Internal Revenue Bulletin 2020-24 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 2020–24
June 8, 2020
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
REG-1243327-19, page 931.
These proposed regulations provide guidance regarding
allocation of the rehabilitation credit over a 5-year peri-
od, as the rehabilitation credit is no longer fully allowed
in the taxable year that a qualified rehabilitated building
is placed in service. These proposed regulations include
rules to coordinate with the other special rules for invest-
ment credit property. These proposed regulations affect
taxpayers that claim the rehabilitation credit.
Rev. Proc. 2020-32, page 930.
This revenue procedure provides the 2021 inflation adjust-
ed amounts for Health Savings Accounts as determined un-
der section 223 of the Internal Revenue Code.
Rev. Rul. 2020-12, page 928.
Federal rates; adjusted federal rates; adjusted federal long-
term rate, the long-term exempt rate, and the blended annu-
al rate. For purposes of sections 382, 1274, 1288, 7872
and other sections of the Code, tables set forth the rates
for June 2020.
Finding Lists begin on page ii.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing of-
ficial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
June 8, 2020 Bulletin No. 2020–24

Part I
Section 1274.—
Determination of Issue
Price in the Case of Certain
Debt Instruments Issued for
Property
(Also Sections 42, 280G, 382, 467, 468, 482, 483,
1288, 7520, 7872.)
Rev. Rul. 2020-12
This revenue ruling provides vari-
ous prescribed rates for federal income
tax purposes for June 2020 (the current
month). Table 1 contains the short-
term, mid-term, and long-term applica-
ble federal 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 feder-
al long-term rate and the long-term
tax-exempt rate described in section
382(f). Table 4 contains the appropri-
ate 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 appli-
cable percentage for non-federally sub-
sidized new buildings placed in service
after July 30, 2008, 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 remainder or
a reversionary interest for purposes of
section 7520.
REV. RUL. 2020-12 TABLE 1
Applicable Federal Rates (AFR) for June 2020
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR0.18%0.18%0.18%0.18%
110% AFR0.20%0.20%0.20%0.20%
120% AFR0.22%0.22%0.22%0.22%
130% AFR0.23%0.23%0.23%0.23%
Mid-term
AFR0.43%0.43%0.43%0.43%
110% AFR0.47%0.47%0.47%0.47%
120% AFR0.52%0.52%0.52%0.52%
130% AFR0.56%0.56%0.56%0.56%
150% AFR0.65%0.65%0.65%0.65%
175% AFR0.75%0.75%0.75%0.75%
Long-term
AFR1.01%1.01%1.01%1.01%
110% AFR1.11%1.11%1.11%1.11%
120% AFR1.21%1.21%1.21%1.21%
130% AFR1.31%1.31%1.31%1.31%
REV. RUL. 2020-12 TABLE 2
Adjusted AFR for June 2020
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted AFR0.14%0.14%0.14%0.14%
Mid-term adjusted AFR0.33%0.33%0.33%0.33%
Long-term adjusted AFR0.77%0.77%0.77%0.77%
June 8, 2020 928 Bulletin No. 2020–24

REV. RUL. 2020-12 TABLE 3
Rates Under Section 382 for June 2020
Adjusted federal long-term rate for the current month.77%
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.)
1.09%
REV. RUL. 2020-12 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for June 2020
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July
30, 2008, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit7.16%
Appropriate percentage for the 30% present value low-income housing credit 3.07%
REV. RUL. 2020-12 TABLE 5
Rate Under Section 7520 for June 2020
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 interest
.6%
Section 42.—Low-Income
Housing Credit
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
June 2020. See Rev. Rul. 2020-12, page 928.
Section 280G.—Golden
Parachute Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
June 2020. See Rev. Rul. 2020-12, page 928.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and
Certain Built-In Losses
Following Ownership
Change
The adjusted applicable federal long-term rate
is set forth for the month of June 2020. See Rev.
Rul. 2020-12, page 928.
Section 467.—Certain
Payments for the Use of
Property or Services
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
June 2020. See Rev. Rul. 2020-12, page 928.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The applicable federal short-term rates are set
forth for the month of June 2020. See Rev. Rul.
2020-12, page 928.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
June 2020. See Rev. Rul. 2020-12, page 928.

Section 483.—Interest on
Certain Deferred Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
June 2020. See Rev. Rul. 2020-12, page 928.
Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month of
June 2020. See Rev. Rul. 2020-12, page 928.
Section 7520.—Valuation
Tables
The applicable federal mid-term rates are set
forth for the month of June 2020. See Rev. Rul.
