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 plr-141757-06 date january legend parent ------------------------------------------------------------ state x llc1 ------------- ------------------------------------------------- ------------------------------------------------ ---------------------- --------------------------------- ---------------------- ------------------------------------ ----------------------- ------------------------------------------------------------- ----------------------- ------------------------------- ----------------------- --------------------------- ----------------------- ------------------------------- ----------------------- --------------------------------------- ----------------------- ------------------------------------------ ----------------------- ------------------------------------------------- ----------------------- sub1 included members plr-141757-06 omitted members --------------------------------- ----------------------- ------------------------------------ ----------------------- ------------------------------ ----------------------- ------------------------------------------ ----------------------- --------------------------------- ----------------------- ------------------------------ ----------------------- -------------------------------------- ----------------------- ------------- ----------------------- ----------------------------------------- ----------------------- ------------------------- ----------------------- -------------------------------- ----------------------- --------------------------------------- ----------------------- --------------------------- ----------------------- --------------------------- ----------------------- ------------------------------------ ----------------------- ------------------------------- ---------------------- ---------------------------- ---------------------- -------------------------- ------- ------- firm year1 year2 date1 ------------------- plr-141757-06 date2 date3 dear -------------- ------------------------ -------------------------- this is in reply to correspondence submitted on your behalf by your authorized representative requesting a ruling under sec_1_1502-75 of the income_tax regulations the regulations additional information was received subsequently facts parent is a statex corporation on date1 parent was a party to a series of transactions the transaction which resulted in parent becoming the common parent of a consolidated_group of entities parent group prior to the transaction llc1 was a limited_liability_company taxed as a partnership for federal_income_tax purposes its membership interests were owned by a mixture of c corporations partnerships llcs and one s_corporation within the meaning of sec_1361 of the internal_revenue_code code sub1 sub1 owned of the stock of qualified subchapter_s subsidiaries collectively omitted members in the transaction parent acquired all of the outstanding_stock of the c_corporation members the stock of sub1 the member interests in the participating llc members and a minority interest in one of the partnership members each corporate llc1 member became a wholly-owned subsidiary of parent collectively included members through which parent indirectly owned of llc1 parent intended that after the transaction any separate business operations of the llc1 members would be transferred to llc1 the transfers and conducted solely by llc1 the sole asset of each llc1 member would then consist of its membership interest in llc1 in connection with the transaction parent understood that certain steps were to be taken so that the operations formerly conducted by sub1 and its subsidiaries could be contributed to llc1 as a result of the transaction sub1 ceased to be an s_corporation filed a short- period return including the required notification of termination of s status for the taxable_year ended date1 and became an included member of parent’s year1 consolidated_return parent engaged firm to prepare the year1 consolidated federal_income_tax return the initial consolidated_return form_1120 for the year ended date3 was prepared and only included members joined in the making of the consolidated_return for such year by filing forms authorization and consent of subsidiary_corporation plr-141757-06 to be included in a consolidated_income_tax_return pursuant to sec_1_1502-75 and h of the regulations further the omitted members were not included on the parent group’s form_851 affiliations schedule for that year parent filed the return on or before date2 in early year2 parent discovered that sub1 was still the sole owner of the omitted members rather than llc1 and that sub1’s stock in the omitted members had not been part of the transfers in the transaction as parent had believed and understood as soon as parent became aware that the omitted members had been owned by sub1 and not llc1 at the time parent filed its consolidated_return for the year ended date3 parent determined to file this letter_ruling request under sec_1_1502-75 of the regulations representations parent and its subsidiaries including the omitted members were eligible to file a parent and its subsidiaries including omitted members would have validly consolidated_return that included all of its members for the year ended date3 elected to file a consolidated_return for the year ended date3 which return would have included parent included members and omitted members and failed to do so only based on a mistake of fact income gain deduction or credit from the date it joined the parent group and expenses on a timely filed consolidated_return for year ended date3 parent and its subsidiaries reported all of their income each of the omitted members had conducted no business had no items of law sec_1_1502-75 of the regulations provides that a group which did not file a consolidated_return for the immediately preceding_taxable_year may file a consolidated_return in lieu of separate returns for the taxable_year provided that each corporation which has been a member during any part of the taxable_year for which the consolidated_return is to be filed consents to the regulations under sec_1502 sec_1_1502-75 of the regulations provides that the consent of a corporation shall be made by such corporation joining in the making of a consolidated_return for such year a corporation shall be deemed to have joined in the making of such return for such year if it files a form_1122 in the manner specified in sec_1 h of the regulations plr-141757-06 sec_1_1502-75 of the regulations provides that if under the provisions of sec_1_1502-75 of the regulations a group wishes to file a consolidated_return for a taxable_year then a form_1122 must be executed by each subsidiary the regulation provides rules for properly executing forms and attaching them to a consolidated_return and also provides that a form_1122 is not required for a taxable_year if a consolidated_return was filed or was required to be filed by the group for the immediately preceding_taxable_year sec_1_1502-75 of the regulations provides that if any member has failed to join in the making of a consolidated_return then the tax_liability of each member of the group shall be determined on the basis of separate returns unless the common parent_corporation establishes to the satisfaction of the commissioner that the failure of such member to join in the making of the consolidated_return was due to a mistake of law or fact or to inadvertence in such case such member shall be treated as if it had filed a form_1122 for such year for purposes of sec_1_1502-75 of the regulations and thus joined in the making of the consolidated_return for such year holding based solely on the facts and information submitted it is held that parent has established to the satisfaction of the commissioner that due to a mistake of fact it excluded the omitted members in making its consolidated_return for the year ended date3 the omitted members shall be treated as if they had filed forms for such year for purposes of sec_1_1502-75 of the regulations and thus joined in the making of the consolidated_return for such year sec_1_1502-75 within days of the date on this letter parent shall file amended returns for the year ended date3 and all subsequent years necessary to include the omitted members 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 material submitted in support of the request for rulings it is subject_to verification on examination 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 plr-141757-06 a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling 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 _thomas i russell_________ thomas i russell senior counsel branch office of associate chief_counsel corporate


internal_revenue_service number info release date dear cc dom p si 1-cor-105966-00 date we are responding to your correspondence requesting information regarding your employer_identification_number per a telephone discussion between you and of this office you were notified that an employer_identification_number was recently assigned a written notice from the service_center confirming your number should arrive within days from the date of this letter for your information we have enclosed three internal_revenue_service publications that may help you further understand your federal tax responsibilities sincerely yours dianna k miosi chief branch office of the assistant chief_counsel passthroughs and special industries enclosures pub pub pub


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi br 1-plr-107156-01 date date x state d1 this responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts x was incorporated on d1 under the laws of state the shareholders of x desired that x elect s_corporation treatment effective on d1 but the election to be treated as an s_corporation was not timely filed accordingly x requests a ruling that it will be treated as an s_corporation effective d1 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 sec_1362 provides in relevant part that 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 under sec_1362 however if an s election is made after the first two and one-half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is filed sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year and sec_1362 shall not apply x did not file an election to be treated as an s_corporation under sec_1362 x has however established reasonable_cause for not making a timely s election and is entitled to relief under sec_1362 plr-107156-01 conclusion based solely on the facts submitted and the representations made and provided that x otherwise qualifies as an s_corporation we conclude that x will be treated as an s_corporation effective date 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 specifically set forth above no opinion is expressed or implied as to the federal_income_tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed concerning whether x is in fact an s_corporation for federal tax purposes this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer enclosures copy of this letter copy for sec_6110 purposes sincerely dianna k miosi chief branch office of the associate chief_counsel passthroughs and special industries


