internal_revenue_service number release date index number ------------- -------------------------------------------- -------------------------------------- --------------------------------------------- --------------- ------------------------------------------------------------ -- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact -------------------- id no ------------------ telephone number ---------------------- refer reply to cc tege eoeg e0 plr-127207-12 date date legend organization ------------------------------------------------- state state board year statute commission --------------------------------------------------------- x ---------------- ------------------------------------------------ ------- -------------------------------------------------------------- ---- dear ------------- this is in reply to your letter dated date requesting a ruling on behalf of organization you requested a ruling that organization is an instrumentality of state and is eligible to receive charitable_contributions under sec_170 of the internal_revenue_code code facts and representations state board was established in year by act of state legislature the act was codified at statute state board is an integral part of state the government management and control of the state university and community college system are vested in state board state board approves the operating and capital budgets of each of the institutions in the state university and community college system organization is a member institution of the state board and serves a governmental purpose of educating the citizens of the state organization was established as an instrumentality of state operating as a public institution of higher learning the purpose of organization is to support educational excellence in state organization represents that contributions made to it are for exclusively public purposes organization is governed by state board composed of x members including four ex officio members who shall be the governor the commissioners of education and agriculture and the executive director of commission a majority of the members of the state board are appointed by the governor of state organization is attached for administrative purposes to commission which establishes a formula for distribution of public funds through which organization receives state operating and capital appropriations state exercises oversight of organization's finances through commission law revrul_57_128 1957_1_cb_311 sets forth the factors to be taken into account in determining whether an entity is an instrumentality of one or more governmental units whether the organization is used for a governmental purpose and performs a governmental function whether performance of its function is on behalf of one or more states or political subdivisions whether there are any private interests involved or whether the states or political subdivisions have the power and interests of an owner whether control and supervision of the organization is vested in a public authority or authorities whether express or implied statutory or other authority is necessary for the creation and or use of the organization and whether this authority exists and the degree of financial autonomy of the entity and the source of its operating_expenses each of these factors must be evaluated in order to determine if organization is an instrumentality of the state sec_170 allows subject_to certain limitations a deduction for charitable_contributions as defined in sec_170 payment of which is made within the taxable_year sec_170 includes in the definition of charitable_contribution a contribution or gift made for exclusively public purposes to or for_the_use_of a state a possession_of_the_united_states a political_subdivision of either a state or possession_of_the_united_states the united_states or the district of columbia entities eligible to receive tax deductible contributions include not only governmental units described in sec_170 but also wholly owned instrumentalities of states and political subdivisions analysis organization satisfies the first factor listed in revrul_57_128 which requires it to have a governmental purpose and perform a governmental function the purpose of organization is to support education in state organization satisfies the second factor as it performs its function on behalf of state board state board is established pursuant to statute state board is an integral part of state organization therefore performs its function on behalf of state organization satisfies the third factor because no private interests are involved and the state has the power and interest of an owner organization is controlled by state board an integral part of the state state board approves the operating and capital budgets of organization organization satisfies the fourth factor organization is governed by state board state board was created by act of state legislature control and supervision of organization is therefore vested in a public authority organization satisfies the fifth factor because state board was created by an act of the state legislature organization is a member institution of state board and provides educational benefits to the people of state thus statutory authority is necessary for the organization to provide educational_services to state organization satisfies the sixth factor which considers the source of operating_expenses as well as the degree of financial autonomy organization’s source of operating funds is from money services and property from commission organization is statutorily limited to specific purposes state indirectly controls organization's finances because state controls state board a majority of state board members are appointed by the governor committee requires organization to maintain financial records consistent with the requirements of committee organization satisfies all factors enumerated in revrul_57_128 accordingly organization is an instrumentality of state and is eligible to receive charitable_contributions under sec_170 of the code 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 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 this letter the rulings contained in this letter are based upon information and representations submitted by the taxpayer 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 sincerely casey a lothamer senior technician reviewer exempt_organizations branch_tax exempt government entities


t c memo united_states tax_court kenneth e robinson petitioner v commissioner of internal revenue respondent docket no filed date larry d harvey for petitioner randall l preheim for respondent memorandum opinion vasquez judge this case is before the court on respondent’s motion for summary_judgment pursuant to rule unless otherwise indicated all rule references are to the tax_court rules_of_practice and procedure and all section references are to the internal_revenue_code in effect for the year in issue after a concession the sole issue for decision is whether petitioner can exclude from income wages earned during from working in antarctica background at the time he filed the petition petitioner resided in vail colorado during petitioner performed services at mcmurdo station in ross island antarctica on hi sec_2002 federal_income_tax return petitioner excluded wage income earned and received during for services performed in antarctica i summary_judgment discussion rule a provides that either party may move for summary_judgment upon all or any part of the legal issues in controversy full or partial summary_judgment may be granted only if it is demonstrated that no genuine issue exists as to any material fact and that the legal issues presented by the motion may be decided as a matter of law see rule b 98_tc_518 affd 17_f3d_965 7th cir we conclude that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law respondent concedes that no penalty pursuant to sec_6662 is due from petitioner for ii in general sec_61 provides that gross_income means all income from whatever source derived accordingly citizens of the united_states generally are taxed on income earned outside the geographical boundaries of the united_states unless the income is specifically excluded from gross_income 117_tc_95 affd sub nom 68_fedappx_44 9th cir affd sub nom 357_f3d_1108 10th cir exclusions from income are construed narrowly and taxpayers must bring themselves within the clear scope of the exclusion id iii sec_911 in 126_tc_89 473_f3d_790 7th cir arnett ii we addressed the arguments made by the parties herein regarding sec_911 the u s court_of_appeals for the seventh circuit agreed with our analysis of sec_911 and affirmed our conclusion that antarctica is not a foreign_country pursuant to sec_911 and the regulations thereunder arnett v commissioner f 3d pincite we shall not repeat our analysis from arnett i herein we follow our analysis and holding in arnett i and the analysis and holding of the court_of_appeals in arnett ii in 126_tc_89 affd 473_f3d_790 7th cir we concluded our opinion with a citation of sec_863 suggesting that sec_863 provided an continued iv conclusion accordingly for the reasons stated in arnett i arnett ii and herein we conclude that petitioner cannot exclude from gross_income wages earned during from working in antarctica to reflect the foregoing an appropriate order and decision will be entered continued additional reason to rule against the taxpayer id pincite see also sec_863 providing that income earned in antarctica by a u_s_person is sourced in the united_states in arnett v commissioner f 3d pincite the u s court_of_appeals for the seventh circuit addressed sec_863 in greater detail stating at the outset we think that it is important to note that considering antarctica not to be a foreign_country is compatible with the general statutory scheme notably sec_911 is found under subtitle a chapter subchapter_n of the irc which is designated tax based on income from sources within or without the united_states part i of this subchapter entitled source_rules and other general rules relating to foreign_income deems any activity in antarctica to be space_or_ocean_activity in turn the united_states is designated the source country of income from such activity when earned by a citizen_of_the_united_states sec_863 although this provision does not provide a definitive answer as to whether antarctica is a foreign_country it supports the conclusion that sec_911 is not intended to apply to income earned for services provided in antarctica we take this opportunity to state our agreement with the court of appeals’ conclusion set forth above see also 450_us_1


