Rev. Proc. 2012-11

Part III. Administrative, Procedural, and Miscellaneous
26 CFR 1.501(c)(29)–1T: CO-OP health insurance
issuers (temporary).

Rev. Proc. 2012–11
SECTION 1. PURPOSE
This revenue procedure sets forth procedures for issuing determination letters
and rulings on the exempt status of qualified nonprofit health insurance issuers
(QNHIIs) described in § 501(c)(29) of the
Internal Revenue Code (Code).
SECTION 2. BACKGROUND
Section 501(c)(29) of the Code provides requirements for tax-exemption
under § 501(a) for QNHIIs. Section
501(c)(29) was added to the Code by
§ 1322(h)(1) of the Patient Protection and
Affordable Care Act, Public Law 111–148
(March 23, 2010) (Affordable Care Act).
Section 1322 of the Affordable Care
Act directs the Centers for Medicare and
Medicaid Services (CMS) to establish the
Consumer Operated and Oriented Plan
program (CO-OP program). The purpose
of the CO-OP program is to foster the creation of member-governed QNHIIs that
will operate with a strong consumer focus
and offer qualified health plans in the individual and small group markets. CMS will
provide loans and repayable grants (collectively loans) to organizations applying
to become QNHIIs to help cover start-up
costs and meet any solvency requirements
in States in which the organization is licensed to issue qualified health plans.
A Funding Opportunity Announcement
for the CO-OP program (CFDA Number
93.545), published by CMS on July 28,
2011 (and amended on September 16,
2011), provides that for each loan, the
appropriate CMS official will issue a Notice of Award and Loan Agreement to the
QNHII. In addition, the Chief Executive
Officer of the QNHII, or an officer of the
QNHII’s Board of Directors, must sign
and return the Loan Agreement to CMS.
On December 13, 2011, CMS issued final
regulations implementing the CO-OP program at 76 FR 77392.
The CMS final regulations define a
QNHII as an entity that, within specified
time frames, satisfies or can reasonably

2012–7 I.R.B.

be expected to satisfy the standards in
§ 1322(c) of the Affordable Care Act and
in the CMS final regulations. The entity
will constitute a QNHII until such time as
CMS determines that the entity does not
satisfy or cannot reasonably be expected
to satisfy these standards.
Section 501(c)(29)(A) provides that a
QNHII (within the meaning of § 1322(c)
of the Affordable Care Act) which has
received a loan or grant under the CO-OP
program may be recognized as exempt
from taxation under § 501(a), but only
for periods for which the organization is
in compliance with the requirements of
§ 1322 of the Affordable Care Act and
of any loan agreement with the Secretary
of Health and Human Services. Section
501(c)(29)(B) provides that a QNHII will
not qualify for tax-exemption unless it
meets four additional requirements, the
first of which is that the organization must
give notice to the Secretary of the Treasury, in such manner as the Secretary may
by regulations prescribe, that it is applying for recognition of exemption as an
organization described in § 501(c)(29).
On February 7, 2012, the Treasury Department and the IRS issued temporary
regulations at 77 FR 6005 authorizing
the IRS to prescribe the procedures by
which QNHIIs may apply to the IRS for
recognition of exemption from Federal
income tax. The temporary regulations
also authorize the IRS to recognize a
QNHII as exempt effective as of the later
of the date of the QNHII’s formation or
March 23, 2010 (the date of enactment of
the Affordable Care Act), provided that the
application is submitted in the manner and
within the time prescribed by the IRS and
the QNHII’s prior purposes and activities
were consistent with the requirements for
exempt status under § 501(c)(29).
SECTION 3. RELATED REVENUE
PROCEDURES
QNHIIs seeking recognition of exemption under § 501(c)(29) should follow this
revenue procedure and, to the extent not
inconsistent with this revenue procedure,
Rev. Proc. 2012–9, 2012–2 I.R.B. 261,
or its successor revenue procedure. User
fees for requests for a determination letter or ruling are set forth in Rev. Proc.

