Bulletin No. 2011-11March 14, 2011

HIGHLIGHTSOF THIS ISSUEThese synopses are intended only as aids to the reader inidentifying the subject matter covered. They may not berelied upon as authoritative interpretations.

INCOME TAX

Notice 2011–14, page 544.Guidance on mortgage assistance programs. This noticeprovides guidance on the federal tax consequences of pay-ments made to or on behalf of financially distressed home-owners under programs established pursuant to the TreasuryDepartment’s Housing Finance Agency Innovative Fund for theHardest-Hit Housing Markets (HFA Hardest Hit Fund) and theDepartment of Housing and Urban Development’s EmergencyHomeowners’ Loan Program (EHLP). This notice also providesguidance on the information reporting requirements for thesepayments.

Notice 2011–18, page 549.This notice provides transitional relief from information report-ing requirements in section 6045B of the Code that apply toissuers of stock with respect to organizational actions that af-fect the basis of the stock.

Rev. Proc. 2011–20, page 551.Guidance is provided to individuals who fail to meet the eligi-bility requirements of section 911(d)(1) of the Code becauseadverse conditions in a foreign country preclude the individualfrom meeting those requirements. A current list of countriesfor tax year 2010 and the dates those countries are subject tothe section 911(d)(4) waiver is provided.

Announcement 2011–19, page 553.This announcement provides conditions under which certainissuers that have purchased their own bonds may enter into avoluntary closing agreement with respect to the extinguishmentof such bonds.

EMPLOYEE PLANS

Notice 2011–19, page 550.This notice provides guidance regarding when securities of theemployer are readily tradable on an established securities mar-ket or readily tradable on an established market for purposesof certain provisions of the Code relating to employer securi-ties held by certain qualified retirement plans.

ADMINISTRATIVE

Notice 2011–14, page 544.Guidance on mortgage assistance programs. This noticeprovides guidance on the federal tax consequences of pay-ments made to or on behalf of financially distressed home-owners under programs established pursuant to the TreasuryDepartment’s Housing Finance Agency Innovative Fund for theHardest-Hit Housing Markets (HFA Hardest Hit Fund) and theDepartment of Housing and Urban Development’s EmergencyHomeowners’ Loan Program (EHLP). This notice also providesguidance on the information reporting requirements for thesepayments.

Notice 2011–18, page 549.This notice provides transitional relief from information report-ing requirements in section 6045B of the Code that apply toissuers of stock with respect to organizational actions that af-fect the basis of the stock.

Finding Lists begin on page ii.

The IRS MissionProvide America’s taxpayers top-quality service by helpingthem understand and meet their tax responsibilities and en-

force the law with integrity and fairness to all.

IntroductionThe Internal Revenue Bulletin is the authoritative instrument ofthe Commissioner of Internal Revenue for announcing officialrulings and procedures of the Internal Revenue Service and forpublishing Treasury Decisions, Executive Orders, Tax Conven-tions, legislation, court decisions, and other items of generalinterest. It is published weekly and may be obtained from theSuperintendent of Documents on a subscription basis. Bulletincontents are compiled semiannually into Cumulative Bulletins,which are sold on a single-copy basis.

It is the policy of the Service to publish in the Bulletin all sub-stantive rulings necessary to promote a uniform application ofthe tax laws, including all rulings that supersede, revoke, mod-ify, or amend any of those previously published in the Bulletin.All published rulings apply retroactively unless otherwise indi-cated. Procedures relating solely to matters of internal man-agement are not published; however, statements of internalpractices and procedures that affect the rights and duties oftaxpayers are published.

Revenue rulings represent the conclusions of the Service on theapplication of the law to the pivotal facts stated in the revenueruling. In those based on positions taken in rulings to taxpayersor technical advice to Service field offices, identifying detailsand information of a confidential nature are deleted to preventunwarranted invasions of privacy and to comply with statutoryrequirements.

Rulings and procedures reported in the Bulletin do not have theforce and effect of Treasury Department Regulations, but theymay be used as precedents. Unpublished rulings will not berelied on, used, or cited as precedents by Service personnel inthe disposition of other cases. In applying published rulings andprocedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,and Service personnel and others concerned are cautionedagainst reaching the same conclusions in other cases unlessthe facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.This part includes rulings and decisions based on provisions ofthe Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.This part is divided into two subparts as follows: Subpart A,Tax Conventions and Other Related Items, and Subpart B, Leg-islation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.To the extent practicable, pertinent cross references to thesesubjects are contained in the other Parts and Subparts. Alsoincluded in this part are Bank Secrecy Act Administrative Rul-ings. Bank Secrecy Act Administrative Rulings are issued bythe Department of the Treasury’s Office of the Assistant Secre-tary (Enforcement).

Part IV.—Items of General Interest.This part includes notices of proposed rulemakings, disbar-ment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative indexfor the matters published during the preceding months. Thesemonthly indexes are cumulated on a semiannual basis, and arepublished in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

March 14, 2011 2011–11 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Codeof 1986Section 163.—Interest

The Service provides guidance on the federal taxconsequences of payments made to or on behalf offinancially distressed homeowners under programsestablished pursuant to the Treasury Department’sHousing Finance Agency Innovative Fund for theHardest-Hit Housing Markets and the Departmentof Housing and Urban Development’s EmergencyHomeowners’ Loan Program. See Notice 2011-14,page 544.

Section 164.—TaxesThe Service provides guidance on the federal tax

consequences of payments made to or on behalf offinancially distressed homeowners under programsestablished pursuant to the Treasury Department’sHousing Finance Agency Innovative Fund for theHardest-Hit Housing Markets and the Departmentof Housing and Urban Development’s EmergencyHomeowners’ Loan Program. See Notice 2011-14,page 544.

Section 6041.—Informationat Source

The Service provides guidance on the informa-tion reporting requirements for payments made to oron behalf of financially distressed homeowners un-

der programs established pursuant to the TreasuryDepartment’s Housing Finance Agency InnovativeFund for the Hardest-Hit Housing Markets and theDepartment of Housing and Urban Development’sEmergency Homeowners’ Loan Program. See No-tice 2011-14, page 544.

Section 6050H.—ReturnsRelating to MortgageInterest Received in Tradeor Business From Individuals

The Service provides guidance on the informa-tion reporting requirements for payments made to oron behalf of financially distressed homeowners un-der programs established pursuant to the TreasuryDepartment’s Housing Finance Agency InnovativeFund for the Hardest-Hit Housing Markets and theDepartment of Housing and Urban Development’sEmergency Homeowners’ Loan Program. See No-tice 2011-14, page 544.

Section 6721.—Failure toFile Correct InformationReturns

The Service provides guidance on the informa-tion reporting requirements for payments made to oron behalf of financially distressed homeowners un-

der programs established pursuant to the TreasuryDepartment’s Housing Finance Agency InnovativeFund for the Hardest-Hit Housing Markets and theDepartment of Housing and Urban Development’sEmergency Homeowners’ Loan Program. See No-tice 2011-14, page 544.

Section 6722.—Failureto Furnish Correct PayeeStatements

The Service provides guidance on the informa-tion reporting requirements for payments made to oron behalf of financially distressed homeowners un-der programs established pursuant to the TreasuryDepartment’s Housing Finance Agency InnovativeFund for the Hardest-Hit Housing Markets and theDepartment of Housing and Urban Development’sEmergency Homeowners’ Loan Program. See No-tice 2011-14, page 544.

2011–11 I.R.B. 543 March 14, 2011

Part III. Administrative, Procedural, and MiscellaneousTax Consequences toHomeowners, MortgageServicers, and StateHousing Finance Agenciesof Participation in the HFAHardest Hit Fund and TheEmergency Homeowners’Loan Program

Notice 2011–14

PURPOSE

This notice provides guidance on thefederal tax consequences of, and informa-tion reporting requirements for, paymentsmade to or on behalf of financially dis-tressed homeowners under programs de-signed by state housing finance agencies(State HFAs)1 with funds allocated fromthe Housing Finance Agency InnovativeFund for the Hardest-Hit Housing Markets(HFA Hardest Hit Fund). This notice ap-plies to the programs designed by StateHFAs that are listed in the Appendix to thisnotice (State Programs).

This notice also provides guidanceon the federal tax consequences of, andinformation reporting requirements for,payments made on behalf of financiallydistressed homeowners under the Depart-ment of Housing and Urban Develop-ment’s Emergency Homeowners’ LoanProgram (EHLP) and any existing stateprogram receiving funding from the EHLP(the substantially similar state programsor SSSPs).

Specifically, this notice addresseswhether—

• Disbursements under a “ForgivableLoan” (as defined below) or a HUDNote (as defined below) are treated aspayments to homeowners and not asdisbursements of loan proceeds;

• Homeowners who receive or benefitfrom payments made under the StatePrograms, the EHLP, or the SSSPs ex-clude the payments from gross incomeunder the general welfare exclusionand deduct otherwise deductible ex-penses (for example, mortgage interest

and real property taxes) paid fromthose payments; and

• Payments to or on behalf of homeown-ers made under the State Programs, theEHLP, or the SSSPs are exempt fromthe information reporting requirementsof §§ 6041 and 6050H of the InternalRevenue Code.

THE HFA HARDEST HIT FUNDPROGRAM

Overview

In February 2010, the United StatesDepartment of the Treasury (Treasury De-partment) established the HFA HardestHit Fund, which is authorized by section109 of the Emergency Economic Stabi-lization Act (EESA), Division A of Pub.L. 110–343, 112 Stat. 3774 (2008). Thepurposes of the HFA Hardest Hit Fundare to provide funds to the State Programs(1) to assist homeowners in preventingavoidable foreclosures, and (2) to stabilizehousing markets. The HFA Hardest HitFund is designed to allow each State HFAmaximum flexibility in designing locallyfocused programs to address the needs offinancially distressed homeowners withinthe state or a specific region of the state.Each of the State Programs that receivesfunding from the HFA Hardest Hit Fundhas as its primary objective preventingavoidable foreclosures of homeowners’homes and stabilizing housing markets.

The HFA Hardest Hit Fund is availablein states where either housing prices havedeclined more than 20 percent from peakprices or the unemployment rate equals orexceeds the national average. The stateseligible for this funding are Alabama, Ari-zona, California, the District of Columbia,Florida, Georgia, Illinois, Indiana, Ken-tucky, Michigan, Mississippi, Nevada,New Jersey, North Carolina, Ohio, Ore-gon, Rhode Island, South Carolina, andTennessee.

To receive funding from the HFA Hard-est Hit Fund, each of these states sub-mitted proposals describing its programsand verifying that each of the programswould meet the requirements of the EESA

and the purposes of the HFA Hardest HitFund. Funding under the HFA Hardest HitFund is available for, but not limited to,programs involving the following transac-tions: mortgage modifications, principalforbearance to facilitate additional mort-gage modifications, short sales and deeds-in-lieu of foreclosure, unemployment pro-grams, principal reductions for homeown-ers with severe negative equity, and sec-ond-lien reductions and modifications.

Approved State Programs and theirCommon Elements

The Treasury Department has approvedall of the State Programs listed in the Ap-pendix to this notice2 and is distributingfunds from the HFA Hardest Hit Fundfor use by the State HFAs. Generally,under the State Programs homeownersmust demonstrate that they have suf-fered a financial hardship due to certainevents, such as unemployment, underem-ployment, medical condition, death of aspouse, or divorce, and as a result are indanger of losing their homes in foreclosureor need financial assistance to ensure thattheir loans become or remain affordable.Although most of the State Programs havethe goal of helping financially distressedhomeowners remain in their homes, someState Programs also help homeownerswho can no longer afford their homes totransition to more affordable homes. Somestates limit participation in their programsto homeowners whose income does notexceed certain limits.

In some cases, the State Programs assista homeowner by making cash paymentsdirectly to or on behalf of the homeownerwithout mentioning any repayment obliga-tion. On the other hand, sometimes thegoverning documents discuss repaymentand call the arrangement a “loan” or a “for-givable loan.” Even in these cases, how-ever, the terms of the arrangement gen-erally operate to relieve the homeownerof an obligation to make any repayments.The terms achieve this end by reducing thestated principal amount to zero over time ifthe homeowner meets certain program re-quirements. Though State Programs may

1 For purposes of this notice, the term “state housing finance agencies” includes other non-profit agencies organized and controlled by a state. In addition, the term “state” means the 50 states,the District of Columbia, and the Commonwealth of Puerto Rico.

2 The Treasury Department may amend the list of State Programs in the Appendix to this notice through subsequent published guidance.

March 14, 2011 544 2011–11 I.R.B.

vary, an arrangement like this is generallysecured by a subordinate lien on the homeand is documented as a zero-percent-inter-est, nonrecourse, non-amortizing “loan” tothe homeowner with a term ranging from3 to 10 years. (This notice calls these ar-rangements “Forgivable Loans.”) For ex-ample, under some programs the unpaidstated principal of a Forgivable Loan de-clines 20 percent each year for 5 yearsif the homeowner remains current on thehomeowner’s mortgage loan payments andcontinues to use the property as a principalresidence. In general, no payments are dueon a Forgivable Loan unless (1) the home-owner sells, refinances, or transfers title tothe property before the term expires, and(2) equity proceeds from the sale, refinanc-ing, or title transfer are available to paysome or all of the remaining unpaid statedprincipal balance. As a result, the TreasuryDepartment and the State Programs do notexpect homeowners to make more than aminimal amount of payments on Forgiv-able Loans.

THE EMERGENCY HOMEOWNERS’LOAN PROGRAM ANDSUBSTANTIALLY SIMILAR STATEPROGRAMS

Overview

Section 1496 of the Dodd-Frank WallStreet Reform and Consumer ProtectionAct (Dodd-Frank Act), Pub. L. 111–203,124 Stat. 2207 (2010), reauthorizedand revised the Emergency Homeown-ers’ Loan Program (EHLP), 12 U.S.C.§§ 2701–2712, and provided $1 billionto the Department of Housing and Ur-ban Development (HUD) to implementthe EHLP and existing state programsthat are substantially similar to the EHLP(the substantially similar state programsor SSSPs). The purpose of the EHLPand the SSSPs is to provide assistance tohomeowners who are at risk of foreclosureand have experienced a substantial reduc-tion in income as a result of involuntaryunemployment or underemployment dueto adverse economic or medical condi-tions. See 12 U.S.C. § 2702(4). The $1billion of funding is allocated based on astate’s approximate share of unemployedhomeowners. The EHLP and the SSSPscomplement the HFA Hardest Hit Fundby providing assistance to homeowners in

Puerto Rico and the 32 states that did notreceive funds from the HFA Hardest HitFund. See Emergency Homeowners’ LoanProgram: Notice of Allocation of Fundingfor Substantially Similar State Programs(“Funding Notice”), 75 Fed. Reg. 69,454(November 12, 2010).

Eligible Pre-Existing State Programs

The Dodd-Frank Act provides that astate may administer EHLP funds if HUDdetermines that the state program qualifiesas an SSSP. An SSSP is a state programexisting on July 21, 2010, that providessubstantially similar assistance to home-owners. 12 U.S.C. § 2707(d). A state withan SSSP may exercise greater flexibilityin program design and is not required tomodify its program to comply with Title12 after HUD determines that the programis an SSSP. 12 U.S.C. § 2707(d). To re-ceive funding from the EHLP, State HFAssubmitted proposals describing how theirprograms provide assistance to homeown-ers that is substantially similar to that pro-vided under the EHLP. Only SSSPs are el-igible to administer an allocation from the$1 billion provided to the EHLP under theDodd-Frank Act. Section III.B.2 of theFunding Notice. If a state does not havean SSSP, then HUD administers the state’sallocation from the $1 billion of funding inaccordance with the EHLP.

Homeowners Eligible for Assistance andOperation of the EHLP and SSSPs

To receive assistance from the EHLPor an SSSP, a homeowner must meet cer-tain eligibility requirements. The home-owner must reside in the mortgaged prop-erty as his or her principal residence at thetime of application and for the durationof the assistance. The homeowner mustalso be involuntarily unemployed or un-deremployed because of adverse economicor medical conditions. The homeownermust have household income equal to orless than 120% of the area median incomefor the area in which the homeowner re-sides, and have experienced a substantialreduction in income as a result of involun-tary unemployment or underemploymentdue to adverse economic or medical condi-tions. See 12 U.S.C. § 2702(4). The home-owner also must be at least three monthsdelinquent on the homeowner’s first mort-gage and provide evidence that foreclo-

sure on that mortgage is likely or immi-nent. In addition, the homeowner musthave a reasonable likelihood of being ableto (1) resume repayments of the first mort-gage obligation within two years, and (2)meet other housing expenses and debt obli-gations when the assistance ends. See 12U.S.C. § 2702.

Under the EHLP (but not an SSSP),eligible homeowners must contribute thegreater of 31 percent of their monthlygross income or $25 towards the monthlypayments on the first mortgage. Underthe EHLP, homeowner contributions willbe combined with the governmental fundsand forwarded to the servicer/lender as themonthly payment on the first mortgage.HUD expects the SSSPs to use their ex-isting procedures for handling borrowercontributions.

The EHLP will provide a reasonablynecessary amount to assist an eligiblehomeowner with (i) a maximum of 24months of monthly payments of mortgageprincipal, interest, mortgage insurancepremiums, taxes, and hazard insurance,and (ii) payments of arrearages (mortgageprincipal, interest, mortgage insurancepremiums, taxes, hazard insurance, latefees, and certain foreclosure related legalexpenses). HUD prefers, but does notrequire, the SSSPs to limit assistance toa 24-month period. The EHLP and theSSSPs must include assistance in mak-ing monthly payments to the servicer ofthe first mortgage and may not restrictpayments only to arrearages. If the house-hold’s gross income increases to 85% ormore of the income prior to the unem-ployment, underemployment, or medicalcondition, then the assistance will bephased out over a two-month period.

The assistance that the EHLP and theSSSPs provide to a homeowner must bepursuant to a note with terms and repay-ment conditions that are similar to theForgivable Loan described above, exceptthat the homeowner is responsible for re-payment of the applicable balance of thenote if the homeowner defaults on thehomeowner’s monthly mortgage paymentobligation during the five-year period af-ter the assistance ends. (This notice callsthese arrangements “HUD Notes.”) As aresult, HUD and the SSSPs do not expecthomeowners to make more than a minimalamount of payments on the HUD Notes.

2011–11 I.R.B. 545 March 14, 2011

APPLICABLE PROVISIONS OF LAW

Characterization of Forgivable Loans andthe HUD Notes

If assistance to a homeowner under aState Program is structured as a ForgivableLoan, the Internal Revenue Service willtreat the disbursements to or on behalf ofthe homeowner as payments to the home-owner rather than as disbursements of loanproceeds, and those payments are treatedas occurring at the time the disbursementsare made. Similarly, if assistance to ahomeowner under the EHLP or an SSSPis pursuant to a HUD Note, the IRS willtreat the disbursements to or on behalf ofthe homeowner as payments to the home-owner rather than as disbursements of loanproceeds, and those payments are treatedas occurring at the time the disbursementsare made.

Income Tax Consequences to Homeowners

Section 61(a) of the Code providesthat, except as otherwise provided bylaw, gross income means all income fromwhatever source derived. The Service hasconsistently held, however, that paymentsmade under governmental programs forthe promotion of the general welfare arenot includible in an individual recipient’sgross income (general welfare exclusion).See Rev. Rul. 2009–19, 2009–28 I.R.B.111, holding that Pay-for-PerformanceSuccess Payments made under the HomeAffordable Modification Program to helphomeowners who are at risk of losing theirhomes pay their mortgage loans on theirprincipal residences are excluded from in-come under the general welfare exclusion.See also Rev. Rul. 76–373, 1976–2 C.B.16.

Similar to the payments in Rev. Rul.2009–19, the payments made under theState Programs with funds from the HFAHardest Hit Fund and the payments madeunder the EHLP and the SSSPs withfunds authorized by the Dodd-Frank Actpromote the general welfare by helpinghomeowners who are at risk of losing theirhomes either pay their mortgage loans ortransition to more affordable housing anddo not involve the performance of ser-vices. Therefore, payments made underthe State Programs, the EHLP, and theSSSPs to or on behalf of a homeowner

are excluded from gross income under thegeneral welfare exclusion.

For taxable years 2010, 2011, and2012, this notice provides a safe harbormethod pursuant to which a homeownermay deduct on his or her federal incometax return an amount equal to the sumof all payments the homeowner actuallymakes during that year to the mortgageservicer, HUD, or the State HFA on thehome mortgage, but not in excess of thesum of the amounts shown on Form 1098,Mortgage Interest Statement, in box 1(mortgage interest received), box 4 (mort-gage insurance premiums) for years 2010and 2011 only, and box 5 (real propertytaxes). This safe harbor method of com-puting the homeowner’s deduction appliesfor a taxable year if (1) the homeownermeets the requirements of §§ 163 and164 to deduct all of the mortgage intereston the loan and all of the real propertytaxes on the principal residence; and (2)the homeowner participates in the EHLP,an SSSP, or a State Program described inthe Appendix to this notice in which theprogram payments could be used to payinterest on the home mortgage.

Information Reporting Obligations

Section 6041 of the Code requires everyperson engaged in a trade or business (in-cluding state governments and their agen-cies) to (1) file an information return foreach calendar year in which the personmakes in the course of its trade or businesspayments to another person of fixed anddeterminable income aggregating $600 ormore, and (2) furnish a copy of the infor-mation return to that person. See § 6041(a)and (d) and § 1.6041–1(a)(1) and (b) of theIncome Tax Regulations.

Because the payments made under theState Programs, the EHLP, and the SSSPsare excluded from the gross income of thehomeowners, they are not fixed or deter-minable income under § 6041. Thus, under§ 6041 payors do not file information re-turns or furnish copies to homeowners forpayments made under the State Programs,the EHLP, or the SSSPs.

Section 6050H of the Code requiresevery person engaged in a trade or busi-ness (including state governments andtheir agencies) to (1) file an informationreturn for each calendar year in which theperson receives in the course of its trade or

business payments from an individual ofinterest on a mortgage aggregating $600or more, and (2) furnish a copy of theinformation return to that individual. See§ 6050H(a) and (d) and § 1.6050H–1(a) ofthe regulations.

For purposes of § 6050H, interest re-ceived from a governmental unit or itsagency or instrumentality is not interest re-ceived on a mortgage, and thus should notbe reported as interest received on a mort-gage. See § 1.6050H–1(e)(3)(ii) of the reg-ulations.

Accordingly, if a person receives pay-ments under a State Program, the EHLP,or an SSSP from a governmental unit orits agency or instrumentality of intereston the homeowner’s mortgage, that personshould not include those payments in theamount reported as interest received on amortgage on Form 1098.

Section 6721 of the Code imposespenalties on a person for failing to in-clude all required information or includingincorrect information on an informationreturn. Section 6722 imposes penalties ona person for failing to include all requiredinformation or including incorrect infor-mation on a payee statement. However,the Service will not assert penalties under§§ 6721 and 6722 against a mortgage ser-vicer that reports on Forms 1098 paymentsreceived under a State Program, the EHLP,or an SSSP during calendar year 2010.Additionally, the Service will not assertpenalties under §§ 6721 and 6722 againsta mortgage servicer that reports on Forms1098 payments received under a StateProgram, the EHLP, or an SSSP duringcalendar years 2011 or 2012 if the servicernotifies homeowners that the amounts re-ported on the Form 1098 are overstatedbecause they include government subsidypayments. The Service will not assertpenalties under §§ 6721 and 6722 againstany State HFA for failing to file and fur-nish Forms 1098 for calendar year 2010.Furthermore, the Service will not assertpenalties under §§ 6721 and 6722 againstany State HFA for failing to file and fur-nish Forms 1098 for calendar years 2011and 2012 if the State HFA provides eachhomeowner and the IRS a statement set-ting forth (1) the homeowner’s name andTIN, and (2) the amount of payments theState HFA made to the mortgage servicerunder the State Program or the SSSP dur-ing that year (separately stating the amount

March 14, 2011 546 2011–11 I.R.B.

the State HFA paid and the amount thehomeowner paid). The statement the StateHFA provides to the IRS must be a singlestatement that separately lists the names,TINs, and relevant payment amounts foreach homeowner. In addition, for calendaryears 2011 and 2012, HUD should provideeach homeowner and the IRS a statementsetting forth (1) the homeowner’s nameand TIN, and (2) the amount of paymentsHUD made to the mortgage servicer underthe EHLP during that year (separately stat-ing the amount HUD paid and the amountthe homeowner paid). The statement HUDprovides to the IRS should be a singlestatement that separately lists the names,TINs, and relevant payment amounts foreach homeowner. The IRS intends to issuefuture published guidance specifying theIRS office where the State HFAs and HUDshould send the single statements.

SUMMARY OF FEDERAL TAXCONSEQUENCES OF PAYMENTSUNDER THE STATE PROGRAMS,THE EHLP, OR THE SSSPS TOASSIST FINANCIALLY DISTRESSEDHOMEOWNERS

Disbursements under a ForgivableLoan or a HUD Note are treated as pay-ments to a homeowner and not as dis-bursements of loan proceeds.

A homeowner who receives or bene-fits from payments made under the StatePrograms, the EHLP, or an SSSP excludesthe payments from gross income under thegeneral welfare exclusion.

Payments to or on behalf of a home-owner made under the State Programs, theEHLP, and the SSSP are not subject tothe information reporting requirements of§ 6041.

The Service will not assert penaltiesunder §§ 6721 and 6722 against a mort-gage servicer that reports on Forms 1098payments received under a State Program,the EHLP or an SSSP during calendar year2010. Additionally, the Service will notassert penalties under §§ 6721 and 6722against a mortgage servicer that reportson Forms 1098 payments received undera State Program, the EHLP, or an SSSPduring calendar years 2011 or 2012 ifthe servicer notifies homeowners that theamounts reported on the Form 1098 areoverstated because they include govern-ment subsidy payments.

The Service will not assert penaltiesunder §§ 6721 and 6722 against any StateHFA for failing to file and furnish Forms1098 for calendar year 2010. In addition,the Service will not assert penalties under§§ 6721 and 6722 for calendar years 2011and 2012 against any State HFA if theState HFA provides each homeowner andthe IRS a statement setting forth (1) thehomeowner’s name and TIN, and (2) theamount of payments the State HFA madeto a mortgage servicer under the StateProgram or the SSSP during that year(separately stating the amount the StateHFA paid and the amount the homeownerpaid). The statement the State HFA pro-vides to the IRS must be a single statementthat separately lists the names, TINs, andrelevant payment amounts for each home-owner. For calendar years 2011 and 2012,HUD should provide each homeownerand the IRS a statement setting forth (1)the homeowner’s name and TIN, and (2)the amount of payments HUD made to themortgage servicer under the EHLP duringthat year (separately stating the amountHUD paid and the amount the homeownerpaid). The statement HUD provides to the

IRS should be a single statement that sep-arately lists the names, TINs, and relevantpayment amounts for each homeowner.The IRS intends to issue future publishedguidance specifying the IRS office wherethe State HFAs and HUD should send thesingle statements.

For taxable years 2010, 2011, and2012, this notice provides a safe harbormethod pursuant to which a homeownermay deduct on his or her federal incometax return an amount equal to the sumof all payments the homeowner actuallymakes during that year to the mortgageservicer, HUD, or the State HFA on thehome mortgage, but not in excess of thesum of the amounts shown on Form 1098,Mortgage Interest Statement, in box 1(mortgage interest received), box 4 (mort-gage insurance premiums) for years 2010and 2011 only, and box 5 (real propertytaxes). This safe harbor method of com-puting the homeowner’s deduction appliesfor a taxable year if (1) the homeownermeets the requirements of §§ 163 and164 to deduct all of the mortgage intereston the loan and all of the real propertytaxes on the principal residence, and (2)the homeowner participates in the EHLP,an SSSP, or a State Program described inthe Appendix to this notice in which theprogram payments could be used to payinterest on the home mortgage.

PERSON TO CONTACT

The principal author of this notice isShareen S. Pflanz of the Office of Asso-ciate Chief Counsel (Income Tax & Ac-counting). For further information regard-ing this notice, contact Shareen S. Pflanzat (202) 622–4920 (not a toll-free call).

Appendix

Alabama

Hardest Hit for Alabama’s Unemployed Homeowners

Arizona

Save My Home AZ Program:

Permanent Modifications Component

Second Mortgage Assistance Component

Temporary Modification Component

2011–11 I.R.B. 547 March 14, 2011

California

Unemployment Mortgage Assistance Program

Mortgage Reinstatement Assistance Program

Principal Reduction Program

The Transition Assistance Program

District of Columbia

Homesaver Program

Florida

Unemployment Mortgage Assistance Program

Mortgage Loan Reinstatement Program

Georgia

Mortgage Payment Assistance (MPA)

Illinois

Hardest Hit Fund Homeowner Emergency Loan Program (HHF HELP)

Indiana

Hardest Hit Fund Unemployment Bridge Program

Kentucky

Kentucky Unemployment Bridge Program

Michigan

Principal Curtailment Program

Loan Rescue Program

Unemployment Mortgage Subsidy Program

Mississippi

Home Saver Program

Nevada

Principal Reduction Program

Second Mortgage Reduction Plan

Short-Sale Acceleration Program

Mortgage Assistance Program (MAP)

New Jersey

New Jersey Homekeeper Program (NJHK)

North Carolina

Mortgage Payment Program (MPP–1)

Mortgage Payment Program (MPP–2)

Second Mortgage Refinance Program (SMRP)

Permanent Loan Modification Program (PLMP)

March 14, 2011 548 2011–11 I.R.B.

Ohio

Rescue Payment Assistance Program

Partial Mortgage Payment Assistance Program

Mortgage Modification with Principal Reduction Program

Transition Assistance Program

Short Refinance Program

Oregon

Loan Modification Assistance Program

Mortgage Payment Assistance Program

Loan Preservation Assistance Program

Transition Assistance Program

Rhode Island

Loan Modification Assistance for HAMP Customers (LMA-HAMP)

Loan Modification Assistance for Non-HAMP Customers (LMA-Non-HAMP)

Temporary and Immediate Homeowner Assistance (TIHA)

Moving Forward Assistance

Mortgage Payment Assistance — Unemployment Program

South Carolina

Monthly Payment Assistance Program

Direct Loan Assistance Program

HAMP Assistance Program

Second Mortgage Assistance Program

Property Disposition Assistance Program

Tennessee

Hardest Hit Fund Program (HHFP)

Postponing Filing Date forSection 6045B Issuer Return

Notice 2011–18

PURPOSE

This notice provides transitional relieffrom information reporting requirementsin section 6045B of the Internal RevenueCode (“Code”) that apply to issuers ofstock with respect to organizational ac-tions that affect the basis of the stock.This notice provides that, for organiza-tional actions occurring in 2011, the In-ternal Revenue Service will not imposepenalties against issuers for missing thedeadline to file a return reporting the actionor make the return publicly available pro-vided that the issuer files the return with

the Service or makes it publicly availableby January 17, 2012. This notice does notapply to an issuer’s requirement to furnishthe same information to the issuer’s stock-holders and nominees of its stockholders.

BACKGROUND

Section 403 of the Energy Improvementand Extension Act of 2008, Div. B ofPub. L. No. 110–343, 122 Stat. 3765,enacted on October 3, 2008, added section6045B to the Code. Section 6045B pro-vides that, for organizational actions be-ginning in 2011, an issuer of stock mustfile a return with the Service to describeany organizational action (such as a stocksplit, merger, or acquisition) that affectsthe basis of a specified security. Under sec-tion 6045B(d) and section 6045(g)(3)(B),in 2011 a specified security is limited tostock in a corporation. The issuer gener-

ally must file the return within 45 days af-ter the organizational action. The issuermust also furnish a corresponding state-ment to each nominee of the stockholder(or to each stockholder if there is no nomi-nee) by January 15th of the year followingthe calendar year of the organizational ac-tion.

Alternately, the issuer is not requiredto file an issuer return with the Ser-vice if it posts the return on its primarypublic Web site in a readily accessibleformat by the filing date. Treas. Reg.§ 1.6045B–1(a)(3).

The requirements under section 6045Bdo not apply to issuers of stock in a regu-lated investment company until 2012.

Under the 45-day deadline, the earliestdate that an issuer must file a return is Feb-ruary 15, 2011, for an organizational actionthat took place on January 1, 2011.

2011–11 I.R.B. 549 March 14, 2011

The Service is developing the form andmanner of an issuer return contemplatedby section 6045B(a), as well as consider-ing what additional information, if any, tobe provided on such return.

TRANSITIONAL INFORMATIONREPORTING REQUIREMENTS FORISSUERS OF STOCK REPORTINGORGANIZATIONAL ACTIONS TAKENIN 2011

Section 6721 imposes a penalty on anyissuer of stock that does not timely file acorrect issuer return with the Service as re-quired by section 6045B(a). The Serviceexpects issuers to make a good-faith effortto comply with the requirements of sec-tion 6045B(a); however, until an alterna-tive form is developed and made availableby the Service, issuer compliance with sec-tion 6045B(a) may be currently satisfiedonly through public reporting of informa-tion, as contemplated by section 6045B(e).Accordingly, the Service will not imposepenalties under section 6721 for a failure tofile an issuer return with the Service within45 days of an organizational action taken in2011, provided that the issuer files the is-suer return with the Internal Revenue Ser-vice (or posts the return on its Web site asprovided in the regulations) by January 17,2012. This transitional relief does not ap-ply to issuers of stock in a regulated invest-ment company, which are not subject to theissuer reporting requirements for 2011 or-ganizational actions.

DRAFTING INFORMATION

The principal author of this notice isCarlton King of the Office of AssociateChief Counsel (Procedure & Administra-tion). For further information regardingthis notice, please contact Carlton King at(202) 622–4910 (not a toll-free call).

Definition of Readily TradableOn An Established SecuritiesMarket

Notice 2011–19

Purpose

This notice provides guidance regard-ing when securities of the employer arereadily tradable on an established securi-

ties market or readily tradable on an estab-lished market for purposes of certain pro-visions of the Internal Revenue Code relat-ing to employer securities held by certainqualified retirement plans.

Background

Section 4975(e)(7) defines an em-ployee stock ownership plan (ESOP) as adefined contribution plan (1) which is astock bonus plan which is qualified under§ 401(a), or a stock bonus and a moneypurchase plan both of which are qualifiedunder § 401(a), and which are designedto invest primarily in qualifying employersecurities as defined in § 4975(e)(8), and(2) which is otherwise defined in regula-tions prescribed by the Secretary. Section4975(e)(7) also states that an employeestock ownership plan must satisfy cer-tain requirements in § 409, including therequirements of § 409(h). In addition,§ 401(a)(23) generally provides that astock bonus plan is not a qualified plan un-der § 401(a) unless the plan meets certainrequirements, including the requirementsof § 409(h).

Section 401(a)(22) generally providesthat a defined contribution plan (other thana profit sharing plan) must meet the re-quirements of § 409(e) (which relates topassthrough of voting rights) if it is estab-lished by an employer whose stock is notreadily tradable on an established market,and after acquiring securities of the em-ployer, more than 10 percent of the totalassets of the plan are securities of the em-ployer.

Section 409(h) provides generally that aplan satisfies the requirements of § 409(h)if the plan offers a participant who is en-titled to a distribution the right to demandpayment in the form of employer securi-ties and, if the employer securities are notreadily tradable on an established market,the participant must also have the right torequire that the employer repurchase theemployer securities under a fair valuationformula (put option).

Section 401(a)(35)(A) provides that atrust which is part of an applicable definedcontribution plan is not a qualified trust un-der § 401(a) unless the plan satisfies cer-tain diversification requirements set forthin § 401(a)(35)(B), (C), and (D). Subjectto certain exceptions, an applicable de-fined contribution plan under § 401(a)(35)

is a defined contribution plan that holdsany publicly traded employer securities. Apublicly traded employer security is de-fined in § 401(a)(35)(G)(v) as an employersecurity under section 407(d)(1) of ERISAwhich is readily tradable on an establishedsecurities market.

Section 401(a)(28) provides that anESOP, and a tax credit employee stockownership plan under § 409(a), is nota qualified plan under § 401(a) un-less the plan meets the requirementsof § 401(a)(28)(B) and (C). Section401(a)(28)(B) imposes certain diversifica-tion requirements with respect to certainparticipants. Section 401(a)(28)(B) wasamended by the Pension Protection Actof 2006, Pub. L. 109–280, 120 Stat.780 (PPA ’06) to not apply to a planto which § 401(a)(35) applies. For em-ployer securities that are not readily trad-able on an established securities market,§ 401(a)(28)(C) requires all valuationswith respect to activities carried on bythe plan to be made by an independentappraiser that meets requirements similarto the requirements of regulations under§ 170(a)(1).

Section 404(k) generally permits anincome tax deduction for the amountof any applicable dividend paid in cashby a C corporation with respect toapplicable employer securities. For thispurpose, applicable employer securitiesare generally defined to mean employersecurities as defined in § 409(l) held by anESOP.

Section 4975(e)(8), as amended by theTechnical Corrections Act of 1979, P.L.96–22 (1980), provides that qualifyingemployer securities must meet the defini-tion set forth in § 409(l). Section 409(l)(1)defines employer securities as commonstock issued by the employer (or by acorporation that is a member of the samecontrolled group) which is readily trad-able on an established securities marketand provides special rules for an employerthat has no class of stock which is read-ily tradable on an established securitiesmarket. In the absence of any guidanceof general applicability, some plans mayhave applied the definition of “publiclytraded” at § 54.4975–7(b)(1)(iv) of theExcise Tax Regulations (issued beforeenactment of the Technical CorrectionsAct of 1979) to determine whether em-ployer securities are readily tradable on

March 14, 2011 550 2011–11 I.R.B.

an established securities market within themeaning of § 409(l)(1).

Section 1042 generally provides that, ifthe taxpayer or executor so elects, gain onthe sale of qualified employer securitieswhich would be recognized as long-termcapital gain is recognized only to the extentthe gain exceeds the cost of qualified re-placement property acquired within the re-placement period. This treatment appliesonly if the sale is to an ESOP or eligibleworker-owned cooperative that holds atleast 30 percent of the corporation’s stockafter the sale, and various other conditionsin § 1042(b) are satisfied. In addition, un-der § 1042(c), the only securities eligiblefor this treatment are employer securitiesdefined under § 409(l) and issued by a do-mestic C corporation that has no stock out-standing that is readily tradable on an es-tablished securities market.

Final regulations under § 401(a)(35)were issued on May 18, 2010 (75 FR27927). Under § 1.401(a)(35)–1(f)(5), asecurity is readily tradable on an estab-lished securities market if the security istraded on a national securities exchangethat is registered under section 6 of the Se-curities Exchange Act of 1934 (15 U.S.C.78f). The regulations also treat a secu-rity as readily tradable on an establishedsecurities market if the security is tradedon a foreign national securities exchangethat is officially recognized, sanctioned,or supervised by a governmental author-ity and where the security is deemed bythe Securities and Exchange Commission(SEC) as having a ready market under SECRule 15c3–1 (17 CFR 240.15c3–1). Un-der the current SEC rules, a security thatis included on the FTSE Group (FTSE)All-World Index is deemed to have a readymarket. Section 1.401(a)(35)–1 is effec-tive for plan years beginning on or afterJanuary 1, 2011.

Readily tradable on an establishedsecurities market or established market

Under this notice, the terms readilytradable on an established securities mar-ket and readily tradable on an establishedmarket, with respect to employer securi-ties, each mean employer securities thatare readily tradable on an established se-curities market within the meaning of

§ 1.401(a)(35)–1(f)(5) for purposes of thefollowing provisions: (1) § 401(a)(22);(2) § 401(a)(28)(C); (3) § 409(h)(1)(B);(4) § 409(l); and (5) § 1042(c)(1)(A).

Effective Date

This notice is effective for plan yearsbeginning on or after January 1, 2012.However, this notice is not effective un-til plan years beginning on or after Jan-uary 1, 2013 for any plan that is sponsoredby an employer with respect to which, onMarch 14, 2011, neither the employer norany member of its controlled group (withinthe meaning of § 409(l)) has any commonstock that is readily tradable on an estab-lished securities market within the mean-ing of § 1.401(a)(35)-(1)(f)(5)(A) (relatingto securities that are traded on a nationalsecurities exchange that is registered un-der section 6 of the Securities ExchangeAct of 1934), but the employer or a mem-ber of its controlled group has commonstock that is readily tradable on an estab-lished securities market within the mean-ing of § 1.401(a)(35)-(1)(f)(5)(B) (relatingto securities that are traded on a foreign na-tional securities exchange that is officiallyrecognized, sanctioned, or supervised by agovernmental authority and is deemed bythe SEC as having a “ready market” un-der SEC Rule 15c3–1, within the mean-ing of § 1.401(a)(35)-(1)(f)(5)(B)). Tax-payers (including any employer sponsor-ing a plan described in the preceding sen-tence) can rely on this notice for periodsafter March 14, 2011.

Drafting Information:

The principal author of this notice isRobert Gertner of the Employee Plans,Tax Exempt and Government EntitiesDivision. For further information re-garding this notice, please contact theEmployee Plans taxpayer assistance an-swering service at 1–877–829–5500 (atoll-free number) or e-mail Mr. Gertner atRetirementPlanQuestions@irs.gov.

26 CFR 601.105: Examination of returns and claimsfor refund, credit, or abatement; determination ofcorrect tax liability.(Also: Part I, § 911, 1.911–1.)

Rev. Proc. 2011–20

SECTION 1. PURPOSE

.01 This revenue procedure provides in-formation to any individual who failed tomeet the eligibility requirements of section911(d)(1) of the Internal Revenue Code be-cause adverse conditions in a foreign coun-try precluded the individual from meetingthose requirements for taxable year 2010.

.02 This revenue procedure lists thecountries for which the eligibility require-ments of section 911(d)(1) are waived fortaxable year 2010.

SECTION 2. BACKGROUND

.01 Section 911(a) of the Code al-lows a “qualified individual,” as definedin section 911(d)(1), to exclude foreignearned income and housing cost amountsfrom gross income. Section 911(c)(4) ofthe Code allows a qualified individual todeduct housing cost amounts from grossincome.

.02 Section 911(d)(1) of the Code de-fines the term “qualified individual” as anindividual whose tax home is in a foreigncountry and who is (A) a citizen of theUnited States and establishes to the satis-faction of the Secretary of the Treasury thatthe individual has been a bona fide residentof a foreign country or countries for an un-interrupted period that includes an entiretaxable year, or (B) a citizen or resident ofthe United States who, during any periodof 12 consecutive months, is present in aforeign country or countries during at least330 full days.

.03 Section 911(d)(4) of the Code pro-vides an exception to the eligibility re-quirements of section 911(d)(1). An in-dividual will be treated as a qualified in-dividual with respect to a period in whichthe individual was a bona fide resident of,or was present in, a foreign country, if theindividual left the country during a periodfor which the Secretary of the Treasury, af-ter consultation with the Secretary of State,determines that individuals were requiredto leave because of war, civil unrest, orsimilar adverse conditions that precludedthe normal conduct of business. An in-dividual must establish that but for thoseconditions the individual could reasonably

2011–11 I.R.B. 551 March 14, 2011

have been expected to meet the eligibilityrequirements.

.04 For 2010, the Secretary of the Trea-sury, in consultation with the Secretary of

State, has determined that war, civil unrest,or similar adverse conditions precluded thenormal conduct of business in the follow-

ing countries beginning on the specifieddate:

Date of Departure

Country On or after

Cote d’Ivoire December 19, 2010

Haiti January 13, 2010

Accordingly, for purposes of section911 of the Code, an individual who left oneof the foregoing countries on or after thespecified departure date during 2010 shallbe treated as a qualified individual with re-spect to the period during which that indi-vidual was present in, or was a bona fideresident of, such foreign country, if the in-dividual establishes a reasonable expecta-tion of meeting the requirements of section911(d) but for those conditions.

.06 To qualify for relief under section911(d)(4) of the Code, an individual musthave established residency, or have beenphysically present, in the foreign countryon or prior to the date that the Secretaryof the Treasury determines that individuals

were required to leave the foreign coun-try. Individuals who establish residency,or are first physically present, in the for-eign country after the date that the Secre-tary prescribes shall not be treated as quali-fied individuals under section 911(d)(4) ofthe Code. For example, individuals whoare first physically present or establish res-idency in Cote d’Ivoire after December 19,2010, are not eligible to qualify for the ex-ception provided in section 911(d)(4) ofthe Code for taxable year 2010.

SECTION 3. INQUIRIES

A taxpayer who needs assistance onhow to claim this exclusion, or on how to

file an amended return, should contact a lo-cal IRS Office or, for a taxpayer residingor traveling outside the United States, thenearest overseas IRS office.

SECTION 4. DRAFTINGINFORMATION

The principal author of this revenueprocedure is Kate Y. Hwa of the Office ofAssociate Chief Counsel (International).For further information regarding this rev-enue procedure, contact Ms. Hwa at (202)622–3840 (not a toll-free call).

March 14, 2011 552 2011–11 I.R.B.

Part IV. Items of General InterestTEB Voluntary ClosingAgreement Program: Relieffrom Debt Extinguishment forCertain Issuers Purchasingand Holding Their OwnTax-Exempt Bonds

Announcement 2011–19

SECTION 1. BACKGROUND

The Treasury Department and theInternal Revenue Service (“IRS”) is-sued Notice 2008–41, 2008–1 C.B.742 (April 14, 2008), as modified byNotice 2008–88, 2008–42 I.R.B. 933(October 20, 2008), and Notice 2010–7,2010–3 I.R.B. 296 (January 19, 2010), toprovide relief from liquidity constraintsin the tax-exempt bond market duringthe financial crisis. The notices providedcertain temporary rules that allowed stateand local governmental issuers to purchaseand hold their own tax-exempt bondsfor temporary holding periods withoutresulting in a retirement of the purchasedtax-exempt bonds solely for the purposesof § 103 and §§ 141–150 of the InternalRevenue Code, as amended (“Code”).Section 3.2 of Notice 2010–7 provides inrelevant part that the permitted holdingperiod during which a state or localgovernmental issuer may hold its owntax-exempt bonds under the special rulesin § 3.1 of Notice 2008–88 expires onDecember 31, 2010. Separately, certainspecial rules of continuing applicationallow state and local governmental issuersto hold their own “qualified tender bonds”for a temporary period pursuant to theexercise of a “qualified tender right”(as defined in § 3.2 of Notice 2008–41)without causing a reissuance or retirementof those bonds. After December 31,2010, except for tax-exempt bonds heldpursuant to rules of continuing applicationfor qualified tender bonds, a state or localgovernmental issuer generally may notpurchase and hold its own tax-exemptbonds without causing a retirementor extinguishment of such bonds (anysuch bonds so held are referred to as“extinguished bonds”).

For various reasons beyond their con-trol, some issuers that previously pur-chased their own tax-exempt bonds inthe financial crisis pursuant to Notices2008–41, 2008–88, and 2010–7 were un-able to resell the bonds by December 31,2010. In addition, other issuers may cur-rently need to purchase and hold theirown tax-exempt bonds due to certain cur-rent market challenges. Some of theseissuers have approached the IRS aboutthe possibility of entering into a voluntaryclosing agreement that would allow themto continue to purchase or hold their owntax-exempt bonds under § 103 of the Codeafter December 31, 2010.

SECTION 2. TAX EXEMPTBONDS VOLUNTARY CLOSINGAGREEMENT PROGRAM (TEBVCAP)

.01 Pursuant to the TEB VCAP pro-gram set forth in Notice 2008–31, 2008–1C.B. 592 (March 17, 2008), the IRS willconsider requests from issuers of extin-guished bonds for a voluntary closingagreement.

.02 The closing agreement will pro-vide that the extinguished bonds willbe treated as remaining outstanding forpurposes of § 103 and §§ 141–150 dur-ing the period beginning on the later ofJanuary 1, 2011 or the date the issuerpurchases its own bonds and ending onthe earlier of: (1) the date that is 180days after the execution of the closingagreement by the IRS and the issuer orsuch earlier date as requested by the issuer(the “Closing Date”); (2) the date thatthe bonds are successfully resold to athird party; (3) the date that the bondsare successfully currently refunded forpurposes of §§ 103 and 141–150; or (4)the date that the bonds are cancelled onthe books and records of the issuer.

.03 The closing agreement will be con-ditioned on:

(A) The authorizing body of the issuersubmitting its adopted resolution (the “Au-thorizing Resolution”) of its intent to resellor currently refund the extinguished bondsas tax-exempt bonds within the relevantperiod described in section 2.02 above.

Such resolution shall be based on the opin-ion of its financial advisor or other expertthat the resale or refunding of the bonds islikely to be successful within such period.

(B) The issuer’s representations that thebonds to be resold or currently refunded bythe issuer: (1) are outstanding for purposesof State law and constitute legal, valid,and binding obligations of the issuer un-der applicable State law; and (2) assum-ing that the bonds are treated as remain-ing outstanding for purposes of § 103 and§§ 141–150, qualify as tax-exempt obli-gations of the issuer under § 103 of theCode. The issuer may make these repre-sentations itself or the issuer may satisfythe requirement for these representationsthrough submission of an unqualified bondcounsel opinion from a nationally recog-nized public finance attorney or law firmthat addresses these representations.

(C) The payment of a fee by the issuerequal to the par value of the outstandingbonds to be held by the issuer multipliedby one thirty-fifth of one percent (.029%)for each month from the later of January 1,2011 or the date of purchase of the extin-guished bonds and continuing through theClosing Date.

.04 The TEB VCAP request must besubmitted no later than December 31, 2012under the operating procedures describedin section 7.2.3 of the Internal RevenueManual.

.05 Generally, a complete VCAP re-quest will be processed and a closingagreement will be sent to the issuer for itsexecution within 45 days of the receipt ofthe complete submission. An issuer mustsubmit payment, in accordance with theclosing agreement, prior to returning theexecuted closing agreement to the IRS forits subsequent execution.

SECTION 3. DRAFTINGINFORMATION

The principal author of this announce-ment is Sandra H. Westin of the IRS Officeof Tax Exempt Bonds. For further infor-mation regarding this announcement, con-tact Sandra Westin at (415) 522–6065 (nota toll-free call).

2011–11 I.R.B. 553 March 14, 2011

Definition of TermsRevenue rulings and revenue procedures(hereinafter referred to as “rulings”) thathave an effect on previous rulings use thefollowing defined terms to describe the ef-fect:

Amplified describes a situation whereno change is being made in a prior pub-lished position, but the prior position is be-ing extended to apply to a variation of thefact situation set forth therein. Thus, ifan earlier ruling held that a principle ap-plied to A, and the new ruling holds that thesame principle also applies to B, the earlierruling is amplified. (Compare with modi-fied, below).

Clarified is used in those instanceswhere the language in a prior ruling is be-ing made clear because the language hascaused, or may cause, some confusion.It is not used where a position in a priorruling is being changed.

Distinguished describes a situationwhere a ruling mentions a previously pub-lished ruling and points out an essentialdifference between them.

Modified is used where the substanceof a previously published position is beingchanged. Thus, if a prior ruling held that aprinciple applied to A but not to B, and thenew ruling holds that it applies to both A

and B, the prior ruling is modified becauseit corrects a published position. (Comparewith amplified and clarified, above).

Obsoleted describes a previously pub-lished ruling that is not considered deter-minative with respect to future transac-tions. This term is most commonly used ina ruling that lists previously published rul-ings that are obsoleted because of changesin laws or regulations. A ruling may alsobe obsoleted because the substance hasbeen included in regulations subsequentlyadopted.

Revoked describes situations where theposition in the previously published rulingis not correct and the correct position isbeing stated in a new ruling.

Superseded describes a situation wherethe new ruling does nothing more than re-state the substance and situation of a previ-ously published ruling (or rulings). Thus,the term is used to republish under the1986 Code and regulations the same po-sition published under the 1939 Code andregulations. The term is also used whenit is desired to republish in a single rul-ing a series of situations, names, etc., thatwere previously published over a period oftime in separate rulings. If the new rul-ing does more than restate the substance

of a prior ruling, a combination of termsis used. For example, modified and su-perseded describes a situation where thesubstance of a previously published rulingis being changed in part and is continuedwithout change in part and it is desired torestate the valid portion of the previouslypublished ruling in a new ruling that is selfcontained. In this case, the previously pub-lished ruling is first modified and then, asmodified, is superseded.

Supplemented is used in situations inwhich a list, such as a list of the names ofcountries, is published in a ruling and thatlist is expanded by adding further names insubsequent rulings. After the original rul-ing has been supplemented several times, anew ruling may be published that includesthe list in the original ruling and the ad-ditions, and supersedes all prior rulings inthe series.

Suspended is used in rare situations toshow that the previous published rulingswill not be applied pending some futureaction such as the issuance of new oramended regulations, the outcome of casesin litigation, or the outcome of a Servicestudy.

AbbreviationsThe following abbreviations in current useand formerly used will appear in materialpublished in the Bulletin.

A—Individual.Acq.—Acquiescence.B—Individual.BE—Beneficiary.BK—Bank.B.T.A.—Board of Tax Appeals.C—Individual.C.B.—Cumulative Bulletin.CFR—Code of Federal Regulations.CI—City.COOP—Cooperative.Ct.D.—Court Decision.CY—County.D—Decedent.DC—Dummy Corporation.DE—Donee.Del. Order—Delegation Order.DISC—Domestic International Sales Corporation.DR—Donor.E—Estate.EE—Employee.E.O.—Executive Order.

ER—Employer.ERISA—Employee Retirement Income Security Act.EX—Executor.F—Fiduciary.FC—Foreign Country.FICA—Federal Insurance Contributions Act.FISC—Foreign International Sales Company.FPH—Foreign Personal Holding Company.F.R.—Federal Register.FUTA—Federal Unemployment Tax Act.FX—Foreign corporation.G.C.M.—Chief Counsel’s Memorandum.GE—Grantee.GP—General Partner.GR—Grantor.IC—Insurance Company.I.R.B.—Internal Revenue Bulletin.LE—Lessee.LP—Limited Partner.LR—Lessor.M—Minor.Nonacq.—Nonacquiescence.O—Organization.P—Parent Corporation.PHC—Personal Holding Company.PO—Possession of the U.S.PR—Partner.

PRS—Partnership.PTE—Prohibited Transaction Exemption.Pub. L.—Public Law.REIT—Real Estate Investment Trust.Rev. Proc.—Revenue Procedure.Rev. Rul.—Revenue Ruling.S—Subsidiary.S.P.R.—Statement of Procedural Rules.Stat.—Statutes at Large.T—Target Corporation.T.C.—Tax Court.T.D. —Treasury Decision.TFE—Transferee.TFR—Transferor.T.I.R.—Technical Information Release.TP—Taxpayer.TR—Trust.TT—Trustee.U.S.C.—United States Code.X—Corporation.Y—Corporation.Z —Corporation.

March 14, 2011 i 2011–11 I.R.B.

Numerical Finding List1

Bulletin 2011–1 through 2011–11

Announcements:

2011-1, 2011-2 I.R.B. 304

2011-2, 2011-3 I.R.B. 324

2011-3, 2011-3 I.R.B. 324

2011-4, 2011-4 I.R.B. 424

2011-5, 2011-4 I.R.B. 430

2011-6, 2011-4 I.R.B. 433

2011-7, 2011-5 I.R.B. 446

2011-8, 2011-5 I.R.B. 446

2011-9, 2011-7 I.R.B. 499

2011-10, 2011-7 I.R.B. 499

2011-11, 2011-7 I.R.B. 500

2011-12, 2011-9 I.R.B. 532

2011-13, 2011-8 I.R.B. 525

2011-14, 2011-9 I.R.B. 532

2011-15, 2011-8 I.R.B. 526

2011-16, 2011-7 I.R.B. 500

2011-17, 2011-9 I.R.B. 532

2011-19, 2011-11 I.R.B. 553

2011-20, 2011-10 I.R.B. 542

Notices:

2011-1, 2011-2 I.R.B. 259

2011-2, 2011-2 I.R.B. 260

2011-3, 2011-2 I.R.B. 263

2011-4, 2011-2 I.R.B. 282

2011-5, 2011-3 I.R.B. 314

2011-6, 2011-3 I.R.B. 315

2011-7, 2011-5 I.R.B. 437

2011-8, 2011-8 I.R.B. 503

2011-9, 2011-6 I.R.B. 459

2011-10, 2011-6 I.R.B. 463

2011-11, 2011-7 I.R.B. 497

2011-12, 2011-8 I.R.B. 514

2011-13, 2011-9 I.R.B. 529

2011-14, 2011-11 I.R.B. 544

2011-15, 2011-10 I.R.B. 539

2011-17, 2011-10 I.R.B. 540

2011-18, 2011-11 I.R.B. 549

2011-19, 2011-11 I.R.B. 550

Proposed Regulations:

REG-149335-08, 2011-6 I.R.B. 468

REG-146097-09, 2011-8 I.R.B. 516

REG-124018-10, 2011-2 I.R.B. 301

REG-131151-10, 2011-8 I.R.B. 519

REG-131947-10, 2011-8 I.R.B. 521

REG-132724-10, 2011-7 I.R.B. 498

Revenue Procedures:

2011-1, 2011-1 I.R.B. 1

2011-2, 2011-1 I.R.B. 90

Revenue Procedures— Continued:

2011-3, 2011-1 I.R.B. 111

2011-4, 2011-1 I.R.B. 123

2011-5, 2011-1 I.R.B. 167

2011-6, 2011-1 I.R.B. 195

2011-7, 2011-1 I.R.B. 233

2011-8, 2011-1 I.R.B. 237

2011-9, 2011-2 I.R.B. 283

2011-10, 2011-2 I.R.B. 294

2011-11, 2011-4 I.R.B. 329

2011-12, 2011-2 I.R.B. 297

2011-13, 2011-3 I.R.B. 318

2011-14, 2011-4 I.R.B. 330

2011-15, 2011-3 I.R.B. 322

2011-16, 2011-5 I.R.B. 440

2011-17, 2011-5 I.R.B. 441

2011-18, 2011-5 I.R.B. 443

2011-19, 2011-6 I.R.B. 465

2011-20, 2011-11 I.R.B. 551

Revenue Rulings:

2011-1, 2011-2 I.R.B. 251

2011-2, 2011-2 I.R.B. 256

2011-3, 2011-4 I.R.B. 326

2011-4, 2011-6 I.R.B. 448

2011-6, 2011-10 I.R.B. 537

2011-7, 2011-10 I.R.B. 534

Treasury Decisions:

9507, 2011-3 I.R.B. 305

9508, 2011-7 I.R.B. 495

9509, 2011-6 I.R.B. 450

9510, 2011-6 I.R.B. 453

9511, 2011-6 I.R.B. 455

9512, 2011-7 I.R.B. 473

9513, 2011-8 I.R.B. 501

9514, 2011-9 I.R.B. 527

1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2010–27 through 2010–52 is in Internal Revenue Bulletin2010–52, dated December 27, 2010.

2011–11 I.R.B. ii March 14, 2011

Finding List of Current Actions onPreviously Published Items1

Bulletin 2011–1 through 2011–11

Announcements:

85-88

Obsoleted by

Rev. Proc. 2011-10, 2011-2 I.R.B. 294

2008-11

Modified by

Ann. 2011-6, 2011-4 I.R.B. 433

2009-62

Obsoleted by

Rev. Proc. 2011-10, 2011-2 I.R.B. 294

Notices:

2006-87

Superseded by

Notice 2011-8, 2011-8 I.R.B. 503

2007-25

Superseded by

Notice 2011-8, 2011-8 I.R.B. 503

2007-77

Superseded by

Notice 2011-8, 2011-8 I.R.B. 503

2008-107

Superseded by

Notice 2011-8, 2011-8 I.R.B. 503

2010-27

Superseded by

Notice 2011-8, 2011-8 I.R.B. 503

2010-59

Modified by

Notice 2011-5, 2011-3 I.R.B. 314

2010-71

Modified and superseded by

Notice 2011-9, 2011-6 I.R.B. 459

2010-79

Clarified and modified by

Notice 2011-4, 2011-2 I.R.B. 282

Proposed Regulations:

REG-132554-08

Corrected by

Ann. 2011-11, 2011-7 I.R.B. 500

Revenue Procedures:

72-50

Modified and superseded by

Rev. Proc. 2011-10, 2011-2 I.R.B. 294

Revenue Procedures— Continued:

76-34

Modified and supersed by

Rev. Proc. 2011-10, 2011-2 I.R.B. 294

83-23

Modified and superseded by

Rev. Proc. 2011-15, 2011-3 I.R.B. 322

94-17

Modified and superseded by

Rev. Proc. 2011-15, 2011-3 I.R.B. 322

97-27

Clarified and modified by

Rev. Proc. 2011-4, 2011-1 I.R.B. 330

2001-10

Modified by

Rev. Proc. 2011-4, 2011-4 I.R.B. 330

2002-28

Modified by

Rev. Proc. 2011-4, 2011-4 I.R.B. 330

2003-21

Modified and superseded by

Rev. Proc. 2011-15, 2011-3 I.R.B. 322

2004-34

Modified by

Rev. Proc. 2011-14, 2011-4 I.R.B. 330

Modified and clarified by

Rev. Proc. 2011-18, 2011-5 I.R.B. 443

2006-44

Modified by

Ann. 2011-6, 2011-4 I.R.B. 433

2006-56

Modified by

Rev. Proc. 2011-14, 2011-4 I.R.B. 330

2008-52

Modified by

Notice 2011-4, 2011-2 I.R.B. 282Rev. Proc. 2011-17, 2011-5 I.R.B. 441

Superseded in part by

Rev. Proc. 2011-14, 2011-4 I.R.B. 330

2009-39

Superseded in part by

Rev. Proc. 2011-14, 2011-4 I.R.B. 330

2009-44

Modified by

Ann. 2011-6, 2011-4 I.R.B. 433

2010-1

Superseded by

Rev. Proc. 2011-1, 2011-1 I.R.B. 1

2010-2

Superseded by

Rev. Proc. 2011-2, 2011-1 I.R.B. 283

Revenue Procedures— Continued:

2010-3

Superseded by

Rev. Proc. 2011-3, 2011-1 I.R.B. 111

2010-4

Superseded by

Rev. Proc. 2011-4, 2011-1 I.R.B. 123

2010-5

Superseded by

Rev. Proc. 2011-5, 2011-1 I.R.B. 167

2010-6

Superseded by

Rev. Proc. 2011-6, 2011-1 I.R.B. 195

2010-7

Superseded by

Rev. Proc. 2011-7, 2011-1 I.R.B. 233

2010-8

Superseded by

Rev. Proc. 2011-8, 2011-1 I.R.B. 237

2010-9

Superseded by

Rev. Proc. 2011-9, 2011-2 I.R.B. 283

2010-15

Updated by

Rev. Proc. 2011-13, 2011-3 I.R.B. 318

2011-1

Corrected by

Ann. 2011-7, 2011-5 I.R.B. 446

2011-8

Corrected by

Ann. 2011-8, 2011-5 I.R.B. 446

2011-11

Corrected by

Ann. 2011-9, 2011-7 I.R.B. 499

Revenue Rulings:

81-100

Modified by

Rev. Rul. 2011-1, 2011-2 I.R.B. 251

2004-67

Modified by

Rev. Rul. 2011-1, 2011-2 I.R.B. 251

2008-40

Modified by

Rev. Rul. 2011-1, 2011-2 I.R.B. 251

2011-3

Corrected by

Ann. 2011-16, 2011-7 I.R.B. 500

1 A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2010–27 through 2010–52 is in Internal Revenue Bulletin 2010–52, dated December 27,2010.

March 14, 2011 iii 2011–11 I.R.B.

Treasury Decisions:

9391

Corrected by

Ann. 2011-12, 2011-9 I.R.B. 532

9505

Corrected by

Ann. 2011-10, 2011-7 I.R.B. 499

2011–11 I.R.B. iv March 14, 2011

March 14, 2011 2011–11 I.R.B.

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