internal_revenue_service number release date index number ------------------------ -------------------------- --------------------------- --------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------- id no ----------------- telephone number --------------------- refer reply to cc psi b01 plr-137337-11 date march legend x a_trust trust date date date state dear ----------------- -------------------------- ------------------------- -------------------------- ---------------------------- -------------------------- -------------------------------- -------------------------- ------------------------- ---------------------- -------------------------- ------------------ this responds to a letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representative requesting relief under sec_1362 of the internal_revenue_code the code facts plr-137337-11 according to the information submitted and representations within x was incorporated on date under the laws of state effective date x elected to be treated as an s_corporation on date a transferred shares of x to trust and trust x represents that trust and trust have at all times met the requirements of an electing_small_business_trust esbt except that the trustees of trust and trust did not make timely esbt elections under sec_1361 x represents that x and its shareholders have treated x as an s_corporation at all relevant times and that trust and trust have been treated as esbts since their dates of formation x represents that the failure_to_file esbt elections for trust and trust was inadvertent and was not motivated by tax_avoidance or retroactive tax planning further x represents that x and its shareholders agree to make any adjustments consistent with the treatment of x as an s_corporation that may be required by the secretary law and analysis sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 defines a small_business_corporation as a domestic_corporation which is not an ineligible_corporation and which does not a have more than shareholders b have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual c have a nonresident_alien as a shareholder and d have more than class of stock sec_1361 provides that for purposes of sec_1362 an esbt may be an s_corporation shareholder sec_1361 provides that an esbt means any trust if i such trust does not have as a beneficiary any person other than i an individual ii an estate iii an organization described in sec_170 or or iv an organization described in sec_170 which holds a contingent_interest in such trust and is not a potential_current_beneficiary ii no interest in such trust was acquired by purchase and iii an election under sec_1361 applies to such trust sec_1361 provides that an esbt does not include i any qualified_subchapter_s_trust as defined in sec_1361 if an election under sec_1361 applies to any corporation the stock of which is held by such trust ii any trust exempt from tax under subtitle a and iii any charitable_remainder_annuity_trust or charitable_remainder plr-137337-11 unitrust as defined in sec_664 sec_1361 provides that an election under sec_1361 shall be made by the trustee any such election shall apply to the taxable_year of the trust for which made and all subsequent taxable years of such trust unless revoked with the consent of the secretary sec_1_1361-1 of the income_tax regulations provides that the trustee of an esbt must make the esbt election by signing and filing with the service_center where the s_corporation files its income_tax return a statement that meets the requirements of sec_1_1361-1 sec_1_1361-1 provides that the trustee of an esbt must file the esbt election within the time requirements prescribed in sec_1_1361-1 for filing a qsst election generally within the 16-day-and-2-month period beginning on the day that the stock is transferred to the trust sec_1362 provides in relevant part that if an election under sec_1362 by any corporation was not effective for the taxable_year for which made determined without regard to sec_1362 by reason of a failure to meet the requirements of sec_1361 the secretary determines that the circumstances resulting in such ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such ineffectiveness or termination steps were taken so that the corporation for which the termination occurred is a small_business_corporation and the corporation for which the termination occurred and each person who was a shareholder in such corporation at any time during the period specified pursuant to sec_1362 agrees to make the adjustments consistent with the treatment of such corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in such ineffectiveness or termination such corporation shall be treated as an s_corporation during the period specified by the secretary conclusion based solely on the facts submitted and the representations made we conclude that x’s s election terminated on date because of the failure to timely file esbt elections for trust and trust we further conclude that the termination of x’s s election was inadvertent within the meaning of sec_1362 therefore x will be treated as an s_corporation effective date and thereafter provided x’s s_corporation_election is otherwise valid and not otherwise terminated under sec_1362 this ruling is contingent on the trustees of trust and trust filing with the appropriate service_center within days from the date of this letter elections to treat trust and trust as esbts effective date a copy of this letter should be attached to each plr-137337-11 esbt election except as specifically ruled upon above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code specifically we express or imply no opinion regarding x’s eligibility to be an s_corporation this ruling is directed only to the taxpayer who requested it according to sec_6110 this ruling may not be used or cited as precedent pursuant to the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative sincerely joy c spies joy c spies acting senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes cc


internal_revenue_service number release date index number - ------------------------------------- ----------------------------------- ---------------- ------------------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------- telephone number --------------------- refer reply to cc tege eoeg teb presp-142949-06 date date dear -------------- pursuant to sec_54 of the internal_revenue_code the code and notice_2005_98 2005_52_irb_1211 and after review of your application submitted on date including supplements thereto we have determined that the project described in appendix a attached hereto is qualified for purposes of sec_54 and will be owned by one or more qualified borrowers we allocate authority to ----------------------------------- ------------ the issuer a qualified issuer under sec_54 to issue up to dollar_figure------------of clean renewable energy bonds crebs bonds issued pursuant to this allocation must be designated by the issuer as bonds for purposes of sec_54 for the project described in appendix a up to the amount allocated for each project described in appendix a bonds so designated must be issued on or before date please be aware that in order for bonds to be crebs the applicable_requirements of the code including without limitation sec_54 notice_2005_98 and notice_2006_7 2006_10_irb_559 must be met please note that creb proceeds may be used to reimburse capital expenditures paid_by qualified borrowers for qualified projects only if the provisions of sec_54 are met if you have any questions with respect to this allocation please contact --------------------- -------- or -----------------------------of the office of division counsel associate chief_counsel tax-exempt and government entities on --------------------- not a toll-free call except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter for purposes of the renewable_electricity_production_credit under sec_45 of the code no inference may be drawn from this allocation that any project listed in appendix presp-142949-06 a is a qualified_facility or that electricity to be produced at such project s is electricity from a qualified_energy resource at a qualified_facility within the meaning of sec_45 this determination is directed only to the applicant named above sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter must be attached to any form 8038-g information_return for tax- exempt governmental obligations filed for bonds issued pursuant to this allocation the allocation contained in this letter is based upon information and representations submitted by the applicant for the creb allocation and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the application_for an allocation it is subject_to verification on examination sincerely assistant chief_counsel exempt_organizations employment_tax government entities tax exempt government entities by timothy l jones senior counsel tax-exempt_bonds branch presp-142949-06 borrower name appendix a project type project location ------------------------------- wind facility ------------ -------------------------------- -------------------------------- ------------ amount allocated dollar_figure-----------


