Source: https://www.irs.gov/irb/2014-40_IRB
Timestamp: 2020-04-01 12:07:14
Document Index: 234516271

Matched Legal Cases: ['§ 1', '§ 417', '§ 430', '§ 31', 'art 31', '§ 31', '§ 417', '§ 430', '§ 417', '§ 431', '§ 430', '§ 414', '§ 430', '§ 412', '§ 430', '§ 430', '§ 430', '§ 430', '§ 430', '§ 436', '§ 430', '§ 430', '§ 431', '§ 412', '§ 417', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1']

Internal Revenue Bulletin: 2014-40 | Internal Revenue Service
Internal Revenue Bulletin: 2014-40
Rev. Rul. 201425
Rev. Rul. 201423
Notice 201450
Notice 201451
Rev. Rul. 2014–23 Rev. Rul. 2014–23
This Revenue Ruling establishes the interest rates on overpayments and underpayments of tax. The rates for interest determined under section 6621 of the code for the calendar quarter beginning October 1, 2014, will be 3 percent for overpayments (2 percent in the case of a corporation), 3 percent for the underpayments, and 5 percent for large corporation underpayments. The rate of interest paid on the portion of a corporation overpayment exceeding $10,000 will be 0.5 percent.
Rev. Rul. 2014–25 Rev. Rul. 2014–25
This Revenue Ruling provides fringe benefits aircraft valuation formula. For purposes of section 1.61–21(g) of the Income Tax Regulations, relating to the rule for valuing non-commercial flights on employer-provided aircraft, the Standard Industry Fare Level (SIFL) cents-per-mile rates and terminal charge in effect for the second half of 2014 are set forth.
Notice 2014–51 Notice 2014–51
Notice 2014–51 provides an exception from the filing requirements under section 1298(f) of the Internal Revenue Code (Code) and § 1.1298–1T, pursuant to which shareholders in passive foreign investment companies (PFICs) are required to file annual reports. This notice generally provides an exception from the filing requirements for shareholders that hold PFIC stock that is marked to market under a provision of chapter 1 of the Code other than section 1296.
T.D. 9692 T.D. 9692
Final regulations under section 3402(p)(3) relating to voluntary withholding agreements allow the Secretary to issue guidance in the Internal Revenue Bulletin to describe payments for which the Secretary finds that income tax withholding under a voluntary withholding agreement would be appropriate.
Notice 2014–50 Notice 2014–50
This notice sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for August 2014 used under § 417(e)(3)(D), the 24-month average segment rates applicable for September 2014, and the 30-year Treasury rates. These rates reflect the application of § 430(h)(2)(C)(iv), which was added by the Moving Ahead for Progress in the 21st Century Act, Public Law 112–141 (MAP–21) and amended by section 2003 of the Highway and Transportation Funding Act of 2014 (HATFA).
Rev. Rul. 2014–25
For purposes of the taxation of fringe benefits under section 61 of the Internal Revenue Code, section 1.61–21(g) of the Income Tax Regulations provides a rule for valuing noncommercial flights on employer-provided aircraft. Section 1.61–21(g)(5) provides an aircraft valuation formula to determine the value of such flights. The value of a flight is determined under the base aircraft valuation formula (also known as the Standard Industry Fare Level formula or SIFL) by multiplying the SIFL cents-per-mile rates applicable for the period during which the flight was taken by the appropriate aircraft multiple provided in section 1.61–21(g)(7) and then adding the applicable terminal charge. The SIFL cents-per-mile rates in the formula and the terminal charge are calculated by the Department of Transportation and are reviewed semi-annually.
The following chart sets forth the terminal charge and SIFL mileage rates:
SIFL Mileage Rates
7/1/14-12/31/14 $46.25 Up to 500 miles = $.2530 per mile
501–1500 miles = $.1929 per mile
Over 1500 miles = $.1855 per mile
The principal author of this revenue ruling is Kathleen Edmondson of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt/Government Entities). For further information regarding this revenue ruling, contact Ms. Edmondson at (202) 317-6798 (not a toll-free call).
Effective Date: These regulations are effective on September 16, 2014.
