Source: https://www.irs.gov/irb/2017-21_IRB
Timestamp: 2019-11-13 10:19:31
Document Index: 365935642

Matched Legal Cases: ['§ 5', '§ 36', '§ 36', '§ 4081', '§ 355', '§ 351', '§ 355', '§ 368', '§ 301', '§ 361', '§ 355', '§ 355', '§ 355', '§ 355', '§ 368', '§ 316', '§ 301', '§ 368', '§ 368', '§ 368', '§ 361', '§ 361', '§ 361', '§ 354', '§ 355', '§ 356', '§ 1001', '§ 351', '§ 1001', '§ 355', '§ 332', '§ 351', '§ 351', '§ 356', '§ 301', '§ 1', '§ 368', '§ 351', '§ 355', '§ 1', '§ 355', '§ 357', '§ 351', '§ 355', '§ 355', '§ 332', '§ 355', '§ 355', '§ 355', '§ 1', '§ 351', '§ 351', '§ 351', '§ 351', '§ 355', '§ 355', '§ 351', '§ 368', '§ 301', '§ 368', '§ 361', '§ 361', '§ 361', '§ 355', '§ 351', '§ 355', '§ 361', '§ 301', '§ 368', '§ 4081', '§ 4081', '§ 4081', '§ 4081', '§ 4081', '§ 4081', '§ 4081', '§ 48', '§ 4082', '§ 4081', '§ 4081', '§ 48', '§ 4081', '§ 4081', '§ 4081', '§ 4081', '§ 48', '§ 4081', '§ 4082', '§ 4081', '§ 48', '§ 4081', '§ 48', '§ 4082', '§ 4081', '§ 4101', '§ 48', '§ 4101', '§ 6725', '§ 48', '§ 4081', '§ 143', '§ 25', '§ 143', '§ 143', '§ 143', '§ 4005', '§ 143', '§ 143', '§ 143', '§ 143', '§ 143', '§ 3', '§ 3', '§ 36', '§ 36', '§ 36', '§ 36', '§ 5000', '§ 36', '§ 1', '§ 36', '§ 1', '§ 5000', '§ 1', '§ 223', '§ 223', '§ 223']

Internal Revenue Bulletin: 2017-21 | Internal Revenue Service
Internal Revenue Bulletin: 2017-21
Rev. Rul. 201709
Notice 201730
Rev. Proc. 201735
Rev. Proc. 201736
Rev. Proc. 201737
Rev. Rul. 2017–09 Rev. Rul. 2017–09
This revenue ruling provides guidance regarding the federal tax treatment of certain transactions referred to as ‘north-south’ transactions. The guidance describes two north-south transactions: one involving steps that are respected as separate and another involving steps that are integrated. This revenue ruling also removes § 5.02 from Rev. Proc. 2017–3, 2017–1 I.R.B. 130, thereby lifting the prohibition on private letter rulings involving north-south transactions.
Rev. Proc. 2017–36 Rev. Proc. 2017–36
This revenue procedure provides indexing adjustments for certain provisions under sections 36B and 5000A of the Internal Revenue Code. In particular, it updates the Applicable Percentage Table in § 36B(b)(3)(A)(i) to provide the Applicable Percentage Table for 2018. This table is used to calculate an individual’s premium tax credit. This revenue procedure also updates the required contribution percentage in section 36B(c)(2)(C)(i)(II) for plan years beginning after calendar year 2017. The percentage is used to determine whether an individual is eligible for affordable employer-sponsored minimum essential coverage under § 36B.
Rev. Proc. 2017–37 Rev. Proc. 2017–37
This revenue procedure provides the 2018 inflation adjusted amounts for Health Savings Accounts (HSAs) as determined under section 223 of the Internal Revenue Code.
Notice 2017–30 Notice 2017–30
This notice provides 180-day emergency relief for fuel removals from Milwaukee terminals due to the shutdown of the West Shore Pipeline. Once the 180-day emergency relief expires, the notice provides a temporary mechanism for refunds of the § 4081(a)(1) tax imposed upon removals of undyed diesel fuel from a Milwaukee terminal when such fuel is transported to and entered into a Green Bay terminal and subsequently removed from that Green Bay terminal as dyed fuel destined for a nontaxable use.
Rev. Proc. 2017–35 Rev. Proc. 2017–35
The proposed revenue procedure provides issuers of qualified mortgage bonds, as defined in section 143(a) of the Internal Revenue Code , and issuers of mortgage credit certificates as defined in section 25(c), with the United States median gross income figure most recently computed by the Department of Housing and Urban Development (HUD). The proposed revenue procedure also provides these issuers with guidance concerning the area median gross income as computed by HUD. Issuers of qualified mortgage bonds (QMB) and mortgage credit certificates (MCC) must use these income figures in determining whether the income limitation placed on the beneficiaries of the mortgages and certificates may be increased because the residences to be financed are located in high housing cost areas. See sections 25(c)(A)(iii)(IV) and 143(f)(5).
