Breadcrumb Region

Internal Revenue Bulletin: 2017-13

March 27, 2017


Highlights of This Issue

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.

INCOME TAX

Notice 2017–21 Notice 2017–21

Attached is Notice 2017–21, which provides for adjustments to the limitation on housing expenses for purposed of section 911 of the Internal Revenue Code. These adjustments are made on the basis of geographic differences in housing costs relative to housing costs in the United States. Further, if the limitation on housing expenses is higher for taxable year 2017 than the adjusted limitations on housing expenses provided in Notice 2016–21, qualified taxpayers may apply the adjusted limitations for taxable year 2017 to their 2016 taxable year.

Rev. Proc. 2017–26 Rev. Proc. 2017–26

Attached is Revenue Procedure 2017–27, which provides a waiver for the time requirements for individuals electing to exclude their foreign earned income who must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Rev. Proc. 2017–26 adds South Sudan for tax year 2016 for which the minimum time requirements are waived. Generally, U.S. citizens or resident aliens living and working abroad are taxed on their worldwide income. However, if their tax home is in a foreign country and they meet either the bona fide residence test or the physical presence test, they can choose to exclude from their income a limited amount of their foreign earned income ($101,300 for 2016). Both the bona fide residence test and the physical presence test contain minimum time requirements.

EMPLOYEE PLANS

Notice 2017–22 Notice 2017–22

This notice sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for March 2017 used under § 417(e)(3)(D), the 24-month average segment rates applicable for March 2017, and the 30-year Treasury rates. These rates reflect the application of § 430(h)(2)(C)(iv), which was added by the Moving Ahead for Progress in the 21st Century Act, Public Law 112–141 (MAP-21) and amended by section 2003 of the Highway and Transportation Funding Act of 2014 (HATFA).

Preface

The IRS Mission

Provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application 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 otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts stated in the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices, identifying details and information of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they 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 procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code. This part includes rulings and decisions based on provisions of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation. This part is divided into two subparts as follows: Subpart A, Tax Conventions and Other Related Items, and Subpart B, Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rulings. Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury’s Office of the Assistant Secretary (Enforcement).

Part IV.—Items of General Interest. This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index for the matters published during the preceding months. These monthly indexes are cumulated on a semiannual basis, and are published in the last Bulletin of each semiannual period.

Part III. Administrative, Procedural, and Miscellaneous

Notice 2017–21

Determination of Housing Cost Amounts Eligible for Exclusion or Deduction for 2017

SECTION 1. PURPOSE

This notice provides adjustments to the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code for specific locations for 2017. These adjustments are made on the basis of geographic differences in housing costs relative to housing costs in the United States.

SECTION 2. BACKGROUND

Section 911(a) allows a qualified individual to elect to exclude from gross income the foreign earned income and housing cost amount of such individual. The term “housing cost amount” is generally the total of the housing expenses for the taxable year minus a base housing amount. See section 911(c)(1). For this purpose, the housing expenses taken into account are limited to an amount that is tied to the maximum foreign earned income exclusion. Specifically, the limit on such housing expenses equals 30 percent (adjusted as may be provided under the Secretary’s authority under section 911(c)(2)(B)) of the maximum exclusion amount (computed on a daily basis), multiplied by the number of days in the applicable period that fall within the taxable year. See section 911(c)(2)(A). Thus, under this general limitation, a qualified individual whose entire taxable year is within the applicable period is limited to maximum housing expenses of $30,630 ($102,100 x .30) for 2017.

Similarly, the computation of the base housing amount is also tied to the maximum foreign earned income exclusion. Specifically, the base housing amount is 16% of the maximum exclusion amount (computed on a daily basis), multiplied by the number of days in the applicable period that fall within the taxable year. See sections 911(c)(1)(B) and 911(d)(1). Assuming that the entire taxable year of a qualified individual is within the applicable period, the base housing amount for 2017 is $16,336 ($102,100 x .16). Section 911(c)(2)(B) authorizes the Secretary to issue regulations or other guidance to adjust the percentage under section 911(c)(2)(A)(i) (which determines the limit on housing expenses) based on geographic differences in housing costs relative to housing costs in the United States. Pursuant to this authority, the Internal Revenue Service (IRS) and the Treasury Department have published annual notices concerning the limitation on the section 911 housing cost amounts since the 2006 taxable year.

For more background on the foreign housing exclusion, see https://www.irs.gov/individuals/international-taxpayers/foreign-housing-exclusion-or deduction.

SECTION 3. TABLE OF ADJUSTED LIMITATIONS FOR 2017

The following table provides adjusted limitations on housing expenses (in lieu of the otherwise applicable limitation of $30,630) for 2017.