t c summary opinion united_states tax_court agwu u okiyi and chinyere a okiyi petitioners v commissioner of internal revenue respondent docket no 7072-16s filed date agwu u okiyi and chinyere a okiyi pro sese elizabeth m shaner and nancy m gilmore for respondent summary opinion lauber judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code code in effect when the petition was filed 1all statutory references are to the internal_revenue_code in effect at all relevant times and all rule references are to the tax_court rules_of_practice and procedure we round all monetary amounts to the nearest dollar under 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 with respect to petitioners’ federal_income_tax for the internal reve- nue service irs or respondent determined a deficiency of dollar_figure and an accura- cy-related penalty of dollar_figure under sec_6662 the issues for decision are whether petitioners are entitled to a claimed deduction for charitable contribu- tions in excess of the amount the irs allowed whether petitioners are entitled to claimed but disallowed miscellaneous_itemized_deductions and whether petitioners are liable for the accuracy-related_penalty we resolve all issues in respondent’s favor background the parties filed a stipulation of facts with accompanying exhibits that is in- corporated by this reference during petitioners were both employed by the state of maryland mr okiyi was a case manager in the social services administration and mrs okiyi was a social worker in the foster care services they resided in maryland when they petitioned this court petitioners timely filed a joint federal_income_tax return for on that return they claimed on schedule a itemized_deductions a cash charitable contri- bution deduction of dollar_figure and miscellaneous deductions of dollar_figure the mis- cellaneous deductions comprised dollar_figure of unreimbursed employee business ex- penses and dollar_figure of tax_return preparation fees upon examination of petitioners’ return the irs disallowed for lack of substantiation dollar_figure of the claimed charitable_contribution_deduction and all of the claimed miscellaneous deductions the irs sent petitioners a timely notice_of_deficiency and they timely petitioned this court at trial mr okiyi testified that petitioners had made charitable_contributions to their church or to an orphanage in amounts exceeding the dollar_figure that the irs had allowed but they provided no substantiation of any kind for these additional gifts petitioners’ reported employee business_expenses consisted primarily of travel costs related to their two automobiles claiming that they had driven a total of big_number business miles in their two cars they reported an aggregate mileage al- lowance of dollar_figure and aggregate expenses of dollar_figure for parking and tolls they also reported expenses of dollar_figure for meals and entertainment the balance of their reported employee business_expenses or dollar_figure was allegedly attributable to a job search petitioners produced no documentation whatsoever to substantiate any of the expenses underlying these claimed deductions mr okiyi testified that the travel costs represented expenses_incurred in transporting foster children to and from their foster homes and in visiting these children plus meals consumed during these trips he testified that his wife had kept a contemporaneous mileage log for this travel but petitioners did not submit any such log into evidence he testified that he had incurred dollar_figure of job search expenses in connection with his applica- tion for a different position with his current employer mr okiyi testified that petitioners had documentation to substantiate some of their expenses but had neglected to bring these documents with them to trial the court accordingly left the record open for days to allow petitioners to sub- mit through a supplemental stipulation any relevant documentation that they had they did not submit anything and we accordingly closed the record on date discussion the irs’ determinations in a notice_of_deficiency are generally presumed correct rule a 290_us_111 deductions are a matter of legislative grace the taxpayer bears the burden of proving his en- titlement to deductions allowed by the code and of substantiating the amounts of expenses underlying claimed deductions 503_us_79 sec_1_6001-1 income_tax regs petitioners do not con- tend and they would have no basis for contending that the burden_of_proof as to any factual issue should shift to respondent under sec_7491 a charitable_contributions sec_170 allows as a deduction contributions made within the taxable_year to churches charities and other specified entities see sec_170 chari- table contributions are allowable as deductions only if verified under regulations prescribed by the secretary sec_170 for all contributions taxpayers are required to keep reliable written records such as canceled checks or receipts establishing the identity of the donee and the date and amount of the contribution sec_1_170a-13 income_tax regs for contributions of dollar_figure or more the taxpayer must obtain a contemporaneous written acknowledgment from the donee sec_170 additional and more stringent substantiation require- ments are imposed for contributions of property with a claimed value exceeding dollar_figure see sec_170 mr okiyi testified that petitioners had made contributions to their church in excess of the dollar_figure that the irs found to have been substantiated and had also made gifts to an unspecified orphanage but they submitted no substantiation of any kind for these alleged gifts we accordingly sustain respondent’s determination that petitioners for are allowed a charitable_contribution de- duction of only dollar_figure b miscellaneous_itemized_deductions sec_162 allows a deduction for ordinary and necessary business ex- penses paid_or_incurred during the taxable_year in carrying on any trade or busi- ness the determination whether an expenditure satisfies the requirements for deductibility is a question of fact see 320_us_467 an individual may be in the trade_or_business of being an employee ordinary and necessary expenses_incurred in that trade_or_business are deductible 65_tc_862 expenses_incurred in search- ing for new employment in the employee’s existing trade_or_business may also be deductible business_expenses 58_tc_219 54_tc_374 deductions are not allowed for personal living or family_expenses sec_262 sec_274 prescribes more stringent substantiation requirements for certain categories of expenses such as traveling expense s including meals while away from home sec_274 to satisfy the sec_274 requirements a taxpayer generally must maintain records and documentary evi- dence sufficient to establish the amount date and business_purpose for an expen- diture sec_1_274-5t temporary income_tax regs fed reg date in the absence of adequate_records the substantia- tion requirements can be met by other_sufficient_evidence corroborating the tax- payer’s own statement see id para c fed reg the substantiation requirements of sec_274 apply to petitioners’ re- ported expenses for travel parking and meals petitioners did not supply substan- tiation of any kind for these expenses moreover mr okiyi admitted that his wife may have been eligible for and may in fact have received reimbursement from her employer the state of maryland for some or all of the travel_expenses she incurred in connection with transportation of the foster care children expenses eligible for reimbursement by the taxpayer’s employer are generally not considered necessary under sec_162 and thus do not qualify for deduction as unreimbursed employee business_expenses see 788_f2d_1406 9th cir aff’g tcmemo_1984_533 petitioners produced no documentation to substantiate their claimed tax_return preparation expenses of dollar_figure or mr okiyi’s claimed job search expenses of dollar_figure and we did not find credible his testimony that he incurred expenses of dollar_figure in applying for a different position with the state of maryland his current employer we accordingly sustain respondent’s determination that petitioners are entitled to no miscellaneous_itemized_deductions c accuracy-related_penalty the code imposes a penalty upon the portion of any underpayment_of_tax that is attributable to a ny substantial_understatement_of_income_tax sec_6662 b an understatement of income_tax is substantial if it exceeds the greater of dollar_figure or of the tax required to be shown on the return sec_6662 under sec_7491 the commissioner bears the burden of production with respect to the liability of an individual for any penalty see 116_tc_438 the deficiency in petitioners’ income_tax which we have sustained in full is dollar_figure there being no dispute over any claimed refundable tax_credits that deficiency amount equals petitioners’ under- statement of income_tax see generally gassoway v commissioner tcmemo_2015_203 moreover because petitioners reported a tax of zero on their return that amount of dollar_figure also equals the tax required to be shown on their return see sec_1_6662-4 income_tax regs as a result petitioners’ understate- ment of income_tax is substantial within the meaning of sec_6662 exceeding both dollar_figure and of itself respondent has thus satisfied sec_7491 by carrying his burden of production of demonstrating a substantial_understatement_of_income_tax under sec_6662 the sec_6662 penalty does not apply to any portion of an underpayment if it is shown that there was a reasonable_cause for such portion and that the tax- payer acted in good_faith with respect to it sec_6664 the decision whe- ther the taxpayer acted with reasonable_cause and in good_faith is made on a case- by-case basis taking into account all pertinent facts and circumstances sec_1_6664-4 income_tax regs generally the most important factor is a tax- payer’s effort to ascertain his or her correct_tax liability petitioners offered no evidence that they attempted to ascertain their correct tax_liability they had no substantiation for their reported expenses and they claimed deductions for expenses that qualified for reimbursement and may in fact have been reimbursed by their employer although a tax_return preparation service prepared their return they do not contend that they relied on the advice of 2petitioners did not allege in their petition or at trial that the accuracy- related penalty at issue was not personally approved in writing by the imm- ediate supervisor of the individual making the penalty determination sec_6751 that issue is therefore deemed conceded see rule b any issue not raised in the assignments of error shall be deemed to be conceded cf lloyd v commissioner tcmemo_2017_60 at n deeming similarly conceded any sec_6751 challenge to assessable_penalties in a sec_6330 levy case a competent tax professional in taking these positions see sec_1_6664-4 income_tax regs we will accordingly sustain respondent’s determination of an accuracy-related_penalty to reflect the foregoing decision will be entered for respondent