internal_revenue_service number release date index number ---------------------- ------------------------------ ------------------------------ --------------------------------------- ---------------------------- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact ---------------------- id no ------------- telephone number --------------------- refer reply to cc intl plr-159413-05 date may taxpayer corp a corp b legend -------------------------------------------------------------------------------------------- ----------------------- -------------------------------------------------------------------------------------------- ----------------------- -------------------------------------------------------------------------------------------- ------------------------ ------- ----------------------------- tax_year one country y dear ------------- this replies to your representative’s letter dated date in which your representative requests on behalf of taxpayer an extension of time under sec_301_9100-3 for taxpayer to file the election and agreement described in sec_1 2t g i with respect to the dual consolidated losses dcls incurred by corp a and corp b in tax_year one additional information was submitted in a letter dated date the information submitted for consideration is substantially as set forth below the ruling contained in this letter is predicated upon facts and representations submitted by taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling verification of the factual information representations and other data may be required as a part of the audit process plr-159413-05 in tax_year one taxpayer was the u s parent of an affiliated_group_of_corporations that filed a consolidated u s income_tax return for that year taxpayer owns directly all of the outstanding_stock of corp a which is a country y unlimited liability company taxpayer also owns corp b through two limited_liability companies corp a those two limited_liability companies and corp b were disregarded entities under sec_301_7701-3 as such corp a and corp b are hybrid_entity separate units as defined in sec_1_1503-2 corp a and corp b incurred dcls as defined in sec_1_1503-2 in tax_year one that taxpayer included in its consolidated u s income_tax return for that year due to inadvertence taxpayer failed to file with that return the election and agreement described in sec_1_1503-2t g i with respect to those dcls taxpayer represents that it filed this application_for relief before the internal_revenue_service discovered the failure_to_file the election and agreement described in sec_1_1503-2t g i sec_301_9100-3 sec_301_9100-1 provides that the commissioner has discretion to grant a taxpayer a reasonable extension of time under the rules set forth in sec_301_9100-3 to make a regulatory election under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 provides that an election includes an application_for relief in respect of tax and defines a regulatory election as an election whose due_date is prescribed by a regulation a revenue_ruling revenue_procedure notice or announcement sec_301_9100-3 provides that requests for relief subject_to this section will be granted when the taxpayer provides evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith within the meaning of sec_301_9100-3 subject_to the conditions set forth in sec_301_9100-3 and the grant of relief will not prejudice the interests of the government within the meaning of sec_301_9100-3 in the present situation the election and agreement described in sec_1 2t g i are regulatory elections as defined in sec_301_9100-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant taxpayer an extension of time provided that taxpayer satisfies the rules set forth in sec_301_9100-3 plr-159413-05 based on the facts and representations submitted we conclude that taxpayer satisfies the standards for relief as set forth in sec_301_9100-3 accordingly taxpayer is granted an extension of time of days from the date of this ruling letter for it to file the election and agreement described in sec_1_1503-2t g i with respect to the dual consolidated losses_incurred by corp a and corp b in tax_year one the granting of an extension of time is not a determination that taxpayer is otherwise eligible to file the election and agreement sec_301_9100-1 a copy of this ruling letter should be associated with the election and agreement this ruling is directed only to taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent no ruling has been requested and none is expressed as to the application of any other section of the code or regulations to the facts presented pursuant to a power_of_attorney on file in this office a copy of this ruling letter is being furnished to your authorized representative sincerely associate chief_counsel international by s richard l chewning richard l chewning senior counsel office of associate chief_counsel international enclosures copy for purposes


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 b6 plr-149061-11 date legend legend taxpayer ----------------------------------------- --------------------------------- investor parent business a corp a corp b corp c corp d corp e corp f corp g state a state b plant - a b c d e f g additive additive test rep ------------------------------------------------------------------------------------------------------------ -------------------------------- ---------------------------------------- -------------------------------------------------- --------------------------------- ----------------------------------- ---------------------------------------- ------------------------------- --------------------------------- -------------------------------- ---------------------- ------------- ------------ --------------------------- -- -------- -- ---- ---- ---- ---- --------------------- ------------------------------------ ------------------------------------------------------------------------------------------ plr-149061-11 test rep ------------------------------------------------------------------------------------------------------------ --------------------------------------------------------------- ------------------------------------------------------------------------------------------ ------------------------------------ test rep ----------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------ ------- ----------------------------------------------------------------------------------------- test rep --------------------------------------------------------------------------------------------------------------------- -- ---------------------------------------------------------------- center ---------------------------------------------------------------------------------------------------------------- ------------------------------------- date date date date date date source region a source region b -------------------------- -------------------------- ----------------------- -------------------- -------------- ----------------- -------------------------- --------------------------- dear --------------- this is in response to your request for rulings submitted by your authorized representative concerning the federal_income_tax consequences of the transaction described below background taxpayer a state a limited_liability_company is a calendar_year taxpayer and employs the accrual_method of accounting for both book and tax purposes investor is a state a corporation and wholly owned indirect subsidiary of parent a publicly traded state a corporation that is primarily engaged through its ownership of interest in subsidiaries and other companies in business a the members of taxpayer are investor and corp a a state a limited_liability_company corp a is a wholly-owned subsidiary of corp b and has elected to be taxable as a corporation for federal tax purposes corp b is wholly owned by corp c which is wholly owned by corp d corp b is engaged in the business of developing and managing various energy-related projects throughout the united_states including backup power generation projects power-house operations cogeneration facilities coke batteries and similar energy-related projects corp d is the holding_company for a number of operating companies engaged in energy-related businesses corp d is also plr-149061-11 the parent company of corp e the regulated public electric utility for a portion of state b other subsidiaries of corp d sell coal and coal transportation services throughout the united_states corp d and its affiliates are calendar_year taxpayers and employ the accrual_method of accounting for book and tax purposes on date investor purchased of the class b membership interests in taxpayer from corp a in a transaction treated as a taxable sale of a proportionate share of all of taxpayer’s assets from corp a to investor followed by a contribution of taxpayer’s assets by both investor and corp a to a newly formed partnership taxpayer constructed a facility consisting of two parallel independent production lines that are designed to produce refined_coal the two production lines presently are located at plant corp e owns plant as originally designed and constructed each of the two production lines is capable of being operated as a separate_unit to produce refined_coal plant is comprised of a coal-fired generating units with an electric generating capacity of approximately b megawatts in the aggregate plant consumes approximately c million tons of coal per year prior to the transaction with investor described above taxpayer sold production line to corp f which is wholly owned by corp b taxpayer retained ownership of production line which it now operates to produce refined_coal that is sold to corp e in addition corp f leased production line back to taxpayer on a month-to-month basis ending no later than date and taxpayer presently operates production line to produce refined_coal that also is sold to corp e all of the refined_coal is used as a fuel at plant to produce steam for the generation of electricity description of the process the process at issue for production of refined_coal currently employed at the facility involves the mixing of proprietary chemicals additives with feedstock coal prior to combustion the process the patent for the process is owned by corp g and is licensed to taxpayer corp g is entitled to certain per ton royalties based on production for_the_use_of its technology test results have shown that when mixed with coal the proprietary additives result in reduced nox so2 and mercury emissions during combustion different chemicals are targeted at specific pollutants based on the characteristics of the feedstock coal burned at the plant taxpayer has chosen a combination of additives that target the reduction of nox and mercury in the case of nox taxpayer understands that additive is believed to cause a portion of the nox to adhere to or react with the additive so that it can be captured and is not emitted in the case of mercury partnership understands that additive is believed to react with the elemental mercury in the feedstock coal so that it is converted into a chemical species of mercury mercury oxide that can be effectively captured by particulate control devices a by-product of the process is a valuable fly ash that can be used