2020-12, page 928.
Section 7872.—Treatment
of Loans With Below-
Market Interest Rates
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
June 2020. See Rev. Rul. 2020-12, page 928.

Bulletin No. 2020–24 929 June 8, 2020

June 8, 2020 930 Bulletin No. 2020–24
Part III
26 CFR 601.602: Tax forms and instructions.
(Also Part 1, §§ 1, 223.)
Rev. Proc. 2020-32
SECTION 1. PURPOSE
This revenue procedure provides the
2021 inflation adjusted amounts for Health
Savings Accounts (HSAs) as determined
under § 223 of the Internal Revenue Code.
SECTION 2. 2021 INFLATION
ADJUSTED ITEMS
Annual contribution limitation. For
calendar year 2021, the annual limita-
tion on deductions under § 223(b)(2)(A)
for an individual with self-only cover-
age under a high deductible health plan
is $3,600. For calendar year 2021, the
annual limitation on deductions under
§ 223(b)(2)(B) for an individual with
family coverage under a high deductible
health plan is $7,200.
High deductible health plan. For calen-
dar year 2021, a “high deductible health
plan” is defined under § 223(c)(2)(A) as a
health plan with an annual deductible that
is not less than $1,400 for self-only cover-
age or $2,800 for family coverage, and the
annual out-of-pocket expenses (deduct-
ibles, co-payments, and other amounts,
but not premiums) do not exceed $7,000
for self-only coverage or $14,000 for fam-
ily coverage.
SECTION 3. EFFECTIVE DATE
This revenue procedure is effective for
calendar year 2021.
SECTION 4. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Bill Ruane of the Office of
Associate Chief Counsel (Income Tax
& Accounting). For further information
regarding § 223 of the Code and HSAs,
contact William Fischer at (202) 317-5500
(not a toll-free number). For further infor-
mation regarding the calculation of the
inflation adjustments in this revenue pro-
cedure, contact Mr. Ruane at (202) 317-
4718 (not a toll-free number).

Bulletin No. 2020–24 931 June 8, 2020
Part IV
Notice of proposed
rulemaking
Rehabilitation Credit
Allocated over a 5-Year
Period
REG-124327-19
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking.
SUMMARY: This document contains
proposed regulations concerning the reha-
bilitation credit, including rules to coordi-
nate the new 5-year period over which the
credit may be claimed with other special
rules for investment credit property. These
proposed regulations affect taxpayers that
claim the rehabilitation credit.
DATES: Written or electronic comments
and requests for a public hearing must be
received by July 21, 2020. Requests for a
public hearing must be submitted as pre-
scribed in the “Comments and Requests
for a Public Hearing” section.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submis-
sions via the Federal eRulemaking Portal
at www.regulations.gov (indicate IRS and
REG-124327-19) by following the online
instructions for submitting comments.
Once submitted to the Federal eRulemak-
ing Portal, comments cannot be edited
or withdrawn. The IRS expects to have
limited personnel available to process
public comments that are submitted on
paper through mail. Until further notice,
any comments submitted on paper will
be considered to the extent practicable.
The Department of the Treasury (Trea-
sury Department) and the IRS will pub-
lish for public availability any comment
submitted electronically, and to the extent
practicable on paper, to its public docket.
Send paper submissions to: CC:PA:LP-
D:PR (REG-124327-19), room 5203,
Internal Revenue Service, PO Box 7604,
Ben Franklin Station, Washington, D.C.
20044.
FOR FURTHER INFORMATION CON-
TACT: Concerning the proposed regu-
lations, call Barbara J. Campbell, (202)
317-4137; concerning submissions of
comments and requests for a public hear-
ing, call Regina Johnson, (202) 317-5177
(not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed
amendments to Title 26 part 1 under
section 47 of the Internal Revenue Code
(Code). The rehabilitation credit under
section 47 is listed as an investment cred-
it under section 46, and the investment
credit under section 46 is a current year
general business credit under section 38.
On December 22, 2017, section 47 was
amended by section 13402 of Public Law
No. 115-97, 131 Stat. 2054 (2017), com-
monly referred to as the Tax Cuts and Jobs
Act (TCJA).
