Part III. Administrative, Procedural, and Miscellaneous

2013 Calendar Year Resident Population Figures

Notice 2013–15

This notice advises State and local housing credit agencies that allocate low-income housing tax credits under § 42 of the Internal Revenue Code, and States and other issuers of tax-exempt private activity bonds under § 141, of the population figures to use in calculating: (1) the 2013 calendar year population-based component of the State housing credit ceiling (Credit Ceiling) under § 42(h)(3)(C)(ii); (2) the 2013 calendar year volume cap (Volume Cap) under § 146; and (3) the 2013 volume limit (Volume Limit) under § 142(k)(5).

Generally, § 146(j) requires determining the population figures for the population-based component of both the Credit Ceiling and the Volume Cap for any cal

endar year on the basis of the most recent census estimate of the resident population of a State (or issuing authority) released by the U.S. Census Bureau before the beginning of the calendar year. Similarly, § 142(k)(5) bases the Volume Limit on the State population.

Sections 42(h)(3)(H) and 146(d)(2) require adjusting for inflation the population-based component of the Credit Ceiling and the Volume Cap. The adjustments for the 2013 calendar year are in Rev. Proc. 2012–41, 2012–45 I.R.B. 539. Section 3.03 of Rev. Proc. 2012–41 provides that, for calendar year 2013, the amount for calculating the Credit Ceiling under § 42(h)(3)(C)(ii) is the greater of $2.25 multiplied by the State population, or $2,590,000. Further, section 3.07 of Rev. Proc. 2012–41 provides that the amount for calculating the Volume Cap under § 146(d)(1) for calendar year 2013

Resident Population Figures

is the greater of $95 multiplied by the State population, or $291,875,000.

For the 50 states, the District of Columbia, and Puerto Rico, the population figures for calculating the Credit Ceiling, the Volume Cap, and the Volume Limit for the 2013 calendar year are the resident population estimates released electronically by the U.S. Census Bureau on December 20, 2012, in Press Release CB12–250. For American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands, the population figures for the 2013 calendar year are the 2012 midyear population figures in the U.S. Census Bureau’s International Data Base (IDB). The U.S. Census Bureau electronically announced an update of the IDB on June 27, 2012, in Press Release CB12–118.

For convenience, these figures are reprinted below.

Alabama 4,822,023 Alaska 731,449 American Samoa 54,947 Arizona 6,553,255 Arkansas 2,949,131

California 38,041,430 Colorado 5,187,582 Connecticut 3,590,347

Delaware 917,092 District of Columbia 632,323

Florida 19,317,568

Georgia 9,919,945 Guam 159,914

Hawaii 1,392,313

Idaho 1,595,728 Illinois 12,875,255 Indiana 6,537,334 Iowa 3,074,186

Kansas 2,885,905 Kentucky 4,380,415

Louisiana 4,601,893

Maine 1,329,192 Maryland 5,884,563 Massachusetts 6,646,144 Michigan 9,883,360 Minnesota 5,379,139 Mississippi 2,984,926 Missouri 6,021,988

2013–14 I.R.B. 739 April 1, 2013

Resident Population Figures

Montana 1,005,141

Nebraska 1,855,525 Nevada 2,758,931 New Hampshire 1,320,718 New Jersey 8,864,590 New Mexico 2,085,538 New York 19,570,261 North Carolina 9,752,073 North Dakota 699,628 Northern Mariana Islands 51,395

Ohio 11,544,225 Oklahoma 3,814,820 Oregon 3,899,353

Pennsylvania 12,763,536 Puerto Rico 3,667,084

Rhode Island 1,050,292

South Carolina 4,723,723 South Dakota 833,354

Tennessee 6,456,243 Texas 26,059,203

Utah 2,855,287

Vermont 626,011 Virginia 8,185,867 Virgin Islands, U.S. 105,275

Washington 6,897,012 West Virginia 1,855,413 Wisconsin 5,726,398 Wyoming 576,412

The principal authors of this notice are Julie Hanlon Bolton, Office of the Associate Chief Counsel (Passthroughs and Special Industries), and Timothy L. Jones, Office of the Associate Chief Counsel (Financial Institutions and Products). For further information regarding this notice, please contact Ms. Hanlon Bolton at (202) 622–3040 (not a toll-free call).