department of the treasury internal_revenue_service washington d c sin - no third party contacts nov employer_identification_number dear sir or madam this refers to your letter dated date requesting advance approval of your scholarship grant procedures under sec_4945 of the internal_revenue_code the code the information submitted indicates that you are exempt under sec_501 of the code and a private non-operating foundation within the meaning of sec_509 since formation your principal activity has been the distribution of assets to other organizations to which contributions are deductible under sec_170 c or c of the code you desire to maintain your current activity and add a scholarship program the scholarship program is for one scholarship grant for undergraduate graduate or professionali school study to any accredited college or university in the united_states the amount of grant will be the lower_of actual tuition costs or dollar_figure annually payable to the college or university of the applicant’s choice the scholarship is available to any descendants of any employee of x provided the employee has been employed for more than one year and works at least hours per week the scholarship is not available to any members of the a family or the descendants of directors or officers of x cl page the scholarship will be awarded based on criteria that include academic merit potential for future academic excellence leadership qualifies community service and meaningful extracurricular activities no consideration will be given to the employee's position services or duties the scholarship will be announced in newsletters bulletin boards and other promotional literature applications for scholarships must be received postmarked on or before january the applications are evaluated and ranked by a selection committee made up of three individuals from three different universities who are independent from you x or the a family their evaluation and ranking are then sent to y an independent party who will determine the highest rank applicant once awarded a scholarship will not be terminated because the recipient's relative terminates employment with x the renewal of the scholarship will not be denied if the recipient's relative terminates employment with x you will exercise the right to receive a report of the recipient’s courses taken and grades received in each academic period as verified by the educational_institution attended by the recipient you may not obtain such reports under the following conditions the scholarship is subject_to the provisions of sec_117 of the code grant funds are payable to an educational_institution and the educational_institution agrees to use the grant funds to defray the recipient's expense at the educational_institution only if the recipient's standing at the educational_institution is consistent with the purposes and conditions of the grant you will also investigate reports of any improper use of grant funds and take necessary steps to recover or restore grant funds for intended purposes the scholarship will not be used to recruit employees induce employees to continue their employment or to compel employees to follow any course of action sought by x further the number of scholarships awarded in any year will not exceed of the number of x 'x employees’ descendants who were eligible applicants considered by the selection committee or of the number of x employees’ descendants who could be shown eligible for grants whether or not they submitted an application sec_4945 of the code imposes a tax on each taxable_expenditure of a private_foundation as defined in sec_4945 sec_4945 provides that a taxable_expenditure includes any amount_paid or incurred by a private_foundation as a grant to an individual for travel study or other similar purposes by such individual unless the grant satisfies the requirements of page subsection g sec_4945 provides that subsection d shall not apply to an individual grant awarded on an objective and nondiscriminatory basis if it is demonstrated to the satisfaction of the secretary or_his_delegate that the grant constitutes a scholarship or fellowship_grant which is subject_to the provisions of sec_117 and is to be used for study at an educational_institution described in sec_170 revproc_76_47 1976_2_cb_670 sets forth guidelines to determine whether a grant made by a private_foundation under an employer-related grant program to an employee or to a child of an employee of the particular employer to which the program relates is a scholarship or fellowship_grant subject_to the provisions of code sec_117 dollar_figure and meets the percentage_test described in section dollar_figure will be assumed to be providing scholarships or fellowship grants subject_to the provisions of sec_117 of the code a program that satisfies the seven conditions set forth in sections dollar_figure through the seven conditions set forth in sections dollar_figure through dollar_figure are as follows no inducement for employment selection by a committee totally independent of the private_foundation its organizers and the employer concerned eligibility requirements of meeting the minimum standards for admission and attendance to an educational_institution selection based solely upon substantial objective standards that are completely unrelated to employment no termination or ineligibility for renewal of a grant on the basis of termination of employment a recipient's free choice in the pursuit of a course of study that is not of particular benefit to the employer and enabling the recipients to obtain education in their personal capacities and solely for their personal benefit with no commitments understandings or obligations to benefit the employer or foundation section dollar_figure provides that a private_foundation giving scholarship awards to children of employees of a related company must agree to limit these grants to percent of all eligible applicants or percent of all those known to be eligible in any given year - accordingly based upon the information presented and assuming your scholarship program will be conducted as proposed with a view to providing objectivity and non-discrimination in the awarding of scholarship grants including meeting the requirements of revproc_76_47 we rule that your grant procedures for the awarding of scholarship grants to descendants of employees of x comply with the requirements of sec_4945 of the code thus grants made in accordance with those procedures will not constitute taxable_expenditures within the meaning of sec_4945 of the code page the recipient of the scholarship shall be responsible for determining whether all or part of the scholarship is includible in gross_income under sec_117 of the code you should advise the recipient that amounts granted are taxable_income if the aggregate scholarship amounts received by the recipient exceed tuition and fees not including room and board required for enrollment or attendance at the educational_institution and fees books supplies and equipment required for courses of instruction this ruling will remain in effect as long as the procedures in awarding grants under your program remain in compliance with sections dollar_figure through dollar_figure of revproc_76_47 described program before you enter into any other scholarship or educational loan program you should submit a request for advance approval of that program please note that this ruling is only applicable to grants awarded under the we are informing the key district_office of this ruling please keep a copy of this ruling with your organization's permanent records this ruling is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as precedent sincerely signed roper o tarps da robert c harper jr chief exempt_organizations technical branch


internal_revenue_service number release date index number ------------------------------------------------ ---------------------------------------- ----------------------------- ---------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------- telephone number --------------------- refer reply to cc psi plr-114227-04 date legend x ------------------------------------------------------------------------------------------------------ a ------------------------------------------------------------------------------------------------------ ----------------------- ------------------------- state ---------- ------------------- d1 ---------------------- d2 dear --------------- this letter responds to a letter dated date and subsequent correspondence written on behalf of x by x’s authorized representative requesting a ruling under ' b of the internal_revenue_code according to the information submitted x was incorporated under state law on facts d1 x’s sole shareholder a intended for x to be an s_corporation effective d2 however x’s form_2553 election by a small_business_corporation was not filed timely sec_1362 provides that except as provided in sec_1362 a small plr-114227-04 law and analysis business corporation may elect to be an s_corporation sec_1362 provides that an election under sec_1362 may be made by a small_business_corporation for any taxable_year - a at any time during the preceding_taxable_year or b at any time during the taxable_year and on or before the 15th day of the 3rd month of the taxable_year sec_1362 provides that if a a small_business_corporation makes an election under sec_1362 for any taxable_year and b such election is made after the 15th day of the 3rd month of the taxable_year and on or before the 15th day of the 3rd month of the following taxable_year then such election shall be treated as made for the following taxable_year sec_1362 provides that if a an election under sec_1362 is made for