Part I. Rulings — Internal Revenue Bulletin 2011-45

Section 1.—Tax Imposed

The Service provides inflation adjustments to the tax rate tables for individuals, trusts, and estates for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 23.—Adoption Expenses

The Service provides inflation adjustments to the adoption credit allowed for the adoption of a child for taxable years beginning in 2012. The Service also provides inflation adjustments to the value used in calculating the modified adjusted gross income limitations used to determine the amount of adoption credit that is allowed in taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 24.—Child Tax Credit

The Service provides an inflation adjustment for the value used in determining the amount of credit that may be refundable for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 25A.—Hope and Lifetime Learning Credits

The Service provides an inflation adjustment for the amount of qualified tuition and related expenses that are taken into account in determining the amount of the Hope Scholarship Credit for taxable years beginning in 2012. Also for taxable years beginning in 2012, the Service provides an inflation adjustment for the amount of a taxpayer’s modified adjusted gross income that is taken into account in determining the reduction in the amount of the Hope Scholarship and Lifetime Learning Credits otherwise available. See Rev. Proc. 2011-52, page 701.

Section 32.—Earned Income

The Service provides inflation adjustments to the limitations on the earned income credit for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 42.—Low-Income Housing Credit

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

The Service provides inflation adjustments to the amounts used to calculate the State housing credit ceiling used in determining the low-income housing credit, and the per low-income unit qualified basis amount, for calendar year 2012. See Rev. Proc. 2011-52, page 701.

Section 59.—Other Definitions and Special Rules for the Alternative Minimum Tax

The Service provides an inflation adjustment to the exemption amount used in computing the alternative minimum tax for a minor child subject to the “kiddie tax” for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 62.—Adjusted Gross Income Defined

The Service provides inflation adjustments to the amounts an eligible employer may pay in calendar year 2012 to certain welders and heavy equipment mechanics for rig-related expenses that are deemed substantiated under an accountable plan if paid in accordance with Rev. Proc. 2002–41, 2002–1 C.B. 1098. See Rev. Proc. 2011-52, page 701.

Section 63.—Taxable Income Defined

The Service provides inflation adjustments to the standard deduction amounts (including the limitation in the case of certain dependents, and the additional standard deduction for the aged or blind) for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 132.—Certain Fringe Benefits

The Service provides inflation adjustments to the limitations on the exclusion of income for a qualifed transportation fringe benefit for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 135.—Income from United States Savings Bonds Used to Pay Higher Education Tuition and Fees

The Service provides inflation adjustments to the limitations on the exclusion of income from United States savings bonds for taxpayers who pay qualified

higher education expenses for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 137.—Adoption Assistance Programs

The Service provides inflation adjustments to the maximum amount that can be excluded from an employee’s gross income in connection with a qualified adoption assistance program for taxable years beginning in 2012. The Service also provides inflation adjustments to the amount used to calculate the modified adjusted gross income limitations used to determine the amount that can be excluded from an employee’s gross income for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 146.—Volume Cap

The Service provides inflation adjustments to the amount used to determine the State ceiling for the volume cap of private activity bonds for calendar year 2012. See Rev. Proc. 2011-52, page 701.

Section 147.—Other Requirements Applicable to Certain Private Activity Bonds

The Service provides an inflation adjustment to the loan limit amount on agricultural bonds for first-time farmers for calendar year 2012. See Rev. Proc. 201152, page 701.

Section 148.—Arbitrage

26 CFR 1.148–5: Yield and valuation of investments.

The Service provides inflation adjustments for determining in the calendar year 2012 whether a broker’s commission or similar fee with respect to the acquisition of a guaranteed investment contract or investments purchased for a yield restricted defeasance escrow is reasonable. The Service provides an inflation adjustment to the computation credit determined under permission to rely on section 1.148–3(d)(4) of the proposed Income Tax Regulations for bond years ending in 2012. See Rev. Proc. 2011-52, page 701.

Section 151.—Allowance of Deductions for Personal Exemptions

The Service provides an inflation adjustment to the personal exemption amount for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

2011–45 I.R.B. 693 November 7, 2011

Section 179.—Election to Expense Certain Depreciable Assets

The Service provides an inflation adjustment for the cost of section 179 property a taxpayer elects to treat as an expense for taxable years beginning in 2012. Also for taxable years beginning in 2012, the Service provides an inflation adjustment for the amount used in calculating the phase-out of the section 179 deduction. See Rev. Proc. 2011-52, page 701.

