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 b03 plr-101178-10 date july legend company -------------------------------------------------------------------------------------------- ----------------------- state -------- d1 d2 d3 n parent a ------------------------- --------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- --- -------------------------------------------------------------------------------------------- ----------------------- -------------------------------------------------------------------------------------------- ------------------------ shareholders -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- plr-101178-10 -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- ------------------------ dear ------------- this letter responds to a letter dated date submitted on behalf of company by its authorized representatives requesting rulings under sec_1362 and sec_1362 of the internal_revenue_code code facts company was incorporated under state law on d1 parent an s_corporation owned of the stock of company an election to treat company as a qualified_subchapter_s_subsidiary qsub was made effective on d1 on d2 a purchased n of the outstanding company stock from parent it was intended for company to continue to be treated as a pass-through entity however a form_2553 election by a small_business_corporation was not timely filed when company became aware of the failure_to_file form_2553 and the ineligible shareholder parent distributed all of its remaining company shares to shareholders in accordance with their percentage holdings in parent on d3 company represents that the presence of an ineligible shareholder was inadvertent company and shareholders agree to make any adjustments consistent with the treatment of company as an s_corporation as may be required by the secretary law 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 plr-101178-10 sec_1361 provides that the term small_business_corporation means 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 one class of stock sec_1361 provides that except as provided in regulations prescribed by the secretary for purposes of the code - i a corporation which is a qsub shall not be treated as a separate corporation and ii all assets liabilities and items of income deduction and credit of a qsub shall be treated as assets liabilities and such items as the case may be of the s_corporation sec_1361 provides that for purposes of sec_1361 the term qualified_subchapter_s_subsidiary means any domestic_corporation which is not an ineligible_corporation as defined in sec_1361 if - i percent of the stock of such corporation is held by the s_corporation and ii the s_corporation elects to treat such corporation as a qsub sec_1361 provides in part that if a corporation’s status as a qsub terminates such corporation and any successor_corporation shall not be eligible to make an election under sec_1362 to be treated as an s_corporation before it sec_5th taxable_year which begins after the 1st taxable_year for which such termination was effective unless the secretary consents to such election sec_1_1361-5 of the income_tax regulations provides that a qsub election will terminate at the close of the day on which an event occurs that renders the subsidiary ineligible for qsub status under sec_1361 sec_1_1361-5 provides that in the case of s and qsub elections effective after date if a corporation’s qsub election terminates the corporation may without requesting the commissioner’s consent make an s election before the expiration of the five-year period described in sec_1361 if immediately following the termination the corporation or its successor_corporation is otherwise eligible to make an s election and the relevant election is made effective immediately following the termination of the qsub election sec_1362 provides that except as provided in sec_1362 a small_business_corporation may elect in accordance with the provisions of sec_1362 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 plr-101178-10 year or b at any time during the taxable_year and on or before the 15th day of the third month of the 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 the election the secretary may treat such an election as timely made for the taxable_year and sec_1362 shall not apply sec_1362 provides in 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 were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such ineffectiveness steps were taken so that the corporation for which the election was made is a small_business_corporation and the corporation for which the election was made and each person who was a shareholder in the corporation at any time during the period specified pursuant to sec_1362 agrees to make adjustments consistent with the treatment of the 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 the corporation shall be treated as an s_corporation during the period specified by the secretary conclusions based on the facts submitted and representations made we conclude that company has established reasonable_cause for failing to make a timely s_corporation_election thus we conclude that company is eligible for relief under sec_1362 accordingly if company 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 shall be treated as timely made a copy of this letter should be attached to the form_2553 filed with the service_center a copy is enclosed for that purpose company failed to timely file an election to be treated as an s_corporation effective d2 had company timely filed the election it would have been ineffective because company had an ineligible shareholder on d2 based solely on the facts submitted and representations made we conclude that company's election to be treated as an s_corporation effective d2 would have been ineffective and also conclude that the ineffectiveness would have been inadvertent within the meaning of sec_1362 under the provisions of sec_1362 company will be treated as an s_corporation effective d2 and thereafter provided that company's s_corporation_election is not otherwise plr-101178-10 terminated under sec_1362 from d2 through d3 shareholders will be treated as if they held the shares in company directly company and shareholders must file federal_income_tax returns consistent with company being an s_corporation accordingly shareholders in determining their respective income_tax liabilities must include their pro_rata shares of separately and nonseparately computed items of company under sec_1366 make any adjustments to stock basis under sec_1367 and take into account any distributions made by company under sec_1368 if company or shareholders fail to treat company as described above this letter_ruling will be null and void except as expressly provided herein we express or imply no opinion concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we express or imply no opinion regarding whether company is otherwise eligible to be an s_corporation or whether company was a valid qsub 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 the ruling contained in this letter is 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 ruling_request it is subject_to verification on examination in accordance with the power_of_attorney on file with this office we are sending a copy of this letter to company's authorized representatives sincerely s tara p volungis acting chief branch office of the associate chief_counsel passthroughs special industries enclosures copy for sec_6110 purposes copy of this letter