Country Location Limitation on Housing Expenses (full year) Limitation on Housing Expenses (daily)
Angola Luanda 84,000 230.14
Argentina Buenos Aires 56,500 154.79
Australia Melbourne 31,600 86.58
Australia Perth 33,800 92.60
Australia Sydney 63,700 174.52
Austria Vienna 35,400 96.99
Bahamas, The Grand Bahama Island 30,900 84.66
Bahamas, The Nassau 49,700 136.16
Bahrain Bahrain 48,300 132.33
Barbados Barbados 37,700 103.29
Belgium Brussels 38,700 106.03
Belgium Gosselies 33,800 92.60
Belgium Mons 33,800 92.60
Belgium SHAPE/Chievres 33,800 92.60
Bermuda Bermuda 90,000 246.58
Brazil Rio de Janeiro 35,100 96.16
Brazil Sao Paulo 56,600 155.07
Canada Calgary 38,500 105.48
Canada Montreal 51,300 140.55
Canada Ottawa 43,600 119.45
Canada Quebec 34,900 95.62
Canada Toronto 45,600 124.93
Canada Vancouver 43,700 119.73
Cayman Islands Grand Cayman 48,000 131.51
Chile Santiago 40,600 111.23
China Beijing 71,200 195.07
China Hong Kong 114,300 313.15
China Shanghai 57,001 156.17
Colombia Bogota 58,700 160.82
Colombia All cities other than Bogota 49,400 135.34
Costa Rica San Jose 32,000 87.67
Democratic Republic of the Congo Kinshasa 42,000 115.07
Denmark Copenhagen 43,704 119.74
Dominican Republic Santo Domingo 45,500 124.66
Ecuador Guayaquil 30,800 84.38
Ecuador Quito 38,200 104.66
El Salvador San Salvador 32,000 87.67
Estonia Tallinn 46,600 127.67
France Garches 66,400 181.92
France Lyon 36,700 100.55
France Marseille 35,800 98.08
France Paris 66,400 181.92
France Sevres 66,400 181.92
France Suresnes 66,400 181.92
France Versailles 66,400 181.92
France All cities other than Garches, Le Havre, Lyon, Marseille, Montpellier, Paris, Sevres, Suresnes, and Versailles 31,900 87.40
Germany Babenhausen 32,600 89.32
Germany Baumholder 32,300 88.49
Germany Berlin 39,800 109.04
Germany Birkenfeld 32,300 88.49
Germany Boeblingen 39,500 108.22
Germany Bonn 42,000 115.07
Germany Cologne 56,200 153.97
Germany Darmstadt 32,600 89.32
Germany Frankfurt am Main 34,000 93.15
Germany Gelnhausen 41,000 112.33
Germany Giessen 36,000 98.63
Germany Grafenwoehr 32,900 90.14
Germany Hanau 41,000 112.33
Germany Idar-Oberstein 32,300 88.49
Germany Ingolstadt 46,500 127.40
Germany Kaiserslautern, Landkreis 39,800 109.04
Germany Karlsruhe 31,400 86.03
Germany Koblenz 32,000 87.67
Germany Ludwigsburg 39,500 108.22
Germany Mainz 43,400 118.90
Germany Munich 46,500 127.40
Germany Nellingen 39,500 108.22
Germany Neubruecke 32,300 88.49
Germany Ober Ramstadt 32,600 89.32
Germany Pfullendorf 32,000 87.67
Germany Pirmasens 39,800 109.04
Germany Sembach 39,800 109.04
Germany Stuttgart 39,500 108.22
Germany Vilseck 32,900 90.14
Germany Wahn 42,000 115.07
Germany Wiesbaden 43,400 118.90
Germany Zweibrueken 39,800 109.04
Germany All cities other than Augsburg, Babenhausen, Bad Aibling, Bad Kreuznach, Bad Nauheim, Baumholder, Berchtesgaden, Berlin, Birkenfeld, Boeblingen, Bonn, Bremen, Bremerhaven, Butzbach, Cologne, Darmstadt, Delmenhorst, Duesseldorf, Erlangen, Flensburg, Frankfurt am Main, Friedberg, Fuerth, Garlstedt, Garmisch-Partenkirchen, Geilenkirchen, Gelnhausen, Germersheim, Giebelstadt, Grafenwoehr, Grefrath, Greven, Gruenstadt, Hamburg, Hanau, Handorf, Hannover, Heidelberg, Heilbronn, Herongen, Idar-Oberstein, Ingolstadt, Kaiserslautern, Landkreis, Kalkar, Karlsruhe, Kerpen, Kitzingen, Koblenz, Leimen, Leipzig, Ludwigsburg, Mainz, Mannheim, Mayen, Moenchen-Gladbach, Muenster, Munich, Nellingen, Neubruecke, Noervenich, Nuernberg, Ober Ramstadt, Oberammergau, Osterholz-Scharmbeck, Pirmasens, Rheinau, Rheinberg, Schwabach, Schwetzingen, Seckenheim, Sembach, Stuttgart, Twisteden, Vilseck, Wahn, Wertheim, Wiesbaden, Worms, Wuerzburg, Zirndorf, and Zweibrueken 32,000 87.67
Ghana Accra 36,000 98.63
Greece Athens 32,500 89.04
Greece Elefsis 32,500 89.04
Greece Ellinikon 32,500 89.04
Greece Mt. Parnis 32,500 89.04
Greece Mt. Pateras 32,500 89.04
Greece Nea Makri 32,500 89.04
Greece Piraeus 32,500 89.04
Greece Tanagra 32,500 89.04
Guatemala Guatemala City 41,800 114.52
Guinea Conakry 51,300 140.55
Guyana Georgetown 35,000 95.89
Holy See, The Holy See, The 44,200 121.10
Hungary Budapest 32,500 89.04
Hungary Papá 44,500 121.92
India Mumbai 67,920 186.08
India New Delhi 56,124 153.76
Indonesia Jakarta 37,776 103.50
Ireland Dublin 38,400 105.21
Israel Tel Aviv 50,800 139.18
Italy Genoa 41,800 114.52
Italy Gioia Tauro 31,200 85.48
Italy La Spezia 40,400 110.68
Italy Milan 66,000 180.82
Italy Naples 44,300 121.37
Italy Parma 33,500 91.78
Italy Pordenone-Aviano 34,300 93.97
Italy Rome 44,200 121.10
Italy Turin 33,100 90.68
Italy Vicenza 36,000 98.63
Jamaica Kingston 41,200 112.88
Japan Atsugi 38,200 104.66
Japan Camp Zama 38,200 104.66
Japan Chiba-Ken 38,200 104.66
Japan Fussa 38,200 104.66
Japan Gifu 74,300 203.56
Japan Haneda 38,200 104.66
Japan Kanagawa-Ken 38,200 104.66
Japan Komaki 74,300 203.56
Japan Machidi-Shi 38,200 104.66
Japan Nagoya 74,300 203.56
Japan Okinawa Prefecture 53,000 145.21
Japan Osaka-Kobe 90,664 248.39
Japan Sagamihara 38,200 104.66
Japan Saitama-Ken 38,200 104.66
Japan Sasebo 32,000 87.67
Japan Tachikawa 38,200 104.66
Japan Tokyo 85,700 234.79
Japan Tokyo-to 38,200 104.66
Japan Yokohama 47,000 128.77
Japan Yokosuka 44,900 123.01
Japan Yokota 36,500 100.00
Kazakhstan Almaty 48,000 131.51
Korea Camp Colbern 54,200 148.49
Korea Camp Market 54,900 150.41
Korea Camp Mercer 54,200 148.49