internal_revenue_service national_office technical_advice_memorandum date number release date third party contact index uil no case-mis no director ---------------------------------------------------------------- tam-131992-03 cc psi taxpayer's name taxpayer's address taxpayer's identification no years involved date of conference ---------------------------------------------------- ------------------------ -------------------------- ---------------- ----------------------------------- ----------------------- legend legend taxpayer ---------------------------------------------------- oas -------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------- ------------------------- issues is taxpayer s exchange of the right to award mileage with the oas an amount_paid by taxpayer for air transportation that is subject_to tax imposed by ' of the internal_revenue_code do taxpayer s reciprocal redemptions of award mileage with the oas constitute an amount_paid by taxpayer for air transportation that is subject_to tax imposed by ' conclusions tam-131992-03 taxpayer s exchange of the right to award mileage with the oas is an amount_paid by taxpayer for air transportation that is not subject_to tax imposed by ' when paid to foreign air carriers or to domestic air carriers for mileage awarded in connection with the purchase of taxable_transportation but is subject_to tax when paid to domestic air carriers for mileage not awarded in connection with the purchase of taxable_transportation taxpayer s reciprocal redemptions of award mileage with the oas were not an amount_paid by taxpayer for air transportation and therefore are not subject_to tax imposed by sec_4261 facts taxpayer is a domestic air carrier and the other air carriers oas are domestic or foreign air carriers all of the air carriers operate frequent flyer programs under which their customers are awarded frequent flyer miles when they purchase and use tickets for air transportation those frequent flyer miles can be redeemed for free tickets for air transportation according to rules established by each air carrier taxpayer entered into separate agreements aagreements with each of the oas to coordinate their frequent flyer programs these alliance agreements are part of the air carriers’ marketing efforts to increase overall air travel under the agreements members of taxpayer s frequent flyer program can purchase tickets for flights on the oas and accrue taxpayer frequent flyer miles for those flights in addition taxpayer s frequent flyer members can redeem taxpayer frequent flyer miles for flights on the oas reciprocally the oas frequent flyer members have the same ability to earn and redeem the oas frequent flyer miles on taxpayer during the periods in issue taxpayer and the oas kept account of mileage earnings and redemptions between themselves and expected a relative balance if an imbalance resulted some of the agreements required an imbalance payment by the deficient air carrier however no imbalance payments were made during any of the periods in issue law sec_4261 imposes a tax on the amount_paid for taxable_transportation as defined in ' of any person by air sec_4261 imposes a tax on the amount_paid for each domestic_segment one takeoff and one landing of taxable_transportation by air for international travel sec_4261 imposes a tax on any amount_paid for any transportation that begins or ends in the united_states of any person by air tam-131992-03 generally under ' d the person paying for the taxable_transportation is liable for the tax and under ' the person receiving the payment is required to collect the tax sec_4262 defines the term ataxable transportation as generally including transportation by air that begins and ends in the united_states for amounts paid after date ' e a treats any amount_paid and the value of any other benefit provided to an air carrier for the right to provide mileage awards for any transportation of persons by air as an amount_paid for taxable_transportation that is taxable under ' a notice_2002_63 2002_2_cb_644 provides that until regulations are issued under ' e the following rules apply to mileage awards amounts paid for mileage awards that cannot be redeemed for taxable_transportation beginning and ending in the united_states are not subject_to tax for purposes of this rule mileage awards issued by a foreign air carrier are considered to be usable only on that foreign carrier and thus not redeemable for taxable_transportation beginning and ending in the united_states therefore amounts paid to a foreign air carrier for mileage awards are not subject_to tax amounts paid_by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable_transportation are not subject_to the tax to the extent those miles will be awarded in connection with the purchase of taxable_transportation amounts paid_by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable_transportation are subject_to the tax to the extent those miles will not be awarded in connection with the purchase of taxable_transportation in revrul_84_12 1984_1_cb_211 an airline company instituted a program for frequent travelers entitling them to free round-trip tickets for amassing sufficient mileage travelers who enroll in the airline’s program prior to a certain date are entitled to a free bonus round-trip ticket without prior accrual of mileage the traveler must then accumulate the requisite amount of mileage by a certain date if the traveler does not accrue the requisite mileage the traveler is billed for the bonus ticket the ruling holds that the tax imposed by ' does not apply in the case of free bonus tickets issued by an air carrier to its customers who have already satisfied all requirements to qualify for the bonus the service reasoned that for purposes of the tax the amount subject_to tax is the actual amount_paid for air transportation and where no amount is paid the tax does not apply tam-131992-03 rationale issue both taxpayer and the oas operate frequent flyer programs under which their members are awarded frequent flyer miles when their members purchase and use air transportation pursuant to reciprocal agreements with the oas taxpayer s members can earn program miles for flights on the oas both foreign and domestic likewise the oas members can earn program miles for flights on taxpayer taxpayer argues that the air carriers are merely making accounting entries for the mileage involved and no payments are made under the agreements therefore by taxpayer s reasoning because no payment is made the tax under ' does not apply we disagree the agreements between taxpayer and the oas establish arrangements that effectively are exchanges of rights to award one another s mileage such exchanges constitute payments in_kind with similar facts revrul_2002_60 2002_2_cb_641 concludes the same when a domestic air carrier sells rights to provide mileage awards to a foreign air carrier in the ruling the foreign air carrier provides the domestic air carrier with mileage awards for transportation on the foreign air carrier s flights rather than pay for the miles with money the ruling reasons that the foreign air carrier s transfer of mileage awards to the domestic air carrier is a payment in_kind for the right to award miles according to the ruling the payment in_kind does not affect the tax consequences in this case each air carrier is effectively granted the right to award the other air carrier s mileage therefore taxpayer s exchange of its mileage awards for mileage awards of the oas constitutes payments by taxpayer for the right to award mileage of the oas whether taxpayer s payments are subject_to tax under ' a depends on whether or not the awarded mileage can be redeemed for taxable_transportation notice_2002_63 relative to foreign air carriers rule of notice_2002_63 provides that for purposes of the rule mileage awards issued by a foreign air carrier are considered usable only on that foreign air carrier and thus not redeemable for taxable_transportation therefore amounts paid to a foreign air carrier for mileage awards are not redeemable for taxable_transportation in the case of domestic air carriers mileage awards that can be redeemed for taxable_transportation are not subject_to the tax under rule of the notice to the extent they will be awarded in connection with the purchase of taxable_transportation and are subject_to tax under rule to the extent they will not be awarded in connection with the purchase of taxable_transportation in this case some of the oas from whom taxpayer purchases mileage are foreign air carriers and some are domestic air carriers in the case of foreign air carriers because the mileage awards are issued by a foreign air carrier the miles are tam-131992-03 considered usable only on that foreign air carrier and thus not redeemable for taxable_transportation thus under rule of notice_2002_63 the amounts taxpayer paid to foreign air carriers for mileage awards are not subject_to tax in the case of domestic air carriers some mileage awards redeemable for taxable_transportation were awarded in connection with the purchase of taxable_transportation and some were not under rule of notice_2002_63 the amounts taxpayer paid to domestic air carriers for mileage awards that were awarded in connection with the purchase of taxable_transportation are not subject_to tax under ' conversely under rule of notice_2002_63 the amounts taxpayer paid to domestic air carriers for mileage awards that were not awarded in connection with the purchase of taxable_transportation are subject_to tax under ' issue taxpayer entered into the alliance agreements with the oas in order to coordinate their frequent flyer programs the coordinated programs are part of the air carriers’ marketing efforts to increase their overall air travel the air carriers entered into the alliances by in part agreeing to the exchange of redemption obligations that is taxpayer s mileage awards are redeemable for air transportation on the oas while the oa s mileage awards are redeemable for air transportation on taxpayer the exchange of redemption obligations does not constitute payments for air transportation because such exchanges do not entitle anyone to air transportation under the agreements only the actual redemption of award mileage by a passenger a nontaxable event under rev_rul entitles a person to air transportation therefore because taxpayer’s payments were not an amount_paid for taxable_transportation taxpayer’s reciprocal redemptions with the oas are not subject_to the tax imposed by sec_4261 caveats temporary or final regulations pertaining to the issues addressed in this memorandum have not yet been adopted therefore this memorandum will be modified or revoked by the adoption of temporary or final regulations to the extent the regulations are inconsistent with any conclusions in the memorandum see ' dollar_figure of revproc_2004_2 2004_1_irb_83 however a technical_advice_memorandum that modifies or revokes a letter_ruling or another technical_advice_memorandum generally is not applied retroactively if the taxpayer can demonstrate that the criteria in ' dollar_figure of revproc_2004_2 are satisfied a copy of this technical_advice_memorandum is to be given to the taxpayer sec_6110 provides that it may not be used or cited as precedent under ' c names addresses and identifying numbers have been deleted