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi b03-plr-101399-02 date date legend company parent1 parent2 d1 d2 state country dear this letter responds to a letter dated date submitted by company requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election to be treated as an association_taxable_as_a_corporation for federal tax purposes under sec_301_7701-3 effective d1 facts according to the information submitted company was organized under the laws of country on d1 company is owned by parent1 and parent2 both state corporations company has not yet filed its first return for the year ending d2 following its formation company intended that it be treated as a association_taxable_as_a_corporation for federal tax purposes however company’s legal and tax representatives inadvertently failed to timely file the required form_8832 entity classification election company became aware of the failure_to_file the form_8832 prior to any contact by the irs law sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes under sec_301_7701-2 an entity with more than one owner can be classified as an association_taxable_as_a_corporation or as a partnership for federal tax purposes sec_301_7701-3 states that unless it elects otherwise a foreign eligible_entity with more than one owner will be classified a partnership for federal tax purposes if at least one of its members does not have limited_liability sec_301_7701-3 provides in part that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing form_8832 entity classification election with the applicable service_center sec_301_7701-3 provides in part that an election made under sec_301_7701-3 will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six 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_9100-1 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 an announcement published in the internal_revenue_bulletin sec_301_9100-1 and provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301 a conclusions based solely on the facts and representations submitted we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied accordingly company is granted an extension of time to file form_8832 with the appropriate service_center to elect to be treated as an association_taxable_as_a_corporation effective d1 until days following the date of this letter the election should be made by following the procedures set forth in form_8832 and a copy of this letter should be attached to the election a copy is enclosed for that purpose 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 sincerely yours william p o’shea acting associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


t c summary opinion united_states tax_court juan a ramirez and rebecca ybarra-ramirez petitioners v commissioner of internal revenue respondent docket no 9335-11s filed date juan a ramirez and rebecca ybarra-ramirez pro sese harry j negro for respondent summary opinion jacobs judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case unless otherwise indicated section references are to the internal_revenue_code in effect for the year at issue and all rule references are to the tax_court rules_of_practice and procedure after concessions the issues for decision are whether dollar_figure in fees juan ramirez received in from univision radio broadcasting texas l p univision for off-air appearances and promotional services performed on behalf of sponsors referred to by the parties as talent and remote fees were earned by him as an independent_contractor or as an employee of univision and whether expenses associated with the talent and remote fees paid to mr ramirez are deductible as business_expenses on schedule c profit or loss from business of petitioners’ joint form_1040 u s individual_income_tax_return or as in the notice_of_deficiency respondent determined that petitioners were not entitled to dollar_figure in charitable_contribution deductions petitioners did not dispute this adjustment in their petition or at trial we therefore deem that adjustment conceded see rule b respondent made several errors in the notice_of_deficiency the totality of which benefited petitioners respondent does not wish to increase petitioners’ taxable_income for to reflect the resulting benefit to petitioners as a consequence of these errors unreimbursed employee business_expenses on schedule a itemized_deductions of form_1040 to the extent that the amount of the expenses exceed sec_2 of petitioners’ adjusted_gross_income background some of the facts have been stipulated and they are so found we incorporate by reference the parties’ stipulation of facts and accompanying exhibits at all relevant times petitioners resided in texas rebecca ybarra- ramirez is a party to this case by virtue of her having signed the joint income_tax return during mr ramirez was employed by univision as an on-air personality and program director for radio station kxtn in san antonio texas pursuant to his employment agreement with univision mr ramirez agreed to host a five-hour-a-day six-days-a-week radio program work as an announcer at the radio station attend staff meetings promote the station by meeting with persons in the entertainment advertising and related fields and make off-air appearances promoting kxtn for these services mr ramirez received a base salary plus a bonus and univision stock_options pursuant to his employment agreement mr ramirez agreed to render services subject_to univision’s supervision direction and control he further agreed to conform to univision’s standards of professional conduct and to comply with univision’s instructions directions requests and policies relating to on-air professionalism and artistic taste and judgment moreover pursuant to the employment agreement univision had the unqualified right to change edit and otherwise alter the content or the personnel involved in the production of mr ramirez’s program in kxtn was struggling financially and univision was considering shutting its kxtn’s doors as kxtn’s program director mr ramirez took it upon himself to find additional radio sponsors initially he joined the station’s salespeople in meetings with potential advertisers but he soon developed his own base of sponsors mr ramirez established a direct personal relationship with his sponsors working hand-in-hand with them from the start of the advertising campaign to its end they had no written contracts just handshake agreements mr ramirez set the amount to be paid to him for his promotional services without input from univision or kxtn the amounts he received for these services varied from year to year depending on how hard he hit the bricks ie the amount of effort mr ramirez exerted in working with his sponsors mr ramirez assisted the sponsors in developing their respective advertising campaigns including the drafting of their copy points which outlined those elements of the advertising campaign that the sponsors desired to highlight he promoted their products and or services both during on-air broadcasts and on off- air appearances at sites designated by the sponsors mr ramirez’s promotional work for his sponsors was not governed by his employment agreement with univision neither univision nor kxtn had direct input in the contents of the script indeed univision’s and kxtn’s only involvement was to ensure that the script did not contain fraudulent material and mr ramirez did not use language that would jeopardize the radio station’s broadcasting license the fees mr ramirez charged his sponsors for promotional services corresponded to his popularity and his show’s ratings mr ramirez was careful to state his station’s call letters and use his radio name of jonny ramirez whenever he promoted his sponsors’ products services in reality the sponsors were paying for mr ramirez’s radio persona as much as his promotional ideas the charges for mr ramirez’s promotional services were included as a line item in univision’s monthly invoice to the sponsors the sponsors paid univision for mr ramirez’s promotional services univision then included the talent and remote fees so collected for mr ramirez’s services in his paycheck hence univision was used as a conduit for payment of mr ramirez’s promotional services to the sponsors on each earnings statement mr ramirez’s compensation was bifurcated--his salary was categorized as regular and payment for his promotional services was categorized as talent remote univision withheld federal_income_tax as well as payroll_taxes ie social_security_tax and medicare_tax with respect to each of these two categories univision timely issued a form_w-2 wage and tax statement to mr ramirez for univision reported mr ramirez’s total compensation ie both his regular pay reflecting