id office uilc cca_2008120212461453 ---------- 6324a number release date from -------------------- sent tuesday december pm to --------------------- cc subject calculation of value and interest rate on property under sec_6324a this memorandum responds to your request for assistance i coordinated these issues with the ----------------------------------------division this advice may not be used or cited as precedent if you have any questions please call me issue sec_1 does the calculation of the maximum value of required property under sec_6324a always include four years of interest is it legally permissible to use a flat rate when calculating the required_interest_amount for purposes of sec_6324a conclusion sec_1 the maximum value of required property under sec_6324a always includes the amount of interest expected to become payable over the first four years of deferral if using a flat rate results in an amount that is less than or equal to of the underpayment interest rate it is legally permissible law and analysi sec_1 the maximum value of required property under sec_6324a always includes the required_interest_amount which is the interest expected to become payable over the first four years of deferral sec_6324a states that the maximum value of collateral the service may require as security for the sec_6324a lien shall not exceed the total of a the deferred_amount and b the required_interest_amount fn1 cases are typically referred to -------- ------------ to secure the sec_6324a lien after a number of years have passed and the estate has already paid two or three years of the interest only payments however whether the required_interest has been paid does not factor into the calculation of the maximum security that can be required pursuant to sec_6324a the terms deferred_amount and required_interest_amount are defined in sec_6324a and respectively the deferred_amount is the aggregate amount deferred under sec_6166 determined as of the date prescribed by sec_6151 for payment of the tax imposed by chapter the required_interest_amount is the aggregate amount of interest which will be payable over the first years of the deferral_period with respect to the deferred_amount determined as of the date prescribed by sec_6151 for the payment of the tax imposed by chapter the term deferred_amount is also referenced in sec_6324a which states in part that the amount of the special_estate_tax_lien is the deferred_amount plus any interest additional_amount addition_to_tax assessable penalty and costs attributable to the deferred_amount the amount of the lien which does not include interest that has not yet accrued is generally thought of as an unpaid balance due yet the deferred_amount is a defined and fixed number in sec_6324a this is not inconsistent with the general tax_lien language found in sec_6321 which provides that the amount of tax unpaid after demand shall be a lien in favor of the united_states while the lien amount starts out at the full amount due it fluctuates with the accrual of interest and payments toward satisfaction therefore to include a clarifying unpaid before the deferred_amount in sec_6324a would have been unnecessary accordingly the maximum amount of collateral that the service can require is the sum of the deferred_amount plus the amount of interest which will be payable over the first years of the deferral_period regardless of the outstanding balance in deciding how much security to require the maximum should not automatically be the default amount requested collateral can fluctuate in value over time the service should exercise its judgment when determining what protection is needed while keeping in mind that sec_6166 and sec_6324a were enacted as relief provisions if using a flat rate results in an amount that is less than or equal to of the underpayment interest rate it is legally permissible sec_6324a provides a framework for calculating the maximum value of property the service may require as security for a special_estate_tax_lien the code does not require that the service determine and or require the maximum amount at any time the service should exercise discretion and judgment in determining the amount of collateral to actually require in each case the maximum amount of collateral the service may require is the deferred_amount plus the required_interest_amount the required_interest_amount is the first four years of interest to be paid during deferral under sec_6166 sec_6601 provides that when estate_taxes are deferred under sec_6166 a 2-part interest rate structure applies interest on the 2-percent_portion defined in sec_6601 fn2 is paid at the rate of then interest on any remaining portion is paid at the rate equal to of the underpayment rate established in sec_6621 fn3 forty-five percent of the underpayment rate effective as of date i sec_2 see revrul_2008_47 2008_39_irb_760 therefore the maximum amount of security that the service could require is calculated by using the rate on the percent portion and a rate of on any additional_amount because this calculation’s goal is to determine a maximum the service may use its judgment to simply use the lower rate on the full deferred_amount however if of the underpayment rate is less than at the time of calculation the service must use the of the underpayment rate so as not to exceed the maximum statutory amount of security that can be required footnote sec_1 sec_6166 provides for deferred payment of estate_taxes for eligible estates with estates paying interest for the first four years followed by ten annual payments of principal plus interest for tax_year the 2-percent_portion is dollar_figure the underpayment rate is the sum of the federal_short-term_rate plu sec_3 percentage points a irc


internal_revenue_service department of the treasury number release date index no 2601-dollar_figure p o box ben franklin station washington dc person to contact telephone number refer reply to cc psi - plr-139683-01 date july in re legend settlor trust_beneficiary a court state dear this responds to your letter dated date and subsequent correspondence requesting rulings regarding the generation-skipping_transfer gst tax consequences of the proposed modification of certain trusts facts the facts submitted and representations made are as follows over many years settlor has created separate irrevocable trusts for the benefit of each of his grandchildren and great-grandchildren the terms of all the trusts are substantially identical the trust at issue in this ruling_request trust was created after date for the benefit of beneficiary a is currently serving as trustee you represent that trust has an inclusion_ratio of greater than for purposes of the gst tax article five paragraph b of the trust instrument provides as follows the trustee shall accumulate the income of the trust estate and may pay to the beneficiary as much of the accumulated income and principal thereof as the trustee shall determine in the trustee’s discretion to be necessary and plr-139683-01 appropriate for the beneficiary’s support education care and maintenance in accordance with the beneficiary’s accustomed standard of living article five paragraph b provides upon the last to occur of i the attainment of age by the beneficiary or ii the death of all trustees identified in exhibit a hereto as the measuring lives this trust shall terminate and the trust estate shall be distributed free of trust to the beneficiary if the beneficiary dies before becoming entitled to distribution of the trust estate the trust estate shall be distributed free of trust to the beneficiary’s then living issue by right of representation or if there are no such then living issue to such of the issue of the trustees identified in exhibit a hereto as the measuring lives as are then living by right of representation however if any part of the trust would be distributed to a person for whose benefit a_trust is then being administered which is substantially identical to the trust created by this instrument that part shall instead be added to that trust and shall thereafter be administered according to its terms article six paragraph i of trust provides that any other provision of trust notwithstanding income and principal of the trust estate shall not be utilized to discharge the legal_obligation of any person to support a_trust beneficiary the parties desire to facilitate trust’s qualification as a qualified_subchapter_s_trust for purposes of sec_1361 of the internal_revenue_code therefore as permitted under the laws of state the parties propose to petition the court with jurisdiction over trust to obtain an order from the court approving the following proposed modification of article five paragraph b of the trust instrument to read as follows the trustee shall distribute all of the income within the meaning of sec_643 of the internal_revenue_code of the trust estate currently and may pay to the beneficiary as much of the principal thereof as the trustee shall determine in the trustee’s discretion to be necessary and appropriate for the beneficiary’s support education care and maintenance in accordance with the beneficiary’s accustomed standard of living we have been asked to rule that the proposed modification will not constitute an addition to corpus and will not alter the inclusion_ratio of trust for generation-skipping_transfer_tax purposes law and analysis sec_2601 imposes a tax on every generation-skipping_transfer under a of the tax_reform_act_of_1986 gst tax is generally applicable to generation- skipping transfers made after date however under b a of the tax reform act and sec_26_2601-1 of the generation-skipping_transfer_tax plr-139683-01 regulations the tax does not apply to a transfer from a_trust if the trust was irrevocable on date and no addition actual or constructive was made to the trust after that date sec_2602 provides that the amount of the tax imposed by sec_2601 is the taxable_amount multiplied by the applicable_rate sec_2641 provides that the term applicable_rate means with respect to any generation-skipping_transfer the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer sec_2642 provides that the inclusion_ratio is the excess if any of over the applicable_fraction determined for the trust from which the transfer is made or in the case of a direct_skip the applicable_fraction determined for the skip the applicable_fraction is a fraction in which the numerator is the generation-skipping_transfer_tax_exemption allocated to the trust or in the case of a direct_skip allocated to the property transferred and the denominator is the value of the property transferred to the trust or transferred in the direct_skip reduced by any federal estate_tax or state death_tax actually recovered from the trust attributable to the property and any charitable deduction allowed under sec_2055 and sec_2522 with respect to the property sec_2631 a provides that for purposes of determining the inclusion_ratio in the case of generation-skipping transfers on or before date every individual is allowed a gst_exemption of dollar_figure adjusted for inflation under sec_2631 that may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_26_2601-1 provides