Source: https://www.irs.gov/irb/2018-09_IRB
Timestamp: 2019-04-24 20:21:58+00:00

Document:
This revenue procedure provides guidance to the Chief Executive Officers (CEOs) of any State, about how certain population census tracts may be designated as Qualified Opportunity Zones for purposes of §§ 1400Z–1 and 1400Z–2 of the Internal Revenue Code. Specifically, this revenue procedure clarifies the nomination process under § 1400Z–1 by informing the CEOs of each State which census tracts in their jurisdictions are eligible to be nominated to be Qualified Opportunity Zones and by providing the requirements and due dates for the nomination, certification, and designation of the zones. Additionally, this revenue procedure provides a safe harbor for applying the 25 percent limitation to the number of population census tracts in a state that may be designated as Qualified Opportunity Zones.
The IRS generally will not require a new exemption application from a domestic section 501(c) organization that changes its form or place of organization. Rev. Rul. 67–390 and Rev. Rul. 77–469 are obsoleted.
This Notice withdraws the solicitations in Notice 2015–12, 2015–10 I.R.B. 700, and Notice 2017–66, 2017–45 I.R.B. 487, for applications for the remaining unused national limitation of authority to issue new clean renewable energy bonds (New CREBs) under § 54C of the Internal Revenue Code (the Code). Section 54C of the Code was repealed by section 13404 of Public Law No. 115–97, 131 Stat 2138 (2017) (Public Law No. 115–97), effective for bonds issued after December 31, 2017.
In response to the devastation caused by Hurricane Maria to the Commonwealth of Puerto Rico, this notice expands the relief provided in Rev. Proc. 2014–49, 2014–37 I.R.B. 535, and Rev. Proc. 2014–50, 2014–37 I.R.B. 540. The expanded relief in this notice is limited to the Hurricane Maria PR Major Disaster (as defined in the notice). This notice also solicits public comment regarding any desirable amendments to Rev. Proc. 2014–49 and Rev. Proc. 2014–50.
This procedure modifies Rev. Proc. 2017–60, 2017–50 I.R.B. 559, to extend the time under the safe harbor for an individual to pay to repair damage to his or her personal residence resulting from deteriorating concrete foundations containing the mineral pyrrhotite.
This revenue procedure amends Rev. Proc. 2002–39, 2002–22 I.R.B. 1046, and Rev. Proc. 2006–45, 2006–45 I.R.B. 451, so as to prohibit specified foreign corporations (for purposes of section 965) with taxable years that end on December 31, 2017 from changing their annual accounting periods.
Section 54C of the Code authorized the issuance of up to $2.4 billion (volume cap) of New CREBs for qualified renewable energy facilities (as defined in § 54C(d)(1)) (projects). Section 54C(c)(2) provided that up to 1/3 of the volume cap is to be allocated to projects to be owned by public power providers, governmental bodies, and cooperative electric companies, respectively.
Notice 2015–12 solicits applications for allocations of the remaining available volume cap of New CREBs for projects to be owned by public power providers, governmental bodies, and cooperative electric companies. Section 4.c. of Notice 2015–12 provides that applications for projects to be owned by governmental bodies or cooperative electric companies may be submitted beginning on March 5, 2015. Section 5.a.(ii) of Notice 2015–12 provides that, except as otherwise provided by section 5 of Notice 2015–12, the Internal Revenue Service (IRS) will allocate the remaining available volume cap designated for projects to be owned by governmental bodies or cooperative electric companies, respectively, on a first-come, first-served basis by order of submission date (as defined in section 4.a. of Notice 2015–12). Notice 2015–12 provides no deadline for applications for projects to be owned by governmental bodies or cooperative electric companies. Under section 4.b. of Notice 2015–12, the deadline for applications for projects to be owned by public power providers is June 3, 2015.
The IRS later identified $379,549,691.35 of remaining available volume cap designated for projects to be owned by public power providers. Notice 2017–66 solicits applications from qualified issuers of New CREBs for projects to be owned by public power providers, and sets forth June 19, 2018, as the due date for submitting applications. See Section 3 of Notice 2017–66.
Section 13404(a) of Public Law No. 115–97 provides, in part, that part IV of subchapter A of chapter 1 of the Code is amended by striking subpart I, which contained § 54C of the Code. Section 13404(d) of Public Law No. 115–97 provides that the amendments made by section 13404 shall apply to bonds issued after December 31, 2017. Accordingly, no bond issued after December 31, 2017, under any allocation of volume cap issued by the IRS under Notice 2015–12, may be treated as a New CREB. In addition, the IRS will not be processing applications for, or issuing allocations of, New CREBs volume cap under Notice 2015–12 or Notice 2017–66.
This Notice obsoletes Notice 2015–12 in part by withdrawing the solicitation of applications for, and discontinuing the allocation of, New CREBs volume cap under sections 3, 4, and 5 of Notice 2015–12. All other provisions of Notice 2015–12 remain in effect for bonds issued on or prior to December 31, 2017.
This Notice obsoletes Notice 2017–66.
The principal author of this Notice is Zoran Stojanovic of the Office of Associate Chief Counsel (Financial Institutions and Products). For further information regarding this Notice, contact Mr. Stojanovic at 202-317-6980 (not a toll-free number).
In response to the devastation caused by Hurricane Maria to the Commonwealth of Puerto Rico (hereinafter, Puerto Rico), this notice expands the relief that is provided in Rev. Proc. 2014–49, 2014–37 I.R.B. 535, and Rev. Proc. 2014–50, 2014–37 I.R.B. 540. The expanded relief in this notice is limited to the Hurricane Maria PR Major Disaster, as defined below. Except as expressly provided in this notice, all provisions of Rev. Procs. 2014–49 and 2014–50 apply to the Hurricane Maria PR Major Disaster without modification.
This notice also solicits public comment regarding any desirable modifications to Rev. Procs. 2014–49 and 2014–50.
