Internal Revenue Bulletin: 2014-12
March 17, 2014
Notice 2012–18, published in the Internal Revenue Bulletin on March 5, 2012, provided state housing finance agencies that participated in the Physical Inspections Pilot Program a temporary alternative method to satisfy the physical inspection and certification review requirements of § 1.42–5(c)(2) of the Income Tax Regulations. The availability of this alternative method ended on December 31, 2012. This notice extends the time period announced in Notice 2012–18 through December 31, 2014.
Rev. Proc. 2012–17 provides the procedures by which a taxpayer may obtain the automatic consent of the Commissioner of Internal Revenue to change to the methods of accounting provided in §§ 1.167(a)–4 and 1.168(i)–7 of the Income Tax Regulations (T.D. 9636), §§ 1.167(a)–4T, 1.168(i)–1T, 1.168(i)–7T, and 1.168(i)–8T of the temporary regulations (T.D. 9564), and §§ 1.168(i)–1, 1.168(i)–7, and 1.168(i)–8 of the proposed regulations (REG–110732–13). This revenue procedure also modifies Rev. Proc. 2011–14 and allows a late partial disposition election under Prop. Reg. § 1.168(i)–8 or a revocation of a general asset account election under § 1.168(i)–1T or Prop. Reg. § 1.168(i)–1 to be treated as a change in method of accounting for a limited period of time. Finally, this revenue procedure modifies section 6.01 of the APPENDIX of Rev. Proc. 2011–14 to waive a scope limitation in certain circumstances.
The proposed revenue procedure provides issuers of qualified mortgage bonds, as defined in § 143(a) of the Internal Revenue Code, and issuers of mortgage credit certificates, as defined in § 25(c), with the United States median gross income figure most recently computed by the Department of Housing and Urban Development (HUD). The proposed revenue procedure also provides these issuers with guidance concerning the area median gross incomes as computed by HUD. Issuers of qualified mortgage bonds (QMB) and mortgage credit certificates (MCC) must use these income figures in determining whether the income limitation placed on the beneficiaries of the mortgages and certificates may be increased because the residences to be financed are located in high housing cost areas. See §§ 25(c)(2)(A)(iii)(IV) and 143(f)(5).
Final regulations provide rules under sections 263A and 471 of the Code relating to capitalizing and allocating sales-based royalties, and adjusting the cost of merchandise inventory for sales-based vendor allowances. The regulations provide rules for accounting for these items under the simplified production method and the simplified resale method.
Section 83 addresses the income tax consequences of property transferred in connection with the performance of services. The final regulations clarify the definition of a substantial risk of forfeiture under § 1.83–3(c)(1). The final regulations also update the regulations under § 1.83–3 to incorporate the holdings in Revenue Ruling 2005–48 (2005–2 CB 259) which address the substantial risk of forfeiture created by liability under Section 16(b) of the Securities Exchange Act of 1934. Rev. Rul. 2005–48 (2005–2 CB 259) is obsolete as of February 26, 2014.
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