Applicability date: For date of applicability, see § 31.3402(p)–1(d).
This document contains amendments to 26 CFR part 31 under section 3402(p) of the Code. On November 29, 2013, Treasury and the IRS published in the Federal Register temporary regulations (TD 9646) at 78 FR 71476 and a notice of proposed rulemaking by cross-reference to temporary regulations (REG–146620–13, 78 FR 71542) under section 3402(p) of the Code relating to voluntary withholding.
Two written comments responding to the notice of proposed rulemaking were received but neither comment addressed issues relevant to the notice of proposed rulemaking or the temporary regulations. No public hearing was requested or held. Accordingly, the proposed regulations (which cross referenced the temporary regulations) are adopted without change as final regulations.
These final regulations under section 31.3402(p)–1 adopt without change the proposed regulations and the temporary regulations that allow the Secretary to describe other payments subject to voluntary withholding agreements in guidance published in the Internal Revenue Bulletin (IRB). Similarly to the proposed and the temporary regulations, these final regulations also provide that the IRB guidance will set forth requirements regarding the form and duration of the voluntary withholding agreement specific to the type of payment from which withholding is authorized.
It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. 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 regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business, and no comments were received.
The principal author of these regulations is Linda L. Conway-Hataloski, Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, personnel from other offices of the IRS and Treasury participated in their development.
Par. 2. Section 31.3402(p)–1 is amended by:
1. Revising the headings of paragraphs (a) and (b).
2. Removing the language “3402(b)” in the first sentence and “3402(p)” in the third sentence of paragraph (a) and “3402(p)” in the five places that it appears in paragraph (b) and adding “3402(p)(3)(A)” in those places.
3. Adding paragraphs (c) and (d).
§ 31.3402(p)–1 Voluntary Withholding Agreements.
(a) Employer-employee agreement. * * *
(b) Form and duration of employer-employee agreement. * * *
(d) Effective/applicability date. (1) This section applies on and after September 16, 2014.
Par. 3. Section 31.3402(p)–1T is removed. 31.3402(p)–1T [Removed].
Approved September 8, 2014.
Mark J. Mazur Assistant Secretary of the Treasury (Tax Policy).
(Filed by the Office of the Federal Register on September 15, 2014, 8:45 a.m., and published in the issue of the Federal Register for September 16, 2014, 79 F.R. 55362)
Rev. Rul. 2014–23
See section 6621(c) and section 301.6621–3 of the Regulations on Procedure and Administration for the definition of a large corporate underpayment and for the rules for determining the applicable date. Section 6621(c) and section 301.6621–3 are generally effective for periods after December 31, 1990.
Notice 88–59, 1988–1 C.B. 546, announced that in determining the quarterly interest rates to be used for overpayments and underpayments of tax under section 6621, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with section 6621 which, pursuant to section 6622, is subject to daily compounding.
The federal short-term rate determined in accordance with section 1274(d) during July 2014 is the rate published in Revenue Ruling 2014–19, 2014–32 IRB 266 to take effect beginning August 1, 2014. The federal short-term rate, rounded to the nearest full percent, based on daily compounding determined during the month of July 2014 is 0 percent. Accordingly, an overpayment rate of 3 percent (2 percent in the case of a corporation) and an underpayment rate of 3 percent are established for the calendar quarter beginning October 1, 2014. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 for the calendar quarter beginning October 1, 2014, is 0.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning October 1, 2014, is 5 percent. These rates apply to amounts bearing interest during that calendar quarter.
The 3 percent rate also applies to estimated tax underpayments for the fourth calendar quarter in 2014.
Interest factors for daily compound interest for annual rates of 0.5 percent are published in Appendix A of this Revenue Ruling. Interest factors for daily compound interest for annual rates of 2 percent, 3 percent and 5 percent are published in Tables 9, 11, and 15 of Rev. Proc. 95–17, 1995–1 C.B. 563, 565, and 569.
The principal author of this revenue ruling is Deborah Colbert-James of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this revenue ruling, contact Ms. Colbert-James at (202) 317-3400 (not a toll-free number).