Rev. Procs. 2014–49 and 2014–50 provide temporary relief from certain requirements of §§ 42 and 142(d) of the Internal Revenue Code in the context of a major disaster. Rev. Proc. 2014–49 provides guidance and relief to the owners of qualified low-income housing projects (each such project, a § 42 Project) and to Agencies (as defined in section 5.01 of Rev. Proc. 2014–49) that are responsible for those § 42 Projects. Rev. Proc. 2014–50 provides guidance to issuers of exempt facility bonds financing qualified residential rental projects under § 142(d) (each such issuer, an Issuer; each such project, a § 142(d) Project) and to operators of those § 142(d) Projects. Various aspects of these revenue procedures apply with respect to § 42 Projects and § 142(d) Projects both inside and outside of the area in which the major disaster occurs.
Sections 12 through 14 of Rev. Proc. 2014–49 and sections 5 through 7 of Rev. Proc. 2014–50 facilitate emergency housing relief for Displaced Individuals (as defined in section 5.02 of Rev. Proc. 2014–49 and in section 4.02 of Rev. Proc. 2014–50). To achieve this end, these sections give owners of § 42 Projects and operators of § 142(d) Projects the option to apply certain modifications to the rules of §§ 42 and 142(d), provided that the relevant Agency or Issuer authorizes the owner or operator to do so. Among these modifications is the ability to disregard the actual income of a Displaced Individual housed in a § 42 Project or a § 142(d) Project, even if the Displaced Individual’s income exceeds the limitations on income provided in §§ 42 or 142(d). The option to apply these modified rules is limited to a period defined in the revenue procedures as the Temporary Housing Period. See section 5.08 of Rev. Proc. 2014–49 and section 4.13 of Rev. Proc. 2014–50. The Temporary Housing Period begins on the first day of the incident period, as determined by the Federal Emergency Management Agency (FEMA), and ends on a date determined by the Agency or Issuer. Both revenue procedures provide a date beyond which the Temporary Housing Period may not extend. See section 12.02(1) of Rev. Proc. 2014–49 and section 5.02(1) of Rev. Proc. 2014–50.
On September 20, 2017, the President of the United States issued major disaster and emergency declarations with respect to Hurricane Maria under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. §§ 5121–5206 (the Stafford Act), and FEMA determined certain areas within Puerto Rico to be eligible for Public Assistance or Public Assistance and Individual Assistance under the Stafford Act (the Hurricane Maria PR Major Disaster). See 82 Fed. Reg. 46820 (2017). The incident period for the Hurricane Maria PR Major Disaster began on September 17, 2017, and closed on November 15, 2017. See 82 Fed. Reg. 61768 (2017).
Agencies must periodically review § 42 Projects for compliance with the affordability and habitability requirements of § 42. See §§ 42(m)(1)(B)(iii) and 142(d)(7); also see §§ 1.42–5 and 1.42–5T of the Income Tax Regulations. Under section 9 of Rev. Proc. 2014–49, an Agency may extend the due date for its scheduled compliance reviews for up to one calendar year from the date of a low-income building’s restoration and placement again into service. That revenue procedure does not delay the compliance review due dates of buildings that do not require restoration and replacement into service.
Ordinarily, even though an owner has received a carryover allocation of housing credit dollar amount for a building, the benefit of that allocation may be lost if the owner does not timely meet certain progress benchmarks with respect to the building. First, not later than the due date in § 42(h)(1)(E)(ii), the owner’s basis in the § 42 Project containing the building must be more than 10 percent of the owner’s reasonably expected eventual basis in the project. Second, the building must be placed in service not later than the due date in § 42(h)(1)(E)(i). However, in the case of certain buildings located in major disaster areas, sections 6 and 7 of Rev. Proc. 2014–49 authorize the Agency responsible for a building to extend these deadlines for limited periods.
In the case of a building that has suffered a casualty loss due to Hurricane Maria or has been taken out of service due to that hurricane, the date of the building’s restoration and placement again in service.
This extension of dates for compliance review by the PRHFA does not, however, extend the compliance monitoring deadlines for owners. If the PRHFA learns that an owner or operator has failed to comply with the rules of § 42, as applicable, the noncompliance must be reported timely to the Internal Revenue Service (Service), along with a description of whether and how Hurricane Maria contributed to the noncompliance.
Similarly, the PRHFA may grant extensions of the due date in § 42(h)(1)(E)(i) (regarding placement into service) up to December 31 of the first calendar year following the calendar year containing the due date in § 42(h)(1)(E)(ii), taking into account any extension granted under the preceding paragraph.
Except for the ability to extend these two due dates for longer periods, all other procedures and limitations in sections 6 and 7 continue to apply to buildings affected by the Hurricane Maria PR Major Disaster. As is the case for extensions under those sections, if an owner satisfies an extended due date prescribed by the PRHFA under this notice, the Service will not assert that the owner fails to satisfy § 42(h)(1)(E)(i) or (ii), as applicable.
Persons should include “Notice 2018–17” in the subject line. All comments submitted by the public will be available for public inspection and copying in their entirety.
The principal author of this notice is James W. Rider of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding this notice contact Mr. Rider at (202) 317-4137 (not a toll-free number).
This revenue procedure modifies Rev. Proc. 2017–60, 2017–50 I.R.B. 559, to extend the time for individuals to pay to repair damage to their personal residences resulting from deteriorating concrete foundations caused by the presence of the mineral pyrrhotite.
.01 Revenue Procedure 2017–60 provides a safe harbor method that allows a taxpayer who pays to repair damage to that taxpayer’s personal residence resulting from a deteriorating concrete foundation that contains the mineral pyrrhotite to treat the amount paid as a casualty loss in the year of payment.