Per Capita Payments from Proceeds of Settlements of Indian Tribal Trust Cases, Updates

Notice 2013–16

BACKGROUND

Notice 2013–1, 2013–3 IRB 281, provides guidance on the federal tax treatment of per capita payments that members of Indian tribes receive from proceeds of certain settlements of tribal trust cases between the United States and those Indian tribes. Additional tribes have settled tribal

trust cases against the United States since publication of Notice 2013–1. This notice provides an updated Appendix that reflects the additional settlement agreements.

EFFECT ON OTHER DOCUMENTS

Notice 2013–1 Appendix is modified and superseded.

FURTHER INFORMATION

For further information regarding this notice, please contact Telly Meier at phone number (202) 283–8877 (not a toll-free call).

Appendix Tribes That Have Entered into Settlement Agreements of Tribal Trust Cases

1. Assiniboine and Sioux Tribes of the Fort Peck Reservation
2. Bad River Band of Lake Superior Chippewa Indians
3. Blackfeet Tribe of the Blackfeet Indian Reservation
4. Bois Forte Band of Chippewa
5. Cachil Dehe Band of Wintun Indians of the Colusa Rancheria

April 1, 2013 740 2013–14 I.R.B.

6. Chippewa Cree Tribe of the Rocky Boy’s Reservation
7. Coeur d’Alene Tribe
8. Confederated Salish and Kootenai Tribes
9. Confederated Tribes of Siletz Indians
10. Confederated Tribes of the Colville Reservation
11. Confederated Tribes of the Goshute Reservation
12. Crow Creek Sioux Tribe
13. Eastern Shawnee Tribe of Oklahoma
14. Hualapai Indian Tribe
15. Iowa Tribe of Kansas and Nebraska
16. Kaibab Band of Paiute Indians of Arizona
17. Kickapoo Tribe of Kansas
18. Lac Courte Oreilles Band of Lake Superior Chippewa Indians
19. Lac du Flambeau Band of Lake Superior Chippewa Indians
20. Leech Lake Band of Ojibwe
21. Lower Brule Sioux Tribe
22. Makah Indian Tribe of the Makah Reservation
23. Mescalero Apache Tribe
24. Minnesota Chippewa Tribe
25. Nez Perce Tribe
26. Nooksack Indian Tribe
27. Northern Cheyenne Tribe of Indians
28. Omaha Tribe - Nebraska
29. Passamaquoddy Tribe of Maine
30. Pawnee Nation
31. Prairie Band of Potawatomi Nation
32. Pueblo of Zia
33. Quechan Tribe of the Fort Yuma Reservation
34. Red Cliff Band of Lake Superior Chippewa Indians
35. Rincon Luiseño Band of Indians
36. Rosebud Sioux Tribe
37. Round Valley Indian Tribes
38. Salt River Pima-Maricopa Indian Community
39. Santee Sioux Tribe of Nebraska
40. Sault Ste. Marie Tribe
41. Shoshone-Bannock Tribes of the Fort Hall Reservation
42. Soboba Band of Luiseno Indians
43. Spirit Lake Dakotah Nation
44. Spokane Tribe of Indians
45. Standing Rock Sioux Tribe
46. Stillaguamish Tribe of Indians
47. Summit Lake Paiute Tribe
48. Swinomish Indian Tribal Community
49. Te-Moak Tribe of Western Shoshone Indians
50. Tohono O’odham Nation
51. Tulalip Tribes
52. Tule River Indian Tribe
53. Ute Indian Tribe of the Uintah and Ouray Reservation
54. Ute Mountain Ute Tribe
55. Winnebago Tribe of Nebraska
56. Qawalangin Tribe of Unalaska
57. Tlingit & Haida Tribes of Alaska
58. Northwestern Band of Shoshone Indians
59. Hoopa Valley Tribe
60. Ak-Chin Indian Community
61. Oglala Sioux Tribe
62. Yurok Tribe
63. Cheyenne River Sioux Tribe

2013–14 I.R.B. 741 April 1, 2013

Update of List of Plants, Grown in Commercial Quantities in the United States, Having a Preproductive Period in Excess of Two Years Based on the Nationwide Weighted Average Preproductive Period for Such Plant.