Rev. Rul. 2017–09
(1) If a parent corporation (P) transfers property (including property constituting an active trade or business that is transferred for the purpose of meeting the requirements of § 355(b)(1)(A) of the Internal Revenue Code (Code)), to its subsidiary (D), and if, pursuant to the same overall plan, this transfer is followed by a distribution by D of the stock of its controlled subsidiary (C) to P, are the transactions treated for federal income tax purposes as an exchange under § 351, followed by a distribution under § 355?
(2) Is a transfer of money or other property by C to D, made in pursuance of a plan of reorganization under §§ 368(a)(1)(D) and 355, governed by § 301 or § 361?
P owns all the stock of D, which owns all the stock of C. The fair market value of the C stock is $100X. P has been engaged in Business A for more than 5 years, and C has been engaged in Business B for more than 5 years. Business A and Business B each constitutes the active conduct of a trade or business within the meaning of § 355(b). D is not engaged in the active conduct of a trade or business, directly or through any member of its separate affiliated group (within the meaning of § 355(b)(3)) other than C.
On Date 1, P transfers the property and activities constituting Business A, having a fair market value of $25X, to D in exchange for additional shares of D stock. On Date 2, pursuant to a dividend declaration, D transfers all the C stock to P for a valid corporate business purpose. D retains the Business A property and continues the active conduct of Business A after the distribution. The purpose of P’s transfer of the property and activities of Business A to D is to allow D to satisfy the active trade or business requirement of § 355(b)(1)(A).
P owns all the stock of D, which owns all the stock of C. D has been engaged in Business A for more than 5 years. C has been engaged in Business B for more than 5 years. Business A and Business B each constitutes the active conduct of a trade or business within the meaning of § 355(b).
On Date 1, C transfers $15X of money and property having a fair market value of $10X to D, pursuant to a dividend declaration, and D retains the money and property. On Date 2, D transfers to C property having a basis of $20X and a fair market value of $100X, and D distributes all the C stock to P in a transaction qualifying as a reorganization under §§ 368(a)(1)(D) and 355. C and D planned and executed the Date 1 transfer in pursuance of the plan of reorganization.
Section 301(c)(1) provides that a distribution that is a dividend (as defined in § 316), made by a corporation to a shareholder with respect to its stock, will be includible in the gross income of the shareholder. Section 301(c)(2) provides that the portion of the distribution which is not a dividend will be applied against and reduce the adjusted basis of the stock. Section 301(c)(3) provides that the portion of the distribution which is not a dividend, to the extent that it exceeds the adjusted basis of the stock, will be treated as gain from the sale or exchange of property.
Section 311(b) provides in part that, if a corporation distributes appreciated property to a shareholder in a distribution to which § 301 applies, gain (but no loss) will be recognized to the distributing corporation as if it had sold the property to the shareholder at its fair market value.
Section 316 generally defines a dividend as any distribution of property made by a corporation to its shareholders out of its earnings and profits accumulated after February 28, 1913, or out of its earnings and profits of the taxable year (computed as of the close of the taxable year without diminution by reason of any other distributions made during the taxable year), without regard to the amount of the earnings and profits at the time the distribution was made.
Section 351(a) provides that no gain or loss will be recognized when property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control (as defined in § 368(c)) of the corporation.
Section 355(a)(1) provides that, if certain requirements are met, a corporation may distribute stock and securities of a controlled corporation to its shareholders and security holders without recognition of gain or loss (nonrecognition treatment) or income to the recipient shareholders or security holders.
Section 355(a)(1)(A) provides that, for a distribution to qualify for nonrecognition treatment, the distributing corporation must distribute stock or securities of a corporation it controls (as defined in § 368(c)) immediately before the distribution.
Section 355(a)(1)(D) provides in part that a distribution may qualify for nonrecognition treatment if the distributing corporation distributes an amount of stock in the controlled corporation constituting control within the meaning of § 368(c).
Section 355(b)(1)(A) provides that the distributing corporation and the controlled corporation each must be engaged in the active conduct of a trade or business immediately after the distribution.
Section 361(a) provides that no gain or loss will be recognized to a corporation a party to a reorganization upon exchange of property in pursuance of a plan of reorganization solely for stock or securities in another corporation a party to the reorganization.
