Part III

Administrative, Procedural, and Miscellaneous

26 CFR 601.602: Tax forms and instructions.

(Also Part I, §§ 1, 23, 24, 25A, 32, 42, 59, 62, 63, 132, 135, 137, 146, 147, 148, 151, 179, 213, 220, 221, 512, 513, 877, 877A, 911, 2010, 2032A, 2503, 2523, 4161, 4261, 6033, 6039F, 6323, 6334, 6601, 7430, 7702B; 1.148-5.)

Rev. Proc. 2011-52

Table of Contents

SECTION 1. PURPOSE

SECTION 2. CHANGES

SECTION 3. 2012 ADJUSTED ITEMS

.01 Tax Rate Tables

.02 Unearned Income of Minor Children Taxed as if Parent’s

Income ("Kiddie Tax")

.03 Adoption Credit

.04 Child Tax Credit

.05 Hope Scholarship, American Opportunity, and Lifetime

Learning Credits

.06 Earned Income Credit 1(a)-(e) 1(g) 23 24 25A 32

.07 Rehabilitation Expenditures Treated as Separate New Building

.08 Low-Income Housing Credit

.09 Alternative Minimum Tax Exemption for a Child Subject to the

“Kiddie Tax”

.10 Transportation Mainline Pipeline Construction Industry Optional

Expense Substantiation Rules for Payments to Employees under

Accountable Plans

.11 Standard Deduction

.12 Qualified Transportation Fringe Benefit

.13 Income from United States Savings Bonds for Taxpayers Who

Pay Qualified Higher Education Expenses

.14 Adoption Assistance Programs

.15 Private Activity Bonds Volume Cap

.16 Loan Limits on Agricultural Bonds

.17 General Arbitrage Rebate Rules

.18 Safe Harbor Rules for Broker Commissions on Guaranteed

Investment Contracts or Investments Purchased for a Yield

Restricted Defeasance Escrow

.19 Personal Exemption

.20 Election to Expense Certain Depreciable Assets

.21 Eligible Long-Term Care Premiums

.22 Medical Savings Accounts

.23 Interest on Education Loans

.24 Treatment of Dues Paid to Agricultural or Horticultural

Organizations 42(e) 42(h) 59(j) 62(c) 63 132(f) 135 137 146(d) 147(c)(2) 148(f) 148 151 179 213(d)(10) 220 221 512(d)

.25 Insubstantial Benefit Limitations for Contributions Associated

with Charitable Fund-Raising Campaigns

.26 Expatriation to Avoid Tax

.27 Tax Responsibilities of Expatriation

.28 Foreign Earned Income Exclusion

.29 Unified Credit Against Estate Tax

.30 Valuation of Qualified Real Property in Decedent's Gross Estate

.31 Annual Exclusion for Gifts

.32 Tax on Arrow Shafts

.33 Passenger Air Transportation Excise Tax

.34 Reporting Exception for Certain Exempt Organizations with

Nondeductible Lobbying Expenditures

.35 Notice of Large Gifts Received from Foreign Persons

.36 Persons Against Whom a Federal Tax Lien Is Not Valid

.37 Property Exempt from Levy

.38 Interest on a Certain Portion of the Estate Tax Payable

in Installments

.39 Attorney Fee Awards

.40 Periodic Payments Received under Qualified Long-Term Care

Insurance Contracts or under Certain Life Insurance Contracts

SECTION 4. EFFECTIVE DATE

SECTION 5. DRAFTING INFORMATION

513(h) 877 877A 911 2010 2032A 2503; 2523 4161 4261 6033(e)(3) 6039F 6323 6334 6601(j) 7430 7702B(d)

SECTION 1. PURPOSE

This revenue procedure sets forth inflation adjusted items for 2012.

SECTION 2. CHANGES

.01 Sections 10909(a)(1) and (b) of the Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, 124 Stat. 119 (PPACA)), and § 101(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, H.R. 4853, Pub. L. No. 111-312, 124 Stat. 3296 (TRUIRJCA), temporarily designated § 23 of the Code as § 36C. As designated, § 36C provides a temporary refundable adoption credit, and an increase in the maximum adoption credit from $10,000 (as adjusted for inflation under former § 23(h)) to $13,170, for taxable years beginning after December 31, 2009, and before January 1, 2012. For taxable years beginning after December 31, 2011, these temporary changes no longer apply. Accordingly, for taxable years beginning after December 31, 2011, the credit is redesignated as § 23 and is no longer

refundable. In addition, the maximum adoption credit is $10,000, as adjusted for inflation. (See section 3.03 of this revenue procedure.)

.02 Section 1151 of the American Recovery and Reinvestment Tax Act of 2009, Tit. I of Div. B of Pub. L. No. 111-5, 123 Stat. 115, and § 727(a) of TRUIRJCA amended § 132(f)(2) of the Code to temporarily increase the amount excludable from gross income for certain employer-provided transportation fringe benefits. For months

beginning after February 17, 2009, and before January 1, 2012, the monthly limitation under § 132(f)(2)(A) for transportation in a commuter highway vehicle and any transit pass is the same as the amount in effect under § 132(f)(2)(B) for qualified parking. For

months beginning after December 31, 2011, the temporary increase no longer applies. Accordingly, the monthly limitation under § 132(f)(2)(A) is $100, as adjusted for inflation. (See section 3.12 of this revenue procedure.)

.03 Section 10909(a)(2) of PPACA and § 101(a) of TRUIRJCA amended § 137(a)(2) and (b)(1) of the Code to temporarily increase the maximum adoption assistance exclusion from $10,000 (as adjusted for inflation) to $13,170, for taxable years beginning after December 31, 2009, and before January 1, 2012. Accordingly, for taxable years beginning after December 31, 2011, the maximum exclusion is $10,000, as adjusted for inflation. (See section 3.14 of this revenue procedure).

.04 Section 402 of TRUIRJCA amended § 179(b)(1) and (2) of the Code to provide that the dollar limitation for the aggregate cost of § 179 property that a taxpayer may elect to expense is $125,000, and that dollar amount is reduced by the amount the cost of all § 179 property placed into service during the taxable year exceeds $500,000. For taxable years beginning in 2012, these amounts are adjusted for inflation. Accordingly, these amounts are included in this revenue procedure. (See section 3.20 of this revenue procedure.)

.05 Section 303 of TRUIRJCA amended § 2010(c) of the Code to provide that the basic exclusion amount for determining the amount of the unified credit against estate tax for estates of decedents dying after December 31, 2009, is $5,000,000. For taxable years beginning after December 31, 2011, this $5,000,000 amount is adjusted for

inflation. Accordingly, this amount is included in this revenue procedure. (See section

3.29 of this revenue procedure.)

.06 Section 202(b)(1) of the Surface and Air Transportation Programs Extension Act of 2011, Pub. L. No. 112-30, 125 Stat. 342, amended § 4261(j)(1)(A)(ii) of the Code (which governs the period of applicability of § 4261(b)(1), (c)(1), and (c)(3)). The effect of that amendment is to temporarily extend the passenger air transportation excise taxes of $3.00 for domestic travel, $12.00 for international travel, and $6.00 for departures beginning or ending in Alaska or Hawaii. These excise taxes apply to

transportation taken through January 31, 2012. In addition, these excise taxes apply to amounts paid on or before January 31, 2012, for transportation taken after that date. The $3.00, $12.00, and $6.00 amounts are adjusted for inflation. Accordingly, these amounts are included in this revenue procedure. (See section 3.33 of this revenue procedure.)

SECTION 3. 2012 ADJUSTED ITEMS § 1 are as follows:

TABLE 1 - Section 1(a) - Married Individuals Filing Joint Returns and Surviving Spouses Not over $17,400

Over $17,400 but

not over $70,700

Over $70,700 but

not over $142,700

Over $142,700 but

not over $217,450 10% of the taxable income $1,740 plus 15% of the excess over $17,400 $9,735 plus 25% of the excess over $70,700 $27,735 plus 28% of the excess over $142,700

Over $217,450 but

not over $388,350

Over $388,350

- 7 - $48,665 plus 33% of the excess over $217,450 $105,062 plus 35% of the excess over $388,350

TABLE 2 - Section 1(b) – Heads of Households Not over $12,400

Over $12,400 but

not over $47,350

Over $47,350 but

not over $122,300

Over $122,300 but

not over $198,050

Over $198,050 but

not over $388,350

Over $388,350

10% of the taxable income $1,240 plus 15% of the excess over $12,400 $6,482.50 plus 25% of the excess over $47,350 $25,220 plus 28% of the excess over $122,300 $46,430 plus 33% of the excess over $198,050 $109,229 plus 35% of the excess over $388,350

TABLE 3 - Section 1(c) – Unmarried Individuals (other than Surviving Spouses and Heads of Households) Not over $8,700

Over $8,700 but

not over $35,350

Over $35,350 but

not over $85,650

Over $85,650 but

not over $178,650

Over $178,650 but 10% of the taxable income $870 plus 15% of the excess over $8,700 $4,867.50 plus 25% of the excess over $35,350 $17,442.50 plus 28% of the excess over $85,650 $43,482.50 plus 33% of

not over $388,350

Over $388,350

- 8 - the excess over $178,650 $112,683.50 plus 35% of the excess over $388,350

TABLE 4 - Section 1(d) – Married Individuals Filing Separate Returns Not over $8,700

Over $8,700 but

not over $35,350

Over $35,350 but

not over $71,350

Over $71,350 but

not over $108,725

Over $108,725 but

not over $194,175

Over $194,175

10% of the taxable income $870 plus 15% of the excess over $8,700 $4,867.50 plus 25% of the excess over $35,350 $13,867.50 plus 28% of the excess over $71,350 $24,332.50 plus 33% of the excess over $108,725 $52,531 plus 35% of the excess over $194,175

TABLE 5 - Section 1(e) – Estates and Trusts Not over $2,400

Over $2,400 but

not over $5,600

Over $5,600 but

not over $8,500

Over $8,500 but

not over $11,650

Over $11,650

15% of the taxable income $360 plus 25% of the excess over $2,400 $1,160 plus 28% of the excess over $5,600 $1,972 plus 33% of the excess over $8,500 $3,011.50 plus 35% of the excess over $11,650

used to reduce the net unearned income reported on the child's return that is subject to the "kiddie tax," is $950. This amount is the same as the $950 standard deduction

amount provided in section 3.11(2) of this revenue procedure. The same $950 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 2012 must be more than $950 but less than $9,500. allowed for an adoption of a child with special needs is $12,650. For taxable years beginning in 2012, under § 23(b)(1) the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $12,650. The available adoption credit begins to phase out under § 23(b)(2)(A) for taxpayers with modified adjusted gross

income in excess of $189,710 and is completely phased out for taxpayers with modified adjusted gross income of $229,710 or more. (See section 3.14 of this revenue procedure for the adjusted items relating to adoption assistance programs.) § 24(d)(1)(B)(i) to determine the amount of credit under § 24 that may be refundable is $3,000.

(1) For taxable years beginning in 2012, the Hope Scholarship Credit under

§ 25A(b)(1), as increased under § 25A(i) (the American Opportunity Tax Credit), is an amount equal to 100 percent of qualified tuition and related expenses not in excess of $2,000, plus 25 percent of those expenses in excess of $2,000, but not in excess of $4,000. Accordingly, the maximum Hope Scholarship Credit allowable under § 25A(b)(1) for taxable years beginning in 2012 is $2,500.

(2) For taxable years beginning in 2012, a taxpayer's modified adjusted gross income in excess of $80,000 ($160,000 for a joint return) is used to determine the reduction under § 25A(d)(2) in the amount of the Hope Scholarship Credit otherwise allowable under § 25A(a)(1). For taxable years beginning in 2012, a taxpayer's modified adjusted gross income in excess of $52,000 ($104,000 for a joint return) is used to determine the reduction under § 25A(d)(2) in the amount of the Lifetime Learning Credit otherwise allowable under § 25A(a)(2). to determine the earned income credit under § 32(b). The "earned income amount" is the amount of earned income at or above which the maximum amount of the earned income credit is allowed. The "threshold phaseout amount" is the amount of adjusted gross income (or, if greater, earned income) above which the maximum amount of the credit begins to phase out. The "completed phaseout amount" is the amount of adjusted gross income (or, if greater, earned income) at or above which no credit is

allowed. The threshold phaseout amounts and the completed phaseout amounts

shown in the table below for married taxpayers filing a joint return include the increase provided in § 32(b)(3)(B)(i), as adjusted for inflation for taxable years beginning in 2012. Earned Income

Amount

Maximum Amount

of Credit

Threshold Phaseout

Amount (Single,

Surviving Spouse, or

Head of Household)

Completed Phaseout

Amount (Single,

Surviving Spouse, or

Head of Household) $9,320 $13,090 $13,090 $6,210 $3,169 $5,236 $5,891 $475 $17,090 $7,770 $17,090 $17,090 $36,920 $41,952 $45,060 $13,980

Threshold Phaseout $22,300 $22,300

Amount (Married Filing

Jointly)

Completed Phaseout $42,130 $47,162

Amount (Married Filing

Jointly)

$22,300 $12,980 $50,270 $19,190

The instructions for the Form 1040 series provide tables showing the amount of the earned income credit for each type of taxpayer. income tax credit is not allowed under § 32(i) if the aggregate amount of certain investment income exceeds $3,200.

2012, the per low-income unit qualified basis amount under § 42(e)(3)(A)(ii)(II) is $6,200. § 42(h)(3)(C)(ii) to calculate the State housing credit ceiling for the low-income housing credit is the greater of (1) $2.20 multiplied by the State population, or (2) $2,525,000. taxable years beginning in 2012, 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) $6,950. calendar year 2012, an eligible employer may pay certain welders and heavy equipment mechanics an amount of up to $16 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. amounts under § 63(c)(2) are as follows:

Married Individuals Filing Joint Returns

and Surviving Spouses (§ 1(a))

Heads of Households (§ 1(b))

Unmarried Individuals (other than Surviving Spouses

and Heads of Households) (§ 1(c))

Married Individuals Filing Separate

Returns (§ 1(d)) $11,900 $8,700 $5,950 $5,950

amount under § 63(c)(5) for an individual who may be claimed as a dependent by

another taxpayer cannot exceed the greater of (1) $950, or (2) the sum of $300 and the individual's earned income. deduction amount under § 63(f) for the aged or the blind is $1,150. These amounts are increased to $1,450 if the individual is also unmarried and not a surviving spouse. monthly limitation under § 132(f)(2)(A), regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass, is $125. The monthly limitation under § 132(f)(2)(B), regarding the fringe benefit exclusion amount for qualified parking, is $240. § 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 $109,250 for joint returns and $72,850 for other returns. The exclusion is

completely phased out for modified adjusted gross income of $139,250 or more for joint returns and $87,850 or more for other returns. § 137(a)(2) the amount that can be excluded from an employee’s gross income for the adoption of a child with special needs is $12,650. For taxable years beginning in 2012, under § 137(b)(1) the maximum amount that can be excluded from an employee’s gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program for other adoptions by the employee is $12,650. The amount excludable from an employee’s gross income begins to phase out under § 137(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $189,710 and is completely phased out for taxpayers with modified adjusted gross income of $229,710 or more. (See section 3.03 of this revenue procedure for the adjusted items relating to the adoption credit.) 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) $284,560,000. on agricultural bonds under § 147(c)(2)(A) for first-time farmers is $488,600. the computation credit determined under permission to rely on § 1.148-3(d)(4) of the proposed Income Tax Regulations is $1,550.

year 2012, 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 $103,000 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. exemption amount under § 151(d) is $3,800. 2012, under § 179(b)(1)(C) the aggregate cost of any § 179 property a taxpayer may elect to treat as an expense cannot exceed $139,000. Under § 179(b)(2)(C), the $139,000 limitation is reduced (but not below zero) by the amount the cost of § 179 property placed in service during the 2012 taxable year exceeds $560,000. limitations under § 213(d)(10), regarding eligible long-term care premiums includible in the term "medical care," are as follows: 40 or less $350

More than 40 but not more than 50

More than 50 but not more than 60

More than 60 but not more than 70

More than 70

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 $2,100 and not more than $3,150, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $4,200. health plan" means, for family coverage, a health plan that has an annual deductible that is not less than $4,200 and not more than $6,300, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $7,650. maximum deduction for interest paid on qualified education loans under § 221 begins to phase out under § 221(b)(2)(B) for taxpayers with modified adjusted gross income in excess of $60,000 ($125,000 for joint returns), and is completely phased out for

taxpayers with modified adjusted gross income of $75,000 or more ($155,000 or more for joint returns). $660 $1,310 $3,500 $4,370