Source: https://www.irs.gov/irb/2010-25_IRB
Timestamp: 2020-07-11 06:12:42
Document Index: 756601481

Matched Legal Cases: ['§ 179', '§ 179', '§ 179', '§ 179', '§ 179', '§ 179', '§ 201', '§ 179', '§ 179', '§ 179', '§ 179', '§1', '§1', '§1', '§1', '§1', '§1', '§1', '§1', '§1']

Internal Revenue Bulletin: 2010-25 | Internal Revenue Service
Internal Revenue Bulletin: 2010-25
REG-106750-10
Announcement 2010-41
Announcement 2010-42
Announcement 2010-41 Announcement 2010-41
The IRS is announcing a change in procedures for individual payees to follow to obtain validation of social security numbers (SSNs) from the Social Security Administration (SSA) to prevent or stop backup withholding under section 3406 of the Code following receipt of a second “B notice” from a payor.
REG-106750-10 REG-106750-10
Proposed regulations under section 1001 of the Code clarify the extent to which the deterioration in an issuer’s financial condition is taken into account to determine whether a modified debt instrument will be recharacterized as an instrument that is not debt. A public hearing is scheduled for September 8, 2010.
Rev. Proc. 2010-24 Rev. Proc. 2010-24
Changes to cost-of-living adjustments for 2010. This procedure modifies the inflation adjusted amounts in Rev. Proc. 2009-50, 2009-45 I.R.B. 617, that apply to taxpayers who elect to expense certain depreciable assets under section 179 of the Code. The modification reflects statutory amendments enacted subsequent to the publication of Rev. Proc. 2009-50 made by the Hiring Incentives to Restore Employment Act of 2010 (the HIRE Act). Section 3.20 of Rev. Proc. 2009-50 modified and superseded.
Announcement 2010-42 Announcement 2010-42
The IRS has revoked its determination that Christian Credit Counseling Center of San Antonio, TX; Gullahorn Family Supporting Organization of Naples, FL; and Visual Credit Counseling, Inc., of Tucson, AZ, qualify as organizations described in sections 501(c)(3) and 170(c)(2) of the Code.
This revenue procedure modifies the inflation adjusted amounts in Rev. Proc. 2009-50, 2009-45 I.R.B. 617, that apply to taxpayers who elect to expense certain depreciable assets under § 179 of the Internal Revenue Code. This modification reflects statutory changes enacted subsequent to the publication of Rev. Proc. 2009-50.
Prior to the enactment of the Hiring Incentives to Restore Employment Act of 2010, Pub. L. No.111-147, 124 Stat. 71 (2010) (the HIRE Act), § 179(b)(1) prescribed a $125,000 limitation (the $125,000 amount) on the aggregate cost of § 179 property that could be treated as an expense for taxable years beginning after 2006 and before 2011. For those same taxable years, § 179(b)(2) provided that the $125,000 amount is reduced by the amount by which the cost of § 179 property placed in service during the taxable year exceeds $500,000 (the $500,000 amount). Both the $125,000 amount and the $500,000 amount were adjusted for inflation annually under § 179(b)(5). For taxable years beginning in 2010, section 3.20 of Rev. Proc. 2009-50 provides that the $125,000 amount and the $500,000 amount, adjusted for inflation, are $134,000 and $530,000, respectively.
Section 102 of the Economic Stimulus Act of 2008, Pub. L. No.110-185, 122 Stat. 613 (2008), changed the $125,000 amount and the $500,000 amount to $250,000 and $800,000, respectively, for taxable years beginning in 2008 and 2009, and also provided that these amounts will not be adjusted for inflation.
Similarly, § 201 of the HIRE Act changes the $125,000 amount and the $500,000 amount to $250,000 and $800,000, respectively, for taxable years beginning in 2010. Section 201 of the Act also provides that these amounts will not be adjusted for inflation for taxable years beginning in 2010.
