significant index number vuy4 zu é yuuuusgrvuuge f department of the treasury internal_revenue_service washington d c jul vax exempt and government entities division se lt ep ra az re taxpayer dear this letter constitutes notice that approval has been granted for your request for a 5-year automatic_extension for amortizing the unfunded liabilities as of date for the above-named plan which are described in sec_431 and sec_431 of the internal_revenue_code code and sec_304 and sec_304 of the employee_retirement_income_security_act_of_1974 erisa this extension is effective with the plan_year beginning date this extension applies to the amortization charge bases as identified in your application submission established as of may total outstanding balance of dollar_figure as of that date with a the extension of the amortization periods of the unfunded liabilities of the plan was granted in accordance with sec_431 of the code sec_431 of the code requires the secretary to extend the period of time required to amortize any unfunded_liability of a plan for a period of time not in excess of years if the plan submits an application meeting the criteria stated in sec_431 the plan has submitted the required information to meet the criteria in sec_431 including a certification from the plan’s actuary that i absent the extension under subparagraph a the plan would have an accumulated_funding_deficiency in the current plan_year or any of the succeeding plan years ii the plan_sponsor has adopted a plan to improve the plan's funding status zvvu94 zug z iii the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended and iv the notice required under paragraph a has been provided we have sent a copy of this letter to the and to the ‘ os this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent if you require further assistance in this matter please contact sincerely yours sd zk david m ziegler manager ep actuarial group


internal_revenue_service number release date index number ---------------------------- -------------------- ---------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------- id no ------------- telephone number -------------------- refer reply to cc tege eb ec plr-114929-07 date date -------------------------------------------- -------------------------------------------- ------------------------------ --------------------------------- employer employer president ------------------------- --------------------- --------------------------- ----------------------- --------- date date dear ----------------- date x this is in response to your letter of date in which you request consent you represent that you were told by president that at a board_of directors to revoke an election that you made under sec_83 of the internal_revenue_code meeting on date employer granted you a choice of x incentive stock_options isos or x shares of restricted_stock on date you purchased x shares of restricted_stock on the same day you filed an election under sec_83 with the internal_revenue_service center where you file your individual_income_tax_return with respect to the restricted_stock on date president learned that the board_of directors had authorized the grant of isos rather than a choice of either isos or restricted_stock and you were notified of the error the next day thus the restricted award was not authorized by the board_of directors you plr-114929-07 subsequently returned the stock to employer on date you sent a letter to this office requesting consent to revoke the sec_83 election sec_83 of the code provides that if in_connection_with_the_performance_of_services property is transferred to any person other than the person for whom such services are performed the fair_market_value of the property less the amount_paid for the property shall be included in the gross_income of the recipient in the first taxable_year in which the recipient s interest in the property is not subject_to a substantial_risk_of_forfeiture under sec_83 of the code any person who performs services with respect to which property is transferred may elect to include in his or her gross_income for the taxable_year in which the property is transferred the excess of the fair_market_value of the property over the amount_paid an election under sec_83 must be filed with the internal_revenue_service not later than days after the date that the property is transferred sec_83 of the code and sec_1_83-2 of the income_tax regulations provides that an election under sec_83 may not be revoked without the consent of the commissioner of internal revenue the regulations also provide that such consent will only be granted where the person filing the election is under a mistake of fact as to the underlying transaction and must be requested within days of the date on which the mistake of fact first became known to the person who made the election in any event neither a mistake as to the value or decline in the value of the property for which an election was made nor the failure of anyone to perform an act that was contemplated at the time of transfer of the property constitute a mistake of fact for this purpose revproc_2006_31 2006_27_irb_32 provides guidance on revoking an election under sec_83 of the code sec_5 example describes a situation involving a mistake of fact as to the underlying transaction in example b begins employment with company o under an employment contract that provides b will receive substantially nonvested company o class a common_stock instead substantially nonvested company o class b common_stock is transferred to b b made a valid sec_83 election with respect to the transferred stock b subsequently discovers that company o ha sec_2 classes of common_stock and that company o transferred class b common_stock instead of class a common_stock b timely requests consent to revoke the sec_83 election consent to revoke b’s sec_83 election is granted because the stock b received was transferred under a mistake of fact as to the underlying transaction you indicate that the amistake of fact was that you believed based on statements from president that the board_of directors had authorized the grant of plr-114929-07 restricted_stock