Notice 2013–18

PURPOSE

This notice modifies and supersedes Notice 2000–45, 2000–2 C.B. 256, which provides guidance to taxpayers engaged in the trade or business of farming in determining whether a plant has a preproductive period in excess of 2 years for purposes of § 263A(d) and (e) of the Internal Revenue Code.

BACKGROUND

Section 263A requires generally that the direct costs and an allocable share of indirect costs of real or tangible personal property produced by a taxpayer be capitalized. Under § 263A, taxpayers generally are required to capitalize the costs of producing property in a farming business (including animals and plants without regard to the length of their preproductive period).

Sections 263A(d) and (e) set forth special rules for property produced in the trade or business of farming. Under § 263A(d)(1) and § 1.263A–4(a)(2) of the Income Tax Regulations, taxpayers that are not required to use an accrual method by § 447 and are not tax shelters prohibited from using the cash receipts and disbursements method of accounting by § 448(a)(3) (“qualified taxpayers”) are not required to capitalize (1) the costs of producing animals in a farming business, or (2) the costs of producing plants with a preproductive period of 2 years or less. In addition, under § 263A(d)(3) and § 1.263A–4(d), a qualified taxpayer may elect to have § 263A not apply to the costs of producing plants in a farming business (other than citrus or almond trees). Thus, unless an election is made to have § 263A not apply in accordance with § 263A(d)(3), qualified taxpayers generally are required to capitalize the costs of

producing plants that have a preproductive period in excess of 2 years.

Section 263A(e)(3)(B) and § 1.263A–4(b)(2)(i)(B) provide that, for purposes of determining whether a plant has a preproductive period in excess of 2 years, the preproductive period of plants grown in commercial quantities in the United States must be based on the nationwide weighted average preproductive period for such plants. The legislative history of § 263A explains that Congress expected the Treasury Department to periodically publish a list of the preproductive periods of various plants based on the nationwide weighted averages for such plants. See H.R. Rep. No. 426, 99th Cong., 1st Sess. 628 (1985), 1986–3 (Vol. 2) C.B. 628. A proposed list was included in the preamble of the proposed § 1.263A–4 regulations (REG–208151–91, 1997–2 C.B. 35 [62 Fed. Reg. 44,542]). The Internal Revenue Service (Service) and the Treasury Department received and considered comments on the proposed list in preparing Notice 2000–45.

In Notice 2000–45 the Service and the Treasury Department published a nonexclusive list of plants having a nationwide weighted average preproductive period in excess of 2 years. The Service and the Treasury Department utilized information provided by the United States Department of Agriculture to develop the list published in Notice 2000–45 of plants that have a nationwide weighted average preproductive period in excess of 2 years. At that time, the Department of Agriculture grouped blueberry, blackberry, and raspberry plants into one overall category, called “berries.” Blueberry plants made up the largest share of the berries category, and they have a preproductive period greater than 2 years. Since that time, the Department of Agriculture has started tracking blueberry, blackberry, and raspberry plants separately. The Department of Agriculture’s current data establishes that blackberry and raspberry plants each have a nationwide weighted average preproductive period of less than 2 years, requiring an update to the list published in Notice 2000–45. The Service and the Treasury Department have also determined that papaya plants should be removed from the list because Department of Agriculture data establishes that papaya

plants have a nationwide weighted average preproductive period of less than 2 years.