.02 The safe harbor is available to a taxpayer who has obtained a written evaluation from a licensed engineer indicating that the foundation was made with defective concrete, and has requested and received a reassessment report that shows the reduced reassessed value of the residential property based on the written evaluation from the engineer and an inspection pursuant to Connecticut Public Act No. 16–45. The safe harbor also is available to a taxpayer whose personal residence is either in Connecticut or outside of Connecticut, provided the taxpayer has obtained a written evaluation from a licensed engineer indicating that the foundation was made with defective concrete containing the mineral pyrrhotite.
03. To claim a casualty loss under the safe harbor in Rev. Proc. 2017–60, a taxpayer generally must have paid to repair damage caused by a deteriorating concrete foundation before January 1, 2018.
04. In view of the unique hardships caused by the extensive repairs necessary to remedy the deteriorating concrete foundations and the comments received expressing concern that taxpayers need additional time to make the repairs, the Department of the Treasury and the Internal Revenue Service have determined that it is appropriate to modify the safe harbor in Rev. Proc. 2017–60 to extend the time for individual taxpayers to pay to repair the damage to their personal residences.
.01 If a taxpayer pays to repair damage to that taxpayer’s personal residence caused by a deteriorating concrete foundation during the taxpayer’s 2016 taxable year or earlier, the taxpayer may treat the amount paid as a casualty loss on a timely Amended U.S. Individual Income Tax Return (Form 1040X) for the taxable year of payment. If a taxpayer pays to repair the damage during the taxpayer’s 2017 taxable year or prior to a timely filed (including extensions) original U.S. Individual Income Tax Return (Form 1040, 1040A or 1040EZ) for the 2017 taxable year, the taxpayer may treat the amount paid as a casualty loss on the taxpayer’s original 2017 income tax return (or a timely filed Form 1040X for the 2017 taxable year). If a taxpayer pays to repair the damage after filing an original 2017 income tax return and prior to the last day for filing a timely Form 1040X for the 2017 taxable year, the taxpayer may treat the amount paid as a casualty loss on a timely filed Form 1040X for the 2017 taxable year. For purposes of this revenue procedure, the term “deteriorating concrete foundation” means a concrete foundation that is damaged as a result of the presence of the mineral pyrrhotite in the concrete mixture used before January 1, 2018, in pouring the foundation. The safe harbor under this revenue procedure is available to a taxpayer who has obtained a written evaluation from a licensed engineer indicating that the foundation was made with defective concrete, and has requested and received a reassessment report that shows the reduced reassessed value of the residential property based on the written evaluation from the engineer and an inspection pursuant to Connecticut Public Act No. 16–45 (Act). The safe harbor also is available to a taxpayer whose personal residence is either in Connecticut or outside of Connecticut, provided the taxpayer has obtained a written evaluation from a licensed engineer indicating that the foundation was made with defective concrete containing the mineral pyrrhotite.
This modification in this revenue procedure will be treated as in effect as of the effective date of Rev. Proc. 2017–60, which is for federal income tax returns (including amended federal income tax returns) filed after November 21, 2017.
Rev. Proc. 2017–60 is modified.
This revenue procedure reduces compliance burdens on certain exempt organizations by providing the circumstances under which the Internal Revenue Service (IRS) generally will not require domestic business entities to file a new exemption application when they change their form or state of organization. This revenue procedure obsoletes Rev. Rul. 67–390 and Rev. Rul. 77–469.
Section 501(a) of the Internal Revenue Code (Code) provides that an organization described in section 501(c) shall be exempt from taxation under Subtitle A of the Code.
Section 1.501(a)–1(a)(2) of the Treasury Regulations provides that it is necessary for an organization to file an application in order to establish its exemption.
Section 1.501(a)–1(a)(3) of the Treasury Regulations provides that an organization claiming exemption under section 501(a) and described in section 501(c) shall file the form of application prescribed by the Commissioner.
Section 505 of the Code generally provides that an organization shall not be treated as described in paragraph (9), (17), or (20) of section 501(c) unless it has given notice to the Secretary that it is applying for recognition of exemption.
Section 506 of the Code generally provides that an organization described in section 501(c)(4) shall, not less than 60 days after the organization is established, notify the Secretary that it is operating as such.
Section 508 of the Code generally provides that an organization organized after October 9, 1969 shall not be treated as described in section 501(c)(3) unless it has given notice to the Secretary that it is applying for recognition of exemption.
Section 1.508–1(a)(2) of the Treasury Regulations provides that an organization seeking exemption under section 501(c)(3) files the notice described in section 508(a) by submitting a properly completed and executed Form 1023 (or, if applicable, Form 1023–EZ) exemption application.
Section 6109(a) of the Code generally provides that any person required to make a return, statement or other document under subtitle A shall include its identifying number.
Section 6109(c) of the Code provides that the Secretary or his delegate is authorized to require such information as may be necessary to assign an identifying number to any person.
Section 301.6109–1(a)(1)(ii)(C) of the Treasury Regulations provides that any person other than an individual that is required to furnish a taxpayer identifying number must use a federal Employer Identification Number (EIN). Section 301.6109–1(h)(1) of the Treasury Regulations generally provides that any entity with an EIN will retain that EIN if its federal tax classification changes under § 301.7701–3 of the Treasury Regulations. For special EIN rules, see § 301.6109–1(h)(2) of the Treasury Regulations (entities disregarded as separate from their owners) and (i) (qualified subchapter S subsidiaries).
Section 301.7701–2(a) of the Treasury Regulations provides that a business entity is any entity recognized for federal tax purposes (including an entity with a single owner that may be disregarded as an entity separate from its owner under § 301.7701–3 of the Treasury Regulations) that is not properly classified as a trust under § 301.7701–4 of the Treasury Regulations or otherwise subject to special treatment under the Code. It further provides that a business entity with two or more members is classified for federal tax purposes as either a corporation or a partnership, and a business entity with only one owner is classified as a corporation or is disregarded.
Section 301.7701–2(b)(1) of the Treasury Regulations provides that a business entity organized under a federal or state statute is a corporation if the statute describes or refers to the entity as incorporated or as a corporation, body corporate, or body politic.