when in fact they had authorized the grant of isos you have requested consent to revoke your election within days of the date you first became aware of the mistake of fact as to the underlying transaction the aunderlying transaction being your employer s transfer of the restricted_stock to you accordingly because you were under a mistake of fact as to the underlying transaction and you requested consent to revoke your sec_83 election within days of when the mistake of fact first became known to you consent to revoke your sec_83 election is granted 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 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 a copy of this letter should be attached to your income_tax return for sincerely yours ________________________________ cate livingston fernandez chief executive compensation branch office of division counsel associate chief_counsel tax exempt and government entities


internal_revenue_service number release date index number --------------- ------------ ------------------------------------------------------------ ----------- ------------------------------------------------------------ ------------------------ ------------------------------------------- -------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ---------------- telephone number ------- ------------ refer reply to cc fip b04 plr-111931-14 date date insurance fund trust state date retail fund adviser subadviser index dear ---- ------ ---------------------------------------------------------------------------------------------------------- ------------- -------------------------------- --------------- ----------------- ------------------------------------------------------------- ----------------------------------------------------------------------- -------------------------------------------- ------------------------------------------------------------- this is in response to the letter submitted by your authorized representatives dated date requesting a ruling concerning the tax_ownership of insurance fund a series of trust for federal_income_tax purposes facts trust trust is a statutory trust formed under the laws of the state on date trust is registered with the securities_and_exchange_commission the sec as an open-end investment_company under the investment_company act of as amended the act trust currently has nine series each of the nine series has a differing investment objective and strategy each of the nine series has elected to be taxable as a regulated_investment_company under subchapter_m of the internal_revenue_code code and to be treated as a separate corporation pursuant to sec_851 plr-111931-14 retail fund is one of the nine series retail fund is publicly available to investors other than through purchase of a life_insurance_contract or variable_annuity contract within the meaning of sec_817 adviser and subadvisers of fund adviser is a registered investment adviser under the investment advisers act of as amended advisor has entered into an investment subadvisory agreement with subadviser to provide investment advisory services to trust in its capacity as manager of insurance fund subadviser or its affiliate will contribute seed money to insurance fund insurance fund insurance fund is a new series of trust that the subadviser intends to introduce insurance fund will elect to be treated as a regulated_investment_company under subchapter_m of the code insurance fund will be offered exclusively to insurance_company segregated_asset accounts to serve as an investment vehicle for life_insurance contracts or variable_annuity contracts within the meaning of sec_817 variable_contracts and possibly to permitted holders as described in sec_1_817-5 permitted holders each variable_contract holder will be able to allocate its amounts held in a segregated_asset_account among the ten series including retail fund and insurance fund retail fund and the insurance fund will have identical investment objectives and strategies subadviser will make investment decisions at the same time for both retail fund and investment fund trades in both retail fund and insurance fund will generally occur simultaneously subject_to the diversification requirements under sec_817 that apply to insurance fund but not retail fund the investment returns of insurance fund and retail fund will potentially deviate because insurance fund will be a source of investment for variable_annuity contracts which are not eligible for the alternative diversification rules with respect to u s treasury securities under sec_817 investment fund and retail fund may differ in their investment in u s treasury securities retail fund has and will continue to invest in u s treasury securities without regard to these rules it is anticipated therefore that the investment returns of retail fund and insurance fund will deviate as a result of the fact that insurance fund will not be able to invest as significantly in u s treasury securities as retail fund and other differences between retail fund and insurance fund in addition there may be differences in current or expected cash flows sizes of insurance fund and retail fund and other operational or financial circumstances that might result in differing portfolios and investment returns retail fund and insurance fund will each offer multiple classes of shares that may differ based on differing levels of distribution and or shareholder service fees the plr-111931-14 investment advisory fee will be the same for retail fund and insurance fund under the currently contemplated fee structure class i of retail fund will have the same expense structure as class iii of insurance fund but the other classes’ fee structures will likely differ between retail fund and insurance fund insurance fund’s investment objective insurance fund’s investment objective is to provide investment results that before fees and expenses correspond generally to the performance of the index the index’s objective is to provide consistent long-term risk adjusted outperformance with the goal of capturing more upside in rising equity markets and limiting the downside including up to percent cash allocation