Prior to the TCJA, former section 47(a)
provided a two-tier credit for qualified
rehabilitation expenditures (QREs) in-
curred in connection with the rehabilita-
tion of a qualified rehabilitated building
(QRB). Former section 47(a)(2) allowed
a 20-percent credit for QREs with respect
to a certified historic structure, and for-
mer section 47(a)(1) allowed a 10-percent
credit for QREs with respect to a QRB
other than a certified historic structure (for
certain buildings first placed in service
before 1936 (pre-1936 buildings)). Under
former section 47, both the 20-percent and
10-percent credits were fully allowed in
the taxable year the QRB was placed in
service.
Section 13402(a) of the TCJA repealed
the 10-percent credit for pre-1936 build-
ings and modified the rules for claiming
the 20-percent credit for certified histor-
ic structures. Section 13402(c)(1) of the
TCJA provides that these amendments
are generally applicable to QRE amounts
paid or incurred after December 31, 2017,
subject to a transition rule provided in
section 13402(c)(2) of the TCJA. This
statutory transition rule provides that in
the case of QREs (for either a certified
historic structure eligible for a 20-percent
credit or a pre-1936 building eligible for
a 10-percent credit prior to December 31,
2017), with respect to any building owned
or leased (as provided under present law)
by the taxpayer at all times on and after
January 1, 2018, the 24-month period se-
lected by the taxpayer (section 47(c)(1)
(B)(i), as amended by section 13402(b)),
or the 60-month period selected by the
taxpayer under the rule for phased re-
habilitation (section 47(c)(1)(B)(ii), as
amended by section 13402(b)), is to begin
not later than the end of the 180-day peri-
od beginning on December 22, 2017, and
the amendments made by section 13402
of the TCJA apply to such QREs paid or
incurred after the end of the taxable year
in which such 24-month or 60-month pe-
riod ends.
As amended by the TCJA, sec-
tion 47(a)(1) provides that for purposes of
the investment credit under section 46, for
any taxable year during the 5-year period
beginning in the taxable year in which a
QRB is placed in service, the rehabil-
itation credit for such taxable year is an
amount equal to the ratable share for the
year. Also, as amended by the TCJA, sec-
tion 47(a)(2) defines the ratable share for
any taxable year during the credit period
as the amount equal to 20 percent of the
QREs with respect to the QRB, as allocat-
ed ratably to each year during the credit
period. Section 47(b)(1), which the TCJA
did not amend, provides that QREs with
respect to any QRB are taken into account
for the taxable year in which the QRB is
placed in service.
Explanation of Provisions
I. Overview
As noted in the Background, the reha-
bilitation credit is no longer fully allowed
in the taxable year the QRB is placed in
service. Instead, the rehabilitation credit
must be claimed ratably over the 5-year
period beginning in the taxable year in

June 8, 2020 932 Bulletin No. 2020–24
which a QRB is placed in service. The
Treasury Department and the IRS are
aware that taxpayers and practitioners
have questioned how the 5-year period
impacts taxpayers claiming the rehabil-
itation credit, including how to apply
the special rules of section 50 relating to
recapture, basis adjustment, and leased
property. In particular, practitioners have
questioned whether the rehabilitation
credit is determined in the year the QRB
is placed in service and allocated ratably
over the 5-year period, or whether five
separate rehabilitation credits are deter-
mined during each year of the 5-year pe-
riod.
As explained in Part II of this Ex-
planation of Provisions, these proposed
regulations provide that the rehabilita-
tion credit is properly determined in the
year the QRB is placed in service (con-
sistent with prior law) but allocated rat-
ably over the 5-year period as required
by the TCJA, rather than resulting in the
determination of five separate rehabili-
tation credits. Similarly, as explained in
Part III of this Explanation of Provisions,
these proposed regulations follow this
same prior law approach for the deter-
mination of a single rehabilitation cred-
it for purposes of applying the rules of
section 50. Therefore, taxpayers claiming
the rehabilitation credit under section 47
with respect to QREs paid or incurred
after December 31, 2017, generally will
have the same Federal income tax con-
sequences from the rules under section
50 for recapture, basis adjustment, and
leased property as taxpayers claiming the
rehabilitation credit under prior law.
The proposed regulations add §1.47-
7(a) through (e) and include: a gener-
al rule for calculating the rehabilitation
credit; definitions of ratable share and
rehabilitation credit determined; and
a rule coordinating the changes to sec-
tion 47 with the special rules in section
50. The proposed regulations also con-
tain examples, including examples illus-
trating the interaction of section 47 with
rules in section 50(a) (recapture in case
of dispositions, etc.), section 50(c) (ba-
sis adjustment to investment credit prop-
erty), and section 50(d)(5) (relating to
certain leased property when the lessee is
treated as owner and subject to an income
inclusion requirement).