his wages and the payment for the talent and remote fees in box wages tips other comp even though fees for mr ramirez’s promotional services were outside the scope of his employment agreement in explaining this apparent discrepancy univision radio san antonio’s general manager dan wilson stated in a letter attached to petitioners’ income_tax return included in juan ramirez w-2 income are amounts paid in previous years sponsors paid promotional fees directly to radio personalities some radio personalities failed to report these payments on their income_tax returns and the internal_revenue_service in some instances challenged deductions claimed by the sponsors for fees paid to the radio personalities thus inclusion of mr ramirez’s fee in univision’s invoice and payment for mr ramirez’s services to univision was to a large extent for tax reasons to juan ramirez through the radio station for talent services provided to clients and advertisers petitioners timely filed their federal_income_tax return the return reported all of mr ramirez’s income including the talent and remote fees as wages on line of form_1040 the return also included a schedule c on which petitioners claimed deductions for dollar_figure in expenses related to mr ramirez’s promotional work for his sponsors the schedule c did not report his dollar_figure in talent and remote fees the schedule c included a statement written in part v other expenses which stated note w-2 gross includes freelance talent income of dollar_figure see letter from emplyer sic attached and included a copy of mr wilson’s letter petitioners’ accountant kenneth davis a certified_public_accountant whose client base included other radio personalities testified as to why he prepared petitioners’ tax_return in this manner t he only other way i could have done it would be to show a schedule and then back out from the wages a -- the and put it on schedule c with a note that this represents freelance talent fees included in the w-2 at that point it would create a problem because i’d get a cp2000 notice that information on the tax_return did not agree with what was reported by the payers believing that reporting petitioners’ income in this way could lead to problems with the internal_revenue_service mr davis requested univision to report the talent and remote fees on form-1099-misc miscellaneous income instead of on form_w-2 but univision refused to do so because according to mr davis that’s the way the irs wants it discussion the commissioner’s determinations are presumed correct and taxpayers bear the burden of proving that those determinations are erroneous rule a 290_us_111 petitioners assert that although mr ramirez was an employee of univision with respect to his radio personality duties as described in his employment agreement he was an independent_contractor with respect to the promotional services he provided to his sponsors consequently the business_expenses related to those services were deductible on schedule c on the other hand respondent asserts that mr ramirez was a common_law_employee of univision with respect to all of his earnings consequently the talent and remote fees are employee wages and the expenses associated with those earnings are not deductible on schedule c respondent does not contest the accuracy as to the amounts reported by petitioners for mr ramirez’s work expenses but maintains that those expenses are deductible as miscellaneous_itemized_deductions on schedule a to the extent that the expenses exceed of petitioners’ adjusted_gross_income see sec_62 sec_67 whether an individual is an employee or an independent_contractor is a factual question to which common_law principles apply sec_3121 503_us_318 weber v commissioner 103_tc_378 aff’d 60_f3d_1104 4th cir factors relevant in determining the existence of an employment relationship include the degree of control exercised by the principal over the details of the work which party invests in the facilities used by the worker the opportunity of the worker for profit or loss whether the principal can discharge the individual whether the work is an integral part of the principal’s regular business the permanency of the relationship the relationship the parties believe they were creating and the provision of employee_benefits nlrb v united ins co 390_us_254 117_tc_263 weber v commissioner t c pincite see also sec_31 d - c employment_tax regs setting forth criteria for identifying employees under common_law rules all of the facts and circumstances are considered and no one factor dictates the outcome ewens miller inc v commissioner t c pincite petitioners and respondent agree that mr ramirez is an employee of univision for purposes of his radio program and the ancillary duties he performed pursuant to the terms of his employment agreement but the fact that an individual is an employee in one capacity does not foreclose the possibility that the individual may independently contract with the employer in another capacity reece v commissioner tcmemo_1992_335 the services mr ramirez rendered in promoting the products and or services of his sponsors are not among the duties envisaged in the employment agreement we therefore must determine whether in promoting his sponsors’ products services mr ramirez was acting as an employee of univision i degree of control although not the exclusive inquiry the degree of control exercised by the principal over the worker is the crucial test in determining the nature of a working relationship see 538_us_440 104_tc_140 in an employer-employee relationship the principal must have the right to control not only the result of the employee’s work but also the means and method used to accomplish that result 63_tc_621 potter v commissioner tcmemo_1994_356 to have the requisite control the principal need only possess the right to control the details of the person’s work the principal need not actually exercise that control 69_tc_1055 moreover if the nature of the job mandates a more independent approach such as professional services a lesser degree of control exercised by the principal may still lead to a finding of an employer-employee relationship see bilenas v commissioner tcmemo_1983_ the record does not demonstrate that univision possessed the requisite degree of control to establish that mr ramirez was acting in his capacity as an employee with respect to promoting his sponsors’ products services reece v commissioner tcmemo_1992_335 and robinson v commissioner tcmemo_2011_99 aff’d 487_fedappx_751 3d cir provide useful guidance in deciding this matter in reece the taxpayer was employed by a university as a full- time professor but in addition to his professorial duties he provided corporate seminar services to multiple clients in his spare time some of the seminars he designed and led were taught through the university’s executive education program in classrooms provided by the university these seminars were short and not offered for college credit the taxpayer wrote his own course materials and syllabi even though those materials were published by the school and were not permitted to be sold separately we held that the taxpayer’s position as a professor was undoubtedly that of an employee despite the degree of independence inherent in that position but we further held that for purposes of his seminars the taxpayer was an independent_contractor in robinson the taxpayer was a vocational instructor at temple university his courses were not part of the university’s regular curriculum they were part of a program offered to nonstudents temple university provided the taxpayer with classroom space and governed his class enrollment the taxpayer bore no risk of loss and had no possibility of earning a profit other than his agreed compensation although temple university controlled the curricula and set the deadline for the taxpayer’s finished product the taxpayer wrote and updated his course materials without oversight by the school laying heavy emphasis on the fact that the taxpayer prepared his own course materials we held that temple university did not exercise sufficient control_over