Korea K-16 54,900 150.41
Korea Kimpo Airfield 54,900 150.41
Korea Munsan 31,500 86.30
Korea Osan AB 34,300 93.97
Korea Pyongtaek 39,200 107.40
Korea Seoul 54,900 150.41
Korea Suwon 54,900 150.41
Korea Taegu 33,400 91.51
Korea Tongduchon 35,200 96.44
Kuwait Kuwait City 64,400 176.44
Kuwait All cities other than Kuwait City 57,700 158.08
Luxembourg Luxembourg 36,200 99.18
Macedonia Skopje 35,400 96.99
Malaysia Kuala Lumpur 46,200 126.58
Malaysia All cities other than Kuala Lumpur 33,700 92.33
Malta Malta 55,100 150.96
Mexico Mazatlan 31,000 84.93
Mexico Merida 37,900 103.84
Mexico Mexico City 47,900 131.23
Mexico Monterrey 33,200 90.96
Mexico All cities other than Ciudad Juarez, Cuernavaca, Guadalajara, Hermosillo, Matamoros, Mazatlan, Merida, Metapa, Mexico City, Monterrey, Nogales, Nuevo Laredo, Reynosa, Tapachula, Tijuana, Tuxtla Gutierrez, and Veracruz 39,400 107.95
Mozambique Maputo 39,500 108.22
Namibia Windhoek 32,100 87.95
Netherlands Amsterdam 52,900 144.93
Netherlands Aruba 36,000 98.63
Netherlands Brunssum 32,400 88.77
Netherlands Eygelshoven 32,400 88.77
Netherlands Hague, The 52,700 144.38
Netherlands Heerlen 32,400 88.77
Netherlands Hoensbroek 32,400 88.77
Netherlands Hulsberg 32,400 88.77
Netherlands Kerkrade 32,400 88.77
Netherlands Landgraaf 32,400 88.77
Netherlands Maastricht 32,400 88.77
Netherlands Papendrecht 31,700 86.85
Netherlands Rotterdam 31,700 86.85
Netherlands Schaesburg 32,400 88.77
Netherlands Schinnen 32,400 88.77
Netherlands Schiphol 52,900 144.93
Netherlands Ypenburg 52,700 144.38
Netherlands All cities other than Amsterdam, Aruba, Brunssum, Coevorden, Eygelshoven, The Hague, Heerlen, Hoensbroek, Hulsberg, Kerkrade, Landgraaf, Maastricht, Margraten, Papendrecht, Rotterdam, Schaesburg, Schinnen, Schiphol, and Ypenburg 31,300 85.75
Netherlands Antilles Curacao 45,800 125.48
New Zealand Auckland 35,700 97.81
New Zealand Christchurch 32,100 87.95
New Zealand Wellington 33,800 92.60
Nicaragua Managua 31,800 87.12
Nigeria Abuja 36,000 98.63
Norway Oslo 35,200 96.44
Oman Muscat 41,300 113.15
Panama Panama City 35,500 97.26
Paraguay Asuncion 31,100 85.21
Peru Lima 39,100 107.12
Philippines Cavite 34,000 93.15
Philippines Manila 37,380 102.41
Portugal Alverca 40,400 110.68
Portugal Lisbon 40,400 110.68
Qatar Al Udeid (in All Cities) 32,400 88.77
Qatar Doha 42,744 117.11
Qatar All cities other than Doha 32,400 88.77
Russia Moscow 108,000 295.89
Russia Saint Petersburg 60,000 164.38
Russia Sakhalin Island 77,500 212.33
Russia Vladivostok 77,500 212.33
Russia Yekaterinburg 47,400 129.86
Rwanda Kigali 31,500 86.30
Saudi Arabia Jeddah 30,667 84.02
Saudi Arabia Riyadh 40,000 109.59
Singapore Singapore 75,900 207.95
Slovenia Ljubljana 46,400 127.12
South Africa Pretoria 39,300 107.67
Spain Barcelona 40,600 111.23
Spain Madrid 53,900 147.67
Spain Rota 32,900 90.14
Spain Valencia 31,000 84.93
Suriname Paramaribo 33,000 90.41
Switzerland Bern 63,000 172.60
Switzerland Geneva 90,600 248.22
Switzerland Zurich 39,219 107.45
Switzerland All cities other than Bern, Geneva, and Zurich 32,900 90.14
Taiwan Taipei 46,188 126.54
Tanzania Dar Es Salaam 44,000 120.55
Thailand Bangkok 59,000 161.64
Trinidad and Tobago Port of Spain 54,500 149.32
Turkey Izmir-Cigli 31,600 86.58
Turkey Yamanlar 31,600 86.58
Ukraine Kiev 72,000 197.26
United Arab Emirates Abu Dhabi 49,687 136.13
United Arab Emirates Dubai 57,174 156.64
United Kingdom Basingstoke 41,099 112.60
United Kingdom Bath 41,000 112.33
United Kingdom Bracknell 62,100 170.14
United Kingdom Bristol 31,300 85.75
United Kingdom Brookwood 34,300 93.97
United Kingdom Cambridge 40,700 111.51
United Kingdom Caversham 73,800 202.19
United Kingdom Cheltenham 49,600 135.89
United Kingdom Croughton 35,000 95.89
United Kingdom Fairford 34,000 93.15
United Kingdom Farnborough 54,700 149.86
United Kingdom Felixstowe 32,900 90.14
United Kingdom Gibraltar 44,616 122.24
United Kingdom Harrogate 36,800 100.82
United Kingdom High Wycombe 62,100 170.14
United Kingdom Huntingdon 34,300 93.97
United Kingdom Kemble 34,000 93.15
United Kingdom Lakenheath 43,900 120.27
United Kingdom Liverpool 30,900 84.66
United Kingdom London 68,700 188.22
United Kingdom Loudwater 54,200 148.49
United Kingdom Menwith Hill 36,800 100.82
United Kingdom Mildenhall 43,900 120.27
United Kingdom Oxfordshire 34,500 94.52
United Kingdom Plymouth 34,500 94.52
United Kingdom Portsmouth 34,500 94.52
United Kingdom Reading 62,100 170.14
United Kingdom Rochester 35,400 96.99
United Kingdom Samlesbury 34,300 93.97
United Kingdom Southampton 44,200 121.10
United Kingdom Surrey 48,402 132.61
United Kingdom Waterbeach 35,300 96.71
United Kingdom Wiltshire 32,800 89.86
United Kingdom All cities other than Basingstoke, Bath, Belfast, Birmingham, Bracknell, Bristol, Brookwood, Brough, Cambridge, Caversham, Chelmsford, Cheltenham, Chicksands, Croughton, Dunstable, Edinburgh, Edzell, Fairford, Farnborough, Felixstowe, Ft. Halstead, Gibraltar, Glenrothes, Greenham Common, Harrogate, High Wycombe, Huntingdon, Hythe, Kemble, Lakenheath, Liverpool, London, Loudwater, Menwith Hill, Mildenhall, Nottingham, Oxfordshire, Plymouth, Portsmouth, Reading, Rochester, Samlesbury, Southampton, Surrey, Waterbeach, Welford, West Byfleet, and Wiltshire 34,300 93.97
Venezuela Caracas 57,000 156.16
Vietnam Hanoi 46,800 128.22
Vietnam Ho Chi Minh City 42,000 115.07

