Rev. Proc. 2012-41; 2012-45 IRB 1
Administrative, Procedural, and Miscellaneous
26 CFR 601.602: Tax forms and instructions.
(Also Part I, §§ 1, 42, 59, 62, 135, 146, 147, 148, 213, 220, 512, 513, 877, 877A, 911, 2032A, 2503, 2523, 4161, 4261, 6033, 6039F, 6323, 6334, 6601, 7430, 7702B; 1.148-5.)
Table of Contents
SECTION 1. PURPOSE
SECTION 2. CHANGES
SECTION 3. 2013 ADJUSTED ITEMS
| ||Code Section|
|.01 Unearned Income of Minor Children Taxed|
as if Parent's Income ("Kiddie Tax")
|.02 Rehabilitation Expenditures Treated as|
Separate New Building
|.03 Low-Income Housing Credit|
|.04 Alternative Minimum Tax Exemption for a|
Child Subject to the "Kiddie Tax"
|.05 Transportation Mainline Pipeline Construction|
Industry Optional Expense Substantiation Rules
for Payments to Employees under Accountable
|.06 Income from United States Savings Bonds for|
Taxpayers Who Pay Qualified Higher
|.07 Private Activity Bonds Volume Cap|
|.08 Loan Limits on Agricultural Bonds|
|.09 General Arbitrage Rebate Rules|
|.10 Safe Harbor Rules for Broker Commissions|
on Guaranteed Investment Contracts or
Investments Purchased for a Yield
Restricted Defeasance Escrow
|.11 Eligible Long-Term Care Premiums|
|.12 Medical Savings Accounts|
|.13 Treatment of Dues Paid to Agricultural|
or Horticultural Organizations
|.14 Insubstantial Benefit Limitations for|
Contributions Associated With Charitable
|.15 Expatriation to Avoid Tax|
|.16 Tax Responsibilities of Expatriation|
|.17 Foreign Earned Income Exclusion|
|.18 Valuation of Qualified Real Property in|
Decedent's Gross Estate
|.19 Annual Exclusion for Gifts|
|.20 Tax on Arrow Shafts|
|.21 Passenger Air Transportation Excise Tax|
|.22 Reporting Exception for Certain Exempt|
Organizations with Nondeductible Lobbying
|.23 Notice of Large Gifts Received from|
|.24 Persons Against Whom a Federal Tax Lien Is|
|.25 Property Exempt from Levy|
|.26 Interest on a Certain Portion of the|
Estate Tax Payable in Installments
|.27 Attorney Fee Awards|
|.28 Periodic Payments Received under|
Qualified Long-Term Care Insurance Contracts
or under Certain Life Insurance Contracts
SECTION 4. EFFECTIVE DATE
SECTION 5. DRAFTING INFORMATION
SECTION 1. PURPOSE
This revenue procedure sets forth inflation-adjusted items for 2013.
SECTION 2. CHANGES
This revenue procedure does not include the following items: the tax rate tables under § 1 of the Internal Revenue Code (Code), the adoption credit under § 23, the child tax credit under § 24, the Hope Scholarship and Lifetime Learning Credits under § 25A, the earned income credit under § 32, the standard deduction under § 63, the overall limitation on itemized deductions under § 68, the qualified transportation fringe benefit under § 132(f), the adoption assistance exclusion under § 137, the personal exemption under § 151, the election to expense certain depreciable assets under § 179, the interest on education loans under § 221, and the unified credit against estate tax for estates of decedents under § 2010(c). Those items will be addressed in future guidance.
SECTION 3. 2013 ADJUSTED ITEMS
.01 Unearned Income of Minor Children Taxed as if Parent's Income (the "Kiddie Tax"). For taxable years beginning in 2013, the amount in § 1(g)(4)(A)(ii)(I), which is used to reduce the net unearned income reported on the child's return that is subject to the "kiddie tax," is $1,000. This $1,000 amount is the same as the amount provided in § 63(c)(5)(A), as adjusted for inflation. The same $1,000 amount is used for purposes of § 1(g)(7) (that is, to determine whether a parent may elect to include a child's gross income in the parent's gross income and to calculate the "kiddie tax"). For example, one of the requirements for the parental election is that a child's gross income is more than the amount referenced in § 1(g)(4)(A)(ii)(I) but less than 10 times that amount; thus, a child's gross income for 2013 must be more than $1,000 but less than $10,000.
.02 Rehabilitation Expenditures Treated as Separate New Building. For calendar year 2013, the per low-income unit qualified basis amount under § 42(e)(3)(A)(ii)(II) is $6,400.
.03 Low-Income Housing Credit. For calendar year 2013, the amount used under § 42(h)(3)(C)(ii) to calculate the State housing credit ceiling for the low-income housing credit is the greater of (1) $2.25 multiplied by the State population, or (2) $2,590,000.
.04 Alternative Minimum Tax Exemption for a Child Subject to the "Kiddie Tax." For taxable years beginning in 2013, for a child to whom the § 1(g) "kiddie tax" applies, the exemption amount under §§ 55 and 59(j) for purposes of the alternative minimum tax under § 55 may not exceed the sum of (1) the child's earned income for the taxable year, plus (2) $7,150.
.05 Transportation Mainline Pipeline Construction Industry Optional Expense Substantiation Rules for Payments to Employees under Accountable Plans. For calendar year 2013, an eligible employer may pay certain welders and heavy equipment mechanics an amount of up to $17 per hour for rig-related expenses that is deemed substantiated under an accountable plan if paid in accordance with Rev. Proc. 2002-41, 2002-1 C.B. 1098. If the employer provides fuel or otherwise reimburses fuel expenses, up to $10 per hour is deemed substantiated if paid under Rev. Proc. 2002-41.
.06 Income from United States Savings Bonds for Taxpayers Who Pay Qualified Higher Education Expenses. For taxable years beginning in 2013, the exclusion under § 135, regarding income from United States savings bonds for taxpayers who pay qualified higher education expenses, begins to phase out for modified adjusted gross income above $112,050 for joint returns and $74,700 for other returns. The exclusion is completely phased out for modified adjusted gross income of $142,050 or more for joint returns and $89,700 or more for other returns.
.07 Private Activity Bonds Volume Cap. For calendar year 2013, the amounts used under § 146(d)(1) to calculate the State ceiling for the volume cap for private activity bonds is the greater of (1) $95 multiplied by the State population, or (2) $291,875,000.
.08 Loan Limits on Agricultural Bonds. For calendar year 2013, the loan limit amount on agricultural bonds under § 147(c)(2)(A) for first-time farmers is $501,100.
.09 General Arbitrage Rebate Rules. For bond years ending in 2013, the amount of the computation credit determined under the permission to rely on § 1.148-3(d)(4) of the proposed Income Tax Regulations is $1,590.
.10 Safe Harbor Rules for Broker Commissions on Guaranteed Investment Contracts or Investments Purchased for a Yield Restricted Defeasance Escrow. For calendar year 2013, under § 1.148-5(e)(2)(iii)(B)(1), a broker's commission or similar fee for the acquisition of a guaranteed investment contract or investments purchased for a yield restricted defeasance escrow is reasonable if (1) the amount of the fee that the issuer treats as a qualified administrative cost does not exceed the lesser of (A) $37,000, and (B) 0.2 percent of the computational base (as defined in § 1.148-5(e)(2)(iii)(B)(2)) or, if more, $4,000; and (2) the issuer does not treat more than $106,000 in brokers' commissions or similar fees as qualified administrative costs for all guaranteed investment contracts and investments for yield restricted defeasance escrows purchased with gross proceeds of the issue.
.11 Eligible Long-Term Care Premiums. For taxable years beginning in 2013, the limitations under § 213(d)(10), regarding eligible long-term care premiums includible in the term "medical care," are as follows:
|Attained Age Before the|
Close of the Taxable Year
|Limitation on Premiums|
|40 or less || $360|
|More than 40 but not more than 50|| $680|
|More than 50 but not more than 60|| $1,360|
|More than 60 but not more than 70|| $3,640|
|More than 70 || $4,550|
.12 Medical Savings Accounts.
(1) Self-only coverage. For taxable years beginning in 2013, the term "high deductible health plan" as defined in § 220(c)(2)(A) means, for self-only coverage, a health plan that has an annual deductible that is not less than $2,150 and not more than $3,200, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $4,300.
(2) Family coverage. For taxable years beginning in 2013, the term "high deductible health plan" means, for family coverage, a health plan that has an annual deductible that is not less than $4,300 and not more than $6,450, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $7,850.
.13 Treatment of Dues Paid to Agricultural or Horticultural Organizations. For taxable years beginning in 2013, the limitation under § 512(d)(1), regarding the exemption of annual dues required to be paid by a member to an agricultural or horticultural organization, is $155.
.14 Insubstantial Benefit Limitations for Contributions Associated with Charitable Fund-Raising Campaigns.
(1) Low cost article. For taxable years beginning in 2013, for purposes of defining the term "unrelated trade or business" for certain exempt organizations under § 513(h)(2), "low cost articles" are articles costing $10.20 or less.
(2) Other insubstantial benefits. For taxable years beginning in 2013, under § 170, the $5, $25, and $50 guidelines in section 3 of Rev. Proc. 90-12, 1990-1 C.B. 471 (as amplified by Rev. Proc. 92-49, 1992-1 C.B. 987, and modified by Rev. Proc. 92-102, 1992-2 C.B. 579), for the value of insubstantial benefits that may be received by a donor in return for a contribution, without causing the contribution to fail to be fully deductible, are $10.20, $51, and $102, respectively.
.15 Expatriation to Avoid Tax. For calendar year 2013, an individual with "average annual net income tax" of more than $155,000 for the five taxable years ending before the date of the loss of United States citizenship under § 877(a)(2)(A) is a covered expatriate for purposes of § 877A(g)(1).
.16 Tax Responsibilities of Expatriation. For taxable years beginning in 2013, the amount that would be includible in the gross income of a covered expatriate by reason of § 877A(a)(1) is reduced (but not below zero) by $668,000.
.17 Foreign Earned Income Exclusion. For taxable years beginning in 2013, the foreign earned income exclusion amount under § 911(b)(2)(D)(i) is $97,600.
.18 Valuation of Qualified Real Property in Decedent's Gross Estate. For an estate of a decedent dying in calendar year 2013, if the executor elects to use the special use valuation method under § 2032A for qualified real property, the aggregate decrease in the value of qualified real property resulting from electing to use § 2032A for purposes of the estate tax cannot exceed $1,070,000.
.19 Annual Exclusion for Gifts.
(1) For calendar year 2013, the first $14,000 of gifts to any person (other than gifts of future interests in property) are not included in the total amount of taxable gifts under § 2503 made during that year.
(2) For calendar year 2013, the first $143,000 of gifts to a spouse who is not a citizen of the United States (other than gifts of future interests in property) are not included in the total amount of taxable gifts under §§ 2503 and 2523(i)(2) made during that year.
.20 Tax on Arrow Shafts. For calendar year 2013, the tax imposed under § 4161(b)(2)(A) on the first sale by the manufacturer, producer, or importer of any shaft of a type used in the manufacture of certain arrows is $0.48 per shaft.
.21 Passenger Air Transportation Excise Tax. For calendar year 2013, the tax under § 4261(b)(1) on the amount paid for each domestic segment of taxable air transportation is $3.90. For calendar year 2013, the tax under § 4261(c)(1) on any amount paid (whether within or without the United States) for any international air transportation, if the transportation begins or ends in the United States, generally is $17.20. Under § 4261(c)(3), however, a lower amount applies under § 4261(c)(1) to a domestic segment beginning or ending in Alaska or Hawaii, and the tax applies only to departures. For calendar year 2013, the rate is $8.60.
.22 Reporting Exception for Certain Exempt Organizations with Nondeductible Lobbying Expenditures. For taxable years beginning in 2013, the annual per person, family, or entity dues limitation to qualify for the reporting exception under § 6033(e)(3) (and section 5.05 of Rev. Proc. 98-19, 1998-1 C.B. 547), regarding certain exempt organizations with nondeductible lobbying expenditures, is $108 or less.
.23 Notice of Large Gifts Received from Foreign Persons. For taxable years beginning in 2013, § 6039F authorizes the Treasury Department and the Internal Revenue Service to require recipients of gifts from certain foreign persons to report these gifts if the aggregate value of gifts received in the taxable year exceeds $15,102.
.24 Persons Against Whom a Federal Tax Lien Is Not Valid. For calendar year 2013, a federal tax lien is not valid against (1) certain purchasers under § 6323(b)(4) who purchased personal property in a casual sale for less than $1,470, or (2) a mechanic's lienor under § 6323(b)(7) who repaired or improved certain residential property if the contract price with the owner is not more than $7,350.
.25 Property Exempt from Levy. For calendar year 2013, the value of property exempt from levy under § 6334(a)(2) (fuel, provisions, furniture, and other household personal effects, as well as arms for personal use, livestock, and poultry) cannot exceed $8,790. The value of property exempt from levy under § 6334(a)(3) (books and tools necessary for the trade, business, or profession of the taxpayer) cannot exceed $4,400.
.26 Interest on a Certain Portion of the Estate Tax Payable in Installments. For an estate of a decedent dying in calendar year 2013, the dollar amount used to determine the "2-percent portion" (for purposes of calculating interest under § 6601(j)) of the estate tax extended as provided in § 6166 is $1,430,000.
.27 Attorney Fee Awards. For fees incurred in calendar year 2013, the attorney fee award limitation under § 7430(c)(1)(B)(iii) is $190 per hour.
.28 Periodic Payments Received under Qualified Long-Term Care Insurance Contracts or under Certain Life Insurance Contracts. For calendar year 2013, the stated dollar amount of the per diem limitation under § 7702B(d)(4), regarding periodic payments received under a qualified long-term care insurance contract or periodic payments received under a life insurance contract that are treated as paid by reason of the death of a chronically ill individual, is $320.
SECTION 4. EFFECTIVE DATE
.01 General Rule. Except as provided in section 4.02, this revenue procedure applies to taxable years beginning in 2013.
.02 Calendar Year Rule. This revenue procedure applies to transactions or events occurring in calendar year 2013 for purposes of sections 3.02 (rehabilitation expenditures treated as separate new building), 3.03 (low-income housing credit), 3.05 (transportation mainline pipeline construction industry optional expense substantiation rules for payments to employees under accountable plans), 3.07 (private activity bonds volume cap), 3.08 (loan limits on agricultural bonds), 3.09 (general arbitrage rebate rules), 3.10 (safe harbor rules for broker commissions on guaranteed investment contracts or investments purchased for a yield restricted defeasance escrow), 3.15 (expatriation to avoid tax), 3.18 (valuation of qualified real property in decedent's gross estate), 3.19 (annual exclusion for gifts), 3.20 (tax on arrow shafts), 3.21 (passenger air transportation excise tax), 3.24 (persons against whom a federal tax lien is not valid), 3.25 (property exempt from levy), 3.26 (interest on a certain portion of the estate tax payable in installments), 3.27 (attorney fee awards), and 3.28 (periodic payments received under qualified long-term care insurance contracts or under certain life insurance contracts).
SECTION 5. DRAFTING INFORMATION
The principal author of this revenue procedure is William Ruane of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure, contact Mr. Ruane at (202) 622-4920 (not a toll-free call).