tcmemo_2007_174 united_states tax_court ronald z thompson petitioner v commissioner of internal revenue respondent docket no filed date anthony v diosdi for petitioner kaelyn romey for respondent memorandum findings_of_fact and opinion haines judge respondent determined a deficiency in petitioner’ sec_2002 federal_income_tax of dollar_figure as well as a penalty under sec_6662 of dollar_figure unless otherwise indicated all section references are to the internal_revenue_code as amended amounts are rounded to nearest dollar the issues for decision are whether petitioner is entitled to deduct the expense of flight school as an educational expense under sec_162 and whether petitioner is liable for the accuracy-related_penalty under sec_6662 findings_of_fact the parties’ stipulation of facts and the attached exhibits are incorporated herein by this reference and the facts stipulated are so found at the time the petition was filed petitioner resided in castro valley california petitioner graduated from san jose state university with a bachelor of science degree in aviation operations petitioner is currently employed as an aeronautical engineer2 with planners collaborative inc planners a subcontractor which provided engineering and technical management services to support the national aeronautics and space administration’s nasa ames research center prior to his employment with planners from date through date petitioner was employed as an aeronautical engineer with teculan inc teculan a subcontractor which also provided engineering and technical management services to nasa the parties also referred to petitioner as a systems engineer petitioner’s duties for teculan required him to identify collect organize and document engineering requirements and drawings maintain configuration control processes to ensure traceability of baseline documentation test and evaluate aircraft flight systems software cockpit ergonomics and other related engineering modalities and perform engineering studies and provide technical assistance including problem solving and formulation of tradeoffs and recommendations while working at teculan on date petitioner began attending a commercial pilot training program offered by sierra academy of aeronautics sierra academy to pursue a commercial pilot’s certificate for both single-engine and multiengine airplanes commercial pilot certificates to receive a commercial pilot certificate for either single-engine or multiengine airplanes petitioner was required to complete three programs personal pilot’s certification pilot instrument rating and commercial pilot certificate petitioner completed these three programs and received his commercial pilot certificates on date the parties stipulated that petitioner was not required to attend flight school to meet the minimum education requirements necessary to qualify as an aeronautical engineer by his former employers or by any law or regulation petitioner was not reimbursed for the expenses paid to attend sierra academy in petitioner paid sierra academy dollar_figure for tuition and dollar_figure for required books equipment and uniforms he reported dollar_figure as educational expenses on his schedule a itemized_deductions for petitioner prepared hi sec_2002 federal_income_tax return using tax preparation software on date respondent mailed petitioner the notice_of_deficiency with respect to which denied petitioner’s deductions for educational expenses petitioner timely filed his petition on date opinion sec_162 allows a deduction for all ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business generally expenditures made by an individual for education are deductible under sec_162 if the education maintains or improves skills required of the individual in his employment or other trade_or_business or meets the express requirements of the individual’s employer sec_1_162-5 income_tax regs however even if the general_rule is satisfied expenses for education are nondeductible if the education is part of a program of study which will lead to qualifying an individual for a new trade_or_business sec_1_162-5 income_tax regs an individual who through education improves his skills in an existing trade_or_business may also become qualified for a new trade_or_business educational expenses_incurred to qualify for a new trade_or_business are nondeductible even if the individual does not engage in the new activity see sec_1_162-5 example income_tax regs the mere capacity to engage in a new trade_or_business is sufficient to disqualify the expenses for the deduction 52_tc_1106 affd per curiam 443_f2d_29 9th cir see sec_1_162-5 income_tax regs the court agrees with petitioner’s contention that his training improved his aeronautical engineering skills by taking flight lessons petitioner likely improved his ability to evaluate cockpit ergonomics and design and troubleshoot future flight concepts the training also likely improved his skills in testing and evaluating aircraft flight systems software however the education undertaken by petitioner was a course of study that led to his receipt of commercial pilot certificates as a result this court must decide whether petitioner became qualified for new trade_or_business by attaining these certificates even though petitioner did not intend to work as a commercial pilot the commercial pilot certificates qualified him to be employed as a pilot-in-command of an aircraft for single and multiengine airplanes for compensation qualified him to serve as a second-in-command pilot for an airline and enabled petitioner to engage in a trade_or_business for which he was previously unqualified 78_tc_550 56_tc_1357 therefore this court finds that petitioner’s commercial pilot training was part of a program of study which qualified him for a new trade_or_business and the expenses paid in to attend the program are nondeductible under sec_162 see sec_1 b income_tax regs respondent contends petitioner is liable for a sec_6662 penalty because the underpayment_of_tax was attributable to negligence sec_6662 imposes a 20-percent accuracy- related penalty on the portion of any underpayment attributable to negligence sec_6662 the term negligence includes any failure to make a reasonable attempt to comply with the provisions of the internal revenue laws or to exercise ordinary and reasonable care in the preparation of a tax_return sec_6662 sec_1_6662-3 income_tax regs see roussel v commissioner tcmemo_1979_125 c f_r sec_61 a and b see c f_r sec dollar_figure because petitioner did not earn an airline transport pilot rating he would not be allowed to captain an airplane for an airline company on this entire record the court finds that petitioner made a reasonable attempt to comply with the internal revenue laws and exercised ordinary and reasonable care by obtaining software to aid him in the preparation of hi sec_2002 federal_income_tax return therefore the court is satisfied that the sec_6662 accuracy-related_penalty for negligence should not be imposed the court in reaching its holding has considered all arguments made and concludes that any arguments not mentioned above are moot irrelevant or without merit to reflect the foregoing decision will be entered under rule


cca_2013080211135852 id uilc number release date from sent friday august am to cc bcc subject re request for informal advice -- taxpayers intend to videotape seizure hi ------- the consensus among the folks you emailed who were in the office yesterday does not differ from what we discussed there is nothing that we are aware of that would bar a taxpayer from videotaping a seizure occurring in his home as promised though i did email the br ------ practice group asking if anyone knows of any statutory provision code or otherwise reg or whatnot that prohibits the videotaping of a seizure on the taxpayer’s property i’ve gotten no affirmative responses but if something comes up between now and monday i’ll definitely let you know there is one thing worth mentioning there are provisions that criminalize forcibly assaulting resisting opposing impeding intimidating or interfering with a federal employee engaged in the performance of official duties usc and corruptly or by force or threats_of_force endeavoring to intimidate or impede any federal employee acting in an official capacity under the code sec_7212 but peacefully videotaping the seizure would not fun afoul of these provisions and there is nothing indicated thus far that suggests that the tp is not going to act peacefully if you would like to discuss this further please contact me have a good weekend


