Source: https://fairviewfundadmin.com/category/ptptax/
Timestamp: 2019-04-26 03:49:04+00:00

Document:
This letter responds to a letter dated August 22, 2011, submitted on behalf of Company, requesting that income derived from treasury locks, interest rate swaps, and forward-rate interest swaps is qualifying income within the meaning of § 7704(d)(1) of the Internal Revenue Code.
Company is a publicly-traded limited partnership organized under the laws of State. Company has not elected to be taxed as an association for federal tax purposes. Company conducts its business through affiliated operating limited partnerships and limited liability companies that are disregarded entities or partnerships for federal tax purposes.
Company’s capital structure includes both fixed and floating rate debt. At a given time, Company may determine that market conditions favor paying a floating rate when it has a fixed rate debt outstanding. At other times, Company may determine that market conditions favor paying a fixed rate when it has a floating rate debt outstanding.
In either case, Company may engage in an interest rate swap.
To obtain a cash flow at a floating rate in exchange for one at a fixed rate, Company will agree to pay to an unrelated party, typically a financial institution, a fixed interest rate on a notional principal amount.
In return, the counterparty agrees to pay Company a floating index rate, determined by reference to some established index, on the notional principal amount. If the index rate for a given month exceeds the fixed rate, the counterparty owes Company an amount equal to the excess interest rate multiplied by the notional principal amount. If, however, the fixed rate exceeds the index rate in a month, Company owes the counterparty. Amounts owing are netted at settlement, which occurs at the end of the interest rate swap’s term.
Exchanging a floating rate cash flow for a fixed rate flow operates in a similar manner, except that Company will pay the counterparty a floating interest rate on a notional principal amount, and it will receive fixed rate payments in return.
As an alternative to interest rate swaps, Company may desire to lock in a current rate with respect to a future issuance, in which case, one of its available options is to enter into a forward-start interest rate swap. To lock in a spot interest rate for a period prior to the issuance of its fixed-debt securities (a forward lock), Company will agree to pay a counterparty a fixed interest rate on a notional principal amount. The counterparty, typically a financial institution, would agree to pay Company an amount equal to a floating index rate, determined by reference to some established index, multiplied by the notional principal amount for a fixed period that begins on the date of the anticipated debt issuance. If the index rate exceeds the fixed interest rate on the date of issuance of the debt securities, the counterparty owes Company an amount equal to the excess of the excess interest rate multiplied by the notional principal amount over the term of the forward lock.
Converting an expected floating-rate debt securities offering into a fixed rate instrument operates in a similar manner as exchanging a floating rate cash flow for a fixed rate flow, except its effective date is in the future because its term coincides with an expected floating-rate debt issuance and not an existing floating-rate debt issuance.
In some cases, the treasury locks, interest rate swaps, and forward-start interest rate swaps entered into by Company may be integrated with the related debt instruments under § 1.1275-6 of the Income Tax Regulations. Company is requesting a ruling to apply only where a treasury lock, interest rate swap, or forward-rate interest swap can not be so integrated.
This letter responds to a letter dated February 8, 2011, submitted on behalf of X, requesting a ruling under § 7704(d)(1)(E) of the Internal Revenue Code.
X is a limited liability company organized under the laws of State. X intends to form a publicly-traded partnership either by creating a new entity or by consummating an initial public offering itself, hereinafter Partnership. The interests in Partnership will be listed and traded on a nationally recognized exchange.
In some cases, Partnership ———————for its own account for use as a feedstock in ————————–. Partnership owns an interest in or is in the process of constructing ——————–facilities, where the ————————are ————————. Partnership also transports, stores, markets and distributes ————————–. Partnership owns a direct or indirect interest in or is in the process of constructing ————————————–. Partnership markets —————.
X requests a ruling that income derived from processing ————– and transporting, storing, marketing and distributing ————————-will constitute qualifying income under § 7704(d)(1)(E).
the Internal Revenue Code (the Code).
This letter responds to a letter dated December 29, 2010, and supplemental correspondence, submitted by Taxpayer requesting rulings under § 168(k) of the Internal Revenue Code.
Parent is engaged in the industrial gas business with worldwide operations. The industrial gas business involves separating the atmosphere into its component parts through cryogenic and high pressure processes and delivering the resulting gases to customers.
Taxpayer is a limited partnership. For federal income tax purposes, Taxpayer is a disregarded entity that is included in Parent’s consolidated federal income tax return.
Taxpayer is responsible for providing service to large industry customers in the United States.
Taxpayer offers gas and energy solutions to these customers to improve their process efficiency and help them with their environmental responsibilities. In the United States, this business serves the refining, natural gas, chemical, and metals industries.
In connection with its business in the United States, Taxpayer operates a network of plants and an extensive pipeline system along the Location2 and the Location3.
Taxpayer separates the components of the atmosphere at its plants and transports the resulting gases to its customers via a network of pipelines.
Taxpayer generally constructs and/or acquires plant and pipeline assets in order to satisfy the requirements of specific customers and contracts.
Depending on a customer’s geographic location and the availability of plant and pipeline resources, Taxpayer has a variety of options regarding the method by which it provides the gases to a customer.
Taxpayer may choose to construct a plant at or near a customer’s location to supply the desired product or it may extend existing pipeline or plant resources to a customer location to supply the product.
“Board members need to take heed that the Dodd-Frank Act isn’t all about financial services companies. In fact, they now have to consider a buried provision in the law that will have a big impact on any company selling products that could contain conflict minerals.
This letter responds to a letter from your authorized representative dated April 6, 2011, submitted on behalf of X, requesting a ruling concerning the qualifying income exception to the publicly traded partnership rules of § 7704 of the Internal Revenue Code. X is a limited partnership organized under the laws of State. X, through affiliated operating limited partnerships, limited liability companies or disregarded entities, will earn income from providing services to customers engaged in the exploration for, and the development and production of, oil and natural gas. Specifically, X will earn income from the supply, transportation and storage of fractionation fluid and other fluids for oil and natural gas wells, including any associated fractionation fluid heating services. X will also earn income from the subsequent removal, treatment and disposal of fracturing flowback and produced water, including, as part of its fluid handling services, the provision of frac tanks and transportation services.
This letter responds to a letter dated November 11, 2010, from Taxpayer’s representative requesting permission, pursuant to §§ 301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations for an extension of time to make an election under § 263(c) of the Internal Revenue Code for the taxable years ending Date 1 and Date 2.
According to the information submitted, Taxpayer is a privately owned corporation organized under the laws of State on Year 1. Taxpayer is a wholly owned subsidiary of Parent, a non-U.S. corporation.
Taxpayer engages in oil and gas exploration and production throughout the United States. Taxpayer first incurred intangible drilling and development costs (IDCs) in Year 1, and continued to incur IDCs in Year 2. Because Taxpayer did not have an in-house corporate tax department Taxpayer hired an independent tax preparer to file its Year 1 tax return. Unfortunately, the tax preparer did not have experience or knowledge with respect to oil and gas operations and the taxation thereof. As a result, the tax preparer was unaware of the option to elect to currently expense IDCs on Taxpayer’s income tax return for the first tax year that IDCs are incurred and did not inform Taxpayer of this option. Consequently, Taxpayer did not make a timely election to currently expense IDCs on Taxpayer’s Year 1 tax return.
In Year 3, Taxpayer engaged an accounting firm to perform a review of the tax accounting for its oil and gas operations. During that review, the accounting firm discovered that Taxpayer had not elected to currently expense IDCs related to oil and gas operations in Year 1. The accounting firm advised Taxpayer to submit a request for relief under § 301.9100-1 for an extension of time to make the election under § 263(c). This request is being made pursuant to such advice.
Taxpayer represents that had it been aware of the ability to currently deduct IDCs, and the need to make an election to deduct such costs on the return for the first taxable year in which it incurred these costs, Taxpayer would have timely made this election on the Year 1 tax return.
This Chief Counsel Advice responds to your request for assistance as to whether the Taxpayer properly applied mark-to-market treatment under section 475(e) to certain portions of a certain contractual Agreement. We are generally in agreement with your conclusions and analysis in the incoming request, and as such, we are only focusing our analysis on areas where we have some differences or those areas which may require further development. This advice may not be used or cited as precedent.

References: § 7704
 § 1
 § 7704
 § 7704
 § 168
 § 7704
 § 263
 § 301
 § 263