired in a transaction
with a principal purpose of avoiding the
purposes of section 7874.
For this purpose, however, marketable
securities generally shall not include stock
(or a partnership interest) issued by a mem-
ber of the expanded affiliated group (as de-
fined in section 7874(c)(1)) that after the
acquisition includesthe foreign corpora-
tion, unless a principal purpose of the is-
suance of the stock ofthe foreign corpo-
ration in exchange for such property was
the avoidance of the purposes of section
7874. For this purpose, a partnership shall
be treated as a member of an expanded af-
filiated group if the partnership would be
a member of the expanded affiliated group
if it were a corporation.
The regulations shall provide similar
rules to address acquisitions of property
by one or more members of the expanded
affiliated group (that includes the foreign
corporation after the acquisition) in ex-
change for stock of the foreign corpora-
tion, including, for example, pursuant to
a triangular reorganization. For this pur-
pose, a partnership shall be treated as a
member of an expanded affiliated group if
the partnership would be a member of the
expanded affiliated group if it were a cor-
poration.
The rules described in this notice are not
intended to affect the application of sec-
tion 7874(c)(2)(A), §1.7874–1, or section
7874(c)(4).
The following examples illustrate the
rules concerning the Ownership Condition
that are intended to be included in the reg-
ulations described in this notice. For pur-
poses of the examples, unless otherwise in-
dicated, FA, FMS and FT are foreign cor-
porations, DMS and DT are domestic cor-
porations, PRS is a partnership, all entities
are unrelated, and section 7874(c)(4) may
apply to disregard certain transfers.
Example 1.Stock issued in exchange for mar-
ketable securities.(i)Facts. Individual A wholly
owns DT. FA, a newly formed corporation, acquires
all the DT stock from individual A in exchange solely
for FA stock. In a transaction related to FA’s acquisi-
tion of the DT stock, PRS transfers marketable secu-
rities (within the meaning of section 453(f)(2)) to FA
solely in exchange for FA stock.
(ii)Analysis. The FA stock issued to PRS in ex-
change for the marketable securities is not taken into
account for purposes of the Ownership Condition.
Example 2.Stock issued with a principal purpose
of avoiding section 7874.(i)Facts. FA acquires all
the DT stock in exchange solely for FA stock. In
a transaction related to FA’s acquisition of the DT
stock, PRS transfers marketable securities (within the
meaning of section 453(f)(2)) to FT, a newly formed
corporation, solely in exchange for FT stock and then
transfers the FT stock to FA in exchange solely for
FA stock. The shares of FT stock do not constitute
marketable securities within the meaning of section
453(f)(2).
(ii)Analysis. The FA stock issued to PRS in ex-
change for the FT stock is not taken into account for
purposes of the Ownership Condition because a prin-
cipal purpose of such issuance is the avoidance of the
purposes of section 7874.
Example 3.Stock issued or exchanged for stock
of a foreign corporation.(i)Facts. The stock of DT
and FT is publicly traded. The following transactions
are completed pursuant to a plan: FT forms FA, and
FA forms DMS and FMS. FMS merges with and into
FT, with FT surviving the merger. Pursuant to the
FMS-FT merger, the FT shareholders exchange their
FT stock solely for FA stock. Following the FMS-FT
merger, DMS merges with and into DT, with DT sur-
viving the merger. Pursuant to the DMS-DT merger,
the DT shareholders exchange their DT stock solely
for FA stock. After completion of the plan, FA wholly
owns FT and DT.
(ii)Analysis. After the FMS-FT merger, FT is a
member of the expanded affiliated group that includes
FA. Therefore, the shares of FT stock are not treated
as marketable securities and therefore do not consti-
tute nonqualified property. Thus, the FA stock issued
or exchanged for the FT stock is taken into account
for purposes of the Ownership Condition.
(iii)Alternative facts. Assume the same facts as
in paragraph (i) of this example except that, instead,
FT merges with and into FA with FA surviving the
merger. At the time of the merger, FT does not hold
nonqualified property. Pursuant to the FT-FA merger,
the FT shareholders exchange their FT stock solely
for FA stock. Because the properties transferred by
FT to FA pursuant to the FT-FA merger do not con-
stitute nonqualified property, the FA stock issued in
exchange for such properties pursuant to the merger
will be taken into account for purposes of the Owner-
ship Condition.
SECTION 5. EFFECTIVE DATE
The regulations described in this notice
shall apply to acquisitions completed on or
after September 17, 2009. Taxpayers may
apply the rules described in this notice in
their entirety to acquisitions completed on
or after September 17, 2009, and before
publication of the regulations described in
this notice if the rules are applied consis-
tently to all such acquisitions.
No inference is intended as to the treat-
ment of transactions described in this no-
tice under current law and the IRS may,
where appropriate, challenge such transac-
tions under applicable provisions, includ-
ing under section 7874(c)(4) or judicial
doctrines (such as the substance-over-form
doctrine).
October 5, 20094532009–40 I.R.B.

SECTION 6. DRAFTING
INFORMATION
The principal author of this notice is
S. James Hawes of the Office of Asso-
ciate Chief Counsel (International). How-
ever, other personnel from the IRS and
the Treasury Department participated in its
development. For further information re-
garding this notice, contact Mr. Hawes or
Milton M. Cahn at (202) 622–3860 (not a
toll-free call).
Modifications of Commercial
Mortgage Loans Held by an
Investment Trust
Notice 2009–79
In T.D. 9463, the Internal Revenue Ser-
vice (IRS) and the Treasury Department
issued final regulations relating to permit-
ted modifications of commercial mortgage
loans held by a real estate mortgage in-
vestment conduit (REMIC).SeeT.D.
9463, 2009–40 I.R.B. 442, 74 FR 47436
(No. 178, September 16, 2009), (amend-
ing § 1.860G–2(b)(3) of the Income Tax
Regulations). In response to a request
for comments in Notice 2007–17, 2007–1
C.B. 748 (March 19, 2007), and in re-
sponse to proposed regulations published
in the Federal Register (72 FR 63523) on
November 9, 2007, several commentators
recommended that the scope of the regu-
lations project be expanded to include a
rule that would permit investment trusts
to modify commercialmortgage loans to
the same extent that REMICs can modify
those loans under § 1.860G–2(b)(3) (tak-
ing into account the anticipated amend-
ments to that rule). The commentators,
however, did not provide detailed explana-
tions for why those changes were needed
or whether there are alternative ways of
dealing with investment trust interests
held by REMICs.
The scope of the final regulations re-
mained focused on § 1.860G–2(b)(3) and
was not expanded to include modifications
of commercial mortgage loans held by in-
vestment trusts. The IRS and the Treasury
Department note that, although REMICs
andinvestmenttrustsareoftenusedtose-
curitize mortgages, the requirements for
classification as a REMIC are not identi-
cal to the requirements for classification as
a trust. The IRS and the Treasury Depart-
ment continue to study the commentators’
recommendation and in this notice solicit
input concerning whether additional guid-
ance may be appropriate.
Background
Section 301.7701–1(b) of the Pro-
cedure and Administration Regulations
provides that the classification of organi-
zations that are recognized as separate en-
tities is determined under §§ 301.7701–2,
301.7701–3, and 301.7701–4, unless a
provision of the Internal Revenue Code
(Code) (such as section 860A addressing
Real Estate Mortgage Investment Con-
duits (REMICs)) provides for special
treatment of that organization.
Section 301.7701–2(a) provides that a
“business entity” isan entity recognized
for federal tax purposes that is not properly
classified as a trust under § 301.7701–4
or otherwise subject to special treatment
under the Code.
Section 301.7701–4(a) provides that, in
general, an arrangement is treated as a trust
if it can be shown that the purpose of the
arrangement is to vest in trustees responsi-
bility for the protection and conservation
of property for beneficiaries who cannot
share in the discharge of this responsibil-
ity and, therefore, are not associates in a
joint enterprise for the conduct of business
for profit.
Section 301.7701–4(b) provides that
there are arrangements that are known
as trusts, because legal title to property
is conveyed to trustees for the benefit of
beneficiaries, but that are not classified
as trusts for purposes of the Code be-
cause they are not simply arrangements
to protect or conserve the property for the
beneficiaries. The beneficiaries generally
create these trusts, which are often known
as business or commercial trusts, simply
as a device to carryon a profit-making
business. Such a business normally would
have been carried on through business
organizations that the Code classifies as
corporations or partnerships (business en-
tities).
Section 301.7701–4(c) provides that
an “investment” trust is not classified
as a trust if there is a power under the
trust agreement to vary the investment
of the certificate holders.See Comm’r v.
NorthAmericanBondTrust, 122 F.2d 545
(2d Cir. 1941),cert. denied, 314 U.S. 701
(1942). An investment trust with a single
class of ownership interests representing
undivided beneficial interests in the assets
of the trust is classified as a trust if there
is no power to vary the investment of the
certificate holders.
A power to vary the investment of the
certificate holders exists where there is a
managerial power, under the trust instru-
ment, that enables a trust to take advan-
tage of variations in the market to improve
the investment of the investors.See North
American Bond Trust, 122 F.2d at 546.
In previous published guidance, the IRS
and the Treasury Department have identi-
fied situations in which a power to vary is
determined not to be present. For example,
in Rev. Rul. 73–460, 1973–2 C.B. 424,
a sponsor establishes an investment trust
to hold municipal bonds. The sponsor has
the power, under certain conditions, such
as a default by a bond issuer or substan-
tial decline in the market value of certain
bonds, to direct the trustee to sell the af-
fected bonds to preserve the sound invest-
ment character of the trust. Except in case
of default or probable default, the trustee
is not permitted to accept any new or sub-
stitute bonds from an obligor who is re-
funding or refinancing bonds held by the
investment trust. The trust agreement also
requires that moneys in the interest and
principal accounts must be distributed to
certificate holders. Rev. Rul. 73–460 con-
cludes that a power to vary is not neces-
sarily present if there is a power to dispose
of trust assets to preserve the value of the
trust in situations where, for example de-
fault has occurred or there is a substantial
decline in the value of the assets provided
that the proceeds of the sale are distributed
to certificate holders and are not reinvested
in additional assets. Rev. Rul. 73–460
also concludes that a power to accept an is-
suer’s offer to exchange or substitute exist-
ing obligations held by the investment trust
pursuant to a plan for the refunding or re-
financing of such obligations in situations
where the issuer has already defaulted or
the occurrence of default is probable is not
apowertovary.
In Rev. Rul. 90–63, 1990–2 C.B. 270, a
trustee has the power to consent to changes
in the credit support of debt obligations
held by the trust, but the power is exercis-
able only if the trustee reasonably believes
that the changes are needed to maintain
2009–40 I.R.B.454October 5, 2009

the value of the trust assets by preserving
the credit rating of the obligations. Rev.
Rul. 90–63 concludes that this power to
change the credit support, exercisable only
if needed to preserve the value of the trust
assets, is not a power to vary.
A “power to vary” was found to be
present, however, in Rev. Rul. 78–149,
1978–1 C.B. 448. Rev. Rul. 78–149
involves a municipal bond trust in which
the trustee has a limited power to rein-
vest in certain types of municipal bonds.
The trust agreement provides that in the
case of early redemption by a bond issuer,
the trustee is permitted to reinvest the pro-
ceeds in similarly rated bonds that mature
no later than the last maturity date of mu-
nicipal bonds originally deposited in the
trust. The trustee may also choose to dis-
tribute the proceeds to the trust certificate
holders. In holding that the trust is an as-
sociation taxable as a corporation for fed-
eral tax purposes, Rev. Rul. 78–149 con-
cludes that “the power in the trust agree-
ment permitting reinvestment of the pro-
ceeds of obligations redeemed prior to ma-
turity, even though limited to reinvestment
of the proceeds of redemptions over which
the trust has no control, is a managerial
power that enables the trust to take advan-
tage of variations in the market to improve
the investment of the investors.”
A power to vary does not exist as a re-
sult of reinvestments that occur outside of
the original investment trust. In Rev. Rul.
81–238, 1981–2 C.B. 248, the sponsor of
the initial investment trust, prior to each
semiannual distribution, creates a new in-
vestment trust in which certificate hold-
ers can invest their distributions. With re-
gard to each specific investment trust, nei-
ther the trustee nor any other person has
a power to vary the investments of the
trust. Certificate holders in the original in-
vestment trust may choose to have all of
their distributions invested in the newly-
created investment trusts under an auto-
matic reinvestment plan or may choose to
receive cash. Further, certificate holders
may choose to participate in or terminate
the reinvestment plan at any time, may
withdraw from the reinvestment plan with
respect to particular distributions, or may
withdraw from the reinvestment plan with
respect to only some of the certificates they
own. Rev. Rul. 81–238 concludes that
the reinvestment plan does not create a
power to vary, because there is no change
in, or addition to, the assets of the original
trust and the investment of each certificate
holder in the original trust remains fixed.
Request for Comments
The IRS and the Treasury Depart-
ment welcome further comments regard-
ing what additional guidance, if any, is
needed regarding modifications of com-
mercial mortgage loans held by investment
trusts. To be most useful, the comments
should also analyze the extent to which
the modifications at issue are consistent
with existing case law and administrative
pronouncements that govern whether an
investment trust is classified as a trust for
federal income tax purposes. Answers to
the following questions would be particu-
larly helpful:
1. Is it common business practice to
hold commercial mortgage loans through
an investment trust? If so, please de-
scribe the structure of an investment trust
that holds commercial mortgage loans.
Also, if commercial mortgages are held
by a REMIC through an investment trust,
please explain the utility of this structure
and its business purpose.
2. Are there fact patterns which are not
described in § 1.860G–2(b)(3)(i) and in
which one or more modifications permit-
ted to REMICs under § 1.860G–2(b)(3)(ii)
through (vi) would be consistent with
the case law and prior administrative
pronouncements if carried out by an in-
vestment trust?
3. Are there alternative structures that
would be consistent with the case law
and prior administrative pronouncements
and would allow the modified mortgage
loans to be held by an investment trust?
Are there any changes or additions to the
REMIC rules that would be needed to
facilitate these alternative structures?
Interested parties are invited to submit
comments on this notice by November 14,
2009. Comments should be submitted in
writing, and should include a reference
to Notice 2009–79. Send submissions
to: CC:PA:LPD:PR (Notice 2009–79),
Room 5203, Internal Revenue Service, PO
Box 7604, Ben Franklin Station, Wash-
ington, DC 20044. Submissions may be
hand delivered Monday through Friday
betweenthehoursof8a.m. and4p.m.
to CC:PA:LPD:PR (Notice 2009–79),
Courier’s Desk, Internal Revenue Service,
1111 Constitution Avenue, NW, Wash-
ington, DC. Alternatively, comments may
be submitted electronically directly to
the IRS via the following e-mail address:
Notice.comments@irscounsel.treas.gov.
Please include “Notice 2009–79” in the
subject line of any electronic communi-
cation. All materials submitted will be
available for public inspection and copy-
ing.
Drafting Information
The principal author of this notice is
Pamela Lew of the Office of Associate
Chief Counsel (Financial Institutions &
Products). For furtherinformation regard-
ing this notice, contact Pamela Lew at
(202) 622–3950 (not a toll-free call).
Extension of Replacement
Period for Livestock Sold
on Account of Drought in
Specified Counties
Notice 2009–81
SECTION 1. PURPOSE
This notice provides guidance regard-
ing an extension of the replacement pe-
riod under § 1033(e) of the Internal Rev-
enue Code for livestock sold on account of
drought in specified counties.
SECTION 2. BACKGROUND
.01Nonrecognition of Gain on Invol-
untary Conversion of Livestock. Section
1033(a) generally provides for nonrecog-
nition of gain when property is involuntar-
ily converted and replaced with property
that is similar or related in service or use.
Section 1033(e)(1) provides that a sale or
exchange of livestock (other than poultry)
held by a taxpayer for draft, breeding, or
dairy purposes in excess of the number
that would be sold following the taxpayer’s
usual business practices is treated as an
involuntary conversion if the livestock is
sold or exchanged solely on account of
drought, flood, or other weather-related
conditions.
.02Replacement Period. Section
1033(a)(2)(A) generally provides that gain
from an involuntary conversion is rec-
ognized only to the extent the amount
realized on the conversion exceeds the
October 5, 20094552009–40 I.R.B.