SECTION 4. ELECTION TO APPLY 2017 ADJUSTED LIMITATIONS TO 2016 TAXABLE YEAR

For some locations, the limitation on housing expenses provided in Section 3 of this notice may be higher than the limitation on housing expenses provided in the “Table of Adjusted Limitations for 2016” in Notice 2016–21. A qualified individual incurring housing expenses in such a location during 2016 may apply the adjusted limitation on housing expenses provided in Section 3 of this notice for 2016 in lieu of the amounts provided in the “Table of Adjusted Limitations for 2016” in Notice 2016–21 (and as set forth in the Instructions to Form 2555, Foreign Earned Income, for 2016).

The Treasury Department and the IRS anticipate that future annual notices providing adjustments to housing expense limitations will make a similar election available to qualified individuals that incur housing expenses in the immediately preceding year. For example, when adjusted housing expense limitations for 2018 are issued, it is expected that taxpayers will be permitted to apply those adjusted limitations to the 2017 taxable year.

SECTION 5. Filing Prior Year or Amended Tax Returns

Notice 2011–8, 2011–1 C.B. 503; Notice 2012–19, 2012–1 C.B. 440; Notice 2013–31, 2013–1 C.B. 1099; Notice 2014–29, 2014–1 C.B. 991; Notice 2015–33, 2015–18 I.R.B. 934; and Notice 2016–21, 2016–1 C.B. 465, are relisted to assist those individuals who are filing prior year or amended tax returns.

EFFECT ON OTHER DOCUMENTS

This notice supersedes Notice 2006–87, 2006–2 C.B. 766; Notice 2007–25, 2007–1 C.B. 760; Notice 2007–77, 2007–2 C.B. 735; Notice 2008–107, 2008–2 C.B. 1266; Notice 2010–27, 2010–1 C.B. 531; Notice 2011–8, 2011–1 C.B. 503; Notice 2012–19, 2012–1 C.B. 440; Notice 2013–31, 2013–1 C.B. 1099; Notice 2014–29, 2014–1 C.B. 991; Notice 2015–33, 2015–18 I.R.B. 934; and Notice 2016–21, 2016–1 C.B. 465.

EFFECTIVE DATE

This notice is effective for taxable years beginning on or after January 1, 2017. However, as provided in Section 4, a taxpayer may elect to apply the 2017 adjusted housing limitations contained in Section 3 of this notice to his or her taxable year beginning in 2016.

DRAFTING INFORMATION

The principal author of this notice is Kate Y. Hwa of the Office of Associate Chief Counsel (International). For further information regarding this notice contact Kate Y. Hwa on (202) 317-6934 (not a toll-free number).

Notice 2017–22

Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the Internal Revenue Code. In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I).

YIELD CURVE AND SEGMENT RATES

Generally, except for certain plans under sections 104 and 105 of the Pension Protection Act of 2006 and CSEC plans under § 414(y), § 430 of the Code specifies the minimum funding requirements that apply to single-employer plans pursuant to § 412. Section 430(h)(2) specifies the interest rates that must be used to determine a plan’s target normal cost and funding target. Under this provision, present value is generally determined using three 24-month average interest rates (“segment rates”), each of which applies to cash flows during specified periods. To the extent provided under § 430(h)(2)(C)(iv), these segment rates are adjusted by the applicable percentage of the 25-year average segment rates for the period ending September 30 of the year preceding the calendar year in which the plan year begins.[1] However, an election may be made under § 430(h)(2)(D)(ii) to use the monthly yield curve in place of the segment rates.

Notice 2007–81, 2007–44 I.R.B. 899, provides guidelines for determining the monthly corporate bond yield curve, and the 24-month average corporate bond segment rates used to compute the target normal cost and the funding target. Consistent with the methodology specified in Notice 2007–81, the monthly corporate bond yield curve derived from February 2017 data is in Table I at the end of this notice. The spot first, second, and third segment rates for the month of February 2017 are, respectively, 1.96, 3.91, and 4.69.

The 24-month average segment rates determined under § 430(h)(2)(C)(i) through (iii) must be adjusted pursuant to § 430(h)(2)(C)(iv) to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates. For plan years beginning before 2021, the applicable minimum percentage is 90% and the applicable maximum percentage is 110%. The 25-year average segment rates for plan years beginning in 2015, 2016, and 2017 were published in Notice 2014–50, 2014–40 I.R.B. 590, Notice 2015–61, 2015–39 I.R.B. 408, and Notice 2016–54, 2016–40 I.R.B. 429, respectively.

24-MONTH AVERAGE CORPORATE BOND SEGMENT RATES

The three 24-month average corporate bond segment rates applicable for March 2017 without adjustment for the 25-year average segment rate limits are as follows:

Applicable Month First Segment Second Segment Third Segment
March 2017 1.62 3.80 4.75

Based on § 430(h)(2)(C)(iv), the 24-month averages applicable for March 2017 adjusted to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates, are as follows:

For Plan Years Beginning In Adjusted 24-Month Average Segment Rates
Applicable Month First Segment Second Segment Third Segment
2016 March 2017 4.43 5.91 6.65
2017 March 2017 4.16 5.72 6.48

30-YEAR TREASURY SECURITIES INTEREST RATES

Generally for plan years beginning after 2007, § 431 specifies the minimum funding requirements that apply to multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum amount for the full-funding limitation described in § 431(c)(6)(A), based on the plan’s current liability. Section 431(c)(6)(E)(ii)(I) provides that the interest rate used to calculate current liability for this purpose must be no more than 5 percent above and no more than 10 percent below the weighted average of the rates of interest on 30-year Treasury securities during the four-year period ending on the last day before the beginning of the plan year. Notice 88–73, 1988–2 C.B. 383, provides guidelines for determining the weighted average interest rate. The rate of interest on 30-year Treasury securities for February 2017 is 3.03 percent. The Service determined this rate as the average of the daily determinations of yield on the 30-year Treasury bond maturing in November 2046 determined each day through February 8, 2017 and the yield on the 30-year Treasury bond maturing in February 2047 determined each day for the balance of the month. For plan years beginning in the month shown below, the weighted average of the rates of interest on 30-year Treasury securities and the permissible range of rates used to calculate current liability are as follows:

For Plan Years Beginning in 30-Year Treasury Weighted Average Permissible Range
Month Year 90% to 105%
March 2017 2.90 2.61 3.05

MINIMUM PRESENT VALUE SEGMENT RATES

In general, the applicable interest rates under § 417(e)(3)(D) are segment rates computed without regard to a 24-month average. Notice 2007–81 provides guidelines for determining the minimum present value segment rates. Pursuant to that notice, the minimum present value segment rates determined for February 2017 are as follows:

First Segment Second Segment Third Segment
1.96 3.91 4.69

DRAFTING INFORMATION

The principal author of this notice is Tom Morgan of the Office of the Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS participated in the development of this guidance. For further information regarding this notice, contact Mr. Morgan at 202-317-6700 or Tony Montanaro at 202-317-8698 (not toll-free numbers).