368

2012–8, 2012–1 I.R.B. 235, or its successor revenue procedure.
SECTION 4. WHAT ARE THE
PROCEDURES FOR REQUESTING
RECOGNITION OF EXEMPT STATUS
UNDER § 501(c)(29)
.01 Letter application.
A QNHII seeking recognition of exemption under § 501(c)(29) must submit a
letter application (rather than a form) with
Form 8718, User Fee for Exempt Organization Determination Letter Request, and
include the appropriate user fee. For more
information on the user fee, see Rev. Proc.
2012–8, 2012–1 I.R.B. 235, or its successor revenue procedure. The request should
be mailed to:
IRS-TEGE
P.O. Box 2508
Cincinnati, OH 45201
.02 Requirements for a substantially
completed letter application.
A QNHII seeking recognition of exemption under § 501(c)(29) must comply
with the requirements for a substantially
completed letter application set forth in
this section rather than the requirements
set forth in § 3.08 of Rev. Proc. 2012–9,
2012–2 I.R.B. 261, or its successor revenue procedure.
A substantially completed letter application for recognition of exemption under § 501(c)(29) must be signed by an authorized individual and must be accompanied by the following declaration: “Under
penalties of perjury, I declare that I have
examined this request, including accompanying documents, and, to the best of my
knowledge and belief, the request contains
all the relevant facts relating to the request,
and such facts are true, correct, and complete.”
A substantially completed letter application also must include:
(1) the QNHII’s Employer Identification Number (EIN).
(2) a statement of receipts and expenditures and a balance sheet for the current year and the three preceding years (or
the years the QNHII was in existence, if
less than four years). If the QNHII has

February 13, 2012

not yet commenced operations, or has not
completed one accounting period, a substantially completed application generally
must include a proposed budget for two
full accounting periods and a current statement of assets and liabilities.
(3) a detailed narrative statement of the
QNHII’s past and proposed activities and a
narrative description of the QNHII’s actual
and anticipated receipts and contemplated
expenditures.
(4) a copy of the QNHII’s organizing or
enabling document that has been filed with
and certified by an appropriate official of
a State authority (e.g., stamped “Filed”
and dated by the Secretary of State). Alternatively, if the QNHII is not required
to file its organizing or enabling documents with a State authority, the organization may submit a copy of the organizing or
enabling document that meets the requirements of a “conformed copy” as outlined
in Rev. Proc. 68–14, 1968–1 C.B. 768.
(5) a current copy of the QNHII’s
by-laws, if applicable, or any similar governing documents.
(6) a copy of both the Notice of Award
issued by CMS and the fully executed
Loan Agreement with CMS.
(7) the following representations regarding the QNHII:

•

•

•

Except to the extent allowed by
§ 1322(c)(4) of the Patient Protection
and Affordable Care Act, no part of
its net earnings inures to the benefit of
any private shareholder or individual,
or has so inured since the later of the
date of formation or March 23, 2010;
No substantial part of its activities constitutes, or has constituted
since the later of the date of formation or March 23, 2010, carrying on
propaganda, or otherwise attempting,
to influence legislation; and
It does not participate in, or intervene
in (including the publishing or distributing of statements), any political
campaign on behalf of (or in opposition to) any candidate for public office,
nor has it so participated or intervened
since the later of the date of formation
or March 23, 2010.

cating “SECTION 501(c)(29) CO-OP
HEALTH INSURANCE ISSUER.”
(9) the correct user fee and Form 8718.
SECTION 5. EFFECT OF
DETERMINATION LETTER OR
RULING RECOGNIZING EXEMPTION
A determination letter or ruling recognizing exemption under § 501(c)(29) is
usually effective as of the later of the date
of the QNHII’s formation or March 23,
2010 (the date of enactment of the Affordable Care Act) if:

•

•

The QNHII’s purposes and activities
prior to the date of issuance of the determination letter or ruling were consistent with the requirements for exemption; and
The QNHII submits a substantially
completed letter application within 15
months of the date of its fully executed
Loan Agreement with CMS.