Section 301.7701–2(b)(2) of the Treasury Regulations provides that an association as determined in § 301.7701–3 of the Treasury Regulations is a corporation.
Section 301.7701–3(a) of the Treasury Regulations provides that a business entity that is not classified as a corporation under § 301.7701–2(b)(1), (3), (4), (5), (6), (7), or (8) (an “eligible entity”) can elect its classification for federal tax purposes. An eligible entity with at least two members can elect to be classified as either an association (and thus a corporation under § 301–7701–2(b)(2) of the Treasury Regulations) or a partnership, and an eligible entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner. Section 301.7701–3(c)(1)(v)(A) of the Treasury Regulations provides that an eligible entity that has been determined to be, or claims to be, exempt from taxation under section 501(a) is treated as having made an election to be classified as an association (and thus a corporation under § 301.7701–2(b)(2) of the Treasury Regulations).
Rev. Proc. 2018–5, 2018–1 I.R.B. 233, as modified by Rev. Proc. 2018–10, 2018–7 I.R.B. 355, sets forth procedures for issuing determination letters on exempt status (in response to applications for recognition of exemption from federal income tax under section 501) under the jurisdiction of the Director, Exempt Organizations (EO) Rulings and Agreements. Section 3.01 of Rev. Proc. 2018–5 provides that EO Determinations issues determination letters on initial qualification for exempt status of organizations described in section 501, and updated exempt status letters (affirmation letters) to reflect changes to an organization’s name or address. Section 3.02 of Rev. Proc. 2018–5 provides that EO Determinations will not issue a determination letter if an organization currently recognized as exempt under section 501(c) seeks a new determination letter confirming that the organization is still recognized under the same Code section under the currently extant facts. Section 4 of Rev. Proc. 2018–5 provides that organizations seeking recognition of exemption under section 501(c)(3) must submit a completed Form 1023 or Form 1023–EZ (if applicable), organizations seeking recognition of exemption under section 501(c)(4) must submit a completed Form 1024–A, organizations seeking recognition of exemption under sections 501(c)(2), (5), (6), (7), (8), (9), (10), (12), (13), (15), (17), (19), and (25) must submit a completed Form 1024, and organizations seeking recognition of exemption under sections 501(c)(11), (14), (16), (18), (21), (22), (23), (26), (27), (28), or (29), or under section 501(d) must submit a letter application. Section 11.02 of Rev. Proc. 2018–5 provides that an organization may not rely on its determination letter if there is a material change of facts, inconsistent with exemption, in the character, purpose, or method of operation of the organization.
Rev. Rul. 67–390, 1967–2 C.B. 179, holds that a new exemption application is required in four cases where an organization previously recognized as exempt from federal income tax under section 501(a) makes certain changes in its structure. The four structural changes are: (1) incorporation of a trust; (2) incorporation of an association; (3) reincorporation by an Act of Congress; and (4) reincorporation under the laws of another state. The ruling states that each of these cases creates a new legal entity and, accordingly, each new organization must file an application for exemption to establish that the new entity qualifies for exemption under the Code and applicable regulations.
Rev. Rul. 77–469, 1977–2 C.B. 196, holds that an unincorporated association which incorporated after the enactment of section 508 is a new legal entity and therefore is required to file an application to be recognized as exempt under section 501(c)(3).
Accordingly, the IRS in the past has specified in forms and publications that a new exemption application is required if an exempt organization changes its legal structure, such as from a trust to a corporation, or it dissolves in one state and incorporates in another. See, e.g., Publication 557, Tax Exempt Status for Your Organization (Rev. Jan. 2018) and 2017 Instructions for Form 990 Return of Organization Exempt from Income Tax (Jan. 18, 2018). These IRS forms and publications also specify that organizations are required to report new significant program services or significant changes in how they conduct program services, and significant changes to their organizational documents, on their Forms 990 rather than in letters to EO Determinations. Id.
However, other rules generally provide that in many of these circumstances a new EIN is not required for federal tax purposes. For example, when one corporation merges into another corporation under state law and the latter corporation survives, a new EIN is not required for the surviving corporation. Similarly, a new EIN is not required if a corporation incorporated under the laws of one state reincorporates as a corporation incorporated under the laws of another state. See Rev. Rul. 73–526, 1973–2 C.B. 404.
After a corporate merger, the surviving corporation uses its existing EIN.
After a corporate reorganization, a corporation only changes its identity, form, or place of organization.
A corporation creates a new corporation after a statutory merger.
A trust changes to an estate or other non-trust.
In 2015, the Department of the Treasury (Treasury Department) and the IRS announced they are studying how to assign (or reassign) EINs to taxpayers following a reorganization under section 368(a)(1)(F) of the Code, including in cases in which the transferor corporation remains in existence as a disregarded entity, and requested public comments. T.D. 9739, 80 F.R. 56904, 56911 (Sept. 21, 2015).
Incorporation of an exempt association.
Reincorporation under an Act of Congress.
Reincorporation of an exempt corporation in a different state.
Continuation of a surviving corporation after a statutory merger of exempt organizations.
Filing articles of domestication in a different state by an exempt organization.
Requiring a new exemption application after a corporate restructuring often is unnecessary and duplicative, because the IRS requires exempt organizations to report significant organizational changes on their annual Forms 990. Moreover, any possible exemption issues with a corporate restructuring are less burdensome for the IRS to administer when the surviving organization can continue to use the same EIN on its Form 990 as the restructuring organization. Accordingly, this revenue procedure generally eliminates the requirement for domestic business entities classified as corporations for federal tax purposes to file a new exemption application after a corporate restructuring, if certain conditions are met, to better align the requirements for new exemption applications with the requirements for obtaining new EINs in common restructuring situations.
In light of the pending Treasury Department and IRS study on assigning and reassigning EINs in certain reorganizations under section 368(a)(1)(F), and the lack of published guidance explaining how exemption requirements apply to limited liability companies organized under various state laws, this revenue procedure does not apply to corporate restructuring transactions with limited liability companies or foreign business entities.
This revenue procedure applies to corporate restructurings of domestic business entities that are classified as corporations under § 301.7701–2(b)(1) or (2) of the Treasury Regulations and are recognized as exempt under section 501(a) as organizations described in section 501(c).
.01 Business entity has the meaning specified in § 301.7701–2(a) of the Treasury Regulations.
.02 Corporate restructuring means incorporation under the laws of a state, reincorporation of a corporation incorporated under the laws of one state under the laws of a different state, filing articles of domestication for a corporation incorporated under the laws of one state under the laws of a different state, or a statutory merger of one corporation with and into another corporation.
.03 Disregarded Entity is an entity that is disregarded as an entity separate from its owner described in § 301.7701–2(c)(2)(i) of the Treasury Regulations.
.04 Domestic business entity is a business entity that is domestic under § 301.7701–5(a) of the Treasury Regulations.
.05 Domestic trust is a trust that is domestic under § 301.7701–7(a)(1) of the Treasury Regulations.
.06 Eligible entity has the meaning specified in § 301.7701–3(a) of the Treasury Regulations.
.07 Employer identification number has the meaning specified in § 301.7701–12 of the Treasury Regulations.
.08 Exemption Application means Form 1023, Form 1023–EZ, Form 1024, Form 1024–A, or letter application, as applicable.
.09 Foreign business entity is a business entity that is foreign under § 301.7701–5(a) of the Treasury Regulations.
.10 Limited liability company means an entity formed under a state limited liability company act.
.11 Restructuring organization means any organization exempt under section 501(a) as an organization described in section 501(c) that enters into a corporate restructuring.
.12 Surviving organization means a surviving or resulting entity of a corporate restructuring.
(3) carrying out the same purposes as the exempt organization that engaged in the corporate restructuring.
For purposes of this section 5, the restructuring organization (or all restructuring organizations in the case of a statutory merger) must be in good standing with the state in which it was incorporated (or formed in the case of unincorporated associations).
For purposes of this section 5, if the restructuring organization is exempt under section 501(a) as an organization described in section 501(c)(3), the articles of organization of the surviving organization must continue to meet the organizational test of § 1.501(c)(3)–1(b) of the Treasury Regulations, including § 1.501(c)(3)–1(b)(4) (regarding dedication of assets to exempt purposes).
Section 5 of this revenue procedure does not apply to any corporate restructuring in which (1) the restructuring organization or the surviving organization is a disregarded entity, limited liability company, partnership, or foreign business entity; or (2) the surviving organization obtains a new EIN.
.05 Exemption application procedures for organizations not meeting requirements of section 5 of this revenue procedure.
Surviving organizations that do not meet the requirements of section 5 of this revenue procedure and that want to be recognized as exempt under section 501(a) should refer to Rev. Proc. 2018–5 for the procedures to apply for a determination letter.
The surviving organization must report the corporate restructuring on any required Form 990 for the applicable taxable year. In the case of a domestication or reincorporation in a different state, the surviving organization must also report a change of address as prescribed by the Commissioner. See Form 8822–B; Form 990; https://www.irs.gov/charities-non-profits/other-non-profits/change-of-address-exempt-organizations.
The application of this revenue procedure is demonstrated in the following examples. In the examples, each restructuring organization is recognized as exempt under section 501(a) and is in good standing in its state of incorporation or formation, the surviving organization continues to carry out the same purposes as the restructuring organization, and (for section 501(c)(3) organizations) the articles of incorporation of the surviving organization continue to meet the organizational test of § 1.501(c)(3)–1(b) of the Treasury Regulations, including § 1.501(c)(3)–1(b)(4) (regarding dedication of assets to exempt purposes).
A is an unincorporated nonprofit organization that was formed on Date 1 under the laws of State M. On Date 2, the IRS recognized A as exempt under section 501(c)(3). A is a domestic business entity and is treated under § 301.7701–3(c)(1)(v)(A) as having made an election to be classified as an association (and thus a corporation under § 301.7701–2(b)(2)). On Date 3, A incorporates in State M, and is classified as a corporation under § 301.7701–2(b)(1). Because A, as both the restructuring organization and the surviving organization, is a domestic business entity classified as a corporation, pursuant to section 5.01 of this revenue procedure, A continues to be recognized as exempt under section 501(c)(3) and is not required to file a new Form 1023.
B is a charitable trust that was formed on Date 1 under the laws of State N. B is a domestic trust. B is not a business entity. On Date 2, the IRS recognized B as exempt under section 501(c)(3). On Date 3, B incorporates in State N. Because the restructuring organization B is not a business entity, pursuant to section 5.01 of this revenue procedure, B is required to file a new Form 1023 to be recognized as exempt under section 501(c)(3). See Rev. Proc. 2018–5, § 3.01(1).
C is a corporation formed on Date 1 under the laws of State O. C is a domestic business entity classified as a corporation under § 301.7701–2(b)(1). On Date 2, the IRS recognized C as exempt under section 501(c)(4). On Date 3, C reincorporates in State P. Because C, as both the restructuring organization and the surviving organization, is a domestic business entity classified as a corporation, pursuant to section 5.01 of this revenue procedure, C continues to be recognized as exempt under section 501(c)(4) without filing a new application for recognition of exemption.
D is a corporation formed on Date 1 under the laws of State Q. D is a domestic business entity classified as a corporation under § 301.7701–2(b)(1). On Date 2, the IRS recognized D as exempt under section 501(c)(3). On Date 3, D files articles of domestication with the corporation governing agency of State R and a certificate of conversion with the corporation governing agency of State Q. Under the laws of State Q and State R, D continues to exist as the same corporation. Because D, as both the restructuring organization and the surviving organization, is a domestic business entity classified as a corporation, pursuant to section 5.01 of this revenue procedure, D continues to be recognized as exempt under section 501(c)(3) and is not required to file a new Form 1023.