II. Proposed §1.47-7(a), (b), and (c):
Rehabilitation credit allocated over a
5-year period
Consistent with section 47(a)(1), pro-
posed §1.47-7(a) provides a general rule
that, for purposes of the investment cred-
it under section 46, for any taxable year
during the 5-year period the rehabilitation
credit for the year is the ratable share.
Proposed §1.47-7(b) generally fol-
lows the definition of ratable share in sec-
tion 47(a)(2) but, for clarification, replac-
es “QREs” with the term “rehabilitation
credit determined” as defined in proposed
§1.47-7(c). Specifically, proposed §1.47-
7(b) defines the term ratable share as the
amount equal to 20 percent of the rehabili-
tation credit determined with respect to the
QRB, as allocated ratably to each taxable
year during the 5-year credit period. Pro-
posed §1.47-7(c) defines the term rehabil-
itation credit determined as the amount
equal to 20 percent of the QREs, as de-
fined in section 47(c)(2) and §1.48-12(c)
of the Income Tax Regulations, taken into
account under section 47(b)(1) for the tax-
able year in which the QRB is placed in
service. However, if the taxpayer claims
the additional first year depreciation for
the QREs pursuant to §1.168(k)-2(g)(9),
proposed §1.47-7(c) defines the rehabil-
itation credit determined as the amount
equal to 20 percent of the remaining re-
habilitated basis, as defined in §1.168(k)-
2(g)(9)(i)(B), of the QRB for the taxable
year in which such building is placed in
service. Proposed §1.47-7(c) is included
to clarify that the rehabilitation credit is
determined in the year the QRB is placed
in service and allocated ratably over the
5-year period under proposed §1.47-7(b).
Determining the total amount of the
credit in the first year the QRB is placed
in service and allocating the credit over
the 5-year period is consistent with the
text of the statute, as well as the intent
of Congress, because the determination
does not change the total amount of re-
habilitation credit over the 5-year period
or the amount of rehabilitation credit for
purposes of section 46 in any individual
year of the 5-year period. The plain lan-
guage in section 47(a)(1), (a)(2), and (b)
(1) makes clear that one rehabilitation
credit is allocated ratably over a 5-year
period. First, section 47(a)(1) and (a)(2)
effectively allocate the 20-percent re-
habilitation credit over a 5-year period.
Second, section 47(b)(1) requires that
QREs are taken into account in the tax-
able year the QRB is placed in service,
which is the first year in the 5-year pe-
riod. Because QREs are taken into ac-
count in the first taxable year the QRB
is placed in service under section 47(b)
(1), the rehabilitation credit for a QRB
is effectively fixed, or determined, as of
that first year. In sum, the overall struc-
ture of section 47(a) and (b)(1) functions
to allocate the rehabilitation credit that is
determined in the taxable year the QRB
is placed in service over a 5-year period
for each of those taxable years, rather
than creating five separate rehabilitation
credits for a single QRB.
Further, this reading of the statutory
text is consistent with the conference re-
port accompanying the TCJA (H.R. Rept.
No. 466, 115th Cong.435-436 (2017))
(Conference Report) and the Joint Com-
mittee on Taxation’s General Explana-
tion of Public Law 115-97, 210 (Staff of
the Joint Committee on Taxation, 115th
Cong., General Explanation of Public
Law 115-97 (Comm. Print 2018) (Blue-
book)). The Conference Report states that
Congress “intended that the sum of the
ratable shares for the taxable years during
the five-year period does not exceed 100
percent of the credit for qualified reha-
bilitation expenditures for the qualified
rehabilitated building.” See Conference
Report, at 435-436; Bluebook, at 210.
By determining the rehabilitation credit
based on 100 percent of the QREs in the
year QREs are taken into account under
section 47(b)(1), that is, the year in which
the QRB is placed in service, and ratably
allocating the amount determined over the
5-year period, the proposed regulations
ensure that the sum of the ratable shares
will never violate Congressional intent.
Comments are requested with respect to
any specific concerns taxpayers may have
with this plain reading of the operative
statutory text.
III. Proposed §1.47-7(d) and (e):
Coordination with section 50 and
examples
Proposed §1.47-7(d) describes the co-
ordination with the special rules of section

Bulletin No. 2020–24 933 June 8, 2020
50 and makes clear that, for purposes of
applying the rules in section 50, the full
rehabilitation credit amount is determined
in the first year of the 5-year period, and
then allocated ratably over that 5-year pe-
riod. Determining the credit in the same
manner for purposes of sections 47 and 50
provides certainty and reduces the com-
plexity under section 50 that would result
if taxpayers were required to determine
five separate rehabilitation credits. For ex-
ample, if five separate rehabilitation cred-
its were determined, then there would be
five separate recapture periods under sec-
tion 50(a) with respect to a single QRB.