Section 361(b) provides that, if § 361(a) would apply to an exchange of assets by a reorganizing corporation but for the fact that the property received in exchange consists not only of stock or securities of the acquiring corporation permitted by § 361(a) to be received without the recognition of gain, but also of other property or money, then (A) if the corporation receiving that other property or money distributes it in pursuance of the plan of reorganization, no gain to the corporation will be recognized from the exchange, but (B) if the corporation receiving that other property or money does not distribute it in pursuance of the plan of reorganization, any gain that the corporation realizes on the exchange of its property will be recognized up to the sum of the money and the fair market value of the other property received that is not distributed.
Section 361(c)(2)(A) provides that, if the acquiring corporation distributes property other than qualified property (defined in § 361(c)(2)(B)), and the fair market value of such property exceeds its adjusted basis, then gain will be recognized as if such property were sold to the distributee at its fair market value.
Section 368(a)(1)(D) includes within the definition of “reorganization” a transfer by a corporation of part of its assets to another corporation if immediately after the transfer the transferor is in control of the corporation to which the assets are transferred and the transferor distributes the stock in a transaction that qualifies under § 354, § 355, or § 356.
Section 368(c) defines “control” as ownership of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote and at least 80 percent of the total number of shares of all other classes of stock of the corporation.
Section 1001(a) provides that the gain from the sale or other disposition of property will be the excess of the amount realized therefrom over the adjusted basis provided in section 1011 for determining gain, and the loss will be the excess of the adjusted basis provided in such section for determining loss over the amount realized. Section 1001(c) provides that except as otherwise provided in subtitle A of the Code, the entire amount of the gain or loss, determined under § 1001, on the sale or exchange of property will be recognized.
Section 1032(a) provides that no gain or loss will be recognized to a corporation on the receipt of money or other property in exchange for stock (including treasury stock) of such corporation.
Section 1.1002–1(c) provides, in part, with respect to §§ 351 and 361, that the underlying assumption of these exceptions to the recognition of gain or loss under § 1001 is that the new property is substantially a continuation of the old investment still unliquidated; and in the case of reorganizations, that the new enterprise, the new corporate structure, and the new property are substantially continuations of the old still unliquidated.
In Rev. Rul. 74–79, 1974–1 C.B. 81, the Internal Revenue Service (Service) ruled that § 355(b)(1)(A)’s requirement that the distributing corporation be engaged in an active trade or business was satisfied where the distributing corporation was an inactive holding company, and a subsidiary of the distributing corporation engaged in a § 332 liquidation for the purpose of transferring its active trade or business to the distributing corporation.
In Rev. Rul. 2003–51, 2003–1 C.B. 938, a person (transferor) transferred assets to a corporation (first corporation) in exchange for an amount of stock in the first corporation constituting control (first transfer). Pursuant to a binding agreement entered into by the transferor with a third party prior to the first transfer, (i) the transferor transferred the stock of the first corporation (second transfer) to another corporation (second corporation); (ii) the third party transferred money to the second corporation (third transfer); and (iii) the second corporation transferred the money transferred to it by the third party to its wholly-owned subsidiary, the first corporation. Immediately after these transactions, the transferor and the third party were in control of the second corporation, and the second corporation was in control of the first corporation. The Service ruled that the first transfer satisfied the control requirement of § 351(a) notwithstanding the second transfer. The Service concluded that the second transfer, a nontaxable disposition of the stock received in the first transfer, was not inconsistent with the purposes of § 351 because the transaction lacked the characteristics of a sale and the transferor retained beneficial ownership in the assets transferred to the first corporation.
In Estates of Bell v. Comm’r, T.C.M. 1971–285, the Tax Court explained that sales of assets between a taxpayer’s wholly-owned corporations followed by liquidating distributions “literally comply with the provisions of the Code dealing with complete liquidations, sections 331, 332, and 337, but in substance accomplish a reorganization coupled with the distribution of a dividend.” (Emphasis added.) The court went on to state that, because § 356 is “the exclusive measure of dividend income provided by Congress where money is distributed to shareholders as an incident of a reorganization,” § 301 and § 1.301–1(l) were not applicable to the acquisitive reorganization under § 368(a)(1)(D).
Situation 1: The federal income tax consequences to P and D in Situation 1 will depend on whether the Date 1 and Date 2 transfers are treated as separate transactions. Because they are undertaken pursuant to the same overall plan, a question arises as to whether the two transactions are part of a single reciprocal transfer of property—an exchange.
If the Date 1 and Date 2 transfers are respected as separate transactions for federal income tax purposes, P would be treated as transferring property to D on Date 1 for D stock in an exchange to which § 351 applies, and D would be treated as distributing all the stock of C to P on Date 2 in a distribution to which § 355 applies (assuming the requirements under those Code sections are otherwise satisfied).