cost of replacement property purchased
during the replacement period. If a sale
or exchange of livestock is treated as an
involuntary conversion under § 1033(e)(1)
and is solely on account of drought, flood,
or other weather-related conditions that re-
sult in the area being designated as eligible
for assistance by the federal government,
§ 1033(e)(2)(A) provides that the replace-
ment period ends four years after the close
of the first taxable year in which any part
of the gain from the conversion is realized.
Section 1033(e)(2)(B) provides that the
Secretary may extend this replacement pe-
riod on a regional basis for such additional
time as the Secretary determines appro-
priate if the weather-related conditions
that resulted in the area being designated
as eligible for assistance by the federal
government continue for more than three
years. Section 1033(e)(2) is effective for
any taxable year with respect to which the
due date (without regard to extensions) for
a taxpayer’s return is after December 31,
2002.
SECTION 3. EXTENSION OF
REPLACEMENT PERIOD UNDER
§ 1033(e)(2)(B)
Notice 2006–82, 2006–2 C.B. 529, pro-
vides for extensions of the replacement pe-
riod under § 1033(e)(2)(B). If a sale or ex-
change of livestock is treated as an invol-
untary conversion on account of drought
and the taxpayer’s replacement period is
determined under § 1033(e)(2)(A), the re-
placement period will be extended under
§ 1033(e)(2)(B) and Notice 2006–82 until
the end of the taxpayer’s first taxable year
ending after the first drought-free year for
the applicable region. For this purpose, the
first drought-free year for the applicable
region is the first 12-month period that (1)
ends August 31; (2) ends in or after the last
year of the taxpayer’s 4-year replacement
period determined under § 1033(e)(2)(A);
and (3) does not include any weekly period
for which exceptional, extreme, or severe
drought is reported for any location in the
applicable region. The applicable region
is the county that experienced the drought
conditions on accountof which the live-
stock was sold or exchanged and all coun-
ties that are contiguous to that county.
A taxpayer may determine whether
exceptional, extreme, or severe drought
is reported for any location in the ap-
plicable region by reference to U.S.
Drought Monitor maps that are pro-
duced on a weekly basis by the Na-
tional Drought Mitigation Center. U.S.
Drought Monitor maps are archived at
www.drought.unl.edu/dm/archive.html.
In addition, Notice 2006–82 provides
that the Internal Revenue Service will
publish in September of each year a list
of counties, districts, cities, or parishes
(hereinafter “counties”) for which excep-
tional, extreme, or severe drought was
reported during the preceding 12 months.
Taxpayers may use this list instead of
U.S. Drought Monitor maps to determine
whether exceptional, extreme, or severe
drought has been reported for any location
in the applicable region.
The Appendix to this notice contains
the list of counties for which exceptional,
extreme, or severe drought was reported
during the 12-month period ending Au-
gust 31, 2009. Under Notice 2006–82,
the 12-month period ending on August 31,
2009, is not a drought-free year for an ap-
plicable region thatincludes any county on
this list. Accordingly, for a taxpayer who
qualified for a four-year replacement pe-
riod for livestock sold or exchanged on ac-
count of drought and whose replacement
period is scheduled to expire at the end of
2009 (or, in the case of a fiscal year tax-
payer, at the end of the taxable year that in-
cludes August 31, 2009), the replacement
period will be extended under § 1033(e)(2)
and Notice 2006–82 if the applicable re-
gion includes any county on this list. This
extension will continue until the end of the
taxpayer’s first taxable year ending after a
drought-free year for the applicable region.
SECTION 4. DRAFTING
INFORMATION
The principal author of this notice is
Seoyeon Park of the Office of Associate
Chief Counsel (Income Tax and Account-
ing). For further information regarding
this notice, contact Ms. Park at (202)
622–4960 (not a toll-free call).
2009–40 I.R.B.456October 5, 2009

APPENDIX
Alabama
Counties of Calhoun, Chambers, Cherokee, Cleburne, DeKalb, Jackson, Lee, Madison, Randolph, Russell.
California
Counties of Alameda, Alpine, Amador, Butte, Calaveras, Colusa,Contra Costa, Del Norte, El Dorado, Fresno, Glenn, Humboldt,
Imperial, Inyo, Kern, Kings, Lake, Lassen, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Modoc, Mono,
Monterey, Napa, Nevada, Orange, Placer, Plumas, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Francisco,
San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Shasta, Sierra, Siskiyou, Solano, Sonoma,
Stanislaus, Sutter, Tehama, Trinity, Tulare, Tuolumne, Ventura, Yolo, Yuba.
Colorado
Counties of Baca, Bent, Las Animas, Prowers.
Florida
Counties of Alachua, Brevard, Broward, Charlotte, Citrus, Collier, DeSoto, Flagler, Glades, Hardee, Hendry, Hernando,
Highlands, Hillsborough, Indian River, Lake, Lee, Levy, Manatee, Marion, Martin, Miami-Dade, Monroe, Okeechobee, Orange,
Osceola, Palm Beach, Pasco, Pinellas, Polk, Putnam, St. Johns, St. Lucie, Sarasota, Seminole, Sumter, Volusia.
Georgia
Counties of Appling, Baldwin, Banks, Barrow, Bartow, Ben Hill, Bibb, Bleckley, Bulloch, Burke, Butts, Candler, Carroll,
Catoosa, Chattahoochee, Chattooga, Cherokee, Clarke, Clayton, Cobb, Coffee, Columbia, Coweta, Crawford, Crisp, Dade,
Dawson, DeKalb, Dodge, Dooly, Douglas, Elbert, Emanuel, Fannin,Fayette, Floyd, Forsyth, Franklin, Fulton, Gilmer, Glascock,
Gordon, Greene, Gwinnett, Habersham, Hall, Hancock, Haralson,Harris, Hart, Heard, Henry, Houston, Irwin, Jackson, Jasper,
Jeff Davis, Jefferson, Jenkins, Johnson, Jones, Lamar, Laurens, Lincoln, Lumpkin, McDuffie, Macon, Madison, Marion,
Meriwether, Monroe, Montgomery, Morgan, Murray, Muscogee,Newton, Oconee, Oglethorpe, Paulding, Peach, Pickens, Pike,
Polk, Pulaski, Putnam, Rabun, Richmond, Rockdale, Schley, Screven, Spalding, Stephens, Stewart, Sumter, Talbot, Taliaferro,
Tattnall, Taylor, Telfair, Toombs, Towns, Treutlen, Troup, Twiggs, Union, Upson, Walker, Walton, Warren, Washington, Webster,
Wheeler, White, Whitfield, Wilcox, Wilkes, Wilkinson.
Hawaii
Counties of Hawaii, Honolulu, Kauai, Maui.
Kansas
Counties of Barber, Clark, Comanche, Hamilton, Meade, Morton, Seward, Stanton, Stevens.
Kentucky
Counties of Adair, Allen, Anderson, Barren, Bath, Bell, Bourbon, Boyle, Breathitt, Butler, Calloway, Carter, Casey, Christian,
Clark, Clay, Clinton, Cumberland, Edmonson, Elliott, Estill, Fayette, Fleming, Floyd, Franklin, Garrard, Grayson, Green, Hardin,
Harlan, Harrison, Hart, Jackson, Jessamine, Johnson, Knott, Knox, Larue, Laurel, Lawrence, Lee, Leslie, Letcher, Lincoln, Logan,
McCreary, Madison, Magoffin, Marion, Martin, Menifee, Mercer, Metcalfe, Monroe, Montgomery, Morgan, Muhlenberg, Nelson,
Nicholas, Owsley, Perry, Pike, Powell, Pulaski, Rockcastle, Rowan, Russell, Scott, Shelby, Simpson, Spencer, Taylor, Todd,
Trigg, Warren, Washington, Wayne, Whitley, Wolfe, Woodford.
Louisiana
Parishes of Assumption, Lafourche, St. Martin, St. Mary, Terrebonne.
Michigan
Counties of Delta, Dickinson, Gogebic, Houghton, Iron, Marquette, Menominee, Ontonagon.
Minnesota
Counties of Aitkin, Anoka, Blue Earth, Carlton, Carver, Cass, Chisago, Crow Wing, Dakota, Dodge, Faribault, Fillmore,
Freeborn, Goodhue, Hennepin, Houston, Isanti, Itasca, Kanabec, Le Sueur, Martin, Olmsted, Pine, Ramsey, Rice, Scott,
Sherburne, Sibley, Wabasha, Waseca, Washington, Watonwan, Winona, Wright.
Montana
Counties of Cascade, Custer, Daniels, Dawson, Fallon, Flathead, Glacier, Lake, Lewis and Clark, Liberty, Lincoln, McCone,
Pondera, Prairie, Richland, Roosevelt, Sanders, Sheridan, Teton, Toole, Valley, Wibaux.
October 5, 20094572009–40 I.R.B.