Days Factor Days Factor Days Factor
PERIODS BEFORE JUL. 1, 1975—PERIODS ENDING DEC. 31, 1986
PERIOD RATE In 1995–1 C.B. DAILY RATE TABLE
align="center">TABLE OF INTEREST RATES
align="center">FROM JAN. 1, 1987—Dec. 31, 1998
align="center">OVERPAYMENTS
FROM JANUARY 1, 1999—PRESENT
1995–1 C.B.
Oct. 1, 2009—Dec. 31, 2009 4% 13 567
Jan. 1, 2010—Mar. 31, 2010 4% 13 567
Apr. 1, 2010—Jun. 30, 2010 4% 13 567
Jul. 1, 2010—Sep. 30, 2010 4% 13 567
Oct. 1, 2010—Dec. 31, 2010 4% 13 567
Jan. 1, 2011—Mar. 31, 2011 3% 11 565
Apr. 1, 2011—Jun. 30, 2011 4% 13 567
Jul. 1, 2011—Sep. 30, 2011 4% 13 567
Oct. 1, 2011—Dec. 31, 2011 3% 11 565
Jan. 1, 2012—Mar. 31, 2012 3% 59 613
Apr. 1, 2012—Jun. 30, 2012 3% 59 613
Jul. 1, 2012—Sep. 30, 2012 3% 59 613
Oct. 1, 2012—Dec. 31, 2012 3% 59 613
Jan. 1, 2013—Mar. 31, 2013 3% 11 565
Apr. 1, 2013—Jun. 30, 2013 3% 11 565
Jul. 1, 2013—Sep. 30, 2013 3% 11 565
Oct. 1, 2013—Dec. 31, 2013 3% 11 565
Jan. 1, 2014—Mar. 31, 2014 3% 11 565
Apr. 1, 2014—Jun. 30, 2014 3% 11 565
Jul. 1, 2014—Sep. 30, 2014 3% 11 565
Oct. 1, 2014—Dec. 31, 2014 3% 11 565
Oct. 1, 2009—Dec. 31, 2009 3% 11 565 4% 13 567
Jan. 1, 2010—Mar. 31, 2010 3% 11 565 4% 13 567
Apr. 1, 2010—Jun. 30, 2010 3% 11 565 4% 13 567
Jul. 1, 2010—Sep. 30, 2010 3% 11 565 4% 13 567
Oct. 1, 2010—Dec. 31, 2010 3% 11 565 4% 13 567
Jan. 1, 2011—Mar. 31, 2011 2% 9 563 3% 11 565
Apr. 1, 2011—Jun. 30, 2011 3% 11 565 4% 13 567
Jul. 1, 2011—Sep. 30, 2011 3% 11 565 4% 13 567
Oct. 1, 2011—Dec. 31, 2011 2% 9 563 3% 11 565
Jan. 1, 2012—Mar. 31, 2012 2% 57 611 3% 59 613
Apr. 1, 2012—Jun. 30, 2012 2% 57 611 3% 59 613
Jul. 1, 2012—Sep. 30, 2012 2% 57 611 3% 59 613
Oct. 1, 2012—Dec. 31, 2012 2% 57 611 3% 59 613
Jan. 1, 2013—Mar. 31, 2013 2% 9 563 3% 11 565
Apr. 1, 2013—Jun. 30, 2013 2% 9 563 3% 11 565
Jul. 1, 2013—Sep. 30, 2013 2% 9 563 3% 11 565
Oct. 1, 2013—Dec. 31, 2013 2% 9 563 3% 11 565
Jan. 1, 2014—Mar. 31, 2014 2% 9 563 3% 11 565
Apr. 1, 2014—Jun. 30, 2014 2% 9 563 3% 11 565
Jul. 1, 2014—Sep. 30, 2014 2% 9 563 3% 11 565
Oct. 1, 2014—Dec. 31, 2014 2% 9 563 3% 11 565
FROM JANUARY 1, 1991—PRESENT
Oct. 1, 2002—Dec. 31, 2002 8% 21 575
Oct. 1, 2009—Dec. 31, 2009 6% 17 571
Jan. 1, 2010—Mar. 31, 2010 6% 17 571
Apr. 1, 2010—Jun. 30, 2010 6% 17 571
Jul. 1, 2010—Sep. 30, 2010 6% 17 571
Oct. 1, 2010—Dec. 31, 2010 6% 17 571
Jan. 1, 2011—Mar. 31, 2011 5% 15 569
Apr. 1, 2011—Jun. 30, 2011 6% 17 571
Jul. 1, 2011—Sep. 30, 2011 6% 17 571
Oct. 1, 2011—Dec. 31, 2011 5% 15 569
Jan. 1, 2012—Mar. 31, 2012 5% 63 617
Apr. 1, 2012—Jun. 30, 2012 5% 63 617
Jul. 1, 2012—Sep. 30, 2012 5% 63 617
Oct. 1, 2012—Dec. 31, 2012 5% 63 617
Jan. 1, 2013—Mar. 31, 2013 5% 15 569
Apr. 1, 2013—Jun. 30, 2013 5% 15 569
Jul. 1, 2013—Sep. 30, 2013 5% 15 569
Oct. 1, 2013—Dec. 31, 2013 5% 15 569
Jan. 1, 2014—Mar. 31, 2014 5% 15 569
Apr. 1, 2014—Jun. 30, 2014 5% 15 569
Jul. 1, 2014—Sep. 30, 2014 5% 15 569
Oct. 1, 2014—Dec. 31, 2014 5% 15 569
FROM JANUARY 1, 1995—PRESENT
Jul. 1. 1998—Sep. 30, 1998 5.5% 16 570
Oct. 1, 2009—Dec. 31, 2009 1.5% 8 562
Jan. 1, 2010—Mar. 31, 2010 1.5% 8 562
Apr. 1, 2010—Jun. 30, 2010 1.5% 8 562
Jul. 1, 2010—Sep. 30, 2010 1.5% 8 562
Oct. 1, 2010—Dec. 31, 2010 1.5% 8 562
Jan. 1, 2011—Mar. 31, 2011 0.5%*
Apr. 1, 2011—Jun. 30, 2011 1.5% 8 562
Jul. 1, 2011—Sep. 30, 2011 1.5% 8 562
Oct. 1, 2011—Dec. 31, 2011 0.5%*
Jan. 1, 2012—Mar. 31, 2012 0.5%*
Apr. 1, 2012—Jun. 30, 2012 0.5%*
Jul. 1, 2012—Sep. 30, 2012 0.5%*
Oct. 1, 2012—Dec. 31, 2012 0.5%*
Jan. 1, 2013—Mar. 31, 2013 0.5%*
Apr. 1, 2013—Jun. 30, 2013 0.5%*
Jul. 1, 2013—Sep. 30, 2013 0.5%*
Oct. 1, 2013—Dec. 31, 2013 0.5%*
Jan. 1, 2014—Mar. 31, 2014 0.5%*
Apr. 1, 2014—Jun. 30, 2014 0.5%*
Jul. 1, 2014—Sep. 30, 2014 0.5%*
Oct. 1, 2014—Dec. 31, 2014 0.5%*
* The asterisk reflects the interest factors for daily compound interest for annual rates of 0.5 percent are published in Appendix A of this Revenue Ruling.
Notice 2014–50
This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the Internal Revenue Code. In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I). The rates in this notice reflect the application of § 430(h)(2)(C)(iv), which was added by the Moving Ahead for Progress in the 21st Century Act, Public Law 112–141 (MAP-21) and amended by section 2003 of the Highway and Transportation Funding Act of 2014, Public Law 113–159 (HATFA).
Generally, except for certain plans under sections 104 and 105 of the Pension Protection Act of 2006 and CSEC plans under § 414(y), § 430 of the Code specifies the minimum funding requirements that apply to single-employer plans pursuant to § 412. Section 430(h)(2) specifies the interest rates that must be used to determine a plan’s target normal cost and funding target. Under this provision, present value is generally determined using three 24-month average interest rates (“segment rates”), each of which applies to cash flows during specified periods. To the extent provided under § 430(h)(2)(C)(iv), these segment rates are adjusted by the applicable percentage of the 25-year average segment rates for the period ending September 30 of the year preceding the calendar year in which the plan year begins. However, an election may be made under § 430(h)(2)(D)(ii) to use the monthly yield curve in place of the segment rates.
Notice 2007–81, 2007–44 I.R.B. 899, provides guidelines for determining the monthly corporate bond yield curve, and the 24-month average corporate bond segment rates used to compute the target normal cost and the funding target. In accordance with the methodology specified in Notice 2007–81, the monthly corporate bond yield curve derived from August 2014 data is in Table I at the end of this notice. The spot first, second, and third segment rates for the month of August 2014 are, respectively, 1.24, 3.86, and 4.96.
The 24-month average segment rates determined under § 430(h)(2)(C)(i) through (iii) must be adjusted pursuant to § 430(h)(2)(C)(iv) by the applicable percentage of the corresponding 25-year average segment rates. Section 2003(a) of HATFA amended the applicable percentages under § 430(h)(2)(C)(iv). This change generally applies to plan years beginning on or after January 1, 2013. However, pursuant to section 2003(e)(2) of HATFA, a plan sponsor can elect not to have the amendments made to the applicable percentages by section 2003 of HATFA apply to any plan year beginning in 2013. These elections can be made either for all purposes or, alternatively, for purposes of determining the adjusted funding target attainment percentage under § 436. The 25-year average segment rates for plan years beginning in 2012, 2013, and 2014 were published in Notice 2012–55, 2012–36 I.R.B. 332, Notice 2013–11, 2013–11 I.R.B. 610, and Notice 2013–58, 2013–40 I.R.B. 294, respectively. For plan years beginning in 2015, based on the segment rates applicable for October 1989 to September 2014, the 25-year averages for the period ending September 30, 2014, of the first, second, and third segment rates are 5.24, 6.79, and 7.57 percent, respectively.
For plan years beginning in years 2012 through 2017, pursuant to the changes made by HATFA, the applicable minimum percentage is 90% and the applicable maximum percentage is 110%. These applicable percentages are referred to as HATFA applicable percentages. As described in the preceding paragraph, a special election is available for any plan year beginning in 2013 under which this change made by HATFA can be disregarded for all purposes or for limited purposes. To the extent such an election is made, the applicable minimum percentage for a plan year beginning in 2013 is 85% and the applicable maximum percentage for that plan year is 115%. These applicable percentages are referred to as MAP-21 applicable percentages.
The three 24-month average corporate bond segment rates applicable for September 2014 without adjustment for the 25-year average segment rate limits are as follows:
September 2014 1.15 4.06 5.15
Based on § 430(h)(2)(C)(iv) as amended by section 2003 of HATFA, the 24-month averages applicable for September 2014 adjusted for the HATFA applicable percentages of the corresponding 25-year average segment rates, are as follows:
Adjusted 24-Month Average Segment Rates, Based on the HATFA Applicable Percentage of 25-Year Average Rates
2013 September 2014 5.23 6.51 7.16
2014 September 2014 4.99 6.32 6.99
2015 September 2014 4.72 6.11 6.81
Based on § 430(h)(2)(C)(iv) as in effect prior to amendment by section 2003 of HATFA, the three 24-month averages applicable for September 2014 adjusted for the MAP-21 applicable percentages of the corresponding 25-year average segment rates, for plan years beginning in 2013, are as follows:
Adjusted 24-Month Average Segment Rates, Based on on MAP-21 Applicable Percentage of 25-Year Average Rates
2013 September 2014 4.94 6.15 6.76
Generally, for plan years beginning after 2007, § 431 specifies the minimum funding requirements that apply to multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum amount for the full-funding limitation described in section 431(c)(6)(A), based on the plan’s current liability. Section 431(c)(6)(E)(ii)(I) provides that the interest rate used to calculate current liability for this purpose must be no more than 5 percent above and no more than 10 percent below the weighted average of the rates of interest on 30-year Treasury securities during the four-year period ending on the last day before the beginning of the plan year. Notice 88–73, 1988–2 C.B. 383, provides guidelines for determining the weighted average interest rate. The rate of interest on 30-year Treasury securities for August 2014 is 3.20 percent. The Service has determined this rate as the average of the daily determinations of yield on the 30-year Treasury bond maturing in May 2044 determined each day through August 13, 2014, and the yield on the 30-year Treasury bond maturing in August 2044 determined each day for the balance of the month. The following rates were determined for plan years beginning in the month shown below.