in a diverse array of applications in the steel mining and cement industries plr-149061-11 emissions reduction testing for purposes of determining emissions reductions under sec_45 of the internal_revenue_code taxpayer will arrange for pilot-scale combustion testing and laboratory analysis for redetermination purposes and will not rely on any continuous emissions monitoring system or other field testing corp b engaged the research center of a prominent university the center to conduct tests on behalf of the taxpayer at its pilot- scale combustion test facility ctf to determine the emission reductions associated with burning the refined_coal compared to the feedstock coal center reports described below state the ctf has been extensively used to research and investigate sox and nox emissions and the transformation of toxic trace metals hg mercury as and pb during the combustion of coal and other fuels or waste materials the ctf is capable of producing gas and particulate samples that are representative of those produced in industrial- and full-scale pulverized coal pc -fired boilers for purposes of qualifying the refined_coal produced at the facility center conducted pilot-scale combustion tests at its ctf on date on three blends of feedstock coal of the type typically burned at the plant subsequently on date center conducted a separate test on one blend of feedstock coals typically burned at the plant and on date center conducted another test on a single type of feedstock coal which is a component of the blends of feedstock coal typically burned at the plant the center reports explain that combustion gas analysis is provided by continuous emissions monitors cems at two locations the furnace exit which is used to monitor and maintain a specified excess air level for all test periods and the outlet of the particulate control device which is used to assess any air inleakage that may have occurred so that emissions of interest sampled at the back end of the system can be corrected for the dilution caused by the inleakage flue gas analyses were obtained from the duct at the outlet of the electrostatic precipitator esp flue gas mercury measurements were obtained separately by a continuous mercury monitor located at the flue gas ducting at the exit of the particulate control device center conducted a series of tests on the feedstock and refined_coal blends measuring the emissions with these devices test rep states that the test results indicate that the blend of coal and additives achieved the required reductions in both nox and total mercury emissions both determined on a lb btu basis to satisfy the requirements of at least nox reduction and at least mercury reduction test rep states that it is expected the emissions reduction reported would be achieved at full scale using the additive levels tested similar conclusions are reached by center in test rep and test rep plr-149061-11 separately in test rep center concluded that refined_coal production using d to e coal from source region a and f to g coal from source region b can be expected to meet the emission reduction requirements outlined in sec_45 tested coal plant currently burns a blend of subbituminous coal from a number of mines in source region a and bituminous coal from a number of mines in source region b taxpayer produces refined_coal using a blend of coals from both source regions and sells that refined_coal to plant which burns it to generate electricity from steam the rank of the source region a coal burned at the plant is classified by the american society of testing materials astm as subbituminous coal with a gross calorific value of big_number to big_number btu lb and the rank of the source region b coal burned at the plant is classified as high volatile bituminous coal with a gross calorific value of big_number to big_number btu lb the source region b coal used by taxpayer is washed at a coal preparation plant to meet the plant’s specifications the coal blend used by taxpayer as feedstock for the process contains d to e source region a coal and f to g source region b coal variations in the coal blend result from the supply and availability of the coals and the needs of the plant taxpayer requested that center test blends of the source region a and source region b coals that represent the range of coal blends to be used to produce refined_coal that will be burned to produce steam at the plant as described above the coal blend burned at the plant contains d to e source region a coal and f to g source region b coal accordingly center tested the range of coal blends in its reports described above for purposes of this letter the term tested coal refers to coal or a blend of coals comprising d to e source region a coal and f to g source region b coal center reports that based on test results over the past year refined_coal produced from all tested coal is expected to meet the emission reduction requirements outlined in sec_45 of the code when compared with the feedstock coal taxpayer expects to continue to operate with the blends and additive levels discussed in the center reports which would be consistent with long-term patterns for coal consumed at the plant if so samples will be taken for redetermination testing within six months after the last emissions test satisfying the qualified_emission_reduction requirement thereafter within six months after such date another set of samples will be taken for redetermination testing in each case samples will be collected and prepared in accordance with sampling and testing procedures set forth in the taxpayer’s operating protocols although taxpayer does not currently anticipate making changes to its coal feedstock or additive levels or using other coal sources or ranks additional testing will plr-149061-11 be conducted prior to acquiring coal feedstock from a different coal source region or of a different rank than reflected in the tested coal in the case of a change in the additive levels tests will also be run at the new minimum levels of additive as the qualified expert advises is necessary to conclude that a qualified emissions reduction will be expected for the new levels of additive in addition taxpayer may collect and test composite samples of feedstock and refined_coal to determine the average sulfur and mercury content of the samples as such samples are collected a rolling six-month average of the laboratory analyses would be computed to determine whether there has been a change_of the sulfur or mercury content by more than ten percent rulings requested based on the foregoing you have requested that we rule as follows the refined_coal produced by using the process constitutes refined_coal within the meaning of sec_45 of the code provided that such refined_coal is produced from feedstock coal that is the same source or rank as the tested coal and provided further that the refined_coal satisfies the qualified_emission_reduction test stated in sec_45 provided that the feedstock coals used to produce refined_coal during any determination_period are from the same coal source regions and of the same rank as the tested coal all feedstock coal that satisfies that criteria shall be treated as feedstock coal of the same source and rank for purposes of section dollar_figure of notice_2010_54 2010_40_irb_403 regardless of the mine from which such feedstock coal is purchased testing by center for qualified emissions reduction as set forth in its test reports satisfies the requirements of notice_2010_54 taxpayer may rely on the pilot scale testing conducted at center and subsequent permitted laboratory testing as required for a redetermination described in section a or b of notice to satisfy the qualified_emission_reduction test of sec_45 of the code regardless of subsequent normal fluctuations in operating conditions and emissions at the plant pursuant to section b of notice_2010_54 taxpayer may satisfy the redetermination requirement of section dollar_figure of notice_2010_54 by laboratory analysis establishing that the sulfur and mercury content of both the feedstock coal and the refined_coal on average do not vary by more than ten percent from the sulfur and mercury content of the feedstock coal and the refined_coal used in the most recent determination that meets the requirements of section dollar_figure of notice_2010_54 plr-149061-11 law and rationale sec_45 of the code generally provides a credit against federal_income_tax for_the_use_of renewable or alternative resources to produce electricity or fuel for the generation of steam sec_45 of the code provides that in the case of a producer of refined_coal the credit available under sec_45 of the code for any taxable_year shall be increased by an amount equal to dollar_figure5 per ton of qualified refined_coal i produced_by_the_taxpayer at a refined_coal_production_facility during the 10-year period beginning on the date that the facility was originally placed_in_service and which is ii sold by the taxpayer to an unrelated_person during such 10-year period and such taxable_year for purposes of sec_45 of the code section dollar_figure of notice_2010_54 provides that the term refined_coal means a fuel which - i is a liquid gaseous or solid fuel including feedstock coal mixed with an additive or additives produced from coal including lignite or high carbon fly ash including such fuel used as a feedstock ii is sold by the taxpayer with the reasonable expectation that it will be used for the purpose of producing steam and iii is certified by the taxpayer as resulting when used in the production of steam in a qualified_emission_reduction section dollar_figure of the notice provides that the term qualified_emission_reduction means in the case of refined_coal produced at a facility placed_in_service after date a reduction of at least twenty percent of the emissions of nitrogen oxide and at least forty percent of the emissions of either sulfur dioxide or mercury released when burning the refined_coal excluding any dilution caused by materials combined or added during the production process as compared to the emissions released when burning the feedstock coal or comparable coal predominantly available in the marketplace as of date sec_45 of the code generally provides that the term refined_coal_production_facility means a facility which is placed_in_service after date and before date section dollar_figure of notice_2010_54 generally provides that a qualified emissions reduction does not include any reduction attributable to mining processes or processes that would be treated as mining as defined in sec_613 a c or i if performed by the mine owner or operator accordingly in determining whether a qualified_emission_reduction has been achieve the emissions released when burning the refined_coal must be compared to the emissions that would be released when burning the feedstock coal feedstock coal is the product resulting from processes that are treated as mining and are actually applied