Nevada
Carson City. Counties of Churchill, Douglas, Elko, Eureka, Humboldt, Lander, Lincoln, Lyon, Nye, Pershing, Storey, Washoe,
White Pine.
New Mexico
Counties of Chaves, DeBaca, Dona Ana, Eddy, Guadalupe, Lea, Lincoln, Luna, Otero, Roosevelt, Sierra, Socorro, Torrance,
Union.
North Carolina
Counties of Alexander, Alleghany, Ashe, Avery, Bertie, Buncombe, Burke, Cabarrus, Caldwell, Camden, Catawba, Cherokee,
Chowan, Clay, Cleveland, Currituck, Dare, Edgecombe, Gaston, Gates, Graham, Greene, Halifax, Haywood, Henderson,
Hertford, Iredell, Jackson, Lincoln, McDowell, Macon, Madison, Martin, Mecklenburg, Mitchell, Nash, Northampton,
Pasquotank, Perquimans, Pitt, Polk, Rowan, Rutherford, Swain, Transylvania, Vance, Warren, Watauga, Wayne, Wilkes, Wilson,
Yadkin, Yancey.
North Dakota
Counties of Adams, Billings, Bowman, Burke, Divide, Dunn,Golden Valley, Grant, Hettinger, McKenzie, McLean, Mercer,
Morton, Mountrail, Oliver, Slope, Stark, Ward, Williams.
Oklahoma
Counties of Alfalfa, Atoka, Beaver, Beckham, Blaine, Bryan, Caddo, Carter, Choctaw, Cimarron, Coal, Comanche, Cotton, Custer,
Dewey, Ellis, Garfield, Garvin, Grady, Greer, Harmon, Harper, Hughes, Jackson, Jefferson, Johnston, Kingfisher, Kiowa, Love,
McClain, Major, Marshall, Murray, Pittsburg, Pontotoc, Roger Mills, Stephens, Texas, Tillman, Washita, Woods, Woodward.
Oregon
Counties of Curry, Harney, Josephine, Lake.
South Carolina
Counties of Abbeville, Aiken, Allendale, Anderson, Bamberg, Barnwell, Cherokee, Chester, Edgefield, Fairfield, Greenville,
Greenwood, Lancaster, Laurens, Lexington, McCormick, Newberry, Oconee, Orangeburg, Pickens, Richland, Saluda,
Spartanburg, Union, York.
Tennessee
Counties of Anderson, Bedford, Benton, Bledsoe, Blount, Bradley,Campbell, Cannon, Carter, Cheatham, Claiborne, Clay, Cocke,
Coffee, Cumberland, Davidson, DeKalb, Dickson, Fentress, Franklin, Grainger, Greene, Grundy, Hamblen, Hamilton, Hancock,
Hawkins, Henry, Houston, Humphreys, Jackson, Jefferson, Johnson, Knox, Loudon, McMinn, Macon, Marion, Meigs, Monroe,
Montgomery, Moore, Morgan, Overton, Pickett, Polk, Putnam, Rhea, Roane, Robertson,Rutherford, Scott, Sequatchie, Sevier,
Smith, Stewart, Sullivan, Sumner, Trousdale, Unicoi, Union,Van Buren, Warren, Washington, White, Williamson, Wilson.
Texas
Counties of Andrews, Aransas, Archer, Atascosa, Austin, Bandera, Bastrop, Baylor, Bee, Bell, Bexar, Blanco, Borden, Bosque,
Brazoria, Brazos, Brooks, Brown, Burleson, Burnet, Caldwell, Calhoun, Callahan, Cameron, Chambers, Childress, Clay, Coke,
Coleman, Collingsworth, Colorado, Comal, Comanche, Concho, Cooke, Coryell, Cottle, Crane, Crockett, Crosby, Culberson,
Dallam, Dawson, Denton, DeWitt, Dickens,Dimmit, Duval, Eastland, Ector, Edwards, El Paso, Erath, Falls, Fayette, Fisher,
Foard, Fort Bend, Freestone, Frio, Gaines, Galveston, Garza, Gillespie, Glasscock, Goliad, Gonzales, Grayson, Grimes,
Guadalupe, Hamilton, Hardeman, Harris, Haskell, Hays, Hidalgo, Hill, Houston, Howard, Hudspeth, Irion, Jack, Jackson, Jeff
Davis, Jim Hogg, Jim Wells, Jones, Karnes, Kendall, Kenedy, Kent,Kerr,Kimble,King,Kinney,Kleberg,Knox,Lampasas,La
Salle, Lavaca, Lee, Leon, Liberty, Limestone, Lipscomb, Live Oak, Llano, Loving, McCulloch, McLennan, McMullen, Madison,
Martin, Mason, Matagorda, Maverick, Medina, Menard, Midland, Milam, Mills, Mitchell, Montague, Montgomery, Motley,
Navarro, Nolan, Nueces, Palo Pinto, Parker, Polk, Presidio, Reagan, Real, Reeves, Refugio, Robertson, Runnels, San Jacinto,
San Patricio, San Saba, Schleicher, Scurry,Shackelford, Starr, Stephens, Sterling, Stonewall, Sutton, Taylor, Throckmorton,
Tom Green, Travis, Trinity, Upton, Uvalde, Val Verde, Victoria, Walker, Waller, Ward, Washington, Webb, Wharton, Wichita,
Wilbarger, Willacy, Williamson, Wilson, Winkler, Wise, Young, Zapata, Zavala.
Utah
Counties of Juab, Millard, Tooele.
2009–40 I.R.B.458October 5, 2009

Virginia
Cities of Bristol, Chesapeake, Emporia,Franklin, Galax, Norton, Radford, Suffolk, Virginia Beach. Counties of Bland,
Brunswick, Buchanan, Carroll, Craig, Dickenson, Floyd, Giles, Grayson, Greensville, Isle of Wight, Lee, Mecklenburg,
Montgomery, Pulaski, Roanoke, Russell, Scott, Smyth, Southampton, Sussex, Tazewell,Washington, Wise, Wythe.
Washington
Counties of Chelan, Clallam, Douglas, Grant, Grays Harbor, Jefferson, Mason, Okanogan.
West Virginia
Counties of Boone, Lincoln, Logan, McDowell, Mercer, Mingo, Monroe, Raleigh, Summers, Wayne, Wyoming.
Wisconsin
Counties of Adams, Ashland, Barron, Bayfield, Buffalo, Burnett, Chippewa, Clark, Door, Douglas, Dunn, Eau Claire, Florence,
Forest, Iron, Jackson, Juneau, La Crosse,Langlade, Lincoln, Marathon, Marinette, Menominee, Monroe, Oconto, Oneida,
Outagamie, Pepin, Pierce, Polk, Portage, Price, Rusk, St. Croix, Sawyer, Shawano, Taylor, Trempealeau, Vilas, Washburn,
Waupaca, Wood.
Wyoming
Counties of Fremont, Lincoln, Sublette, Sweetwater, Uinta.
26 CF
R 601.601: Rules and regulations.
(Als
o: Part 1, § 851; 1.851–2.)
Rev. Proc. 2009–42
SEC
TION 1. PURPOSE
Thi
s revenue procedure sets forth con-
di
tions under which a regulated invest-
me
nt company (RIC) that holds a partner-
sh
ip interest in a Public-Private Investment
Pa
rtnership (PPIP) created under the Pub-
li
c-Private Investment Program (Program)
i
s treated for purposes of section 851(b)(3)
o
f the Internal Revenue Code as if it di-
r
ectly invested in the assets held by the
P
PIP.
SECTION 2. BACKGROUND — THE
PROGRAM
.01 In response to the financial issues
affecting the banking system and the fi-
nancial markets due to the contraction in
the economy, the Treasury Department, to-
gether with other governmental bodies, has
implemented a series of initiatives as part
of the Financial Stability Plan pursuant
to the Emergency Economic Stabilization
Act of 2008, Pub. L. No. 110–343, 122
Stat. 3765 (EESA).
.02 One program established by the
EESA is the Troubled Asset Relief Pro-
gram (TARP). TARP authorizes the Trea-
sury Department to purchase troubled
assets, including mortgage-backed se-
curities. Pursuant to TARP, on March
23, 2009, the Treasury Department, in
conjunction with the Federal Deposit In-
surance Corporation and the Board of
Governors of the Federal Reserve System,
announced the creation of the Program to
help the financial system by stimulating
the extension of new credit.
.03 The Program includes the Legacy
Securities Program. Through the Legacy
Securities Program, Treasury will part-
ner with private investors to form PPIPs.
A PPIP will acquire certain commercial
mortgage-backed securities and certain
non-agency residential mortgage-backed
securities (collectively, Legacy Securi-
ties).SeeRev. Proc. 2009–38, 2009–37
I.R.B. 360 (prescribing conditions under
which the Internal Revenue Service will
not assert that certain entities created in
connection with the Program constitute
taxable mortgage pools for purposes of
section 7701(i)).
SECTION 3. BACKGROUND — RICS
.01 Section 851(b) provides that certain
requirements must be satisfied in order for
a domestic corporation to be taxed as a RIC
under subchapter M, part 1, of the Code.
.02 Section 851(b)(3)(A) requires that,
in order for a corporation to qualify as a
RIC, at the close of each quarter of the tax-
able year, at least 50 percent of the value
of the corporation’s total assets must be
represented by cash and cash items (in-
cluding receivables), Government securi-
ties and securities of other RICs, and other
securities generally limited in respect of
any one issuer to an amount not greater
in value than 5 percent of the value of the
total assets of the corporation and to not
more than 10 percent of the outstanding
voting securities of such issuer.
.03 Section 851(b)(3)(B) requires that,
in order for a corporation to qualify as a
RIC, not more than 25 percent of the cor-
poration’s total assets may be invested in
the securities (other than Government se-
curities and the securities of other RICs) of
any one issuer, or of two or more issuers
that the corporation controls and which
are determined, under regulations, to be
engaged in the same or similar trades or
businesses or related trades or businesses,
or the securities of one or more publicly
traded partnerships (as defined in section
851(h)).
.04 In certain situations, the Service
treats a RIC that invests in certain part-
nerships as if it directly invested in the
assets held by the partnership for purposes
of the asset diversification tests of sec-
tion 851(b)(3) (Look-Through Treatment).
Rev. Proc. 2001–57, 2001–2 C.B. 577,
extends Look-Through Treatment to cer-
tain RICs in a master-feeder structure.See
alsoRev. Proc. 2005–20, 2005–1 C.B.
990,amplifying and supersedingRev.
Proc. 2003–32, 2003–1 C.B. 803 (extend-
ing Look-Through Treatment to certain
RICs that invest in eligible tax-exempt
bond partnerships).
October 5, 20094592009–40 I.R.B.

SECTION 4. SCOPE
This revenue procedure applies to a RIC
that meets the following requirements:
.01 It is registered as a management in-
vestment company under the Investment
Company Act of 1940, 15 U.S.C. 80a–1et
seq., as amended, and elects to be treated
as a RIC under subchapter M, part 1, of the
Code.
.02 It invests at least 70 percent of its
original assets (including seed capital and
net proceeds from an initial public offer-
ing) as a partner in one or more PPIPs that
hold Legacy Securities pursuant to the Pro-
gram and that are treated as partnerships
for federal income tax purposes.
.03 Except for certain special alloca-
tions agreed to by the Treasury Department
and those allocations required under sec-
tion 704, its allocable share of each item of
the PPIP’s income, gain, loss, deduction,
and credit is proportionate to its percent-
age of ownership of the capital interests in
the PPIP.
SECTION 5. APPLICATION
For purposes of qualifying as a RIC un-
der section 851(b)(3), a RIC meeting the
requirements of Section 4 of this revenue
procedure is treated as if it directly in-
vested in the assets held by the PPIP in
which it invests. For these purposes, its
interest in PPIP assets is determined in ac-
cordance with its percentage of ownership
of the capital interests in the PPIP.
SECTION 6. EFFECTIVE DATE
This revenue procedure is effective for
asset determinations that are made as of
dates after September 9, 2009.
SECTION 7. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Andrea Hoffenson of the
Office of Associate Chief Counsel (Finan-
cial Institutions & Products). For further
information regarding this revenue proce-
dure, contact Andrea Hoffenson at (202)
622–3930 (not a toll free call).
Revocation of Elections by
Multiemployer Defined Benefit
Pension Plans to Freeze
Funded Status Under Section
204 of WRERA
Rev. Proc. 2009–43
I. Background
Section 432 of the Internal Revenue
Code (Code), which was added by the Pen-
sion Protection Act of 2006, P.L. 109–280
(PPA), prescribes rules for multiemployer
defined benefit pension plans that are sig-
nificantly underfunded. In particular, sec-
tion 432(b)(3) provides that the plan actu-
ary for any such multiemployer plan must,
by the 90
th
day of each plan year, certify
to the Secretary of the Treasury and to the
plan sponsor as to theplan’s “section 432
status” (i.e., whether the plan is in endan-
gered status, critical status, or neither sta-
tus) for the plan year.
A number of actions are required for a
plan that has been certified to be in en-
dangered or critical status. In particu-
lar, section 432(b)(3)(D) requires that a
sponsor provide, within 30 days follow-
ing the certification, notice to participants
and others of the certification and, if the
plan has been certified to be in critical sta-
tus, that adjustable benefits under section
432(e)(8) may be reduced. In addition,
section 432(f)(2) requires, in the case of a
plan certified to be in critical status, that
payments of certain accelerated benefits
must be suspended as of the date the no-
tice is sent.
In the first plan year that a plan is in
endangered status (including seriously en-
dangered status), the plan sponsor must
adopt a funding improvement plan that is
reasonably expected toenable the multi-
employer plan to achieve certain funding
improvements by the end of its 10–year
funding improvement period (with a pos-
sible substitution of a 15–year funding
improvement period for a plan in seri-
ously endangered status). Similarly, in the
first year that a plan is in critical status,
the plan sponsor must adopt a rehabili-
tation plan that generally is reasonably
expected to enable the multiemployer plan
to emerge from critical status by the end
of its 10–year rehabilitation period (with
alternative approachesavailable if the plan
sponsor determines, as described in sec-
tion 432(e)(3)(A)(ii), that the plan cannot
reasonably be expected to emerge from
critical status by the end of the rehabilita-
tion period using all reasonable measures).
A funding improvement plan or rehabili-
tation plan, as applicable, must be adopted
by the 330
th
day of the plan year (i.e.,not
later than 240 days after the due date for
the certification of status, which is the 90
th
day of the plan year).
Section 432(d)(1) provides that, dur-
ing the funding plan adoption period (de-
scribed in section 432(d)(8) as the period
beginning on the date of the plan’s certi-
fication for the initial determination year
andendingonthedaybeforethefirstday
of the funding improvement period), the
sponsor of a plan that is in endangered
status may not take certain actions that
would adversely affect the plan’s funded
status, such as accepting a collective bar-
gaining agreement that provides for a re-
duction in the level of contributions for any
participants. Section 432(f)(4) provides
similar rules for sponsors of critical status
plans during the rehabilitation plan adop-
tion period (described in section 432(e)(5)
as the period beginning on the plan’s cer-
tification for the initial critical year and
ending on the day before the first day of
the rehabilitation period). For plan years
following the initial endangered or initial
critical year, section 432(c)(6) and section
432(e)(3)(B) require that the funding im-
provement plan or rehabilitation plan, as
applicable, be updated to reflect the expe-
rience of the plan.
The Worker, Retiree, and Employer
Recovery Act of 2008, P.L. 110–458
(WRERA), provides, in part, funding
relief for multiemployer plans in
endangered or critical status. Section
204(a) of WRERA provides that a
multiemployer plan sponsor may elect,
notwithstanding the actuarial certification
of the plan’s section 432 status under
section 432(b)(3) for the plan year for
which the election is made (“election
year”), to temporarily freeze the plan’s
section 432 status so that it is the same
as the plan’s section 432 status for the
plan year immediately prior to the election
year (“prior year”). Specifically, section
204(a)(1) of WRERA provides that a
multiemployer plan sponsor may elect
that the plan’s section 432 status for
2009–40 I.R.B.460October 5, 2009