This would increase the length of the
recapture period and increase the recap-
ture amount as compared to results under
section 50(a) prior to the TCJA changes
to section 47. The proposed regulations
ensure that this is not the result under sec-
tion 50.
Moreover, in coordinating the rules
between sections 47 and 50, the Treasury
Department and the IRS considered the
fact that that there is no indication that, in
changing section 47, Congress intended
to modify the application of section 50.
The Conference Report and the Bluebook
explain that the TCJA’s amendments to
section 47 retain the 20-percent credit for
QREs with respect to a certified historic
structure while extending the credit period
from one year to five years, but nowhere
in the Conference Report or the Bluebook
is there any suggestion that the results
for taxpayers claiming the rehabilitation
credit under the rules of section 50 were
intended to be different. See Conference
Report, at 435-436; Bluebook, at 210. Fur-
ther, the TCJA made no changes to section
50. Accordingly, the proposed regulations
generally place taxpayers claiming the
rehabilitation credit after the TCJA in the
same position with respect to the rules of
section 50 as taxpayers prior to the TCJA.
Comments are requested with respect to
any specific concerns taxpayers may have
with this plain reading of the operative
statutory text.
Proposed §1.47-7(e) provides exam-
ples that illustrate these rules with respect
to the most relevant fact patterns. In ad-
dition to examples that show the general
calculation for claiming the rehabilitation
credit, proposed §1.47-7(e) demonstrates
the interaction with section 50(a) (recap-
ture in case of dispositions, etc.), sec-
tion 50(c) (basis adjustment to investment
credit property), and two examples to il-
lustrate interaction with section 50(d)(5)
(relating to certain leased property when
the lessee is treated as owner and subject
to an income inclusion requirement). The
first example illustrating the interaction
with section 50(d)(5) describes a transac-
tion in which the lessee is a corporation,
and in the second example the lessee is a
partnership that is subject to special rules
under §1.50-1(b)(3)(i).
The Treasury Department and the IRS
request comments on these examples and
whether any additional examples illustrat-
ing the coordination of section 47 with
other provisions of the Code and regu-
lations are necessary. The Treasury De-
partment and the IRS are aware that other
provisions of the Code and regulations
require computations that are impacted
by the amount of the rehabilitation cred-
it determined with respect to a QRB and
the adjusted basis of a QRB. The Trea-
sury Department and the IRS also request
comments regarding whether special rules
are needed to address how the amount of
the rehabilitation credit determined and
the adjusted basis of a QRB interact with
those other provisions of the Code and
regulations.
Proposed Applicability Date
These regulations are proposed to ap-
ply to taxable years beginning on or after
the date the Treasury decision adopting
these regulations as final regulations is
published in the Federal Register. Tax-
payers may rely on these proposed reg-
ulations for QREs paid or incurred after
December 31, 2017, in taxable years be-
ginning before the date the Treasury de-
cision adopting these regulations as final
regulations is published in the Federal
Register, provided the taxpayers follow
the proposed regulations in their entirety
and in a consistent manner.
Special Analyses
This regulation is not subject to review
under section 6(b) of Executive Order
12866 pursuant to the Memorandum of
Agreement (April 11, 2018) between the
Treasury Department and the Office of
Management and Budget regarding re-
view of tax regulations.
In accordance with the Regulatory
Flexibility Act (5 U.S.C. chapter 6), it is
hereby certified that these proposed reg-
ulations will not have a significant eco-
nomic impact on a substantial number
of small entities. Although the rules may
affect small entities, data are not readily
available about the number of taxpayers
affected. The economic impact of these
regulations is not likely to be significant,
however, because these proposed regula-
tions substantially incorporate statutory
changes made to section 47 by the TCJA
that have been effective for QREs paid or
incurred after December 31, 2017. The
proposed regulations will assist taxpayers
in understanding the changes to section 47
and make it easier for taxpayers to comply
with those changes and section 50, which
was not changed by the TCJA. Notwith-
standing this certification, the Treasury
Department and the IRS welcome com-
ments on the impact of these regulations
on small entities.
Pursuant to section 7805(f) of the In-
ternal Revenue Code, these regulations
will be submitted to the Chief Counsel for
Advocacy of the Small Business Admin-
istration for comment on their impact on
small business.
Comments and Public Hearing
Before these proposed amendments
to the regulations are adopted as final
regulations, consideration will be given
to comments that are submitted timely
to the IRS as prescribed in the preamble
under the “ADDRESSES” section. The
Treasury Department and the IRS request
comments on all aspects of the proposed
regulations. Any electronic comments
submitted, and to the extent practicable
any paper comments submitted, will be
made available at www.regulations.gov or
upon request.
A public hearing will be scheduled if
requested in writing by any person who
timely submits electronic or written com-
ments. Requests for a public hearing are
also encouraged to be made electronically.
If a public hearing is scheduled, notice of
the date and time for the public hearing
will be published in the Federal Regis-
ter. Announcement 2020-4, 2020-17 IRB

June 8, 2020 934 Bulletin No. 2020–24
1, provides that until further notice, pub-
lic hearings conducted by the IRS will be
held telephonically. Any telephonic hear-
ing will be made accessible to people with
disabilities.
Drafting Information
The principal author of these pro-
posed regulations is Barbara J. Campbell,
Office of the Associate Chief Counsel
(Passthroughs and Special Industries),
IRS. However, other personnel from the
Treasury Department and the IRS partic-
ipated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is pro-
posed to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.47-7 is added to read
as follows:
§1.47-7 Rehabilitation credit allocated
over a 5-year period.
(a) In general. For purposes of sec-
tion 46, for any taxable year during the
5-year period beginning in the taxable
year in which a qualified rehabilitated
building, as defined in section 47(c)(1)
and §1.48-12(b), is placed in service, the
rehabilitation credit for the taxable year
is an amount equal to the ratable share
for the taxable year, provided the require-
ments of section 47 are satisfied. Except
as provided by section 13402(c)(2) of
Public Law No. 115-97, 131 Stat. 2054
(2017), this section applies with respect
to qualified rehabilitation expenditures,
as defined in section 47(c)(2) and §1.48-
12(c), paid or incurred after December
31, 2017.
(b) Ratable share. For purposes of
paragraph (a) of this section, the term
ratable share means, for any taxable year
during the 5-year period described in such
paragraph, the amount equal to 20 percent
of the rehabilitation credit determined
with respect to the qualified rehabilitated
building, allocated ratably to each year
during such period.
(c) Rehabilitation credit determined.
The term rehabilitation credit determined
means the amount equal to 20 percent
of the qualified rehabilitation expendi-
tures, as defined in section 47(c)(2) and
§1.48-12(c), taken into account under
section 47(b)(1) for the taxable year in
which the qualified rehabilitated building
is placed in service. However, if the tax-
payer claims the additional first year de-
preciation for the qualified rehabilitation
expenditures pursuant to §1.168(k)-2(g)
(9), the term rehabilitation credit deter-
mined means the amount equal to 20 per-
cent of the remaining rehabilitated basis,
as defined in §1.168(k)-2(g)(9)(i)(B), of
the qualified rehabilitated building for
the taxable year in which such building is
placed in service.
(d) Coordination with section 50. For
purposes of section 50 and §1.50-1, the
amount of the rehabilitation credit deter-
mined is the amount defined in paragraph
(c) of this section.
(e) Examples. The provisions of para-
graphs (a) through (d) of this section are
illustrated by the following examples.
Assume that the additional first year de-
preciation deduction provided by section
168(k) is not allowed or allowable for the
qualified rehabilitation expenditures.
(1) Example 1: Rehabilitation Credit Determined
and Ratable Share. Between February 1, 2021 and
October 1, 2021, X, a calendar year C corporation,
incurred qualified rehabilitation expenditures of
$200,000 with respect to a qualified rehabilitated
building. X placed the building in service on Octo-
ber 15, 2021. X’s rehabilitation credit determined in
2021 under paragraph (c) of this section is $40,000
($200,000 x 0.20). For purposes of section 46, for
each taxable year during the 5-year period beginning
in 2021, the ratable share allocated under paragraph
(b) of this section for the year is $8,000 ($40,000 x
0.20).
(2) Example 2: Coordination with section 50(c).
The facts are the same as in paragraph (e)(1) of this
section (Example 1). For purposes of determining
the amount of X’s basis adjustment in 2021 under
section 50(c), the amount of the rehabilitation cred-
it determined under paragraph (c) of this section is
$40,000.
(3) Example 3: Coordination with section 50(a).
The facts are the same as in paragraph (e)(1) of this
section (Example 1). In 2021 and 2022, X claimed
the full amount of the ratable share allowed under
section 46, or $8,000 per taxable year. X’s total
allowable ratable share for 2023 through 2025 is
$24,000 ($8,000 allowable per taxable year). On
November 1, 2023, X disposes of the qualified re-
habilitated building. Under section 50(a)(1)(B)(iii),
because the period of time between when the qual-
ified rehabilitated building was placed in service is
more than two, but less than 3 full years, the appli-
cable recapture percentage is 60%. Based on these
facts, X has an increase in tax of $9,600 under sec-
tion 50(a) ($16,000 of credit claimed in 2021 and
2022 x 0.60) and has $3,200 of credits remaining in
each of 2023 through 2025, after forgoing $4,800
in credits in each of the years 2023 through 2025
($8,000 x 0.60).
(4) Example 4: Coordination with section 50(d)
(5) and §1.50-1; C corporation lessee. X, a calendar
year C corporation, leases nonresidential real prop-
erty from Y. The property is a qualified rehabilitat-
ed building that is placed in service on October 15,
2021. Under paragraph (c) of this section, the amount
of the rehabilitation credit determined is $100,000. Y
elects under §1.48-4 to treat X as having acquired
the property. The shortest recovery period that could
be available to the property under section 168 is 39
years. Because Y has elected to treat X as having ac-
quired the property, Y does not reduce its basis in
the property under section 50(c). Instead, pursuant
to section 50(d)(5) and §1.50-1, X, the lessee of the
property, must include ratably in gross income over
39 years an amount equal to the rehabilitation credit
determined with respect to such property.
(5) Example 5: Coordination with section 50(d)
(5) and §1.50-1; partnership lessee. A and B, calen-
dar year taxpayers, form a partnership, the AB part-
nership, that leases nonresidential real property from
Y. The property is a qualified rehabilitated building
that is placed in service on October 15, 2021. Under
paragraph (c) of this section, the amount of the re-
habilitation credit determined is $200,000. Y elects
under §1.48-4 to treat the AB partnership as having
acquired the property. The shortest recovery period
that could be available to the property under section
168 is 39 years. Because Y has elected to treat the
AB partnership as having acquired the property, Y
does not reduce its basis in the building under section
50(c). Instead, A and B, the ultimate credit claim-
ants, as defined in §1.50-1(b)(3)(ii), must include the
amount of the rehabilitation credit determined under
paragraph (c) of this section with respect to A and B
ratably in gross income over 39 years, the shortest
recovery period available with respect to such prop-
erty.
(f) Applicability date. These regula-
tions are proposed to apply to taxable
years beginning on or after the date the
Treasury decision adopting these regula-
tions as final regulations is published in
the Federal Register.
Sunita Lough
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register on May
21, 2020, 8:45 a.m., and published in the issue of the
Federal Register for May 22, 2020, 85 F.R. 31096)

Bulletin No. 2020–24 i June 8, 2020
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion. It
is not used where a position in a prior rul-
ing is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previous-
ly published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cas-
es in litigation, or the outcome of a Ser-
vice study.
Abbreviations
The following abbreviations in current use
and formerly used will appear in material