any taxable_year determined without regard to sec_1362 after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat the election as timely made for such taxable_year and sec_1362 shall not apply conclusion based on the facts submitted and representations made we conclude that x has established reasonable_cause for its failure to make a timely s_corporation_election and that x is eligible for relief under sec_1362 accordingly if x makes an election to be an s_corporation by filing with the appropriate service_center a completed form_2553 effective d2 within days following the date of this letter the election will be treated as timely made a copy of this letter should be attached to the form_2553 filed with the service_center the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we express or imply no opinion concerning whether x is otherwise eligible to be an s_corporation for federal tax purposes being sent to x’s authorized representative except as expressly provided herein we express or imply no opinion concerning pursuant to a power_of_attorney on file with this office a copy of this letter is this ruling is directed only to the taxpayer who requested it sec_6110 plr-114227-04 provides that it may not be used or cited as precedent enclosures copy of this letter copy for sec_6110 purposes cc sincerely yours s jeanne sullivan senior technician reviewer branch office of the associate chief_counsel passthroughs and special industries


internal_revenue_service number release date index number -------------------- -------------------------------- ------------------------------ ------------------------- ----------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------- id no ---------------- telephone number ---------------------- refer reply to cc ita b01 plr-133397-17 date date re ------------------------------------------------------------- taxpayer ----------------------------------- legend parent brand year year date date date date date --------------------------------------------- ---------------------- ------- ------- ------------------------ -------------------- ------------------ --------------------- ------------------------ region region ---------------- -------------------- plr-133397-17 franchisee -------------------- sub sub sub sub ---------------------------------- ------------------------------------------------------------- ---------------------------------------------------------------- ------------------------------------------ holdco ------------------------------- holdco --------------------- holdco ----------------------------------------- holdco -------------------------- holdco ---------------------------------------------- holdco ---------------------------------------------- holdco ---------------------------------- state a -------------- dear --------------- this is in response to a letter dated date submitted on behalf of taxpayer requesting a letter_ruling under sec_165 of the internal_revenue_code the code the information submitted for consideration is summarized below facts taxpayer a state a corporation is an indirect wholly owned subsidiary of parent parent a state a corporation is the common parent of an affiliated_group_of_corporations that file a consolidated u s federal_income_tax return parent is also the common parent of a worldwide group of entities parent and its related entities sell brand products unless otherwise noted all of taxpayer’s subsidiaries mentioned in this ruling are foreign subsidiaries treated as corporations for u s federal_income_tax purposes plr-133397-17 in year one of parent’s subsidiaries entered into a franchise agreement with franchisee and its subsidiaries to operate brand stores in region and region sub a wholly-owned subsidiary of franchisee operated brand stores in region sub which became a wholly owned subsidiary of sub operated brand stores in region as part of a strategy to take more direct control of poorly performing brand stores operated by franchisee taxpayer formed holdco on date subsequently holdco formed holdco which formed holdco on date holdco acquired sub in anticipation of a new brand store in region taxpayer caused holdco to form sub in year taxpayer formed holdco which formed holdco which formed holdco on date holdco sold sub to holdco on date sub sold sub to holdco in anticipation of a new brand store in region taxpayer negotiated a lease agreement allowing assignment of the future lease to an affiliate subsequently taxpayer caused sub to enter a lease for the region store in year taxpayer formed holdco which formed sub sub assigned the lease of the region store to sub on date sub has closed three of its brand stores in region and will soon close a fourth taxpayer represents that it intends to cause sub to sell its remaining two region brand stores to sub in summary taxpayer is currently the common parent of three relevant holding_company chains the initial holding_company chain now contains holdco holdco holdco and sub the region holding_company chain contains holdco and sub the region holding_company chain contains holdco holdco holdco sub and sub taxpayer now proposes the following transaction sub will file an election under sec_301_7701-3 to be classified as a disregarded_entity for u s federal_income_tax purposes resulting in a deemed_distribution of all of sub 1’s assets and liabilities to holdco3 the sub ctb election holdco will file an election under sec_301_7701-3 to be classified as a disregarded_entity for u s federal_income_tax purposes resulting in a deemed_distribution of all of holdco 3’s assets and liabilities to holdco the holdco ctb election holdco will file an election under sec_301_7701-3 to be classified as a disregarded_entity for u s federal_income_tax purposes resulting in a deemed plr-133397-17 distribution of all of holdco 2’s assets and liabilities to holdco the holdco ctb election holdco will file an election under sec_301_7701-3 to be classified as a disregarded_entity for u s federal_income_tax purposes resulting in a deemed_distribution of all of holdco 1’s assets and liabilities to taxpayer the holdco ctb election representation sec_1 the sub ctb election will qualify as a liquidation under sec_332 for u s federal_income_tax purposes and pursuant to sec_381 the attributes will carry over to holdco the holdco ctb election will qualify as a liquidation under sec_332 for u s federal_income_tax purposes and pursuant to sec_381 the attributes will carry over to holdco the holdco ctb election will qualify as a liquidation under sec_332 for u s federal_income_tax purposes and pursuant to sec_381 the attributes will carry over to holdco taxpayer owns directly more than percent of the total voting power and percent of the total value of holdco within the meaning of sec_1504 the holdco ctb election will occur at a time when holdco will be insolvent as described in revrul_2003_125 c b and its stock will be worthless within the meaning of sec_165 holdco has not made any distributions that caused it to become insolvent rulings based upon the information submitted and representations made by taxpayer we rule as follows for purposes of computing the more than percent gross_receipts_test under sec_165 holdco will take into account the historic gross_receipts of holdco holdco and sub provided however that prior distributions received by holdco holdco and holdco from sub holdco and holdco respectively will be eliminated so as to prevent duplication assuming the requirements for claiming a worthless_stock deduction under sec_165 are otherwise satisfied taxpayer may claim a worthless_stock deduction for the holdco stock upon the occurrence of the holdco ctb election plr-133397-17 caveats the rulings contained in this letter are based on facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling sincerely ronald j goldstein assistant to the branch chief branch income_tax accounting cc


t c summary opinion united_states tax_court darrell r fulcher petitioner v commissioner of internal revenue respondent docket no 14140-01s filed date darrell r fulcher pro_se dustin m starbuck for respondent couvillion special_trial_judge this case was heard pursuant to sec_7463 in effect at the time the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority respondent determined a deficiency of dollar_figure in petitioner's federal_income_tax unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year at issue the sole issue for decision is whether petitioner is liable for the 10-percent additional tax under sec_72 for early distributions from two qualified_retirement_plans some of the facts were stipulated those facts and the accompanying exhibits are so found and are incorporated herein by reference petitioner's legal residence at the time the petition was filed was martinsville virginia during petitioner received the following distributions from two qualified_individual retirement accounts nationwide life_insurance co dollar_figure first national bank dollar_figure total distributions dollar_figure both institutions issued to petitioner forms 1099-r distributions from pensions annuities retirement or profit- sharing plans iras insurance contracts etc the form 1099-r from nationwide life_insurance co stated that the taxable_amount of the dollar_figure distribution was dollar_figure on his federal_income_tax return for petitioner included dollar_figure as income representing the taxable_distributions from the two plans in the notice_of_deficiency