during market downturns retail fund has the same investment objectives as insurance fund insurance fund’s diversification insurance fund will comply with the diversification requirements of sec_817 and sec_1_817-5 variable_contract holders other than a variable_contract holder’s ability to allocate premiums and transfer its amounts held in an insurance company’s segregated_asset_account among the account’s investment options all investment decisions concerning insurance fund will be made by subadviser subject_to the approval of the trust’s board_of trustees a variable_contract holder will not be able to direct insurance fund’s investments in any particular asset or recommend a particular investment or investment strategy and there will not be any agreement or plan between the adviser or the subadviser and a variable_contract holder regarding a particular investment a variable_contract holder will only have knowledge of insurance fund’s specific assets on a delayed basis based on information provided on the subadviser’s website within days after the end of each fiscal quarter and in periodic filings with the sec a variable_contract holder will have no legal equitable direct or indirect interest in any of the assets of insurance fund rather a variable_contract holder will have only a contractual claim against the insurance_company issuing the respective variable_contract pursuant to the terms of that variable_contract representations in addition to the facts described above adviser has also made the following representations except as otherwise permitted by sec_1_817-5 all of the beneficial interests in insurance fund will be held directly or indirectly by one or more segregated_asset accounts of one or more insurance_companies and public access to insurance fund will be available exclusively through the purchase of a variable_contract plr-111931-14 the life_insurance_companies whose segregated_asset accounts will hold shares of insurance fund will be life_insurance_companies within the meaning of sec_816 each segregated_asset_account that will hold shares of insurance fund will be a separate_account registered with the sec as a unit_investment_trust under the act or which will be exempt from registration under the act insurance fund will satisfy the diversification requirements of sec_817 and sec_1_817-5 there is not and there will not be any arrangement plan contract or agreement between the adviser or subadviser and any variable_contract holder regarding the availability of insurance fund as a subaccount under the variable_contract or the specific assets to be held by insurance fund or retail fund other than a variable_contract holder’s ability to allocate variable_contract premiums and transfer amounts in the insurance_company segregated_asset_account to and from the insurance_company subaccount corresponding to insurance fund all investment decisions concerning insurance fund will be made by the adviser and subadviser subject_to supervision by the trust’s board_of trustees a variable_contract holder will not be able to direct insurance fund’s investment in any particular asset or recommend a particular investment or investment strategy and there will not be any agreement or plan between the adviser or subadviser and a variable_contract holder regarding a particular investment of insurance fund no variable_contract holder will be able to communicate directly or indirectly with the adviser or subadviser concerning the selection quality or rate of return on any specific investment or ground of investments held by insurance fund a variable_contract holder will not have any current knowledge of insurance fund’s specific assets a variable_contract holder will not have any legal equitable direct or indirect ownership in any of the assets of insurance fund a variable_contract holder only will have a contractual claim against the insurance_company offering the variable_contract to receive cash from the insurance_company under the terms of his or her variable_contract all of the shares of insurance fund will be held directly or indirectly by segregated_asset accounts of life_insurance_companies that are held in connection with variable_contracts or other permitted holders described in sec_1_817-5 and therefore qualify for the exception from federal excise_tax provided by sec_4982 unless a variable_contract holder is plr-111931-14 treated as a shareholder of insurance fund pursuant to the investor_control requirements for purposes of sec_61 and sec_817 of the code and revrul_81_225 1981_2_cb_12 and revrul_82_54 1982_1_cb_11 and it is currently anticipated that certain classes of shares of insurance fund will have a different fee arrangement for shareholder services or the distribution of shares or both as compared to share classes of retail fund but some classes of insurance fund will have the same fee structure as retail fund law investor_control rules if the separate_account assets underlying the variable_contract are considered the assets of the life_insurance_company that issues the contract and not the property of the contract holder sec_817 governs the tax treatment of the contract if the separate_account assets underlying the contract are considered the assets of the contract holder the contract holder is taxed on the income derived from the investment_assets under sec_61 in general the holder of legal_title is the owner of the property and is taxed on the income derived from the property however if a person other than the holder of legal_title possesses the benefits_and_burdens_of_ownership that person is attributed ownership of property for tax purposes see eg 435_us_561 309_us_331 the supreme court summarized this principle in corliss v bowers 381_us_376 stating that taxation is not so much concerned with the refinements of title as it is with actual command over the property taxed - the actual benefit for which the tax is paid the service applied these general tax_ownership principles in a series of investor_control rulings revrul_77_85 1977_1_cb_12 revrul_80_274 1980_2_cb_27 revrul_81_225 1981_2_cb_12 revrul_82_54 1982_1_cb_11 revrul_2003_91 2003_2_cb_347 and revrul_2003_92 2003_2_cb_350 the rulings stand for the proposition that contract holders possessing control_over the investment of the separate_account assets in addition to the other_benefits and burdens of contract ownership are the owners of separate_account assets for federal_income_tax purposes even if the insurance_company retains possession of and legal_title to those assets in revrul_77_85 the service concluded that if the contract holder of an investment annuity_contract may select and control the investment_assets in the separate_account of the life_insurance_company then the contract holder is treated as the owner of those assets for federal_income_tax purposes and is taxed on the income derived from the investment_assets in the ruling the individual_contract holder of a variable_annuity contract retained the right to direct the custodian of the account supporting that variable_annuity to sell purchase and exchange securities or other assets held in the custodial_account the contract holder also was able to exercise an owner's right to vote account plr-111931-14 securities either through the custodian or individually the service found that the contract holder possessed significant incidents_of_ownership over the assets held in the custodial_account and thus concluded that the policyholder was the owner of those assets for federal_income_tax purposes in revrul_80_274 the contract holder transferred existing investments to an insurance_company in return for an annuity_contract and could withdraw all or a portion of the cash_surrender_value of the contract at any time prior to the annuity_starting_date the service applying revrul_77_85 concluded that the contract holder’s position was substantially identical to what it would have been had the investment been directly maintained or established and thus the contract holder was the owner of the investment for federal_income_tax purposes in revrul_81_225 the service described four situations in which the contract holder is considered the owner of mutual_fund shares held by insurance_companies in connection with annuity_contracts and one situation in which the insurance_company is the owner of the mutual_fund shares for federal_income_tax purposes in the four situations in which the contract holder is considered the owner of the mutual_fund shares the shares are available for purchase other than through the purchase of an annuity_contract in those situations the service concluded that the contract holder had investment control_over the mutual_fund shares and that the contract holder’s position in each situation was substantially identical to what it would have been had the mutual_fund shares been purchased directly by the contract holders conversely in the situation in which the mutual_fund shares were only available through the purchase of an annuity_contract the insurance_company was the owner for federal_income_tax purposes in revrul_82_54 the contract holder of certain annuity_contracts could allocate premium payments among three funds and had an unlimited right to change those allocations prior to the maturity_date of the annuity_contract interests in the funds were not available for purchase by the general_public but were instead only available through the purchase of an annuity_contract the service concluded that the purchaser’s ability to choose among general investment strategies for example between stock bonds or money market instruments either at the time of the initial purchase or subsequent thereto did not constitute control sufficient to cause the contract holders to be treated as the owners of the mutual_fund shares for federal_income_tax purposes in the eight circuit addressed the tax_ownership issue in the context of a variable_annuity contract 749_f2d_513 8th cir the taxpayers upon purchasing the contract could allocate premiums among mutual funds and could change the allocation at any time the taxpayers bore the full investment risk and could withdraw any or all of the investment upon seven days notice in addition the taxpayer was not required to exercise the annuity feature of the contract the eighth circuit concluded that the taxpayers surrendered few of the rights of ownership or control_over assets of the sub-account id pincite the court held that for federal_income_tax purposes the taxpayers not the issuing insurance_company owned the plr-111931-14 mutual_fund shares that funded the variable_annuity and thus the taxpayers were required to include in gross_income any gains dividends or other income derived from the mutual_fund shares in revrul_2003_91 the service concluded that the variable_contract holder did not have sufficient control_over segregated account assets to be deemed the owner of the assets the variable_contract was funded by a separate_account that was divided into twelve subaccounts each subaccount offered a different investment strategy interests in the subaccounts were available solely through the purchase of a variable life or variable_annuity contract that qualified as a variable_contract under sec_817 the investment activities of each subaccount were managed by an independent investment adviser there was no arrangement plan contract or agreement between the contract holder and the issuing insurance_company or between the contract holder and the independent investment adviser regarding the availability of a particular subaccount the investment strategy of any subaccount or the assets to be held by a particular subaccount other than a contract holder’s right to allocate premiums and transfer funds among the available subaccounts all investment decisions concerning the subaccounts were made by the issuing insurance_company or the independent investment adviser in their sole and absolute discretion a contract holder had no legal equitable direct or indirect interest in any of the assets held by a subaccount but had only a contractual claim against the issuing insurance_company to collect cash in the form of death_benefits or cash surrender values under the contract the service concluded that based on all the facts and circumstances the contract holder did not have direct or indirect control_over the separate_account or any subaccount asset and therefore the contract holder did not possess sufficient incidents_of_ownership over the assets supporting the variable_contracts to be deemed the owner of the assets for federal_income_tax purposes in revrul_2003_92 the purchasers of variable_annuity and variable life_insurance contracts were able to allocate their premiums among ten different sub- accounts each sub-account invested in a partnership in the factual scenario in which the partnership interests were available other than through the purchase of a variable_annuity or life_insurance_contract the service concluded that the contract holders were the owners of the interests in the partnerships in contrast if the partnership interests were only available through the purchase of a variable_annuity or life_insurance_contract the service concluded that the insurance_company was the owner of the interests in the partnerships analysis in the revenue rulings discussed above the service took the position that if the holder of a variable life_insurance_policy or variable_annuity contract possesses sufficient incidents_of_ownership over the assets supporting the policy or contract the contract holder is viewed for federal_income_tax purposes as the owner of the underlying assets and as a result is currently taxed on any income and gains attributable to the plr-111931-14 underlying assets the determination of whether the holder of a variable life_insurance_policy or variable_annuity contract possesses sufficient incidents_of_ownership over the assets of the separate_account underlying the variable life_insurance_contract or variable_annuity contract depends on all the relevant facts and circumstances see revrul_2003_91 in the instant case the variable_contract holders do not have any control_over insurance fund’s investments the investment decisions of insurance fund are made by insurance fund’s adviser and subadviser in their sole and absolute discretion and are subject_to change without notice to or approval by the variable_contract holders the variable_contract holders in this case do not have any more control_over the assets held under their contract than was the case in revrul_82_54 or revrul_2003_91 insurance fund is not an indirect means of allowing a variable_contract holder to invest in a publically-available fund conclusion based on the authority cited herein and the representations and facts presented by insurance fund the formation and operation of insurance fund as described herein and its establishment as a separate series within the same trust as retail fund will not cause the variable_contract holders to be treated as the owners of the shares of insurance fund for federal_income_tax purposes except as expressly provided herein no opinion is expressed concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter the rulings contained in this letter are based upon information and representations submitted by taxpayer while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination 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 plr-111931-14 pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely s donald j drees jr senior technician reviewer branch financial institutions products cc


internal_revenue_service number release date index number ---------------------------------------- ------------------------ ---------------------------------- re ------------------------------------ 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 b04 plr-122755-16 date november legend decedent spouse date date ---------------------------------------------------- ----------------------- ------------------ ------------------------ dear -------------------- this letter responds to your personal representative’s letter of date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election under sec_2010 of the internal_revenue_code portability election to allow a decedent’s surviving_spouse to take into account that decedent’s deceased spousal unused exclusion dsue amount the facts and representations are as follows decedent died on date survived by spouse date is a date after the effective date of the amendment to sec_2010 which provides for portability of a dsue amount to a surviving_spouse to obtain the benefit of portability of decedent’s dsue amount to spouse decedent’s estate was required to file form_706 united_states estate and generation-skipping_transfer_tax return on or before the date that is nine months after decedent’s date of death or the last day of the period covered by an extension decedent’s form_706 was due on date but the estate did not file a form_706 to make the portability election the estate discovered its failure to elect portability after the due_date for making the election it is represented that the value of decedent’s gross_estate is less than the basic exclusion amount in the year of decedent’s death including any taxable_gifts made during his lifetime plr-122755-16 you request an extension of time pursuant to sec_301_9100-3 to elect portability of decedent’s dsue amount pursuant to sec_2010 law and analysis sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2010 provides that a credit of the applicable credit_amount shall be allowed to the estate of every decedent against the tax imposed by sec_2001 sec_2010 provides that the applicable credit_amount is the amount of the tentative_tax that would be determined under sec_2001 if the amount with respect to which such tentative_tax is to be computed were equal to the applicable_exclusion_amount on date congress amended sec_2010 effective for estates of decedents dying and gifts made after date to allow portability of a decedent’s unused applicable_exclusion_amount between spouses tax relief unemployment insurance reauthorization and job creation act of pub_l_no sec_303 124_stat_3296 sec_2010 provides that the applicable_exclusion_amount is the sum of the basic exclusion amount and in the case of a surviving_spouse the dsue amount sec_2010 generally provides that the basic exclusion amount is dollar_figure to be adjusted for inflation annually after calendar_year sec_2010 defines the dsue amount to mean the lesser_of a the basic exclusion amount or b the excess of -- i the applicable_exclusion_amount of the last deceased spouse of the surviving_spouse over ii the amount with respect to which the tentative_tax is determined under sec_2001 on the estate of such deceased spouse sec_2010 provides that a dsue amount may not be taken into account by a surviving_spouse under sec_2010 unless the executor of the estate of the deceased spouse files an estate_tax_return on which such amount is computed and makes an election on such return that such amount may be so taken into account the election once made shall be irrevocable no election may be made if such return is filed after the time prescribed by law including extensions for filing such return sec_2010 provides that the secretary shall prescribe regulations as may be necessary or appropriate to implement sec_2010 plr-122755-16 sec_20_2010-2t a of the estate_tax regulations as in effect on date provides that to allow a decedent’s surviving_spouse to take into account that decedent’s dsue amount the executor of the decedent’s estate must elect portability of the dsue amount on a timely-filed form_706 under sec_20_2010-2t a the due_date of an estate_tax_return required to elect portability is nine months after the decedent’s date of death or the last day of the period covered by an extension if an extension of time for filing has been granted under sec_20_2010-2t a the portability election is made by timely filing a complete and properly prepared estate_tax_return unless the executor satisfies the requirements for the election not to apply in sec_20_2010-2t a i 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 six months except in the case of taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term statutory election means an election whose due_date is prescribed by statute the term regulatory election means an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute a request for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election the due_date for the portability election is prescribed by statute in the case of an estate required to file an estate_tax_return under sec_6018 see sec_2010 sec_6075 and sec_6018 in the case of an estate that is not required to file an estate_tax_return under sec_6018 the due_date is prescribed by regulation see sec_20_2010-2t a see also sec_20_2010-2 and revproc_2014_18 2014_7_irb_513 sec_2 accordingly in the latter case a taxpayer may seek an extension of time to elect portability under the provisions of sec_301_9100-3 plr-122755-16 sec_6018 requires the filing of an estate_tax_return in all cases where the gross_estate exceeds the basic exclusion amount in effect under sec_2010 for the calendar_year which includes the date of death for purposes of this determination under sec_6018 the basic exclusion amount is reduced but not below zero by the sum of -- a the amount of the adjusted_taxable_gifts within the meaning of sec_2001 made by the decedent after date plus b the aggregate amount allowed as a specific exemption under sec_2521 as in effect before its repeal by the tax reform act of with respect to gifts made by the decedent after date it is represented that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is not required to file an estate_tax_return under sec_6018 under these facts the commissioner has discretionary authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we grant an extension of time of days from the date of this letter in which to elect portability under sec_2010 the election should be made by filing a complete and properly-prepared form_706 and a copy of this letter within days from the date of this letter to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center stop cincinnati oh for purposes of electing portability a form_706 filed by decedent’s estate within days from the date of this letter will be considered to be timely filed the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination if it is later determined that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is required to file an estate_tax_return pursuant to sec_6018 the commissioner is without authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability and the grant of the extension referred to in this letter is deemed null and void this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-122755-16 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely associate chief_counsel passthroughs special industries by lorraine e gardner lorraine e gardner senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index number ----------------------------- --------------------------------------- ---------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------- id no ---------------- ----------------- telephone number ---------------------- refer reply to cc psi b04 plr-110074-18 date date re -------------------------------------------------------------------------------------------------------------- legend donor spouse date year year trust company - ------------------------------------------------------- - ---------------------------------------------------------- - --------------------------- - ------- - --------------- - ------------------------------------------------------------------------------------------------ - -------------------------------- dear --------------------- this letter responds to the letter dated march submitted by your authorized representative requesting an extension of time pursuant to sec_2642 of the internal_revenue_code and sec_301_9100-3 of the procedure and administration regulations to make an election under sec_2632 to opt_out of the generation-skipping_transfer gst_exemption automatic allocation rules under sec_2632 with respect to transfers to a_trust facts the facts submitted and the representations made are as follows on date in year a date prior to date donor created trust an irrevocable_trust for the benefit of a child and the child’s issue trust has generation- skipping transfer gst tax potential plr-110074-18 prior to date donor and spouse made gifts to trust but did not allocate their gst_exemption to trust subsequent to date donor made gifts to trust in year sec_2 