by a taxpayer in any part of the taxpayer’s process of producing refined_coal from coal sec_613 of the code describes treatment processes that are not considered as mining unless they are provided for in sec_613 or are necessary or incidental to a process provided for in sec_613 any cleaning process such as a plr-149061-11 process that uses ash separation dewatering scrubbing through a centrifugal pump spiral concentration gravity concentration flotation application of liquid hydrocarbons or alcohol to the surface of the fuel particles or to the feed slurry provided such cleaning does not change the physical or chemical structure of the coal and drying to remove free water provided such drying does not change the physical or chemical identity of the coal will be considered as mining section of the notice provides in part that emissions reduction may be determined using continuous emission monitoring system cems field testing section a provides in part that cems field testing is testing that meets all the following requirements i the boiler used to conduct the test is coal-fired and steam-producing and is of a size and type commonly used in commercial operations ii emissions are measured using a cems iii if epa has promulgated a performance standard that applies at the time of the test to the pollutant emission being measured the cems must conform to that standard iv emissions for both the feedstock coal and the refined_coal are measured at the same operating conditions and over a period of at least hours during which the boiler is operating at a steady state at least percent of full load and v a qualified_individual verifies the test results in a manner that satisfies the requirement of section b section of the notice provides that methods other than cems field testing may be used to determine the emission reduction the permissible methods include a testing using a demonstration pilot-scale combustion furnace if it establishes that the method accurately measures the emission reduction that would be achieved in a boiler described in section a i and a qualified_individual verifies the test results in a manner that satisfies the requirements of section c i ii v and vi of the notice and b a laboratory analysis of the feedstock coal and the refined_coal that complies with a currently applicable epa or astm standard and is permitted under section b i or ii section of the notice provides that a taxpayer may establish that a qualified_emission_reduction determined under section dollar_figure applies to production from a facility by a determination or redetermination that is valid at the time the production occurs a determination or redetermination is valid for the period beginning on the date of the determination or redetermination and ending with the occurrence of the earliest of the following events i the lapse of six months from the date of such determination or redetermination ii a change in the source or rank of the feedstock coal that occurs after the date of such determination or redetermination or iii a change in the process of producing refined_coal from the feedstock coal that occurs after the date of such determination or redetermination section of the notice provides that in the case of a redetermination required because of a change in the process of producing refined_coal from the feedstock coal the redetermination required under section dollar_figure must use a method that meets the requirements of section in any other case the redetermination plr-149061-11 requirement may be satisfied by laboratory analysis establishing that - a the sulfur s or mercury content of the amount of refined_coal necessary to produce an amount of useful energy has been reduced by at least percent percent in the case of facilities placed_in_service after date in comparison to the s or mercury content of the amount of feedstock coal necessary to produce the same amount of useful energy excluding any dilution caused by materials combined or added during the production process b the s or mercury content of both the feedstock coal and the refined_coal do not vary by more than percent from the s and mercury content of the feedstock coal and refined_coal used in the most recent determination that meets the requirements of the notice finally section dollar_figure of the notice provides that the certification requirement of sec_3 c of the notice is satisfied with respect to fuel for which the refined_coal credit is claimed only if the taxpayer attaches to its tax_return on which the credit is claimed a certification that contains the following a statement that the fuel will result in a qualified emissions reduction when used in the production of steam a statement indicating whether cems field testing was used to determine the emissions reduction if cems field testing was not used to determine the emissions reduction a description of the method used a statement that the emissions reduction was determined or redetermined within the six months preceding the production of the fuel and that there have been no changes in the source or rank of the feedstock coal used in the process of producing refined_coal from feedstock coal since the emissions reduction was most recently determined or redetermined and a declaration signed by the taxpayer in the following form under penalties of perjury i declare that i have examined this certification and to the best of my knowledge and belief it is true correct and complete with respect to the first issue the process starts with several chemical additives being added to the feedstock coal prior to its combustion in a furnace the additives provide the chemical structure that results in the reduction of emissions of nitrogen oxide and mercury during combustion section dollar_figure of the notice provides generally that a qualified emissions reduction does not include any reduction attributable to mining processes or processes that would be treated as mining if performed by the mine owner or operator in the instant case the process is not a mining process further section dollar_figure of the notice clarifies sec_45 of the code and specifically provides that refined_coal includes feedstock coal mixed with additives thus additive processes that mix certain chemicals or other additives with the coal in order to achieve emissions reductions may qualify for the refined_coal production_tax_credit additionally section dollar_figure defines comparable coal as coal that is of the same rank as the feedstock coal and that has an emissions profile comparable to the emissions profile of the feedstock coal accordingly we conclude that the coal produced by using the process constitutes a refined_coal within the meaning of sec_45 of the code provided that the refined_coal i is produced from feedstock coal that is the same source or rank as plr-149061-11 the tested coal and ii satisfies the qualified_emission_reduction test stated in sec_45 of the code with respect to the second issue the emissions profile of the refined_coal product is compared to the emissions profile of either the feedstock coal or a comparable coal predominantly available in the marketplace as of date section dollar_figure of the notice provides that a comparable coal is defined as coal that is of the same rank as the feedstock coal and that has an emissions profile comparable to the emissions profile of the feedstock coal section dollar_figure of provides that a determination or redetermination of a qualified emissions reduction is valid until the occurrence of the earliest of the following events i the lapse of six months from the date of such determination or redetermination ii a change in the source or rank of the feedstock coal that occurs after the date of such determination or redetermination or iii a change in the process of producing refined_coal from the feedstock coal that occurs after the date of such determination or redetermination accordingly we conclude that provided that the feedstock coals during any determination_period are from the same coal source regions and of the same rank as the tested coal all feedstock coal that satisfies that criteria shall be treated as feedstock coal of the same source and rank for purposes of section dollar_figure of notice_2010_54 regardless of the mine from which such feedstock coal is purchased with respect to the third issue section of the notice provides that any permissible testing method provided for in the notice can be used in emission testing for any pollutant that is a taxpayer can use different testing methods for each of nitrogen oxide sulfur dioxide or mercury provided the method used for any pollutant is a permissible method section provides that an emission test establishing a qualified_emission_reduction qualifies the refined_coal for a six-month period provided there is no change in the process for producing the refined_coal or in the source or rank of the feedstock coal therefore a taxpayer must redetermine the emission reductions to qualify for the succeeding six-month period using one or more approved methods in the instant case taxpayer will arrange for pilot-scale combustion testing and will not rely on any continuous emissions monitoring system or other field testing which is permitted under section dollar_figure of the notice specifically taxpayer will arrange with the center to conduct testing including redetermination testing at its ctf to determine the emissions reductions associated with burning the refined_coal product compared to the feedstock for purposes of qualifying the refined_coal produced at the facilities the center has conducted pilot-scale combustion tests at its ctf as documented in test rep test rep test rep and test rep in conducting such tests the center conducted tests on the feedstock and then mixed a separate sample of the feedstock with the additives so that it could conduct tests on the refined_coal product in each of its reports the center reported that the test results indicated that the blend of coal and additives achieved the required emissions reductions based on the foregoing we conclude that testing by the center for qualified emissions reductions as set forth in its test reports including interim reports satisfies the plr-149061-11 requirements of notice_2010_54 taxpayer may establish a qualified emissions reduction through testing by the center at its combustion research facility or similar pilot-scale combustion testing facilities under notice_2010_54 regardless of subsequent normal fluctuations in operating conditions and emissions at the power plants where the refined_coal is burned with respect to the fourth issue section of the notice provides in part that in the case of a redetermination required because of a change in the process of producing refined_coal from the feedstock coal the redetermination required under section dollar_figure must use a method that meets the requirements of section in any other case the redetermination requirement may be satisfied by laboratory analysis establishing that the sulfur and mercury content of both the feedstock coal and the refined_coal do not vary by more than percent from the sulfur and mercury content of the feedstock coal and refined_coal used in the most recent redetermination that meets the requirements of the notice accordingly we conclude that taxpayer may satisfy the redetermination requirement of section dollar_figure of notice_2010_54 by laboratory analysis establishing that the sulfur and mercury content of both the feedstock coal and the refined_coal on average do not vary by more than percent from the sulfur and mercury content of the feedstock coal and refined_coal used in the most recent determination that meets the requirements of section dollar_figure of notice_2010_54 no opinion is expressed regarding any other issue not specifically addressed in this ruling letter in particular no opinion is expressed with respect to whether taxpayer or any of its affiliates is the producer of the refined_coal for purposes of sec_45 of the code whether there has been a sale of refined_coal to an unrelated_person or when the facility was in fact placed_in_service in accordance with the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representatives a copy of this ruling 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 this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides it may not be used or cited as precedent we are sending a copy of this letter_ruling to the industry director sincerely peter c friedman senior technician reviewer branch plr-149061-11 office of associate chief_counsel passthroughs special industries


department of the treasury employer_identification_number contact person - id number contact telephone number uil internal_revenue_service p o box cincinnati oh release number release date date date legend b foundation c llc d project e religion f country g university h dollar amount j dollar amount m dollar amount n dollar amount p dollar amount dear you asked for advance approval of your educational grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax our determination we approved your procedures for awarding educational grants based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding educational grants meet the requirements of code sec_4945 as a result expenditures you make under these procedures will not be taxable description of your request b a foundation and the sole member of c operates an educational grant program called d the purpose of d is to expose participants to leadership and career opportunities nurture those skills and encourage participants to consider a career as a professional in the e community while b will primarily fund d b may request that other donors enter into their original grant agreement with the recipient in providing additional funding you plan on operating in connection with b to become an additional donor party to the grant agreement in doing so you will provide grants to the original recipient and funds would be administered and monitored under the procedures established by b described below you initially plan to invite anywhere from to college students who have demonstrated an affinity towards playing a leadership role in the e community and anticipate will seriously consider a career as a e communal professional to apply for d the first_phase of the program will involve recruitment during summer some distance learning during the fall semester of the first academic year and a scholarship and other funding for participants to spend the spring semester at a university in f currently anticipated to be g in addition to being a matriculated student program participants will participate in a number of additional educational activities which you expect to provide exclusively during the spring semester in f which may include e weekly educational seminars which will expose participants to e educational content leadership skills role models and career guidance educational tours single and multiple day tours of f consistent with the educational theme of the program opportunities to intern at educational institutions not-for-profit_organizations or other social service agencies in f planning sessions for the camp and campus projects e e e the duration of the first_phase of your program will last for approximately two years thereafter you will commit to funding new participants and the participant number will be determined after an assessment regarding the success of the program's first year and available_resources it is anticipated that you will recruit a new cohort each year to participate in phase of the program in connection with the spring semester in f you will award each participant a stipend to fully subsidize the cost of the tuition to attend their university on a financial needs basis you may also make scholarship funding available at the conclusion of phase you will invite a number of participants who you believe are likely to pursue careers as e communal professionals either as a rabbi educator social worker or not- for-profit manager to apply for a fellowship to graduate school you anticipate awarding a certain number of fellowships to deserving applicants to attend graduate school phase ii will last for the duration of the graduate program in which participants are matriculated students you anticipate focusing your recruiting efforts on the senior staff at certain summer camps that have substantial e educational programming and inviting such individuals to identify potential college age staff members who would be appropriate candidates to apply to your program your staff will then send promotional materials and an application to such senior camp staff and once potential applicants are identified you will send such materials directly to such college students program staff will also visit certain summer camps that have substantial e educational programming to recruit potential program participants and will market the program directly to college age staff at such camps letter catalog number 58222y in the event that your selection process does not yield enough candidates to meet the participant numbers you may broaden your process and recruit college students directly from nominations recommendations and referrals from other sources either by seeking individuals who have a track record of service within the e community or by virtue of the fact that such individuals are already scheduled to spend the spring semester abroad at an university in f you will provide such individuals with recruitment materials and an application that needs to be completed individuals will then interview with your staff while the participants are in f for the spring semester they will receive guidance on the development of an educational project that they will be responsible for implementing during the following summer and on their college campus during the following academic year you will underwrite the cost and will provide a mentor providing guidance on the development of this project you will also underwrite a budget expected on average to equal approximately j dollars to support implementation costs such amount will be dependent upon a budget the participant will submit for approval upon successful implementation during the summer you will pay a m dollars honorarium to the participant during the second year participants in good standing would be invited to an in person multi- day educational conference in the united_states you will underwrite all travel lodging and food expenses to enable participants to attend the conference program participants are also expected to implement an educational program on their college campus or in the local community during the second year of your program in connection with such project you will underwrite the cost of and provide a mentor to provide guidance on the development of this project expected on average to equal approximately h dollars to support implementation costs such amount will be dependent upon a budget that the participant would submit for your approval upon successful completion of this project during the second year of the program you will pay a honorarium to the participant j dollars selection for participation in phase will be based in connection with the following parameters the level of engagement in e life of the applicant the level of the interest in pursuing a career as a e communal professional aptitudes of the applicant in a career as a communal e professional academic achievements strength of the letter of reference for such applicant interview and interpersonal skills as determined by your staff to obtain a fellowship during phase ii of d the participant must demonstrate to your staff superior leadership abilities a passion to serve and work in a professional capacity in a not-for-profit organization that serves the e community and superb academic capabilities demonstrated in their coursework at their f university and at their domestic college fellowship recipients are eligible for up to three years of support or the duration of the academic program if it is longer than three years fellowship recipients must be accepted into a graduate program and remain in good standing at the academic institution where they are studying in order to continue to receive your financial support letter catalog number 58222y phase ii participants will also participate in certain distance learning and may be asked to mentor future phase participants phase ii participants may also be invited to an educational conference held in the united_states selection for participation in phase ii will be based on the level of promise and aptitudes that the phase participants have demonstrated towards fulfilling the program objective - pursuing a successful career as a communal professional either as a rabbi cantor educator social worker or administrator for a not-for-profit organization only individuals who were participants in phase will be considered for phase il staff will consider the criteria referenced above including the ability and capacity of the participant to plan and implement a quality program of e content in either a camp or campus setting the n dollars tuition subsidy that each participant will receive is intended to match the tuition cost at their university in f for the spring semester additionally on a needs basis participants are eligible to apply for additional scholarship support if they can demonstrate to you that their families would be unable to afford the costs of attending your program in f the amount of such scholarship would directly relate to the anticipated actual costs of attending spring semester and the demonstrated financial needs of the participant additionally while in f during the spring semester you will pay for the costs of the educational programming and touring that is made available exclusively to program participants you will award certain participants with a fellowship up to p dollars annually for up to three years to enable fellows to attend graduate school to study to become a rabbi cantor educator social worker or not-for-profit manager such fellowship awards may cover the costs of tuition housing and living_expenses and will be subject_to your discretion you anticipate staffing an advisory committee to inform shape and advise the development and implementation of the program you will identify knowledgeable educators with expertise and experience in the subject matter that will be the focus of your program your committee may also be tapped to identify alternative locations programs from which you will recruit prospective participants committee members may also have input on the recruitment process and selection criteria your selection committee will be comprised of your staff and an outside expert consultant knowledgeable in program implementation engaged by you to support the development and implementation of your program selection committee members will be individuals with knowledge and expertise in operating educational programs for college students and may or may not comprise members of the advisory committee your selection committee will also be responsible for identifying any relationships between potential applicants and disqualified persons ensuring that individuals with any such relationship s are not invited to participate in your program during phase i officers or other c representatives will regularly communicate with participants in the program to receive feedback on how the grant monies are being spent this will include reports on all aspects of the educational programming in the united letter catalog number 58222y states and f as well as the implementation of the two related projects in connection with phase ii of the project your staff will monitor and remain in regular communication with fellowship recipients and will monitor how grant monies are being spent in connection with phase ii of d c in its sole discretion may take any and all such reasonable and appropriate steps including possible legal action to compel compliance of use of funds for their intended purpose including requiring the return of all or any portion of funds remitted and the withholding of funds not previously remitted in connection with d potential participants who are related to whether by blood or through marriage or have any direct or indirect affiliation with d staff or any of your or c’s directors officers or employees will be ineligible to participate no director officer_or_employee of you or c or any other person who is involved in the process of selecting applicants will be in a position to derive a private benefit directly or indirectly if certain participants are selected over others you will pre-screen any and all non-u s applicants using the treasury department's specially designated nationals and blocked persons list sdn the fbi’s most wanted terrorists list the state department's terrorist exclusion list the u s bureau of industry and security's denied persons list unverified list and entity list and similar lists maintained by the united nations basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure e e e the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is - - - ascholarship or fellowship subject_to sec_117 and is to be used for study at an educational_organization described in sec_170 or a prize or award subject_to the provisions of sec_74 if the recipient of the prize or award is selected from the general_public or to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar skill or talent of the recipient to receive approval of its educational grant procedures sec_53_4945-4 requires that a private_foundation show e e the grant procedure includes an objective and nondiscriminatory selection process the grant procedure results in the recipients performing the activities the grants were intended to finance letter catalog number 58222y the foundation plans to obtain reports to determine whether the recipients have performed the activities that the grants were intended to finance other conditions that apply to this determination this determination covers only the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don’t differ significantly from those described in your original request this determination applies only to you it may not be cited as precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes in your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations p o box cincinnati oh you cannot make grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and must further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 b you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary we've sent a copy of this letter to your representative as indicated in your power_of_attorney please keep a copy of this letter in your records if you have any questions please contact the person listed at the top of this letter enclosures notice redacted letter sincerely director exempt_organizations letter catalog number 58222y


internal_revenue_service cor-115823-00 number info release date uil the honorable richard w pombo u s house of representatives washington d c dear mr pombo date thank you for your letter of date signed by you and a number of your colleagues encouraging the internal_revenue_service to immediately readjust the business standard mileage rate to reflect the recent increase in gasoline prices you note that the increased cost has particularly burdened self-employed taxpayers who use automobiles for business purposes gasoline prices we realize increased gasoline prices are an economic burden however the cost of gasoline is only one part of the business standard mileage rate which includes fixed and operating automobile costs these costs include depreciation or lease payments maintenance and repairs insurance and license and registration fees in addition to gasoline and oil less than one-third of the cents per mile rate comes from the cost of gasoline and oil thus an immediate adjustment in the rate taking into account the recent increase in gasoline prices might not be significant setting the business standard mileage rate the rate is a national average amount determined by an annual study performed by an independent_contractor who is an expert in the cost analysis of business use of automobiles the contractor uses recent data from each state on the component costs of operating the most popular automobiles the contractor then combines this data to achieve a national composite cents-per-mile rate advantages of using the business standard mileage rate reducing a taxpayer’s record-keeping burden is the principal advantage of using the rate gasoline prices rise and fall during the year but taxpayers may continue to use the same rate without having to keep records of actual expenses although rising gasoline prices can be a disadvantage for taxpayers who use the rate falling prices can work to their advantage for example although gasoline prices fell in for all of and through date taxpayers were able to use the rate that reflected the earlier higher prices taxpayer’s options to deduct the ordinary and necessary expenses of using an automobile for business purposes a taxpayer must substantiate the cost date place and business_purpose of each use of the automobile by adequate_records for the cost the taxpayer has two options cid substantiate actual cost by keeping records or by other_sufficient_evidence cid use the business standard mileage rate using the rate gives approximate not actual costs taxpayers can deduct the actual business_expenses of using a personally-owned automobile and this may be advantageous when automobile costs are rising publication travel entertainment gift and car expenses contains further information on how taxpayers should substantiate expenses i have enclosed the relevant pages from that publication i am sending a similar letter to your colleagues i hope this information is helpful please call me at or robert a berkovsky at if you have any questions sincerely charles o rossotti enclosure


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi 4-plr-131730-01 date june re legend grantor a grantor b grantors child a child b child c date date date trust trust trust state statutes c d e dear this is in response to your date letter submitted on behalf of the grantors in which you requested rulings concerning the income gift and estate_tax consequences of the creation of trust trust and trust collectively the trusts charitable lead unitrusts the information submitted states that grantor a and grantor b the grantors husband and wife executed trust trust and trust on date and designated c as trustee the grantors transferred assets to the trusts on date the plr-131730-01 grantors have three children child a child b and child c trust article ii paragraphs a b and c of trust provide that the trust is irrevocable the grantors declare that the trust agreement constitutes an irrevocable gift in trust of all property at any time held under the trust agreement and that any right title or reversionary_interest of any kind or description which either or both of the grantors now have or may subsequently acquire either by operation of law or otherwise is renounced and relinquished forever except as specifically provided in the trust agreement the grantors waive and release the power_to_revoke alter amend or modify the trust either alone or in conjunction with any other person the trustee has the power to amend the trust agreement in any manner required for the sole purpose of ensuring that the trust created qualifies as a charitable_lead_unitrust within the meaning of sec_170 sec_2522 and sec_2055 of the internal_revenue_code under article iii paragraphs a and b the term of the trust shall commence on the effective date of the trust and shall end on the 20th anniversary of the effective date the trustee shall pay in cash in_kind or partly in each to such organization or organizations selected by the trustee that is are described in each of sec_170 sec_170 sec_2055 and sec_2522 to be used in furtherance of each organization’s religious and charitable purposes in such proportions as are determined by the trustee in each taxable_year during the trust term an amount equal to six percent of the net fair_market_value of the trust assets valued as of the first day of each taxable_year of the trust the unitrust_amount the unitrust_amount shall be paid on an annual basis on the 31st day of december of each year during the trust term first from ordinary_income excluding unrelated_business_income then from short-term_capital_gain then from long-term_capital_gain then from unrelated_business_income then from tax-exempt_income and to the extent that the foregoing items for the taxable_year are not sufficient from principal any income of the trust for a taxable_year that exceeds the unitrust_amount shall be added to principal notwithstanding any existing or hereafter enacted state law no amount may be paid during the trust term to or for_the_use_of any person other than an organization described in sec_170 sec_170 sec_2055 and sec_2522 however an amount shall not be deemed to be so paid if the amount is paid for full consideration such as reasonable trustee fees article iii paragraph c provides that the first year of the trust begins with the effective date of the trust agreement date and shall end on date a 20-year period subsequent taxable years shall be on a calendar_year basis in the case of a taxable_year which is for a period of less than twelve months the unitrust_amount which must be distributed shall be such amount multiplied by a fraction the numerator of which is the number of days in the taxable_year of the trust and the denominator of which is if february is a day included in the numerator in the case of the plr-131730-01 taxable_year in which the trust term ends the unitrust_amount which must be distributed shall be such amount multiplied by a fraction the numerator of which the number of days in the period beginning on the first day of the taxable_year and ending on the date the trust term ends and the denominator for which is if february is a day included in the numerator article iii paragraph d provides that on the expiration of the trust term and after the unitrust_amount due to the charities has been distributed to the charities the trustee shall retain the remaining assets and undistributed_income in further trust for the benefit of child a the grantors’ child if child a is not then living the trustee shall pay over and distribute or retain in trust as applicable the remaining assets to or for the benefit of the grantors’ living children or lineal_descendants of a deceased child per stirpes article iii paragraph e provides that if the net fair_market_value of the assets comprising the trust is incorrectly determined by the trustee for any taxable_year during the trust term then within a reasonable period after the final_determination of the correct value the trustee shall pay to the charities in the case of an undervaluation on the basis as to each charity of the pro_rata amount of the undervaluation as it relates to the amount of distribution made to such charity or shall receive from the charities in the case of an overvaluation on the basis as to each charity of the pro_rata amount of the overvaluation as it relates to the amount of the distribution made to such charity an amount equal to the difference between the unitrust_amount actually paid plus interest and the unitrust_amount property payable plus interest article iii paragraph f provides that in computing the net fair_market_value of the assets comprising the trust during the trust term there shall be taken into account all assets and liabilities without regard to whether particular items are taken into account in determining the income of the trust all determinations of the trust’s net fair_market_value shall be in accordance with generally accepted fiduciary accounting principles and any united_states treasury requirements governing charitable lead trusts article iv provides that to the extent permitted by law no beneficiary shall have any power to dispose_of or to charge by way of anticipation any interest given to him or her and all sums payable to any beneficiary shall be free and clear of his or her debts contracts dispositions and anticipations and shall not be taken or reached by any legal or equitable process in satisfaction thereof article v paragraph c provides that notwithstanding any provision contained in the trust agreement to the contrary in no event shall any power provided to the trustee in the trust agreement or pursuant to law be construed to enable the trustee or any other person to purchase exchange or otherwise deal with or dispose_of the principal or income of the trust estate for less than adequate or full consideration in money or plr-131730-01 money’s worth or to enable the trustee or any other person to borrow the principal of the trust directly or indirectly without adequate interest or security no person other than the trustee shall have or exercise the power to vote or direct a voting of a stock or other_securities of the trust to control the investment of the trust either by directing investments or reinvestments or by vetoing opposed investments or reinvestments or to reacquire or exchange any property of the trust estate by substituting property of an equivalent value under article v paragraphs d and f notwithstanding anything contained in the trust agreement to the contrary the trustee shall be bound by the prudent investor rule set forth in state statutes the trustee is specifically empowered to retain as a part of the trust estate any limited_partnership interests and shares of stock in any closely- held corporation transferred by either or both grantors to the trust without liability for depreciation or loss to any beneficiary and without a duty to diversify for investment purposes under article vi paragraph a in the event of c’s death incompetency or resignation as trustee the successor trustee or co-trustees shall be such individual s or entity ies designated in writing by c which specifically refers to this paragraph a in default of a written designation being made by c or in the event the individual s or entity ies designated by c die become incompetent or resign the successor trustee is to be d an attorney in the event of the death incompetency or resignation of d as trustee the successor trustee is to be such individual s or entity ies designated in writing by d which specifically refers to paragraph a in default of a written designation being made by d or in the event the individual s or entity ies designated by d die become incompetent or resign the successor trustee is to be e an attorney in the event of e’s death incompetency or resignation as trustee the successor trustee is to be such individual s or entity ies designated in writing by e which specifically refers to paragraph a in default of a written designation being made by e or in the event the individual s or entity ies designated by e die become incompetent or resign the successor trustee is to be such individual or entity designated in writing by a majority of the then living adult beneficiaries of the trust who are eligible to receive any current income therefrom and who are not incompetent so long as such individual or entity that is to become the successor trustee is not a_related_or_subordinate_party as defined in sec_672 of either of the grantors or any adult beneficiary under article ix paragraph e the trustee is prohibited during the trust term from engaging in any act of self-dealing as defined in sec_4941 from retaining any excess_business_holdings as defined in sec_4943 which would subject the trust to tax under sec_4943 from making any investments which would jeopardize the charitable purpose of the trust and subject the trust to tax under sec_4944 and from making any taxable_expenditures as defined in sec_4945 plr-131730-01 trust and trust the provisions of trust and trust are identical to those of trust except that under article iii paragraph d of trust on the expiration of the trust term the trustee shall retain the remaining assets and undistributed_income in further trust for the benefit of child b if living under article iii paragraph d of trust on the expiration of the trust term the trustee shall retain the remaining assets and undistributed_income in further trust for the benefit of child c if living requested rulings you have requested the following rulings neither grantor will be treated as the owner of the trusts pursuant to sec_671 through and no portion of the income of the trusts will be taxable to either grantor the unitrust amounts payable under the trusts will be unitrust interests within the meaning of sec_25_2522_c_-3 and therefore will meet the deductible_interest requirements under sec_2522 and accordingly the grantors will be allowed a gift_tax deduction under sec_2522 for the present_value of each of the unitrust interests neither grantor has retained any interest or power in or over the trusts that would cause the trusts to be included in the grantor’s gross_estate for federal estate_tax purposes and therefore no portion of the assets of the trusts will be included in a grantor’s gross_estate for federal estate_tax purposes ruling sec_671 provides that where it is specified in subpart e part i subchapter_j chapter that the grantor or another person shall be treated as the owner of any portion of a_trust there shall then be included in computing the taxable_income and credits of the grantor or the other person those items of income deductions and credits against tax of the trust which are attributable to that portion of the trust to the extent that such items would be taken into account under chapter in computing taxable_income or credits against the tax of an individual sec_673 through specify the circumstances under which the grantor is treated as the owner of a portion of a_trust sec_673 provides that the grantor shall be treated as the owner of any portion plr-131730-01 of a_trust in which the grantor has a reversionary_interest in either the corpus or the income therefrom if as of the inception of that portion of the trust the value of such interest exceed sec_5 percent of the value of such portion sec_674 provides that the grantor shall be treated as the owner of any portion of a_trust in respect of which the beneficial_enjoyment of the corpus or the income therefrom is subject_to a power fo disposition exercisable by the grantor or a nonadverse_party or both without the approval or consent of any adverse_party sec_674 provides that sec_674 shall not apply to a power to determine the beneficial_enjoyment of the corpus or the income therefrom if the corpus or income is irrevocably payable for a purpose specified in sec_170 relating to definition of charitable_contributions under sec_675 and applicable regulations the grantor is treated as the owner of any portion of a_trust if under the terms of the trust agreement or circumstances attendant on its operation administrative control is exercisable primarily for the benefit of the grantor rather than the beneficiary of the trust sec_676 provides that the grantor shall be treated as the owner of any portion of a_trust whether or not the grantor is treated as such owner under any other provision of part i subchapter_j chapter where at any time the power to revest in the grantor title to such portion is exercisable by the grantor or a nonadverse_party or both sec_677 provides that the grantor shall be treated as the owner of any portion of a_trust whether or not the grantor is treated as the owner under sec_674 whose income without the approval or consent of any adverse_party is or in the discretion of the grantor or a nonadverse_party or both may be distributed to the grantor or the grantor’s spouse held or accumulated for future distribution