the first plan year beginning on or after
October 1, 2008, and not later than
September 30, 2009, be the same as the
plan’s section 432 status for the prior year
(“section 204 election”). If a section 204
election is made, no update of a funding
improvement plan or rehabilitation plan is
required for the election year.
Section 204(c)(1) of WRERA provides
that a section 204 election must be made at
the time and in the manner that the Secre-
tary of the Treasury or the Secretary’s del-
egate may prescribe and, once made, may
be revoked only with the consent of the
Secretary.
Section 204(c)(2) of WRERA provides
special notice rules that apply when a
section 204 election is made to freeze a
plan’s section 432 status and that modify
the otherwise applicable notice require-
ments under section 432(b)(3)(D) of the
Code. If a plan is in neither endangered
nor critical status as a result of the elec-
tion, the plan sponsor must provide the
notice described in section 204(c)(2)(A)
of WRERA. This notice applies in lieu
of the notice that is otherwise required
under section 432(b)(3)(D) of the Code in
the case of a plan that has been certified
to be in endangered or critical status. In
addition, if a plan is certified to be in
critical status for the election year but
is in endangered status by reason of a
section 204 election, the notice that must
be provided is the notice that would have
been provided under section 432(b)(3)(D)
of the Code if the plan had been certified
to be in endangered status for the election
year.
On March 27, 2009, the Service is-
sued Notice 2009–31, 2009–16 I.R.B.
856, which provided guidance to mul-
tiemployer plans making a section 204
election. Section IV of the notice de-
scribed the election procedures. Under
Notice 2009–31, as modified by Notice
2009–42, 2009–20 I.R.B. 1011, the due
date for making the election was the later
of June 30, 2009, and the date that is
30 days after the due date of the annual
certification of section 432 status for the
election year.
Notice 2009–42 further provides that
the Service will automatically approve a
request to revoke a section 204 election if
(1) as of the otherwise applicable deadline
for making a section 204 election, a plan
sponsor has been unable to reach agree-
ment as to whether to make the election so
that the decision must be resolved through
an arbitration process; (2) the plan sponsor
makes an election by the otherwise appli-
cable deadline that is contingent on the res-
olution of the arbitration; and (3) the reso-
lution is to not make an election.
Section II of this revenue procedure sets
forth additional circumstances in which
the Service will automatically approve
a request to revoke a section 204 elec-
tion. Section III sets forth the procedures
for submitting a request for automatic
approval of revocation of a section 204
election. Section IV addresses other re-
quests for approval to revoke a section 204
election.
II. Conditions for automatic approval
of request for revocation of a section
204 election
Pursuant to section 204(c)(1) of
WRERA, a request for revocation of
an election under section 204 will be
approved automatically by the Service,
regardless of whether the election was
the subject of arbitration, if the following
requirements are met:
(1) The request for revocation of the
election must be submitted to the Service
by the due date for the adoption of a fund-
ing improvement plan, rehabilitation plan,
or update, whichever is applicable for the
election year after taking the revocation
into account. In the case of a plan de-
scribed in Notice 2009–42, where the de-
cision to make a section 204 election is the
subject of an arbitration process, the dead-
line for submitting the request for revoca-
tion is the later of the due date under the
preceding sentence or 30 days following
the resolution of the arbitration.
(2) Notice under section 432(b)(3)(D)
of the plan’s actual certified status for the
election year must be provided no later
than 30 days after the request for revoca-
tion is submitted. The notice is also re-
quired to include a statement that the elec-
tion was revoked and to explain the conse-
quences of the revocation.
(3) The plan sponsor must have com-
plied with the requirements of section
432(d)(1)(A) and (B) or section 432(f)(4),
as applicable, during the plan’s funding
plan adoption period or rehabilitation plan
adoption period, determined as though a
section 204 election had never been made.
This requirement does not apply to a plan
where revocation results from the resolu-
tion of arbitration as described in Notice
2009–42.
III. Submission of request for automatic
approval of revocation
A request for revocation that is eligi-
ble for automatic approval under section
II above must be signed by an authorized
trustee who is a current member of the
board of trustees that is the plan sponsor,
and a copy of the plan’s section 204 elec-
tion must be attached. The request for re-
vocationmustbemailedtotheServiceat
the following address (which is also the
address to which a section 204 election is
sent):
Internal Revenue Service
EPCU
Group 7602
SE:TEGE:EP
Room 1700 – 17th Floor
230 S. Dearborn Street
Chicago, IL 60604
The request for revocation may not be
submitted electronically.
IV. Other requests for approval to
revoke a section 204 election
The Service may approve requests for
revocations in circumstances other than
those set forth in section II above. Such
requests are not eligible for automatic ap-
proval under this revenue procedure, but
must instead be made in accordance with
Rev. Proc. 2009–4, 2009–1 I.R.B. 118.
V. Effect on other guidance
Notice 2009–31 and Notice 2009–42
are hereby amplified.
VI. Paperwork Reduction Act
The collection of information described
in section III of this revenue procedure
modifies the collection of information de-
scribed in section IV of Notice 2009–31.
The collection of information required
under section IV and other parts of that
notice has been approved by the Office of
Management and Budget in accordance
October 5, 20094612009–40 I.R.B.

with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(c)). An agency may
not conduct or sponsor, and a person is
not required to respond to, a collection
of information unless the collection of
information displays a valid OMB control
number. The OMB approval number
for Notice 2009–31 and for this revenue
procedure is 1545–2141.
Drafting information
The principal author of this rev-
enue procedure is Diane S. Bloom of
the Employee Plans, Tax Exempt and
Government Entities Division.For
further information regarding this no-
tice, please contact the Employee Plans
taxpayer assistance answering ser-
vice at 1–877–829–5500 (a toll-free
number) or e-mail Ms. Bloom at
RetirementPlanQuestions@irs.gov.
26 CFR 601.106: Appeals functions.
(Also: §§ 601.202, 601.203; and Part I,
§ 7123(b)(1).)
Rev. Proc. 2009–44
SECTION 1. PURPOSE
This revenue procedure updates Rev-
enue Procedure 2002–44, which for-
mally established a mediation procedure
for cases in the Appeals administrative
process. This revenue procedure expands
and clarifies the types of cases that may
be mediated in Appeals. Generally, this
program is available for cases in which a
limited number of legal and factual issues
remain unresolved following settlement
discussions in Appeals.
SECTION 2. BACKGROUND
Section 7123(b)(1) of the Internal Rev-
enue Code, as enacted by section 3465 of
the Internal Revenue Service Restructur-
ing and Reform Act of 1998, Pub. L. No.
105–206, 112 Stat. 685, provides the statu-
tory authority for the Appeals mediation
program. On July 1, 2002, Revenue Pro-
cedure 2002–44, 2002–2 C.B. 10, formally
established the Appeals mediation proce-
dure. Rev. Proc. 2002–44 modified and
expanded the availability of mediation for
cases that are already in the Appeals ad-
ministrative process. This revenue proce-
dure supersedes Rev. Proc. 2002–44.
SECTION 3. SIGNIFICANT CHANGES
This revenue procedure modifies the
Appeals mediation program to expand the
types of cases that are eligible for media-
tion while also clarifying the types of cases
that are ineligible. Significant changes
from Rev. Proc. 2002–44 in this revenue
procedure include:
.01 Section 4.02 provides that media-
tion does not create any special settlement
authority for Appeals.
.02 Section 4.03(7) provides that me-
diation may be available for certain of-
fer in compromise and Trust Fund Re-
covery Penalty cases as provided for in
Announcement 2008–111, 2008–48 I.R.B.
1224, or any subsequent guidance issued
by the IRS;
.03 Section 9.02 provides that, for of-
fer in compromise cases with liabilities of
$50,000 or more, any settlement or agree-
ment reached must be reviewed by the Of-
fice of Chief Counsel pursuant to section
7122(b).
SECTION 4. SCOPE OF MEDIATION
.01In general.Mediation may be used
to resolve issues in cases that qualify un-
der this revenue procedure while they are
under consideration by Appeals. This pro-
cedure may be used only after Appeals set-
tlement discussions are unsuccessful and,
generally, when all other issues are re-
solved but for the issue(s) for which me-
diation is being requested.
.02Authority. The mediation procedure
does not create any special authority for
settlement by Appeals. During the medi-
ation process, Appeals is still subject to
the procedures that would be applicable
if the issue were being considered via the
standard Appeals process, including pro-
cedures in the Internal Revenue Manual
and existing published guidance.
.03Applicability. Mediation is avail-
able for:
(1) Legal issues;
(2) Factual issues;
(3) A Compliance Coordinated Issue
(CCI) or an Appeals Coordinated Issue
(ACI). (CCI and ACI issues are listed on-
line atwww.irs.gov/appeals.) However, a
CCI or ACI issue will not be eligible for
mediation when the taxpayer has declined
the opportunity to discuss the CCI or ACI
issue with the Appeals CCI or ACI coordi-
nator during the course of regular Appeals
settlement discussions;
(4) An early referral issue when an
agreement is not reached, provided the
early referral issue meets the requirements
for mediation (seesection 2.16 of Rev.
Proc. 99–28, 1999–2 C.B. 109, or any
subsequent revenue procedure);
(5) Issues for which a request for com-
petent authority assistance has not yet been
filed. Taxpayers are cautioned that if they
enter into a settlement with Appeals (in-
cluding an Appeals settlement through the
mediation process) and then request com-
petent authority assistance, the competent
authority will endeavor only to obtain
a correlative adjustment with the treaty
country and will not take any actions that
would otherwise change the settlement.
Seesection 7.05 of Rev. Proc. 2006–54,
2006–2 C.B. 1035, or the corresponding
provision of any successor guidance. If a
taxpayer enters into the Appeals mediation
program, the taxpayer may not request
competent authority assistance until the
mediation process is complete unless the
taxpayer demonstrates that a request for
competent authority assistance is neces-
sary to keep open a period of limitations
in the treaty country. If so, competent au-
thority assistance may be requested while
mediation is pending and the U.S. compe-
tent authority will suspend action on the
case until mediation is completed;
(6) Unsuccessful attempts to enter into a
closing agreement under section 7121; and
(7) Offer in compromise and Trust Fund
Recovery Penalty cases as provided for in
Announcement 2008–111, or any subse-
quent guidance issued by the IRS.
.04Inapplicability. Mediation will not
be available for:
(1) Cases in which mediation is not
appropriate under either 5 U.S.C. § 572
or 5 U.S.C. § 575, which provide the
general authority and guidelines for use
of alternative dispute resolution in the
administrative process;
(2) Issues designated for litigation;
(3) Issues docketed in any court (for
the Chief Counsel mediation program
involving issues in docketed cases,see
Chief Counsel Directives Manual (CCDM
35.5.5.4));
2009–40 I.R.B.462October 5, 2009