Section 213.—Medical, Dental, etc., Expenses

The Service provides inflation adjustments to the limitations on the amount of eligible long-term care premiums includible in the term “medical care” for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 220.—Archer MSAs

The Service provides inflation adjustments to the amounts used to determine whether a health plan is a “high deductible health plan” for purposes of determining whether an individual is eligible for a deduction for cash paid to a medical savings account for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 221.—Interest on Education Loans

The Service provides inflation adjustments to the income limitations used to determine the allowable deductions for interest on education loans for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 280G.—Golden Parachute Payments

Federal short-term, mid-term, and long-term rates are set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

Section 382.—Limitation on Net Operating Loss Carryforwards and Certain Built-In Losses Following Ownership Change

The adjusted applicable federal long-term rate is set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

Section 412.—Minimum Funding Standards

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

Section 467.—Certain Payments for the Use of Property or Services

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

Section 468.—Special Rules for Mining and Solid Waste Reclamation and Closing Costs

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

Section 482.—Allocation of Income and Deductions Among Taxpayers

Federal short-term, mid-term, and long-term rates are set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

Section 483.—Interest on Certain Deferred Payments

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

Section 512.—Unrelated Business Taxable Income

The Service provides an inflation adjustment to the maximum amount of annual dues that can be paid to certain agricultural or horticultural organizations without any portion being treated as unrelated trade or business income by reason of any benefits or privileges available to members for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 513.—Unrelated Trade or Business

The Service provides an inflation adjustment to the maximum cost of a “low cost article” for taxable years beginning in 2012. Funds raised through

a charity’s distribution of “low cost articles” will not be treated as unrelated business income to the charity. See Rev. Proc. 2011-52, page 701.

Section 642.—Special Rules for Credits and Deductions

Federal short-term, mid-term, and long-term rates are set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

Section 807.—Rules for Certain Reserves

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

Section 846.—Discounted Unpaid Losses Defined

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

Section 877.—Expatriation to Avoid Tax

The Service provides an inflation adjustment to the amount used for calendar year 2012 to determine whether an individual’s loss of United States citizenship had the avoidance of United States tax as one of its principal purposes. See Rev. Proc. 2011-52, page 701.

Section 877A.—Tax Responsibilities of Expatriation

The Service provides an inflation adjustment to the amount that reduces the amount that would be includible in the gross income of a covered expatriate for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 911.—Citizens or Residents of the United States Living Abroad

The Service provides an inflation adjustment to the amount of foreign earned income that may be excluded from gross income for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

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Section 1274.—Determi- nation of Issue Price in the Case of Certain Debt Instru- ments Issued for Property

(Also Sections 42, 280G, 382, 412, 467, 468, 482, 483, 642, 807, 846, 1288, 7520, 7872.)

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 November 2011.

Rev. Rul. 2011–25

This revenue ruling provides various prescribed rates for federal income tax

purposes for November 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.

Applicable Federal Rates (AFR) for November 2011

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-term

AFR .19% .19% 19% .19% 110% AFR .21% .21% .21% .21% 120% AFR .23% .23% .23% .23% 130% AFR .25% .25% .25% .25%

Mid-term

AFR 1.20% 1.20% 1.20% 1.20% 110% AFR 1.32% 1.32% 1.32% 1.32% 120% AFR 1.45% 1.44% 1.44% 1.44% 130% AFR 1.57% 1.56% 1.56% 1.55% 150% AFR 1.81% 1.80% 1.80% 1.79% 175% AFR 2.11% 2.10% 2.09% 2.09%

Long-term

AFR 2.67% 2.65% 2.64% 2.64% 110% AFR 2.94% 2.92% 2.91% 2.90% 120% AFR 3.21% 3.18% 3.17% 3.16% 130% AFR 3.48% 3.45% 3.44% 3.43%

REV. RUL. 2011–25 TABLE 2

Adjusted AFR for November 2011

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-term adjusted .41% .41% .41% 41% AFR

Mid-term adjusted AFR 1.38% 1.38% 1.38% 1.38%

Long-term adjusted 3.41% 3.38% 3.37% 3.36% AFR

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REV. RUL. 2011–25 TABLE 3

Rates Under Section 382 for November 2011

Adjusted federal long-term rate for the current month 3.41%

Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal long-term rates for the current month and the prior two months.) 3.77%

REV. RUL. 2011–25 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for November 2011

Note: 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%.