internal_revenue_service department of the treasury index numbers washington dc number release date person to contact telephone number refer reply to cc dom corp 4-plr-111928-99 date date legend seller target target new parent x corp parent purchaser sub sub son parent’s company officials parent’s tax professionals plr-111928-99 seller’s official seller’s tax professional authorized representatives date a date b date c date d date e date f date g x business a business b condition x this is in response to your authorized representatives’ letter dated jul requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations for the above taxpayers to an file election new parent as to common parent of the consolidated_group of which x corp parent and purchaser ie the latter being the purchasing_corporation are members and seller are requesting an extension of time to file a sec_338 election under sec_338 and sec_338 of the internal_revenue_code and sec_1_338_h_10_-1 of the income_tax regulations with respect to purchaser's acquisition the stock of target sometimes hereinafter referred to as the election on date d an extension is not being requested to make a sec_338 election with respect to purchaser's acquisition of the stock of target on the same date additional information was received in letters dated november and and date and date the material information is summarized below plr-111928-99 new parent is the common parent of a consolidated_group that presently includes x corp parent purchaser target and target and that has a calendar taxable_year and uses the accrual_method of accounting presently x corp is wholly owned by new parent parent is wholly owned by x corp purchaser is wholly owned by parent and target and target are wholly owned by purchaser on or around date a certain investors formed purchaser as a subchapter_c_corporation for the purpose of acquiring target and target also prior to date a target and target were each s_corporations within the meaning of sec_1361 and were wholly owned by seller an individual new parent x corp parent and purchaser are holding_companies purchaser is engaged in business a and target and target are engaged in business b on date a purchaser and seller entered into a stock purchase agreement for purchaser to acquire all of seller's target stock ie of the target stock and all of seller's target stock that would not be transferred to his son prior to consummation of the purchase agreement ie seller would transfer x which is less than of his target stock to his son and thus purchaser would acquire over of the target stock from seller on date b purchaser formed sub and sub as transitory special acquisition corporations solely for the purpose of facilitating the acquisition of target and target on date c seller transferred x of his stock of target by gift to his son it is represented that such transfer by gift did not terminate target 2's s election on date d investors funded purchaser with the cash acquisition price and purchaser in turn funded sub and sub son transferred his x of target stock to purchaser ie in exchange solely for a portion of purchaser's stock in a transaction that is represented to qualify under sec_351 and for which such a return position was taken and sub and sub merged into target and target respectively pursuant to applicable state law and the stock purchase agreement with seller receiving solely cash in exchange for his stocks in fully taxable transactions ie again some portion of the cash purchase_price is subject_to an escrow and earn out provision it is represented that purchaser was not related to seller within the meaning of sec_338 and purchaser's acquisition of target and target stocks qualified as qualified_stock purchases as defined in sec_338 on date e in transactions represented to qualify under sec_351 investors and son transferred their purchaser stock to parent solely in exchange for all of parent's stock and then investors and son transferred their parent stock to x corp solely in exchange for all of x corp's stock and then investors and son transferred their x corp stock to new parent solely in exchange for all of new parent's stock x corp and new parent were newly formed by new parent and investors respectfully with same occurring on date d and date e respectively all of which is in the same taxable_year following the acquisitions new target and new target were included in new parent's consolidated_return new parent and seller intended to file the election the election was due on date f but for various reasons was not filed on date g which is after the due_date for plr-111928-99 the election new parent x corp parent target target seller son parent’s company official seller’s official parent’s tax professionals seller’s tax professional and authorized representatives discovered that the election and a sec_338 election with respect to the acquisition of the target stock were not filed subsequently this request was submitted under sec_301_9100-1 for an extension of time to file the election again an extension is not being requested to make a sec_338 election with respect to purchaser's acquisition of the stock of target the period of limitations on assessment under sec_6501 has not expired for the applicable parties' ie new parent's x corp's parent's purchaser’s target 1's target 2's seller's and son's taxable_year s in which the transactions were consummated the taxable_year in which the election should have been filed or for any taxable years that would have been affected by the election had it been timely filed eg carryback years if any etc moreover it is represented that all returns for the applicable parties ie new parent x corp parent purchaser target target seller and son were filed as if a valid election had been made and also as if a valid sec_338 election had been made with respect to the target stock notwithstanding that such return was erroneous because target was treated as an s_corporation instead of as a c_corporation on its deemed asset sale and deemed liquidation that is for their taxable_year s in which the acquisitions sales were consummated for their taxable_year s in which the election and a sec_338 election for the target stock should have been filed and for any taxable years that would have been affected by the election and by a sec_338 election for the target stock had such been timely filed eg carryback years if any etc also none of such applicable parties have had any such returns examined and such audit cycles have not passed and the service has not discovered that the election or a sec_338 election for the target stock has not been made sec_338 permits certain stock purchases to be treated as asset acquisitions if the purchasing_corporation makes or is treated as having made a sec_338 election under sec_338 and the acquisition is a qualified_stock_purchase sec_338 defines a qualified_stock_purchase as any transaction or series of transactions in which stock meeting the requirements of sec_1504 of one corporation is acquired by another corporation by purchase during the month acquisition period sec_338 provides that the term purchase means any acquisition of stock but only of if i the basis of the stock in the hands of the purchasing_corporation is not determined i in whole or in part by reference to the adjusted_basis of such stock in the hands of the person from whom acquired or ii under sec_1014 relating to property_acquired_from_a_decedent ii the stock is not acquired in an exchange to which sec_351 sec_354 sec_355 or sec_356 applies and is not acquired in any other transaction described in regulations in which the transferor does not recognize the entire amount of the gain_or_loss realized on the transaction and iii the stock is not acquired from a plr-111928-99 person the ownership of whose stock would under sec_318 other than paragraph thereof be attributed to the person acquiring such stock sec_338 permits the purchasing and selling corporations to jointly elect to treat the target_corporation as deemed to sell all of its assets and distribute the proceeds in complete_liquidation thus the sale of target stock included in the qualified_stock_purchase generally is ignored a sec_338 election may be made for target only if it is a member of a selling_consolidated_group a member of a selling affiliated_group filing separate returns or an s_corporation sec_1_338_h_10_-1 sec_1_338_h_10_-1 provides that a sec_338 election may be made for the target_corporation if the purchasing_corporation makes a qualified_stock_purchase of the target_corporation stock sec_1_338_h_10_-1 and provide that if a sec_338 election is made for the target_corporation it is irrevocable and a sec_338 election is deemed made for the target_corporation sec_1_338_h_10_-1 provides that a sec_338 election is jointly made by a purchaser and the selling_consolidated_group or the selling affiliate or the s_corporation shareholders on form_8023 in accordance with the instructions to the form the regulations further provide that the election must be made not later than the 15th day of the ninth month beginning after the month in which the acquisition_date occurs the instructions to form_8023 provide that if a sec_338 election must be made jointly by the purchasing_corporation and the common parent of the selling_consolidated_group or selling affiliate or s_corporation shareholders the instructions provide that the form must be signed by each person authorized to act on behalf of each corporation and if made for an s_corporation it must be signed by each s_corporation shareholder who sells target stock in the qualified_stock_purchase the instructions further provide that the signatures dates and titles if applicable of those persons must be provided in a signature attachment and they provide specific details as to the preparation of the signature attachment and its attachment to form_8023 sec_1_338-2 restates the sec_338 requirement that a corporation must purchase the stock of the target and provides that facts that may indicate that a newly formed corporation is not considered to be the purchasing_corporation for tax purposes include such things as the new corporation's downstream_merger into the target following the purported qsp moreover sec_1_338-2 example illustrates a factual situation where a newly formed corporation that was formed for the sole purpose of acquiring the stock of the target by means of a reverse subsidiary cash_merger and conducted no activities other than the merger was disregarded and its corporate shareholder was considered to be the purchasing_corporation sec_1 b provides that if an election under sec_338 is made for target old target is deemed to sell target's assets and new target is deemed to acquire those assets sec_1_1502-77 provides that the common parent for all purposes other than for several purposes not relevant here shall be the sole agent for each subsidiary plr-111928-99 in the group duly authorized to act in its own name in all matters relating to the tax_liability of the consolidated_return_year see also form_8023 and the instructions thereto under sec_301_9100-1 the commissioner has discretion to 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 internal_revenue_code except subtitles e g h and i provided the taxpayer demonstrates to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a regulation revenue_ruling revenue_procedure notice or announcement sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making