E is a corporation formed on Date 1 under the laws of State S. E is a domestic business entity classified as a corporation under § 301.7701–2(b)(1). On Date 2, the IRS recognized E as exempt under section 501(c)(3). On Date 3, E converts into a limited liability company under the laws of State T. Because the surviving organization E is a limited liability company, pursuant to section 5.04 of this revenue procedure, E is required to file a new Form 1023 to be recognized as exempt under section 501(c)(3). See Rev. Proc. 2018–5, § 3.01(1).
F is a corporation formed on Date 1 under the laws of Country U. F is a foreign business entity classified as a corporation under § 301.7701–2(b)(8). On Date 2, the IRS recognized F as exempt under section 501(c)(3). On Date 3, F reincorporates in State V. Because the restructuring organization F is a foreign business entity, pursuant to section 5.04 of this revenue procedure, F is required to file a new Form 1023 to be recognized as exempt under section 501(c)(3). See Rev. Proc. 2018–5, § 3.01(1).
G is a corporation formed on Date 1 under the laws of State W. G is a domestic business entity classified as a corporation under § 301.7701–2(b)(1). On Date 2, the IRS recognized G as exempt under section 501(c)(3). H is a corporation formed on Date 1 under the laws of State X. H is a domestic business entity classified as a corporation under § 301.7701–2(b)(1). On Date 3, the IRS recognized H as exempt under section 501(c)(3). On Date 4, G merged into H in accordance with the applicable state merger statutes and H was the surviving organization. After the corporate restructuring, H carries out the same purposes that G and H carried out prior to the corporate restructuring. Because both G and H are domestic business entities classified as corporations, pursuant to section 5.01 of this revenue procedure, H continues to be recognized as exempt under section 501(c)(3) and is not required to file a new Form 1023.
I is a corporation formed on Date 1 under the laws of State Y. I is a domestic business entity classified as a corporation under § 301.7701–2(b)(1). On Date 2, the IRS recognized I as exempt under section 501(c)(3). On Date 3, J is formed as a State Z corporation. J is a domestic business entity classified as a corporation under § 301.7701–2(b)(1). On Date 4, the IRS recognized J as exempt under section 501(c)(3). On Date 5, J forms a new State Z limited liability company K that is a disregarded entity. On Date 6, I merges into K under the applicable state laws. After the corporate restructuring, J, directly and through K, carries out the same purposes that I and J carried out prior to the corporate restructuring. Because K is a limited liability company, section 5 of this revenue procedure does not apply. K is required to file a new Form 1023 if it wants to be recognized as exempt under section 501(c)(3). See Rev. Proc. 2018–5, § 3.01(1). J should not file a new Form 1023. See Rev. Proc. 2018–5, § 3.02(6).
.01 This revenue procedure specifies the circumstances under which organizations recognized as exempt under section 501(c) are not required to file new exemption applications under the same subsection of section 501(c) for federal income tax purposes after a corporate restructuring.
.02 For purposes of section 508, a surviving section 501(c)(3) organization that meets the requirements of sections 5.01 through 5.04 of this revenue procedure will not be treated as a new organization.
.03 For purposes of section 506, a surviving section 501(c)(4) organization that meets the requirements of sections 5.01, 5.02, and 5.04 of this revenue procedure will not be treated as a newly established organization.
.04 For purposes of section 505, a surviving section 501(c)(9), (17) or (20) organization that meets the requirements of sections 5.01, 5.02, and 5.04 of this revenue procedure will not be treated as a new organization.
.05 Even when the surviving organization of a corporate restructuring is not required to file a new exemption application pursuant to section 5 of this revenue procedure, the surviving organization may not rely on the determination letter of the restructuring organization if there has been a material change of facts, inconsistent with exemption, in the character, purpose, or method of operation of the restructuring organization. See Rev. Proc. 2018–5, section 11.02.
.06 This revenue procedure does not apply to a corporate restructuring in which the surviving organization seeks a determination that it is exempt under a different paragraph of section 501(c) than its prior determination.
.07 This revenue procedure does not affect or provide guidance on the rules for EINs under section 6109 or the requirements for a reorganization under section 368(a)(1)(F).
.08 This revenue procedure does not affect any state law requirements, including any state law reporting, filing, or notice requirements for corporate restructurings.
Rev. Rul. 67–390, 1967–2 C.B. 179, and Rev. Rul. 77–469, 1977–2 C.B. 196, are obsoleted.
This revenue procedure is effective for tax years beginning on or after January 1, 2018.
The principal authors of this revenue procedure are Obinna Chukwuanu and Don Spellmann of the Office of Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this revenue procedure contact Obinna Chukwuanu or Don Spellmann on (202) 317-4086 (not a toll-free number).
This revenue procedure provides guidance to the Chief Executive Officers of any State, any possession of the United States, and the District of Columbia regarding the procedure for designating population census tracts as Qualified Opportunity Zones for purposes of §§ 1400Z–1 and 1400Z–2 of the Internal Revenue Code (Code).
.01 Enactment. Section 13823 of “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,” P.L. 115–97, which was enacted on December 22, 2017, amended the Code by adding §§ 1400Z–1 and 1400Z–2 to the Code.
.02 Tax incentives. Section 1400Z–2 of the Code allows the temporary deferral of inclusion in gross income for certain realized gains to the extent that corresponding amounts are timely invested in a qualified opportunity fund. Investments in a qualified opportunity fund may also be eligible for additional tax benefits.
.03 Qualified Opportunity Fund. Section 1400Z–2(d)(1) of the Code provides that a qualified opportunity fund is an investment vehicle that is organized as a partnership or a corporation for the purpose of investing in Qualified Opportunity Zone property.