(4) Collection cases, except for certain
offer in compromise and Trust Fund Re-
covery Penalty cases as provided for in
Announcement 2008–111 or any subse-
quent guidance issued by the IRS;
(5) Issues for which mediation would
not be consistent with sound tax adminis-
tration, such as, but not limited to, issues
governed by closing agreements, byres ju-
dicata, or by controlling Supreme Court
precedent;
(6) Frivolous issues, such as, but not
limited to, those identified in Rev. Proc.
2009–2, 2009–1 I.R.B. 87, or any subse-
quent revenue procedure;
(7) “Whipsaw” issues, such as, but not
limited to, issues for which resolution with
respect to one party might result in incon-
sistent treatment in the absence of partici-
pation of another party;
(8) Cases in which the taxpayer did not
act in good faith during settlement nego-
tiations, such as, but not limited to, cases
in which the taxpayer failed to timely re-
spond to document requests or offers to
settle, or failed to address arguments and
precedents raised by Appeals; and
(9) Issues that have been otherwise
identified in subsequent guidance issued
by the IRS as excluded from the mediation
program.
SECTION 5. APPLICATION PROCESS
.01Mediation is optional.A taxpayer
and Appeals may request mediation after
consultation with each other.
.02Filing requirements.
(1)Where to file. To request media-
tion, the taxpayer should send a written
request to the appropriate Appeals Team
Manager. The taxpayer should also send
copies of the written request to the appro-
priate Appeals Area Director and to the
Chief Appeals, 1099 14
th
Street, NW, Suite
4200E — East, Washington, DC 20005,
Attn: AP:TS:TPP. (SeeExhibit 1 of this
revenue procedure for a listing of the ad-
dresses for each Appeals Area Director.)
(2)Required information.The media-
tion request should include:
(a) The taxpayer’s name, taxpayer iden-
tification number, and address (and the
name, title, address, and telephone number
of a person to contact);
(b) The name of the Team Case Leader,
Appeals Officer, or Settlement Officer;
(c) The taxable period(s) involved;
(d) A description of the issue for which
mediation is being requested, including the
dollar amount of the adjustment in dispute;
and
(e) A representation that the issue is not
an excluded issue listed in the “Scope of
Mediation” section above.
.03Review of Mediation Request.The
Appeals Team Manager will confer with
the Appeals Office of Tax Policy and Pro-
cedure before deciding to approve or deny
a mediation request. Generally, the Ap-
peals Team Manager will respond to the
taxpayer and the Team Case Leader or Ap-
peals Officer within two weeks after the
Appeals Team Manager receives the re-
quest for mediation.
(1)Request approved.If Appeals ap-
proves the mediation request, the Appeals
Team Manager will inform the taxpayer
and the Team Case Leader or Appeals Offi-
cer and will schedule a conference or con-
ference call that may include a represen-
tative from Appeals Tax Policy and Proce-
dure Headquarters to discuss the mediation
process.
(2)Request denied.If Appeals de-
nies the mediation request, the Appeals
Team Manager will promptly inform the
taxpayer and the Team Case Leader or
Appeals Officer. Although no formal ap-
peal procedure exists for the denial of a
mediation request, a taxpayer may request
a conference with the Appeals Team Man-
ager to discuss the denial. The denial of a
mediation request is not subject to judicial
review.
SECTION 6. AGREEMENT TO
MEDIATE
.01Written agreement. Upon approval
of the request to mediate, the taxpayer and
Appeals will enter into a written agreement
to mediate.SeeExhibit 2 of this revenue
procedure for a model agreement to medi-
ate. This agreement will be negotiated via
a conference or conference call. A repre-
sentative from the Appeals Office of Tax
Policy and Procedure may participate in
the negotiation. The agreement to medi-
ate should:
(a) Be as concise as possible;
(b) Specify the issue(s) that the parties
have agreed to mediate;
(c) Contain an initial list of witnesses,
attorneys, representatives, and observers
for each party;
(d) Identify the location and the pro-
posed date of the mediation session; and
(e) Prohibitex partecontacts between
the mediator and the parties.
The Appeals Team Manager, in consul-
tation with the Team Case Leader or Ap-
peals Officer, will sign the agreement to
mediate on behalf of Appeals.
Generally, it is expected that the parties
will complete and execute the agreement
to mediate within three weeks after being
notified that Appeals approved the media-
tion request and will proceed to mediation
within 60 days after signing the agreement
to mediate. A taxpayer’s inability to ad-
here to these timeframes, without reason-
able cause, may result in Appeals’ with-
drawal from the mediation process.
.02Participants.The parties to the me-
diation process will be the taxpayer and
Appeals. Each party must have at least one
participant with decision-making author-
ity attending the mediation session. The
agreement to mediate will set forth the pro-
cedures by which the parties inform each
other and the mediator of the participants
in the mediation, and will set forth any lim-
itation on the number, identity, or partic-
ipation of such participants. In general,
the parties are encouraged to include, in
addition to the required decision-makers,
those persons with information and exper-
tise that will be useful to the decision-mak-
ers and the mediator. In this regard, Ap-
peals has the discretion to communicateex
partewith the IRS Office of Chief Coun-
sel, the originating function,e.g., Compli-
ance, or both, in preparation for or during
the mediation session. Appeals also has
the discretion to have Counsel, the origi-
nating function, or both, participate in the
mediation proceeding to present the posi-
tion and views of the IRS, and to rebut rep-
resentations and arguments made by the
taxpayer. Counsel’s participation in this
regard is separate from the review func-
tion outlined in Section 9.02 of this rev-
enue procedure. To minimize the possi-
bility of a last minute disqualification of
the mediator, each party must notify the
mediator and the other party of the par-
ticipants on the party’s mediation team no
later than two weeks before the mediation.
SeeExhibit 3 of this revenue procedure for
a model participants list.
.03Disclosure.To participate in media-
tion under this revenue procedure, the tax-
payer must consent under section 6103(c)
October 5, 20094632009–40 I.R.B.

to the disclosure by the IRS of the tax-
payer’s returns and return information in-
cident to the mediation to the mediator
and any participant or observer identified
in the initial list of participants and ob-
servers and to any subsequent participants
and observers identified in writing by the
parties. The taxpayer must execute a sep-
arate consent to disclose tax information.
SeeExhibit 4 of this revenue procedure for
a model consent to disclose tax informa-
tion. If the agreement to mediate and con-
sent are executed by a person pursuant to
a power of attorney executed by the tax-
payer, that power of attorney must clearly
express the taxpayer’s grant of authority to
consent to disclose the taxpayer’s returns
and return information by the IRS to third
parties, and a copy of that power of attor-
ney must be attached to the agreement.
SECTION 7. MEDIATION PROCESS
.01Selection of mediator and expenses.
An Appeals employee trained as a medi-
ator will serve as the mediator under this
revenue procedure. Appeals will pay all
expenses associated with the use of an Ap-
peals mediator. The taxpayer and the Ap-
peals Team Manager will select the Ap-
peals mediator from a list of trained em-
ployees who, generally, will be located in
the same Appeals office or geographical
area as the taxpayer, but will not be a mem-
ber of the same team that was assigned to
the case.
Additionally, at the taxpayer’s expense,
the taxpayer may elect to use a co-media-
tor who is not employed by the IRS. The
taxpayer and the Appeals Team Manager
will select the non-IRS co-mediator from
any local or national organization that pro-
vides a roster of neutrals. A representa-
tive from the Appeals Office of Tax Policy
and Procedure may participate in the ne-
gotiations to select a non-IRS co-mediator.
Criteria for selecting a non-IRS co-medi-
ator may include: completion of media-
tion training; previous mediation experi-
ence; substantive knowledge of tax law; or
knowledge of industry practices. A me-
diator shall have no official, financial, or
personal conflict of interest with respect
to the parties, unless such interest is fully
disclosed in writing to the taxpayer and
the Appeals Team Manager and they agree
that the mediator may serve.See5U.S.C.
§ 573.
.02Appeals personnel as mediators and
conflict statement.To address the inher-
ent conflict arising from the Appeals me-
diator’s status as an employee of the IRS,
the Appeals mediator will provide to the
taxpayer a statement confirming his or her
proposed service as a mediator and stating
that (i) he or she is a current employee of
the IRS, (ii) a conflict results from his or
her continued status as an IRS employee,
and (iii) this conflict will not interfere in
the mediator’s ability to facilitate the case
impartially. This statement will also be in-
cluded in the written agreement to mediate.
SECTION 8. MEDIATION SESSION
.01Discussion summaries.Each party
will prepare a discussion summary of the
issues (including the party’s arguments in
favor of the party’s position) for considera-
tion by the mediator. The discussion sum-
maries should be submitted to the mediator
and the other party no later than two weeks
before the mediation session is scheduled
to occur.
.02Confidentiality. The mediation
process is confidential. Therefore, all
information concerning any dispute res-
olution communication is confidential
and may not be disclosed by any party,
participant, observer or mediator except
as provided by statute, such as in sec-
tion 6103 of the Internal Revenue Code
and 5 U.S.C. § 574. A dispute resolution
communication includes all oral or written
communications prepared for the purposes
of a dispute resolution proceeding.See
5 U.S.C. § 571(5).
.03Ex Parte Contacts Prohibited.To
ensure that one party is not in a position
to exert undue influence on the mediator,
there will be noex partecontacts with the
mediator outside the mediation session.
The prohibition againstex partecom-
munications is intended to apply only to
unsolicited contacts from one of the parties
outside the mediation session. It ensures
the mediator does not receive information
or evidence the other party is unaware of
and is unable to respond to or rebut. This
provision does not prevent the mediator
from contacting a party, or a party from an-
swering a question or request posed by the
mediator.
.04Withdrawal. Either party may with-
draw from the process anytime before
reaching a settlement of the issue(s) being
mediated by notifying the other party and
the mediator in writing.
SECTION 9. POST-SESSION
PROCEDURES
.01Mediator’s report. At the conclu-
sion of the mediation process, the media-
tor will prepare a brief written report and
submit a copy to each party.SeeExhibit 5
of this revenue procedure for a model me-
diator’s report.
.02Closing procedures. If the parties
reach an agreement on all or some issues
through the mediation process, Appeals
will use established procedures, includ-
ing preparation of a Form 906,Closing
Agreement on Final Determination Cover-
ing Specific Matters.SeeStatement of Pro-
cedural Rules, 26 C.F.R. § 601.106. Dele-
gation Order 236 (Rev. 3) (addressing set-
tlement authority for issues in a Coordi-
nated Examination Program) may apply to
settlements.
For offer in compromise cases with lia-
bilities of $50,000 or more, any settlement
or agreement reached through mediation
must be reviewed by the Office of Chief
Counsel pursuant to section 7122(b) be-
fore being finalized. When review is re-
quired, Appeals will forward the case to
Area Counsel for an opinion concerning
whether the case is subject to compromise.
SeeIRM 5.8.8.5 and 8.23.4.2.2.
If the parties do not reach an agree-
ment on an issue being mediated, they may
request arbitration for the issue, provided
the mediation issue meets the requirements
for arbitration.SeeRev. Proc. 2006–44,
2006–2 C.B. 800, or any subsequent pro-
cedure. If arbitration is not requested or
approved, Appeals will not reconsider the
mediated issue(s), and a statutory notice
of deficiency will be issued with respect
to all unagreed issues (or the case will be
processed using established closing proce-
dures if there is no deficiency).
SECTION 10. GENERAL PROVISIONS
.01Employees.IRS and Treasury em-
ployees who participate in or observe the
mediation process in any way, and any per-
son under contract to the IRS pursuant to
section 6103(n) that the IRS invites to par-
ticipate or observe, will be subject to the
confidentiality and disclosure provisions
2009–40 I.R.B.464October 5, 2009

of the Internal Revenue Code, including
sections 6103, 7213, and 7431.
.02Section 7214(a)(8) disclosure.Un-
der section 7214(a)(8), IRS employees
must report information concerning viola-
tions of any revenue law to the Secretary.
The agreement to mediate will state this
requirement and the parties will acknowl-
edge this duty.
.03Disqualification of the non-IRS
co-mediator. The non-IRS co-mediator
will be disqualified from representing the
taxpayer in any pending or future action
that involves the transactions or issues
that are the particular subject matter of the
mediation. This disqualification extends
to representing any other parties involved
in the transactions or issues that are the
particular subject matter of the media-
tion. Moreover, the co-mediator’s firm
will be disqualified from representing the
taxpayer or any other parties involved in
the transactions or issues that are the par-
ticular subject matter of the mediation in
any action that involves the transactions or
issues that are the particular subject matter
of the mediation.
The co-mediator’s firm will not be dis-
qualified from representing the taxpayer
or any other parties in any future action
that involves the same transactions or is-
sues that are the particular subject mat-
ter of the mediation, provided that (i) the
co-mediator disclosed the potential of such
representation to the parties to the medi-
ation conducted by the co-mediator prior
to the parties’ acceptance of the co-medi-
ator, (ii) such action relates to a taxable
year that is different from the taxable year
that is the subject matter of the media-
tion, (iii) the firm’s internal controls pre-
clude the co-mediator from any form of
participation in the matter, and (iv) the firm
does not apportion to the co-mediator any
part of the fee therefrom. In the event the
co-mediator has been selected prior to the
co-mediator learning of the identity of one
or more of the parties involved in the medi-
ation, requirement (i) will be deemed sat-
isfied if the co-mediator promptly notifies
the parties of the potential representation.
Although the co-mediator is prohibited
from receiving a direct allocation of the
fee from the taxpayer (or other party) in
the matter for which the internal controls
are in effect, the co-mediator will not be
prohibited from receiving a salary, part-
nership share, or corporate distribution es-
tablished by prior independent agreement.
The co-mediator and his or her firm are
not disqualified from representing the tax-
payer or any other parties involved in the
mediation in any matters unrelated to the
transactions or issues that are the particu-
larsubjectmatterofthemediation.
This paragraph 3 only applies to repre-
sentations on matters before the IRS.
The provisions of this paragraph 3 are in
addition to any other applicable disqualifi-
cation provisions, including, for example,
the rules of the United States Tax Court and
applicable canons of ethics.
.04Use as precedent.A settlement
reached by the parties through mediation
will not be binding on the parties (or be
otherwise controlling) for taxable years
not covered by the agreement. Except as
provided in the agreement, no party may
use such settlement as precedent.
SECTION 11. EFFECTIVE DATE
This procedure is effective October 5,
2009, the date this revenue procedure is
published in the Internal Revenue Bulletin.
SECTION 12. EFFECT ON OTHER
DOCUMENTS
Revenue Procedure 2002–44 is super-
seded. This revenue procedure is subject
to the requirements in Announcement
2008–111 for offer in compromise and
Trust Fund Recovery Penalty cases.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Sarah Sheldon, Office of
Chief Counsel, Procedure and Admin-
istration. For further information re-
garding this revenue procedure, contact
Ms. Sheldon at (202) 622–7950 (not a
toll-free call).
October 5, 20094652009–40 I.R.B.