.20 Election to Expense Certain Depreciable Assets. For taxable years beginning in 2010, under § 179(b)(1) the aggregate cost of any § 179 property a taxpayer may elect to treat as an expense cannot exceed $250,000. Under § 179(b)(2), the $250,000 limitation is reduced (but not below zero) by the amount by which the cost of § 179 property placed in service during the 2010 taxable year exceeds $800,000.
The principal author of this revenue procedure is Patrick M. Clinton of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure, contact Patrick M. Clinton at (202) 622-4930 (not a toll-free call).
Notice of Proposed Rulemaking and Notice of Public Hearing Modifications of Debt Instruments
This document contains proposed regulations relating to the modification of debt instruments. The regulations clarify the extent to which the deterioration in the financial condition of the issuer is taken into account to determine whether a modified debt instrument will be recharacterized as an instrument or property right that is not debt. The regulations provide needed guidance to issuers and holders of debt instruments. This document also provides notice of a public hearing on these proposed regulations.
Written or electronic comments must be received by August 3, 2010. Outlines of topics to be discussed at the public hearing scheduled for Wednesday, September 8, 2010, at 10 a.m. must be received by Wednesday, August 11, 2010.
Send submissions to: CC:PA:LPD:PR (REG-106750-10), room 5205, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-106750-10), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington, DC, or sent electronically, via the Federal eRulemaking Portal at www.regulations.gov (IRS and REG-106750-10).
Concerning the proposed regulations, Diana Imholtz, at (202) 622-3930; concerning submission of comments, the hearing, and/or to be placed on the building access list to attend the hearing, Richard.A.Hurst@irscounsel.treas.gov, at (202) 622-7180 (not toll-free numbers).
Section 1.1001-3 provides rules for determining when a modification of a debt instrument results in an exchange for purposes of §1.1001-1(a). In general, §1.1001-3 defines a modification and provides that a modification that is significant results in a deemed exchange of the original debt instrument for a modified debt instrument. Section 1.1001-3 also addresses alterations to the terms of a debt instrument that result in a modified instrument that is not debt. Section 1.1001-3(c)(2)(ii) generally provides that a modification to a debt instrument occurs if an alteration changes the instrument to an instrument or property right that is not debt for federal income tax purposes, even if the alteration occurs by operation of the original terms of the debt instrument. Section 1.1001-3(e)(5)(i) generally provides that a modification of a debt instrument that results in an instrument or property right that is not debt for federal income tax purposes is a significant modification. For purposes of making the determination prescribed by §1.1001-3(e)(5)(i), the regulations state that any deterioration in the financial condition of the issuer between the issue date of the unmodified debt instrument and the date of modification (as it relates to the issuer’s obligation to repay the debt instrument) is not taken into account, unless there is a substitution of a new obligor or the addition or deletion of a co-obligor.
In response to the proposed regulations published on December 2, 1992 (FI-31-92, 1992-2 C.B. 633 [57 FR 57034]), taxpayers were concerned that taking into account the creditworthiness of a financially troubled issuer when a debt instrument is modified would impose a significant barrier to restructuring distressed debt instruments. The rule in §1.1001-3(e)(5)(i) to disregard the financial condition of the issuer was intended to address this concern. The preamble to the existing regulations published on September 24, 1996 (T.D. 8675, 1996-2 C.B. 5 [61 FR 32926]) explains that “for purposes of this regulation, unless there is a substitution of a new obligor, any deterioration in the financial condition of the issuer is not considered in determining whether the modified instrument is properly characterized as debt.”
The language in the preamble to the existing regulations suggests that for all purposes of §1.1001-3 the financial deterioration of the issuer is generally not taken into account. Issuers and holders, however, are concerned that, as the existing regulations are currently drafted, a decline in the creditworthiness of the issuer, under certain circumstances, may be taken into account under §1.1001-3. The uncertainty about the proper interpretation of the existing regulations has led taxpayers to request clarification on the circumstances in which the credit quality of the issuer should be considered in determining the nature of the instrument resulting from an alteration or modification of a debt instrument. Accordingly, the IRS and the Treasury Department believe it is appropriate to propose amendments to §1.1001-3 to clarify this issue.
In general, the proposed regulations require an analysis of all of the factors relevant to a debt determination of the modified instrument at the time of an alteration or modification. However, in making this determination for purposes of the regulation, any deterioration in the financial condition of the issuer between the issue date of the debt instrument and the date of the alteration or modification (as it relates to the issuer’s ability to repay the debt instrument) is not taken into account, unless there is a substitution of a new obligor or the addition or deletion of a co-obligor.
As noted in this preamble, the proposed regulations clarify that any deterioration in the financial condition of the issuer is generally not taken into account to determine if the modified instrument is debt. For example, under the proposed regulations, any decrease in the fair market value of a debt instrument (whether or not publicly traded) between the issue date of the debt instrument and the date of the alteration or modification is not taken into account to the extent that the decrease in fair market value is attributable to the deterioration in the financial condition of the issuer and not to a modification of the terms of the instrument. Consistent with this rule in the proposed regulations, if a debt instrument is significantly modified and the issue price of the modified debt instrument is determined under §1.1273-2(b) or (c) (relating to a fair market value issue price for publicly traded debt), then any increased yield on the modified debt instrument attributable to this issue price generally is not taken into account to determine whether the modified debt instrument is debt or some other property right for federal income tax purposes. However, any portion of the increased yield that is not attributable to a deterioration in the financial condition of the issuer, such as a change in market interest rates, is taken into account.
The regulations, as proposed, apply to alterations of the terms of a debt instrument on or after the date of publication of the Treasury decision adopting these rules as final regulation in the Federal Register. A taxpayer, however, may rely on these amendments for alterations of the terms of a debt instrument occurring before that date.
It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulation does not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
A public hearing has been scheduled for Wednesday, September 8, 2010, beginning at 10 a.m. in Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 30 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see the “FOR FURTHER INFORMATION CONTACT” section of this preamble.
The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit electronic or written comments and an outline of the topics to be discussed and the time to be devoted to each topic (signed original and eight (8) copies) by Wednesday, August 11, 2010. A period of 10 minutes will be allotted to each person for making comments. An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.
Par. 2. Section 1.1001-3 is amended by revising paragraphs (c)(2)(ii), (e)(5)(i) and (h) and adding paragraph (f)(7) to read as follows:
§1.1001-3 Modifications of debt instruments.
(ii) Property that is not debt. An alteration that results in an instrument or property right that is not debt for federal income tax purposes is a modification unless the alteration occurs pursuant to a holder’s option under the terms of the instrument to convert the instrument into equity of the issuer (notwithstanding paragraph (c)(2)(iii) of this section). The rules of paragraph (f)(7) of this section apply to determine whether an alteration or modification results in an instrument or property right that is not debt.
(5) Changes in the nature of a debt instrument—(i) Property that is not debt. A modification of a debt instrument that results in an instrument or property right that is not debt for federal income tax purposes is a significant modification. The rules of paragraph (f)(7) of this section apply to determine whether a modification results in an instrument or property right that is not debt.
(7) Rules for determining whether an alteration or modification results in an instrument or property right that is not debt—(i) In general. Except as provided in paragraph (f)(7)(ii) of this section, the determination of whether an instrument resulting from an alteration or modification of a debt instrument will be recharacterized as an instrument or property right that is not debt for federal income tax purposes shall take into account all of the factors relevant to such a determination.
(ii) Financial condition of the obligor—(A) Deterioration in financial condition of the obligor generally disregarded. Except as provided in paragraph (f)(7)(ii)(B) of this section, in making a determination as to whether an instrument resulting from an alteration or modification of a debt instrument will be recharacterized as an instrument or property right that is not debt under this section, any deterioration in the financial condition of the obligor between the issue date of the debt instrument and the date of the alteration or modification (as it relates to the obligor’s ability to repay the debt instrument) is not taken into account. For example, any decrease in the fair market value of a debt instrument (whether or not the debt instrument is publicly traded) between the issue date of the debt instrument and the date of the alteration or modification is not taken into account to the extent that the decrease in fair market value is attributable to the deterioration in the financial condition of the obligor and not to a modification of the terms of the instrument.
(B) Substitution of a new obligor; addition or deletion of co-obligor. If there is a substitution of a new obligor or the addition or deletion of a co-obligor, the rules in paragraph (f)(7)(ii)(A) of this section do not apply.
(h) Effective/applicability date—(1) In general. Except as otherwise provided in paragraph (h)(2) of this section, this section applies to alterations of the terms of a debt instrument on or after September 24, 1996. Taxpayers, however, may rely on this section for alterations of the terms of a debt instrument after December 2, 1992, and before September 24, 1996.
(2) Exception. Paragraph (f)(7) of this section applies to an alteration of the terms of a debt instrument on or after the date of publication of the Treasury decision adopting these rules as final regulation in the Federal Register.
A taxpayer, however, may rely on paragraph (f)(7) of this section for alterations of the terms of a debt instrument occurring before that date.
(Filed by the Office of the Federal Register on June 3, 2010, 8:45 a.m., and published in the issue of the Federal Register for June 4, 2010, 73 F.R. 31736)
The principal author of these regulations is Diana Imholtz, Office of Associate Chief Counsel (Financial Institutions & Products). However, other personnel from the IRS and the Treasury Department participated in their development.
New Backup Withholding Procedures: Social Security Number Validation following Receipt of Second B Notice
The Internal Revenue Service (“IRS”) is announcing a change in procedures for individual payees to follow to obtain validation of social security numbers (“SSNs”) from the Social Security Administration (“SSA”) to prevent or stop backup withholding under section 3406 of the Internal Revenue Code following receipt of a second “B notice” from a payor.
Pursuant to section 3406 and the regulations thereunder, a payor (such as a bank) must send certain notices under section 3406(a)(1)(B) (“B notices”) to a payee after being notified by the IRS or a broker that the payee has provided an incorrect name and taxpayer identification number (“TIN”) combination with respect to an account. Following the first notification from the IRS or broker, the payor must send a first B notice to a payee directing the payee to certify the TIN on Form W-9 in order to stop or prevent backup withholding on reportable payments by the payor. If the payor receives a second notice of incorrect TIN from the IRS or broker within three years, the payor must send a second B notice to the payee requiring the payee to provide TIN validation. After the second B notice, the payor cannot accept a TIN certification on Form W-9 but must receive validation of the payee’s TIN from the SSA or the IRS. Absent receipt of proper validation, the payor must backup withhold from future reportable payments it makes to the payee.
The rules concerning the form, content and manner of delivery of B notices are set forth in Rev. Proc. 93-37, 1993-2 C.B. 477. That revenue procedure sets forth specific instructions regarding TIN validation, which must be included in the second B notice sent to payees. Pursuant to the instructions in Rev. Proc. 93-37, a payee who needs to validate an SSN must contact the local SSA office to inquire about SSN validation, provide a copy of the B notice to SSA, and request and authorize SSA to send Form SSA-7028, Notice to Third Party of Social Security Number Assignment, to the payor to validate the payee’s SSN.
Effective January 1, 2010, SSA discontinued the availability of Form SSA-7028 for purposes of verifying SSNs to avoid backup withholding. This announcement updates the instructions for TIN validation given that Form SSA-7028 is no longer available.
To obtain validation of the payee’s SSN from the SSA for purposes of responding to a second B notice, each individual payee should now contact the local SSA office and request a Social Security Number Printout. The Social Security Number Printout will validate the SSN of the individual and will serve as acceptable validation of the individual’s TIN for purposes of the requirements of section 3406. An individual may request one free copy of the Social Security Number Printout, which will verify the SSN assigned to that individual. The individual should provide a copy of the Social Security Number Printout to the payor who sent the second B notice. A payor who receives a copy of the Social Security Number Printout validating the SSN of a payee will not be required to commence backup withholding, and may stop backup withholding, on reportable payments made to that payee.
A payor sending a second B notice to an individual payee should inform the payee of this change in procedure. The following language is acceptable:
Note that the Instructions for Incorrect Social Security Numbers have changed and the SSA no longer uses Form SSA-7028. You must request a Social Security Number Printout from SSA rather than Form SSA-7028. You must send a copy of the Social Security Number Printout directly to us, along with a copy of this notice.
These interim procedures may be used until additional forthcoming guidance, including a revision of Rev. Proc. 93-37, is published.
The principal author of this Announcement is Nancy Rose of the Office of the Associate Chief Counsel (Procedure and Administration). For further information regarding this announcement, contact Ms. Rose at (202) 622-4940 (not a toll-free call).
If on the other hand a suit for declaratory judgment has been timely filed, contributions from individuals and organizations described in section 170(c)(2) that are otherwise allowable will continue to be deductible. Protection under section 7428(c) would begin on June 21, 2010 and would end on the date the court first determines that the organization is not described in section 170(c)(2) as more particularly set forth in section 7428(c)(1). For individual contributors, the maximum deduction protected is $1,000, with a husband and wife treated as one contributor. This benefit is not extended to any individual, in whole or in part, for the acts or omissions of the organization that were the basis for revocation.
Christian Credit Counseling Center San Antonio TX
Gullahorn Family Supporting Organization Naples FL
Visual Credit Counseling Inc Tucson AZ
Bulletins 2010-1 through 2010-25
2010-34 2010-20 I.R.B. 2010-20 685
2010-35 2010-20 I.R.B. 2010-20 685
2010-36 2010-21 I.R.B. 2010-21 696
2010-37 2010-20 I.R.B. 2010-20 685
2010-38 2010-21 I.R.B. 2010-21 696
2010-39 2010-22 I.R.B. 2010-22 724
2010-40 2010-22 I.R.B. 2010-22 725
2010-41 2010-25 I.R.B. 2010-25
2010-42 2010-25 I.R.B. 2010-25
2010-38 2010-20 I.R.B. 2010-20 682
2010-39 2010-24 I.R.B. 2010-24 756
2010-40 2010-21 I.R.B. 2010-21 693
2010-41 2010-22 I.R.B. 2010-22 715
2010-42 2010-23 I.R.B. 2010-23 733
2010-43 2010-22 I.R.B. 2010-22 716
2010-44 2010-22 I.R.B. 2010-22 717
2010-45 2010-23 I.R.B. 2010-23 734
2010-46 2010-24 I.R.B. 2010-24 757
114494-10 2010-22 I.R.B. 2010-22 723
106750-10 2010-25 I.R.B. 2010-25
2010-22 2010-23 I.R.B. 2010-23 747
2010-23 2010-24 I.R.B. 2010-24 762
2010-24 2010-25 I.R.B. 2010-25
2010-13 2010-21 I.R.B. 2010-21 691
2010-15 2010-23 I.R.B. 2010-23 730
9482 2010-22 I.R.B. 2010-22 698
9483 2010-23 I.R.B. 2010-23 726
9484 2010-24 I.R.B. 2010-24 748
2010-22 Corrected by Ann. 2010-34 2010-20 I.R.B. 2010-20 685
97-66 Modified by Notice 2010-46 2010-24 I.R.B. 2010-24 757
2009-27 Obsoleted by Rev. Proc. 2010-23 2010-24 I.R.B. 2010-24 762
2009-50 Section 3.20 modified and superseded by Rev. Proc. 2010-24 2010-25 I.R.B. 2010-25
9350 Corrected by Ann. 2010-38 2010-21 I.R.B. 2010-21 696
9350 Corrected by Ann. 2010-39 2010-22 I.R.B. 2010-22 724