the taxpayer to treat him as an employee like college professors radio personalities such as mr ramirez are provided with substantial independence and mr ramirez was given wide latitude in programming his show he also as part of his duties under his employment agreement broadcasted commercials for the radio station but like the taxpayer in reece mr ramirez acted outside the scope of his employment with univision with respect to his promotional services in reece the university did not require the taxpayer to conduct seminars although it did support him in that it paid him to conduct the seminars on campus and provided the facilities similarly univision did not require mr ramirez to find sponsors as part of his duties as a radio personality under his employment agreement rather he took this duty upon himself when the radio station faced possible closure mr ramirez developed his relationships with the sponsors helped create the marketing campaign copy points and scripts and set his own fees for promotional services without supervision or input from univision admittedly univision exercised some control_over mr ramirez to ensure that the scripts he read during his radio show did not violate governmental requirements ie rules against fraud and broadcast decency standards and the radio station had the right to reject broadcasting on-air commercials from mr ramirez’s sponsors but the radio station retained approval control_over all broadcasted commercials including those that were pre-recorded in both reece and robinson the universities’ right of final approval over all course materials did not in and of itself establish an employer-employee relationship we are mindful that mr ramirez’s promotional value to his sponsors was inextricably linked to his broadcast ratings he was valuable to them only as long as he was a popular radio personality and to maintain that status mr ramirez had to act in a manner which met with the approval of univision and kxtn but comporting oneself in a manner that does not cause the termination of one’s employment does not by itself rise to the requisite level of control contemplated by the law this factor weighs in favor of classifying mr ramirez as an independent_contractor ii provision of facilities used univision provided the facilities from which mr ramirez broadcasted his program and his sponsors’ commercials however mr ramirez worked with his sponsors and made paid off-air appearances at their facilities or sites designated by them we judge this factor to be neutral iii opportunity for profit or loss the opportunity for profit or loss indicates one’s independent_contractor status blodgett v commissioner tcmemo_2012_298 mr ramirez offered his services to advertisers desiring him to be a spokesperson for their products or services mr ramirez’s promotional fees were paid_by those advertisers and as he testified his income depended on how hard he hit the bricks moreover the amount mr ramirez earned was dependent on the satisfaction of his sponsors mr wilson’s letter makes clear that univision was merely a conduit through which mr ramirez was paid for his appearances and promotional services this factor weighs in favor of classifying mr ramirez as an independent_contractor iv right to discharge the worker because mr ramirez was an employee of univision it had the right to discharge him however with respect to the promotional sponsors only his sponsors had the right to terminate their promotional relationship this factor weighs in favor of classifying mr ramirez as an independent_contractor v integral part of the business selling and broadcasting advertising is the manner by which a radio station earns a profit it is an integral part ie the so-called mother’s milk of the station’s business but mr ramirez was not employed by univision to sell on-air advertising rather he was employed to create on-air content ie his radio program univision hired him to be a radio personality not a salesperson other individuals were employed to create and sell commercials although it is true that mr ramirez was required to broadcast commercials payment for that aspect of his services to univision and kxtn was included in his regular pay as an employee mr ramirez’s promotional services to his sponsors as their spokesperson was separate from the services he rendered to univision and kxtn this factor weighs in favor of classifying mr ramirez as an independent_contractor vi permanency of the relationship it is undisputed that during mr ramirez was an employee of univision and kxtn and as such he had a permanent relationship with them however univision did not require mr ramirez to pursue sponsors and his compensation under his employment agreement was not affected by his success in performing promotional work for his sponsors with respect to mr ramirez’s relationship with his sponsors the number of sponsors varied from year to year and was based on the time and effort mr ramirez expended this factor weighs in favor of classifying mr ramirez as an independent_contractor vii the relationship the parties believed they created we are satisfied that mr ramirez univision and the sponsors each believed the relationship created was that between mr ramirez and his sponsors mr wilson’s letter makes clear that mr ramirez was providing services to clients and advertisers ie his sponsors and that univision was simply acting as a conduit with respect to the remuneration by the sponsors to mr ramirez this factor weighs in favor of classifying mr ramirez as an independent_contractor viii the provision of employee_benefits univision provided mr ramirez with numerous employee_benefits these benefits were provided under the terms of the employment agreement and accrued to mr ramirez without regard to the number of his sponsors the sponsors paid mr ramirez a fee for his services not employee_benefits this factor weighs in favor of classifying mr ramirez as an independent_contractor ix conclusion all of the aforementioned factors either favor classifying mr ramirez as an independent_contractor or are neutral giving due consideration to the totality of the facts presented we hold that the talent and remote fees paid to mr ramirez for his appearance and promotional services were earned by him as an independent_contractor consequently the dollar_figure talent and remote fee that petitioners listed as wages on their income_tax return should be reclassified as schedule c gross_receipts respondent does not dispute the deductibility of or the amounts of the various business_expenses reported on schedule c after reclassifying the talent and remote fees of dollar_figure as schedule c gross_receipts and giving consideration to the dollar_figure in business_expenses we find that petitioners’ schedule c net business profits for properly totaled dollar_figure because of petitioners’ concession see supra note a computation under rule is required to reflect the foregoing decision will be entered under rule