Exhibit 1:
Addresses for Appeals Area Directors
Director, Area 1
IRS Appeals
290 Broadway, 11
th
Floor
New York, NY 10007
Director, Area 2 — Collection
IRS Appeals
1099 14
th
Street, N.W.
Washington, DC 20005
Director, Area 3
IRS Appeals
810 Broadway, Suite 300
Nashville, TN 37203
Director, Area 4
IRS Appeals
701 Market St., Suite 2200
Philadelphia, PA 19106
Director, Area 7
IRS Appeals
4050 Alpha Road
Farmers Branch, TX 75244
Director, Area 8
IRS Appeals
160 Spear St. Suite 800
San Francisco, CA 94105
Director, Area 9
IRS Appeals
330 North Brand Blvd, Suite 600
Glendale, CA 91203
Director, Appeals Team Case Leaders
300 North Los Angeles Street, Federal Building
Los Angeles, CA 90012
2009–40 I.R.B.466October 5, 2009

Exhibit 2:
Model Agreement to Mediate
1.The Mediation Process.
The mediation will be an extension of the Appeals process to help[NAME OF TAXPAYER]and Internal Revenue Service
(IRS)—Appeals (the PARTIES) reach a negotiated settlement of the issues to be mediated.See(2) below for the participants in
the mediation process. To accomplish this goal, the mediator willact as a facilitator, assist in defining the issues, and promote
settlement negotiations between the PARTIES. The mediator will inform and discuss with the PARTIES the rules and procedures
pertaining to the mediation process. The mediator will not havesettlement authority and will notrender a decision regarding any
issue in dispute. The PARTIES will continue to have settlement authority for all issues considered under the mediation process.
2.Nature of Process, Participants, Withdrawal.
(a) The mediation process is optional.
(b) Each PARTY must have at least one participant attendingthe mediation session with decision-making authority. No
later than two weeks before the mediation, each PARTY will submit to the other PARTY and the mediator a list
of the participants who will attend the mediation session on behalf of or at the request of the PARTY, including a
designation of the person with decision-making authority who will represent the PARTY at the mediation session.
Each PARTY’s list of participants will contain the participant’s name, the participant’s position with the PARTY or
other affiliation (e.g., a member of XYZ law firm, counsel to the taxpayer), and the participant’s address, [telephone
number, and fax number]. All participants attending themediation on behalf of or at the request of a PARTY will be
listed on the PARTY’s list of participants, including witnesses, consultants, and attorneys.
[Insert limitations on the number or types of participants, if any.]
(c) Either PARTY may withdrawfrom the process at any time prior to reaching a settlement of the issues to be mediated
by notifying the other PARTY and the mediator in writing.
3.Selection of Mediator and Costs.
(a) Headquarters Appeals will pay the costs associated with the Appeals mediator. The taxpayer will pay the cost of
a non-IRS co-mediator.
(b) The taxpayer, by signing this agreement, acknowledges that (i) the Appeals mediator is a current employee of the
IRS, (ii) a conflict results from his or her continued status as an IRS employee, and (iii) this conflict will not interfere
in the mediator’s ability to facilitate the case impartially.
4.Issues to be Mediated.
The mediation session will encompass the following issues in the IRS audit of the federal tax returns of[NAME OF
TAXPAYER]for tax year(s)
:
(a) Issue #1
(b) Issue #2
5.Submission of Materials.
Each PARTY will present to the mediator a separate written summation not to exceed 20 pages (exclusive of exhibits consisting of
pre-existing documents and reports) regarding each issue. The mediator will have the right to ask either PARTY for additional
information before the mediation session if deemed necessary for a full understanding of the issues to be mediated. Each PARTY
will simultaneously submit to the other PARTY a copy of any submission to the mediator.
6.Place of Mediation.
The PARTIES will attempt to select a site at or near the mediator’s office,[NAME OF TAXPAYER]’s office, or an Appeals office.
7.Proposed Schedule.
Subject to the approval of the mediator, the mediation session will be conducted according to the following schedule:
Submission of
Materials to Mediator:
A DATE NO LATER THAN TWO WEEKS BEFORE THE DATE OF
MEDIATION SESSION
Mediation Session:
By MONTH DAY, YEAR and TIME
October 5, 20094672009–40 I.R.B.

8.Confidentiality.
IRS and Treasury employees who participate in or observe themediation process in any way, and any person under contract
to the IRS pursuant to § 6103(n) of the Internal Revenue Code (including the mediator) that the IRS invites to participate or
observe, will be subject to the confidentiality and disclosure provisions of the Internal Revenue Code, including §§ 6103, 7213
and 7431.See also5 U.S.C. § 574.
9.Ex Parte Contacts Prohibited.
There will be noex partecontacts from a PARTY to the mediator outside the mediation session. This provision is not intended to
prevent the mediator from contacting a PARTY, or a PARTY from responding to the mediator’s request for information.
10.Section 7214(a)(8) Disclosure.
The PARTIES to this agreement acknowledge that IRS employees involved in this mediation are bound by the § 7214(a)(8)
disclosure requirements concerning violations of any revenue law.
11.No Record.
There will be no stenographic record, audio or video tape recording, or other transcript of the mediation session(s).
12.Report by Mediator.
At the conclusion of the mediation session, the mediator will issue a brief report to the PARTIES identifying each issue described
in section 4, above, and whether the PARTIES either agreed to resolve or did not resolve the issue.
13.Appeals Procedures Apply.
If the mediation process enables the PARTIES to reach agreement on the issues, Appeals will use established procedures to close
the case. Delegation Order 236 (Rev. 3) (addressing settlement authority for issues in a Coordinated Examination Program) or
§ 7122(b) (regarding offer in compromise cases) may apply to settlements resulting from the mediation process. If the PARTIES
do not reach an agreement on an issue being mediated, the PARTIESmay request arbitration for the issue provided the issue meets
the requirements for arbitration.SeeRev. Proc. 2006–44, 2006–2 C.B. 800, or any subsequent procedure. If arbitration is not
requested or approved, Appeals will not reconsider the mediated issue(s), and a statutory notice of deficiency will be issued with
respect to all unagreed issues (or the case will be processed usingestablished closing procedures if there is no deficiency).
14.Precedential Use.
A settlement reached by the PARTIES through mediation will notbe binding on the PARTIES (or beotherwise controlling) for
taxable years not covered by the agreement. Except as provided in the agreement, no PARTY may use such settlement as precedent.
INTERNAL REVENUE SERVICE,
APPEALS
NAME OF TAXPAYER
By:
NAME
Appeals Team Manager
By:
NAME
TITLE
Date:
Date:
2009–40 I.R.B.468October 5, 2009

Exhibit 3:
Model Mediation Participants List
Case Name:
Submitted By:
Date:
Please list belowallparticipants attending the mediation, including witnesses, consultants, and attorneys. This form must be sent
to the other PARTY and to the mediator(s) no later than two weeks before the mediation session. Insert anasterisk (*)before the
name of the person who has decision-makingauthority at the mediation session:
NAME
POSITION OR
AFFILIATION
ADDRESSTELEPHONE &
FAX NUMBER
October 5, 20094692009–40 I.R.B.

Exhibit 4:
Consent to Disclose Tax Information
Pursuant to section 6103(c) of the Internal Revenue Code of 1986 (as amended), I hereby consent to the disclosure of return
information (as defined in section 6103(b)(2)) relating to the mediation session between
(Taxpayer) and
the Commissioner of Internal Revenue to be held on
(date), as follows:
The Internal Revenue Service may disclose the taxpayer’s return and return information incident to the
mediation to the mediator and any participants or observers identified in the initial list of participants
and to any subsequent participants and observers identified in writing by the parties.
This consent relates to the mediation session thatis the subject of an agreement to mediate dated
.I
am aware that in the absence of this authorization, the return and return information of
(Taxpayer) is
confidential and may not be disclosed except as authorized by the Internal Revenue Code.
I certify that I have the authority to execute this consent on behalf of Taxpayer.
Taxpayer Name:
Taxpayer Identification Number:
Taxpayer Address:
By:[Name of Individual Executing Consent]
Title:[Title of Individual Executing Consent]
Signature:
Date:
2009–40 I.R.B.470October 5, 2009

Exhibit 5:
Model Mediator’s Report
The parties below agreed to mediate their dispute and attended a mediation session onMONTH DAY, YEARin an attempt to
settle the following issue(s):
ISSUE:
SETTLEMENT:[ ] Yes
[]No
[ ] Partial
Proposed Adjustment Amount:Amount Sustained:
ISSUE:
SETTLEMENT:[ ] Yes
[]No
[ ] Partial
Proposed Adjustment Amount:Amount Sustained:
Settlement documents will be prepared under established Appeals procedures.
DATED this
day of
/s/ Mediator
/s/ Party
/s/ Party
26 CFR 601.105: Examination of returns and claims
for refund, credit or abatement; determination of cor-
rect tax liability.
(Also: Part I, §§ 860D, 860F, 860G, 1001; 1.860G–2,
1.1001–3, 301.7701–2, 301.7701–3, 301.7701–4.)
Rev. Proc. 2009–45
SECTION 1. PURPOSE
Th
is revenue procedure describes the
co
nditions under which modifications to
ce
rtain mortgage loans will not cause the
In
ternal Revenue Service (Service) to
ch
allenge the tax status of certain securi-
ti
zation vehicles that hold the loans or to
a
ssert that those modifications give rise to
p
rohibited transactions.
N
o inference should be drawn about
w
hether similar consequences would ob-
t
ain if a transaction falls outside the limited
s
cope of this revenue procedure. Further-
m
ore, there should be no inference that,
i
n the absence of this revenue procedure,
transactions within its scope would have
impaired the tax status of securitization ve-
hicles or would have given rise to prohib-
ited transactions.
SECTION 2.
BACKGROUND—COMMERCIAL
MORTGAGE LOANS
.01 Under the terms of many commer-
cial mortgage loans,all or a large portion
of the original stated principal is due at ma-
turity. Typically, at the time of loan orig-
ination, both the borrower and the lender
expected the borrower to obtain funds to
satisfy the large payment at maturity by ob-
taininganewmortgageloansecuredbythe
same underlying interest in real property.
.02 The current situation in the credit
markets is affecting the availability of fi-
nancing and refinancing for commercial
real estate. In particular, borrowers under
many of the commercial mortgage loans
that will mature in the next few years are
concerned that they will encounter great
difficulty in obtaining refinancing for these
loans. Because they had always antici-
pated using the proceeds from refinancing
to satisfy the principal balance due at ma-
turity, these borrowers are often at risk of
defaulting when their loans mature. This
may be true even for loans in which the un-
derlying commercial real estate is provid-
ingmorethanenoughcashflowtosatisfy
debt service before maturity.
.03 Many commercial mortgage loans
are held in securitization vehicles such as
investment trusts and real estate mortgage
investment conduits (REMICS). Typically,
these pools of loans are administered by
servicers that handle the day-to-day oper-
ations of the mortgage loan pools and by
special servicers that handle the modifica-
tion and restructuring of defaulted loans, as
well as foreclosure or similar conversion
of defaulted mortgage loan property.
.04 Many loan pool administrators have
developed and implemented procedures
for monitoring both the status of the com-
mercial properties securing the mortgage
loans and the likelihood of borrowers be-
ing able to refinance their mortgage loans
or sell the mortgaged property as the loans
mature. The personnel who implement
these procedures are often experienced in
negotiating with borrowers, restructuring
troubled commercial loans, and foreclos-
ingoncommercialproperties. Itmaybe
possible, therefore, to foresee impending
October 5, 20094712009–40 I.R.B.

difficulties for a mortgage loan well in
advance of any actual payment default.
.05 Many industry participants have
concluded that the monitoring procedures
that have been adopted and the level of
experience of those implementing the pro-
cedures make it possible to assess with
substantial accuracy whether particular
commercial mortgage loans present an
unacceptably high risk of eventual fore-
closure. It may be possible to foresee this
risk of foreclosure even when no payment
default has yet occurred and when the
event of default may not occur until the
maturity of the loan.
.06 Many industry participants have
also concluded that it is possible to pre-
dict with a reasonable degree of accuracy
whether proposed modifications will al-
low mortgage loans to continue to perform
(and so avoid the necessity of property
foreclosure). Modifications that may be
considered include interest rate changes,
principal forgiveness, extensions of ma-
turity, and alterations in the timing of
changes to an interest rate or to a principal
amortization schedule. In many cases,
modifications that include extensions of
the maturity and, thus, postpone the need
for refinancing, may reduce the risk of
foreclosure.
.07 Often the complexity of the mort-
gage loans themselves and the consequent
complexity of modifications to them ne-
cessitate a substantial period prior to any
expected payment or maturity default for
the negotiation of any such modifications.
SECTION 3.
BACKGROUND—REMICS
.01 REMICs are widely used securitiza-
tion vehicles for mortgages. REMICs are
governed by sections 860A through 860G
of the Internal Revenue Code.
.02 For an entity to qualify as a REMIC,
all of the interests in the entity must consist
of one or more classes of regular interests
and a single class of residual interests,see
section 860D(a), and those interests must
be issued on the startup day, within the
meaning of § 1.860G–2(k) of the Income
Tax Regulations.
.03 A regular interest is one that is des-
ignated as a regular interest and whose
terms are fixed on the startup day. Section
860G(a)(1). In addition, a regular interest
must (1) unconditionally entitle the holder
to receive a specifiedprincipal amount (or
other similar amount), and (2) provide that
interest payments, if any, at or before ma-
turity are based on a fixed rate (or to the
extent provided in regulations, at a variable
rate).
.04 An interest issued after the startup
day does not qualify as a REMIC regular
interest.
.05 Under section 860D(a)(4), an entity
qualifies as a REMIC only if, among other
things, as of the close of the third month
beginning after the startup day and at all
times thereafter, substantially all of its as-
sets consist of qualified mortgages and per-
mitted investments. This asset test is sat-
isfied if the entity owns no more than a
de minimisamount of other assets.See
§ 1.860D–1(b)(3)(i). As a safe harbor, the
amount of assets other than qualified mort-
gages and permitted investments isde min-
imisif the aggregate of the adjusted bases
of those assets is less than one percent of
the aggregate of the adjusted bases of all of
the entity’s assets. § 1.860D–1(b)(3)(ii).
.06 With limited exceptions, a mort-
gage loan is not a qualified mortgage
unless it is transferred to the REMIC on
the startup day in exchange for regular
or residual interests in the REMIC.See
section 860G(a)(3)(A)(i).
.07 The legislative history of the
REMIC provisions indicates that Congress
intended the provisions to apply only to
an entity that holds a substantially fixed
pool of real estate mortgages and related
assets and that “has no powers to vary
the composition of its mortgage assets.”
S. Rep. No. 99–313, 99
th
Cong., 2
d
Sess.
791–92, 1986–3 (Vol. 3) C.B. 791–92.
.08 Section 1.1001–3(c)(1)(i) defines a
“modification” of a debt instrument as any
alteration, including any deletion or addi-
tion, in whole or in part, of a legal right or
obligation of the issuer or holder of a debt
instrument, whether the alteration is evi-
denced by an express agreement (oral or
written), conduct of the parties, or other-
wise. Section 1.1001–3(e) governs which
modifications of debt instruments are “sig-
nificant.” Under § 1.1001–3(b), for most
federal income tax purposes, a significant
modification produces a deemed exchange
of the original debt instrument for a new
debt instrument.
.09 Under § 1.860G–2(b), related rules
apply to determine REMIC qualifica-
tion. Except as specifically provided in
§ 1.860G–2(b)(3), if there is a significant
modification of an obligation that is held
by a REMIC, then the modified obligation
is treated as one that was newly issued in
exchange for the unmodified obligation
that it replaced.See§ 1.860G–2(b)(1).
For this purpose, the rules in § 1.1001–3(e)
determine whether a modification is “sig-
nificant.”See§ 1.860G–2(b)(2). Thus,
even if an entity initially qualifies as a
REMIC, one or more significant modifi-
cations of loans held by the entity may
terminate the qualification if the modifica-
tions cause less than substantially all of the
entity’s assets to be qualified mortgages.
.10 Certain loan modifications, how-
ever, are not significant for purposes of
§ 1.860G–2(b)(1), even if the modifi-
cations are significant under the rules
in § 1.1001–3. In particular, under
§ 1.860G–2(b)(3)(i), if a change in the
terms of an obligation is “occasioned by
default or a reasonably foreseeable de-
fault,” the change is not a significant mod-
ification for purposes of § 1.860G–2(b)(1),
regardless of the modification’s status un-
der § 1.1001–3.
.11 Discussions between a holder or ser-
vicer and a borrower concerning a possible
modification of a loan may occur at any
time and need not begin only after the loan
is in default or there is a reasonably fore-
seeable default.
.12 The Service understands that many
industry participants believe that a loan
modification necessarily fails to be “oc-
casioned by default or a reasonably fore-
seeable default” unless the loan is not per-
forming or default is imminent.
.13Section860F(a)(1)imposesataxon
REMICs equal to 100 percent of the net
income derived from “prohibited transac-
tions.” The disposition of a qualified mort-
gage is a prohibited transaction unless the
“disposition [is] pursuant to—(i) the sub-
stitution of a qualified replacement mort-
gage for a qualified mortgage . . . , (ii) a
disposition incident to the foreclosure, de-
fault, or imminent default of the mortgage,
(iii) the bankruptcy or insolvency of the
REMIC, or (iv) a qualified liquidation.”
Section 860F(a)(2)(A).
.14 Under section 860C(b)(1), “The
taxable income of a REMIC shall be
determined under an accrual method of ac-
counting...exceptthat—...(C)there
shall not be taken into account any item of
2009–40 I.R.B.472October 5, 2009