rules for determining when a modification judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the gst tax will not cause the trust to lose its exempt status sec_26_2601-1 provides that a modification will not cause an exempt trust to be subject_to the provisions of chapter if the modification does not shift a beneficial_interest in the trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification and the modification does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust a modification of an exempt trust will result in a shift in beneficial_interest to a lower generation beneficiary if the modification can result in either an increase in the amount of a gst transfer or the creation of a new gst transfer no guidance has been issued regarding the gst tax consequences of a modification of a_trust that was created after date or to which contributions have been made after that date however a modification that would not affect the gst tax status of a_trust that is exempt from tax under sec_26_2601-1 or should similarly not affect the gst tax status of a_trust to which contributions have been made after date in this case the proposed modification will not result in a shift of any beneficial_interest in trust to a lower generation beneficiary plr-139683-01 nor will the modification extend the time for vesting of any beneficial_interest in trust accordingly we conclude that the proposed modification of trust will not effect the inclusion_ratio with respect to trust except as specifically ruled herein we express no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours chief branch office of the associate chief_counsel passthroughs and special industries by_________________________ george l masnik enclosure copy for sec_6110 purposes cc


internal_revenue_service number release date index number re department of the treasury washington dc person to contact telephone number refer reply to cc psi 4-plr-128861-00 date date legend trust t decedent date child child child child trust trust trust trust bank state dear this is in response to your letter dated date in which you requested a ruling concerning the generation-skipping_transfer_tax consequences of the proposed partitions of certain trusts into separate trusts facts the facts are represented to be as follows decedent’s mother died prior to survived by decedent and decedent’s two siblings item v of decedent’s mother’s will established trust t which was divided pursuant to plr-128861-00 the terms of the will into three separate shares one for decedent and one for each of her two siblings under item v d of decedent’s mother’s will decedent was given a testamentary limited power to appoint her share of trust t to one or more of her descendants or to charity either outright or in trust under item v f of decedent’s mother’s will any trust created under the provisions of the will was to terminate at the time required by the state’s rule_against_perpetuities decedent died on date survived by four children all of whom were born before the death of decedent’s mother under article fourth of her will decedent exercised her power_of_appointment over her share of trust t by appointing the property in further trust the trustees were directed to divide the property into four separate trusts trust was created for the benefit of the issue of child trust was created for the benefit of the issue of child trust was created for the benefit of the issue of child and trust was created for the benefit of the issue of child under article fourth a of decedent’s will if a child of decedent has no issue during the life of such child and until such time as such child has issue trustees are to pay to such child all the income of his or her trust under article fourth a of decedent’s will if a child of decedent has issue during the life of such child the trustees are to pay to each such issue per stirpes such part or parts or all of the income to which such issue is entitled as the trustees may in their sole discretion appoint until such issue attains age at which time such issue is to receive all of the income of his or her per stirpital share under article fourth a of decedent’s will upon the death of a child of decedent leaving issue or upon decedent’s death if such child predeceased decedent the trustees are to continue to pay the income to such issue as provided in paragraph above and are to distribute one-third of such issue’s share of principal to such issue when he or she attains age an additional one-third when he or she attains age and all when he or she attains age under article fourth a of decedent’s will upon the death of a child of decedent leaving no issue and upon the death of all issue of a child of decedent who dies leaving issue if any property is then held in trust hereunder the trustees are to distribute the then remaining principal of that child’s trust if any in equal shares per stirpes to the surviving beneficiaries of the other trusts created under article fourth if the beneficiary is a beneficiary of another trust created under article fourth the share is to be added to the principal of the other trust under article fourth a of decedent’s will unless terminated earlier under article fourth a each trust is to terminate not later than years after the death of the last to die of the children of decedent who were living at the time of decedent’s mother’s death at such time the remaining principal and undistributed_income if any are to be vested in and distributed to those persons who at such time are enjoying or entitled to enjoy the use and benefit of the trust in proportions in which they are so enjoying or entitled to enjoy the same irrespective of their attained ages at the present time child is living and has four living children who are and years of age under the terms of decedent’s will the income of trust is divided annually into four equal shares and distributed to the four children of child at the death of child if plr-128861-00 no additional children are born to or adopted by her before that time the corpus of trust will be divided into four shares one for each child and held in trust or distributed outright in whole or in part under article fourth a a and a of decedent’s will at the present time child is living and has three living children who are and years of age under the terms of decedent’s will the income of trust is divided annually into three equal shares the share of the younger child is applied for his benefit as trustees in their sole discretion determine and the shares of the 30-year-old and the 32-year old are distributed to them at the death of child if no additional children are born to or adopted by him before that time the corpus of trust will be divided into three shares one for each child and held in trust or distributed outright in whole or in part under article fourth a a and a of decedent’s will at the present time child is living and has two living children who are and years of age under the terms of decedent’s will the income of trust is divided annually into two equal shares and applied for the benefit of the children as trustees in their sole discretion determine at the death of child if no additional children are born to or adopted by her before that time the corpus of trust will be divided into two shares one for each child and held in trust or distributed outright in whole or in part under article fourth a a and a of decedent’s will at the present time child is living and has two living children who are and years of age under the terms of decedent’s will the income of trust is divided annually into two equal shares and distributed to the two children of child at the death of child if no additional children are born to or adopted by him before that time the corpus of trust will be divided into two shares one for each child and held in trust or distributed outright in whole or in part under article fourth a a and a of decedent’s will child and bank are the trustees of trust trust and trust child is the trustee of trust the trustees and the beneficiaries propose to partition each trust into separate trusts for the benefit of each of decedent’s living grandchildren the purpose of the partitions is to facilitate the pursuit of different investment strategies by the beneficiaries each new separate trust will be funded with a pro_rata portion of the assets of its predecessor trust and each new separate trust will continue to be governed by the provisions of decedent’s will trust will be partitioned into four separate trusts for the benefit of child 1's children each child of child will continue to be entitled to the income of his or her separate trust under article fourth a of decedent’s will and the principal of his or her separate trust under article fourth a unless terminated earlier under article fourth a each separate trust will terminate years after the last of decedent’s four children to die although it is not expected that additional children will be born to or adopted by child prior to her death provision is made for that contingency in that event a_trust would be created for the benefit of an afterborn child and funded with a pro_rata distribution from the four trusts created out of trust so that the five trusts would be of equal value the trust for the afterborn child would also be governed by the provisions of decedent’s will trust will be partitioned into three separate trusts for the benefit of child 2's children each child of child will continue to be entitled to the income of his or her separate trust under article fourth a of decedent’s will and the principal of his or her separate trust under plr-128861-00 article fourth a unless terminated earlier under article fourth a each separate trust will terminate years after the last of decedent’s four children to die although it is not expected that additional children will be born to or adopted by child prior to his death provision is made for that contingency in that event a_trust would be created for the benefit of an afterborn child and funded with a pro_rata distribution from the three trusts created out of trust so that the four trusts would be of equal value the trust for the afterborn child would also be governed by the provisions of decedent’s will trust will be partitioned into two separate trusts for the benefit of child 3's children each child of child will continue to be entitled to the income of his or her separate trust under article fourth a of decedent’s will and the principal of his or her separate trust under article fourth a unless terminated earlier under article fourth a each separate trust will terminate years after the last of decedent’s four children to die although it is not expected that additional children will be born to or adopted by child prior to her death provision is made for that contingency in that event a_trust would be created for the benefit of an afterborn child and funded with a pro_rata distribution from the two trusts created out of trust so that the three trusts would be of equal value the trust for the afterborn child would also be governed by the provisions of decedent’s will trust will be partitioned into two separate trusts for the benefit of child 4's children each child of child will continue to be entitled to the income of his or her separate trust under article fourth a of decedent’s will and the principal of his or her separate trust under article fourth a unless terminated earlier under article fourth a each separate trust will terminate years after the last of decedent’s four children to die although it is not expected that additional children will be born to or adopted by child prior to his death provision is made for that contingency in that event a_trust would be created for the benefit of an afterborn child and funded with a pro_rata distribution from the two trusts created out of trust so that the three trusts would be of equal value the trust for the afterborn child would also be governed by the provisions of decedent’s will the trustees will petition the local court in state to appoint guardians ad litem for the minor grandchildren of decedent any unborn afterborn grandchildren of decedent and any unborn descendants of a grandchild of decedent who might predecease his or her parent who is a child of the decedent to make decedent’s children parties to the proceeding and to approve the partition of trust trust trust and trust in the manner described above ruling_request the trustees have requested a ruling that the successor trusts to be created pursuant to the proposed partitions and any successor trusts that may be created for afterborn children will remain exempt from the application of the generation-skipping_transfer_tax imposed under chapter of the internal_revenue_code law and analysis sec_2601 imposes a tax on every generation-skipping_transfer gst which is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip under a of the tax_reform_act_of_1986 the generation-skipping_transfer_tax gstt is generally applicable to generation-skipping transfers made after date plr-128861-00 however under b a of the act and sec_26_2601-1 of the generation-skipping_transfer_tax regulations the tax does not apply to a transfer under a_trust that was irrevocable on date but only to the extent that such transfer is not made out of corpus added to the trust after date or out of income attributable to corpus so added under sec_26_2601-1 any trust in existence on date will be considered irrevocable unless the settlor held a power with respect to the trust that would have caused the value of the trust to be included in the settlor’s gross_estate for federal estate_tax purposes by reason of sec_2038 or by reason of sec_2042 if the settlor had died on date sec_26_2601-1 provides rules for determining when a modification judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the generation-skipping_transfer_tax under sec_26_2601-1 will not cause the trust to lose its exempt status sec_26_2601-1 provides that a modification will not cause an exempt trust to be subject_to the gstt if the modification does not shift a beneficial_interest in the trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification and the modification does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust a modification of an exempt trust will result in a shift in beneficial_interest to a lower generation beneficiary if the modification can result in either an increase in the amount of a gst transfer or the creation of a new gst transfer sec_26_2601-1 example provides that if the division of a_trust into two trusts does not shift any beneficial_interest in the trust to a beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the division and the division does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust then the two partitioned trusts will not be subject_to the provisions of chapter of the internal_revenue_code in a previously issued private_letter_ruling we concluded that trust t was irrevocable on date if no additions were made to trust t after date transfers from trust t would be exempt from the gstt and decedent’s exercise of her testamentary limited_power_of_appointment over her share of trust t by creating trust trust trust and trust did not cause trust t trust trust trust or trust to lose its exempt status for gstt purposes for purposes of the present case it is represented that no additions actual or constructive were made to trust t after date and no additions actual or constructive were made to trust trust trust or trust since decedent’s death in this case the proposed partitions of trust trust trust and trust by the trustees will not result in a shift of any beneficial_interest in either trust to any beneficiary who occupies a generation lower than the persons holding the beneficial interests prior to the division further the proposed partitions will not extend the time for vesting of any beneficial_interest in either trust beyond the period provided for in the original trust accordingly based on the facts submitted and the representations made we conclude that the proposed partition of trust into four separate trusts the proposed partition of trust into three separate trusts the proposed partition of trust into two separate trusts and the proposed partition of trust into plr-128861-00 two separate trusts will not cause either trust to lose its exempt status for generation-skipping_transfer_tax purposes in addition if successor trusts are created for afterborn children as described above the new successor trusts will not be subject_to the gstt and will not cause the partitioned trusts to lose their exempt gstt status the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for the ruling it is subject_to verification on examination except as specifically ruled herein we express no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code the ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent sincerely yours katherine a mellody senior technician reviewer branch office of the associate chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes


internal_revenue_service department of the treasury washington dc voor o i contact person telephone number in reference to date t ep ra t2 dec - s iln legend amount n amount o individual a individual b individualc ira j trust m state x dear this is in response to the ruling_request dated date as supplemented by letters dated date date and date in which your authorized representative has requested rulings on your behalf concerning the calculations of the minimum distributions as required by sec_401 of the internal_revenue_code and the proposed trustee to trustee transfer of individual a’s individual_retirement_account ira your authorized representative has submitted the following facts and representations individual b is the trustee of trust m the trust has two beneficiaries individual b and individual c individual a was born on date and died on date prior to attaining age 70’2 on date individual a had established for himself ira j on date individual a named trust m as the beneficiary of ira j on that date prior to his death individual a received minimum distributions based on his recalculated single life expectancy o2'b o upon the death of individual a ira j is distributable to individual b as trustee of trust m the trust is valid under state law the trust became irrevocable upon individual a’s death trust m lists the two children of individual a as beneficiaries namely individual b who was born on date and individual c who was born on date the trust instrument of trust m provides in part a of the sixth paragraph as follows the trustee shall distribute free of trust seventy percent of the trust estate to settlor’s daughter individual b if she is still living the named beneficiary of ira j is the trustee of trust m with the legal rightto __ distribution of ira m the statement in the trust document that percent will be paid to individual b free of trust does not circumvent the legal right of the trustee to the payment under state x trust law the trustee is nevertheless percent accountable to the beneficiary once the trustee of the trust actually receives a distribution of a minimum distribution payment from ira j individual b has the right enforceable in equity to the distribution with no restrictions on it moreover if individual b directs the trustee to withdraw more than the minimum distribution amount the trustee has the fiduciary obligation to follow that direction after the trustee receives the funds they must flow through to individual b the trust instrument of trust m provides in part b of the sixth paragraph as follows the trustee shall retain in trust thirty percent of the trust estate for the benefit of settlor’s daughter individual c the trustee shall pay to or apply for the benefit of individual c so much of the income and principal of her trust as the trustee in her absolute discretion determines to be advisable to provide for her comfort and happiness but not for her support in making such payments and expenditures the trustee shall take into account any funds or assistance the trustee knows to be available to individual c from governmental and private sources individual c’s interest in the income or principal of this trust shall be free from the control or interference of any of individual c’s creditors or of any government agency providing aid or benefits to her and shall not be subject_to attachment or susceptible of anticipation or alienation upon the death of individual c or in the event that the terms and conditions of this trust are challenged in court by any government agency this trust shall terminate and the corpus of this trust shall be paid absolutely to individual b if she is living with reference to the percent share payable for the comfort and happiness of individual c the trustee is also the named beneficiary with the legal right to receive the funds however the percent payable to the trustee is subject_to individual c’s general_power_of_appointment the os words in trust m specifically state that it will be paid for her comfort and happiness state x law is in accord with the proposition that a power to use property for the comfort and happiness of the beneficiary entitles the beneficiary to a flow through of the benefits the funds are to be received by the trustee and used for the comfort and happiness of the benéficiary although trust m uses the words absolute discretion to describe the discretion of the trustee the state x probate code states that such discretion is nevertheless subject_to fiduciary principles and in this case the language of trust m as well as such fiduciary principles indicate that all the benefits are to flow through individual c thus the clear intent of trust m is for individual c’ sec_30 percent share to flow through her upon the death of individual c any balance is payable out right to individual b unless sooner terminated in accordance with other provisions of the instrument trust m shall terminate years after the death of the settlor individual a the principal and undistributed_income of the terminated trust m shall be distributed to the then income beneficiaries of trust m in the same proportion that the beneficiaries are entitled to receive income when trust m terminates individual b as trustee would like to make to make a trustee-to-trustee transfer of ira j to a new special ira account that would be under the name and social_security_number of individual a for the benefit of individual b and individual c you have determined that the minimum distribution for calendar_year will equal amount n amount n is based on the ira j account balance as of date amount o divided by individual c’s remaining life expectancy of individual a attained age in the calendar_year and individual c was age in the calendar_year individual a received distributions for four calendar years individual c’s life expectancy was obtained by using table v provided in sec_1_72-9 of the income_tax regulations you reduced this sum by the number of years since individual a turned years to derive individual c’s life expectancy of for the year based on the above facts and representations you have requested the following rulings distributions from ira j should be paid to the successor trustee of trust m over the life expectancy of individual c the oldest beneficiary of the trust and the minimum required distributions for the year should be amount n in each subsequent year individual a’s ira account balance as of december should be divided by years minus one for each subsequent year in order to determine the minimum_required_distribution for each such calendar_year ira j may be transferred to a new special ira account under the name and social_security_number of individual a for trust m for the benefit of individual b and individual c a sec_408 of the code defines an individual_retirement_account as a_trust which meets the requirements of sec_408 through a sec_408 states that under regulations prescribed by the secretary rules similar to the rules of sec_401 and the incidental death_benefit requirements of sec_401 shall apply to the distribution of the entire_interest of an individual for whose benefit the ira trust is maintained sec_401 sets forth the general rules applicable to required minimum distributions from qualified_plans sec_401 of the code provides that a_trust shail not constitute a qualified_trust under this subsection unless the plan provides that the entire_interest of each employee will be distributed beginning not later than the required_beginning_date in accordance with regulations over the life of such employee or over the lives of such employee and a designated_beneficiary or over a period not extending beyond the life expectancy of such employee or the life expectancy of such employee and a designated_beneficiary sec_401 of the code provides that for purposes of this paragraph the term required_beginning_date means april of the calendar_year following the later of the year in which the employee attains age 70’ or ii the calendar_year in which the employee retires sec_401 of the code provides that where distributions have begun under subparagraph a ii a_trust shall not constitute a qualified_trust under this section unless the plan provides that if- a the distribution of the employee’s interest has begun in accordance with subparagraph a ii and ii the employee dies before his entire_interest has been distributed to him the remaining portion of such interest will be distributed at least as rapidly as under the method of distributions being used under subparagraph a ii as of the date of his death - sec_1_401_a_9_-1 of the proposed income_tax regulations q a d-2 a provides in pertinent part that designated beneficiaries are only individuals who are designated as beneficiaries under the plan in general it provides that an individual may be designated as a beneficiary under the plan either by the terms of the plan or if the plan provides by an affirmative election by the employee or the employee’s surviving_spouse specifying the beneficiary a beneficiary designated as such under the plan is an individual who is entitled to a portion of an employee’s benefit contingent on the employee’s death or another specified event sec_1_401_a_9_-1 of the proposed_regulations q a d-3 a provides that for purposes of calculating the distribution period described in sec_401 for distributions before death the designated_beneficiary will be determined as of the employee’s required_beginning_date if as of that date there is no designated_beneficiary under the plan to receive the employee’s benefit upon the employee’s death the distribution period is limited to the employee’s life or a period not extending beyond the employee’s life expectancy sec_1_401_a_9_-1 of the proposed_regulations q a d-5 provides in part a pursuant to d-2a of this section only an individual may be designated_beneficiary for purposes of determining the distribution period under sec_401 consequently a_trust itself may not be the designated_beneficiary even though the trust is named as a beneficiary however if the requirements of paragraph b of this d-5a are met distributions made to the trust will be treated as paid to the beneficiaries of the trust with respect to the trust’s interest in the employee’s benefit and the beneficiaries of the trust will be treated as having been designated as beneficiaries of the employee under the plan for purposes of determining the distributions period under sec_401 if as of any date on or after the employee’s required_beginning_date a_trust is named as a beneficiary of the employee and the requirements in paragraph b of this d-5a are not met the employee will be treated as not having a designated_beneficiary under the plan for purposes of sec_401 consequently for calendar years beginning after that date distribution must be made over the employee’s life or over the period which would have been the employee’s remaining life expectancy determined as if no beneficiary had been designated as of the employee’s required_beginning_date b the requirements of this paragraph b are met if as of the later of the date on which the trust is named as a beneficiary of the employee or the employee’s required_beginning_date and as of all subsequent periods during which the trust is named as a beneficiary the following requirements are met the trust is a valid trust under state law or would be but for the fact there is no corpus - the trust is irrevocable or will by its terms become irrevocable upon the death of the employee the beneficiaries of the trust who are beneficiaries with respect to the trust’s interest in the employee’s benefit are identifiable from the trust instrument within the meaning of d-2 of this section the document described in d-2 of this section has been provided to the plan_administrator c in the case of payments to a_trust having more than one beneficiary see e-5 of this section for the rules for determining the designated_beneficiary whose life expectancy will be used to determine the distribution period sec_1_401_a_9_-1 of the proposed_regulations q a e-5 provides in pertinent part that if more than one individual is designated as a beneficiary with respect to an employee as of the applicable_date for determining the designated_beneficiary the designated_beneficiary with the shortest life expectancy will be the designated_beneficiary for purposes of determining the distribution period sec_401 of the code permits an employee and his spouse to recalculate their life expectancies annually sec_1_401_a_9_-1 of the proposed_regulations q a e-8 a provides guidance on how an employee’s life expectancy is recalculated and provides that upon the death of the employee the recalculated life expectancy of the employee or the employee’s spouse will be reduced to zero in the calendar_year following the calendar_year of death in any calendar_year in which the last applicable life expectancy is reduced to zero the plan must distribute the employee’s entire remaining interest prior to the last day of such year in order to satisfy sec_401 a sec_1 a -i of the proposed_regulations q a e-8 b provides guidance on calculating the applicable life expectancy when the employee’s life expectancy is being recalculated and the life expectancy of his designated_beneficiary is not recalculated it provides in relevant part that if the designated_beneficiary is not the employee’s spouse and the life expectancy of the employee is being recalculated annually the applicable life expectancy for determining the minimum distribution for each distribution calendar_year will be determined by recalculating the employee’s life expectancy but not recalculating the beneficiary’s life expectancy such applicable life expectancy is the joint and last survivor expectancy using the employee’s attained age as of the employee’s birthday in the distribution calendar_year and an adjusted age of the designated_beneficiary the adjusted age of the designated_beneficiary is determined as follows first the beneficiary’s applicable life expectancy is calculated based on the beneficiary’s attained age as of the beneficiary’s birthday in the calendar_year described in e-1 reduced by one for each calendar_year which has elapsed since that calendar_year the age rounded if necessary to the higher age in table v of sec_1_72-9 is then located which corresponds to the designated beneficiary’s applicable life expectancy such age is the adjusted age of the designated_beneficiary as provided in paragraph a upon the death of the employee the life expectancy of the employee is reduced to zero in the calendar_year following the calendar_year of the employee’s death thus for determining the minimum distribution for such calendar_year and subsequent calendar years the applicable life expectancy is the applicable life expectancy of the designated_beneficiary determined under this paragraph sec_1_401_a_9_-1 of the proposed_regulations q a e-1 a provides generally that for required distributions under sec_401 of the code life expectancies are calculated using the employee’s and the designated beneficiary’s attained age as of the employee’s birthday and the designated beneficiary’s birthday in the calendar_year in which the employee attains age sec_1_401_a_9_-1 of the proposed_regulations q a f-5 provides generally that in the case of an individual_account the benefit used in determining the minimum distribution for a distribution calendar_year is the account balance as of the last valuation_date in the calendar_year immediately preceding any distribution calendar_year because individual a’s life expectancy was being recalculated upon his death in accordance with q a e-8 a of sec_1_401_a_9_-1 of the proposed_regulations his life expectancy was reduced to zero although his benefit was paid in the form of a single life expectancy upon his death his life expectancy was not the last applicable life expectancy because he timely designated his beneficiary by his required_beginning_date in accordance with q a d- a of the proposed_regulations therefore pursuant to q a e-8 b of sec_1_401_a_9_-1 of the proposed_regulations for purposes of determining the minimum distribution in the calendar_year after the death of the grantor the applicable life expectancy is the life expectancy of the designated_beneficiary as determined under that section because individual a named trust m as his beneficiary and because trust m is a_trust that meets the requirements of q a d-5a b of the proposed_regulations the distributions of ira j made to trust m will be treated as paid to the beneficiaries of trust m and the beneficiaries of trust m will be treated as having been designated as beneficiaries of ira j for purposes of determining the distribution period under sec_401 of the code since more than one individual was designated as a beneficiary with respect to ira j pursuant to sec_1_401_a_9_-1 of the proposed regulation q a e-5 a the beneficiary who is the oldest and who has the shortest life expectancy will be the designated_beneficiary for purposes of determining the distribution period under ira j individual c had the shorter life expectancy of the two designated beneficiaries on individual a’s required_beginning_date therefore she is the designated_beneficiary whose life expectancy will be used when determining the minimum distribution period under ira j for the calendar_year commencing after the year of individual a’ death and for all subsequent years thereafter pursuant to sec_1_401_a_9_-1 of the proposed_regulations q as e-1 a and e-8 b individual c’s applicable life expectancy is calculated based on her attained age as of her birthday in the calendar_year in which individual a attained age reduced by one for each calendar_year which has elapsed since that calendar_year pursuant to table v provided in sec_1_72-9 of the regulations her single life expectancy in the year that individual c attained wa sec_33 this number is reduced for each year subsequent to minu sec_4 or the account balance as of the last valuation_date in the previous year was amount o the calculation of the life expectancy would be the number minus one for each subsequent year in future years accordingly with respect to ruling_request one we conclude that distributions from ira j should be paid to the successor trustee of trust m over the life expectancy of individual c the oldest beneficiary of the trust and that the minimum required distributions for the year should be amount n and in each subsequent year individual a’s ira account balance as of december should be divided by years minus one for each subsequent year in order to determine the minimum_required_distribution for each such calendar_year sec_408 of the code provides in general that any amount_paid or distributed out of an individual_retirement_plan shall be included in gross_income by the payee or distribute sec_408 however provides that such amount is not includible in the gross_income of the individual for whose benefit the amount is maintained if the entire amount received is paid into another ira for the benefit of such individual not later than days after receipt of the payment or distribution revrul_78_406 1978_2_cb_157 provides that the direct transfer of funds from one ira trustee to another ira trustee does not result in such finds being paid or distributed to the participant and that such transfer is not a rollover_contribution the revenue_ruling further states that this conclusion would apply whether the bank trustee initiates the transfer or the ira participant directs the transfer of funds in the situation presented ira j has been maintained in the name of the deceased ira holder as noted in revrul_78_405 the mere transfer of funds of the deceased ira holder’s ira between trustees will not result in any payment or distribution of funds from the ira to the ira beneficiary further the designation of the new ira will be in the name of individual a for the benefit of individual b and individual c accordingly we conclude with respect to the second ruling_request that the account may be transferred to a new special ira account under the name and social_security_number of individual a for the benefit of individual b and individual c these rulings are based on the assumption that ira j and the new ira otherwise meet the requirements of sec_408 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the internal_revenue_code provides that is may not be used or cited by others as precedent in accordance with a power_of_attorney on file in this office a copy of this ruling is being sent to your authorized representative sincerely yours é kia’ wt ao fe se ae co he ty yw joyce e floyd manager employee_plans technical group tax_exempt_and_government_entities_division enclosures deleted copy of this letter notice of intention to disclose ol


set ep rats department of the treasury internal_revenue_service washington d c tax exempt and 30vernment entities division sep sec_408 -- individual_retirement_account sec_408 individual_retirement_account sec_408 exclusive benefit of individual or beneficiary rollover_contribution sec_408 ira_distributions nkk wkk kak kk legend surviving_spouse decedent ira x custodian amount trust t agreement t state date date date date page kkk date dear this is in response to your request for a private_letter_ruling submitted by your authorized representative dated as supplemented by correspondence dated x see ond concerning the proper treatment of a distribution from decedent's individual_retirement_account ira x under sec_408 of the internal_revenue_code the code your authorized representative has submitted the following facts and representations decedent was born on date and died on date at age decedent was a resident of state at the time of his death decedent was survived by his spouse surviving_spouse whose date of birth is date prior to his death on date decedent executed agreement t which created trust t initially decedent was the trustee of trust t upon decedent’s death surviving_spouse and custodian became co-trustees of trust t under article vii c and d of trust t at the time of his death decedent maintained ira x with custodian on date decedent had amended ira x to provide that trust t was the beneficiary of ira x on date the value of ira x was amount at the time of his death decedent had not yet reached his required_beginning_date under code sec_401 at all times subsequent to decedent's death ira x has been maintained in decedent's name and all required minimum distributions under code sec_401 have been distributed from ira x the date amendment to ira x provides that surviving_spouse has the right to income from ira x through trust t the amendment also gives surviving_spouse the right to withdraw principal from ira x article of trust t in relevant part gives the trustee s of trust t the right to request that trust t receive payment of amounts held in an individual_retirement_account kek page subparagraph a of article iii of trust t directs the trustee to pay the income received by trust t from ira x to surviving_spouse at least annually for life subparagraph a of article ii of trust t provides that surviving_spouse has the right to withdraw such sums from the principal of trust t that surviving_spouse may desire pursuant to the above-referenced trust t provisions surviving_spouse intends to request that the trustees of trust t request a full distribution of the ira x assets be paid to trust t surviving_spouse will then request the ira x proceeds be paid to her as the beneficiary of trust t within days of the date on which the ira x proceeds are paid to trust t surviving_spouse will contribute said ira x proceeds less any calendar_year required_distribution into an ira set up and maintained in her name based on the above facts and representations you through your authorized representative request rulings that ira x will not be treated as an inherited ira within the meaning of code sec_408 with respect to surviving_spouse surviving_spouse is eligible to rollover or transfer by means of a trustee- to-trustee transfer the funds in ira x into an ira established in surviving spouse’s own name and surviving_spouse will not be required to include in gross_income for federal_income_tax purposes for the year in which the amounts are distributed from ira x and the year in which the above-referenced rollover is made if different any portion of the amounts distributed from ira x and contributed to the individual_retirement_account set up and maintained in surviving spouse’s name provided that the rollover of such distribution occurs no later than the 60th day from the date on which the ira x proceeds are distributed from ira x to trust t with respect to your ruling requests code sec_408 provides that except as otherwise provided in this subsection any amount_paid or distributed out of an individual_retirement_plan shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 kkk page code sec_408 provides the rules with regard to the tax treatment of ira_rollovers under the code code sec_408 provides that sec_408 does not apply to a rollover_contribution if such contribution satisfies the requirements of sec_408 and d b code sec_408 provides that code sec_408 does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if - i ii the entire amount received including money and any other_property i is paid into an ira for the benefit of such individual not later than the day after the date on which the individual receives the payment or distribution or the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to code sec_408 code sec_408 provides in pertinent part that in the case of an inherited ira sec_408 shall not apply to any amount received by an individual from such account and no amount transferred from such account to another ira shall be excluded from income by reason of such transfer and such inherited account shall not be treated as an ira for purposes of determining whether any other amount is a rollover_contribution therefore the rollover rules of code sec_408 do not apply to inherited iras code sec_408 provides that an ira shall be treated as inherited if the individual for whose benefit the account is maintained acquired such account by reason of the death of another individual and such individual was not the surviving_spouse of such other individual thus pursuant to code sec_408 ii a surviving_spouse who acquires ira proceeds from and by reason of the death of her husband may elect to treat those ira proceeds as her own or roll them over into her own ira kkk page code sec_408 provides generally that code sec_408 does not apply to any amount required to be distributed pursuant to code sec_408 on date final income_tax regulations regulations were published in the federal_register with respect to code sec_401 and sec_408 see also 2002_19_irb_852 date sec_1_408-8 of the regulations question and answer provides that a surviving_spouse of an ira owner may elect to treat the spouse's entire_interest as a beneficiary in an individual's ira as the spouse's own ira in order to make this election the spouse must be the sole beneficiary of the ira and have an unlimited right to withdraw amounts from the ira if a_trust is named as beneficiary of the ira this requirement is not satisfied even if the spouse is the sole beneficiary of the trust the preamble to the regulations provides in relevant part that a surviving_spouse who actually receives a distribution from an ira is permitted to roll that distribution over into his her own ira even if the surviving_spouse is not the sole beneficiary of the deceased's ira as long as the rollover is accomplished within the requisite day period a rollover may be accomplished even if ira assets pass through either a_trust and or an estate in this case the ira x account balance remaining at decedent's death is payable to trust t surviving_spouse is the co-trustee of trust t and the sole beneficiary of trust t with the right under subparagraph a of trust t to receive the net_income of trust t including ira x income at least annually during her life surviving_spouse also has the right under subparagraph a of trust t to withdraw all or as much of the principal of trust t as she desires in her sole discretion we note that under the facts stated above surviving_spouse has an unlimited right to withdraw amounts from ira x through trust t as beneficiary of trust t surviving_spouse has the right under the terms of trust t to receive the income of trust t and the income of ira x through trust t and also to request and receive any and all of the principal of trust t including ira x under this set of facts we believe it is appropriate to treat surviving_spouse as the payee or distributee of ira x for purposes of code sec_408 even though ira x must originally pass through trust t as such she is eligible to roil over or transfer by means of a trustee-to-trustee transfer ira x or any portion thereof into an ira established in her name kek page thus with respect to your ruling requests we conclude that ira x will not be treated as an inherited ira within the meaning of code sec_408 with respect to surviving_spouse surviving_spouse is eligible to rollover or transfer by means of a trustee- to-trustee transfer the funds in ira x into an ira established in surviving spouse’s own name and surviving_spouse will not be required to include in gross_income for federal_income_tax purposes for the year in which the amounts are distributed from ira x and the year in which the above-referenced rollover is made if different any portion of the amounts distributed from ira x and contributed to the individual_retirement_account set up and maintained in surviving spouse's name provided that the rollover of such distribution occurs no later than the 60th day from the date on which the ira x proceeds are distributed from ira x to trust t and provided further that such distribution does not include any amount required to be distributed pursuant to code sec_408 this ruling letter assumes that ira x either is or was qualified under code sec_408 at all times relevant thereto it also assumes that the rollover ira to be set up by surviving_spouse will also meet the requirements of code sec_408 at all times relevant thereto finally it assumes that surviving spouse's rollover of the ira x distribution will be made within the time frame referenced in code sec_408 note this letter_ruling does not authorize surviving_spouse to contribute amounts required to be distributed under code sec_401 applicable to iras pursuant to code sec_408 with respect to calendar years beginning with the calendar_year following the calendar_year of decedent’s death and ending with the calendar_year of rollover into her ira if any this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited by others as precedent a copy of this letter is being sent to your authorized representative in accordance with a power_of_attorney on file in this office eek page no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto if you have any questions please contact id at - please address all correspondence to po yours ances v sloan manager employee_plans t chnical group cc tek kk eee enclosures deleted copy of letter_ruling notice of intention to disclose


department of the treasury internal_revenue_service washington d c tan government entities division sep rollover_contributions t cp’ gr kt s legend taxpayer a decedent b ira c account d financial_institution e account f amount amount dear this letter is in response to a request for a letter_ruling dated date as supplemented by correspondence from date submitted on your behalf by your authorized representative in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code code perjury in support of the ruling requested the following facts and representations have been submitted under penalty of taxpayer a represents that she received a distribution from ira c totaling amount on date taxpayer a asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_408 of the code was due to her mental condition following the sudden death of her spouse decedent b which impaired her ability to make financial decisions taxpayer a further represents that amount has not been used for any other purpose - decedent b died unexpectedly in date decedent b maintained two accounts with financial_institution e an individual_retirement_annuity ira c and a non-qualified annuity account d on date financial_institution e contacted taxpayer a as beneficiary to process a claim for ira c and account d although decedent b maintained two accounts with financial_institution e it sent taxpayer a only one claim form to fill out for both the ira annuity and the non-ira annuity the claim form and the accompanying correspondence described both accounts as policies did not distinguish between an ira and a non-ira annuity and did not include any specific indication on how to accomplish a rollover of an ira annuity the claim form also included two opportunities for taxpayer a to establish an account in her own name that would continue to be maintained by financial_institution e on her behalf taxpayer a filled out the form and chose one of the options that allowed her to establish an account in her own name account f with financial_institution e she returned the papers believing she had established a rollover ira for amount but she had actually chosen an option to receive a lump sum payment of both accounts to be deposited into account f a non-ira account with financial_institution e taxpayer a received confirmation that amount from ira c and amount from account d were transferred to account f on date taxpayera represents that she did not learn of her failure to roll over the proceeds of ira c until after the 60-day period had expired based on the facts and representations you request that the service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distribution of amount from ira c sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if- i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the 60th day after the day on which the individual received the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity and good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 revproc_2003_16 i r b provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability or hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and the documentation submitted by taxpayer a is consistent with her assertion that her failure to accomplish a timely rollover of amount was due to her mental condition following the sudden death of her spouse decedent b which impaired her ability to make financial decisions therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement for the distribution of amount from ira c taxpayer a is granted a period of days from the issuance of this ruling letter to contribute a sum up to amount into an ira established in your own name provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contribution amount will be considered a rollover_contribution within the meaning of sec_408 of the code no opinion is expressed as to the tax treatment of the transactions described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 of the code this letter is directed only to the taxpayer who requested it sec_61 k of the code provides that it may not be used or cited as precedent a copy of this letter is being sent to your authorized representative in accordance with a power_of_attorney form on file with this office if vou wish to inquire about this ruling please contact id number at se t ep ra t please address all correspondence to sincerely yours cc bfer-t with carlton a watkins manager employee_plans technical group ‘enclosures deleted copy of letter_ruling notice of intention to disclose notice cc


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc intl br1-plr-122612-98 date date do ty re a country b date c year d date e date f dear a this is in response to a letter dated date f submitted on behalf of a requesting a ruling under sec_877 of the internal_revenue_code_of_1986 code that a’s renunciation of the status of lawful permanent resident of united_states did not have for one of its principal purposes the avoidance of u s taxes under subtitle a or subtitle b of the code1 the information submitted for consideration is substantially as set forth below the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a declaration executed by him under penalties of perjury that he has examined the ruling_request including accompanying documents and to the best of his knowledge and belief the request contains all the relevant facts relating to the request and such facts are true correct and complete this office has not verified any of the material submitted in support of the ruling_request and they are subject_to verification on examination a is a citizen of country b by birth as is his spouse he was born on date c a obtained permanent resident status in the united_states in year d and relinquished it on date e 1all section references are to the internal_revenue_code_of_1986 as amended plr-122612-98 as of the date he ceased to be permanent resident_of_the_united_states his net_worth was in excess of the threshold set by the statute for a rebuttable_presumption of tax_avoidance under sec_877 of the code sec_877 generally provides that a citizen who loses u s citizenship or a u s long- term resident who ceases to be taxed as a lawful permanent resident individuals who expatriate within the 10-year period immediately preceding the close of the taxable_year will be taxed under sec_877 and be subject_to the special rules of sec_877 for such taxable_year unless such loss did not have for one of its principal purposes the avoidance of u s taxes sec_2107 and sec_2501 provide special estate and gift_tax regimes respectively for individuals who expatriate with a principal purpose to avoid u s taxes a former citizen or former long-term_resident will be treated as having expatriated with a principal purpose to avoid u s taxes for purposes of sec_877 sec_2107 and sec_2501 if the individual’s average income_tax_liability or the individual’s net_worth on the date of expatriation exceeds certain thresholds see sec_877 sec_2107 and sec_2501 a former citizen whose net_worth or average tax_liability exceeds these thresholds however will not be presumed to have a principal purpose of tax_avoidance if that former citizen is described within certain statutory categories and submits a request for a ruling within one year of the date of loss of u s citizenship for the secretary’s determination as to whether such loss had for one of its principal purposes the avoidance of u s taxes see sec_877 sec_2107 and sec_2501 under notice_98_34 1998_27_irb_30 modifying notice_97_19 1997_1_cb_394 an eligible former long-term_resident whose net_worth or average tax_liability exceeds the applicable thresholds will not be presumed to have a principal purpose of tax_avoidance if that former resident is described within certain categories and submits a complete and good_faith request for a ruling as to whether such loss had for one of its principal purposes the avoidance of u s taxes notice_98_34 requires that certain information be submitted with a request for a ruling that an individual’s expatriation did not have for one of its principal purposes the avoidance of u s taxes a is eligible to request a ruling pursuant to notice_98_34 because he is covered by two categories of individuals eligible to submit ruling requests first within a reasonable period after his expatriation a became a resident fully liable to income_tax in country b the country where he was born second within a reasonable period after his expatriation a became a resident fully liable to income_tax in country b the country where his spouse was born a submitted all the information required by notice_98_34 including any additional plr-122612-98 information requested by the service after review of the original submission accordingly based solely on the information submitted and the representations made it is held that a has made a complete and good_faith submission in accordance with sec_877 and notice_98_34 therefore a will not be presumed to have as one of his principal purposes for expatriating the avoidance of u s taxes however because the information submitted does not clearly establish the existence or lack of a principal purpose to avoid taxes under subtitle a or b of the code no opinion is expressed as to whether a’s expatriation had for one of its principal purposes the avoidance of such taxes while this ruling rebuts the presumption of tax_avoidance under sec_877 it is not conclusive as to whether a subsequently may be found to have a principal purpose of tax_avoidance under sec_877 sec_2107 and sec_2501 based on all the facts and circumstances see sec_877 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 in addition no opinion is expressed as to a’s u s tax_liability for taxable periods prior to his relinquishment of the status of lawful permanent resident or for taxable periods after his relinquishment of the status of lawful permanent resident under any section of the code other than sec_877 sec_2107 and sec_2501 a copy of this letter must be attached to a’s u s income_tax return for the year in which a obtained the ruling whether or not a is otherwise required to file a return 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 a’s authorized representative yours truly w edward williams senior technical reviewer branch office of the associate chief_counsel international cc assistant_commissioner international international district operations op in d


department of the treasury employer_identification_number contact person - id number contact telephone number vil internal_revenue_service p o box cincinnati oh release number release date date date legend d scholarship program e county f state x dollar amount y dollar amount z dollar amount dear we have considered your request for advance approval of your grant-making program under sec_4945 of the internal_revenue_code dated date our records indicate that you are recognized as exempt from federal_income_tax under sec_501 of the code and that you are classified as a private_foundation as defined in sec_509 you will operate a grant-making program called d the purpose of d is to provide a scholarship to individuals who are high school seniors attending public schools located in e in the state of f the individual receiving the scholarship must be seeking an education at a college university or community college under a degree seeking program you require completion of an application whereby the following information shall be provided by each applicant applicant’s name and addre sec_2 high school attended two letters of reference responses to various essay question sec_5 a statement as to whether the applicant wants the committee to give consideration to financial need if applicable financial need analysis documentation information to apply for d is publicized to high school seniors by the administrator and or guidance counselors at each public school located in e through each public school’s normal procedures all complete applications submitted by the application deadline shall be considered by your selection committee subject_to your board’s approval you will seek to award two to three scholarships annually the scholarship recipient shall receive monthly scholarship disbursements of z dollars per month disbursements shall be made on the of each month beginning in august and ending in may for a total of y dollars per school year the maximum amount of the scholarship will be x dollars payments are made directly to the college or university for tuition or to the scholarship recipient for housing or room and board the selection criteria will be based on the location of the high school attended by the applicant two letters of reference applicant's response to essay questions academic ability community involvement willingness to return to pursue a career in e interviews and financial need as selection criteria an applicant's willingness to return to pursue a career in e is not given any more weight than high school academic success community involvement career aspirations or applicant’s interviews there is not any requirement for the award recipient to seek any specific degree or pursue any specific careers your selection committee will be composed of five members those members shall be one representative appointed by the school district one representative appointed by you and three community volunteers in february your selection committee will finalize and critique the application process number and amount of awards in march the selection committee will set the framework for evaluating the applications and determine the point system for evaluating the applications next your selection committee will evaluate the applications and make award selections finally in may your selection committee will critique the selection process and make awards under no circumstances shall any of the applicants be weighted based upon the applicant’s ethnic or religious background selection committee members shall annually certify that they are not in a position to derive a benefit directly or indirectly from the selection of any of the applicants your board members selection committee members or any of their relatives are not eligible for any of the scholarship awards selection committee members shall certify that they are not related to any of the applicants and that they are unbiased during the selection process your board members shall certify that they are not related to any of the applicants and that they did not influence any of the selection committee applicant selection decisions scholarship awards shall be made by one of your representatives at the annual scholarship banquet for the school from which the award recipient is graduating prior to payment of any scholarship award the recipient must sign the award acceptance letter’ whereby the recipient agrees to the terms of the scholarship award the reward terms are as follows the maximum annual award amount the allowable use for scholarship funds disbursement procedures minimum enrollment criteria and verification minimum gpa criteria agreement to provide school grades and or transcripts and the requirement to notify you of any change_of address you will maintain a record for each scholarship award recipient award amounts and their academic achievements by accepting an award a recipient will not have any requirements that they teach conduct research work provide service or produce any item you will communicate with the award recipient s at least twice a year to remind them of their reporting requirements you will also set a timetable for the recipient's compliance with the reporting requirements and will suspend distributions if the applicant fails to meet the prescribed timetable you will evaluate the recipient's compliance with the scholarship award terms failure to meet the terms of the award will result in the suspending or terminating of the award as stated in the award acceptance letter in the event that the award recipient fails to meet the minimum gpa requirements or the minimum hour achievement the award will be terminated except for certain hardship considerations by your board you will not seek to have award recipients reimburse you when all eligibility criteria were met at the beginning of a term but failed to meet the minimum gpa or minimum hour achievement at the end of a term in order to renew the award annually the recipient will be required to provide copies of all grades to you within a reasonable_time of issuance from the school otherwise the award will be suspended annually the award recipients will be required to designate the school in which they will be enrolling to ensure continued eligibility at a qualified_school and show proof of registration for the minimum required classes no disbursements will be made unless the award recipient fulfills this annual renewal process for award recipients who choose to transfer to a non-qualified school their scholarship award would be terminated sec_4945 and b of the code impose certain excise_taxes on taxable_expenditures made by a private_foundation sec_4945 of the code provides that the term taxable_expenditure means any amount_paid or incurred by a private_foundation as a grant to an individual for travel study or other similar purposes by such individual unless such grant satisfies the requirements of subsection g sec_4945 of the code provides that sec_4945 shall not apply to individual grants awarded on an objective and nondiscriminatory basis pursuant to a procedure approved in advance if it is demonstrated that the grant constitutes a scholarship or fellowship_grant which is subject_to the provisions of sec_117 as in effect on the day before the date of the enactment of the tax_reform_act_of_1986 and is to be used for study at an educational_organization described in sec_170 the grant constitutes a prize or award which is subject_to the provisions of sec_74 if the recipient of such prize or award is selected from the general_public or the purpose of the grant is to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar capacity skill or talent of the grantee sec_53_4945-4 of the regulations provides that to secure approval a private_foundation must demonstrate that i its grant procedure includes an objective and nondiscriminatory selection process ii such procedure is reasonably calculated to result in performance by grantees of the activities that the grants are intended to finance and iii the foundation plans to obtain reports to determine whether the grantees performed activities that the grants are intended to finance based on the information submitted and assuming your award programs will be conducted as proposed with a view to providing objectivity and nondiscrimination in making the awards we have determined that your procedures for granting the awards comply with the requirements contained in sec_4945 of the code and that awards granted in accordance with such procedures will not constitute taxable_expenditures within the meaning of sec_4945 in addition we have determined that awards made under your procedures are ‘scholarship or fellowship’ grants within the meaning of sec_117 of the code and are excludable from the gross_income of the recipients subject_to the limitations provided in sec_117 of the code including to the extent that such grants are used for qualified_tuition_and_related_expenses within the meaning of sec_117 of the code this determination is conditioned on the understanding that there will be no material_change in the facts upon which it is based it is further conditioned on the premise that no grants will be awarded to foundation managers or members of the selection committee or for a purpose that is inconsistent with the purpose described in sec_170 of the code the approval of your award program procedures herein constitutes a one-time approval of your system standards and procedures designed to result in awards which meet the requirements of sec_4945 of the code this determination only covers the grant programs described above thus approval shall apply to subsequent award programs only as long as the standards and procedures under which they are conducted do not differ materially from those described in your request any funds you distribute to individuals must be made on a true charitable basis in furtherance of the purposes for which you are organized therefore you should maintain adequate_records and case histories so that any or all award distributions can be substantiated upon request by the internal_revenue_service this determination is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as a precedent you must report any future changes in your grant making procedures please keep a copy of this letter in your permanent records we have sent a copy of this letter to your representative as indicated in your power_of_attorney if you have any questions please contact the person whose name and telephone number are shown above sincerely yours lois g lerner director exempt_organizations enclosures notice redacted letter


internal_revenue_service number release date index number ---------------------------------------- ---------------- --------------------------------------------- --------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ------------- telephone number -------------------- refer reply to cc psi b02 plr-111970-11 date date p1 p2 a ------------------------------------------------------------------------------------------------------ ----------------------- ------------------------------------------------------------------------------------------------------ ----------------------- ------------------------------------------------------------------------------------------------------ ------------------------ state ---------- q d1 ------ ----------------------- year ------- dear ------------------ this responds to a letter dated date and subsequent correspondence submitted on behalf of p2 by its authorized representative requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to make an election under sec_754 of the internal_revenue_code the information submitted states that on d1 a acquired an interest in p1 a state limited_liability_company classified as a partnership for federal tax purposes p1 owns a q interest in p2 a state limited_liability_company classified as a partnership for federal tax purposes p1 made a sec_754 election for its year taxable_year however p2 inadvertently failed to timely file a sec_754 election for year sec_754 provides that if a partnership files an election in accordance with plr-111970-11 regulations prescribed by the secretary the basis of partnership property shall be adjusted in the case of a transfer of a partnership_interest in the manner provided in sec_743 such an election shall apply with respect to all distributions of property by the partnership and to all transfers of interests in the partnership during the taxable_year with respect to which such election was filed and all subsequent taxable years the optional_adjustment_to_basis under sec_754 will be available to both an upper-tier partnership utp and a lower-tier partnership ltp when there is a sale_or_exchange of a partnership_interest or the death of a partner in utp and both utp and ltp have made an election under sec_754 to adjust the basis of partnership property on a sale_or_exchange of a partnership_interest or on the death of a partner revrul_87_115 1987_2_cb_163 sec_1_754-1 of the income_tax regulations provides that an election under sec_754 to adjust the basis of partnership property under sec_734 and sec_743 with respect to a distribution_of_property to a partner or a transfer of an interest in a partnership shall be made in a written_statement filed with the partnership return for the taxable_year during which the distribution or transfer occurs for the election to be valid the return must be filed not later than the time prescribed by sec_1 e including extensions thereof for filing the return for such taxable_year sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result p2 is granted an extension of time of days from the date of this letter to make an election under sec_754 effective for the year taxable_year and thereafter the election should be made in a written_statement filed with the appropriate service_center for association with p2’s year return a copy of this letter should be attached to the plr-111970-11 sec_754 election except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination in accordance with the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative sincerely associate chief_counsel passthroughs special industries by ____________________________ charlotte chyr senior technician reviewer branch passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc tege eb ec plr-125485-01 date february target acquiring date a date b date c year executive dear this is in reply to a letter dated date from your authorized representative requesting rulings concerning the deduction limitation of sec_162 of the internal_revenue_code the facts as represented by acquiring are as follows pursuant to an amended and restated agreement and plan of exchange dated as of date a amended and restated as of date b acquiring acquired all the common_stock of target and target became a wholly-owned subsidiary of acquiring the acquisition the acquisition occurred on date c and target’s final separate consolidated tax_year ended on that date acquiring is the sole shareholder of target acquiring has represented that target is not required to file any proxy statements containing a summary compensation table that disclose executive compensation under item of regulation s-k for its short_year that ends with the acquisition however target and its wholly-owned subsidiary continue to be reporting companies for purposes of the securities exchange act of exchange act as a result target will continue to be required to file form 10-k with the securities_and_exchange_commission sec plr-118086-01 executive resigned in year the year of the acquisition acquiring has represented that none of the target executives who continue to perform services after the acquisition will be included in the summary compensation table for year to be filed by acquiring thus the compensation paid and deducted by target in its short taxable_year ending with the acquisition will never be reported on a summary compensation table filed by either acquiring or target sec_162 of the code allows as a deduction all the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business including a reasonable allowance for salaries or other compensation_for_personal_services actually rendered sec_162 of the code provides that in the case of any publicly_held_corporation no deduction shall be allowed for applicable_employee_remuneration with respect to any covered_employee to the extent that the amount of the remuneration for the taxable_year exceeds dollar_figure sec_162 of the code defines covered_employee to mean any employee of the taxpayer if as of the close of the taxable_year such employee is the chief_executive_officer of the taxpayer or is an individual acting in such capacity or the total compensation of such employee for the taxable_year is required to be reported to shareholders under the exchange act by reason of such employee being among the highest compensated officers for the taxable_year other than the chief_executive_officer sec_1_162-27 of the income_tax regulations provides the general_rule for who is a covered_employee under the regulations a covered_employee means any individual who on the last day of the taxable_year is a the chief_executive_officer of the corporation or is acting in such capacity or b among the four highest compensated officers other than the chief_executive_officer whether an individual is the chief_executive_officer or one of the four highest compensated officers is determined pursuant to the executive compensation disclosure rules under the exchange act in the notice of proposed rulemaking containing the proposed_regulations under sec_162 the preamble contains the following language concerning the identification of covered_employee the regulations clarify which employees are covered employees for purposes of sec_162 the legislative_history to sec_162 provides that covered employees are defined by reference to the sec rules governing executive compensation disclosure under the exchange act under the regulations an individual generally is a covered_employee if the individual’s compensation is reported on the summary compensation table under the sec’s executive compensation disclosure rules as set forth in item of regulation s-k cfr under the exchange act however the regulations specifically provide that in order to be a covered_employee for sec_162 purposes an plr-118086-01 individual must be employed as an executive officer on the last day of the taxable_year thus only those employees who appear on the summary compensation table and who are also employed on the last day of the taxable_year are covered employees therefore based on the facts submitted we rule as follows for purposes of sec_162 of the code target’s officers will not be covered employees with respect to year provided that no summary compensation table listing target officers is included in any target proxy statement that is sent to shareholders and filed by target with the sec for year for purposes of sec_162 of the code executive will not be a covered_employee with respect to year accordingly no compensation paid to executive with respect to year will be subject_to the sec_162 deduction limitation except as specifically ruled above no opinion is expressed as to the federal tax consequences of the transaction described above under any other provision of the code specifically no ruling was requested and none is given regarding the federal tax consequences of the acquisition of target this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely yours robert b misner assistant chief executive compensation branch office of the division counsel associate chief_counsel tax exempt and government entities enclosure copy for purposes