The determination of whether steps of a transaction should be integrated requires review of the scope and intent underlying each of the implicated provisions of the Code. The tax treatment of a transaction generally follows the taxpayer’s chosen form unless: (1) there is a compelling alternative policy; (2) the effect of all or part of the steps of the transaction is to avoid a particular result intended by otherwise-applicable Code provisions; or (3) the effect of all or part of the steps of the transaction is inconsistent with the underlying intent of the applicable Code provisions. See H.B. Zachry Co. v. Comm’r, 49 T.C. 73 (1967); Makover v. Comm’r, T.C. Memo 1967–53; Rev. Rul. 78–330, 1978–2 C.B. 147. Sections 351, 355, and 368 generally allow continued ownership of property in modified corporate form without recognition of gain. See American Compress & Warehouse Co. v. Bender, 70 F.2d 655 (5th Cir. 1934), cert. denied, 293 U.S. 607 (1934); § 1.1002–1(c); Rev. Rul. 2003–51.
Section 355(b)(2)(C) and (D) permit the direct and indirect acquisition of an active trade or business by a corporation within the 5-year period ending on the date of a distribution in transactions in which no gain or loss was recognized. The intent of § 355(b)(2)(C) and (D) is to prevent the acquisition of a trade or business by the distributing corporation or the controlled corporation from an outside party in a taxable transaction within the 5-year pre-distribution period. See Rev. Rul. 78–442, 1978–2 C.B. 143 (holding that § 357(c) gain arising from a § 351 transfer of an active trade or business does not violate § 355(b)(2)(C)). These provisions ensure that transfers of assets in transactions eligible for nonrecognition treatment (nonrecognition transactions) throughout the 5-year period will not adversely impact an otherwise qualifying § 355 distribution. This principle is illustrated in Rev. Rul. 74–79, in which an active trade or business was transferred to a distributing corporation in a § 332 liquidation to satisfy the requirements of § 355(b).
The transfer of property permitted to be received by D in a nonrecognition transaction has independent significance when undertaken in contemplation of a distribution by D of stock and securities described in § 355(a)(1)(A). The transfer thus is respected as a separate transaction, regardless of whether the purpose of the transfer is to qualify the distribution under § 355(b). See, e.g., Rev. Rul. 78–330; § 1.355–6(d)(3)(v)(B), Example 1; and Athanasios v. Comm’r, T.C. Memo 1995–72. Back-to-back nonrecognition transfers are generally respected when consistent with the underlying intent of the applicable Code provisions and there is no compelling alternative policy. See, e.g., Rev. Rul. 2015–9, 2015–21 I.R.B. 972, and Rev. Rul. 2015–10, 2015–21 I.R.B. 973.
P’s transfer on Date 1 is the type of transaction to which § 351 is intended to apply. Analysis of the transaction as a whole does not indicate that P’s transfer should be properly treated other than in accordance with its form. Each step provides for continued ownership in modified corporate form. Additionally, the steps do not resemble a sale, and none of the interests are liquidated or otherwise redeemed. On these facts, nonrecognition treatment under §§ 351 and 355 is not inconsistent with the congressional intent of these Code provisions. The effect of the steps in Situation 1 is consistent with the policies underlying §§ 351 and 355. Accordingly, the Date 1 and Date 2 transfers described in Situation 1 will be respected as separate transactions for federal income tax purposes. Therefore, § 351 applies to P’s transfer on Date 1 and § 355 applies to D’s transfer on Date 2.
The federal income tax consequences would be the same (qualification under § 355) if, instead of acquiring an active trade or business in a § 351 transfer from P to D, D acquired an active trade or business from a subsidiary of P in a cross-chain reorganization under § 368(a)(1). See Rev. Rul. 74–79.
Situation 2: If the distribution by C of money and other property on Date 1 is treated as separate from the distribution of C stock, § 301 would apply to D’s receipt of the money and other property from C, and no gain would be recognized to D upon the transfer of property to C.
If the Date 1 distribution is treated as made in pursuance of the plan of reorganization under §§ 368(a)(1)(D) and 355 that includes the Date 2 distribution of C stock, the money and other property distributed by C to D would constitute boot to D, and, under § 361(b)(1)(B), gain would be recognized to D on its transfer of property to C to the extent of the amount of the money and the fair market value of the property. Section 361(b) requires gain recognition to D if boot is distributed to D and not further distributed by D to its shareholders or creditors in pursuance of the plan of reorganization unless the facts establish that the distribution is in substance a separate transaction. Cf., Rev. Rul. 71–364, 1971–2 C.B. 182 (finding that a distribution of money declared and paid following a reorganization exchange is treated as boot in the reorganization).
As noted above, in Estates of Bell v. Comm’r, the Tax Court explained that the boot rules are “the exclusive measure of dividend income provided by Congress where cash is distributed to shareholders as an incident of a reorganization.” See also American Manufacturing. Co. v. Comm’r, 55 T.C. 204 (1970). Section 361 broadly looks to whether transfers of money or other property occur “in pursuance of the plan of reorganization” or “in connection with the reorganization.”