regulatory 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_9100-3 in this case the time for filing the election is fixed by regulations ie sec_1_338_h_10_-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for new parent and seller to file the election provided new parent and seller show they acted reasonably and in good_faith the requirements sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by seller son new parent x corp parent purchaser parent's company official parent's tax professionals seller's official seller's tax professional and authorized representatives explain the circumstances that resulted in the failure_to_file a valid election the information establishes that tax professionals were responsible for the election that seller and new parent relied on them to timely file the election and that the government will not be prejudiced if relief is granted see sec_301_9100-3 based on the facts and information submitted including the representations made we conclude that new parent and seller have shown they acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an plr-111928-99 extension of time is granted under sec_301_9100-1 until days from the date_of_issuance of this letter for new parent as to common parent of the consolidated_group of which purchaser the purchasing_corporation is a member and seller to file the election with respect to the acquisition of target stock as described above again an extension is not being requested or granted make a sec_338 election for target the above extension of time is conditioned on i the fulfillment of condition x which is fully described in the above redacted legend to prevent the disclosure of taxpayer identifying information ii new parent and seller not making a sec_338 election for target and new parent for target old target and new target and seller filing amended returns to treat the acquisition of target as a stock acquisition and not as a deemed asset acquisition iii son not receiving and or owning stock eg directly or by applying sec_318 of purchaser or of x corp or new parent that is equal to or more in value of the stock of purchaser or of x corp or new parent or anything else that would cause the subject acquisition not to qualify as qsp see sec_338 and sec_338 iv both new parent and seller signing the election v both new parent and seller treating the acquisition sale of target stock as sec_338 transaction iv purchaser in fact being the purchasing_corporation of the target stock compare sec_1_338-2 and ii example and that such acquisition qualify for sec_338 treatment and iiv the taxpayers' new parent's x corp's parent's purchaser's target 1's target 2's seller's son's and investor's tax_liability being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely filed taking into account the time_value_of_money no opinion is expressed as to the taxpayers' tax_liability for the years involved a determination thereof will be made by the district director's office upon audit or examination of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers' liability is lower sec_301_9100-3 new parent and seller must file the election in accordance with sec_338 -1 d ie a new election on form_8023 must be executed on or after the date of this letter which grants an extension and filed in accordance with the instructions to the form a copy of this letter should be attached to the election form further new parent for all members of its group including target and target and seller must amend their applicable returns for the year is which the transactions were consummated the year in which the election was due and for any year s that was affected by the erroneously reporting or any year s that would have been affect had the election been timely filed to report the acquisition of the target stock as stock acquisition and not as a deemed asset acquisition under sec_338 ie this is necessary because the acquisition of the target stock was reported by all parties as a sec_338 transaction notwithstanding that the required election was not filed and because all such parties are now maintaining that same was in error and that such should be reported as a stock acquisition to attached to old target 1's final return and new target 1's first return a copy of this letter and a copy of the election form this is necessary plr-111928-99 notwithstanding that they reported report the acquisition of target stock as sec_338 transaction target must file a s_short_year return for that portion of its taxable_year ending the day before date d because son's transfer of his x of target stock to purchaser on date d terminated target 2's s election effective the day before date d ie the termination occurred by operation of son's transfer and target must file a s_short_year return for that portion of its taxable_year beginning the on the date of the son's transfer date d through the end of the calendar taxable_year but as a subchapter_c_corporation see sec_1361 and e and the applicable regulations we express no opinion regarding whether the acquisition sale of target stock qualifies as a qualified_stock_purchase under sec_338 whether in fact purchaser is the purchasing_corporation of the target stock compare sec_1 b and b ii example whether the acquisition sale of target stock qualifies for sec_338 treatment as to the tax consequences if any to the target shareholders on the termination of target 2's s election or if sec_338 is applicable as to the amount and character of gain_or_loss if any recognized by target on its deemed asset sale and deemed liquidation ie as an s_corporation and thus such gain_or_loss passing though to seller in addition we express no opinion as to the tax consequences of filing the election late under the provisions of any other section of the code and regulations or the tax treatment of any conditions existing at the time of or effects resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-1 we relied on certain statements and representations made by the taxpayers its employees and representatives however the district_director s should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-1 to file the election penalties and interest that would otherwise be applicable if any continue to apply this letter is directed only to the taxpayers who requested it sec_6110 provides that it may not be used or cited as precedent copies of this letter are being sent to applicable first listed authorized representative of new parent and seller pursuant to the powers of attorney on file in this office sincerely yours assistant chief_counsel corporate by richard todd counsel to the assistant chief_counsel corporate


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division date uniform issue list legend t c dear sir or madam contact person identification_number telephone number t be this is in reply to your rulings request of date concerning t's proposed transfer of all of its assets to c pursuant to sec_507 of the internal_revenue_code t a charitable_trust and c a nonprofit charitable corporation are exempt from federal_income_tax under sec_501 of the code and are private_foundations under sec_509 of the code t will transfer all of its assets to c after its transfer t will dissolve under state law t will have no expenditure_responsibility grants outstanding under sec_4945 of the code at the time of the transfer t and c are controlled by the same individuals the following rulings are requested t's transfer of all of its assets to the newly created charitable corporation c will constitute a transfer pursuant to a reorganization under sec_507 of the code t's transfer will not terminate t's status as a private_foundation under sec_507 of the code and will not result in any termination taxes imposed by sec_507 of the code as a resuit of the transfer the transferee c will be treated as if c were t for purposes of chapter and for part of subchapter_f of chapter of the code cwill succeed to any excess qualifying distributions carryover of t under sec_4942 of the code t's transfer of assets to c will not be an act of self-dealing under sec_4941 of the code the voluntary termination of t as a private_foundation after t's transfer of assets to c will be a taxable_termination under sec_507 of the code but no tax will be imposed under sec_507 of the code because t will not have any assets at the time of its termination t's transfer of assets to c will not constitute a gross_investment_income or capital_gain_net_income within the meaning of sec_4940 of the code b an act of self-dealing under sec_4941 of the code c undistributed_income under sec_4942 of the code d excess_business_holdings under sec_4943 of the code e an investment that jeopardizes charitable purposes under sec_4944 of the code or f a taxable_expenditure under sec_4945 of the code t's asset transfer will not cause t c or any disqualified_person as defined under sec_4946 of the code with respect to t or c to be subject_to any_tax under sec_4940 through of the code t will not have to exercise expenditure_responsibility under sec_4945 of the code as a result of the transfer t's transfer of its assets to c will not be treated as a sale_or_exchange of property subject_to tax under sec_4940 of the code the tax basis and holding_period of the transferred assets into c shall be determined in the same manner as if such assets had continued to be held uninterruptedly by t sec_501 of the code provides for the exemption from federal_income_tax of nonprofit_organizations organized and operated exclusively for charitable and or other exempt purposes stated in that section sec_509 of the code describes organizations exempt from federal_income_tax under sec_501 of the code that are private_foundations subject_to the private_foundation provisions of chapter of the code sec_507 of the code concerns the transfer of assets by one private_foundation to one or more other private_foundations and provides that each transferee private_foundation shall not be treated as a newly created organization sec_1_507-3 of the income_tax regulations indicates that a transfer under sec_507 of the code includes a transfer of assets from one private_foundation to another private_foundation pursuant to any reorganization including a significant disposition of or more of the transferor foundation's assets sec_1_507-3 of the regulations indicates that in a transfer of assets from one private_foundation to another private_foundation pursuant to a reorganization the transferee foundation shall not be treated as a newly created organization but shall succeed to the transferor's aggregate tax benefits under sec_507 of the code sec_507 of the code indicates in general that the aggregate tax benefits of an exempt_private_foundation refer to the value of its exemption