September 2014 3.40 3.06 3.57
In general, the applicable interest rates under § 417(e)(3)(D) are segment rates computed without regard to a 24-month average. Notice 2007–81 provides guidelines for determining the minimum present value segment rates. Pursuant to that notice, the minimum present value segment rates determined for August 2014 are as follows:
1.24 3.86 4.96
Monthly Yield Curve for August 2014
Derived from August 2014 Data
Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield
0.5 0.16 20.5 4.60 40.5 5.00 60.5 5.14 80.5 5.21
1.0 0.42 21.0 4.62 41.0 5.01 61.0 5.14 81.0 5.21
1.5 0.67 21.5 4.63 41.5 5.01 61.5 5.15 81.5 5.22
2.0 0.92 22.0 4.65 42.0 5.02 62.0 5.15 82.0 5.22
2.5 1.16 22.5 4.67 42.5 5.02 62.5 5.15 82.5 5.22
3.0 1.39 23.0 4.68 43.0 5.03 63.0 5.15 83.0 5.22
3.5 1.61 23.5 4.70 43.5 5.03 63.5 5.16 83.5 5.22
4.0 1.83 24.0 4.71 44.0 5.04 64.0 5.16 84.0 5.22
4.5 2.03 24.5 4.73 44.5 5.04 64.5 5.16 84.5 5.22
5.0 2.22 25.0 4.74 45.0 5.04 65.0 5.16 85.0 5.22
5.5 2.41 25.5 4.75 45.5 5.05 65.5 5.16 85.5 5.23
6.0 2.58 26.0 4.77 46.0 5.05 66.0 5.17 86.0 5.23
6.5 2.74 26.5 4.78 46.5 5.06 66.5 5.17 86.5 5.23
7.0 2.89 27.0 4.79 47.0 5.06 67.0 5.17 87.0 5.23
7.5 3.04 27.5 4.80 47.5 5.06 67.5 5.17 87.5 5.23
8.0 3.17 28.0 4.81 48.0 5.07 68.0 5.17 88.0 5.23
8.5 3.30 28.5 4.82 48.5 5.07 68.5 5.18 88.5 5.23
9.0 3.42 29.0 4.83 49.0 5.08 69.0 5.18 89.0 5.23
9.5 3.52 29.5 4.84 49.5 5.08 69.5 5.18 89.5 5.23
10.0 3.63 30.0 4.85 50.0 5.08 70.0 5.18 90.0 5.24
10.5 3.72 30.5 4.86 50.5 5.09 70.5 5.18 90.5 5.24
11.0 3.80 31.0 4.87 51.0 5.09 71.0 5.18 91.0 5.24
11.5 3.88 31.5 4.88 51.5 5.09 71.5 5.19 91.5 5.24
12.0 3.96 32.0 4.89 52.0 5.10 72.0 5.19 92.0 5.24
12.5 4.02 32.5 4.90 52.5 5.10 72.5 5.19 92.5 5.24
13.0 4.09 33.0 4.91 53.0 5.10 73.0 5.19 93.0 5.24
13.5 4.14 33.5 4.91 53.5 5.11 73.5 5.19 93.5 5.24
14.0 4.19 34.0 4.92 54.0 5.11 74.0 5.19 94.0 5.24
14.5 4.24 34.5 4.93 54.5 5.11 74.5 5.20 94.5 5.24
15.0 4.28 35.0 4.94 55.0 5.11 75.0 5.20 95.0 5.25
15.5 4.32 35.5 4.94 55.5 5.12 75.5 5.20 95.5 5.25
16.0 4.36 36.0 4.95 56.0 5.12 76.0 5.20 96.0 5.25
16.5 4.40 36.5 4.96 56.5 5.12 76.5 5.20 96.5 5.25
17.0 4.43 37.0 4.96 57.0 5.13 77.0 5.20 97.0 5.25
17.5 4.46 37.5 4.97 57.5 5.13 77.5 5.20 97.5 5.25
18.0 4.48 38.0 4.97 58.0 5.13 78.0 5.21 98.0 5.25
18.5 4.51 38.5 4.98 58.5 5.13 78.5 5.21 98.5 5.25
19.0 4.53 39.0 4.99 59.0 5.14 79.0 5.21 99.0 5.25
19.5 4.56 39.5 4.99 59.5 5.14 79.5 5.21 99.5 5.25
20.0 4.58 40.0 5.00 60.0 5.14 80.0 5.21 100.0 5.25
Notice 2014–51
Section 1298(f) Reporting Requirements for U.S. Persons that Hold Stock of a Passive Foreign Investment Company that is Marked to Market Under Section 475 or Another Chapter 1 Code Provision Other Than Section 1296
