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This Week's Internal Revenue Bulletin

NOV. 2, 2020

2020-45 IRB 1

DATED NOV. 2, 2020
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Subject Area/Tax Topics
  • Jurisdictions
  • Tax Analysts Document Number
    2020-42782
  • Tax Analysts Electronic Citation
    2020 TNTG 211-33
    2020 TNTF 211-40
Citations: 2020-45 IRB 1

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.

EMPLOYEE PLANS

Rev. Proc. 2020-43, page 991. This revenue procedure provides the inflation-adjusted maximum dollar amount that may be made newly available for excepted benefit health reimbursement arrangements or other account-based group health plans for plan years beginning after December 31, 2020, and before January 1, 2022. Due to indexing methodology requiring rounding down to the nearest $50 increment, this amount remains $1,800 for the 2021 plan year.

Rev. Proc. 2020-46, page 995. This revenue procedure modifies and updates Rev. Proc. 2016-47, 2016-37 I.R.B. 346, which provides a list of permissible reasons for a taxpayer to self-certify eligibility for a waiver of the 60-day rollover requirement under certain eligible retirement plans. This revenue procedure modifies that list by adding a new reason: a distribution was made to a state unclaimed property fund.

EMPLOYMENT PLANS

Notice 2020-77, page 988. This notice sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for October 2020 used under § 417(e)(3)(D), the 24-month average segment rates applicable for October 2020, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

INCOME TAX

Announcement 2020-40, page 999. The United States provided written notification, dated August 18, 2020, to the Government of the Hong Kong Special Administrative Region of its termination of a reciprocal agreement to exempt from income tax certain income from the international operation of ships. The termination of the agreement takes effect on January 1, 2021, and will have effect for taxable years beginning on or after January 1, 2021.

Rev. Proc. 2020-44, page 991. To facilitate the market's transition away from the London Interbank Offered Rate and other interbank offered rates, this revenue procedure mitigates certain potential tax consequences of adopting fallback language recommended by the Alternative Reference Rates Committee (ARRC) and the International Swaps and Derivatives Association (ISDA). The revenue procedure generally provides that modifying certain contracts to incorporate the ARRC's and ISDA's recommended fallback language will not result in a realization event. In addition, the revenue procedure generally provides that such modifications will not result in legging out of an integrated transaction or in the disposition or termination of either leg of a hedging transaction.

Rev. Rul. 2020-22, page 963. Federal rates; adjusted federal rates; adjusted federal long-term rate, and the long-term tax exempt rate. For purposes of sections 382, 1274, 1288, 7872 and other sections of the Code, tables set forth the rates for November 2020.

Rev. Rul. 2020-24, page 965. This revenue ruling clarifies the federal income tax withholding and reporting obligations that apply for the year a payment is made from a qualified plan to a state unclaimed property fund.

T.D. 9911, page 966. The final regulations provide guidance on determining life insurance reserves and changing the method of computing certain insurance company reserves. The final regulations also authorize changes to insurance company reporting requirements and contain numerous conforming changes to other regulations. The final regulations implement legislative changes made by sections 13513 and 13517 of the Tax Cuts and Jobs Act.

The main regulation citations are: 26 CFR 1.338-11: Effect of section 338 election on insurance company targets; 26 CFR 1.807-1: Computation of life insurance reserves; 26 CFR 1.807-3: Reporting of reserves; 26 CFR 1.807-4: Adjustment for change in computing reserves; 26 CFR 1.816-1: Life insurance reserves; 26 CFR 1.817A-1: Certain modified guaranteed contracts; 26 CFR 1.6012-2: Corporations required to make returns of income; 26 CFR 301.9100-6T: Time and manner of making certain elections under the Deficit Reduction Act of 1984.

T.D. 9913, page 975. These final regulations clarify the definition of a “qualifying relative” for purposes of various provisions of the Internal Revenue Code for taxable years 2018 through 2025.

T.D. 9918, page 979. This document contains final regulations clarifying that the following deductions allowed to an estate or non-grantor trust are not miscellaneous itemized deductions subject to the suspension in section 67(g): costs paid or incurred in connection with the administration of an estate or non-grantor trust that would not have been incurred if the property were not held in the estate or trust, the personal exemption of an estate or non-grantor trust, the distribution deduction for trusts distributing current income, and the distribution deduction for estates and trusts accumulating income. The final regulations also provide guidance on determining the character, amount, and allocation of deductions in excess of gross income succeeded to by a beneficiary on the termination of an estate or non-grantor trust.

DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Subject Area/Tax Topics
  • Jurisdictions
  • Tax Analysts Document Number
    2020-42782
  • Tax Analysts Electronic Citation
    2020 TNTG 211-33
    2020 TNTF 211-40
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