internal_revenue_service significant index no department of the treasury webhdg a to oggutact participants person to contact telenhane number petes peply fain date dec in re _ this letter constitutes notice that with respect to the above-named defined benefit pension_plan we have granted a waiver of a the minimum_funding_standard for the plan_year ending december the waiver for the plan_year ended date has been granted in accordance with sec_412 of the internal_revenue_code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa the waived amount_is the contribution which would otherwise be required to reduce the balance in the funding_standard_account to zero as of the end of the plan_year for which this waiver has been granted after taking into account the contributions made through date portion of the company has experienced a hardship as shown by losses in its the company has also however the company three fiscal years ended date-1999 had de_minimis cash on hand for the same period has maintained positive net_worth increased revenue and has reduced operating costs as shown by a de_minimis loss for its fiscal_year ended date that was only percent of the loss in addition the company has the plan was amended in to cease additional benefit accruals the company contributed of the contribution otherwise needed to satisfy the minimum_funding those contributions raised the plan’s current_liability funding percentage to contribution otherwise needed to satisfy the minimum_funding_standard or accordingly the waived amount is approximately of the standard for the plan_year your attention is called to sec_412 of the code and sec_304 of erisa which describe the consequences which would result in the event the plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived_funding_deficiency remains unamortized based on the information submitted accumulated funding deficiencies existed for the six plan years ended date- on which a tax is imposed under sec_4971 of the code tax for these years has been paid the al sec_3 oa when filing amended form_5500 for the plan_year ending december a copy of this letter should be attached to the schedule b actuarial information we have sent a copy to the emplovee plans area manager for the a copy of this letter is being sent to your authorized representative pursuant to a form_2848 power_of_attorney on file with our office area office in s sincerely t welland o ames e holland jr manager employee_plans actuarial group tax exempt and government entities diviston of sy


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 fip b5 plr-149384-08 date date legend agency ---------------------------------------------------------------------- corporation ------------------------------------------------------------ county state state law -------------------------------------- --------------------- ---------------------------------------------- ----------------------------------------------------------------------------------------- -- state law ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ state law -------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------ dear ----------------- this responds to your request for a ruling that bonds issued by the corporation will be treated as issued on behalf of the county for purposes of sec_103 of the internal_revenue_code the code facts and representations the county is a political_subdivision of the state governed by an elected board_of representatives the county’s board agency is a public benefit corporation of the plr-149384-08 state created pursuant to state law agency is governed by members who are appointed by and serve without compensation at the pleasure of the county’s board pursuant to state law the county caused the corporation to be formed as a public instrumentality of the county and approved its certificate of incorporation the corporation is a not-for-profit local development_corporation organized under state law to assist the county with carrying out the public purposes of relieving and reducing unemployment promoting and providing for additional and maximum employment bettering and maintaining job opportunities instructing or training individuals to improve or develop their capabilities for such jobs carrying on scientific research for the purpose of aiding the county by attracting new industry to the county by encouraging the development of or retention of an industry in the county and by lessening the burdens of government and acting in the public interest under state law in furtherance of its purposes corporation is empowered to construct acquire rehabilitate and improve for use by others industrial or manufacturing plants in the county to assist financially in such construction acquisition rehabilitation and improvement to maintain such plants for others in such territory to disseminate information and furnish advice technical assistance and liaison with federal state and local authorities with respect thereto and to acquire by purchase lease gift bequest devise or otherwise real or personal_property or interests therein to borrow money and to issue negotiable bonds notes and other obligations therefore to sell lease mortgage or otherwise dispose_of or encumber any such plants or any of its real or personal_property or any interest therein upon such terms as it may determine state law further provides that in carrying out such powers the corporation will be performing an essential government function the county is the sole member of the corporation the county’s board appoints the corporation’s governing board_of directors the corporation’s board from members of the agency the corporation’s board serves without compensation at the pleasure of the county’s board the corporation is required to undergo annual independent audits and to submit those audits to the county and to the state to prepare and submit its annual budget to the county and to the state and to form governance and audit committees to ensure the corporation is in compliance with state laws the corporation may not amend its by-laws or certificate of incorporation without the consent of the chairman of the county’s board no part of the corporation’s net_earnings will inure to the benefit of any private person upon dissolution title to all property owned by the corporation will vest in and become the property of the county bonds issued by the corporation will not be backed by the full faith and credit of the county and thus will be non-recourse to the county bonds issued by the corporation will be secured solely by the creditworthiness of a particular project the county’s board will provide the public approval under sec_147 for private_activity_bonds issued by plr-149384-08 the corporation that are intended to be tax-exempt for federal_income_tax purposes under sec_103 of the code pursuant to state law the income and operations of the corporation are exempt from state taxation pursuant to state law interest on bonds that are tax-exempt for federal_income_tax purposes is exempt from state_income_tax law and analysis sec_103 of the code provides in general that gross_income does not include interest on any state_or_local_bond sec_103 defines a state_or_local_bond for purposes of sec_103 and sec_141 through as an obligation of a state or political_subdivision thereof sec_1_103-1 of the income_tax regulations provides in part that interest upon obligations of a state territory a possession_of_the_united_states the district of columbia or any political_subdivision thereof hereinafter collectively or individually called state_or_local_government unit is not includable in gross_income sec_1_103-1 provides in part that an obligation issued by or on behalf of any state_or_local_governmental_unit by a constituted_authority empowered to issue such an obligation is the obligation of such a unit revrul_57_187 1957_1_cb_65 holds that bonds issued by an industrial development board the entity are considered issued on behalf of a political_subdivision of the state under the following facts and circumstances the entity is formed only after the governing body of the political_subdivision has formally approved the entity's creation the board_of directors of the entity is elected by the governing body of the political_subdivision and serves without compensation the entity is empowered to issue bonds in furtherance of the purposes for which it is established bonds issued by the entity are payable solely out of revenues and receipts derived from the leasing or sale by the entity of its projects the political_subdivision is not liable for the payment of principal or interest on any of the bonds of the entity the entity is exempt from all state taxation and interest on bonds issued by the entity is exempt from state taxes the entity is a nonprofit organization and none of its net_earnings inure to the benefit of any private person and upon dissolution of the entity title to all property it owns vests in and becomes the property of the political_subdivision which creates it although this revenue_ruling deals with an industrial development board the analysis contained therein has been applied to a variety of governmental entities comparing the facts of revrul_57_187 to the facts as presented we conclude that the