In Situation 2, the distribution is made in pursuance of the plan of reorganization. A distribution of money and other property in pursuance of the plan of reorganization will be treated as boot subject to recognition of gain, consistent with the congressional intent underlying § 361.
Therefore, the federal income tax treatment of the transaction will follow its substance, and the distribution of money and property by C to D will constitute a distribution of boot under § 361(b).
(1) In Situation 1, the transfer by P to its subsidiary, D, of property (including a transfer of property constituting an active trade or business for the purpose of meeting the requirements of § 355(b)(1)(A)), immediately followed by the distribution by D to P of the stock of its controlled subsidiary, C, is treated as an exchange to which § 351 applies, followed by a distribution of C stock to which § 355 applies.
(2) In Situation 2, § 361, and not § 301, applies to the transfer of money or other property by C to D made in pursuance of the plan of reorganization under §§ 368(a)(1)(D) and 355.
Rev. Proc. 2017–3, 2017–1 I.R.B. 130, is modified by deleting section 5.02 (with respect to steps in North-South transactions). However, the Service may decline to issue a letter ruling addressing the integration of steps when appropriate in the interest of sound tax administration or on other grounds when warranted by the facts or circumstances of a particular case. There are also areas in which the Service will not issue letter rulings or determination letters because the issues are inherently factual, in the interest of sound tax administration, and other reasons. See Rev. Proc. 2017–1, 2017–1 I.R.B. 1, section 6.02; Rev. Proc. 2017–3, sections 2.01 and 3.01(51).
The principal author of this revenue ruling is Susan E. Massey of the Office of Associate Chief Counsel (Corporate). For further information regarding this revenue ruling, contact Susan E. Massey at (202) 317-5024 (not a toll-free number).
Notice 2017–30
Temporary Relief for Fuel Removals Due to Energy Emergencies Resulting from West Shore Pipeline Shutdown
This notice provides 180-day emergency relief for fuel removals from Milwaukee terminals due to energy emergencies resulting from the shutdown of the West Shore Pipeline. Once the 180-day emergency relief described in this notice expires, there will be subsequent temporary relief that provides a mechanism for refunds of the § 4081(a)(1) tax imposed upon removals of undyed diesel fuel and kerosene from the Milwaukee terminals when such fuel is subsequently removed from the Green Bay terminals as dyed fuel destined for a nontaxable use.
.01 West Shore Pipeline Shutdown
The West Shore Pipeline is a 650-mile pipeline system that has transported refined petroleum products to the northeastern part of Wisconsin for over 50 years. The West Shore Pipeline is the only fuel pipeline serving Green Bay and northeastern Wisconsin. The West Shore Pipeline segment between the cities of Milwaukee and Green Bay closed on March 10, 2016, for repairs, testing, and inspections. On June 22, 2016, this segment of the West Shore Pipeline was shut down indefinitely after integrity concerns were detected. On April 21, 2017, the Wisconsin Department of Administration issued a statement that this segment of the West Shore Pipeline will not be replaced. Due to this unanticipated shut down and the decision that this section of the pipeline will not be replaced or reactivated, the areas of Green Bay and northeast Wisconsin are expected to have material fuel shortages for a relatively long period of time. In response to this shut down and the resulting fuel shortages, Wisconsin Governor Scott Walker issued Executive Orders on May 6, 2016, September 7, 2016, and November 4, 2016, declaring energy emergencies.
Fuel is currently being removed from the Milwaukee terminals and transported via tank trucks and/or rail cars to Green Bay terminals in order to mitigate and avoid material fuel shortages and supply fuel to the northern portion of Wisconsin during the West Shore Pipeline outage. Aside from vessels, transporting fuel via tank trucks and rail cars is the only way to get fuel to Green Bay for distribution now that the pipeline is permanently shut down.
Section 4081(a)(1)(A)(ii) imposes tax on the removal of taxable fuel, which includes gasoline and diesel fuel, from any terminal.
Section 48.4081–1(b) of the Manufacturers and Retailers Excise Taxes Regulations defines “removal” as any physical transfer of taxable fuel, and any use of taxable fuel other than as a material in the production of taxable fuel or special fuels. Taxable fuel is not removed when it evaporates or is otherwise lost or destroyed.
Section 48.4081–2 provides the rules regarding tax on the removal of taxable fuel at the terminal rack.
Section 4081(a)(2)(A)(i) prescribes a tax rate of 18.3 cents per gallon of gasoline for the tax imposed by § 4081(a)(1)(A).
Section 4081(a)(2)(B) imposes an additional tax of 0.1 cent per gallon (referred to as Leaking Underground Storage Tank Trust Fund tax or the LUST tax).