This notice announces that the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) will amend the regulations under section 1298(f) of the Internal Revenue Code (Code) to provide guidance concerning United States persons (U.S. persons) that hold stock of a passive foreign investment company within the meaning of section 1297(a) (PFIC) that is marked to market under section 475 or another chapter 1 Code provision other than section 1296.
.01 Sections 1291 Through 1298
Sections 1291 through 1298 set forth three tax regimes for shareholders that own stock of a PFIC: (i) the excess distribution rules under section 1291; (ii) the qualified electing fund (QEF) rules under section 1293; and (iii) the mark to market rules under section 1296, which apply when an election under section 1296(k) is in effect.
Section 1298(f) provides that, except as otherwise provided by the Secretary, a U.S. person that is a shareholder of a PFIC must file an annual report containing the information required by the Secretary. Section 1.1298–1T sets forth the annual information reporting requirements for PFIC shareholders. Annual information reports of PFIC shareholders are provided on Form 8621, “Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund.” Under section 6501(c)(8), the period of limitation for assessment of tax with respect to periods for which reporting is required under section 1298(f) will not expire before three years after the date on which the IRS receives Form 8621 for the taxable year.
.02 PFIC Stock Marked to Market Under Section 475 or Another Chapter 1 Code Provision Other than Section 1296
Section 1291(d)(1) provides that, subject to the coordination rules provided in section 1296(j), section 1291 does not apply if an election under section 1296(k) is in effect for the taxpayer’s taxable year. Section 1291(d)(1) further provides that, subject to coordination rules similar to the rules of section 1296(j), section 1291 also does not apply in the case of PFIC stock that is marked to market under any other provision of chapter 1 of the Code (a non-section 1296 MTM regime), including section 475. The regulations under section 1291 incorporate these rules, provide guidance on the coordination rules, and clarify that the section 1291(d)(1) rule applies with respect to a non-section 1296 MTM regime regardless of whether the applicable mark to market regime is mandatory or elective. § 1.1291–1(c)(4). The coordination rule relevant to a non-section 1296 MTM regime applies to the first taxable year in which a U.S. person marks to market the PFIC stock if, during the U.S. person’s holding period (as defined in section 1291(a)(3)(A) and § 1.1296–1(f)), the foreign corporation was a PFIC for any taxable year prior to such first taxable year and the corporation was not treated as a QEF with respect to the U.S. person. Section 1291(d)(1) and § 1.1291–1(c)(4)(ii). Subject to this coordination rule, U.S. persons that hold PFIC stock that has been marked to market under a non-section 1296 MTM regime are not subject to tax under any of the PFIC regimes. See also §§ 1.1295–1(i)(3) and 1.1296–1(h)(3).