.04 Designations, in general. Section 1400Z–1 of the Code allows the Chief Executive Officer (CEO) of each State to nominate a limited number of population census tracts to be designated as Qualified Opportunity Zones (QOZs). For purposes of §§ 1400Z–1 and 1400Z–2 and this revenue procedure, the term “State” means any State, any possession of the United States, and the District of Columbia. See §§ 1400Z–1(c)(3) and 7701(a)(10) of the Code. Under § 1400Z–1(c)(1), a population census tract is eligible for designation as a QOZ if it satisfies the definition of “low-income community” (LIC) in § 45D(e) of the Code.
(2) The median family income of the non-LIC tract does not exceed 125 percent of the median family income of that contiguous LIC QOZ.
.06 Determination Period and Extension. Pursuant to § 1400Z–1(b)(1)(A) and (c)(2)(B) of the Code, the CEO of the State in which a tract is located may nominate the tract to be a QOZ, and any such nomination must be made no later than March 21, 2018. Under § 1400Z–1(b)(2), however, the State CEO may request, and receive, a 30-day extension of this deadline.
.07 Consideration Period and Extension. In general, not later than the end of a 30-day period beginning on the date that the Secretary of the Treasury (Secretary) receives notice of a nomination, the Secretary may certify the nomination and designate the nominated tract as a QOZ. Under § 1400Z–1(b)(2) of the Code, however, the State CEO may request, and receive, a 30-day extension of the Secretary’s deadline.
.08 Qualified Opportunity Zone. Section 1400Z–1 of the Code defines a QOZ as any population census tract (either a nominated LIC or a nominated non-LIC, contiguous census tract) that is designated as a QOZ.
(1) In general, § 1400Z–1(d)(1) of the Code provides that the number of population census tracts in a State that may be designated as QOZs may not exceed 25 percent of the number of population census tracts in the State that are LICs. If the number of LICs in a State is not evenly divisible by 4, the 25 percent limitation is determined by rounding the fractional quotient up to the next whole number. For example, if a State contains 197 LICs, the maximum number of designations is 50, even though 25 percent of 197 is 49.25.
(2) Section 1400Z–1(d)(2) of the Code further provides that, notwithstanding the 25 percent limitation, if a State contains fewer than 100 LICs, then a total of 25 tracts may be designated.
(3) Section 1400Z–1(e)(2) of the Code provides that not more than 5 percent of the tracts designated in a State may be non-LIC, contiguous tracts designated under § 1400Z–1(e)(1). Thus, designations under § 1400Z–1(d)(1) and (d)(2) may include a limited number of non-LIC contiguous tracts. If the number of designated QOZs in a State is not evenly divisible by 20, the 5 percent limitation is determined by rounding the fractional quotient up to the next whole number. For example, suppose that State B has 80 LICs. Under § 1400Z–1(d)(2), State B is allowed to nominate 25 tracts for QOZ designation because State B has fewer than 100 LICs. If State B nominates all 25 of the QOZs allowed, then of the 25 nominated tracts, only 2 (5 percent of 25 or 1.25, rounded up to 2) nominated tracts may be non-LIC contiguous tracts. But if State B nominated only 18 LICs, then it could nominate only 1 (5 percent of 19 or 0.95, rounded up to 1) additional non-LIC contiguous tract.
(2) 9,453 non-LIC population census tracts that are eligible for designation if a particular LIC contiguous to the non-LIC tract is designated as a QOZ.
.02 This Information Resource includes detailed mapping, which makes it possible to see the exact location of every tract and to view a variety of demographic information for each eligible tract.
.03 In the case of each tract described in section 3.01(2) of this revenue procedure, the Information Resource includes one or more LIC tracts on whose designation as a QOZ the non-LIC tract’s eligibility depends.
.04 The Information Resource can be accessed at https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx.
.05 In the fall of 2017, the Census Bureau released the 2012–2016 ACS 5-Year data. Because of the March 21, 2018, deadline for State CEOs to nominate tracts for designation as QOZs, the maximum aggregate number of designations in a State is determined on the basis of the 2011–2015 ACS, as reflected in the Information Resource described above.
.06 In addition, the Information Resource is a “safe harbor.” That is, if the Information Resource identifies a census tract as being either an eligible LIC or an eligible non-LIC contiguous tract, a State CEO’s nomination of that tract will not fail to be certified on the grounds that the tract is no longer eligible under more recent census data.
.07 On the other hand, in many cases, if a tract is eligible under the most recent available ACS 5-Year data, the tract is eligible to be nominated for designation. If the Information Resource, however, does not identify the tract as eligible, the nomination must be accompanied by an analysis demonstrating that eligibility, including appropriate supporting data from that ACS.
This revenue procedure applies to the CEO of any State that desires to nominate for designation as QOZs population census tracts that are either LICs that qualify under § 1400Z–1(c)(1) of the Code or non-LIC contiguous tracts that qualify under § 1400Z–1(e)(1) of the Code.
.01 A Nomination Tool, which can be accessed online, has been developed for the benefit of State CEOs that are making nominations of census tracts for designation as QOZs.
.02 Further information on the nomination process under § 1400Z–1 of the Code, including how to access the on-line Nomination Tool and how to request an extension of the determination period, will be sent individually to all State CEOs.
This revenue procedure is effective on February 8, 2018.
The principal author of this revenue procedure is Erika Reigle of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this revenue procedure contact Erika Reigle at (202) 317-7006 (not a toll-free number). For further information regarding the Information Resource, contact the CDFI Fund Help Desk at (202) 653-0421 (not a toll-free number).
This revenue procedure modifies the circumstances under which the Internal Revenue Service (“IRS”) grants approval of certain requests by certain foreign corporations for changes in annual accounting periods filed under Rev. Proc. 2002–39, 2002–22 I.R.B. 1046, and Rev. Proc. 2006–45, 2006–45 I.R.B. 851. This revenue procedure is issued pursuant to section 965(o) to prevent the avoidance of the purposes of section 965 through changes in the taxable years of certain specified foreign corporations (within the meaning of section 965(e)).