Section 4081(a)(2)(A)(iii) prescribes a tax rate of 24.3 cents per gallon of diesel fuel or kerosene for the tax imposed by § 4081(a)(1)(A). Section 4081(a)(2)(B) imposes an additional LUST tax of 0.1 cent per gallon.
Section 4081(e) provides that, under regulations prescribed by the Secretary, if any person who paid the tax imposed by § 4081 with respect to any taxable fuel establishes to the satisfaction of the Secretary that a prior tax was paid (and not credited or refunded) with respect to such taxable fuel, then an amount equal to the tax paid by such person shall be allowed as a refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by section 4081.
Section 4082 provides that the tax imposed by § 4081 does not apply to diesel fuel and kerosene that is indelibly dyed in accordance with Treasury regulations, meets any marking requirements prescribed by Treasury regulations, and is destined for a nontaxable use.
.03 Reasons for Relief
Under existing law, tax is imposed under § 4081(a)(1) upon the removal of taxable fuel from the Milwaukee terminals (referred to as the first tax). The taxable fuel that is transported to and entered into the Green Bay terminals is subject to a second § 4081(a)(1) tax upon removal from the Green Bay terminals (referred to as the second tax). Section 4081(e) and § 48.4081–7 provide a refund mechanism that allows the person who pays the second tax, i.e., the position holder in Green Bay, to claim a refund (but not a credit) in the amount of the second tax paid (without interest). In the case of dyed fuel, there is no mechanism in existing law that allows a refund for taxable fuel that is removed from a Milwaukee terminal, transported to and entered into a Green Bay terminal, and dyed pursuant to the provisions of § 4082.
The Treasury Department and the Internal Revenue Service (IRS) recognize that position holders in Milwaukee will need time to adjust sales contracts and business practices and to explore the possibility of increasing bulk transfers via vessel in order to account for the imposition of the § 4081(a)(1) tax upon the removal of taxable fuel from the Milwaukee terminals now that the West Short Pipeline is permanently closed. Accordingly, the Treasury Department and the IRS are providing temporary emergency relief from the removal rules under § 4081(a)(1)(A) and § 48.4081–2(b) for a period of 180 days, subject to the conditions in section 3 of this notice. This relief will temporarily put position holders in the Milwaukee terminals in the same position as they were prior to the shutdown of the West Shore pipeline. Following the expiration of the temporary emergency relief described in section 3.01 of this notice, relief is available through § 4081(e), which allows position holders in the Green Bay terminals to claim a refund (but not a credit) of the second tax imposed upon the removal of taxable fuel from the Green Bay terminals.
The Treasury Department and the IRS also recognize that there is no mechanism under existing law that permits a refund of the § 4081(a)(1) tax imposed upon removal of taxable fuel from a Milwaukee terminal when that fuel is transported to and entered into a Green Bay terminal, and then removed from the Green Bay terminal as dyed fuel destined for a nontaxable use. Accordingly, the Treasury Department and the IRS are providing a temporary refund mechanism for the first tax paid on the taxable fuel when it is removed from a Milwaukee terminal, transported to and entered into a Green Bay terminal, and later removed from that Green Bay terminal as dyed fuel destined for a nontaxable use. Under this temporary relief, the person who dyes the fuel at the rack in Green Bay will be allowed to claim a refund (without interest) of the first tax. The refund provision under this temporary relief will be similar to the refund provision for taxable fuel under § 4081(e) in that the same person is allowed to make the claim for refund (i.e., the position holder who removes the taxable or dyed fuel from the Green Bay terminal).
SECTION 3. TEMPORARY RELIEF
.01 180-day Emergency Relief
For the period beginning on May 3, 2017 and ending on October 30, 2017, tax will be imposed under § 4081(a)(1)(A)(ii) and § 48.4081–2(b) on the removal of taxable fuel from a terminal rack in Milwaukee, unless the fuel is transported by tank truck or rail car and entered into a Green Bay terminal within 24 hours of its removal from the Milwaukee terminal. If such fuel is entered into a Green Bay terminal within 24 hours of its removal from a Milwaukee terminal, the fuel will be subject to tax under § 4081(a)(1)(A)(ii) upon its removal from the Green Bay terminal rack, unless § 4082 applies. All existing rules under § 4081 and § 48.4081–2 apply once the fuel removed from a Milwaukee terminal is entered into a Green Bay terminal in accordance with the requirements prescribed in this section.
This relief is subject to satisfaction of all of the conditions to relief set forth in section 3.03 of this notice. Upon the termination of this 180-day emergency relief, the normal rules of § 4081(a)(1)(A)(ii) and § 48.4081–2(b) will apply to removals of taxable fuel from the Milwaukee terminals.