to the grantor or the grantor’s spouse or applied to the payment of premiums on policies of insurance on the life of the grantor or the grantor’s spouse our examination of the trusts reveals none of the circumstances that would cause the grantors to be treated as the owners of any portion of the trusts under sec_673 sec_674 sec_676 or sec_677 our examination of the trusts reveals none of the circumstances that would cause administrative controls to be considered exercisable primarily for the benefit of the grantors under sec_675 thus the circumstances attendant on the operation of the trusts will determine whether the grantors will be treated as the owners of any portion of the trusts under sec_675 this is a question of fact the determination of which must be deferred until the federal_income_tax returns of the parties involved have been examined by the office with responsibility for such examination in addition the ordering of income distributions provided in article iii paragraph plr-131730-01 b of the trusts will not be given effect for federal_income_tax purposes because the ordering provision has no economic_effect on the distributions independent of tax consequences the trusts require that the trusts pay annually a stated unitrust_amount to an organization described in sec_170 sec_170 sec_2055 and sec_2522 regardless of the amount or character of income earned by the trusts instead income distributed to the organizations described in sec_170 sec_170 sec_2055 and sec_2522 shall consist of the same proportion of each class of the items of income of the trusts as the total of each class bears to the total of all classes see sec_1_642_c_-3 of the income_tax regulations ruling sec_2501 imposes a tax on the transfer of property by gift sec_2511 provides that the federal gift_tax shall apply whether a transfer is in trust or otherwise whether the gift is direct or indirect and whether the property is real or personal tangible or intangible sec_25_2511-2 of the gift_tax regulations provides in part that a gift is incomplete in every instance in which a donor reserves the power to revest the beneficial title to the property in himself a gift is also incomplete if and to the extent that a reserved power gives the donor the power to name new beneficiaries or to change the interests of the beneficiaries as between themselves sec_2522 provides that in computing taxable_gifts for the calendar_year there shall be allowed as a deduction the amount of all gifts to or for_the_use_of certain governmental entities certain corporations organized and operated exclusively for religious charitable scientific literary or educational_purposes and certain other fraternal and veterans organizations sec_2522 provides that where a transfer is made to both a charitable and a noncharitable person or entity no deduction shall be allowed for the charitable portion of the gift unless in the case of interests other than charitable_remainder interests such interest is in the form of a guaranteed annuity or is a fixed percentage distributed yearly of the fair_market_value of the property to be determined yearly a unitrust_interest sec_25_2522_c_-3 states that the term unitrust_interest means in irrevocable right pursuant to the instrument of transfer to receive a payment not less often than annually of a fixed percentage of the net fair_market_value determined annually of the property which funds the unitrust_interest in computing the net fair_market_value of the property which funds the unitrust_interest all assets and liabilities shall be taken into account without regard to whether particular items are taken into account in determining the income from the property the net fair_market_value of the property which funds the unitrust_interest may be determined on any one date during the year or by taking the average of valuations made on more than one date during the plr-131730-01 year provided that the same valuation_date or dates and valuation methods are used each year payments under a unitrust_interest may be paid for a specified term of years or for the life or lives of certain individuals each of whom must be living at the date of the gift and can be ascertained at such date in this case under the terms of the trusts qualified charitable organizations are given the irrevocable right to receive annually an amount equal to six percent of the net fair_market_value of the assets in the trusts determined annually the unitrust_amount we conclude that the unitrust amounts payable under the trusts are unitrust interests within the meaning of sec_25_2522_c_-3 and therefore will meet the deductible_interest requirements of sec_2522 accordingly the grantors will be allowed a gift_tax_charitable_deduction under sec_2522 for the present_value of the unitrust amounts in trust trust and trust value determined as of the date of the funding of trusts the amount of the charitable deduction will be determined under sec_25_2522_c_-3 although unmarketable assets may be transferred to the trusts the trusts provide that the valuations are to be performed by the trustee and under the terms of the trusts the trustee would be an independent_trustee within the meaning of sec_1_664-1 ruling sec_2033 provides that the value of the gross_estate shall include the value of all property to the extent of the interest therein of the decedent at the time of his her death under sec_2035 if the decedent made a transfer by trust or otherwise of an interest in property or relinquished a power with respect to any property during the 3-year period ending on the date of decedent’s death and the value of such property or an interest therein would have been included in the decedent’s gross_estate under sec_2036 sec_2037 sec_2038 or sec_2042 if such transferred interest or relinquished power had been retained by the decedent on the date of death then the value of the gross_estate shall include the value of any property or interest therein which would have been so included sec_2036 provides that the value of the gross_estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer except in case of a bona_fide sale for an adequate_and_full_consideration in money or money’s worth by trust or otherwise under which the decedent has retained for life or for any period not ascertainable without reference to the decedent’s death or for any period which does not in fact end before the decedent’s death- the possession or enjoyment of or the right to the income from the property or plr-131730-01 the right either alone or in conjunction with any person to designate the persons who shall possess or enjoy the property or the income therefrom sec_20_2036-1 of the estate_tax regulations provides that for purposes of sec_2036 an interest or right is treated as having been retained or reserved by the decedent if at the time of the transfer there was an understanding express or implied that the interest or right would later be conferred sec_2037 provides that the value of the gross_estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time after date made a transfer except in the case of a bona_fide sale for an adequate_and_full_consideration in money or money’s worth by trust or otherwise if possession or enjoyment of the property can through ownership of such interest be obtained only by surviving the decedent and the decedent has retained a reversionary_interest in the property and the value of such reversionary_interest immediately before the death of the decedent exceed sec_5 percent of the value of such property sec_2038 provides that the value of the gross_estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer except in case of a bona_fide sale for an adequate_and_full_consideration in money or money’s worth by trust or otherwise where the enjoyment thereof was subject at the date of death to any change through the exercise of a power in whatever capacity exercisable by the decedent alone or by the decedent in conjunction with any other person to alter amend revoke or terminate or where any such power is relinquished during the 3-year period ending on the date of the decedent’s death sec_2039 provides that the value of the gross_estate shall include the value of an annuity_or_other_payment receivable by any beneficiary by reason of surviving the decedent under any form of contract or agreement if under such contract or agreement an annuity_or_other_payment was payable to the decedent during life sec_2041 provides that the value of the gross_estate shall include the value of all property to the extent of any property with respect to which the decedent has at the time of death a general_power_of_appointment or with respect to which the decedent has at any time exercised or released such a power_of_appointment by a disposition which had the property been owned by the decedent such property would be includible in the decedent's gross_estate under sec_2035 through inclusive sec_2041 provides that a general_power_of_appointment is a power which is exercisable in favor of the decedent the decedent’s estate the decedent’s creditors or the creditors of the decedent’s estate except that a power to consume plr-131730-01 invade or appropriate property for the benefit of the decedent which is limited by an ascertainable_standard relating to the health education support or maintenance of the decedent shall not be deemed a general_power_of_appointment in the present case trust trust and trust are irrevocable a fixed percentage of the value of the respective trust property determined annually will be distributed to organizations described in each of sec_170 sec_170 sec_2055 and sec_2522 for a 20-year period thereafter the remaining property in the trusts will pass to or for the benefit of the grantors’ children and their descendants the grantors have retained no interest or reversion in the trusts and no right to alter amend or revoke the trusts or to receive an annuity_or_other_payment from the trusts during the grantors’ lives in addition the grantors hold no general_power_of_appointment over the property in the trusts accordingly assuming there is no understanding express or implied between the grantors and the trustee regarding the disposition of the amounts received by the trusts we conclude that no portion of the assets of trust trust or trust will be included in either grantor’s gross_estate for federal estate_tax purposes 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 the 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 above no opinion is expressed as to the federal tax consequences of the facts described above under the cited provisions or any other provisions of the code or regulations in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to the grantors 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 sincerely yours _________________________ lorraine e gardner assistant to branch chief branch associate chief_counsel passthroughs and special industries enclosure copy for purposes