Table I
Monthly Yield Curve for February 2017
Derived from February 2017 Data
Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield
0.5 1.13 20.5 4.47 40.5 4.72 60.5 4.81 80.5 4.85
1.0 1.37 21.0 4.49 41.0 4.72 61.0 4.81 81.0 4.85
1.5 1.60 21.5 4.50 41.5 4.72 61.5 4.81 81.5 4.85
2.0 1.79 22.0 4.51 42.0 4.73 62.0 4.81 82.0 4.85
2.5 1.96 22.5 4.52 42.5 4.73 62.5 4.81 82.5 4.85
3.0 2.10 23.0 4.52 43.0 4.73 63.0 4.81 83.0 4.85
3.5 2.23 23.5 4.53 43.5 4.74 63.5 4.81 83.5 4.85
4.0 2.36 24.0 4.54 44.0 4.74 64.0 4.81 84.0 4.85
4.5 2.48 24.5 4.55 44.5 4.74 64.5 4.82 84.5 4.86
5.0 2.61 25.0 4.56 45.0 4.74 65.0 4.82 85.0 4.86
5.5 2.73 25.5 4.56 45.5 4.75 65.5 4.82 85.5 4.86
6.0 2.86 26.0 4.57 46.0 4.75 66.0 4.82 86.0 4.86
6.5 2.98 26.5 4.58 46.5 4.75 66.5 4.82 86.5 4.86
7.0 3.11 27.0 4.59 47.0 4.75 67.0 4.82 87.0 4.86
7.5 3.22 27.5 4.59 47.5 4.76 67.5 4.82 87.5 4.86
8.0 3.34 28.0 4.60 48.0 4.76 68.0 4.82 88.0 4.86
8.5 3.44 28.5 4.61 48.5 4.76 68.5 4.83 88.5 4.86
9.0 3.54 29.0 4.61 49.0 4.76 69.0 4.83 89.0 4.86
9.5 3.64 29.5 4.62 49.5 4.77 69.5 4.83 89.5 4.86
10.0 3.73 30.0 4.63 50.0 4.77 70.0 4.83 90.0 4.86
10.5 3.81 30.5 4.63 50.5 4.77 70.5 4.83 90.5 4.86
11.0 3.88 31.0 4.64 51.0 4.77 71.0 4.83 91.0 4.86
11.5 3.95 31.5 4.64 51.5 4.77 71.5 4.83 91.5 4.87
12.0 4.01 32.0 4.65 52.0 4.78 72.0 4.83 92.0 4.87
12.5 4.07 32.5 4.65 52.5 4.78 72.5 4.83 92.5 4.87
13.0 4.12 33.0 4.66 53.0 4.78 73.0 4.84 93.0 4.87
13.5 4.16 33.5 4.66 53.5 4.78 73.5 4.84 93.5 4.87
14.0 4.20 34.0 4.67 54.0 4.78 74.0 4.84 94.0 4.87
14.5 4.24 34.5 4.67 54.5 4.79 74.5 4.84 94.5 4.87
15.0 4.27 35.0 4.68 55.0 4.79 75.0 4.84 95.0 4.87
15.5 4.30 35.5 4.68 55.5 4.79 75.5 4.84 95.5 4.87
16.0 4.32 36.0 4.68 56.0 4.79 76.0 4.84 96.0 4.87
16.5 4.35 36.5 4.69 56.5 4.79 76.5 4.84 96.5 4.87
17.0 4.37 37.0 4.69 57.0 4.79 77.0 4.84 97.0 4.87
17.5 4.39 37.5 4.70 57.5 4.80 77.5 4.84 97.5 4.87
18.0 4.41 38.0 4.70 58.0 4.80 78.0 4.84 98.0 4.87
18.5 4.42 38.5 4.70 58.5 4.80 78.5 4.85 98.5 4.87
19.0 4.44 39.0 4.71 59.0 4.80 79.0 4.85 99.0 4.87
19.5 4.45 39.5 4.71 59.5 4.80 79.5 4.85 99.5 4.87
20.0 4.46 40.0 4.71 60.0 4.80 80.0 4.85 100.0 4.87


[1] Pursuant to § 433(h)(3)(A), the 3rd segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount of the full funding limitation under § 433(c)(7)(C)).

Rev. Proc. 2017–26

SECTION 1. PURPOSE

.01 This revenue procedure provides information to any individual who failed to meet the eligibility requirements of section 911(d)(1) of the Internal Revenue Code because adverse conditions in a foreign country precluded the individual from meeting those requirements for taxable year 2016.

.02 This revenue procedure lists the countries for which the eligibility requirements of section 911(d)(1) are waived for taxable year 2016.

SECTION 2. BACKGROUND

.01 Sections 911(a) and (c)(4) of the Code allow a “qualified individual,” as defined in section 911(d), to exempt from taxation the individual’s foreign earned income and the housing cost amount.

.02 Section 911(d)(1) of the Code defines the term “qualified individual” as an individual whose tax home is in a foreign country and who is (A) a citizen of the United States and establishes to the satisfaction of the Secretary of the Treasury that the individual has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire taxable year, or (B) a citizen or resident of the United States who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days.