.02 Temporary Dyed Fuel Relief
For the period beginning on October 31, 2017, and ending on May 3, 2018, if any person who removes diesel fuel or kerosene that satisfies the requirements of § 4082 from a Green Bay terminal establishes to the satisfaction of the Secretary that a prior tax was paid with respect to the removal of such fuel from a Milwaukee terminal, then an amount equal to the prior tax paid shall be allowed as a refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by § 4081. No refund will be allowed unless the fuel removed from a Milwaukee terminal was transported by tank truck or rail car and entered into a Green Bay terminal within 24 hours of its removal from the Milwaukee terminal.
The Treasury Department and the IRS will publish guidance on how to submit claims for refund pursuant to this section 3.02 prior to the expiration of the relief described in section 3.01 of this notice. The relief in this section 3.02 will be subject to satisfaction of all of the conditions to relief set forth in section 3.03 of this notice.
.03 Conditions to Relief
The relief granted in sections 3.01 and 3.02 of this notice is available only if all of the following conditions are satisfied:
(2) All operators of terminals from which fuel is removed or entered pursuant to the relief granted in sections 3.01 and 3.02 of this notice must timely and accurately satisfy Excise Summary Terminal Activity Reporting System (ExSTARS) reporting obligations by filing Form 720-TO, Terminal Operator Report, as required by § 4101(d) and § 48.4101–1(h)(1)(iii). Form 720-TO filers are reminded of the information reporting requirements under § 4101(d) and the penalty provisions of § 6725 for any failure to report and any failure to include all of the information required to be shown on such report or the inclusion of incorrect information.
(3) All position holders with respect to fuel removed or entered pursuant to the relief granted in sections 3.01 and 3.02 of this notice must keep records pursuant to § 48.4101–1(h)(1)(ii) that sufficiently show tax liability under § 4081 and payments or deposits of such liability.
(4) The same person who removes taxable fuel from a Milwaukee terminal (i.e., the position holder in the Milwaukee terminal) must enter the fuel into a Green Bay terminal within 24 hours of its removal from the Milwaukee terminal.
The relief set forth in sections 3.01 and 3.02 of this notice is not available with respect to any transaction for which one or more conditions set forth in this section 3.03 are not satisfied.
The 180-day emergency relief provided in section 3.01 of this notice applies to removals from Milwaukee terminals on or after May 3, 2017, and before October 31, 2017.
The temporary dyed fuel relief provided in section 3.02 of this notice applies to removals of diesel fuel and kerosene from Green Bay terminals on or after October 31, 2017, and before May 4, 2018.
The principal author of this notice is the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding this notice contact (202) 317-6855 (not a toll-free number).
Rev. Proc. 2017–35
This revenue procedure provides guidance with respect to the United States and area median gross income figures that are to be used by issuers of qualified mortgage bonds, as defined in § 143(a) of the Internal Revenue Code, and issuers of mortgage credit certificates, as defined in § 25(c), in computing the income requirements described in § 143(f).
.05 Section 143(f)(5) provides for an upward adjustment of the income limitations in certain high housing cost areas. Under § 143(f)(5)(C), a high housing cost area is a statistical area for which the housing cost/income ratio is greater than 1.2. The housing cost/income ratio is determined under § 143(f)(5)(D) by dividing (a) the applicable housing price ratio by (b) the ratio that the area median gross income bears to the median gross income for the United States. The applicable housing price ratio is the new housing price ratio (new housing average purchase price for the area divided by the new housing average purchase price for the United States) or the existing housing price ratio (existing housing average area purchase price divided by the existing housing average purchase price for the United States), whichever results in the housing cost/income ratio being closer to 1. This income adjustment applies only to bonds issued, and nonissued bond amounts elected, after December 31, 1988. See § 4005(h) of the Technical and Miscellaneous Revenue Act of 1988, 1988–3 C.B. 1, 311 (1988).
.06 The Department of Housing and Urban Development (HUD) has computed the median gross income for the United States, the states, and statistical areas within the states. The income information was released to the HUD regional offices on April 14, 2017, and may be obtained by calling the HUD reference service at 1-800-245-2691. The income information is also available at HUD’s World Wide Web site, http://www.huduser.gov/portal/datasets/il.html, which provides a menu from which you may select the year and type of data of interest.
.07 The most recent nationwide average purchase prices and average area purchase price safe harbor limitations were published on April 03, 2017, in Rev. Proc. 2017–27, 2017–14 I.R.B. 1042.
.01 When computing the income requirements of § 143(f), issuers of qualified mortgage bonds and mortgage credit certificates must use either (1) the median gross income for the United States, the states, and statistical areas within the states, as released to the HUD regional offices on March 28, 2016, or (2) the median gross income for the United States, the states, and statistical areas within the states, as released to the HUD regional offices on April 14, 2017.
.02 If an issuer uses the median gross income for the United States, the states, and statistical areas within the states, as released to the HUD regional offices on March 28, 2016, to compute the housing cost/income ratio under § 143(f)(5), the issuer must use the median gross income for the United States, the states, and statistical areas within the states, as released to the HUD regional offices on March 28, 2016, for all purposes under § 143(f). Likewise, if an issuer uses the median gross income for the United States, the states, and statistical areas within the states, as released to the HUD regional offices on April 14, 2017, to compute the housing cost/income ratio under § 143(f)(5), the issuer must use the median gross income for the United States, the states, and statistical areas within the states, as released to the HUD regional offices on April 14, 2017, for all purposes under § 143(f).
.01 Rev. Proc. 2016–26, 2016–22 I.R.B. 1018, is obsolete except as provided in §§ 3.01, 3.02, or 5.01 of this revenue procedure.
.02 This revenue procedure does not affect the effective date provisions of Rev. Rul. 86–124, 1986–2 C.B. 27. Those effective date provisions will remain operative at least until the Service publishes a new revenue ruling that conforms the approach to effective dates set forth in Rev. Rul. 86–124 to the general approach taken in this revenue procedure.
.01 Issuers must use the United States and area median gross income figures specified in § 3.01 of this revenue procedure for commitments to provide financing that are made, or (if the purchase precedes the financing commitment) for residences that are purchased, in the period that begins on April 14, 2017, and ends on the date when these United States and area median gross income figures are rendered obsolete by a new revenue procedure.
The principal authors of this revenue procedure are David White and Timothy Jones of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure contact Mr. White or Mr. Jones at (202) 317-6980 (not a toll-free number).
Rev. Proc. 2017–36
This revenue procedure provides indexing adjustments for certain provisions under sections 36B and 5000A of the Internal Revenue Code. In particular, it updates the Applicable Percentage Table in § 36B(b)(3)(A)(i) to provide the Applicable Percentage Table for 2018. This table is used to calculate an individual’s premium tax credit. This revenue procedure also updates the required contribution percentage in § 36B(c)(2)(C)(i)(II) for plan years beginning after calendar year 2017. The percentage is used to determine whether an individual is eligible for affordable employer-sponsored minimum essential coverage under § 36B. This revenue procedure uses the methodology described in Section 4 of Rev. Proc. 2014–37, 2014–2 C.B. 363, to index the Applicable Percentage Table and the § 36B required contribution percentage for 2018. Additionally, this revenue procedure cross-references the required contribution percentage under § 5000A(e)(1)(A) for plan years beginning after calendar year 2017, as determined under guidance issued by the Department of Health and Human Services. The percentage is used to determine whether an individual is eligible for an exemption from the individual shared responsibility payment because of a lack of affordable minimum essential coverage.
SECTION 2. ADJUSTED ITEMS
.01 Applicable Percentage Table for 2018. For taxable years beginning in 2018, the Applicable Percentage Table for purposes of § 36B(b)(3)(A)(i) and § 1.36B–3T(g) is:
At least 133% but less than 150% 3.02% 4.03%
At least 150% but less than 200% 4.03% 6.34%
.02 Section 36B Required Contribution Percentage for 2018. For plan years beginning in 2018, the required contribution percentage for purposes of § 36B(c)(2)(C)(i)(II) and § 1.36B–2T(c)(3)(v)(C) is 9.56%.
.03 Section 5000A Required Contribution Percentage. In the 2018 Benefit and Payment Parameters, 81 Fed. Reg. 94058 (December 22, 2016), for plan years beginning in 2018, the Department of Health and Human Services (HHS) announced that the Section 5000A required contribution percentage for purposes of § 5000A(e)(1)(A) and § 1.5000A–3(e)(2) is 8.05%. See Exchange and Insurance Market Standards for 2015 and beyond, 79 Fed. Reg. 30239, 30302 (May 27, 2014), for further information on the computation methodology and publication approach for the Section 5000A required contribution percentage.
This revenue procedure is effective for taxable years and plan years beginning after December 31, 2017.
The principal author of this revenue procedure is Bill Ruane of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this revenue procedure, contact Mr. Bill Ruane at (202) 317-4718 (not a toll-free number).
Rev. Proc. 2017–37
This revenue procedure provides the 2018 inflation adjusted amounts for Health Savings Accounts (HSAs) as determined under § 223 of the Internal Revenue Code.
SECTION 2. 2018 INFLATION ADJUSTED ITEMS
Annual contribution limitation. For calendar year 2018, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,450. For calendar year 2018, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $6,900.
This revenue procedure is effective for calendar year 2018.
Bulletin 2017–1 through 2017–21