In general, gain on a sale of appreciated property by a corporation is taxed to the corporation when the sale occurs and to the shareholders when the proceeds are distributed as dividends. In addition, gain is recognized by a corporation on a distribution of appreciated property to its shareholders. However, the corporate organization and reorganization provisions, in certain circumstance, permit a corporation to transfer property to a controlled corporation and distribute the stock of the controlled corporation to its shareholders in a transaction in which no gain is recognized on either the transfer of assets or the distribution of stock. Concerns arise when these provisions are used to cause property of a corporation to become property of a real estate investment trust (“REIT”) because gain on the property will rarely be taxed at the corporate level while the property is in the hands of a REIT. The proposed regulations will cause gain to be recognized, and taxed at the corporate level, in an amount approximating the amount that would have been recognized if the corporation had disposed of the property in a taxable sale, exchange, or distribution.

Interest rates: underpayment and overpayments. The rates for interest determined under section 6621 of the code for the calendar quarter beginning July 1, 2016, will be 4 percent for overpayments (3 percent in the case of a corporation), 4 percent for the underpayments, and 6 percent for large corporation underpayments. The rate of interest paid on the portion of a corporation overpayment exceeding $10,000 will be 1.5 percent.

This revenue ruling clarifies that real property held for lease in a leasing business is real property used in a trade or business. Accordingly, indebtedness, incurred or assumed, and secured by such property is qualified real property business indebtedness for purposes of section 108(c)(3)(A). Real property held primarily for sale to customers in the ordinary course of business is not real property used in a trade or business for purposes of section 108(c)(3)(A).

This ruling contains an updated list of all geographical areas included in the North American area for purposes of section 274 of the Code. Rev. Rul. 2011–26 modified and superseded.

The revenue procedure provides that Notice 2016–39, recovery of investment in the contract from payments received from a retirement plan by an employee during phased retirement, does not apply to amounts that are received from a non-qualified contract. The revenue procedure concludes that in applying the § 72 regulations cited in the Notice to non-qualified contracts, the possibility of further contributions to the contract or a subsequent election under the contract to receive the benefit payable under the contract in a different manner generally will not affect the determination of whether payments are amounts received as an annuity.

In general, gain on a sale of appreciated property by a corporation is taxed to the corporation when the sale occurs and to the shareholders when the proceeds are distributed as dividends. In addition, gain is recognized by a corporation on a distribution of appreciated property to its shareholders. However, the corporate organization and reorganization provisions, in certain circumstance, permit a corporation to transfer property to a controlled corporation and distribute the stock of the controlled corporation to its shareholders in a transaction in which no gain is recognized on either the transfer of assets or the distribution of stock. Concerns arise when these provisions are used to cause property of a corporation to become property of a real estate investment trust (“REIT”) because gain on the property will rarely be taxed at the corporate level while the property is in the hands of a REIT. The temporary regulations will cause gain to be recognized, and taxed at the corporate level, in an amount approximating the amount that would have been recognized if the corporation had disposed of the property in a taxable sale, exchange, or distribution.

This notice sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for June 2016 used under § 417(e)(3)(D), the 24-month average segment rates applicable for May 2016, 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).

This notice provides guidance as to whether payments received by an employee from a qualified defined benefit plan during phased retirement are amounts received as an annuity under section 72 of the Internal Revenue Code. This notice does not apply to amounts received from non-qualified contracts.

Pub. 1167, General Rules and Specifications for Substitute Forms and Schedules, provides guidelines and general requirements for the development, printing, and approval of substitute tax forms. Rev. Proc. 2015–55 is superseded.

This procedure provides specifications for the private printing of red-ink substitutes for the 2016 revisions of certain information returns. This procedure will be reproduced as the next revision of Publication 1179. Rev. Proc. 2015–35 is superseded.