DISCUSSION

Notice 2000–45 states that the Service and the Treasury Department intend to update, as needed, the list of plants that have a nationwide weighted average preproductive period in excess of 2 years. Based upon information provided by the Department of Agriculture, for the reasons stated above, the Service and the Treasury Department have decided to remove raspberry, blackberry, and papaya plants from its previously published list of plants having a preproductive period in excess of 2 years. In addition, the Service and the Treasury Department have determined that plants producing the following crops or yields continue to have a nationwide weighted average preproductive period in excess of 2 years:

almonds, apples, apricots, avocados, blueberries, cherries, chestnuts, coffee beans, currants, dates, figs, grapefruit, grapes, guavas, kiwifruit, kumquats, lemons, limes, macadamia nuts, mangoes, nectarines, olives, oranges, peaches, pears, pecans, persimmons, pistachio nuts, plums, pomegranates, prunes, tangelos, tangerines, tangors, and walnuts. This guidance is not an all-inclusive list of plants that have a nationwide weighted average preproductive period in excess of 2 years. In the case of other plants grown in commercial quantities in the United States, the nationwide weighted average preproductive period must be determined based on available statistical data. § 1.263A–4(b)(2)(i)(B). The Service and the Treasury Department intend to continue to update this guidance periodically as needed.

ACCOUNTING METHOD CHANGES

Concurrently with the issuance of this notice, the Service and the Treasury Department are issuing Revenue Procedure 2013–20 (2013–14 I.R.B. 744). Revenue Procedure 2013–20 modifies Revenue Procedure 2011–14, 2011–4 I.R.B. 330, to provide procedures for a taxpayer to obtain under § 446(e) the automatic consent of the Commissioner (1) to not apply § 263A, pursuant to § 263A(d)(1) and § 1.263A–4(a)(2), to the production of one

April 1, 2013 742 2013–14 I.R.B.

98–369, the Joint Committee of Taxation explained that the statutory reserve cap included deficiency reserves:

For purposes of determining life insurance company taxable income, the

[1984] Act provides that the life insurance reserves for any contract shall be the greater of the net surrender value of the contract or the reserves determined under Federally prescribed rules. In no event will the amount of the tax reserves at any time exceed the amount of statutory reserves, which (given the general definition thereof in new sec. 809(b)(4)(B)(i)) include also any deficiency reserves relating to the liabilities. Joint Committee on Taxation, General Explanation of the Revenue Provisions of the Tax Reform Act of 1984, at 598.

When later enacting a subsection of a different provision, Congress affirmed the Joint Committee’s explanation. Specifically, when Congress enacted § 816(h) in 1986 as a technical correction to the Deficit Reduction Act of 1984, Tax Reform Act of 1986, Pub. L. No. 99–514, § 1821(l), the House report stated that “deficiency reserves are included in statutory reserves for purposes of comparing the tax reserve to statutory reserves in determining the amount of any increase or decrease in the reserves.” H.R. Rep. No. 426, 99th Cong., 1st Sess. 956 (1985), 1986–3 C.B. Vol. 2, 956 (House Report). The bill, as ultimately enacted, included § 816(h) from the House bill verbatim.

Moreover, the legislative history of another technical correction to the Deficit Reduction Act of 1984 further demonstrates that both houses of Congress believed the definition of statutory reserves that now appears in § 807(d)(6) includes deficiency reserves. At the same time that § 816(h) was enacted, former § 809(b)(2) was amended to provide that no item could be taken into account more than once in determining the equity base. Both the House Report and the Senate Report noted that former § 809(b)(2) was necessary in part “because deficiency reserves, which are specifically listed in the statute as included in the equity base, could also be included indirectly as part of the excess of statutory policy reserves over tax reserves, which is also specifically included in the equity base.” House Report at 948; S. Rep.

or more plants that the Service and the Treasury Department have removed from the list of plants that have a nationwide weighted average preproductive period in excess of 2 years, or (2) to revoke an election pursuant to § 263A(d)(3) and § 1.263A–4(d) to not apply § 263A to the production of a plant or plants that have been removed from the list of plants that have a nationwide weighted average preproductive period in excess of 2 years.

EFFECT ON OTHER DOCUMENTS

Notice 2000–45 is modified and superseded.