corporation qualifies as an on behalf of issuer of the county for purposes of sec_1 b the corporation was formed as a public instrumentality of the county only after the county’s board formally approved its incorporation the corporation’s board is appointed by and serves at the pleasure of the county’s board the corporation is plr-149384-08 empowered to issue bonds in furtherance of its purposes bonds issued by the corporation will be nonrecourse to the county the income and operations of the corporation are exempt from state taxation under state law pursuant to state law interest on federally tax-exempt_bonds issued by the corporation will be exempt from state_income_tax the corporation is a nonprofit corporation and no part of its net_earnings will inure to the benefit of any private person upon dissolution of the corporation title to all property owned by it will vest in and become the property of the county conclusion based on the foregoing we conclude that bonds issued by the corporation will be treated as issued on behalf of the county for purposes of sec_103 of the code 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 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 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 materials submitted in support of the request for rulings it is subject_to verification on examination in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your representative sincerely associate chief_counsel financial institutions and products by ________________________ carla a young assistant to the branch chief branch


internal_revenue_service department of the treasury index number washington dc person to contact refer reply to cc intl-plr-112133-97 date legend taxable years taxpayer tin foreign_corporation a country m x business date a date b t e t d r e i r o r e o m e t s this is in response to your letter dated date which requested rulings on two issues the first of these addressed whether in any taxable_year the amount includible in the gross_income of a united_states_shareholder of a foreign_personal_holding_company fphc as undistributed_foreign_personal_holding_company_income ufphci under sec_551 of the internal_revenue_code is limited by the corporation's current and accumulated_earnings_and_profits e_p subsequently and in part in response to our ruling herein a second request for a ruling was withdrawn the ruling contained in this letter is 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 materia submitted plr-112133-97 in support of the request for rulings it is subject_to verification on examination the information you submitted for consideration is summarized below taxpayer a united_states citizen owns of the shares of stock of foreign_corporation a a country m corporation incorporated on date a that is engaged in the x business in the course of x business foreign_corporation a generates rental income primarily from unrelated persons but also from transactions with related_persons foreign_corporation a's rental income is foreign_base_company_shipping_income within the meaning of sec_954 foreign-corporation a incurs substantial expenses that are directly related to its x business as a result of these expenses foreign_corporation a has incurred losses from its x business since its inception and anticipates incurring continued losses in one or more subsequent taxable years some of these expenses may not be deductible in the year in which they are incurred as the result of the application of sec_469 regarding the limitation of passive_activity_losses and credits foreign_corporation a also earns interest_income which constitutes foreign_personal_holding_company_income fphci under both sec_954 and sec_553 on account of its x business operating losses it is expected that foreign_corporation a will have an accumulated deficit in earnings_and_profits at the end of its fye ending date b issue do current and accumulated_earnings_and_profits limit an inclusion of ufphci under sec_551 by a united_states_shareholder of a fphc under sec_551 the united_states_shareholders of a fphc on the last day of the corporation's taxable_year on which they meet the ownership test of sec_552 for fphc status must include in gross_income as a dividend an appropriate portion of the corporation's undistributed_foreign_personal_holding_company_income ufphci under sec_551 in general the amount to be included is the amount the united_states_shareholder would have received as a dividend if on such last day there had been distributed by the company and received by the shareholder the proportionate part of the company's ufphci for the taxable_year represented by the ratio of the portion of the taxable_year up to and including such last day to the entire taxable_year amplifying on this requirement sec_1_551-2 provides in part that the amount which each shareholder must include in gross_income is the amount which he would have received as a dividend if his allocable share of ufphci had in fact been distributed by the foreign_personal_holding_company as a dividend on the last day of its taxable_year emphasis supplied the emphasized language does not parallel plr-112133-97 the language of sec_551 under sec_551 a fphc's accumulated e_p is decreased to take into account any amounts required to be included as a dividend in the income of its united_states_shareholders under sec_551 a united_states shareholder's basis in its stock in a fphc is increased to reflect amounts included in the shareholder's income under sec_551 ufphci is defined by sec_556 and regulations thereunder as the fphc's taxable_income determined as if the fphc were a domestic_corporation with certain adjustments minus dividends_paid ufphci is not limited by a fphc's current or accumulated e_p regulations under the fphc provisions and the examples illustrating those regulations do not clearly state whether in each case in which the treatment of an amount of ufphci by the fphc's united_states_shareholders is at issue the corporation has current or accumulated e_p sufficient to result in all of its ufphci being reportable by those shareholders under sec_551 for the reasons discussed in the paragraphs below regarding both the specific statutory language of sec_551 as well as the overall structure of the fphc and personal_holding_company phc regimes we conclude that current and accumulated e_p limits the amount of ufphci that may be included in the gross_income of a fphc's united_states_shareholders unlike sec_541 et seq regarding the phc tax sec_551 expressly incorporates an e_p limitation on the amount of ufphci by referring to the amount which would have been received as a dividend by the shareholder had it been _ distributed by the corporation at the end of its taxable_year or on the last date on which it met the stock ownership test of sec_552 amounts exceeding current and accumulated e_p would not be treated as a dividend under sec_316 it is the existence of this limitation which accounts for certain differences in the overall structure of the fphc provisions specifically the existence of an e_p limitation in determining the amount of ufphci that is includible in the gross_income of a fphc's united_states_shareholders is the only plausible explanation for certain distinctions between the phc and fphc regimes as discussed in the following paragraphs sec_541 through address the taxation of phc's in many respects a phc is definitionally similar fo a fphc uniike a fphc however a phc itself is subject_to tax on its undistributed_personal_holding_company_income uphci as defined in sec_545 at a flat rate for taxable years beginning after under plr-112133-97 sec_545 uphci is defined in general as the corporation's taxable_income for the year adjusted as described in sec_545 c and d and minus the dividends_paid deduction described in sec_561 through certain code provisions apply to both the phc and fphc regimes because both the phc tax and the tax imposed on a shareholder with respect to ufphc were intended to penalize corporate accumulations of earnings and to promote making actual distributions of such earnings to shareholders in