If the Service requires the QNHII to
alter its activities or make substantive
amendments to its enabling instrument,
exemption will be recognized effective as
of the date specified in the determination
letter or ruling. If the Service requires
the QNHII to make a nonsubstantive
amendment, exemption will ordinarily be
recognized as of the later of the date of the
QNHII’s formation or March 23, 2010.
If a QNHII does not submit a substantially completed letter application within
15 months of the date of its fully executed
Loan Agreement with CMS, it may not
qualify for exempt status before the postmark date of the letter application.
SECTION 6. EFFECTIVE DATE
This revenue procedure is effective
February 7, 2012.
SECTION 7. PAPERWORK
REDUCTION ACT
The collection of information for a letter application under § 3.01 of this revenue procedure has been approved under
OMB control number 1545–2080. See
Rev. Proc. 2012–9, § 15.

(8) a subject line or other indicator
on the first page of the request in bold,
underlined, and/or all capitals font indi-

February 13, 2012

DRAFTING INFORMATION
The principal author of this Revenue
Procedure is Justin Lowe of the Exempt
Organizations, Tax Exempt and Government Entities Division. For further information regarding this revenue procedure,
contact Mr. Lowe at 202–283–9486 (not a
toll-free call).
26 CFR 601.105: Examination of returns and claims
for refund, credit or abatement; determination of correct tax liability.
(Also: Part 1, §§ 6662, 6694, 1.6662–4, 1.6694–2.)

Rev. Proc. 2012–15
SECTION 1. PURPOSE
This revenue procedure updates Rev.
Proc. 2011–13, 2011–3 I.R.B. 318, and
identifies circumstances under which the
disclosure on a taxpayer’s income tax return with respect to an item or a position
is adequate for the purpose of reducing
the understatement of income tax under
section 6662(d) of the Internal Revenue
Code (relating to the substantial understatement aspect of the accuracy-related
penalty), and for the purpose of avoiding
the tax return preparer penalty under section 6694(a) (relating to understatements
due to unreasonable positions) with respect to income tax returns. This revenue procedure does not apply with respect to any other penalty provisions (including the disregard provisions of the section 6662(b)(1) accuracy-related penalty,
the section 6662(i) increased accuracy-related penalty in the case of nondisclosed
noneconomic substance transactions, and
the section 6662(j) increased accuracy-related penalty in the case of undisclosed foreign financial asset understatements).
This revenue procedure applies to
any income tax return filed on 2011
tax forms for a taxable year beginning
in 2011, and to any income tax return
filed on 2011 tax forms in 2012 for short
taxable years beginning in 2012.
SECTION 2. CHANGES FROM REV.
PROC. 2011–13
.01 This revenue procedure has been
updated to include reference to: (i) a correction to the reference to Schedule M–3

369

2012–7 I.R.B.

(Form 1120), Part III, and (ii) the employee-remuneration limitations under the
amended section 162(m).
SECTION 3. BACKGROUND
.01 If section 6662 applies to any portion of an underpayment of tax required
to be shown on a return, an amount equal
to 20 percent of the portion of the underpayment to which the section applies is
added to the tax (the penalty rate is 40 percent in the case of gross valuation misstatements under section 6662(h), nondisclosed
noneconomic substance transactions under
section 6662(i), or undisclosed foreign financial asset understatements under section 6662(j)). Section 6662(b)(2) applies
to the portion of an underpayment of tax
that is attributable to a substantial understatement of income tax.
.02 Section 6662(d)(1) provides that
there is a substantial understatement of
income tax if the amount of the understatement exceeds the greater of 10 percent of
the amount of tax required to be shown on
the return for the taxable year or $5,000.
Section 6662(d)(1)(B) provides a special
rule for corporations. A corporation (other
than an S corporation or a personal holding
company) has a substantial understatement of income tax if the amount of the
understatement exceeds the lesser of (i) 10
percent of the tax required to be shown on
the return for a taxable year (or, if greater,
$10,000) or (ii) $10,000,000. Section
6662(d)(2) defines an understatement as
the excess of the amount of tax required to
be shown on the return for the taxable year
over the amount of the tax that is shown
on the return reduced by any rebate.
.03 In the case of an item not attributable to a tax shelter, section
6662(d)(2)(B)(ii) provides that, if there is
a reasonable basis for the tax treatment of
the item by taxpayer, the amount of the
understatement is reduced by the portion
of the understatement attributable to any
item with respect to which the relevant
facts affecting the item’s tax treatment are
adequately disclosed in the return or in a
statement attached to the return.
.04 Section 6694(a) imposes a penalty
on a tax return preparer who prepares a return or claim for refund reflecting an understatement of liability due to an “unreasonable position” if the tax return preparer
knew (or reasonably should have known)

2012–7 I.R.B.

of the position. A position (other than a
position with respect to a tax shelter or
a reportable transaction to which section
6662A applies) is generally treated as unreasonable unless (i) there is or was substantial authority for the position, or (ii)
the position was properly disclosed in accordance with section 6662(d)(2)(B)(ii)(I)
and had a reasonable basis. If the position
is with respect to a tax shelter (as defined in
section 6662(d)(2)(C)(ii)) or a reportable
transaction to which section 6662A applies, the position is treated as unreasonable unless it is reasonable to believe that
the position would more likely than not
be sustained on the merits. See Notice
2009–5, 2009–3 I.R.B. 309 (January 21,
2009) for interim penalty compliance rules
for tax shelter transactions.
.05 In general, this revenue procedure
provides guidance for determining when
disclosure by return is adequate for purposes of section 6662(d)(2)(B)(ii) and section 6694(a)(2)(B). For purposes of this
revenue procedure, the taxpayer must furnish all required information in accordance
with the applicable forms and instructions,
and the money amounts entered on these
forms must be verifiable.
.06 Fiscal and short tax year returns. (a)
In general. This revenue procedure may
apply to a return for a fiscal tax year that
begins in 2011 and ends in 2012. This revenue procedure may also apply to a short
year return for a period beginning in 2012
if the return is to be filed before the 2012
forms are available. (Note that individuals are generally not put in this position
as a decedent’s final return for a fractional
part of a year is due the fifteenth day of
the fourth month following the close of
the 12-month period which began with the
first day of such fractional part of the year.
See Treas. Reg. § 1.6072–1(b).) In the
case of fiscal year and short year returns,
the taxpayer must take into account any tax
law changes that are effective for tax years
beginning after December 31, 2011, even
though these changes are not reflected on
the form.
(b) Tax law changes effective after December 31, 2011. This document does
not take into account the effect of tax law
changes effective for tax years beginning
after December 31, 2011. If a line referenced in this revenue procedure is affected by such a change and requires additional reporting, a taxpayer may have

370

to file Form 8275, Disclosure Statement,
or Form 8275–R, Regulation Disclosure
Statement, until the Service prescribes criteria for complying with the requirement.
.07 A complete and accurate disclosure of a tax position on the appropriate
year’s Schedule UTP, Uncertain Tax Position Statement, will be treated as if the
corporation filed a Form 8275 or Form
8275–R regarding the tax position. The filing of a Form 8275 or Form 8275–R, however, will not be treated as if the corporation filed a Schedule UTP.
SECTION 4. PROCEDURE
.01 General
(1) Additional disclosure of facts relevant to, or positions taken with respect
to, issues involving any of the items set
forth below is unnecessary for purposes
of reducing any understatement of income
tax under section 6662(d) (except as otherwise provided in section 4.02(3) concerning Schedules M–1 and M–3), provided
that the forms and attachments are completed in a clear manner and in accordance
with their instructions.
(2) The money amounts entered on the
forms must be verifiable, and the information on the return must be disclosed in the
manner described below. For purposes of
this revenue procedure, a number is verifiable if, on audit, the taxpayer can prove
the origin of the amount (even if that number is not ultimately accepted by the Internal Revenue Service) and the taxpayer can
show good faith in entering that number on
the applicable form.
(3) The disclosure of an amount as provided in section 4.02 below is not adequate when the understatement arises from
a transaction between related parties. If an
entry may present a legal issue or controversy because of a related-party transaction, then that transaction and the relationship must be disclosed on a Form 8275 or
Form 8275–R.
(4) When the amount of an item is
shown on a line that does not have a
preprinted description identifying that
item (such as on an unnamed line under an
“Other Expense” category), the taxpayer
must clearly identify the item by including
the description on that line. For example,
to disclose a bad debt for a sole proprietorship, the words “bad debt” must be
written or typed on the line of Schedule