.01 Section 442 and § 1.442–1(a) generally provide that a taxpayer seeking to change its annual accounting period and use a new taxable year must obtain the approval of the Commissioner.
.02 In general, under § 1.442–1(b)(2), a change in annual accounting period will be approved when a taxpayer agrees to the Commissioner’s prescribed terms, conditions, and adjustments for effecting the change.
.03 Section 1.442–1(b)(3) provides that the Commissioner will prescribe the administrative procedures for a taxpayer to be allowed to adopt, change, or retain an annual accounting period.
.04 Rev. Proc. 2002–39 provides the general procedures under section 442 and § 1.442–1(b) for obtaining the approval of the Commissioner to adopt, change, or retain an annual accounting period for federal income tax purposes.
.05 Rev. Proc. 2006–45, as a successor to Rev. Proc. 2002–37, 2002–22 I.R.B. 1030, provides the exclusive procedures for certain corporations to obtain automatic approval of the Commissioner to change their annual accounting periods, including a section 898 specified foreign corporation that is changing to a one-month deferral year or to a 52–53-week taxable year that references the one-month deferral year. See section 4.02(8) of Rev. Proc. 2006–45.
.06 Section 898(a) provides that the taxable year of any section 898 specified foreign corporation is the required year determined under section 898(c). In contrast, a foreign corporation other than a section 898 specified foreign corporation generally does not have a required year.
.08 The required year determined under section 898(c) is the majority U.S. shareholder year (as defined in section 898(c)(3)), or, if there is no majority U.S. shareholder year, the taxable year prescribed under regulations. Section 898(c)(2) provides that a section 898 specified foreign corporation may elect, in lieu of the required year, a taxable year beginning one month earlier than the majority U.S. shareholder year.
.09 Section 965(a) provides that for the last taxable year of a deferred foreign income corporation (“DFIC”) that begins before January 1, 2018, the subpart F income of the corporation (as otherwise determined for such taxable year under section 952) shall be increased by the greater of the accumulated post-1986 deferred foreign income of such corporation determined as of November 2, 2017, or December 31, 2017 (each such date, a “measurement date”).
.10 For purposes of section 965, a DFIC is, with respect to any United States shareholder, any section 965 specified foreign corporation of such United States shareholder that has accumulated post-1986 deferred foreign income (as of a measurement date) greater than zero. Section 965(d)(1). The term “section 965 specified foreign corporation” means (A) any CFC, and (B) any foreign corporation with respect to which one or more domestic corporations is a United States shareholder (“10-percent corporation”). Section 965(e)(1). For purposes of sections 951 and 961, a 10-percent corporation is treated as a CFC solely for purposes of taking into account the subpart F income of such corporation under section 965(a). Section 965(e)(2). However, if a passive foreign investment company (as defined in section 1297) with respect to the shareholder is not a CFC, then such corporation is not a section 965 specified foreign corporation. Section 965(e)(3).
.11 Section 965(o) provides that the Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the provisions of section 965, including regulations or other guidance to prevent the avoidance of the purposes of such section, including through a reduction in earnings and profits, through changes in entity classification or accounting methods, or otherwise. The Conference Report accompanying the Act states, “The conferees are also aware that certain taxpayers may have engaged in tax strategies designed to reduce the amount of post-1986 earnings and profits in order to decrease the amount of the inclusion required under this provision. Such tax strategies may include a change in entity classification, accounting method, and taxable year . . . .” H.R. Rep. No. 115–466, at 619 (2017) (emphasis added).
.12 A section 965 specified foreign corporation with a taxable year ending on December 31, 2017, could avoid the purposes of section 965 by changing its taxable year. For example, if a DFIC with the calendar year as its taxable year elected, effective for its taxable year beginning January 1, 2017, a taxable year closing on November 30, the election could defer by as much as 11 months a United States shareholder’s inclusion with respect to the DFIC under section 965. Further, the election could, depending on the facts, reduce the amount of the tax liability of a United States shareholder of the DFIC by reason of section 965, including through the reduction of the post-1986 earnings and profits of the DFIC.
This revenue procedure applies to a section 965 specified foreign corporation seeking to change its taxable year that ends on December 31, 2017. For purposes of applying this revenue procedure, a 52–53-week taxable year is deemed to begin on the first day of the calendar month nearest to the first day of the 52–53-week taxable year, and is deemed to end or close on the last day of the calendar month nearest to the last day of the 52–53-week taxable year, as the case may be. See § 1.441–2(c).
Rev. Proc. 2002–39 and Rev. Proc. 2006–45 are modified.
This revenue procedure applies with respect to any request to change an annual accounting period that ends on December 31, 2017, regardless of when such request was filed.
The principal author of this revenue procedure is Leni C. Perkins of the Office of Associate Chief Counsel (International). For further information regarding this revenue procedure, contact Ms. Perkins on (202) 317-6934 (not a toll-free number).
This announcement serves notice to donors that on September 20, 2017, the United States Tax Court entered a stipulated decision that, as of September 19, 1980, the organization listed below is qualified as an organization described in section 501(c)(3), is exempt from taxation under section 501(a), and is described in section 170(c)(2), and, as of August 31, 1990, the organization is a private foundation.
This announcement serves notice to donors that on September 14, 2017, the United States Tax Court entered a stipulated decision that, as of May 5, 1994, the organization listed below is qualified as an organization described in section 501(c)(3), is exempt from taxation under section 501(a), and is described in section 170(c)(2).
This announcement serves notice to donors that, on September 13, 2017, the United States Tax Court entered a stipulated decision stating that, effective January 1, 2008, the organization listed below is not qualified as an organization described in I.R.C. § 501(c)(3), is not exempt from taxation under I.R.C. § 501(a), and is not an organization described in I.R.C. § 170(c)(2).

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