published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

June 8, 2020 ii Bulletin No. 2020–24
Numerical Finding List
1
Bulletin 2020–24
AOD:
2020-1, 2020-12 I.R.B. 521
2020-2, 2020-14 I.R.B. 558
2020-3, 2020-17 I.R.B. 663
Announcements:
2020-1, 2020-5 I.R.B. 552
2020-2, 2020-15 I.R.B. 609
2020-3, 2020-15 I.R.B. 655
2020-4, 2020-17 I.R.B. 667
2020-5, 2020-19 I.R.B. 796
2020-6, 2020-23 I.R.B. 911
Notices:
2020-1, 2020-2 I.R.B. 290
2020-2, 2020-3 I.R.B. 327
2020-3, 2020-3 I.R.B. 330
2020-4, 2020-4 I.R.B. 380
2020-5, 2020-4 I.R.B. 380
2020-6, 2020-7 I.R.B. 411
2020-7, 2020-7 I.R.B. 411
2020-8, 2020-7 I.R.B. 415
2020-9, 2020-7 I.R.B. 417
2020-10, 2020-10 I.R.B. 456
2020-11, 2020-11 I.R.B. 492
2020-12, 2020-11 I.R.B. 495
2020-13, 2020-11 I.R.B. 502
2020-14, 2020-13 I.R.B. 555
2020-15, 2020-14 I.R.B. 559
2020-16, 2020-14 I.R.B. 559
2020-17, 2020-15 I.R.B. 590
2020-18, 2020-15 I.R.B. 590
2020-19, 2020-15 I.R.B. 591
2020-20, 2020-16 I.R.B. 660
2020-21, 2020-16 I.R.B. 660
2020-22, 2020-17 I.R.B. 664
2020-23, 2020-18 I.R.B. 742
2020-26, 2020-18 I.R.B. 744
2020-27, 2020-19 I.R.B. 778
2020-28, 2020-19 I.R.B. 781
2020-30, 2020-19 I.R.B. 781
2020-31, 2020-19 I.R.B. 783
2020-32, 2020-21 I.R.B. 837
2020-34, 2020-21 I.R.B. 838
2020-36, 2020-21 I.R.B. 840
2020-25, 2020-22 I.R.B. 863
2020-29, 2020-22 I.R.B. 864
2020-33, 2020-22 I.R.B. 868
2020-37, 2020-23 I.R.B. 900
2020-38, 2020-23 I.R.B. 903
Proposed Regulations:
REG-107431-19, 2020-3 I.R.B. 332
REG-122180-18, 2020-3 I.R.B. 342
REG-100956-19, 2020-4 I.R.B. 383
REG-125710-18, 2020-5 I.R.B. 554
REG-132741-17, 2020-10 I.R.B. 458
REG-100814-19, 2020-12 I.R.B. 542
REG-132529-17, 2020-12 I.R.B. 667
REG-106013-19, 2020-18 I.R.B. 757
REG-117138-17, 2020-19 I.R.B. 796
REG-106864-18, 2020-20 I.R.B. 805
REG-113295-18, 2020-22 I.R.B. 875
REG-104591-18, 2020-23 I.R.B. 911
Revenue Procedures:
2020-1, 2020-01 I.R.B. 1
2020-2, 2020-01 I.R.B. 107
2020-3, 2020-01 I.R.B. 131
2020-4, 2020-01 I.R.B. 148
2020-5, 2020-01 I.R.B. 241
2020-7, 2020-01 I.R.B. 281
2020-9, 2020-02 I.R.B. 294
2020-10, 2020-02 I.R.B. 295
2020-11, 2020-06 I.R.B. 406
2020-8, 2020-08 I.R.B. 447
2020-12, 2020-11 I.R.B. 511
2020-13, 2020-11 I.R.B. 515
2020-17, 2020-12 I.R.B. 539
2020-18, 2020-15 I.R.B. 592
2020-14, 2020-16 I.R.B. 661
2020-22, 2020-18 I.R.B. 745
2020-23, 2020-18 I.R.B. 749
2020-24, 2020-18 I.R.B. 750
2020-26, 2020-18 I.R.B. 753
2020-25, 2020-19 I.R.B. 785
2020-28, 2020-19 I.R.B. 792
2020-20, 2020-20 I.R.B. 801
2020-27, 2020-20 I.R.B. 803
2020-29, 2020-21 I.R.B. 859
2020-19, 2020-22 I.R.B. 871
2020-21, 2020-22 I.R.B. 872
2020-30, 2020-22 I.R.B. 873
2020-15, 2020-23 I.R.B. 905
Revenue Rulings:
2020-1, 2020-3 I.R.B. 296
2020-2, 2020-3 I.R.B. 298
2020-3, 2020-3 I.R.B. 409
2020-4, 2020-4 I.R.B. 444
2020-5, 2020-5 I.R.B. 454
2020-6, 2020-11 I.R.B. 490
2020-7, 2020-12 I.R.B. 522
2020-9, 2020-15 I.R.B. 563
2020-10, 2020-15 I.R.B. 565
Revenue Rulings:—Continued
2020-8, 2020-19 I.R.B. 775
2020-11, 2020-19 I.R.B. 776
Treasury Decisions:
9886, 2020-2 I.R.B. 285
9887, 2020-3 I.R.B. 302
9888, 2020-3 I.R.B. 306
9891, 2020-8 I.R.B. 419
9892, 2020-8 I.R.B. 439
9893, 2020-9 I.R.B. 449
9895, 2020-15 I.R.B. 565
9896, 2020-18 I.R.B. 681
9897, 2020-23 I.R.B. 882
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2018–27 through 2018–52 is in Internal Revenue Bulletin
2018–52, dated December 27, 2018.

Bulletin No. 2020–24 iii June 8, 2020
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2020–24
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2018–27 through 2018–52 is in Internal Revenue Bulletin
2018–52, dated December 27, 2018.

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