respondent determined that petitioner was liable for the additional tax under sec_72 for early distributions from qualified_retirement_plans petitioner contends he is not liable for the additional tax because the proceeds of the distribution were used to purchase a home as a first-time homeowner under sec_72 during petitioner was employed by several employers doing electrical maintenance work petitioner married on date and he and his spouse purchased a home in date which they moved into sometime in date petitioner and his spouse separated however petitioner continued living in the house petitioner had previously been married but was divorced in during the first marriage petitioner served in the united_states military and he and his spouse never purchased a home his testimony is that the home purchased in date was the first home he had ever purchased and that the proceeds of the two distributions in question were applied to the dollar_figure purchase_price for the home respondent presented no evidence to discredit petitioner's testimony nor did respondent present any other evidence to establish that the date home purchase was not petitioner's first home purchase or that the individual_retirement_accounts proceeds in question were not applied to the purchase_price of the home sec_72 imposes a 10-percent additional tax on early distributions from qualified_retirement_plans there are several situations however in which the additional tax does not apply pertinent to this case is sec_72 which provides generally that the additional tax does not apply to distributions that qualify as first-time_homebuyer distributions as defined in sec_72 sec_72 provides generally that the term qualified_first-time_homebuyer_distribution means any payment or distribution received by an individual to the extent such payment or distribution is used by the individual before the close of the 120th day after the day on which such distribution or payment is received to pay qualified_acquisition_costs with respect to a principal_residence of a first-time_homebuyer who is such individual the spouse of such individual or any child grandchild or ancestor of such individual or the individual's spouse sec_72 defines a first-time_homebuyer as an individual and if married his spouse who had no present ownership_interest in a principal_residence during the 2-year period ending on the date_of_acquisition of the principal_residence in question other provisions in that section are not pertinent here on this record the court is satisfied that the distributions in question constituted distributions that were used by petitioner in the acquisition of a principal_residence and that such distributions were qualified first-time_homebuyer distributions within the intent and meaning of sec_72 petitioner accordingly is sustained on the sole issue before the court reviewed and adopted as the report of the small_tax_case division decision will be entered for petitioner


of f i c e of c h i ef c ou n sel department of the treasury i n t e r n al r e v e n u e s e r v i c e w ashington d c date number info release date conex-139001-09 index uil no ---------------------------- ---------------------------------------------- -------------------------------------------------------- -------------------------------- dear ----------------- i am responding to your letter to commissioner douglas h shulman dated date you suggested that we publish a standard mileage rate for business use of a motorcycle similar to the rate used by the general services administration to reimburse the business use of a motorcycle by federal employees the actual cost of operating any means of transportation including automobiles motorcycles aircraft and boats may be deducted as long as the amount of business use is substantiated through appropriate recordkeeping the internal_revenue_service publishes annually a per-mile deduction rate the standard mileage rate for business use of an automobile for which simplified substantiation requirements apply as an alternative to the recordkeeping required to deduct the actual costs of operating the automobile the standard mileage rate also represents the maximum per-mile rate at which an employer may reimburse an employee for the employee’s business use of the employee’s automobile without triggering inclusion of the reimbursement in the employee’s income the standard mileage rate is calculated each year based upon a complex study of actual costs for a range of representative automobiles we are currently in the process of preparing our standard mileage rate guidance for calendar_year as part of that process we are examining whether we can extend the use of the automobile standard mileage rate to motorcycles conex-139001-09 i hope our response is helpful if i can assist you further please contact me or -------------------------- identification_number ------------- at -------------------- kathleen reed chief branch office of the associate chief_counsel income_tax and accounting sincerely


internal_revenue_service number release date index number ---------------------------- ----- ------------------------------------------------------------ ------------- ------------------------------- ------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------- id no ------------- telephone number --------------------- refer reply to cc psi b06 plr-105634-04 date date re original_use for purposes of the additional first year depreciation deduction legend taxpayer aircraft aircraft2 a ----------------------------------------------------- ---------------------------------------------------------------- --------------------------------------------- ------------------------------------------------------------------------------------------- b c d e f g h i j k l m n o p q r s date1 date2 date3 date4 date5 --------- ---------------------------------- --------------------------------------------------------------------------------------- ------------------------------------- ---- ------ ------ ---------------- -------- ---- ---- ------ -------- -------------- ---- -------- ---------------------------------------------------- ------ ---------------------- -------------------------- ---------------------- ------------------ --------------------------- -------------------------- --------------------------------------------------------------- this letter responds to a letter dated date and supplemental sb_se official dear ----------------- correspondence requesting a ruling that the original_use of taxpayer’s aircraft commenced with taxpayer for purposes of the 50-percent additional first year depreciation deduction provided by sec_168 of the internal_revenue_code facts business through various subsidiaries for federal_income_tax purposes taxpayer has elected to be treated as an association_taxable_as_a_corporation q is a disregarded_entity under sec_301_7701-3 of the procedure and administration regulations and is treated as a division of taxpayer taxpayer a p general_partnership is engaged in the insurance services taxpayer represents that the facts are as follows taxpayer owns all of the membership interests in q a p limited_liability_company taxpayer and q own all of the interests in b a p limited_partnership taxpayer is the limited_partner and q is the general_partner because q is a disregarded_entity b is also a disregarded_entity and all of its assets and liabilities are treated as owned by taxpayer for federal_income_tax purposes b owns all of the membership interests in a a p limited_liability_company in date c a foreign company and d a manufacturer of aircraft entered into a accordingly a is also a disregarded_entity and all of its assets and liabilities are treated as owned by b for federal_income_tax purposes a is a certificated air carrier engaged in the air charter business purchase agreement under which c agreed to purchase the aircraft from d as of the date of the purchase agreement there were e hours on the aircraft later in date c accepted the aircraft with r hours on the aircraft also in date c and d entered into an agreement for d to perform certain modifications to the aircraft the aircraft subsequent to the date of the purchase agreement the aircraft was flown by d pilots to d’s service facility for completion of the modifications agreed upon proving flights were made by d pilots for quality assurance testing of the modifications and return of the aircraft to s bringing the total flight time to f hours following the completion of the modifications the aircraft was placed into storage in d’s hangar aircraft also on date3 c entered into an agreement to purchase the aircraft2 from d pursuant to which c traded in the aircraft for the aircraft2 without ever taking physical while c accepted the aircraft c never took physical delivery or possession of on date3 c formally acknowledged completion of the modifications to the a purchased the aircraft from d on date1 which is after date no upon reacquisition of the aircraft taxpayer and d represent that d continued to plr-105634-04 delivery of the aircraft d received the aircraft with g hours on a trade-in by c for the aircraft2 on date4 hold the aircraft primarily for sale in addition taxpayer and d represent that d temporarily used the aircraft as follows a as a demonstrator b for transportation of d officials on d business c to ferry the aircraft to an airport other than h for a static showing of the aircraft d to ferry the aircraft to