the case of a phc or to require deemed distributions of such earnings to shareholders in the case of a fphc the provisions common to both the phc and fphc regimes include those pertaining to the dividends_paid deduction and to consent dividends described in sec_565 because of differences in the manner in which taxes are imposed on a phc with respect to its uphci and on the shareholders of a fphc with respect to its ufphci however certain portions of those provisions must differentiate between phc's and fphc's in particular sec_316 provides that in the case of a phc the term dividend is not limited to its ordinary meaning ie a distribution out of current or accumulated e_p as described in sec_316 but generally includes any distribution_of_property by the phc to its shareholders to the extent of its uphci for such year the legislative_history of this provision makes clear that sec_316 was intended as a relief provision to take into account the possibility that a phc's uphci for the taxable_year might exceed its e_p as for example when a net_capital_loss reduces e_p but does not reduce either the corporation's taxable_income or its uphci see h rept 77th cong ist sess reprinted in 1942_2_cb_372 pincite see also sec_1_316-1 example in such a case absent the special rule_of sec_316 the phc would not be able to distribute a dividend during the taxable_year or within two and one-half months thereafter as provided in sec_563 and so would be unable to avoid the phc tax no comparable provision applies with respect to fphc's none is necessary we conclude because of the dividend limitation already incorporated in sec_551 another distinction between the treatment of phc's and fphc's arises in the characterization of their liquidating distributions prior to a phc's liquidating distributions were treated as dividends for purposes of the dividends_paid deduction to the extent of the corporation's accumulated e_p as a result income that would have been subject_to the phc tax escaped such treatment in the year in which a phc was liquidated its shareholders included such amounts in income at capital_gains rates rather than as ordinary_income see h rept 88th cong ist sess reprinted in part c b pincite in the revenue act of p l congress narrowed the circumstances under which a phc's liquidating distributions would be treated as dividends under sec_316 by adding to the code sec_316 under that subsection only certain designated liquidating distributions to noncorporate phc shareholders may be treated in whole or in part under sec_316 2a plr-112133-97 as dividends and then only to the extent such distributions do not exceed such shareholders’ allocable shares of uphci p l f sec_316 prevents a phc with noncorporate shareholders that wishes to liquidate from finding itself unable to make a dividend distribution and therefore to avoid the phc tax by eliminating all of its uphci for the year in which it liquidates ' the revenue act of dealt with the consequences of certain fphc liquidating distributions in a different manner sec_551 was amended to provide that distributions in liquidation do not affect the calculation of the corporation's ufphci for that taxable_year instead the fphc's shareholders are in effect taxed on the liquidation proceeds to the extent of e_p as a hypothetical dividend the additional basis in their stock yielded by sec_551 offsets the gain from the liquidating_distribution which is thus in substance converted from capital_gain to ordinary_income see p l f see also technical explanation of h_r reprinted as an appendix to h rept 88th cong 1st sess in part c b pincite again this treatment is consistent with and explicable only in light of the existence of an e_p limitation on the amount of ufphci accordingly based on both the express language of sec_551 and the overall statutory scheme and purposes of the fphc provisions we conclude that current and accumulated e_p limits the amount of ufphci that is includible in the gross_income of the fphc's united_states_shareholders we believe that our view of sec_1_551-2 is bolstered by certain parallel language in sec_555 and the terms of regulations thereunder sec_555 applies for purposes of determining whether a foreign_corporation meets the gross_income_test of sec_551 and for purposes of determining the amount of ufphci includible in its shareholders’ gross_income it provides that in the case of a foreign_corporation which is a shareholder of another fphc the first company must include in its gross_income as a dividend the amount it would have received had the lower-tier corporation made a distribution on the last day of the taxable_year in-which it met the stock ownership test of sec_551 sec_555 was intended to reach down through a chain of corporations to bring the income of fphc's into the fphc the income of which is treated as income of american stockholders h rept ' under sec_562 certain post-1963 liquidating distributions by a phc to a corporate shareholder are treated as dividends for purposes of the dividends_paid deduction but not for purposes of determining the corporate shareholder's treatment on the liquidation see technical explanation of h_r reprinted as an appendix to h rept 88th cong ist sess in part c b pincite my plr-112133-97 no 75th cong 1st sess where sec_1_551-2 states that each shareholder must include in gross_income the amount which he would have received as a dividend if his allocable share of ufphci had in fact been distributed by the foreign_personal_holding_company as a dividend on the last day of its taxable_year emphasis supplied sec_1 a by contrast provides that the amount to be included in the gross_income of the upper-tier company as a dividend ts the amount the first company would have received as a dividend if on the relevant date there had been distributed by the the lower-tier fphc and received by the shareholders the relevant portion of the second company's ufphci the regulation does not repeat the phrase as a dividend a second time and so does not suggest that the deemed_distribution be treated as supported by e_p and so necessarily characterized as a dividend thus sec_555 includes language that parallels the relevant statutory language found in sec_551 but sec_1 a fails to echo sec_1_551-2 by suggesting that a deemed_distribution of ufphci by a lower-tier to an upper-tier foreign company must necessarily be treated as a dividend by the upper-tier foreign company even in the absence of e_p in the lower-tier corporation we view the absence of symmetry between these two regulations as additional confirmation of the existence of an e_p limitation in sec_551 conclusion based on the facts and representations made we hold that current and accumulated e_p limits the amount of ufphci that is includible in the gross_income of the taxpayer as fphci this ruling is directed only to the taxpayer s 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 etter j 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 s phyllis e marcus phyllis e marcus chief branch associate chief_counsel international


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 corp b04 plr-151395-09 date date legend parent sub business ---------------------------------------------------- ----------------------- ---------------------------------------------------- ----------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------- state a ------------- a b ---- -- dear ------------------ plr-151395-09 this letter responds to your date request for rulings as to the federal_income_tax consequences of a proposed transaction the information provided in that letter and in later correspondence is summarized below facts parent is a state a holding_company and the common parent of an affiliated_group_of_corporations that files a consolidated federal_income_tax return the parent group consists of parent and sub a state a limited_liability_company that is treated as a corporation for federal_income_tax purposes parent has issued and outstanding one class of voting common_stock which is closely held sub which is engaged in business has one class of membership interests a percent of which is held by parent the remaining b percent is held by a key_employee of sub a membership interest in sub entitles its holder to vote and to receive dividend distributions based upon the holder’s ownership_interest in sub in addition upon liquidation assets are to be distributed to members in accordance with their membership interest proposed transaction parent proposes to merge into sub in a statutory merger under state a law the merger pursuant to the terms of a proposed joint agreement and plan of merger the following will occur parent and sub will become one entity which will be sub sub will survive the merger as a state a limited_liability_company parent’s separate existence will cease sub will possess all of its and parent’s rights privileges and franchises all of parent’s property and assets will be transferred to and vested in sub sub will be responsible for all of the obligations and liabilities of parent taxpayer has made the following representations in connection with the merger representations plr-151395-09 a b c d e f g h i j the fair_market_value of the sub membership interests received by each parent shareholder will be approximately equal to the fair_market_value of the parent stock surrendered in the exchange there is no plan or intention by sub or any person related to sub as defined in sec_1_368-1 to acquire or redeem any membership interests issued in the transaction either directly or through any transaction agreement or other arrangement with any other person sub has no plan or intention to sell or otherwise dispose_of any of parent’s assets acquired in the transaction except for dispositions made in the ordinary course of business or transfers described in sec_368 of the code the liabilities of parent assumed by sub and the liabilities to which the transferred assets of parent are subject were incurred by parent in the ordinary course of its business following the merger sub will continue its historical business parent sub and the shareholders of parent will pay their respective expenses if any incurred in connection with the transaction there is no intercorporate indebtedness existing between parent and sub that was issued acquired or will be settled at discount no two parties to the transaction are investment companies as defined in sec_368 and iv of the code parent is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 of the code the fair_market_value of the assets of parent transferred to sub will equal or exceed the sum of the liabilities assumed by sub plus the amount of liabilities if any to which the transferred assets are subject and the fair_market_value of the assets of sub will exceed its liabilities immediately after the transaction plr-151395-09 k at least percent of the proprietary interest in parent will be exchanged for sub membership interests and will be preserved within the meaning of sec_1_368-1 based solely on the information submitted we rule as follows rulings provided the merger qualifies as a statutory merger in accordance with state a law the merger will constitute a reorganization under sec_368 parent and sub will each be a_party_to_a_reorganization within the meaning of sec_368 parent will recognize no gain_or_loss on the transfer of its assets to sub in exchange for sub membership interests and the assumption by sub of any liabilities of parent sec_357 and sec_361 sub will recognize no gain_or_loss on the receipt of parent assets in exchange for its membership interests and the assumption of parent’s liabilities if any sec_1032 sub’s basis in the assets received from parent will equal the basis of such assets in the hands of parent immediately before the merger sec_362 sub’s holding_period in the assets received from parent will include the period during which such assets were held by parent sec_1223 parent will recognize no gain_or_loss on the distribution of the sub membership interests to its shareholders sec_361 sub will succeed to and take into account the items of parent as described in sec_381 as provided by sec_381 and sec_1_381_c_2_-1 sub will succeed to and take into account the earnings_and_profits or deficits in earnings_and_profits of parent as of the close of the date of the merger a parent shareholder will recognize no gain_or_loss on the receipt of sub membership interest in exchange for parent stock sec_354 plr-151395-09 a parent shareholder’s basis in the sub membership interest received will equal the basis of the parent stock surrendered in exchange therefor sec_358 a parent shareholder’s holding_period of the sub membership interest received will include the period during which the parent shareholder held the parent stock surrendered in exchange therefor provided that the parent stock was held as a capital_asset on the date of the merger sec_1223 parent will cease to exist as a result of the merger and because sub will not have any subsidiaries at that time the parent consolidated_group will terminate pursuant to sec_1_1502-75 sub will begin a separate taxable_year on the day after the merger which will be treated as a separate taxable_year for federal_income_tax purposes pursuant to sec_1_1502-75 and sec_1_1502-76 parent will be required to file a consolidated federal_income_tax return up to and including the day of the merger sec_1_1502-75 and sec_1_1502-76 caveats no opinion is expressed about the tax treatment of the proposed transaction under other provisions of the code and regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the transaction that are not specifically covered by the above rulings procedural statements this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent a copy of this letter must be attached to the taxpayer’s federal_income_tax return for the taxable_year in which the transaction is consummated alternatively taxpayers filing plr-151395-09 their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of this letter sincerely __________________ lewis k brickates chief branch office of associate chief_counsel corporate cc


internal_revenue_service department of the treasury index number washington dc number release date telephone number refer reply to cc dom p si plr-110315-99 date nov person to contact legend x d1 state this is in reply to a letter dated date together with subsequent correspondence submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts x was incorporated under state law x intended to be treated as an s_corporation for federal_income_tax purposes effective on d1 but the s election was not timely filed law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective if an s election is made within the first two and one-half months of a corporation’s taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made if the election is made after the first two and one-half months of a corporation’s taxable_year then the corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made plr-110315-99 sec_1362 provides that if no election is made pursuant to sec_1362 or if made the election is made after the date prescribed for making such an election and the secretary determines there was reasonable_cause for the failure to timely make the election then the secretary may treat such an election as timely made for such taxable_year and effective as of the first day of that tax_year x did not file a timely election to be treated as an s_corporation under sec_1362 effective on d1 x has however established reasonable_cause for not making a timely election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and representations made and provided that x otherwise qualifies as a subchapter_s_corporation we conclude that x will be recognized as an s_corporation effective d1 within days from the date of this letter x should submit a properly completed form_2553 with a copy of this letter attached to the relevant service_center 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 s 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 sincerely signed david r haglund david r haglund senior technical reviewer branch office of the assistant chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes