This Week's Internal Revenue Bulletin

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.

ADMINISTRATIVE

REV PROC 2019-35, page 871. General Rules and Specifications for Substitute Forms and Schedules. This procedure provides guidelines and general requirements for the development, printing, and approval of the 2019 substitute tax forms. This procedure will be reproduced as the next revision of Publication 1167. Rev. Proc. 2018-51 is superseded.

EMPLOYEE PLANS

TD 9875, page 856. These final regulations amend the current regulations under §401(k) relating to hardship distributions. Section 41113 of the Bipartisan Budget Act of 2018 (BBA) directs the Secretary to remove the requirement in the current regulations that an employee's plan contributions be suspended for at least 6 months following a hardship distribution from the plan. The amendments conform the regulations with § 41113 and update the regulations to reflect BBA § 41114 and certain other statutory changes to 401(k) plans.

NOT 2019-51, page 866. This notice sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for September 2019 used under § 417(e)(3)(D), the 24-month average segment rates applicable for September 2019, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

EMPLOYMENT TAX

AOD 2019-2, page 806. In Union Pacific Railroad Company v. United States, 865 F.3d 1045 (8th Cir. 2017), rev'g No. 8:14CV237 (D. Neb. July 1, 2016), the Eighth Circuit held that lump-sum payments paid to unionized employees upon ratification of collective bargaining agreements (“ratification payments”) are not taxable compensation under the RRTA. In Union Pacific, the Eighth Circuit declined to follow Soc. Sec. Bd. v. Nierotko, 327 U.S. 358 (1946), and other cases following it that have broadly defined payment for services under FICA. The Supreme Court subsequently rejected the same reasoning in reversing the Eighth Circuit's opinion in BNSF Ry. Co. v. Loos, 139 S.Ct. 893 (2019), and instead emphasized the parallels between the FICA and the RRTA schemes. This AOD provides that Union Pacific's holding on ratification payments has been superseded by the Supreme Court analysis in Loos.

INCOME TAX

REV RUL 2019-23, page 807. Federal rates; adjusted federal rates; adjusted federal long-term rate, the long-term exempt rate, and the blended annual rate. For purposes of sections 382, 1274, 1288, 7872 and other sections of the Code, tables set forth the rates for October 2019.

TD 9874, page 809. This Treasury Decision provides guidance regarding the additional first year depreciation deduction under section 168(k) and reflects changes to section 168(k) by the Tax Cuts and Jobs Act.

NOT 2019-52, page 869. In response to the devastation caused by the 2018 California Wildfires to Butte, Los Angeles, and Ventura counties in the State of California, this notice expands the emergency housing and compliance monitoring relief provided in Rev. Proc. 2014-49, 2014-37 I.R.B. 535, and Rev. Proc. 2014-50, 2014-37 I.R.B. 540. The expanded relief in this notice is limited to the CA Wildfires Major Disaster (as defined in the notice). This notice also solicits public comment regarding any desirable amendments to Rev. Proc. 2014-49 and Rev. Proc. 2014-50.

REG-106808-19, page 912. These proposed regulations provide guidance regarding the additional first year depreciation deduction under section 168(k), as amended by the Tax Cuts and Jobs Act. This document proposes rules regarding (i) property not eligible for the additional first year depreciation deduction, (ii) a de minimus use rule for determining whether a taxpayer previously used property, (iii) application of the used property acquisition requirements to partnerships, (iv) an election to allow the additional first year depreciation deduction for certain components of larger self-constructed property, (v) computation of the additional first year depreciation deduction for certain property having longer production periods, (vi) the mid-quarter convention, (vii) the definition of binding contract in the context of a business acquisition, and (viii) application of the acquisition requirements to property not acquired pursuant to a written binding contract.