.03 Section 911(d)(4) of the Code provides an exception to the eligibility requirements of section 911(d)(1). An individual will be treated as a qualified individual with respect to a period in which the individual was a bona fide resident of, or was present in, a foreign country if the individual left the country during a period for which the Secretary of the Treasury, after consultation with the Secretary of State, determines that individuals were required to leave because of war, civil unrest, or similar adverse conditions that precluded the normal conduct of business. An individual must establish that but for those conditions the individual could reasonably have been expected to meet the eligibility requirements.

SECTION 3. APPLICATION

.01 For 2016, the Secretary of the Treasury, in consultation with the Secretary of State, has determined that war, civil unrest, or similar adverse conditions precluded the normal conduct of business in the following country beginning on the specified date:

Country Date of Departure On or After
South Sudan July 10, 2016

Accordingly, for purposes of section 911 of the Code, an individual who left South Sudan on or after July 10, 2016, will be treated as a qualified individual with respect to the period during which that individual was present in, or was a bona fide resident of, South Sudan if the individual establishes a reasonable expectation of meeting the requirements of section 911(d) but for those conditions.

.02 To qualify for relief under section 911(d)(4) of the Code, an individual must have established residency, or have been physically present, in the foreign country on or before the date that the Secretary of the Treasury determines that individuals were required to leave the foreign country. Accordingly, individuals who were first physically present or established residency in South Sudan after July 10, 2016, are not eligible to qualify for the exception provided in section 911(d)(4) of the Code for taxable year 2016.

SECTION 4. INQUIRIES

A taxpayer who needs assistance on how to claim this exclusion, or on how to file an amended return, should contact a local IRS Office or consult the section under the heading How to Get Tax Help at https://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad.

SECTION 5. DRAFTING INFORMATION

The principal author of this revenue procedure is Kate Y. Hwa of the Office of Associate Chief Counsel (International). For further information regarding this revenue procedure contact Kate Y. Hwa on (202) 317-6934 (not a toll free number).

Definition of Terms and Abbreviations

Definition of Terms

Revenue rulings and revenue procedures (hereinafter referred to as “rulings”) that have an effect on previous rulings use the following defined terms to describe the effect:

Amplified describes a situation where no change is being made in a prior published position, but the prior position is being extended to apply to a variation of the fact situation set forth therein. Thus, if an earlier ruling held that a principle applied to A, and the new ruling holds that the same principle also applies to B, the earlier ruling is amplified. (Compare with modified, below).

Clarified is used in those instances where the language in a prior ruling is being made clear because the language has caused, or may cause, some confusion. It is not used where a position in a prior ruling is being changed.

Distinguished describes a situation where a ruling mentions a previously published ruling and points out an essential difference between them.

Modified is used where the substance of a previously published position is being changed. Thus, if a prior ruling held that a principle applied to A but not to B, and the new ruling holds that it applies to both A and B, the prior ruling is modified because it corrects a published position. (Compare with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions. This term is most commonly used in a ruling that lists previously published rulings that are obsoleted because of changes in laws or regulations. A ruling may also be obsoleted because the substance has been included in regulations subsequently adopted.

Revoked describes situations where the position in the previously published ruling is not correct and the correct position is being stated in a new ruling.

Superseded describes a situation where the new ruling does nothing more than restate the substance and situation of a previously published ruling (or rulings). Thus, the term is used to republish under the 1986 Code and regulations the same position published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single ruling a series of situations, names, etc., that were previously published over a period of time in separate rulings. If the new ruling does more than restate the substance of a prior ruling, a combination of terms is used. For example, modified and superseded describes a situation where the substance of a previously published ruling is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previously published ruling in a new ruling that is self contained. In this case, the previously published ruling is first modified and then, as modified, is superseded.

Supplemented is used in situations in which a list, such as a list of the names of countries, is published in a ruling and that list is expanded by adding further names in subsequent rulings. After the original ruling has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations to show that the previous published rulings will not be applied pending some future action such as the issuance of new or amended regulations, the outcome of cases in litigation, or the outcome of a Service study.

Abbreviations

The following abbreviations in current use and formerly used will appear in material published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

Numerical Finding List

Numerical Finding List

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2016–27 through 2016–52 is in Internal Revenue Bulletin 2016–52, dated December 26, 2016.

Bulletin 2017–1 through 2017–13

Action on Decision:

Article Issue Link Page
2017-1 2016-7 I.R.B. 2016-7 868


Announcements:

Article Issue Link Page
2017-01 2017-08 I.R.B. 2017-08 941
2017-02 2017-10 I.R.B. 2017-10 1007


Notices:

Article Issue Link Page
2017-1 2017-2 I.R.B. 2017-2 367
2017-2 2017-4 I.R.B. 2017-4 539
2017-3 2017-2 I.R.B. 2017-2 368
2017-4 2017-4 I.R.B. 2017-4 541
2017-5 2017-6 I.R.B. 2017-6 779
2017-6 2017-3 I.R.B. 2017-3 422
2017-7 2017-3 I.R.B. 2017-3 423
2017-8 2017-3 I.R.B. 2017-3 423
2017-9 2017-4 I.R.B. 2017-4 542
2017-10 2017-4 I.R.B. 2017-4 544
2017-12 2017-5 I.R.B. 2017-5 742
2017-13 2017-6 I.R.B. 2017-6 780
2017-14 2017-6 I.R.B. 2017-6 783
2017-15 2017-6 I.R.B. 2017-6 783
2017-16 2017-7 I.R.B. 2017-7 913
2017-18 2017-9 I.R.B. 2017-9 997
2017-19 2017-9 I.R.B. 2017-9 1000
2017-20 2017-11 I.R.B. 2017-11 1010
2017-21 2017-13 I.R.B. 2017-13 1026
2017-22 2017-13 I.R.B. 2017-13 1033


Proposed Regulations:

Article Issue Link Page
REG-137604-07 2017-7 I.R.B. 2017-7 923
REG-128276-12 2017-2 I.R.B. 2017-2 369
REG-103477-14 2017-5 I.R.B. 2017-5 746
REG-112324-15 2017-4 I.R.B. 2017-4 547
REG-127203-15 2017-7 I.R.B. 2017-7 918
REG-131643-15 2017-6 I.R.B. 2017-6 865
REG-134438-15 2017-2 I.R.B. 2017-2 373
REG-112800-16 2017-4 I.R.B. 2017-4 569
REG-123829-16 2017-5 I.R.B. 2017-5 764
REG-123841-16 2017-5 I.R.B. 2017-5 766
REG-133353-16 2017-2 I.R.B. 2017-2 372
REG-134247-16 2017-5 I.R.B. 2017-5 744
REG-135122-16 2017-9 I.R.B. 2017-9 1005


Revenue Procedures:

Article Issue Link Page
2017-1 2017-1 I.R.B. 2017-1 1
2017-2 2017-1 I.R.B. 2017-1 106
2017-3 2017-1 I.R.B. 2017-1 130
2017-4 2017-1 I.R.B. 2017-1 146
2017-5 2017-1 I.R.B. 2017-1 230
2017-7 2017-1 I.R.B. 2017-1 269
2017-12 2017-3 I.R.B. 2017-3 424
2017-13 2017-6 I.R.B. 2017-6 787
2017-14 2017-3 I.R.B. 2017-3 426
2017-15 2017-3 I.R.B. 2017-3 437
2017-16 2017-3 I.R.B. 2017-3 501
2017-18 2017-5 I.R.B. 2017-5 743
2017-19 2017-7 I.R.B. 2017-7 913
2017-21 2017-6 I.R.B. 2017-6 791
2017-22 2017-6 I.R.B. 2017-6 863
2017-23 2017-7 I.R.B. 2017-7 915
2017-24 2017-7 I.R.B. 2017-7 916
2017-26 2017-13 I.R.B. 2017-13 1036


Revenue Rulings:

Article Issue Link Page
2017-1 2017-3 I.R.B. 2017-3 377
2017-2 2017-2 I.R.B. 2017-2 364
2017-3 2017-4 I.R.B. 2017-4 522
2017-4 2017-6 I.R.B. 2017-6 776
2017-5 2017-9 I.R.B. 2017-9 1000
2017-6 2017-12 I.R.B. 2017-12 1011
2017-7 2017-10 I.R.B. 2017-10 1009


Treasury Decisions:

Article Issue Link Page
9794 2017-2 I.R.B. 2017-2 273
9795 2017-2 I.R.B. 2017-2 326
9796 2017-3 I.R.B. 2017-3 380
9801 2017-2 I.R.B. 2017-2 355
9802 2017-2 I.R.B. 2017-2 361
9803 2017-3 I.R.B. 2017-3 384
9804 2017-3 I.R.B. 2017-3 406
9806 2017-4 I.R.B. 2017-4 524
9807 2017-5 I.R.B. 2017-5 573
9808 2017-5 I.R.B. 2017-5 580
9809 2017-5 I.R.B. 2017-5 664
9810 2017-6 I.R.B. 2017-6 775
9811 2017-7 I.R.B. 2017-7 869
9814 2017-7 I.R.B. 2017-7 878
9815 2017-9 I.R.B. 2017-9 944
9817 2017-9 I.R.B. 2017-9 968


Effect of Current Actions on Previously Published Items

Finding List of Current Actions on Previously Published Items

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2016–27 through 2016–52 is in Internal Revenue Bulletin 2016–52, dated December 26, 2016.

Bulletin 2017–1 through 2017–13

Notices:

Old Article Action New Article Issue Link Page
2002-1 Amplified by Notice 2017-1 2017-2 I.R.B. 2017-2 367
2010-46 Obsoleted by Notice 2017-1 2017-2 I.R.B. 2017-2 367
2016-29 Modified by Notice 2017-6 2017-3 I.R.B. 2017-3 422


Revenue Procedures:

Old Article Action New Article Issue Link Page
2013-22 Clarified by Rev. Proc. 2017-18 2017-05 I.R.B. 2017-05 743
2015-57 Modified by Rev. Proc. 2017-24 2017-07 I.R.B. 2017-07 916


Treasury Decisions:

Old Article Action New Article Issue Link Page
2010-46 Obsoleted by T.D. 9815 2017-09 I.R.B. 2017-9 944


INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue Bulletins are available at www.irs.gov/irb/.

We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page (www.irs.gov) or write to the

Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave. NW, IR-6230 Washington, DC 20224.