income, gain, loss, or deduction allocable
to a prohibited transaction, . . . .”
SECTION 4.
BACKGROUND—TRUSTS
.01 Section 301.7701–2(a) of the Pro-
cedure and Administration Regulations
defines a “business entity” as any entity
recognized for federal tax purposes (in-
cluding an entity with a single owner that
may be disregarded as an entity separate
from its owner under § 301.7701–3) that
is not properly classified as a trust under
§ 301.7701–4 or otherwise subject to spe-
cial treatment under the Code.
.02 Section 301.7701–4(a) provides
that an arrangement is treated as a trust if
the purpose of the arrangement is to vest
in trustees responsibility for the protection
and conservation of property for benefi-
ciaries who cannot share in the discharge
of this responsibilityand, therefore, are
not associates in a joint enterprise for the
conduct of business for profit.
.03 Section 301.7701–4(c) provides
that an “investment” trust is not classified
as a trust if there is a power under the trust
agreement to vary the investment of the
certificate holders.
SECTION 5. SCOPE
This revenue procedure applies to a
modification (including an actual ex-
change to which § 1.1001–3 applies) of
a mortgage loan (the “pre-modification
loan”) that is held by a REMIC, or by an
investment trust, if all of the following
conditions are satisfied:
.01 The pre-modification loan is not se-
cured by a residence that contains fewer
than five dwelling units and that is the prin-
cipal residence of the issuer of the loan.
.02 Either—(1) If a REMIC holds the
pre-modification loan, then as of the end
of the 3-month period beginning on the
startup day, no more than ten percent of
the stated principal of the total assets of the
REMIC was represented by loans fitting
the following description: At the time of
contribution to the REMIC, the payments
on the loan were then overdue by at least
30 days or a default on the loan was rea-
sonably foreseeable; or
(2) If an investment trust holds the pre-
modification loan, then as of all dates when
assets were contributed to the trust, no
more than ten percent of the stated prin-
cipal of all the debt instruments then held
by the trust was represented by instruments
the payments on which were then overdue
by 30 days or more or for which default
was reasonably foreseeable.
.03 Based on all the facts and circum-
stances, the holder or servicer reasonably
believes that there is a significant risk of
default of the pre-modification loan upon
maturity of the loan or at an earlier date.
This reasonable belief must be based on a
diligent contemporaneous determination
of that risk, which may take into account
credible written factual representations
made by the issuer of the loan if the holder
or servicer neither knows nor has reason to
know that such representations are false.
In a determination of the significance of
the risk of a default, one relevant fac-
tor is how far in the future the possible
default may be. There is no maximum
period, however, after which default is
per senot foreseeable. For example, in
appropriate circumstances, a holder or
servicer may reasonably believe that there
is a significant risk of default even though
the foreseen default is more than one year
in the future. Similarly, although past
performance is another relevant factor
for assessing default risk, in appropriate
circumstances, a holder or servicer may
reasonably believe that there is a signif-
icant risk of default even if the loan is
performing.
.04 Based on all the facts and circum-
stances, the holder or servicer reasonably
believes that the modified loan presents
a substantially reduced risk of default, as
compared with the pre-modification loan.
SECTION 6. APPLICATION
If one or more modifications of pre-
modification loans are within the scope of
Section 5 of this revenue procedure—
.01 The Service will not challenge a
securitization vehicle’s qualification as a
REMIC on the grounds that the modifica-
tions are not among the exceptions listed
in § 1.860G–2(b)(3);
.02 The Service will not contend that
the modifications are prohibited trans-
actions under section 860F(a)(2) on the
grounds that the modifications result in
one or more dispositions of qualified mort-
gages and that the dispositions are not
among the exceptions listed in section
860F(a)(2)(A)(i)-(iv);
.03 The Service will not challenge a
securitization vehicle’s classification as a
trust under § 301.7701–4(c) on the grounds
that the modifications manifest a power to
vary the investment of the certificate hold-
ers; and
.04 The Service will not challenge a
securitization vehicle’s qualification as a
REMIC on the grounds that the modifica-
tions result in a deemed reissuance of the
REMIC regular interests.
SECTION 7. EXAMPLE
The following example illustrates the
application of this revenue procedure:
.01Facts. As part of its business,Sservices mort-
gage loans that are held byR,aREMICthatisde-
scribed in Section 5.02(1) of this revenue procedure.
BorrowerBis the issuer of one of the mortgage loans
held byR.B’s mortgage loan is non-amortizing, and
thus the entire principal amount is due upon matu-
rity. The real property securingB’s mortgage loan is
an office building. All ofB’s required payments on
themortgageloanhavebeen timely, and the loan is
not scheduled to maturefor another 12 months.Bex-
pects that in order to repay the loan when it matures,
Bwill have to refinance the maturing mortgage loan
into a newly issued mortgage loan. There are factors,
however, that indicate that refinancing options may
be unavailable toBat the time the mortgage loan ma-
tures. These factors include either or both of the fol-
lowing: current economic conditions in the relevant
credit markets, and the current market value of the
real property securing the loan.Bprovides a written
factual representation toSshowing thatBwill prob-
ably not be able to repay or refinance the mortgage
loan at maturity.Sneither knows, nor has reason to
know, that the representation is false.
Based on all the facts and circumstances and a
diligent contemporaneous determination,Sreason-
ably believes that, if the loan toBis not modified,
there is a significant risk of default byBupon matu-
rity of the mortgage loan. Therefore,SandBagree
to modify the mortgage loan by extending its matu-
rity and increasing the interest rate.Sreasonably be-
lieves that this modification reduces the risk of de-
fault. The modification is a significant modification
under § 1.1001–3(e). The modification occurs after
the effective date of this revenue procedure.
.02Analysis.Sreasonably believed that the pre-
modification loan presented a significant risk of de-
fault and that the modification substantially reduced
that risk. Accordingly, the modification is within the
scope of this revenue procedure.
SECTION 8. EFFECTIVE DATE
This revenue procedure applies to loan
modifications effected on or after January
1, 2008.
October 5, 20094732009–40 I.R.B.

SECTION 9. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Diana Imholtz of the Office
of Associate Chief Counsel (Financial
Institutions and Products). For further
information, contactMs. Imholtz at (202)
622–3930 (not a toll-free call).
2009–40 I.R.B.474October 5, 2009

Part IV. Items o
fGeneralInterest
Wind Energy Partnerships
Announcement 2009–69
This announcement revises Revenue
Procedure 2007–65 by replacing the fol-
lowing language in Section 3: “The Ser-
vice generally will closely scrutinize a
Project Company as a partnership or In-
vestors as partners if a Project Company’s
partnership agreement does not satisfy
each requirement of this revenue proce-
dure. The requirements set forth in this
revenue procedure that must be satisfied
in order to qualify for the Safe Harbor,
however, are not intended to provide sub-
stantive rules and are not to be used as
audit guidelines. The Safe Harbor in this
revenue procedure is to provide guidance
to taxpayers establishing or participat-
inginwindenergypartnershipsinlieu
of taxpayers requesting a letter ruling.
Therefore, the Service will not rule on
any issues under Subchapter K for part-
nerships claiming the credit under § 45.”
with “The requirements set forth in this
revenue procedure that must be satisfied
in order to qualify for the Safe Harbor are
not intended to provide substantive rules
and are not to be used as audit guidelines.
Returns claiming wind energy production
tax credits under § 45 are subject to exam-
ination by the Service. The Safe Harbor
in this revenue procedure is to provide
guidance to taxpayers establishing or par-
ticipatinginwindenergypartnershipsin
lieu of taxpayers requesting a letter ruling.
Therefore, the Service will not rule on any
issues under Subchapter K for partnerships
claiming the credit under § 45.”
This announcement also replaces the
following language from Section 4.05:
“Neither the Developer, the Investors nor
any related parties may have a contractual
right to purchase, at any time, the Wind
Farm, any property included in the Wind
Farm or an interest in the Project Com-
pany at a price less than its fair market
value determined at the time of exercise
of the contractual right to purchase, and
provided further that the Developer (or
any party related to the Developer) may
not have a contractual right to purchase
the Wind Farm or an interest in the Project
Company earlier than 5 years after the
qualified facility is first placed into ser-
vice,” with “The Developer, the Investor,
or any related party may only have a con-
tractual right to purchase the Wind Farm,
any property included in the Wind Farm,
or an interest in the Project Company (the
Property) that satisfies the requirements
of this section 4.05. The contractual right
must be negotiated for valid non-tax busi-
ness reasons at arm’s length by parties
with material adverse interests. The pur-
chase price for the Property must either be
a price that is not less than the fair market
value of the Property determined at the
time of exercise or, if the purchase price is
determined prior to exercise, a price that
the parties reasonably believe, based on
all facts and circumstances at the time the
price is determined, will not be less than
the fair market value of the Property at the
time the right may be exercised. Finally,
the Developer (or any party related to the
Developer) may not have a contractual
right to purchase theProperty earlier than
5 years after the qualified facility is first
placed in service.”
This announcement also replaces the
following language in Section 4.09:
“Thus, generally only entities not subject
to § 469, and not individuals, will be able
to offset non-project income with cred-
its received as a passive investor in the
partnership,” with “Generally, a taxpayer
subject to § 469 may utilize passive activ-
ity credits from qualified wind facilities
only to the extent of their tax liability al-
locable to passive activities, whether from
qualified wind facilities or other sources.”
Finally, this announcement replaces the
following language in Section 5.02:
“Example 2. The facts are the same as in Exam-
ple 1, except Investor is initially allocated 99.5% of
LLC’s gross income or loss and § 45 credits. Un-
der these facts, the wind energy limited liability com-
pany’s classification as a valid partnership would be
closely scrutinized by the Service. Likewise, if any
other provision of this safe harbor is not followed
for any wind energy partnerships, the Service will
closely scrutinize the validity of such purported part-
nerships,” with, “Example 2.Thefactsarethesame
as in Example 1, except Investor is initially allocated
99.5% of LLC’s gross income or loss and § 45 cred-
its. Under these facts, the wind energy LLC’s classi-
fication as a valid partnership would not be governed
by the safe harbor in this revenue procedure. Like-
wise, if any other provision of this safe harbor is not
followed for any wind energy partnerships, such part-
nerships would not be governed by the safe harbor in
this revenue procedure.”
The principal authors of this announce-
ment are Vishal R. Amin and Richard T.
Probst of the Office of Associate Chief
Counsel (Passthroughs and Special In-
dustries). For furtherinformation regard-
ing this announcement, contact Vishal
R. Amin or Richard T. Probst at (202)
622–3060 (not a toll-free call).
Announcement of Disciplinary Sanctions From the Office
of Professional Responsibility
Announcement 2009-71
TheOfficeofProfessionalResponsi-
bility (OPR) announcesrecent disciplinary
sanctions involving attorneys, certified
public accountants, enrolled agents, en-
rolled actuaries, enrolled retirement plan
agents, and appraisers. These individuals
are subject to the regulations governing
practice before the Internal Revenue Ser-
vice (IRS), which are set out in Title 31,
Code of Federal Regulations, Part 10, and
which are published in pamphlet form as
Treasury Department Circular No. 230.
The regulations prescribe the duties and
restrictions relating to such practice and
prescribe the disciplinary sanctions for
violating the regulations.
The disciplinary sanctions to be im-
posed for violation of the regulations are:
Disbarred from practice before the
IRS—An individual who is disbarred is
October 5, 20094752009–40 I.R.B.