a service_center e to ferry home or reposition the location of the aircraft in connection with one of the above uses of the aircraft and f in two instances the aircraft was loaned to customers under no cost leases each for a period of one month or less for use by the customer pending delivery of an aircraft that had been ordered by the customer taxpayer and d represent that at all times d continued to show the aircraft and to hold the aircraft primarily for sale binding contract for the purchase of the aircraft by a was in effect prior to date d represents that the total flight time on the aircraft from date4 until date of sale of the aircraft to a with delivery on date5 the day after date1 was approximately i flight hours of which the uses listed in the above previous paragraph a through d comprised approximately j hours the use listed in the above previous paragraph e comprised approximately k hours and the use listed in the above previous paragraph f comprised approximately l hours the total flight time on the aircraft upon delivery to a on date5 was m hours hours and is expected to have an actual_useful_life in excess of o years d also represents that neither d nor any related_taxpayer has claimed depreciation with respect to the aircraft for federal_income_tax purposes other entities pending certification of the aircraft for air charter services ruling requested d represents that the aircraft typically has an average annual usage of n flight upon purchase of the aircraft on date1 a has used the aircraft for lease to the original_use of the aircraft for purposes of the 50-percent additional first year sec_168 provides a 50-percent additional first year depreciation depreciation under sec_168 commenced with taxpayer law and analysis deduction for the taxable_year in which 50-percent bonus_depreciation property is placed_in_service by a taxpayer as meaning property i among other things to which sec_168 applies with a sec_168 defines the term 50-percent bonus_depreciation property sec_1_168_k_-1t b i of the temporary income_tax regulations provides plr-105634-04 recovery_period of years or less ii the original_use of which commences with the taxpayer after date iii that is acquired by the taxpayer after date and before date but only if no written binding contract for the acquisition was in effect before date and iv that is placed_in_service by the taxpayer before date or for certain property having longer production periods before date in part that except as provided in sec_1_168_k_-1t b iii and iv original_use means the first use to which the property is put whether or not that use corresponds to the use of the property by the taxpayer it is intended that when evaluating whether property qualifies as original_use property the factors used to determine whether property qualified as new sec_38 property for purposes of the investment_tax_credit would apply joint_committee on taxation staff general explanation of tax legislation enacted in the 107th congress date footnote in order to qualify as new sec_38 property for investment_tax_credit purposes sec_1_48-2 required that the original_use of the property commences with the taxpayer this original_use requirement has been a factor for determining new sec_38 property for the investment_tax_credit since sec_48 was enacted by the revenue act of both the house and senate committee reports on the revenue act of stated that the principles applicable under sec_167 are to be applied under sec_48 in determining whether the original_use of the property commences with the taxpayer h_r rep no 87th cong 2d sess 1962_3_cb_402 s rep no 87th cong 2d sess 1962_3_cb_703 both the house and senate committee reports on h_r which enacted sec_167 discussed original_use as relating to property that must be new in use that is never before having been subject_to depreciation whether or not depreciation_deductions relating to such property were allowable h_r rep no 83d cong 2d sess a49 s rep no 83d cong 2d sess used as demonstrators the airplanes are stock-in-trade held primarily_for_sale_to_customers in the ordinary course of business and consequently the use of such airplanes as demonstrators does not constitute a use for investment_credit purposes accordingly the airplanes are new sec_38 property in the hands of the purchaser revrul_69_272 1969_1_cb_23 concludes that although the airplanes are consistent with revrul_69_272 example of sec_1_168_k_-1t b v illustrates that if an automobile that is used as a demonstrator by an automobile dealer is held by the dealer primarily_for_sale_to_customers in the ordinary course of its business the use of the automobile by the dealer as a demonstrator does not constitute a use for purposes of the original_use requirement for the additional first year plr-105634-04 depreciation deduction and thus the first purchaser of the automobile would be considered the original user of the automobile while c accepted delivery of the aircraft c never took physical delivery or possession of the aircraft consequently c never used the aircraft and therefore is not considered the original user of the aircraft for purposes of the original_use requirement in sec_1_168_k_-1t b i consistent with example of sec_1_168_k_-1t b v d’s use of the aircraft as a demonstrator after its acquisition from c is not a use for purposes of the original_use requirement in sec_1_168_k_-1t b i however d’s other uses of the aircraft after its acquisition from c goes beyond the facts of example of sec_1_168_k_-1t b v and revrul_69_272 the question of whether the aircraft was held for use in d’s trade_or_business or was held by d primarily_for_sale_to_customers in the ordinary course of business is a question of fact if property is acquired for resale and is temporarily used by a taxpayer in its business the property would properly remain as inventory because the use of property temporarily in a business does not support re-characterizing the property as property used in a trade_or_business see eg 264_f2d_548 5th cir aff’g 28_tc_42 automobiles removed from inventory by car dealer and provided to company officials and salesmen to stimulate interest in cars were only temporarily assigned for use in car dealer’s business in the present case taxpayer and d represent that at all times d held the aircraft primarily for sale even when the aircraft was used by d for the various uses listed in the second paragraph on page of this letter_ruling further d represents that the aircraft typically has an average annual usage of n flight hours and is expected to have an actual_useful_life in excess of o years consequently d’s various uses of the aircraft which totaled i flight hours account in the aggregate for less than two percent of the aircraft’s estimated flight time over the aircraft’s useful_life accordingly we conclude that the various uses of the aircraft by d can reasonably be characterized as temporary conclusions based solely on the representations and the relevant law and analysis set forth above we conclude that the original_use of the aircraft commences with a for purposes of the 50-percent additional first year depreciation under sec_168 and because a is a disregarded_entity and the aircraft is treated as owned by taxpayer taxpayer will be considered the original user of the aircraft for purposes of the 50-percent additional first year depreciation under sec_168 concerning the tax consequences of the facts described above specifically no opinion except as specifically ruled upon above no opinion is expressed or implied in accordance with the power_of_attorney we are sending a copy of this letter to this ruling is directed only to the taxpayer requesting it sec_6110 plr-105634-04 is expressed or implied on whether the aircraft meets all of the requirements to be eligible for the 50-percent additional first year depreciation deduction provides that it may not be used or cited as precedent taxpayer we are also sending a copy of this letter to the sb_se official enclosures copy copy of this letter kathleen reed senior technician reviewer branch office of associate chief_counsel passthroughs and special industries kathleen reed sincerely


internal_revenue_service department of the treasury number release date index numbers washington dc person to contact telephone number refer reply to cc psi 9-plr-112334-02 date date in re legend decedent spouse son daughter date date bank dollar_figurex dear this is in response to your letter dated date and subsequent correspondence requesting on behalf of decedent’s estate and spouse an extension of time under sec_301_9100-3 of the procedure and administration regulations and sec_2642 of the internal_revenue_code to make allocations of decedent and spouse’s generation-skipping_transfer gst exemptions to transfers to two irrevocable trusts a summary of the facts and representations submitted are as follows decedent died on date survived by spouse son and daughter prior to her death on date decedent created two irrevocable trusts trusts one for the benefit of son and one for the benefit of daughter son daughter and bank are the co-trustees of the trusts the terms of the trusts are identical except as to each trust’s beneficiary the pertinent terms of the trusts are as follows plr-112334-02 article second section a of each trust provides that the trustees shall distribute the entire income of each trust to the beneficiary at least quarterly for the beneficiary’s lifetime and shall from time to time or at any time distribute to the beneficiary so much of the principal as the trustees other than the beneficiary shall in their sole discretion deem proper for the beneficiary’s health support or education article second section b of each trust provides the beneficiary with a testamentary limited power to appoint the accrued and undistributed_income and principal of his or her trust among decedent’s descendants other than the beneficiary the beneficiary’s estate the beneficiary’s creditors or the creditors of the beneficiary’s estate article second section c provides that any unappointed accrued and undistributed_income and principal shall be distributed in equal shares to the beneficiary’s then living descendants per stirpes if any or if none then in equal shares to decedent’s then living descendants per stirpes decedent funded each trust with marketable_securities valued at dollar_figurex decedent and spouse each consented to split the gifts under sec_2513 for gift_tax purposes and to be treated as the transferor of one-half of the gifts for gst tax purposes under sec_2652 decedent requested bank to prepare a united_states gift and generation- skipping transfer_tax return form_709 for decedent and spouse reporting the gifts to the trusts bank prepared the returns which were then reviewed by decedent’s attorneys and executed by decedent and spouse bank inadvertently failed to make an allocation of gst_exemption on either return and the attorney who reviewed the returns failed to notice the error the returns were timely filed but no allocation of gst_exemption was made on either return you have requested a ruling that spouse individually and as the personal representative of decedent’s estate be granted an extension of time under sec_2642 and sec_301_9100-3 to make allocations of decedent and spouse’s gst exemptions to the split_gifts to the trusts in an amount that would cause each trust to have an inclusion_ratio of zero for gst tax purposes law and analysis sec_2601 imposes a tax on every generation-skipping_transfer gst a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of the tax is the taxable_amount multiplied by the applicable_rate sec_2641 defines applicable_rate as the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer plr-112334-02 sec_2631 provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure adjusted for inflation under sec_2631 which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2632 provides that any allocation by an individual of his or her gst_exemption under sec_2631 may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual’s estate determined with regard to extensions regardless of whether such a return is required to be filed sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides that an allocation of gst_exemption to property transferred during the transferor’s lifetime other than in a direct_skip is made on form_709 as applicable during the year at issue sec_2642 provided that except as provided in sec_2642 if the allocation of the gst_exemption to any property is made on a gift_tax_return filed on or before the date prescribed by sec_6075 for such transfer or is deemed to be made under sec_2632 deemed allocations to certain lifetime direct skips - a the value of such property for purposes of determining the inclusion_ratio shall be its value for purposes of chapter and b such allocation shall be effective on and after the date of such transfer sec_2642 provides that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of sec_2642 which was enacted on date sec_2642 provides that in determining whether to grant relief the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant sec_2642 further provides that for purposes of determining whether to grant relief the time for making the allocation shall be treated as if not expressly prescribed by statute notice_2001_50 2001_34_irb_189 provides that under sec_2624 the time for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a generation-skipping_trust are to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 plr-112334-02 sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute under sec_301_9100-1 a regulatory election includes an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin in accordance with sec_2642 and notice_2001_50 taxpayers may seek an extension of time to make an allocation described in sec_2642 under the provisions of sec_301_9100-3 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied therefore spouse individually and as the personal representative of decedent’s estate is granted an extension of time of sixty days from the date of this letter to make a retroactive_allocation of decedent and spouse’s gst exemptions in any amount that would cause decedent and spouse’s split_gifts to the trusts to have an inclusion_ratio of zero for gst tax purposes the allocations once made will be effective as of the date of the transfers to the trusts and the gift_tax value of the transfers to the trusts will be used in determining the amount of decedent and spouse’s gst_exemption to be allocated to the trusts the allocations should be made on separate supplemental form 709s filed for spouse and decedent’s estate with the internal_revenue_service center cincinnati ohio a copy of this letter should be attached to each supplemental form_709 copies are enclosed for this purpose the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination plr-112334-02 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer sincerely william p o’shea acting associate chief_counsel passthroughs and special industries enclosures copy for sec_6110 purposes two copies for attachment to supplemental form 709s cc


internal_revenue_service number release date index number --------------------- --------------------------------- --------------------------------------------------------- -------------------------------------- -------------------------------- - department of the treasury washington dc person to contact ------------------------ id no ------------- telephone number --------------------- refer reply to cc psi - plr-102066-03 date date ---------------------------------------------------------- ------------------------------------------------------------------------------ ------------------------------------------------------------------- ----------------------------------------- legend v ------------------------------------------ w ------------------------------------------ ---------------------- x ------------------------------------------ y ------------------------------------------ z ------------------------------------------ country ------------ country state d1 ------------------- ------------- ------- this responds to a letter from v’s authorized representative dated v represents that pursuant to sec_301_7701-3 v is a foreign eligible_entity plr-102066-03 dear --------------------- date requesting that the service grant v an extension of time to elect to be treated as a disregarded_entity under sec_301_7701-3 of the procedure and administration regulations the information submitted states that v is a corporation formed under the laws of country v is wholly owned by w a corporation formed under the laws of country w is wholly owned by x a u s partnership formed under the laws of state that is controlled by y a u s partnership formed under the laws of state all four entities are managed under agreement by z y requested that z ask their accounting firm to form v under the laws of country that is not required to be classified as a corporation for federal tax purposes v intended to elect under sec_301_7701-3 to be treated as a disregarded_entity effective d1 however v inadvertently failed to timely file a form_8832 entity classification election entity for federal_income_tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if a foreign eligible_entity has only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_7701-3 provides that an entity classification election must be filed sec_301_9100-1 provides that the commissioner may grant a reasonable sec_301_7701-3 provides guidance on the classification of a foreign sec_301_9100-1 through provide the standards the sec_301_9100-3 provides the standards the commissioner will use to sec_301_9100-2 provides the rules governing automatic extensions of time for plr-102066-03 commissioner will use to determine whether to grant an extension of time to make the election making certain elections determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result v is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center and elect to treat v as a disregarded_entity effective d1 a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose federal tax consequences of the facts described above under any other provision of the internal_revenue_code provides that it may not be used or cited as precedent being sent to v’s authorized representative this ruling is directed only to the taxpayer s requesting it sec_6110 except as specifically set forth above no opinion is expressed concerning the based solely on the information submitted and the representations made we pursuant to a power_of_attorney on file with this office a copy of this letter is sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes plr-102066-03 cc ------------------------ -------------------------------------- -------------------------------- ---------------------------------- --------------------------------------------------------------------- ------------------------ ---------------------------- ---------------------------


department of the treasury washington dc person to contact --------------------- id no ------------- telephone number --------------------- refer reply to cc psi b04 plr-106456-06 date december internal_revenue_service number release date index number -------------------- ------------------------------ -------------------------------------- -------- --------------------------------------------------- ------------------------- --------------------------------------------------- ------------------------- --------------------------------------------------- --------------------------- --------------------------------------------------- --------------------------------- - legend year wife husband trust ------- ------------------------------------------------ ------------------------------------------ -------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- ----------------------------------------------------- trust -------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ----------------------------------------------------- trust -------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- ----------------------------------------------------- trust -------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------ ----------------------------------------------------- attorney law firm ------------------------------------ ----------------------------------------------------- plr-106456-06 ---- a company ----------------------------- y --------------- dear ------------ this is in response to a letter from your authorized representative dated date and subsequent submissions requesting an extension of time pursuant to sec_2642 of the internal_revenue_code and sec_301_9100-3 of the procedure and administration regulations to allocate husband’s generation-skipping_transfer gst_exemption to transfers to four trusts the facts and representations submitted are summarized as follows in year on the advice of attorney wife established four substantially identical irrevocable trusts trust sec_1 and one trust for the benefit of each of the spouses’ four children and that child’s issue each child and child’s issue had a right to withdraw principal not to exceed y from the child’s trust on the same date wife transferred a shares of stock in a closely-held corporation company to each trust the reported value of the stock transfers to the four trusts exceeded the total value of the withdrawal rights granted to the grandchildren attorney prepared and filed form_709 united_states gift and generation- skipping transfer_tax return to report the year gifts to trust sec_1 and husband and wife elected gift-splitting for the gifts made in year attorney allocated husband’s and wife’s gst exemptions to that amount of the stock transfers to each trust attributable to the withdrawal rights granted to each grandchild however attorney failed to allocate husband’s and wife’s gst exemptions to that amount of the stock transfers that exceeded the withdrawal rights of the grandchildren subsequent to filing the form_709 attorney advised husband and wife that husband’s and wife’s gst exemptions should have been allocated to the entire value of the stock transferred to each of the four trusts not just to the amount of the stock transfers attributable to the withdrawal rights husband has requested an extension of time under sec_2642 and sec_301_9100-1 and sec_301_9100-3 to allocate his gst_exemption to the transfers made to trust sec_1 and in year sec_2601 imposes a tax on every generation-skipping_transfer gst a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip plr-106456-06 sec_2631 provides that for purposes of determining the gst tax every individual shall be allowed a gst_exemption of dollar_figure adjusted for inflation under sec_2631 which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2632 provides that any allocation by an individual of his or her gst_exemption under sec_2631 may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual’s estate determined with regard to extensions regardless of whether such a return is required to be filed sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides that an allocation of gst_exemption to property transferred during the transferor’s lifetime other than in a direct_skip is made on form_709 sec_2642 provides in relevant part that if the allocation of the gst_exemption to any transfers of property is made on a timely filed gift_tax_return or is deemed to be made under sec_2632 or c the value of such property for purposes of determining the inclusion_ratio shall be its value as finally determined for gift_tax purposes and such allocation shall be effective on and after the date of such transfer sec_2642 provides that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of sec_2642 which was enacted into law on date sec_2642 provides that in determining whether to grant relief the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant for purposes of determining whether to grant relief the time for making the allocation shall be treated as if not expressly prescribed by statute sec_2652 and sec_26_2652-1 provide that if under sec_2513 one-half of a gift is treated as made by an individual and one-half is treated as made by the spouse of the individual then for purposes of the gst tax each spouse is treated as the transferor of one-half of the entire value of the property transferred by the donor spouse regardless of the interest the electing spouse is actually deemed to have transferred under sec_2513 plr-106456-06 notice_2001_50 2001_34_irb_189 provides that under sec_2642 the time for allocating the gst_exemption to lifetime transfers is to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in sec_2642 under the provisions of sec_301_9100-3 sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute under sec_301_9100-1 a regulatory election includes an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin in accordance with sec_2642 and notice_2001_50 taxpayers may seek an extension of time to make an allocation described in sec_2642 under the provisions of sec_301_9100-3 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied pursuant to sec_2513 husband and wife consented to split the gifts in year husband and wife are treated as the transferors for gst purposes of one-half of the entire value of the property transferred by the donor spouse regardless of the interest the electing spouse is actually deemed to have transferred under sec_2513 husband is granted an extension of time of days from the date of this letter to allocate his available gst_exemption to the year gifts to trust sec_1 and the allocations will be effective as of the date of the transfers to trust sec_1 and the inclusion_ratio of trust sec_1 and will be determined based on the values of the transfers to trust sec_1 and as determined for federal gift_tax purposes and the amount of exemption allocated to the trusts further the value of the transferred shares as of the date of the original transfers to trust sec_1 and will be used in determining the amount of husband’s gst_exemption to be plr-106456-06 allocated to the trusts the allocation should be made on a supplemental form_709 united_states gift and generation-skipping_transfer_tax return for year and filed with the internal_revenue_service center cincinnati ohio a copy of this letter should be attached to the supplemental form_709 a copy is enclosed for this purpose the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as specifically ruled herein no opinion is expressed or implied concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we are not ruling on whether trust sec_1 and will have zero inclusion ratios as a result of husband’s allocation of gst_exemption to the year transfers to the trusts this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely william p o'shea associate chief_counsel passthroughs and special industries enclosures copy for sec_6110 purposes copy of this letter


o f f i c e o f c h i e f c o u n se l department of the treasury i n t e r n a l r e v e n u e s e r v i c e washington d c date number release date conex-120096-10 uil the honorable martin heinrich member u s house of representatives first plaza n w suite albuquerque new mexico attention ----------------------- dear congressman heinrich i am responding to your inquiry dated date on behalf of your constituent ---- -- ----------------- -------------- asked how he could establish that stock he purchased is worthless to obtain a deduction on his taxes under the law the taxpayer must establish that the security had a basis was not worthless before the year he or she claimed the worthlessness was worthless in the year claimed to show that the stock is worthless -------------- must show both balance_sheet insolvency and a complete lack of future potential value sec_165 of the internal_revenue_code to show balance_sheet insolvency the taxpayer must show that liabilities exceed assets in the year of worthlessness the asset value must reflect any significant differences between the book_value and the fair_market_value of the assets if ---- -------- --------- is a minority shareholder he may have trouble obtaining a reliable balance_sheet in that case the decision as to whether the stock has any liquidation value in the year he claimed the stock as worthless would depend on the exercise of business judgment to the extent information is reasonably obtainable see 58_tc_731 -------------- can establish that the stock had no liquidation value once a sale of assets and distribution in liquidation to creditors in the conex-120096-10 bankruptcy proceeding has occurred even though the balance_sheet may show insolvency the stock of the corporation could possibly have some value in the future therefore the taxpayer must show not only current balance_sheet insolvency but the destruction of potential value to establish current worthlessness generally a series of events which in the context of what has happened previously shows both current and future worthlessness would have to occur based on the facts given -------------- can most likely use the following to establish that the stock is worthless adoption and commencement of a plan_of_liquidation sale of assets distribution in liquidation to creditors to show this he will need to monitor the bankruptcy proceedings once the sale of assets has occurred and the distributions have taken place -------------- can use this documentation to establish that he did not receive anything for his stock or the amount that he received for his stock i hope this information is helpful if you have additional questions please contact me or ------------------------ at --------------------- sincerely thomas d moffitt branch chief branch income_tax accounting


t c memo united_states tax_court david dobrich and naomi dobrich petitioners v commissioner of internal revenue respondent docket nos filed date john m youngquist and donald l feurzeig for petitioners daniel j parent for respondent supplemental memorandum opinion gerber judge the court filed a memorandum findings_of_fact and opinion in this case t c memo on date stating that a decision would be entered for petitioners for docket no and pursuant to rule as to docket no respondent filed an unagreed computation for the taxable_year that would result in a dollar_figure income_tax deficiency and a dollar_figure overpayment after considering payments made after issuance of the notice_of_deficiency respondent's computation for would also result in a dollar_figure fraud_penalty under sec_6663 this opinion addresses the parties' controversy over the computation of the decision s to be entered respondent had determined deficiencies in petitioners' and federal_income_tax in the amounts of dollar_figure and dollar_figure respectively and sec_6663 civil_fraud penalties for and of dollar_figure and dollar_figure respectively respondent determined the income_tax deficiency and penalty in the alternative for or the issues we considered were whether petitioners may defer recognition of gain from the disposition of certain real_property under sec_1031 if the transaction does not qualify for sec_1031 exchange whether petitioners are entitled to report the gain in under the installment_sale_method and whether petitioners are liable for a fraud_penalty under sec_6663 unless otherwise indicated rule references are to the tax_court rules_of_practice and procedure and section references are to the internal_revenue_code for the years in issue in tcmemo_1997_477 we decided that petitioners were not entitled to defer recognition of gain under sec_1031 the gain was recognizable in petitioners did not qualify for installment_sales treatment to place income in and petitioners were liable for the sec_6663 fraud_penalty for under rule a parties are required to submit computations pursuant to the court's determination of the issues showing the correct amount of the deficiency liability or overpayment to be entered as the decision parties are not permitted to raise new issues or matters in connection with the rule_155_computations 287_us_308 the starting point for the computation is the statutory_notice_of_deficiency from which the parties compute the redetermined deficiency based upon matters agreed by the parties or ruled upon by the court 91_tc_265 affd 875_f2d_377 2d cir whitham v commissioner a memorandum opinion of this court dated date petitioners in their proffered computation filed date objected to respondent's computation on several grounds first because we found that petitioners' transactions were sales and not like-kind_exchanges they contend that the dollar_figure of sales proceeds used by respondent should have been dollar_figure to reflect dollar_figure in selling costs documented in the record if we adopt petitioners' approach the income_tax deficiency would be dollar_figure the reduction of the income_tax deficiency also causes a reduction in the sec_6663 penalty from dollar_figure to dollar_figure support for petitioners' entitlement to a dollar_figure reduction is adequately documented in the record and is an integral part of our finding that the transactions in question do not qualify under sec_1031 after considering the parties' proposed computations our opinion and the record in these consolidated cases we hold that petitioners' approach to the computation for the deficiency and penalty is correct in addition petitioners objected that the dollar_figure overpayment for after considering post-notice payments was understated in that petitioners' early date payment in the amount of dollar_figure was not considered in respondent's computation following a telephone conference between the court and the parties respondent's counsel determined that the dollar_figure payment had been made by petitioners after respondent's computation had been submitted to the court and that the overpayment after considering post-notice payments should be increased accordingly with respect to the taxable_year the court did not request a computation under rule respondent had determined that the transactions in question were taxable alternatively for or we decided that was the year in which the income was to be included and no computation under rule was required for because of our understanding that petitioners would have no deficiency or overpayment for the year petitioners however proffered a computation for entry of decision for reflecting a dollar_figure overpayment which they claim is attributable to additional_depreciation that they could have claimed on the acquired properties on the premise that they were purchased rather than exchanged petitioners point out that they were permitted to amend their petition for the year to claim dollar_figure of additional_depreciation respondent in turn answered petitioners' allegation in the amendment to the petition by admitting that petitioners would be entitled to additional_depreciation if the court determines that the transaction is taxable in respondent however denied for lack of sufficient information that petitioners were entitled to the amount they had alleged petitioners also contend that we held that the period for assessment would be open for the year due to our finding of fraud for under these circumstances petitioners seek an overpayment for rather than a no deficiency no overpayment decision we find that petitioners are not entitled to an overpayment for their taxable_year their amended petition for sought the dollar_figure of additional_depreciation only if the court concludes that the transaction is taxable in additionally petitioners did not seek an overpayment or refund in their petition or the amendment thereto or at any time until after the court's issuance of the opinion and request for the computations under rule for the year petitioners rely on note in tcmemo_1997_477 in their attempt to show that the year remained open for their claim of a refund that footnote contained the following commentary petitioners had raised the defense that the period for assessment had expired when respondent issued the notice_of_deficiency for the year the year comes into play in the context of this case if petitioners are entitled to installment_sale treatment in that event respondent would also have the burden of proving that an exception to the general period of limitations applies 54_tc_255 that question is mooted by our holding that petitioners are not entitled to installment reporting even if petitioners had been successful on the installment reporting issue respondent has carried the burden of showing a fraudulent return and therefore the period for assessment would not have expired prior to issuance of the deficiency_notice sec_6501 the footnote is dicta in that its purpose is to consider whether the overall result in these cases would have been different if we found that the installment_sales method could have been used it was not the holding of our opinion and accordingly not a predicate for petitioners' argument that the year is open there was no need to make a holding on that issue because the sole issue raised for was mooted by our finding that petitioners were required to include the income from real_property sales for accordingly petitioners have not shown that the question of an overpayment for was raised and or in issue prior to the submission of the rule computation petitioners' argument that the limitations_period is still open within which a refund for could be claimed falls short of the statutory requirements in several obvious respects petitioners have not shown that they have met the requirements of sec_6501 sec_6511 or sec_6512 we therefore hold that petitioners are not entitled to an overpayment for to reflect the foregoing decisions will be entered in accord with this opinion in docket no and for petitioners in docket no