Appropriate percentage for the 70% present value low-income housing credit 7.44%

Appropriate percentage for the 30% present value low-income housing credit 3.19%

REV. RUL. 2011–25 TABLE 5

Rate Under Section 7520 for November 2011

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a remainder or reversionary interest 1.4%

transportation for calendar year 2012. See Rev. Proc. 2011-52, page 701.

Section 6033.—Returns by Exempt Organizations

The Service provides an inflation adjustment to the amount of dues certain exempt organizations with nondeductible lobbying expenditures can charge and still be excepted from reporting requirements for taxable years beginning in 2012. See Rev. Proc. 201152, page 701.

Section 6039F.—Notice of Large Gifts Received From Foreign Persons

The Service provides an inflation adjustment to the amount of gifts received in a taxable year from foreign persons that triggers a reporting requirement for a United States person for taxable years beginning in 2012. See Rev. Proc. 2011-52, page 701.

Section 6323.—Validity and Priority Against Certain Persons

The Service provides inflation adjustments for calendar year 2012 to (1) the maximum amount of a casual sale of personal property below which a federal tax lien will not be valid against a purchaser of the property, and (2) the maximum amount of a contract for the repair or improvement of certain residential

Section 1288.—Treatment of Original Issue Discount on Tax-Exempt Obligations

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

Section 2010.—Unified Credit Against Estate Tax

The Service provides an inflation adjustment to the amount of the unified credit against estate tax for the estate of a decedent dying in calendar year 2012. See Rev. Proc. 2011-52, page 701.

Section 2032A.—Valuation of Certain Farm, etc., Real Property

The Service provides an inflation adjustment to the maximum amount by which the value of certain farm and other qualified real property included in a decedent’s gross estate may be decreased for purposes of valuing the estate of a decedent dying in calendar year 2012. See Rev. Proc. 2011-52, page 701.

Section 2503.—Taxable Gifts

The Service provides an inflation adjustment to the amount of gifts that may be made to a person in a calendar year without including the amount in taxable gifts for calendar year 2012. See Rev. Proc. 2011-52, page 701.

Section 2523.—Gift to Spouse

The Service provides an inflation adjustment to the amount of gifts that may be made in a calendar year to a spouse who is not a citizen of the United States without including the amount in taxable gifts for calendar year 2012. See Rev. Proc. 2011-52, page 701.

Section 4161.—Imposition of Tax

The Service provides an inflation adjustment to the amount of excise tax imposed for calendar year 2012 on the first sale by a manufacturer, producer, or importer of any shaft of a type used in the manufacture of certain arrows. See Rev. Proc. 2011-52, page 701.

Section 4261.—Imposition of Tax

The Service provides inflation adjustments for excise taxes on domestic and international passenger air

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Section 7702B.—Treatment of Qualified Long-Term Care Insurance

The Service provides an inflation adjustment to the stated dollar amount for calendar year 2012 of the per diem limitation regarding periodic payments received under qualified long-term care insurance contract or periodic payments received under a life insurance contract that are treated as paid by reason of the death of a chronically ill individual. See Rev. Proc. 2011-52, page 701.

Section 7872.—Treatment of Loans With Below-Market Interest Rates

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

property at or below which a federal tax lien will not be valid against a mechanic’s lienor. See Rev. Proc. 2011-52, page 701.

Section 6334.—Property Exempt From Levy

The Service provides inflation adjustments to the value of certain property exempt from levy (fuel, provisions, furniture, household personal effects, arms for personal use, livestock, poultry, and books and tools of a trade, business, or profession) for calendar year 2012. See Rev. Proc. 2011-52, page 701.

Section 6601.—Interest on Underpayment, Nonpayment, or Extension of Time for Payment, of Tax

The Service provides an inflation adjustment to the amount used to determine the amount of interest charged on a certain portion of the estate tax payable

in installments for the estate of a decedent dying in calendar year 2012. See Rev. Proc. 2011-52, page 701.

Section 7430.—Awarding of Costs and Certain Fees

The Service provides an inflation adjustment to the hourly limit on attorney fees incurred in calendar year 2012 that my be awarded in a judgment or settlement of an administrative or judicial proceeding concerning the determination, collection, or refund of tax, interest, or penalty. See Rev. Proc. 2011-52, page 701.

Section 7520.—Valuation Tables

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of November 2011. See Rev. Rul. 2011-25, page 695.

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