from federal_income_tax and the deductions taken by its donors during its existence sec_1_507-1 of the regulations provides that a private_foundation which has transferred all of its net assets is not required to file annual information returns under sec_6033 of the code for tax years after the tax_year of such transfer when the transferor has no assets or activities a sec_1_507-3 of the regulations indicates that a transferor private_foundation is required to meet its own charitable distribution_requirements under sec_4942 of the code even for its tax_year in which it makes a transfer of its assets to another private_foundation pursuant to sec_507 of the code sec_1_507-3 of the regulations provides that a private_foundation that has transferred ail a transfer pursuant to sec_507 of the code is of its assets to another private_foundation in not subject_to the expenditure_responsibility requirement of sec_4945 of the code sec_1_507-3 of the regulations provides that certain tax provisions will carry over to a transferee private_foundation that is given a transfer of assets from a transferor private_foundation pursuant to sec_507 of the code sec_1_507-3 of the regulations indicates that if a transferor private_foundation transfers assets to another private_foundation which is effectively controlled directly or indirectly by the same person s who effectively control the transferor foundation then the transferee foundation will be treated as if it were the transferor foundation for purposes of sec_4940 through and also sec_507 through sec_1_507-3ii of the regulations indicates that a transfer of assets under section its own final b of the code does not relieve the transferor private_foundation from filing returns sec_1_507-1 and sec_1_507-3 of the regulations provide that a transferor foundation's transfer of assets under sec_507 of the code will not constitute any termination of the transferor foundation's status as a private_foundation sec_1_507-4 of the regulations provides that the tax under sec_507 of the code on termination of private_foundation_status does not apply to a transfer of assets pursuant to sec_507 of the code sec_4941 of the code imposes excise_tax on any act of self-dealing between a private_foundation and any of its disqualified persons under sec_4946 of the code sec_53_4946-1 of the foundation and similar excise_taxes regulations provides that for purposes of self-dealing under sec_4941 of the code an exempt_organization under sec_501 of the code is not a disqualified_person sec_4942 of the code requires that a private_foundation must expend qualifying distributions under sec_4942 for the conduct of exempt purposes revrul_78_387 1978_2_cb_270 describes the carryover of a transferor foundation's excess qualifying distributions under sec_4942 of the code to a transferee foundation that is effectively controlled by the same persons under sec_1_507-3 of the regulations under the regulation the transferee is treated as the transferor and thus the transferee can reduce its own distributable_amount under sec_4942 of the code by the amount if any of its transferor's excess qualifying distributions under sec_4942 of the code sec_4945 of the code imposes excise_tax on a private foundation's making of any taxable_expenditure under sec_4945 of the code sec_4945 of the code requires that in order to avoid making a taxable_expenditure a transferor private_foundation must exercise expenditure_responsibility under sec_4945 of the code on its grants to another private_foundation sec_4945 of the code defines expenditure_responsibility in terms of a grantor private_foundation requiring proper pre-grant inquiry and post-grant reports from a grantee private_foundation on the grantee’s uses of the grant sec_4945 of the code provides that a taxable_expenditure also includes any amount expended by a private_foundation for purposes other than purposes under sec_170 of the code sec_53_4945-6 allows a private_foundation to make transfers of its assets pursuant to sec_507 of the code to organizations exempt under sec_501 of the code without the transfers being taxable_expenditures under sec_4945 analysi sec_1 under sec_1_507-3 of the regulations a transfer under sec_507 of the code includes a transfer of assets from one private_foundation to another private_foundation pursuant to any reorganization including a significant disposition of or more of the transferor foundation's assets because t will transfer all of its assets to c t's transfer will be a significant disposition of its assets under sec_1_507-3 of the regulations and thus will be a transfer under sec_507 of the code under sec_1_507-3 of the regulations t's transfer of all of its assets to c pursuant to sec_507 of the code will not be a termination of t's private_foundation_status under sec_509 of the code and thus will not result in termination_tax under sec_507 of the code on t or c under sec_507 of the code and sec_1_507-3 of the regulations transferee c will be treated as its transferor t for purposes of chapter of the code and sec_507 through of the code 0uul3s3027 under sec_1_507-3 of the regulations t's transfer will result in c being treated as t for purposes of sec_4942 of the code so that t's distribution_requirements under sec_4942 of the code for its tax_year of its transfer may be satisfied by c and b t's qualifying distributions during t's tax_year of its transfer may be treated as made by c a as in revrul_78_387 described above c may reduce its required distributions under sec_4942 of the code including those for c's tax_year of the transfer by the amount if any of t's excess qualifying distributions carryover under sec_4942 of the code as of the time of t's transfer t's transfer of its assets will be for exempt purposes to c which is an organization exempt from federal_income_tax under sec_501 of the code under sec_53_4946-1 of the regulations because c is exempt from federal_income_tax under sec_501 of the code c is not a disqualified_person as to t under sec_4946 of the code for purposes of sec_4941 of the code because t's transfer of assets will not be a transfer between a disqualified_person and a private_foundation t's transfer will not be an act of self-dealing under sec_4941 of the code under sec_507 of the code when t notifies the internal_revenue_service at least one day after t transfers all of its net assets to c of its intent to voluntarily terminate its private_foundation_status pursuant to sec_507 of the code t will thus terminate its private_foundation_status pursuant to that sec_507 of the code under sec_507 of the code the value of t's assets after it has transferred all of its assets to thus t's voluntary notice of termination of its private_foundation_status pursuant to c will be zero sec_507 will not result in tax under sec_507 of the code t's transfer of assets to c will not result in tax under sec_4940 of the code as discussed above in t's transfer of assets to c will not result in tax under sec_4941 of the code under sec_1_507-3 of the regulations a transferor private_foundation is required to meet its charitable distribution_requirements under sec_4942 of the code even for any_tax year in which it makes a transfer of its assets to another private_foundation pursuant to sec_507 of the under sec_1_507-3 of the regulations t's transfer will result in c being treated as code t for purposes of sec_4942 of the code thus t can make its own timely distributions for exempt purposes as required by sec_4942 of the code or c being treated as if c were t can make t's required distributions under sec_4942 of the code on behalf of t in same manner that t would have made the distributions t's transfer will not result in tax under sec_4943 of the code provided that t's assets are not excess_business_holdings of t or c under sec_4943 of the code under sec_4944 of the code t's transfer of assets for exempt purposes under sec_501 of the code will not be a jeopardizing investment or result in tax under that section under sec_4945 of the code sec_53_4945-6 of the regulations indicates that a private_foundation can transfer its assets pursuant to sec_507 of the code to an organization exempt under sec_501 of the code without the transfer being a taxable_expenditure under sec_4945 provided that any expenditure_responsibility requirement under sec_4945 is met thus t's transfer to c pursuant to sec_507 of the code will not be a taxable_expenditure under sec_4945 of the code under sec_1_507-3 of the regulations t will not be required to exercise any expenditure_responsibility under sec_4945 of the code because t will transfer all of its assets to c t's asset transfer will not cause t c or any disqualified_person as defined under sec_4946 of the code with respect to t or c to be subject_to any_tax under sec_4940 through of the code under sec_4940 of the code t's transfer of its assets to c will not result in tax to t or c under sec_4940 of the code under sec_1_507-3 of the regulations the tax bases and holding periods of t's assets transferred to c will carry over to c for purposes of sec_4940 of the code accordingly we rule that t's transfer of all of its assets to c will constitute a transfer under sec_507 of the code t's transfer will not terminate t's status as a private_foundation under sec_507 of the code and will not result in termination_tax under sec_507 of the code as a result of t's transfer transferee c will be treated as if c were t for purposes of chapter_3 and part il of subchapter_f of chapter of the code cwill succeed to any excess qualifying distributions carryover of t under sec_4942 of the code t's transfer of assets to c will not be an act of self-dealing under sec_4941 of the code the voluntary termination of t as a private_foundation after t's transfer of its assets to c will be a taxable_termination under sec_507 of the code but no tax will be imposed under sec_507 of the code because t will have no assets at the time of its termination t's transfer of assets to c will not constitute a gross_investment_income or capital_gain_net_income within the meaning of sec_4940 of the code b an act of self-dealing under sec_4941 of the code c undistributed_income under sec_4942 of the code d excess_business_holdings under sec_4943 of the code e an investment that jeopardizes charitable purposes under sec_4944 of the code or a taxable_expenditure under sec_4945 of the code t's asset transfer will not cause t c or any disqualified_person as defined under sec_4946 of the code with respect to t or c to be subject_to any_tax under sec_4940 through of the code t will not have to exercise expenditure_responsibility under sec_4945 of the code as a result of the transfer of all of its assets to c f t's transfer of its assets to c will not be subject_to tax under sec_4940 of the code the tax basis and holding_period of t's transferred assets to c shall be determined in the same manner as if t's assets had continued to be held uninterruptedly by t because this ruling letter could help to resolve any questions please keep it in your permanent records this ruling letter is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as precedent sincerely terrell m berkovsky manager exempt_organizations technical group