February 13, 2012

C that shows the amount of the bad debt.
Also, for Schedule M–3 (Form 1120),
Part II, line 25, Other income (loss) items
with differences, or Part III, line 37, Other
expense/deduction items with differences,
the entry must provide descriptive language; for example, “Cost of non-compete
agreement deductible not capitalizable.”
If space limitations on a form do not allow
for an adequate description, the description must be continued on an attachment.
(5) Although a taxpayer may literally
meet the disclosure requirements of this
revenue procedure, the disclosure will
have no effect for purposes of the section
6662 accuracy-related penalty if the item
or position on the return: (1) does not have
a reasonable basis as defined in Treas.
Reg. § 1.6662–3(b)(3); (2) is attributable
to a tax shelter item as defined in section
6662(d)(2); or (3) is not properly substantiated or the taxpayer failed to keep
adequate books and records with respect
to the item or position.
(6) Disclosure also will have no effect
for purposes of the section 6694(a) penalty
as applicable to tax return preparers if the
position is with respect to a tax shelter
(as defined in section 6662(d)(2)(C)(ii)) or
a reportable transaction to which section
6662A applies.
.02 Items
(1) Form 1040, Schedule A, Itemized
Deductions:
(a) Medical and Dental Expenses:
Complete lines 1 through 4, supplying all
required information.
(b) Taxes: Complete lines 5 through 9,
supplying all required information. Line 8
must list each type of tax and the amount
paid.
(c) Interest Expenses: Complete lines
10 through 15, supplying all required information. This section 4.02(1)(c) does
not apply to (i) amounts disallowed under
section 163(d) unless Form 4952, Investment Interest Expense Deduction, is completed, or (ii) amounts disallowed under
section 265.
(d) Contributions: Complete lines 16
through 19, supplying all required information. Enter the amount of the contribution reduced by the value of any substantial benefit (goods or services) provided by
the donee organization in consideration, in
whole or in part. Entering the value of
the contribution unreduced by the value
of the benefit received will not constitute

February 13, 2012

adequate disclosure. If a contribution of
$250 or more is made, this section will
not apply unless a contemporaneous written acknowledgment, as required by section 170(f)(8), is obtained from the donee
organization. If a contribution of cash of
less than $250 is made, this section will
not apply unless a bank record or written communication from the donee, as required by section 170(f)(17), is obtained
from the donee organization. If a contribution of property other than cash is made
and the amount claimed as a deduction exceeds $500, attach a properly completed
Form 8283, Noncash Charitable Contributions, to the return. In addition to the
Form 8283, if a contribution of a qualified motor vehicle, boat, or airplane has a
value of more than $500, this section will
not apply unless a contemporaneous written acknowledgment, as required by section 170(f)(12), is obtained from the donee
organization and attached to the return. An
acknowledgment under section 170(f)(8)
is not required if an acknowledgment under section 170(f)(12) is required.
(e) Casualty and Theft Losses: Complete Form 4684, Casualties and Thefts,
and attach to the return. Each item or article for which a casualty or theft loss is
claimed must be listed on Form 4684.
(2) Certain Trade or Business Expenses
(including, for purposes of this section, the
following six expenses as they relate to the
rental of property):
(a) Casualty and Theft Losses: The procedure outlined in section 4.02(1)(e) must
be followed.
(b) Legal Expenses: The amount
claimed must be stated. This section does
not apply, however, to amounts properly characterized as capital expenditures,
personal expenses, or non-deductible lobbying or political expenditures, including
amounts that are required to be (or that
are) amortized over a period of years.
(c) Specific Bad Debt Charge-off: The
amount written off must be stated.
(d) Reasonableness of Officers’ Compensation: Form 1120, Schedule E, Compensation of Officers, must be completed
when required by its instructions. The time
devoted to business must be expressed as
a percentage as opposed to “part” or “as
needed.” This section does not apply to
“golden parachute” payments, as defined
under section 280G. This section will not
apply to the extent that remuneration paid

371

or incurred exceeds the employee-remuneration limitations under section 162(m),
if applicable.
(e) Repair Expenses: The amount
claimed must be stated. This section does
not apply, however, to any repair expenses
properly characterized as capital expenditures or personal expenses.
(f) Taxes (other than foreign taxes): The
amount claimed must be stated.
(3) Differences in book and income tax
reporting.
For Schedule M–1 and all Schedules
M–3, including those listed in (a)–(f) below, the information provided must reasonably apprise the Service of the potential controversy concerning the tax treatment of the item. If the information provided does not so apprise the Service, a
Form 8275 or Form 8275–R must be used
to adequately disclose the item (see Part II
of the instructions for those forms).
Note: An item reported on a line with
a pre-printed description, shown on
an attached schedule or “itemized” on
Schedule M–1, may represent the aggregate amount of several transactions
producing that item (i.e., a group of
similar items, such as amounts paid or
incurred for supplies by a taxpayer engaged in business). In some instances,
a potentially controversial item may involve a portion of the aggregate amount
disclosed on the schedule. The Service
will not be reasonably apprised of a
potential controversy by the aggregate
amount disclosed. In these instances,
the taxpayer must use Form 8275 or
Form 8275–R regarding that portion of
the item.
Combining unlike items, whether on
Schedule M–1 or Schedule M–3 (or on an
attachment when directed by the instructions), will not constitute an adequate disclosure.
Additionally, for taxpayers that file
the Schedule M–3 (Form 1120), the new
Schedule B, Additional Information for
Schedule M–3 Filers, must also be completed. For taxpayers that file the Schedule
M–3 (Form 1065), the new Schedule C,
Additional Information for Schedule M–3
Filers, must also be completed. When required, these new Schedules are necessary
to constitute adequate disclosure.
(a) Form 1065. Schedule M–3 (Form
1065), Net Income (Loss) Reconciliation
for Certain Partnerships: Column (a),

2012–7 I.R.B.

Income (Loss) per Income Statement, of
Part II (reconciliation of income (loss)
items) and Column (a), Expense per Income Statement, of Part III (reconciliation
of expense/deduction items); Column (b),
Temporary Difference, and Column (c),
Permanent Difference, of Part II (reconciliation of income (loss) items) and Part
III (reconciliation of expense/deduction
items); and Column (d), Income (Loss)
per Tax Return, of Part II (reconciliation
of income (loss) items) and Column (d),
Deduction per Tax Return, of Part III (reconciliation of expense/deduction items).
(b) Form 1120. (i) Schedule M–1, Reconciliation of Income (Loss) per Books
With Income per Return.
(ii) Schedule M–3 (Form 1120), Net
Income (Loss) Reconciliation for Corporations with Total Assets of $10 Million
or More: Column (a), Income (Loss) per
Income Statement, of Part II (reconciliation of income (loss) items) and Column
(a), Expense per Income Statement, of
Part III (reconciliation of expense/deduction items); Column (b), Temporary
Difference, and Column (c), Permanent
Difference, of Part II (reconciliation of
income (loss) items) and Part III (reconciliation of expense/deduction items) and
Column (d), Income (Loss) per Tax Return, of Part II (reconciliation of income
(loss) items); and Column (d), Deduction
per Tax Return, of Part III (reconciliation
of expense/deduction items).
(c) Form 1120–L. Schedule M–3 (Form
1120–L), Net Income (Loss) Reconciliation for U.S. Life Insurance Companies
With Total Assets of $10 Million or More:
Column (a), Income (Loss) per Income
Statement, of Part II (reconciliation of
income (loss) items) and Column (a),
Expense per Income Statement, of Part
III (reconciliation of expense/deduction
items); Column (b), Temporary Difference, and Column (c), Permanent Difference, of Part II (reconciliation of income
(loss) items) and Part III (reconciliation
of expense/deduction items); and Column (d), Income (Loss) per Tax Return,
of Part II (reconciliation of income (loss)
items) and Column (d), Deduction per
Tax Return, of Part III (reconciliation of
expense/deduction items).

2012–7 I.R.B.

(d) Form 1120–PC. Schedule M–3
(Form 1120–PC), Net Income (Loss) Reconciliation for U.S. Property and Casualty
Insurance Companies With Total Assets
of $10 Million or More: Column (a), Income (Loss) per Income Statement, of
Part II (reconciliation of income (loss)
items) and Column (a), Expense per Income Statement, of Part III (reconciliation
of expense/deduction items); Column (b),
Temporary Difference, and Column (c),
Permanent Difference, of Part II (reconciliation of income (loss) items) and Part
III (reconciliation of expense/deduction
items); and Column (d), Income (Loss)
per Tax Return, of Part II (reconciliation
of income (loss) items) and Column (d),
Deduction per Tax Return, of Part III (reconciliation of expense/deduction items).
(e) Form 1120S. Schedule M–3 (Form
1120S), Net Income (Loss) Reconciliation
for S Corporations With Total Assets of
$10 Million or More: Column (a), Income
(Loss) per Income Statement, of Part II
(reconciliation of income (loss) items)
and Column (a), Expense per Income
Statement, of Part III (reconciliation of
expense/deduction items); Column (b),
Temporary Difference, and Column (c),
Permanent Difference, of Part II (reconciliation of income (loss) items) and Part
III (reconciliation of expense/deduction
items); and Column (d), Income (Loss)
per Tax Return, of Part II (reconciliation
of income (loss) items) and Column (d),
Deduction per Tax Return, of Part III (reconciliation of expense/deduction items).
(f) Form 1120–F. Schedule M–3 (Form
1120–F), Net Income (Loss) Reconciliation for Foreign Corporations With Total
Assets of $10 Million or More: Column
(b), Temporary Difference, Column (c),
Permanent Difference, and Column (d),
Other Permanent Differences for Allocations to Non-ECI and ECI, of Part II
(reconciliation of income (loss) items) and
Part III (reconciliation of expense/deduction items).
(4) Foreign Tax Items:
(a) International Boycott Transactions:
Transactions disclosed on Form 5713,
International Boycott Report; Schedule
A, International Boycott Factor (Section 999(c)(1)); Schedule B, Specifically

372

Attributable Taxes and Income (Section
999(c)(2)); and Schedule C, Tax Effect
of the International Boycott Provisions,
must be completed when required by their
instructions.
(b) Treaty-Based Return Position:
Transactions and amounts under section
6114 or section 7701(b) as disclosed on
Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or
7701(b), must be completed when required
by its instructions.
(5) Other:
(a) Moving Expenses: Complete Form
3903, Moving Expenses, and attach to the
return.
(b) Employee Business Expenses:
Complete Form 2106, Employee Business
Expenses, or Form 2106–EZ, Unreimbursed Employee Business Expenses, and
attach to the return. This section does not
apply to club dues, or to travel expenses
for any non-employee accompanying the
taxpayer on the trip.
(c) Fuels Credit: Complete Form 4136,
Credit for Federal Tax Paid on Fuels, and
attach to the return.
(d) Investment Credit: Complete Form
3468, Investment Credit, and attach to the
return.
SECTION 5. EFFECTIVE DATE
This revenue procedure applies to any
income tax return filed on a 2011 tax form
for a taxable year beginning in 2011, and
to any income tax return filed on a 2011
tax form in 2012 for a short taxable year
beginning in 2012.
SECTION 6. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Thomas W. Curteman, Jr.
of the Office of Associate Chief Counsel
(Procedure & Administration). For further
information regarding this revenue procedure, contact Branch 2 of Procedure and
Administration at (202) 622–4940 (not a
toll-free call).

February 13, 2012