For example, in cases in which a U.S. person properly marks to market under section 475 its PFIC stock in the first year and each succeeding year that it holds the stock, the U.S. person will not be subject to any of the PFIC regimes with respect to the stock. Rather, the U.S. person will be required to report any gain with respect to the PFIC stock under the rules of section 475. However, a U.S. person that is subject to section 475 (either because the U.S. person is a dealer in securities under section 475 or has made a valid and timely election under section 475(f)) may not be required under section 475 to mark to market certain stock, such as stock that it holds for investment or as a hedge. See section 475(b)(1)(A) and (C). A U.S. person will be subject to tax under the PFIC regimes with respect to any PFIC stock that is not marked to market under a non-section 1296 MTM regime.
.03 Section 1298(f) Information Reporting Regulations
On December 31, 2013, the Treasury Department and the IRS published temporary and proposed regulations under sections 1291 and 1298 (2014–3 I.R.B. 394), which included guidance under section 1298(f) on the annual filing requirements for shareholders of PFICs. § 1.1298–1T. The regulations generally are effective for taxable years of shareholders ending on or after December 31, 2013. § 1.1298–1T(h).
Under § 1.1298–1T(b), a U.S. person that directly owns stock in a PFIC or that is an indirect shareholder of a PFIC generally is required to file a Form 8621. Section 1.1298–1T(b) provides certain exceptions from the information reporting requirements, including an exception that can apply when the aggregate value of PFIC stock held by a shareholder is less than a specified threshold. §§ 1.1298–1T(c)(2)(i)(A)(1) and 1.1298–1T(c)(2)(iii).
The § 1.1298–1T regulations do not provide an exception from the information reporting requirements for shareholders of PFIC stock that is marked to market under a non-section 1296 MTM regime. Thus, a U.S. person that owns PFIC stock that is marked to market under a non-section 1296 MTM regime is subject to the generally applicable rules in § 1.1298–1T that apply to direct and indirect shareholders that own PFIC stock.
SECTION 3. SECTION 1298(f) INFORMATION REPORTING FOR U.S. PERSONS THAT OWN AN INTEREST IN A PFIC THAT IS MARKED TO MARKET UNDER A NON-SECTION 1296 MTM REGIME
The Treasury Department and the IRS have determined that a U.S. person that holds PFIC stock that is marked to market under a non-section 1296 MTM regime generally should not be subject to the reporting requirements of § 1.1298–1T with respect to that stock. Accordingly, the Treasury Department and the IRS will amend § 1.1298–1T to provide an exception from the reporting requirements of § 1.1298–1T for a U.S. person with respect to PFIC stock that is marked to market under a non-section 1296 MTM regime, except that the exception will not be available for a taxable year in which the U.S. person is required to apply the rules of section 1291 with respect to the PFIC stock pursuant to the coordination rules in § 1.1291–1(c)(4)(ii). The exception from the reporting requirements of § 1.1298–1T will not be available to the extent PFIC stock held by a U.S. person is not in fact marked to market for any reason, including, for example, because it is treated as held for investment or as a hedge under section 475. In addition, the regulations will be revised to provide that a shareholder that is not subject to section 1298(f) information reporting with respect to PFIC stock that is marked to market under a non-section 1296 MTM regime is not required to take the value of the stock into account for purposes of determining whether it exceeds the relevant threshold under § 1.1298–1T(c)(2)(i)(A)(1) or § 1.1298–1T(c)(2)(iii).
If a U.S. person is not subject to the reporting requirements of section 1298(f) with respect to PFIC stock for a taxable year pursuant to the regulations, the failure to furnish Form 8621 with respect to the PFIC stock does not result in the extension of the period of limitation for the taxable year under section 6501(c)(8). Accordingly, the IRS will not assert that the period of limitation is extended for any taxable year of any shareholder of PFIC stock that appropriately relies on the rules described in this notice prior to the issuance of final regulations.
Shareholders may rely on the rules described in Section 3 of this notice for their taxable years ending on or after December 31, 2013. The provisions of the future final regulations incorporating the guidance described in Section 3 of this notice will be effective for taxable years of shareholders ending on or after December 31, 2013.
The principal author of this notice is Rose E. Jenkins of the Office of Associate Chief Counsel (International). For further information regarding this notice contact Rose E. Jenkins at (202) 317-6934 (not a toll-free number).
Bulletins 2014–27 through 2014–40