internal_revenue_service number release date index number --------------------------------------- ------------------------------------ ---------------------------- --------------------------------- legend 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 b02 plr-121920-12 date date x state date ------------------------------------ -------------------------------- --------- ----------------- dear ------------------ this responds to a letter dated date submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was formed under the law of state it was intended that x elect s_corporation treatment effective date however a form_2553 election by a small_business_corporation was not timely filed for x 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 generally 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 sec_1362 provides that if an s 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 sec_1362 provides that if an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making the election for the plr-121920-12 taxable_year or no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for such taxable_year and sec_1362 shall not apply based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation effective date accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective date within days following the date of this letter then such election will be treated as timely made for x's taxable_year beginning date a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed or implied as to the federal_income_tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed concerning whether x is in fact an s_corporation for federal tax purposes 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 pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representatives sincerely melissa c liquerman chief branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service national_office technical_advice_memorandum december third party communication none date of communication not applicable tam-131399-05 cc psi b08 number release date index uil no case-mis no ------------------------ -------------------------- --------------------------- taxpayer's name taxpayer's address taxpayer's identification no year involved date of conference ------------------------------------------- ------------------------------- ---------------------------- ---------------- ---------- ----------------------- legend whether claimant is entitled to claim the small_ethanol_producer_credit under claimant ------------------------------------------- foreign_country -------------------------- foreign_country --------------- issue sec_40 of the internal_revenue_code with respect to the processing of hydrous ethanol into anhydrous ethanol as described below conclusion sec_40 with respect to the processing of hydrous ethanol into anhydrous ethanol facts claimant is not entitled to claim the small_ethanol_producer_credit under law and analysis sec_40 provides that for purposes of the sec_38 general business claimant purchases hydrous ethanol that is produced in foreign_country tam-131399-05 claimant arranges for delivery of the hydrous ethanol to a facility in foreign_country claimant is party to an agreement for the processing of anhydrous alcohol agreement with the facility under the agreement the facility processes the hydrous ethanol into anhydrous ethanol in a series of procedures that includes dehydrating the ethanol claimant distributes the resulting anhydrous ethanol in the united_states to be added to gasoline the facility is not owned by or otherwise related to claimant under the agreement the facility provides equipment and workers to process the hydrous ethanol claimant notes that although the facility has transitory legal_title to the ethanol at all times between the purchase of the ethanol in foreign_country and the sale of motor fuel grade ethanol to blenders in the united_states claimant possesses all the benefits_and_burdens_of_ownership related to the ethanol thus claimant argues that claimant was the producer of the ethanol notwithstanding its use of a facility owned and operated by a third party credit the alcohol fuels credit for the taxable_year includes in the case of an eligible_small_ethanol_producer the small_ethanol_producer_credit small ethanol producer for any taxable_year is cents for each gallon of qualified_ethanol_fuel_production of such producer sec_40 defines qualified_ethanol_fuel_production as any alcohol which is ethanol which is produced by an eligible_small_ethanol_producer and which during the taxable_year is under prescribed conditions sold for use or used by such producer as fuel claimant did not engage in qualified_ethanol_fuel_production because claimant did not produce alcohol that is ethanol rather claimant purchased ethanol that was produced in foreign_country and caused it to be further processed hence claimant is not entitled to the small_ethanol_producer_credit with regard to the ethanol at issue incoming technical_advice request or that may be raised based on the facts of this case including the ability of claimant to base its claim on the processing performed by a third party or the amount of value added to the hydrous alcohol sec_40 provides that the small_ethanol_producer_credit of any eligible no opinion is expressed herein as to any other issues that were raised in the caveats a copy of this technical_advice_memorandum is to be given to the taxpayer temporary or final regulations pertaining to one or more of the issues addressed tam-131399-05 sec_6110 of the code provides that it may not be used or cited as precedent in this memorandum have not yet been adopted therefore this memorandum will be modified or revoked by the adoption of temporary or final regulations to the extent the regulations are inconsistent with any conclusion in the memorandum see section dollar_figure of revproc_2005_2 2005_1_irb_86 however a technical_advice_memorandum that modifies or revokes a letter_ruling or another technical_advice_memorandum generally is not applied retroactively if the taxpayer can demonstrate that the criteria in section dollar_figure of revproc_2005_2 are satisfied


- significant index number departme motnuannevenwesenvce solozogzi washington d c feb se-t ep rk i az tax _- and government entities division re taxpayer dear _ for the above-named plan which are described in sections this letter constitutes notice that approval has been granted for your request for a 5-year automatic_extension for amortizing the unfunded liabilities as of january b b and b of the internal_revenue_code code and sec_304 and sec_304 of the employee_retirement_income_security_act_of_1974 erisa this extension is effective with the plan_year beginning january bases as identified in your application submission established as of january this extension applies to the eligible amortization charge with a total outstanding balance of dollar_figure as of that date the extension of the amortization periods of the unfunded liabilities of the plan was granted in accordance with sec_431 of the code sec_431 of the code requires the secretary to extend the period of time required to amortize any unfunded_liability of a plan for a period of time not in excess of years if the plan submits an application meeting the criteria stated in sec_431 the plan has submitted the required information to meet the criteria in sec_431 including a certification from the plan’s actuary that i absent the extension under subparagraph a the plan would have an accumulated_funding_deficiency in the current plan_year or any of the succeeding plan years ii the plan_sponsor has adopted a plan to improve the plan's funding status iii the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended and iv the notice required under paragraph a has been provided we have sent a copy of this letter to the and to the this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent if you require further assistance in this matter please contact sincerely yours pe cng david m ziegler manager ep actuarial group


internal_revenue_service department of the treasury 1362-dollar_figure number release date index number washington dc person to contact telephone number refer reply to cc psi b01- plr-163809-02 date december legend x date state dear this letter responds to your letter submitted on behalf of x dated date requesting relief under sec_1362 of the internal_revenue_code facts x was incorporated under state law on date the shareholders of x intended that x elect to be treated as an s_corporation effective date however the election to be treated as an s_corporation was not timely filed law and analysis sec_1362 of the code provides that a small_business_corporation can elect to be treated as an s_corporation sec_1362 of the code provides guidance on when the s election becomes effective if an s election is made within the first two and one-half months of a corporation’s taxable_year then that corporation will be treated as an s_corporation for the year in which the election was made if the corporation makes an election after the first two and one-half months of a corporation’s taxable_year then the corporation will generally not be treated as an s_corporation until the following taxable_year plr-163809-02 sec_1362 of the code provides that if no election is made pursuant to sec_1362 or if the election is made after the date prescribed for making such an election and the secretary determined reasonable_cause existed for the failure to timely make the election then the secretary can treat such an election as being timely made for that taxable_year and effective as of the first day of that taxable_year x did not file a timely election to be treated as a s_corporation under sec_1362 x has however established reasonable_cause for not making a timely s election therefore x is entitled to relief under section b 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 date an original form_2553 along with a copy of this letter much be forwarded to the relevant service_center within sixty days from the date of this letter 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 the taxpayer_representative s david r haglund sincerely david r haglund senior technician reviewer branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes