Federal rates; adjusted federal rates; adjusted federal long-term rate and the long-term exempt rate. For purposes of sections 382, 642, 1274, 1288, and other sections of the Code, tables set forth the rates for April 2011.

Final and temporary regulations under section 1502 of the Code relate to the redetermination of intercompany gain as excluded from gross income. Temporary regulations under section 1.1502-13T are reissued.

Proposed regulations under section 6103(c) of the Code extends the period for submission to the IRS of taxpayer authorizations permitting disclosure of returns and return information to third-party designees. A public hearing is scheduled for June 9, 2011.

Guidance for Phase II of the qualifying advanced coal program under Section 48A and the qualifying gasification program under Section 48B. This notice updates the rules regarding the separation and sequestration of carbon dioxide emissions for Phase II of the qualifying advanced coal program under section 48A of the Code and the qualifying gasification program under section 48B. Specifically, the notice provides for the annual measurement of separated and sequestered carbon dioxide and applies the recapture rules of section 50(a) in the event that a taxpayer fails to attain or maintain the carbon dioxide separation and sequestration requirements of section 48A or section 48B. Notices 2009-23 and 2009-24 modified.

Credit for carbon dioxide sequestration; modification of Notice 2009-83. This notice modifies Notice 2009-83 by removing section 4.07, which provided that for purposes of section 45Q of the Code, qualified carbon dioxide (CO₂) does not include CO₂ that is captured and sequestered in a project as required under the qualifying advanced coal project program of section 48A or the qualifying gasification project program of section 48B. Notice 2009-83 modified.

The IRS has revoked its determination that Bennafield Enterprises, Inc., of Canton, OH; Challenge 2000, Inc., of Clackamas, OR; Christ Temple Breaking Free Ministry of Itta Bena, MS; Consumerwiz of Connecticut, Inc., of Groton, CT; Dakota Academy Charter School of Burnsville, MN; Human Shelter Innovation Institute, formerly Human Shelter Research Institute, of St. Louis, MO; LBOH, Inc., of Gainesville, FL; Larry T. Herrig Charitable Foundation of Dubuque, IA; National Spending & Credit Counseling Center of Spring Valley, CA; and S.H.O.C. Enterprise, Inc., of Corona, CA, qualify as organizations described in sections 501(c)(3) and 170(c)(2) of the Code.

This document provides notice of a public hearing on proposed regulations (REG-149335-08, 2011-6 I.R.B. 468) relating to the capitalization and allocation of royalties that are incurred only upon the sale of property produced or property acquired for resale (sales-based royalties) and adjusting the cost of merchandise inventory for an allowance, discount, or price rebated based on merchandise sales (sales-based vendor allowances). The regulations modify the simplified production method and the simplified resale method. A public hearing is scheduled for April 13, 2011.

This revenue ruling provides various prescribed rates for federal income tax purposes for April 2011 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in section 42(b)(1) for buildings placed in service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, and before December 31, 2013, shall not be less than 9%. Finally, Table 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520.

Internal Revenue Service (IRS), Treasury.

Final and temporary regulations.

This document contains final regulations concerning the treatment of certain intercompany gain with respect to stock owned by members of a consolidated group. These regulations provide for the redetermination of intercompany gain as excluded from gross income in certain transactions involving stock transfers between members of a consolidated group. The temporary regulations contained in this document are solely for the purpose of retaining the portion of the existing temporary regulations that were in the same temporary regulation section but that are not being promulgated as final regulations at this time. These regulations affect corporations filing consolidated returns.

Effective Date: These regulations are effective on March 4, 2011.

Applicability Date: Section 1.1502-13(c)(6)(ii)(C), (c)(6)(ii)(D), and (c)(7)(ii), Examples 16 and 17 apply with respect to items taken into account on or after March 4, 2011.

John F. Tarrant (202) 622-7790 or Lawrence M. Axelrod, (202) 622-7713 (not toll-free numbers).

Accordingly, 26 CFR part 1 is amended as follows:

The principal author of this regulation is John F. Tarrant, Office of Associate Chief Counsel (Corporate). However, other personnel from the IRS and the Treasury Department participated in its development.

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This notice updates the rules relating to the qualifying advanced coal project program under § 48A and the qualifying gasification project program under § 48B of the Internal Revenue Code. Specifically, this notice applies to any qualifying project that includes equipment that separates and sequesters such project’s total carbon dioxide emissions. Except as specifically provided in this notice, the qualifying advanced coal project program and the qualifying gasification project program will be conducted in the manner and under the procedures provided in Notice 2009-24, 2009-16 I.R.B. 817, and Notice 2009-23, 2009-16 I.R.B. 802.

.01 Section 46 provides that the amount of the investment credit for any taxable year is the sum of the credits listed in § 46. That list includes the qualifying advanced coal project credit under § 48A and the qualifying gasification project credit under § 48B.

.02 Section 48A allows a qualifying advanced coal project credit in an amount equal to (1) 20 percent of the qualified investment (as defined in § 48A(b)) for that taxable year in qualifying advanced coal projects (as defined in § 48A(c)(1) and (e)) described in § 48A(d)(3)(B)(i), (2) 15 percent of the qualified investment for that taxable year in qualified advanced coal projects described in § 48A(d)(3)(B)(ii), and (3) 30 percent of the qualified investment for that taxable year in qualifying advanced coal projects described in § 48A(d)(3)(B)(iii).

.03 Section 48A(d)(3)(B)(iii), as added by section 111 of the Energy Improvement and Extension Act of 2008, Pub. L. No. 110-343, 122 Stat. 3765 (October 3, 2008), provides for a second phase of the qualifying advanced coal project program and authorizes the Secretary to certify $1.25 billion of additional credits for advanced coal-based generation technology projects (“the Phase II advanced coal program” and “the Phase II advanced coal projects.”)

.04 Under § 48A(e)(1)(G), any project the application for which is submitted under the Phase II advanced coal program must include equipment that separates and sequesters—

(1) At least 65 percent of such project’s total carbon dioxide (“CO₂”) emissions in the case of an application other than an application for reallocated credits under § 48A(d)(4); and

(2) At least 70 percent of such project’s total CO₂ emissions in the case of an application for reallocated credits under § 48A(d)(4).

.05 On April 20, 2009, the Internal Revenue Service (“Service”) issued Notice 2009-24 to announce procedures for the allocation of credits under the Phase II advanced coal program.

.06 Section 48B(a) allows a qualifying gasification project credit for a taxable year in an amount equal to 20 percent (30 percent in the case of projects for which credits are allocated under § 48B(d)(1)(B)) of the qualified investment for such taxable year.

.07 Section 48B(d)(1)(B), as added by section 112 of the Energy Improvement and Extension Act of 2008 provides for a second phase of the qualifying gasification project program and authorizes the Secretary to certify an additional $250 million of credits to qualifying projects that include equipment that separates and sequesters at least 75 percent of such project’s total CO₂ emissions (“Phase II gasification program” and “Phase II gasification projects.”)

.08 On April 20, 2009, the Service issued Notice 2009-23 to announce procedures for the allocation of credit under the Phase II gasification program.

.09 On September 27, 2010, the Service issued Announcement 2010-56, 2010-39 I.R.B. 398, setting forth the results of the first round of allocations under the Phase II advanced coal program and the Phase II gasification program.

.01 In General. Section 48A(i) requires a recapture of the qualifying advanced coal project credit with respect to any project that fails to attain or maintain the separation and sequestration requirements of § 48A(e)(1)(G). Section 7.04 of Notice 2009-24 states that the § 48A credit allocated to a Phase II advanced coal project will be recaptured if, at any time during the applicable recovery period (as defined in § 168(c)) for such project, the project fails to attain or maintain the separation and sequestration requirements for such project under § 48A(e)(1)(G).

Similarly, § 48B(f) requires a recapture of the qualifying gasification project credit with respect to any project that fails to attain or maintain the separation and sequestration requirements for such project under § 48B(d)(1)(B). Section 6.04 of Notice 2009-23 provides that the § 48B credit allocated to a Phase II gasification project will be recaptured if, at any time during the applicable recovery period (as defined in § 168(c)) for such project, the project fails to attain or maintain the separation and sequestration requirements for such project under § 48B(d)(1)(B).

Additionally, credits allowed under § 48A and § 48B are subject to the recapture rules of § 50(a) as provided under section 2.12 of Notice 2009-24 and section 2.07 of Notice 2009-23, respectively. Section 50(a)(1) provides, generally, for recapture of the investment credit if, during any taxable year, investment tax credit property is disposed of or otherwise ceases to be investment credit property with respect to the taxpayer before the close of the recapture period. The recapture period under § 50(a) is the 5-year period beginning on the date the property is placed in service.

.02 Applicability of the Recapture Rule of § 50(a). The Service recognizes that § 168(c) provides a wide range of recovery periods that apply to Phase II advanced coal projects or Phase II gasification projects. This may create uncertainty for taxpayers regarding which recovery period to use if a project fails to attain or maintain the separation and sequestration requirements of § 48A and § 48B.

Moreover, different recapture periods provided under § 168(c) and § 50(a) may create further confusion and difficulty to taxpayers and to the Service. Therefore, the Service has determined that the recapture rules under § 50(a) will apply for all events that trigger recapture of the credits allowed under § 48A or § 48B, including a failure to attain or maintain the separation and sequestration requirements of § 48A(e)(1)(G) or § 48B(d)(1)(B).

.03 Annual Basis During Normal Plant Operations. For purposes of determining whether a project meets the requirements of § 48A(e)(1)(G) or § 48B(d)(1)(B), the amount of the project’s total CO₂ emissions and the amount of CO₂ separated and sequestered will be measured on an annual basis during normal plant operations. An annual period other than the taxpayer’s taxable year may be used for these purposes if the same period is consistently used. If a period other than the taxable year is used, any failure to meet the requirements of § 48A(e)(1)(G) or § 48B(d)(1)(B) will be treated as occurring in the taxable year that includes the last day of the annual period in which the failure occurs. The term “normal plant operations” is defined as operations other than during periods of initial plant certification, plant startup, plant shutdown, integrated gasifier shutdown for gasification system maintenance, or interruption of the coal supply to the project resulting from an event of force majeure (including an act of God, war, strike, or other similar event beyond the control of the taxpayer).

Notice 2009-23 and Notice 2009-24 are modified.

This notice is effective for all projects that receive either § 48A credits under the Phase II advanced coal program or § 48B credits under the Phase II gasification program.

The principal author of this notice is Jennifer C. Bernardini of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding this notice, contact Jennifer C. Bernardini at (202) 622-3110 (not a toll-free call).

This notice modifies Notice 2009-83, 2009-44 I.R.B. 588, by removing section 4.07 of the Notice. Section 4.07 provided that for purposes of § 45Q of the Internal Revenue Code, qualified carbon dioxide (CO₂) does not include CO₂ that is captured and sequestered in a project as required under an agreement entered into in connection with the qualifying advanced coal project program of § 48A or the qualifying gasification project program of § 48B.

Section 45Q was enacted by § 115 of the Energy Improvement and Extension Act of 2008, Pub. L. No. 110-343, 122 Stat. 3829 (October 3, 2008), as amended by section 1131 of the American Recovery and Reinvestment Tax Act of 2009, Division B of Pub. L. 111-5, 123 Stat 115 (Feb. 17, 2009). Section 45Q(a) provides that a credit for CO₂ sequestration is generally available to a taxpayer that captures qualified CO₂ at a qualified facility and disposes of qualified CO₂ in secure geological storage within the United States, effective for CO₂ captured after October 3, 2008.

Section 45Q(b)(1) defines qualified CO₂ as CO₂ from an industrial source which (A) would otherwise be released into the atmosphere as industrial emission of greenhouse gas, and (B) is measured at the source of capture and verified at the point of disposal or injection.

On November 2, 2009, the Internal Revenue Service (Service) issued Notice 2009-83, providing guidance on determining eligibility for the credit and the amount of the credit, as well as rules regarding adequate security measures for secure geological storage of CO₂. Section 4.07 of Notice 2009-83 provides that “qualified CO₂ for purposes of the § 45Q credit does not include CO₂ that is captured and sequestered in a project to the extent required under an agreement executed with the Service under the qualifying advanced coal project program of § 48A or the qualifying gasification project program of § 48B.”

Since the issuance of Notice 2009-83, several commenters asserted that the interpretation of § 45Q(b)(1) in section 4.07 is too restrictive and is inconsistent with the tax and energy policy underlying the § 45Q credit, the § 48A program, and the § 48B program. According to these commenters, the intent of § 45Q(b)(1) is not to exclude CO₂ that has been captured and sequestered under the § 48A program or the § 48B program, but to ensure merely that the § 45Q credit is limited to CO₂ captured from an industrial source that, but for the physical act of capture, would otherwise be released into the atmosphere as an industrial emission of greenhouse gas.

This notice removes section 4.07 of Notice 2009-83. Accordingly, qualified CO₂, as defined under § 45Q(b)(1), does not exclude CO₂ that is required to be captured and sequestered under the § 48A program or the § 48B program.

Notice 2009-83 is modified as provided in this notice. Except as explicitly provided, this notice does not otherwise affect the guidance provided in Notice 2009-83.

This notice is effective November 2, 2009, the effective date of Notice 2009-83.

The principal author of this notice is Jennifer C. Bernardini of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding this notice, contact Jennifer C. Bernardini at (202) 622-3110 (not a toll-free call).

Internal Revenue Service (IRS), Treasury.

Notice of proposed rulemaking and notice of public hearing.

This document contains a proposed regulation pertaining to the period for submission to the IRS of taxpayer authorizations permitting disclosure of returns and return information to third-party designees. Specifically, the proposed regulation extends from 60 days to 120 days the period within which a signed and dated authorization must be received by the IRS (or an agent or contractor of the IRS) in order for it to be effective. The proposed regulation extends the period as some institutions charged with assisting taxpayers in their financial dealings have encountered difficulty in obtaining written authorizations and submitting the authorizations within the 60-day period allowed by the existing regulations. The proposed regulation will affect taxpayers who submit authorizations permitting disclosure of returns and return information to third-party designees. This document also provides notice of a public hearing on the proposed regulation.

Written or electronic comments must be received by May 17, 2011. Outlines of topics to be discussed at the public hearing scheduled for Thursday, June 9, 2011 at 10 a.m. must be received by Wednesday, May 18, 2011.

Send submissions to CC:PA:LPD:PR (REG-153338-09), room 5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-153338-09), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington, DC, or sent electronically via the Federal eRulemaking Portal at www.regulations.gov (IRS REG-153338-09). The public hearing will be held in Auditorium, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC.

Concerning the proposed regulation, contact Amy Mielke, (202) 622-4570; concerning submissions of comments, the hearing, or to be placed on the building access list to attend the hearing, Oluwafunmilayo Taylor, (202) 622-7180 (not toll-free numbers).

Accordingly, 26 CFR part 301 is proposed to be amended as follows:

The principal author of this proposed regulation is Amy Mielke, Office of the Associate Chief Counsel (Procedure and Administration).

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The Internal Revenue Service has revoked its determination that the organizations listed below qualify as organizations described in sections 501(c)(3) and 170(c)(2) of the Internal Revenue Code of 1986.

Generally, the Service will not disallow deductions for contributions made to a listed organization on or before the date of announcement in the Internal Revenue Bulletin that an organization no longer qualifies. However, the Service is not precluded from disallowing a deduction for any contributions made after an organization ceases to qualify under section 170(c)(2) if the organization has not timely filed a suit for declaratory judgment under section 7428 and if the contributor (1) had knowledge of the revocation of the ruling or determination letter, (2) was aware that such revocation was imminent, or (3) was in part responsible for or was aware of the activities or omissions of the organization that brought about this revocation.

If on the other hand a suit for declaratory judgment has been timely filed, contributions from individuals and organizations described in section 170(c)(2) that are otherwise allowable will continue to be deductible. Protection under section 7428(c) would begin on April 4, 2011 and would end on the date the court first determines that the organization is not described in section 170(c)(2) as more particularly set forth in section 7428(c)(1). For individual contributors, the maximum deduction protected is $1,000, with a husband and wife treated as one contributor. This benefit is not extended to any individual, in whole or in part, for the acts or omissions of the organization that were the basis for revocation.

Internal Revenue Service (IRS), Treasury.

Notice of public hearing on proposed rulemaking.

This document provides notice of public hearing on a notice of proposed rulemaking (REG-149335-08, 2011-6 I.R.B. 468) relating to the capitalization and allocation of royalties that are incurred only upon the sale of property produced or property acquired for resale (sales-based royalties) and adjusting the cost of merchandise inventory for an allowance, discount, or price rebated based on merchandise sales (sales-based vendor allowances). The regulations modify the simplified production method and the simplified resale method of allocating capitalized costs between ending inventory and cost of goods sold. The regulations affect taxpayers that incur capitalizable sales-based royalties and earn sales-based vendor allowances.

The public hearing is being held on Wednesday, April 13, 2011, at 10 a.m. The IRS must receive outlines of the topics to be discussed at the hearing by Monday, March 28, 2011.

The public hearing is being held in the auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC. Send submissions to: CC:PA:LPD:PR (REG-149335-08), room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-149335-08), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC. Alternatively, taxpayers may submit electronic outlines of oral comments via the Federal eRulemaking Portal at http://www.regulations.gov.

Concerning the proposed regulations, John Roman Faron at (202) 622-4930; concerning submissions of comments, the hearing, and/or to be placed on the building access list to attend the hearing, Richard A. Hurst at Richard.A.Hurst@irscounsel.treas.gov or (202) 622-7180 (not toll-free numbers).

The subject of the public hearing is the notice of proposed rulemaking (REG-149335-08) that was published in the Federal Register on Friday, December 17, 2010 (75 FR 78940).

Persons, who wish to present oral comments at the hearing that submitted written comments, must submit an outline of the topics to be discussed and the amount of time to be devoted to each topic (signed original and eight (8) copies) by Monday, March 28, 2011.

A period of 10 minutes is allotted to each person for presenting oral comments. After the deadline for receiving outlines has passed, the IRS will prepare an agenda containing the schedule of speakers. Copies of the agenda will be made available, free of charge, at the hearing or in the Freedom of Information Reading Room (FOIA RR) (Room 1621) which is located at the 11^th and Pennsylvania Avenue NW entrance, 1111 Constitution Avenue, NW, Washington, DC.

Because of access restrictions, the IRS will not admit visitors beyond the immediate entrance area more than 30 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section of this document.