DRAFTING INFORMATION

The principal author of this notice is Patrick M. Clinton of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this notice, contact Patrick M. Clinton at (202) 622–4930 (not a toll-free call).

Section 807.—Rules for Certain Reserves

(Also Part I, § 816.)

Notice 2013–19

PURPOSE

This notice provides guidance on whether, for purposes of applying the limitation set forth in the flush language of § 807(d)(1) (the statutory reserve cap), deficiency reserves are included in the amount taken into account with respect to a life insurance contract in determining statutory reserves under § 807(d)(6).

BACKGROUND

A life insurance company must pay tax on its life insurance company taxable income, which is defined in § 801(b) to mean life insurance gross income less life insurance deductions. Life insurance gross income is defined in § 803(a) to include net decreases in certain reserves under § 807(a). Life insurance deductions include the general deductions provided in § 805 including, under § 805(a)(2), the net increase in certain reserves under § 807(b). The reserves taken into account

under § 807(a) and (b) are described in § 807(c), and include “life insurance reserves (as defined in section 816(b)).”

For purposes of determining a life insurance company’s decreases or increases in life insurance reserves under § 807, § 807(d)(1) provides that the amount of the life insurance reserve for any contract is the greater of (A) the contract’s net surrender value, or (B) the contract’s reserve determined under § 807(d)(2) (the Federally prescribed reserve). The flush language of § 807(d)(1) further provides that in no event may the reserve for a contract exceed the amount that would be taken into account with respect to the contract in determining statutory reserves as defined in § 807(d)(6). Section 807(d)(6) generally defines statutory reserves as “the aggregate amount set forth in the annual statement with respect to items described in section 807(c).”

Section 807(d)(2) provides that the Federally prescribed reserve is determined using the tax reserve method applicable to the contract. Section 807(d)(3) defines the applicable tax reserve method and includes an explicit rule in § 807(d)(3)(C) that denies any increase in the Federally prescribed reserve because the net premium (computed on the basis of assumptions required under § 807(d)) exceeds the actual premiums or other consideration charged for the benefit. The reserve that applies because gross premium is less than the net premium is often referred to as a “deficiency reserve.”

DISCUSSION

The flush language of § 807(d)(1) limits the reserve for a contract to the amount that would be taken into account with respect to the contract in determining statutory reserves. The term “statutory reserves” is defined in § 807(d)(6) to mean the aggregate amount set forth in the annual statement with respect to items described in § 807(c).

When § 807 was enacted, the term “statutory reserves” for purposes of the statutory reserve cap was defined by cross-reference to former § 809(b)(4)(B)(i), which was the predecessor to § 807(d)(6) and defined statutory reserves identically to § 807(d)(6). After § 807 was enacted as part of the Deficit Reduction Act of 1984, Pub. L. No.

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tice 2013–18 (2013–14 I.R.B. 742), modifying and superseding Notice 2000–45. Notice 2013–18 removes blackberry, raspberry, and papaya plants from the list of plants that produce crops or yields that have a nationwide weighted average preproductive period in excess of 2 years.

.06 Not applying § 263A to the production of a plant pursuant to § 263A(d)(1) and § 1.263A–4(a)(2) is a method of accounting under § 446. Therefore, a taxpayer that currently applies § 263A to the costs of producing plants with a preproductive period of 2 years or less must obtain the consent of the Commissioner to not apply § 263A to such costs.

.07 The election pursuant to § 263A(d)(3) and § 1.263A–4(d) to not have the rules of § 263A(d) apply to all plants produced in a farming business conducted by the electing taxpayer is a method of accounting under § 446, and once an election is made, it is revocable only with consent of the Commissioner.

.08 Section 1.446–1(e)(3)(ii) authorizes the Commissioner to prescribe administrative procedures setting forth the limitations, terms, and conditions necessary to permit a taxpayer to obtain consent to change a method of accounting. Revenue Procedure 2011–14 provides the procedures by which a taxpayer may obtain automatic consent from the Commissioner to change to a method of accounting described in the APPENDIX of Rev. Proc. 2011–14.