not eligible to represent taxpayers before
the IRS.
Suspended from practice before the
IRS—An individual who is suspended is
not eligible to represent taxpayers before
the IRS during the term of the suspension.
Censured in practice before the
IRS—Censure is a public reprimand. Un-
like disbarment or suspension, censure
does not affect an individual’s eligibility
to represent taxpayers before the IRS, but
OPR may subject the individual’s future
representations to conditions designed to
promote high standards of conduct.
Monetary penalty—A monetary
penalty may be imposed on an individual
who engages in conduct subject to sanc-
tion or on an employer, firm, or entity
if the individual was acting on its behalf
and if it knew, or reasonably should have
known, of the individual’s conduct.
Disqualification of appraiser—An
appraiser who is disqualified is barred
from presenting evidence or testimony in
any administrative proceeding before the
Department of the Treasury or the IRS.
Under the regulations, attorneys, cer-
tified public accountants, enrolled agents,
enrolled actuaries, and enrolled retirement
plan agents may not assist, or accept assis-
tance from, individuals who are suspended
or disbarred with respect to matters consti-
tuting practice (i.e., representation) before
the IRS, and they may not aid or abet sus-
pended or disbarred individuals to practice
before the IRS.
Disciplinary sanctions are described in
these terms:
Disbarred by decision after hearing,
Suspended by decision after hearing,
Censured by decision after hearing,
Monetary penalty imposed after hear-
ing, and Disqualified after hearing—An
administrative law judge (ALJ) conducted
an evidentiary hearing upon OPR’s com-
plaint alleging violation of the regulations
and issued a decision imposing one of
these sanctions. After 30 days from the
issuance of the decision, in the absence of
an appeal, the ALJ’s decision became the
final agency decision.
Disbarred by default decision, Sus-
pended by default decision, Censured by
default decision, Monetary penalty im-
posed by default decision, and Disqual-
ified by default decision—An ALJ, after
findingthatnoanswertoOPR’scomplaint
had been filed, granted OPR’s motion for a
default judgment and issued a decision im-
posing one of these sanctions.
Disbarment by decision on appeal,
Suspended by decision on appeal, Cen-
sured by decision on appeal, Monetary
penalty imposed by decision on ap-
peal, and Disqualified by decision on
appeal—The decision of the ALJ was
appealed to the agency appeal authority,
acting as the delegate of the Secretary
of the Treasury, and the appeal authority
issued a decision imposing one of these
sanctions.
Disbarred by consent, Suspended by
consent, Censured by consent, Mone-
tary penalty imposed by consent, and
Disqualified by consent—In lieu of a
disciplinary proceeding being instituted
or continued, an individual offered a con-
sent to one of these sanctions and OPR
accepted the offer. Typically, an offer
of consent will provide for: suspension
for an indefinite term; conditions that the
individual must observe during the sus-
pension; and the individual’s opportunity,
after a stated number of months, to file
with OPR a petition for reinstatement af-
firming compliance with the terms of the
consent and affirming current eligibility
to practice (i.e., an active professional
license or active enrollment status). An
enrolled agent or an enrolled retirement
plan agent may also offer to resign in order
to avoid a disciplinary proceeding.
Suspended by decision in expedited
proceeding, Suspended by default de-
cision in expedited proceeding, Sus-
pended by consent in expedited pro-
ceeding—OPR instituted an expedited
proceeding for suspension (based on cer-
tain limited grounds, including loss of a
professional license and criminal convic-
tions).
OPR has authority to disclose the
grounds for disciplinary sanctions in these
situations: (1) an ALJ or the Secretary’s
delegate on appeal has issued a decision
on or after September 26, 2007, which was
theeffectivedateofamendmentstothe
regulations that permit making such deci-
sions publicly available; (2) the individual
has settled a disciplinary case by signing
OPR’s “consent to sanction” form, which
requires consenting individuals to admit to
one or more violations of the regulations
and to consent to the disclosure of the in-
dividual’s own return information related
to the admitted violations (for example,
failure to file Federal income tax returns);
or (3) OPR has issued a decision in an
expedited proceeding for suspension.
Announcements of disciplinary sanc-
tions appear in the Internal Revenue Bul-
letin at the earliest practicable date. The
sanctions announced below are alphabet-
ized first by the names of states and sec-
ond by the last names of individuals. Un-
less otherwise indicated, section numbers
(e.g., §10.51) refer to the regulations.
City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
California
West HillsRosenthal, MartinCPASuspended by default
decision in expedited
proceeding under § 10.82
(revocation of CPA
license)
Indefinite from
September 16, 2009
2009–40 I.R.B.476October 5, 2009

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
California (Continued)
Palm DesertWinings, David M.CPASuspended by default
decision in expedited
proceeding under § 10.82
(revocation of CPA
license)
Indefinite from
September 16, 2009
Florida
Coral GablesEstefano, Delaila J.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
September 16, 2009
MiamiGoldstein, Stephen J.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment)
Indefinite from
September 4, 2009
Lawrence, Mark,
See Maryland
NaplesHausler, Gary J.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
September 4, 2009
Bonita SpringsJohanson, Kent A.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment)
Indefinite from
September 16, 2009
Haire, Benjamin H.,
See South Carolina
VeniceMiller, Raymond E.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment)
Indefinite from
September 4, 2009
Lauderdale LakesOdunna, Okechukwu J. AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
September 4, 2009
Pereira, Lizabeth L.,
See Michigan
WestonRoach, Jr., WilliamAttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
September 16, 2009
October 5, 20094772009–40 I.R.B.

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
Florida (Continued)
Coral GablesRyan, III, David P.AttorneySuspended by default
decision in expedited
proceeding under §10.82
(suspension of attorney
license)
Indefinite from
September 16, 2009
MiamiStolar, Leonard U.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment)
Indefinite from
September 16, 2009
Mary EstherTipler, James H.AttorneySuspended by decision
in expedited proceeding
under § 10.82 (attorney
disbarment)
Indefinite from
September 4, 2009
HialeahWhitney, Wilfrid M.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment)
Indefinite from
September 16, 2009
Georgia
AcworthCopeland, Robert P.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(voluntary surrender of
license)
Indefinite from
September 4, 2009
Maryland
Ocean CityLawrence, MarkAttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment in
Florida)
Indefinite from
September 16, 2009
Michigan
Farmington HillsPereira, Lizabeth L.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment in
Florida)
Indefinite from
September 4, 2009
New York
New RochelleMicek, Andrew M.AttorneySuspended by decision
in expedited proceeding
under § 10.82 (attorney
disbarment)
Indefinite from
September 10, 2009
2009–40 I.R.B.478October 5, 2009

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
South Carolina
SenecaHaire, Benjamin H.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment in
Florida)
Indefinite from
September 4, 2009
October 5, 20094792009–40 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.
2009–40 I.R.B.iOctober 5, 2009

Numerical Finding List
1
Bulletins 2009–27 through 2009–40
Announcements:
2009-56, 2009-28 I.R.B.145
2009-57, 2009-29 I.R.B.158
2009-58, 2009-29 I.R.B.158
2009-59, 2009-29 I.R.B.158
2009-60, 2009-30 I.R.B.166
2009-61, 2009-33 I.R.B.246
2009-62, 2009-33 I.R.B.247
2009-63, 2009-33 I.R.B.248
2009-64, 2009-36 I.R.B.319
2009-65, 2009-36 I.R.B.319
2009-66, 2009-37 I.R.B.364
2009-67, 2009-38 I.R.B.388
2009-68, 2009-38 I.R.B.388
2009-69, 2009-40 I.R.B.475
2009-71, 2009-40 I.R.B.475
Notices:
2009-51, 2009-28 I.R.B.128
2009-55, 2009-31 I.R.B.170
2009-57, 2009-29 I.R.B.147
2009-58, 2009-30 I.R.B.163
2009-59, 2009-31 I.R.B.170
2009-60, 2009-32 I.R.B.181
2009-61, 2009-32 I.R.B.181
2009-62, 2009-35 I.R.B.260
2009-63, 2009-34 I.R.B.252
2009-64, 2009-36 I.R.B.307
2009-65, 2009-39 I.R.B.413
2009-66, 2009-39 I.R.B.418
2009-67, 2009-39 I.R.B.420
2009-68, 2009-39 I.R.B.423
2009-69, 2009-35 I.R.B.261
2009-70, 2009-34 I.R.B.255
2009-71, 2009-35 I.R.B.262
2009-72, 2009-37 I.R.B.325
2009-73, 2009-38 I.R.B.369
2009-74, 2009-38 I.R.B.370
2009-75, 2009-39 I.R.B.436
2009-77, 2009-40 I.R.B.449
2009-78, 2009-40 I.R.B.452
2009-79, 2009-40 I.R.B.454
2009-81, 2009-40 I.R.B.455
Proposed Regulations:
REG-152166-05, 2009-32 I.R.B.183
REG-112994-06, 2009-28 I.R.B.144
REG-113289-08, 2009-33 I.R.B.244
REG-130200-08, 2009-31 I.R.B.174
Revenue Procedures:
2009-30, 2009-27 I.R.B.27
Revenue Procedures— Continued:
2009-31, 2009-27 I.R.B.107
2009-32, 2009-28 I.R.B.142
2009-33, 2009-29 I.R.B.150
2009-34, 2009-34 I.R.B.258
2009-35, 2009-35 I.R.B.265
2009-36, 2009-35 I.R.B.304
2009-37, 2009-36 I.R.B.309
2009-38, 2009-37 I.R.B.362
2009-39, 2009-38 I.R.B.371
2009-40, 2009-39 I.R.B.438
2009-41, 2009-39 I.R.B.439
2009-42, 2009-40 I.R.B.459
2009-43, 2009-40 I.R.B.460
2009-44, 2009-40 I.R.B.462
2009-45, 2009-40 I.R.B.471
Revenue Rulings:
2009-18, 2009-27 I.R.B.1
2009-19, 2009-28 I.R.B.111
2009-20, 2009-28 I.R.B.112
2009-21, 2009-30 I.R.B.162
2009-22, 2009-31 I.R.B.167
2009-23, 2009-32 I.R.B.177
2009-24, 2009-36 I.R.B.306
2009-25, 2009-38 I.R.B.365
2009-26, 2009-38 I.R.B.366
2009-27, 2009-39 I.R.B.404
2009-28, 2009-39 I.R.B.391
2009-29, 2009-37 I.R.B.322
2009-30, 2009-39 I.R.B.391
2009-31, 2009-39 I.R.B.395
2009-32, 2009-39 I.R.B.398
2009-33, 2009-40 I.R.B.447
Treasury Decisions:
9452, 2009-27 I.R.B.1
9453, 2009-28 I.R.B.114
9454, 2009-32 I.R.B.178
9455, 2009-33 I.R.B.239
9456, 2009-33 I.R.B.188
9463, 2009-40 I.R.B.442
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.
October 5, 2009ii2009–40 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2009–27 through 2009–40
Announcements:
2006-93
Superseded by
Ann. 2009-62, 2009-33 I.R.B.247
Notices:
2002-3
Modified and superseded by
Notice 2009-68, 2009-39 I.R.B.423
2004-67
Supplemented and superseded by
Notice 2009-59, 2009-31 I.R.B.170
2006-70
Obsoleted by
T.D. 9453, 2009-28 I.R.B.114
2006-109
Superseded in part by
Rev. Proc. 2009-32, 2009-28 I.R.B.142
2008-30
Amplified and clarified by
Notice 2009-75, 2009-39 I.R.B.436
2008-43
Obsoleted by
REG-113289-08, 2009-33 I.R.B.244
2009-28
Clarified by
Notice 2009-69, 2009-35 I.R.B.261
2009-31
Amplified by
Rev. Proc. 2009-43, 2009-40 I.R.B.460
2009-42
Amplified by
Rev. Proc. 2009-43, 2009-40 I.R.B.460
Revenue Procedures:
97-27
Clarified and modified by
Rev. Proc. 2009-39, 2009-38 I.R.B.371
97-49
Modified and superseded by
Rev. Proc. 2009-31, 2009-27 I.R.B.107
2002-44
Superseded by
Rev. Proc. 2009-44, 2009-40 I.R.B.462
2002-59
Superseded by
Rev. Proc. 2009-41, 2009-39 I.R.B.439
Revenue Procedures— Continued:
2005-63
Modified by
Rev. Proc. 2009-39, 2009-38 I.R.B.371
2007-44
Modified by
Rev. Proc. 2009-36, 2009-35 I.R.B.304
2007-65
Modified by
Ann. 2009-69, 2009-40 I.R.B.475
2008-38
Superseded by
Rev. Proc. 2009-30, 2009-27 I.R.B.27
2008-44
Superseded by
Rev. Proc. 2009-35, 2009-35 I.R.B.265
2008-52
Amplified, clarified, and modified by
Rev. Proc. 2009-39, 2009-38 I.R.B.371
2008-65
Modified by
Rev. Proc. 2009-33, 2009-29 I.R.B.150
2009-16
Modified by
Rev. Proc. 2009-33, 2009-29 I.R.B.150
2009-39
Modified by
Ann. 2009-67, 2009-38 I.R.B.388
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.
2009–40 I.R.B.iiiOctober 5, 2009

October 5, 20092009–40 I.R.B.

INTERNAL REVENUE BULLETIN
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Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superin-
tendent of Documents when their subscriptions must be renewed.
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