through donor and spouse retained the tax department of company a family owned company to advise and prepare their year through form sec_709 united_states gift and generation-skipping_transfer_tax return reporting the year through transfers to trust both donor and spouse elected to split the gifts to trust for those years although donor and spouse did not intend for gst_exemption to be allocated to the year through transfers company’s tax professionals failed to advise donor or spouse of the rules under sec_2632 regarding the automatic allocation of gst_exemption and the ability to elect out of the automatic allocation of gst_exemption by making an election under sec_2632 therefore donor and spouse failed to elect out of the automatic allocation of gst_exemption for the year through transfers to trust the tax department discovered these errors upon review of the form sec_709 spouse requests an extension of time to elect out of the automatic allocation rules with respect to the year through transfers to trust law and analysis sec_2601 imposes a tax on every generation-skipping_transfer gst made by a transferor to a skip_person a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of gst tax imposed by sec_2601 is the taxable_amount multiplied by the applicable_rate sec_2641 defines the applicable_rate as the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer sec_2631 provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption amount which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2631 provides that for purposes of sec_2631 the gst_exemption amount for any calendar_year shall be equal to the basic exclusion amount under sec_2010 for such calendar_year sec_2632 provides that any allocation by an individual of his or her gst_exemption under sec_2631 may be made at any time on or before the date prescribed plr-110074-18 for filing the estate_tax_return for such individual’s estate determined with regard to extensions regardless of whether such a return is required to be filed sec_2632 provides that the manner in which allocations are to be made shall be prescribed by forms or regulations issued by the secretary sec_2632 provides that if any individual makes an indirect_skip during such individual’s lifetime any unused portion of such individual’s gst_exemption is treated as allocated to the property transferred to the extent necessary to make the inclusion_ratio for such property zero if the amount of the indirect_skip exceeds such unused portion the entire unused portion shall be allocated to the property transferred under sec_2632 the term indirect_skip means any transfer of property other than a direct_skip subject_to the tax imposed by chapter made to a gst_trust as defined in sec_2632 under sec_2632 a gst_trust is a_trust that could have gst potential with respect to the transferor unless the trust satisfies any of the exceptions listed in sec_2632 i - vi sec_2632 provides that an individual may elect to have the automatic allocation rules of sec_2632 not apply to an indirect_skip or any or all transfers made by such individual to a particular trust sec_2632 provides that the election may be made on a timely filed gift_tax_return for the calendar_year for which the election is to become effective sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides in part that a transferor may prevent the automatic allocation of gst_exemption elect out with respect to any transfer or transfers constituting an indirect_skip made to a_trust a transferor may elect out with respect to one or more or all current-year transfers made by the transferor to a specified trust or trusts sec_26_2632-1 provides that to elect out the transferor must attach an election out statement to a form_709 filed within the time period provided in sec_26 b iii c in general the election out statement must identify the trust and specifically must provide that the transferor is electing out of the automatic allocation of gst_exemption with respect to the described transfer or transfers under sec_26 b iii c to elect out the form_709 with the attached election out statement must be filed on or before the due_date for timely filing the form_709 for the calendar_year in which the transfer to be covered by the election out was made sec_2642 provides generally that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 or and an election under sec_2632 or c plr-110074-18 sec_2642 provides that in determining whether to grant relief under sec_2642 the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant for purposes of determining whether to grant relief the time for making the allocation or election shall be treated as if not expressly prescribed by statute notice_2001_50 2001_2_cb_189 provides that under sec_2642 the time for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a gst_trust are to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides an automatic_extension of time for making certain elections sec_301_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose date is prescribed by a regulation and not expressly provided by statute in accordance with sec_2642 and notice_2001_50 taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 sec_301_9100-3 provides in part that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly spouse is granted an extension of time of days from the date of this letter to make an election under sec_2632 that the automatic allocation rules do not apply to the year through transfers to trust spouse should make the election on supplemental form sec_709 for year through the supplemental form sec_709 should be filed with the cincinnati service_center at the following address internal_revenue_service center cincinnati oh a copy of plr-110074-18 this letter should be attached to the supplemental form_709 a copy is enclosed for this purpose in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely associate chief_counsel passthroughs and special industries lorraine e gardner by _____________________________ lorraine e gardner senior counsel branch office of associate chief_counsel passthroughs and special industries enclosures copy for sec_6110 purposes copy of this letter cc