Bulletin No. 2019-17 April 22, 2019 HIGHLIGHTS OF THIS ISSUE

HIGHLIGHTS                                                                               Bulletin No. 2019–17
OF THIS ISSUE                                                                                   April 22, 2019
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.


ADMINISTRATIVE                                                  Federal Register on June 8, 2016. If adopted, the proposed
                                                                rules would have provided guidance for transactions in which
                                                                property of a C corporation becomes the property of a REIT
REV. PROC. 2019-17, page 1045.                                  following certain corporate distributions of controlled corpora-
This revenue procedure provides guidance regarding the          tion stock. This document also contains a notice of proposed
general public use requirements for qualified residential       rulemaking that provides revised guidance on the same sub-
rental projects financed with tax-exempt bonds under §          ject. These proposed regulations would affect REITs, C corpo-
142(d) of the Internal Revenue Code. Specifically, this rev-    rations the property of which becomes property of a REIT, and
enue procedure coordinates these requirements with the          their respective shareholders.
provisions in § 42(g)(9). Under § 42(g)(9), a project does
not violate the general public use requirement under § 42       REG-143686-07, page 1072.
as a result of specified occupancy restrictions or preferenc-   This document withdraws a notice of proposed rulemaking
es (for example, certain housing preferences for military       published in the Proposed Rules section of the Federal Regis-
veterans).                                                      ter on January 21, 2009 with corrections published on March
                                                                5, 2009. If adopted, the proposed rules would have provided
INCOME TAX                                                      guidance on the recovery of stock basis in distributions of
                                                                property made by a corporation to a shareholder and cer-
                                                                tain transactions treated as dividend-equivalents, as well as
REV. RUL. 2019-11, page 1041.                                   guidance regarding the determination of gain and the basis
This revenue ruling provides guidance to taxpayers regarding    of stock or securities received in certain transactions. The
the inclusion in income of recovered state and local taxes in   proposed regulations would affect shareholders and security
the current year when the taxpayer deducted state and local     holders of corporations.
taxes paid in a prior year, subject to the section 164(b)(6)
limitation.                                                     REG-124627-11, page 1073.
                                                                This is a withdrawal of a notice of proposed rulemaking (REG-
REG-103083-18, page 1046.                                       124627-11) published on December 19, 2011 in the Federal
The proposed regulations provide guidance on new infor-         Register (76 FR 78591).
mation reporting obligations related to reportable policy
sales of life insurance contracts and payments of report-
able death benefits under § 6050Y, which was added by           EXEMPT ORGANIZATIONS
section 13520 of the Tax Cuts and Jobs Act, PL 115–97
(TCJA). The proposed regulations also provide guidance on
the amount of death benefits excluded from gross income         EXCISE TAX
under § 101 following a reportable policy sale, under an
exception to the transfer for valuable consideration rules      T.D. 9855, page 1042.
for life insurance contracts added to § 101(a) by section       These final regulations prescribe filing Form 4720 to report
13522 of the TCJA.                                              excise tax under sections 4960, 4966, 4967, and 4968 by
                                                                the 15th day of the fifth month after the end of the tax year
REG-113943-17, page 1067.                                       of the person reporting the tax, and update the abatement
This document withdraws a portion of a notice of proposed       rules under section 4963 for section 4966 and 4967 taxes,
rulemaking published in the Proposed Rules section of the       consistent with a statutory change.

Finding Lists begin on page ii.
The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.


Introduction
The Internal Revenue Bulletin is the authoritative instrument                      against reaching the same conclusions in other cases unless
of the Commissioner of Internal Revenue for announcing of-                         the facts and circumstances are substantially the same.
ficial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of                      The Bulletin is divided into four parts as follows:
general interest. It is published weekly.
                                                                                   Part I.—1986 Code.
It is the policy of the Service to publish in the Bulletin all sub-                This part includes rulings and decisions based on provisions
stantive rulings necessary to promote a uniform application                        of the Internal Revenue Code of 1986.
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-                  Part II.—Treaties and Tax Legislation.
wise indicated. Procedures relating solely to matters of inter-                    This part is divided into two subparts as follows: Subpart A,
nal management are not published; however, statements of                           Tax Conventions and Other Related Items, and Subpart B,
internal practices and procedures that affect the rights and                       Legislation and Related Committee Reports.
duties of taxpayers are published.

                                                                                   Part III.—Administrative, Procedural, and Miscellaneous.
Revenue rulings represent the conclusions of the Service                           To the extent practicable, pertinent cross references to these
on the application of the law to the pivotal facts stated in                       subjects are contained in the other Parts and Subparts. Also
the revenue ruling. In those based on positions taken in rul-                      included in this part are Bank Secrecy Act Administrative
ings to taxpayers or technical advice to Service field offices,                    Rulings. Bank Secrecy Act Administrative Rulings are issued
identifying details and information of a confidential nature are                   by the Department of the Treasury’s Office of the Assistant
deleted to prevent unwarranted invasions of privacy and to                         Secretary (Enforcement).
comply with statutory requirements.

                                                                                   Part IV.—Items of General Interest.
Rulings and procedures reported in the Bulletin do not have the                    This part includes notices of proposed rulemakings, disbar-
force and effect of Treasury Department Regulations, but they                      ment and suspension lists, and announcements.
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and                  The last Bulletin for each month includes a cumulative index
procedures, the effect of subsequent legislation, regulations,                     for the matters published during the preceding months. These
court decisions, rulings, and procedures must be considered,                       monthly indexes are cumulated on a semiannual basis, and are
and Service personnel and others concerned are cautioned                           published 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.




April 22, 2019	                                                                                                            Bulletin No. 2019–17
Part I.
Section 111.—Recovery of                        of the $12,000 state and local taxes paid.     production of income). Section 164(b)(5)
                                                Including other allowable itemized deduc-      allows a taxpayer to elect to deduct state
Tax Benefit Items                               tions, B claimed a total of $15,000 in item-   and local general sales taxes in lieu of
26 CFR 1.111-1: Recovery of certain items       ized deductions on B’s 2018 federal income     state and local income taxes.
previously deducted or credited.                tax return. In 2019, B received a $750 state       Section 164(b)(6), as added by section
(Also: § 164; 1.164-1.)                         income tax refund due to B’s overpayment       11042 of the “Tax Cuts and Jobs Act” (the
                                                of state income taxes in 2018.                 “Act”), Pub. L. 115-97, limits an individu-
Rev. Rul. 2019-11                                  Situation 3: Taxpayer C paid local real     al’s deduction for the aggregate amount of
                                                property taxes of $5,000 and state income      state and local taxes paid during the calen-
ISSUE                                           taxes of $6,000 in 2018. Section 164(b)(6)     dar year to $10,000 ($5,000 in the case of
                                                limited C’s state and local tax deduction      a married individual filing a separate re-
   If a taxpayer received a tax benefit         on C’s 2018 federal income tax return to       turn). The dollar limitations apply to tax-
from deducting state and local taxes under      $10,000, so C could not deduct $1,000          able years beginning after December 31,
section 164 of the Internal Revenue Code        of the $11,000 state and local taxes paid.     2017, and before January 1, 2026, but they
in a prior taxable year, and the taxpayer       Including other allowable itemized de-         do not apply to foreign taxes described in
recovers all or a portion of those taxes in     ductions, C claimed a total of $15,000 in      section 164(a)(3) or to any taxes described
the current taxable year, what portion of       itemized deductions on C’s 2018 federal        in section 164(a)(1) and (2) that are paid or
the recovery must the taxpayer include in       income tax return. In 2019, C received         accrued in carrying on a trade or business
gross income?                                   a $1,500 state income tax refund due to        or an activity described in section 212.
                                                C’s overpayment of state income taxes in           Section 111(a) excludes from gross in-
FACTS                                           2018.                                          come amounts attributable to the recovery
                                                   Situation 4: Taxpayer D paid local real     during the taxable year of any amount de-
    In Situations 1 through 4 below, the tax-   property taxes of $4,250 and state income      ducted in any prior year to the extent the
payers are unmarried individuals whose          taxes of $6,000 in 2018. Section 164(b)        amount did not reduce the amount of tax
filing status is “single” and who itemized      (6) limited D’s state and local tax deduc-     imposed by Chapter 1 of the Code. Sec-
deductions on their federal income tax re-      tion on D’s 2018 federal income tax return     tion 111 partially codifies the tax benefit
turns for 2018 in lieu of using their stan-     to $10,000, so D could not deduct $250         rule, which generally requires a taxpay-
dard deduction of $12,000. The taxpayers        of the $10,250 state and local taxes paid.     er to include in gross income recovered
did not pay or accrue the taxes in carry-       Including other allowable itemized de-         amounts that the taxpayer deducted in
ing on a trade or business or an activity       ductions, D claimed a total of $12,500 in      a prior taxable year to the extent those
described in section 212. For 2018, the         itemized deductions on D’s 2018 federal        amounts reduced the taxpayer’s tax liabil-
taxpayers were not subject to alternative       income tax return. In 2019, D received         ity in the prior year. See Rev. Rul. 93-75,
minimum tax under section 55 and were           a $1,000 state income tax refund due to        1993-2 C.B. 63.
not entitled to any credit against income       D’s overpayment of state income taxes in           If the taxpayers in Situations 1 through
tax. The taxpayers use the cash receipts        2018.                                          4 had paid only the proper amount of state
and disbursements method of accounting.                                                        and local tax in the prior taxable year, their
    Situation 1: Taxpayer A paid local real     LAW AND ANALYSIS                               itemized deductions may have been lower
property taxes of $4,000 and state income                                                      or they may have opted for the standard de-
taxes of $5,000 in 2018. A’s state and local       Section 164 generally provides an           duction. Thus, the taxpayer in each situa-
tax deduction was not limited by section        itemized deduction for certain taxes paid      tion must determine the amount of itemized
164(b)(6) because it was below $10,000.         or accrued during the taxable year. Section    deductions that the taxpayer would have
Including other allowable itemized de-          164(a) provides a deduction for (1) state      deducted in the prior year had the taxpay-
ductions, A claimed a total of $14,000 in       and local, and foreign, real property taxes;   er paid only the proper amount of tax. The
itemized deductions on A’s 2018 federal         (2) state and local personal property taxes;   taxpayer must then compare this amount to
income tax return. In 2019, A received          (3) state and local, and foreign, income,      the total itemized deductions actually tak-
a $1,500 state income tax refund due to         war profits and excess profits taxes; and      en on the return, or the standard deduction
A’s overpayment of state income taxes in        (4) the generation-skipping transfer tax       that could have been taken on the return,
2018.                                           imposed on income distributions. Section       and include the difference as income on the
    Situation 2: Taxpayer B paid local real     164(a) also provides a deduction for state     current year return if the taxpayer received
property taxes of $5,000 and state income       and local, and foreign, taxes not previ-       a tax benefit in the prior taxable year from
taxes of $7,000 in 2018. Section 164(b)         ously described that were paid or accrued      that itemized deduction.
(6) limited B’s state and local tax deduc-      within the taxable year in carrying on any         Situation 1: State income tax refund ful-
tion on B’s 2018 federal income tax return      trade or business or an activity described     ly includable. In 2019, A received a $1,500
to $10,000, so B could not deduct $2,000        in section 212 (relating to expenses for       refund of state income taxes paid in 2018.



Bulletin No. 2019–17                                              1041                                               April 22, 2019
Had A paid only the proper amount of state     HOLDING                                        ACTION: Final regulations.
income tax in 2018, A’s state and local tax
deduction would have been reduced from            If a taxpayer received a tax benefit        SUMMARY: This document contains fi-
$9,000 to $7,500 and as a result, A’s item-    from deducting state or local taxes in a       nal regulations specifying which return
ized deductions would have been reduced        prior taxable year and the taxpayer re-        to use to pay certain excise taxes and the
from $14,000 to $12,500, a difference of       covers all or a portion of those taxes in      time for filing the return. The regulations
$1,500. A received a tax benefit from the      the current taxable year, the taxpayer         also implement the statutory addition of
overpayment of $1,500 in state income tax      must include in gross income the lesser        two excise taxes to the first-tier taxes
in 2018. Thus, A is required to include the    of (1) the difference between the taxpay-      subject to abatement. These regulations
entire $1,500 state income tax refund in A’s   er’s total itemized deductions taken in        affect applicable tax-exempt organiza-
gross income in 2019.                          the prior year and the amount of item-         tions and their related organizations,
    Situation 2: State income tax refund       ized deductions the taxpayer would have        applicable educational institutions, spon-
not includable. In 2019, B received a          taken in the prior year had the taxpayer       soring organizations that maintain certain
$750 refund of state income taxes paid in      paid the proper amount of state and lo-        donor advised funds, fund managers of
2018. Had B paid only the proper amount        cal tax or (2) the difference between the      such sponsoring organizations, and cer-
of state income tax in 2018, B’s state and     taxpayer’s itemized deductions taken in        tain donors, donor advisors, and persons
local tax deduction would have remained        the prior year and the standard deduction      related to a donor or donor advisor of a
the same ($10,000) and B’s itemized de-        amount for the prior year, if the taxpayer     donor advised fund.
ductions would have remained the same          was not precluded from taking the stan-
($15,000). B received no tax benefit from      dard deduction in the prior year. This         DATES: Effective date: These regulations
the overpayment of $750 in state income        holding applies to the recovery of any         are effective on April 9, 2019. Applicabili-
tax in 2018. Thus, B is not required to in-    state or local tax, including state or local   ty date: These regulations apply on and af-
clude the $750 state income tax refund in      income tax and state or local real or per-     ter April 9, 2019. See also §53.6071–1(j)
B’s gross income in 2019.                      sonal property tax.                            (3).
    Situation 3: State income tax refund
partially includable. In 2019, C received a    DRAFTING INFORMATION                           FOR FURTHER INFORMATION CON-
$1,500 refund of state income taxes paid in                                                   TACT: Amber L. MacKenzie, (202) 317-
2018. Had C paid only the proper amount            The principal author of this revenue       4086 or Ward L. Thomas, (202) 317-6173
of state income tax in 2018, C’s state and     ruling is Amy S. Wei of the Office of As-      (not toll-free numbers).
local tax deduction would have been re-        sociate Chief Counsel (Income Tax & Ac-
duced from $10,000 to $9,500 and as a          counting). For further information regard-     SUPPLEMENTARY INFORMATION:
result, C’s itemized deductions would have     ing this revenue ruling, contact Amy S. Wei
been reduced from $15,000 to $14,500, a        at (202) 317-7011 (not a toll-free number).    Background
difference of $500. C received a tax ben-
efit from $500 of the overpayment of state                                                        This document contains final regu-
income tax in 2018. Thus, C is required to                                                    lations amending 26 CFR part 53 un-
include $500 of C’s state income tax refund                                                   der chapter 42, subtitle D, section 4963
in C’s gross income in 2019.                   T.D. 9855                                      and chapter 61, subtitle F, sections 6011
    Situation 4: Standard deduction. In                                                       and 6071 of the Internal Revenue Code
2019, D received a $1,000 refund of state      DEPARTMENT OF THE                              (Code), to specify the return to accom-
income taxes paid in 2018. Had D paid          TREASURY                                       pany payment of excise taxes under
only the proper amount of state income tax                                                    sections 4960, 4966, 4967, and 4968; to
in 2018, D’s state and local tax deduction
                                               Internal Revenue Service                       specify the time for filing that return; and
would have been reduced from $10,000           26 CFR Part 53                                 to conform the regulations to the statu-
to $9,250, and, as a result, D’s itemized                                                     torily expanded definition of the first-tier
deductions would have been reduced from        Regulations to Prescribe                       taxes subject to abatement under section
$12,500 to $11,750, which is less than         Return and Time for Filing                     4962.
the standard deduction of $12,000 that D       for Payment of Section                             On November 7, 2018, the Depart-
would have taken in 2018. The difference                                                      ment of the Treasury (Treasury Depart-
between D’s claimed itemized deductions
                                               4960, 4966, 4967, and                          ment) and the IRS published a notice of
($12,500) and the standard deduction D         4968 Taxes and to Update                       proposed rulemaking (REG–107163–18)
could have taken ($12,000) is $500. D          the Abatement Rules for                        in the Federal Register (83 FR 55653)
received a tax benefit from $500 of the        Section 4966 and 4967                          setting forth proposed regulations under
overpayment of state income tax in 2018.                                                      sections 6011 and 6071. The proposed
Thus, D is required to include $500 of D’s
                                               Taxes                                          regulations specified Form 4720,“Return
state income tax refund in D’s gross in-       AGENCY: Internal Revenue Service               of Certain Excise Taxes Under Chapters
come in 2019.                                  (IRS), Treasury.                               41 and 42 of the Internal Revenue Code,”


April 22, 2019                                                   1042                                    Bulletin No. 2019–17
as the return to accompany payment of             Availability of IRS Documents                  Ward L. Thomas of the Office of Asso-
excise taxes under sections 4960, 4966,                                                          ciate Chief Counsel (Employee Benefits,
4967, and 4968; required that a person               For copies of recently issued revenue       Exempt Organizations, and Employment
(including a governmental entity) re-             procedures, revenue rulings, notices and       Tax). However, other personnel from the
quired to file a return to report such tax        other guidance published in the Internal       Treasury Department and the IRS partici-
file Form 4720 by the 15th day of the             Revenue Bulletin, please visit the IRS         pated in their development.
5th month after the end of the person’s           Web site at http://www.irs.gov or contact         *****
taxable year; and added sections 4966             the Superintendent of Documents, U.S.
and 4967 to the first-tier taxes subject to       Government Publishing Office, Washing-         Adoption of Amendments to the
abatement under section 4962.                     ton, DC 20402.                                 Regulations
    Only one comment from the public was
received, which did not raise any concerns        Special Analyses                                  Accordingly, 26 CFR part 53 is amend-
or make any recommendations specific                                                             ed as follows:
to the proposed regulation, and no hear-              This regulation is not subject to review
ing was requested or held. Therefore, the         under section 6(b) of Executive Order          PART 53 – FOUNDATION AND
proposed regulations are adopted without          12866 pursuant to the Memorandum of            SIMILAR EXCISE TAXES
change by this Treasury decision. (All            Agreement (April 11, 2018) between the
comments are available at www.regula-             Treasury Department and the Office of             Paragraph 1. The authority citation for
tions.gov or upon request.)                       Management and Budget regarding re-            part 53 continues to read in part as fol-
                                                  view of tax regulations.                       lows:
Explanation of Provisions                             Pursuant to the Regulatory Flexibili-         Authority: 26 U.S.C. 7805 * * *
                                                  ty Act (5 U.S.C. chapter 6), it is hereby         § 53.4963–1 [Amended]
1. Section 4962 Abatement                         certified that the collection of information      Par. 2. Section 53.4963–1 is amended
                                                  in these regulations will not have a sig-      by:
   These final regulations add section            nificant economic impact on a substantial         1. In paragraph (a), removing the lan-
4966 and section 4967 excise taxes to the         number of small entities. This certification   guage ‘‘4958, 4971’’ and adding ‘‘4958,
definitions of ‘‘first tier tax’’ and ‘‘taxable   is based on the fact that this rule merely     4966, 4967, 4971’’ in its place.
event’’ in §53.4963-1. Qualified first tier       provides guidance as to the timing and            2. In paragraph (c), removing the lan-
taxes are subject to abatement under sec-         filing of Form 4720 for persons liable for     guage ‘‘4958, 4971’’ and adding ‘‘4958,
tion 4962.                                        the specified excise taxes and who have        4966, 4967, 4971’’ in its place.
                                                  a statutory filing obligation. Completing         Par. 3. Section 53.6011–1(b) is amend-
2. Requirement To File a Form 4720                the applicable portion of the Form 4720        ed by:
                                                  imposes little incremental burden in time         1. Revising the first sentence.
   These final regulations amend §                or expense as compared to any other filing        2. Removing from the third sentence
53.6011-1(b) to provide that persons (in-         method.                                        the language ‘‘4958(a), or 4965(a),’’
cluding governmental entities) that are li-           In addition, a person may already be       and adding ‘‘4958(a), 4960(a), 4965(a),
able for section 4960, 4966, 4967, or 4968        required to file the Form 4720 under the       4966(a), or 4967(a),’’ in its place.
excise taxes are required to file a return on     existing final regulations in §§ 53.6011–1        The revision reads as follows:
Form 4720.                                        and 53.6071–1 if it is liable for another
                                                  excise tax for which filing of the Form        §53.6011–1 General requirement of
3. Deadline for Filing a Form 4720                4720 is required. Therefore, a regulatory      return, statement or list.
                                                  flexibility analysis under the Regulatory
    Under §53.6071-1(i) of these final            Flexibility Act (5 U.S.C. chapter 6) is not       *****
regulations, a person required to file a          required.                                         (b) Every person (including a gov-
Form 4720 to report an excise tax under               Pursuant to section 7805(f) of the         ernmental entity) liable for tax imposed
section 4960, 4966, 4967, or 4968 must            Code, the notice of proposed rulemak-          by sections 4941(a), 4942(a), 4943(a),
file a Form 4720 by the 15th day of the           ing preceding these regulations was            4944(a), 4945(a), 4955(a), 4958(a), 4959,
fifth month after the end of the person’s         submitted to the Chief Counsel for Ad-         4960(a), 4965(a), 4966(a), 4967(a), or
taxable year during which the excise tax          vocacy of the Small Business Admin-            4968(a), and every private foundation and
liability was incurred.                           istration for comment on its impact on         every trust described in section 4947(a)(2)
                                                  small businesses, and no comment was           which has engaged in an act of self-deal-
4. Effective/Applicability Date                   received.                                      ing (as defined in section 4941(d)) (oth-
                                                                                                 er than an act giving rise to no tax under
   These regulations are effective on April       Drafting Information                           section 4941(a)) shall file an annual return
9, 2019. These regulations apply on and                                                          on Form 4720,“Return of Certain Excise
after April 9, 2019. See also § 53.6071–             The principal authors of these reg-         Taxes Under Chapters 41 and 42 of the In-
1(j)(3).                                          ulations are Amber L. MacKenzie and            ternal Revenue Code,” and shall include


Bulletin No. 2019–17                                                1043                                              April 22, 2019
therein the information required by such     §53.6071–1 Time for filing returns.                (3) Paragraph (i) of this section applies
form and the instructions issued with re-                                                    on and after April 9, 2019.
spect thereto. * * *                             *****
   *****                                         (i) Taxes under section 4960, 4966,                               Kirsten Wielobob
                                             4967, or 4968. A person (including a gov-             Deputy Commissioner for Services
§53.6071–1 [Amended]                         ernmental entity) required by §53.6011–                               and Enforcement.
                                             1(b) to file a return for a tax imposed by         Approved: March 25, 2019
   Par. 4. Section 53.6071–1 is amended      section 4960(a), 4966(a), 4967(a), or
by:                                          4968(a) in a taxable year must file the Form                               David J. Kautter
   1. Redesignating paragraph (i) as para-   4720 on or before the 15th day of the fifth              Assistant Secretary of the Treasury
graph (j).                                   month after the end of the person’s taxable                                    (Tax Policy).
   2. Adding new paragraphs (i) and (j)      year (or, if the person has not established a
(3).                                         taxable year for Federal income tax purpos-     (Filed by the Office of the Federal Register on April
                                                                                             5, 2019, 11:15 a.m., and published in the issue of the
   The additions read as follows:            es, the person’s annual accounting period).
                                                                                             Federal Register for April 9, 2019, 84 F.R. 14008)
                                                 (j) * * *




April 22, 2019                                                 1044                                        Bulletin No. 2019–17
Part III.
26 CFR 601.601: Rules and regulations               .04 Section 42 provides a low-income          SECTION 3. SCOPE
(Also Part I, §§ 42 and 142)                    housing credit in an amount equal to a
                                                portion of the qualified basis (as defined in        This revenue procedure only applies
Rev. Proc. 2019-17                              § 42(c)(1)) of each qualified low-income          to exempt facility bonds that finance
                                                building (as defined in § 42(c)(2)) that is       qualified residential rental projects under
SECTION 1. PURPOSE
                                                part of a qualified low-income housing            § 142(d) and does not affect the rules appli-
                                                project (as defined in § 42(g)).                  cable to exempt facility bonds that finance
   This revenue procedure provides guid-
                                                    .05 Section 1.42-9(a) provides that a         other exempt facilities. For rules applica-
ance regarding the general public use re-
                                                residential rental unit in a building that        ble to exempt facility bonds that finance
quirements for qualified residential rental
                                                is not for use by the general public is not       other exempt facilities, see, generally,
projects financed with tax-exempt bonds
                                                eligible for a low-income housing cred-           § 1.103-8.
under § 142(d) of the Internal Revenue
                                                it under § 42. Section 1.42-9(a) further
Code (Code). Specifically, this revenue
                                                provides that a residential rental unit is        SECTION 4. APPLICATION
procedure coordinates these requirements
                                                for use by the general public if the unit is
with the provisions in § 42(g)(9). Under
                                                rented in a manner consistent with hous-          A qualified residential rental project (as
§ 42(g)(9), a project does not violate the
                                                ing policy governing non-discrimination,          defined in § 142(d)) does not fail to meet
general public use requirement under § 42
                                                as evidenced by rules or regulations of           the general public use requirement appli-
as a result of specified occupancy restric-
                                                the Department of Housing and Urban               cable to exempt facilities solely because
tions or preferences (for example, certain
                                                Development. Section 1.42-9(b), howev-            of occupancy restrictions or preferences
housing preferences for military veterans).
                                                er, provides that if a residential rental unit    that favor tenants described in § 42(g)(9)
                                                is provided only for a member of a social         (for example, certain housing preferences
SECTION 2. BACKGROUND
                                                organization or provided by an employer           for military veterans).
                                                for its employees, the unit is not for use by
   .01 State and local governments may
                                                the general public and is not eligible for        SECTION 5. EFFECTIVE DATE
issue tax-exempt bonds under § 103 to
                                                a low-income housing credit under § 42.
finance exempt facilities (exempt facility
                                                    .06 Section 42(g)(9) provides that a proj-    This revenue procedure applies to bonds
bonds). A qualified residential rental proj-
                                                ect does not fail to meet the general public      sold before, on, or after April 3, 2019.
ect, as defined in § 142(d), is one type of
                                                use requirement solely because of occu-
exempt facility that may be financed with
                                                pancy restrictions or preferences that favor      SECTION 6. DRAFTING
exempt facility bonds.
                                                tenants (A) with special needs, (B) who are       INFORMATION
   .02 To satisfy the requirements of
                                                members of a specified group under a Fed-
§ 142(d), a specified portion of the resi-
                                                eral program or State program or policy that      The principal author of this revenue pro-
dential units in a residential rental project
                                                supports housing for such a specified group,      cedure is Johanna Som de Cerff of the Of-
must serve individuals with qualifying
                                                or (C) who are involved in artistic or literary   fice of Associate Chief Counsel (Financial
incomes. For example, under § 142(d)(1)
                                                activities. For example, there are certain Fed-   Institutions & Products). For further infor-
(A), a residential rental project satisfies
                                                eral or State programs that support housing       mation regarding this revenue procedure
these requirements if 20 percent or more
                                                for military veterans. Section 42(g)(9) was       contact Johanna Som de Cerff on (202)
of the residential units in the project are
                                                added to the Code by § 3004(g) of the Hous-       317-6980 (not a toll free number).
occupied by individuals whose income is
                                                ing and Economic Recovery Act of 2008,
50 percent or less of area median gross in-
                                                Pub. L. 110-289, 122 Stat. 2654, 2884.
come.
                                                    .07 Section 142(d) does not contain a
   .03 Under § 1.103-8(a)(2) of the In-
come Tax Regulations, to qualify as an          provision similar to § 42(g)(9). Low-in-          Section 42.—Low-income
                                                come housing credits under § 42 and ex-
exempt facility, a facility must serve or
                                                empt facility bonds issued under § 142(d)
                                                                                                  housing credit
be available on a regular basis for gen-
                                                are often used together to finance residen-
eral public use, or be part of a facility so                                                          This revenue procedure provides guidance re-
                                                tial rental projects. Questions have arisen
used, as contrasted with similar types of                                                         garding the general public use requirements for
                                                as to whether a project that is treated as
facilities that are constructed for the ex-                                                       qualified residential rental projects financed with
                                                not failing the general public use require-       tax-exempt bonds under § 142(d) of the Internal
clusive use of a limited number of private
                                                ment solely based on the restrictions or          Revenue Code. Specifically, this revenue procedure
business users. For example, an apartment
                                                preferences provided under § 42(g)(9) for         coordinates these requirements with the provisions
building for which employees of an adja-                                                          in § 42(g)(9). Under § 42(g)(9), a project does not
                                                purposes of the low-income housing cred-
cent factory are given preference over oth-                                                       violate the general public use requirement under
                                                it under § 42 may be treated as not failing
er potential tenants is not available for use                                                     § 42 as a result of specified occupancy restrictions
                                                the general public use requirement appli-         or preferences (for example, certain housing prefer-
by the general public. See § 1.103-8(b)(9),
                                                cable to tax-exempt financing of qualified        ences for military veterans). See Rev. Proc. 2019-
Example 2.
                                                residential rental projects under § 142(d).       17, p. [1045].




Bulletin No. 2019–17                                               1045                                                    April 22, 2019
Part IV.
Notice of Proposed                             between the hours of 8 a.m. and 4 p.m. to         income from the sale of the life insurance
                                               CC:PA:LPD:PR (REG-103083-18), Cou-                contract (capital or ordinary). Sections
Rulemaking; Notification of                    rier’s Desk, Internal Revenue Service,            1.6050Y-3(f)(1) and 1.6050Y-4(e)(1)
Public Hearing                                 1111 Constitution Avenue NW, Washing-             of the proposed regulations contain re-
                                               ton, DC 20224, or sent electronically via         porting exceptions for certain foreign
Information Reporting for                      the Federal eRulemaking Portal at www.            beneficial owners. To determine quali-
Certain Life Insurance                         regulations.gov (IRS REG-103083-18).              fication for these reporting exceptions,
Contract Transactions                                                                            §§1.6050Y-3(f)(1) and 1.6050Y-4(e)(1)
                                               FOR FURTHER INFORMATION CON-                      would require that certain foreign ben-
and Modifications to the                       TACT: Concerning the proposed regula-             eficial owners provide a Form W-8ECI,
Transfer for Valuable                          tions, Kathryn M. Sneade, (202) 317-6995;         “Certificate of Foreign Person’s Claim
Consideration Rules                            concerning submissions of comments and            that Income is Effectively Connected
                                               requests to speak at the public hearing,          with the Conduct of a Trade or Business
REG-103083-18                                  Regina Johnson, (202) 317-6901 (not toll-         in the United States,” to certain persons.
                                               free numbers).                                    This information is necessary to document
AGENCY: Internal Revenue Service                                                                 whether the reporting exception in either
(IRS), Treasury.                               SUPPLEMENTARY INFORMATION:                        §1.6050Y-3(f)(1) or §1.6050Y-4(e)(1) ap-
                                                                                                 plies in a particular situation.
ACTION: Notice of proposed rulemak-            Paperwork Reduction Act                               The likely respondents to the collection
ing; notification of public hearing.                                                             of information are (1) Entities acquiring
                                                   The collection of information con-            life insurance contracts in reportable poli-
SUMMARY: This document contains                tained in this notice of proposed rulemak-        cy sales; (2) life insurance companies; (3)
proposed regulations providing guidance        ing has been submitted to the Office of           life insurance companies and other entities
on new information reporting obligations       Management and Budget for review under            making payments of reportable death ben-
under section 6050Y related to reportable      OMB Control Numbers 1545-0119, 1545-              efits; and (4) entities receiving payments
policy sales of life insurance contracts and   1621, and 1545-2281 in accordance with            of reportable death benefits.
payments of reportable death benefits.         the Paperwork Reduction Act of 1995 (44               The burden for the collection of infor-
The proposed regulations also provide          U.S.C. 3507(d)). In general, the collec-          mation contained in §1.6050Y-2 of the
guidance on the amount of death benefits       tion of information in the proposed reg-          proposed regulations will be reflected in
excluded from gross income under section       ulations is required under section 6050Y          the burden on the form that the IRS cre-
101 following a reportable policy sale.        of the Internal Revenue Code (Code): (1)          ated to request the information in section
The proposed regulations affect parties        The requirement under §1.6050Y-2 of the           6050Y(a) and §1.6050Y-2 of the proposed
involved in certain life insurance contract    proposed regulations for an acquirer to re-       regulations (Form 1099-LS, “Reportable
transactions, including reportable policy      port certain information about payments           Life Insurance Sale”). The burden for the
sales, transfers of life insurance contracts   made in reportable policy sales is required       collection of information contained in
to foreign persons, and payments of re-        under section 6050Y(a); (2) the require-          §1.6050Y-3 of the proposed regulations
portable death benefits. This document         ment under §1.6050Y-3 of the proposed             will be reflected in the burden on the form
invites comments and provides a notice of      regulations for an issuer to report certain       that the IRS created to request the informa-
a public hearing on these proposed regu-       information about transferors of life insur-      tion in section 6050Y(b) and §1.6050Y-3
lations.                                       ance contracts is required under section          of the proposed regulations (Form 1099-
                                               6050Y(b); and (3) the requirement under           SB, “Seller’s Investment in Life Insurance
DATES: Written or electronic comments          §1.6050Y-4 of the proposed regulations            Contract”). The OMB Control Number
must be received by May 9, 2019. Re-           for a payor to report certain information         for both of these forms is 1545-2281. The
quests to speak and outlines of topics to      about payments of reportable death ben-           burden for the collection of information
be discussed at the public hearing sched-      efits is required under section 6050Y(c).         contained in §1.6050Y-4 of the proposed
uled for June 5, 2019, at 10 a.m. must be      Section 1.6050Y-3(a)(3) of the proposed           regulations will be reflected in the burden
received by May 9, 2019.                       regulations would require the issuer to re-       on the Form 1099-R, “Distributions From
                                               port to the seller and the IRS the amount         Pensions, Annuities, Retirement or Prof-
ADDRESSES: Send submissions to:                the seller would have received if the seller      it-Sharing Plans, IRAs, Insurance Con-
CC:PA:LPD:PR         (REG-103083-18),          had surrendered the life insurance contract       tracts, etc.” (OMB Control Number 1545-
Room 5203, Internal Revenue Service,           on the date of the reportable policy sale.        0119). The burden for the collection of
P.O. Box 7604, Ben Franklin Station,           This information is necessary to allow the        information contained in §§1.6050Y-3(f)
Washington, DC 20044. Submissions may          seller and the IRS to determine the charac-       (1) and 1.6050Y-4(e)(1) of the proposed
be hand-delivered Monday through Friday        ter of all or a portion of the seller’s taxable   regulations will be reflected in the bur-



April 22, 2019                                                    1046                                      Bulletin No. 2019–17
den on the Form W-8ECI (OMB Control            get for fiscal year 2018,” Pub. L. 115-97,      policy sales of life insurance contracts and
Number 1545-1621), when the burden is          131 Stat. 2054, 2149 (Act). The proposed        payments of reportable death benefits.
revised to reflect the additional collection   regulations under section 101 amend final       Section 1.6050Y-1 of the proposed reg-
of information in §§1.6050Y-3(f)(1) and        regulations under section 101 published         ulations contains definitional provisions.
1.6050Y-4(e)(1) of the proposed regula-        in the Federal Register on November             Sections 1.6050Y-2, 1.6050Y-3, and
tions.                                         26, 1960 (25 FR 11402), as subsequent-          1.6050Y-4 of the proposed regulations
   Comments on the collection of infor-        ly amended on December 24, 1964 (29             provide guidance on the reporting obliga-
mation should be sent to the Office of         FR 18356), September 27, 1982 (47 FR            tions imposed by section 6050Y(a), (b),
Management and Budget, Attn: Desk              42337), and July 26, 2007 (72 FR 41159)         and (c), respectively.
Officer for the Department of the Trea-        (existing regulations).
sury, Office of Information and Regula-           Section 13520 of the Act added section       1. Section 1.6050Y-1: Definitions
tory Affairs, Washington, DC 20503, with       6050Y to chapter 61 (Information and Re-
copies to the Internal Revenue Service,        turns) of subtitle A of the Code (chapter           The definitions set forth in §1.6050Y-1
Attn: IRS Reports Clearance Officer, SE:-      61). Section 6050Y imposes information          of the proposed regulations apply for pur-
CAR:MP:T:T:SP, Washington, DC 20224.           reporting obligations related to certain life   poses of §§1.6050Y-1 through -4 of the
Comments on the collection of informa-         insurance contract transactions, including      proposed regulations.
tion should be received by May 24, 2019.       reportable policy sales and payments of             Under the proposed regulations, “life
   Comments are specifically requested         reportable death benefits. Section 6050Y        insurance contract,” also referred to as a
concerning:                                    provides that each of the returns required      life insurance policy, is defined by refer-
   Whether the proposed collection of in-      by section 6050Y is to be made “at such         ence to section 7702(a). See §1.6050Y-1(a)
formation is necessary for the proper per-     time and in such manner as the Secretary        (9) of the proposed regulations. “Interest
formance of the functions of the IRS, in-      shall prescribe.” The proposed regulations      in a life insurance contract,” “transfer of
cluding whether the information will have      under section 6050Y implement section           an interest in a life insurance contract,”
practical utility;                             6050Y. The proposed regulations specify         “direct acquisition of an interest in a life
   The accuracy of the estimated burden        the manner in which and time at which the       insurance contract,” “indirect acquisition
associated with the proposed collection of     information reporting obligations must be       of an interest in a life insurance contract,”
information;                                   satisfied. The proposed regulations also        and “reportable policy sale” are defined
   How the quality, utility, and clarity of    provide definitions and rules that govern       by reference to the proposed regulations
the information to be collected may be en-     the application of the information report-      under section 101. See §1.6050Y-1(a)(3),
hanced;                                        ing obligations.                                (5), (6), (14), and (19) of the proposed
   How the burden of complying with               Section 13522 of the Act amended sec-        regulations. “Foreign person” means a
the proposed collection of information         tion 101. New section 101(a)(3) defines         person that is not a “United States per-
may be minimized, including through the        the term “reportable policy sale” and pro-      son,” as defined in section 7701(a)(30).
application of automated collection tech-      vides rules for determining the amount          See §1.6050Y-1(a)(4) of the proposed reg-
niques or other forms of information tech-     of death benefits excluded from gross in-       ulations.
nology; and                                    come following a reportable policy sale.            Section 6050Y(a) requires any person
   Estimates of capital or start-up costs      The proposed regulations under section          that acquires a life insurance contract or
and costs of operation, maintenance, and       101 provide definitions applicable under        any interest in a life insurance contract in
purchase of services to provide informa-       sections 101 and 6050Y and guidance for         a reportable policy sale during any taxable
tion.                                          determining the amount of death benefits        year to report certain information regard-
   An agency may not conduct or sponsor,       excluded from gross income following a          ing the transaction, including information
and a person is not required to respond to,    reportable policy sale.                         about each recipient of payment in the re-
a collection of information unless it dis-        Notice 2018-41, 2018-20 I.R.B. 584,          portable policy sale. Under the proposed
plays a valid control number assigned by       described sections 13520 and 13522 of the       regulations, “acquirer” means any person
the Office of Management and Budget.           Act and the regulations the Department of       that, directly or indirectly, acquires an in-
                                               the Treasury (Treasury Department) and          terest in a life insurance contract in a re-
Background                                     the IRS expected to propose under sec-          portable policy sale. See §1.6050Y-1(a)(1)
                                               tions 101 and 6050Y. The Treasury De-           of the proposed regulations.
   This document contains proposed             partment and the IRS received comments              Section 6050Y(d)(1) defines “pay-
amendments to 26 CFR part 1 under sec-         in response to the notice and considered        ment,” with respect to any reportable pol-
tions 101 and 6050Y of the Code (pro-          these comments in developing these pro-         icy sale, to mean the amount of cash and
posed regulations). The proposed regula-       posed regulations.                              the fair market value of any other consid-
tions implement recent legislative changes                                                     eration transferred in the sale. Under the
to sections 101 and 6050Y by sections          Explanation of Provisions                       proposed regulations, “reportable policy
13520 and 13522 of “[a]n Act to provide                                                        sale payment” means the total amount of
for reconciliation pursuant to titles II and      Section 6050Y imposes information            cash and the fair market value of any oth-
V of the concurrent resolution on the bud-     reporting obligations related to reportable     er consideration transferred, or to be trans-


Bulletin No. 2019–17                                             1047                                                April 22, 2019
ferred, in a reportable policy sale, includ-    portable policy sale payment made to the        in reportable policy sales, the recipients of
ing any amount of a reportable policy sale      broker is the amount of cash and the fair       those payments, and existing reporting re-
payment recipient’s debt assumed by the         market value of any other consideration         quirements applicable to those payments.
acquirer in a reportable policy sale. See       retained by the broker. The reportable pol-         Section 6050Y(b) requires issuers of
§1.6050Y-1(a)(15) of the proposed regu-         icy sale payment made to the seller would       life insurance contracts receiving a writ-
lations. An interest in a life insurance con-   be the amount of cash and fair market val-      ten statement furnished by an acquirer
tract may be acquired directly, from the        ue of any other consideration transferred       under section 6050Y(a) and §1.6050Y-2
direct holder of the interest, or indirectly,   to the seller, including any amount of the      of the proposed regulations (a “reportable
through the acquisition of an ownership         seller’s debt assumed by the acquirer in a      policy sale statement” or “RPSS,” under
interest in an entity that holds an interest    reportable policy sale, and it would not in-    §1.6050Y-1(a)(17) of the proposed reg-
in a life insurance contract. See §§1.101-      clude the amount of the reportable policy       ulations) or notice of a transfer to a for-
1(e)(3)(i) and (ii) and 1.6050Y-1(a)(3) and     sale payment made to the broker.                eign person to report certain information
(5) of the proposed regulations. In the case        Comments received on Notice 2018-41         regarding sellers. Under the proposed
of an indirect acquisition of an interest in    suggested that the amount of the payment        regulations, “seller” means any person
a life insurance contract that is a report-     to a seller in a reportable policy sale that    that holds an interest in a life insurance
able policy sale, the reportable policy sale    should be reported under section 6050Y(a)       contract and transfers that interest, or any
payment is the amount of cash and the fair      should be the amount actually paid to the       part of that interest, to an acquirer in a
market value of any other consideration         seller. These comments were taken into          reportable policy sale or any person that
transferred for the ownership interest in       consideration in developing the definition      owns a life insurance contract and trans-
the entity that is appropriately allocable to   of “reportable policy sale payment recip-       fers title to, possession of, or legal own-
the interest in the life insurance contract     ient” in the proposed regulations, as well      ership of that life insurance contract to a
held by the entity. See §1.6050Y-1(a)(15)       as the reporting requirements in the pro-       foreign person. See §1.6050Y-1(a)(18)
of the proposed regulations. The proposed       posed regulations, which require the ac-        of the proposed regulations. “Notice of a
regulations require the acquirer to report      quirer in a reportable policy sale to report,   transfer to a foreign person” means any
the aggregate amount of reportable policy       with respect to each reportable policy sale     notice of a transfer of a life insurance con-
sale payments made, or to be made, with         payment recipient, the aggregate amount         tract (i.e., a transfer of title to, possession
respect to a reportable policy sale. See        of reportable policy sale payments made         of, or legal ownership of the life insurance
§1.6050Y-2(a)(5) of the proposed regu-          to that person. See §1.6050Y-2(a)(5) of         contract) received by a 6050Y(b) issuer
lations. Accordingly, when an acquirer          the proposed regulations.                       (as that term is defined in §1.6050Y-1(a)
makes payments in installments in more              Comments received on Notice 2018-           (8)(iii)(B) of the proposed regulations).
than one year, the acquirer reports the total   41 suggested that no reporting should be        See §1.6050Y-1(a)(10) of the proposed
amount of all payments in the year of the       required for payments of ancillary costs        regulations. Notice of a transfer to a for-
policy sale.                                    and expenses in a reportable policy sale,       eign person includes information provid-
    “Reportable policy sale payment re-         including broker fees, securities interme-      ed for nontax purposes such as a change
cipient” means any person that receives         diary fees, and other fees and expenses.        of address notice for purposes of sending
a reportable policy sale payment in a re-       Comments noted that the person pay-             statements or for other purposes, and in-
portable policy sale. See §1.6050Y-1(a)         ing these expenses is normally paying           formation relating to loans, premiums, or
(16) of the proposed regulations. The           them in connection with the conduct of          death benefits with respect to the contract,
seller in a reportable policy sale is a re-     a trade or business, and is therefore re-       unless the 6050Y(b) issuer knows that no
portable policy sale payment recipient if       quired to report these amounts to payees        transfer of the life insurance contract has
the seller receives a reportable policy sale    in accordance with applicable rules. The        occurred or knows the transferee is a Unit-
payment. A broker or other intermediary         proposed regulations require the acquir-        ed States person. Id. For this purpose, a
that retains a portion of the cash or oth-      er in a reportable policy sale to report        6050Y(b) issuer may rely on a Form W-9,
er consideration transferred in a report-       all reportable policy sale payments made        Request for Taxpayer Identification Num-
able policy sale is also a reportable policy    with respect to the reportable policy sale,     ber and Certification, or a valid substi-
sale payment recipient. Id. The aggregate       meaning all amounts of cash and the fair        tute form, that meets the requirements of
amount of all reportable policy sale pay-       market value of any other consideration         §1.1441-1(d)(2) (substituting “6050Y(b)
ments made with respect to a reportable         transferred in the reportable policy sale,      issuer” for “withholding agent”), that in-
policy sale must be reported under section      including any amount of a reportable pol-       dicates the transferee is a United States
6050Y(a). The objective of the proposed         icy sale payment recipient’s debt assumed       person.
regulations is for the acquirer to report the   by the acquirer in a reportable policy sale.        The definition of “issuer” under the
net payment, if any, made to each person        The Treasury Department and the IRS are         proposed regulations depends on the con-
involved in a reportable policy sale. Ac-       considering whether reportable policy sale      text in which the term is used. In general,
cordingly, if the acquirer transfers cash or    payments should be defined to exclude           the term “issuer” means, on any date, with
other consideration to a broker in a report-    payments of any ancillary costs and ex-         respect to any interest in a life insurance
able policy sale, the broker is a reportable    penses and request comments regarding           contract, any person that bears any part
policy sale payment recipient, and the re-      the types of payments made by acquirers         of the risk with respect to the life insur-


April 22, 2019                                                    1048                                      Bulletin No. 2019–17
ance contract on that date and any per-          RPSS with respect to the life insurance         surance contract that has been transferred
son responsible on that date for adminis-        contract or interest therein (or, in the case   in a reportable policy sale. The proposed
tering the contract, including collecting        of a designee, receives notice that the issu-   regulations clarify that the amounts must
premiums and paying death benefits. See          er for whom it serves as designee received      be attributable to an interest in the life in-
§1.6050Y-1(a)(8)(i) of the proposed reg-         a RPSS), and (2) is or was, on or before        surance contract that was transferred in a
ulations. For instance, if a reinsurer rein-     the date of receipt of the RPSS, an issuer      reportable policy sale. See §1.6050Y-1(a)
sures on an indemnity basis all or a portion     (as defined in §1.6050Y-1(a)(8)(i) of the       (12) of the proposed regulations. For in-
of the risks that the original issuer (and       proposed regulations) with respect to the       stance, if the original policyholder of a life
continuing contract administrator) might         life insurance contract. See §1.6050Y-1(a)      insurance contract transfers a 50 percent
otherwise have incurred with respect to a        (8)(iii)(A) of the proposed regulations.        interest in the life insurance contract in a
life insurance contract, both the reinsurer      More than one person may meet this defi-        reportable policy sale, amounts paid by
and the original issuer of the contract are      nition, but a 6050Y(b) issuer’s reporting       reason of the death of the insured that are
issuers of the life insurance contract. Id.      obligation is deemed satisfied if the infor-    attributable to the 50 percent interest re-
    Additionally, any designee of an issuer      mation required by section 6050Y(b) and         tained by the original policyholder are not
for purposes of section 6050Y reporting          §1.6050Y-3 is timely reported by any oth-       reportable death benefits.
purposes is generally also considered an         er 6050Y(b) issuer. See §1.6050Y-3(b) of            The proposed regulations define “pay-
issuer. See §1.6050Y-1(a)(8)(i) of the pro-      the proposed regulations.                       or” to mean any person making a payment
posed regulations. Under §1.6050Y-1(a)               With respect to a life insurance con-       of reportable death benefits and “report-
(8)(iv) of the proposed regulations, a per-      tract transferred to a foreign person, the      able death benefits payment recipient” to
son is the designee of an issuer for pur-        6050Y(b) issuer generally is any person         mean any person that receives reportable
poses of section 6050Y reporting under           that (1) Receives notice of the transfer of     death benefits as a beneficiary under the
§1.6050Y-1(a)(8) only if so designated           the life insurance contract to a foreign per-   life insurance contract or as the holder of
in writing, including electronically. The        son, and (2) is or was, on the date of trans-   an interest in the life insurance contract.
designation must be signed and acknowl-          fer or on the date of receipt of the notice,    See §1.6050Y-1(a)(11) and (13) of the
edged, in writing or electronically, by the      an issuer (as defined in §1.6050Y-1(a)(8)       proposed regulations. Comments received
person named as designee, or that person’s       (i) of the proposed regulations), with re-      on Notice 2018-41 suggested that “payor”
representative, and by the issuer making         spect to the life insurance contract. See       be defined the same as “issuer” for pur-
the designation, or a representative of that     §1.6050Y-1(a)(8)(iii)(B) of the proposed        poses of section 6050Y. The proposed
issuer.                                          regulations. However, a person is not a         regulations do not adopt this suggestion,
    For purposes of information reporting        6050Y(b) issuer under §1.6050Y-1(a)(8)          but comments are requested as to wheth-
by the acquirer under section 6050Y(a)           (iii)(B) of the proposed regulations if (1)     er payor should be so narrowly defined,
and §1.6050Y-2 of the proposed regula-           That person (or, in the case of a designee,     or should also include any holder of an
tions, the “6050Y(a) issuer” is the issuer       the issuer for whom it serves as designee)      interest in a life insurance contract that
that is responsible for administering the        is not responsible for administering the        receives reportable death benefits attrib-
life insurance contract, including collect-      life insurance contract, including collect-     utable to that interest and is contractually
ing premiums and paying death benefits           ing premiums and paying death benefits          obligated to pay part or all of the proceeds
under the contract, on the date of the re-       under the contract, on the date the notice      to the beneficial owner of the interest.
portable policy sale. See §1.6050Y-1(a)(8)       of a transfer to a foreign person of a life     Comments are also requested as to wheth-
(ii) of the proposed regulations.                insurance contract is received, and (2)         er, for purposes of reporting under section
    For purposes of information reporting        that person, or its designee, provides the      6050Y(c), reportable death benefits pay-
by the issuer under section 6050Y(b) and         6050Y(b) issuer that is responsible for         ment recipients should include, in addi-
§1.6050Y-3 of the proposed regulations,          administering the life insurance contract,      tion to any person that receives reportable
the definition of “6050Y(b) issuer” de-          including collecting premiums and pay-          death benefits as a beneficiary under the
pends on whether the reporting obligation        ing death benefits under the contract, on       life insurance contract, any person that
results from a reportable policy sale and        that date with such notice and any avail-       receives reportable death benefits as the
the receipt of a RPSS, or by a transfer to       able information necessary to accomplish        holder of an interest in the life insurance
a foreign person and the receipt of no-          reporting under section 6050Y(b) and            contract.
tice of a transfer to a foreign person. See      §1.6050Y-3 of the proposed regulations.             Section 6050Y(b) and §1.6050Y-3 of
§1.6050Y-1(a)(8)(iii)(A) of the proposed         See §1.6050Y-1(a)(8)(iii)(B) of the pro-        the proposed regulations require issuers to
regulations (applicable to reportable pol-       posed regulations.                              report the seller’s investment in the con-
icy sales) and §1.6050Y-1(a)(8)(iii)(B) of           Section 6050Y(c) imposes reporting          tract to the seller, and section 6050Y(c)
the proposed regulations (applicable to          requirements on any person that makes           and §1.6050Y-4 of the proposed regula-
transfers to foreign persons).                   a payment of reportable death benefits          tions require payors to report the payor’s
    With respect to a life insurance contract,   during any taxable year. Section 6050Y(d)       estimate of the buyer’s investment in the
or an interest therein, that is transferred      (4) defines the term “reportable death ben-     contract to the reportable death benefits
in a reportable policy sale, the 6050Y(b)        efits” to mean amounts paid by reason of        payment recipient. The “buyer,” with re-
issuer is any person that (1) Receives a         the death of the insured under a life in-       spect to any interest in a life insurance


Bulletin No. 2019–17                                               1049                                                April 22, 2019
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