internal_revenue_service department of the treasury number release date index no washington dc person to contact telephone number refer reply to cc ita plr-104126-03 date date legend taxpayer date1 date2 year1 year2 year3 year4 shareholder1 shareholder2 bank firma a b dear this responds to your letter of date requesting an extension of time under sec_301_9100-1 and -3 of the procedure and administration regulations for taxpayer to make consent_dividend elections pursuant to sec_565 of the internal_revenue_code taxpayer uses an annual_accounting_period ending date1 and utilizes the accrual_method as its overall_method_of_accounting taxpayer was formed by shareholder1 in date2 year1 taxpayer deposited its initial cash contributions with bank in a money market portfolio and other interest-bearing accounts in early year2 shareholder1 transferred all of the stock of taxpayer to shareholder2 as a gift shareholder2 was a resident_alien at date1 year2 taxpayer engaged firma to prepare its u s federal_income_tax returns based on its investment_income and closely-held ownership taxpayer has been a personal_holding_company phc within the meaning of sec_542 since its inception the status of taxpayer as a phc has always been recognized and understood by taxpayer shareholder1 shareholder2 and firma for the year ending date1 year2 taxpayer attempted to distribute all of its phc income through a combination of regular dividends throwback dividends under sec_563 and a consent_dividend election under sec_565 for the year ending date1 year3 taxpayer attempted to distribute all of its phc income through regular dividends and throwback dividends however due to errors made by firma in preparing taxpayer’s financial statements and federal_income_tax returns taxpayer’s income was understated by amounts a and b for the taxable years ended date1 year2 and year3 respectively the errors in large part were caused by firma incorrectly processing data received on monthly statements from bank also in year3 a monthly statement from bank contained pages that did not relate to taxpayer which contributed to firma’s understatement of taxpayer’s year3 income firma ultimately discovered the errors in year4 taxpayer requests the commissioner's consent to extend the due_date to make consent_dividend elections under sec_565 on form sec_972 and for taxpayer in the amounts of a and b for the taxable years ended date1 year2 and year3 respectively sec_565 provides that if any person owns consent_stock as defined in sec_565 in a corporation on the last day of the taxable_year of such corporation and such person agrees in a consent filed with the return of such corporation in accordance with the regulations to treat as a dividend the amount specified in such consent the amount so specified shall except as provided in sec_565 constitute a consent_dividend for purposes of sec_561 relating to the deduction for dividends_paid sec_1_565-1 of the income_tax regulations provides that the dividends_paid deduction as defined in sec_561 includes the consent dividends for the taxable_year a consent_dividend is a hypothetical distribution as distinguished from an actual distribution made by certain corporations to any person who owns consent_stock on the last day of the taxable_year of such corporation and who agrees to treat the hypothetical distribution as an actual dividend subject_to specified limitations by filing a consent at the time and in the manner specified in sec_1_565-1 sec_1_565-1 provides that a consent may be filed not later than the due_date of the corporation's income_tax return for the taxable_year for which the dividends_paid deduction is claimed under revrul_78_296 1978_2_cb_183 the due_date for purposes of sec_1_565-1 includes the extended due_date of a return filed pursuant to an extension of the time to file sec_301_9100-3 of the procedure and administration regulations generally provides extensions of time for making regulatory elections for this purpose sec_301_9100-1 defines the term regulatory election to include an election whose deadline is prescribed by a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-3 provides in part that requests for relief will be granted when the taxpayer provides evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_301_9100-3 provides in part that except as otherwise provided in sec_301_9100-3 through iii a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer i requests relief before failure to make the regulatory election is discovered by the service or v reasonably relied on a qualified_tax professional and the tax professional failed to make or advise the taxpayer to make the election taxpayer represents that at the time this request was filed taxpayer had not been contacted by the internal_revenue_service with respect to an examination of its returns to the best of the knowledge of taxpayer and firma this request for relief was filed before the failure to make the proper elections was discovered by the service the affidavit presented shows that taxpayer acted reasonably and in good_faith having relied on firma to prepare its returns during the tax years at issue sec_301_9100-3 provides in part that a taxpayer is deemed to have not acted reasonably and in good_faith if the taxpayer i seeks to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time the taxpayer requests relief taking into account sec_1_6664-2 of the income_tax regulations and the new position requires or permits a regulatory election for which relief is requested ii was informed in all material respects of the required election and related tax consequences but chose not to file the election or iii uses hindsight in requesting relief in connection with hindsight if specific facts have changed since the due_date for making the election that make the election advantageous to the taxpayer the service will not ordinarily grant relief in such a case the service will grant relief only when the taxpayer provides strong_proof that the taxpayer's decision to seek relief did not involve hindsight in the present case taxpayer is not attempting to alter a return position taken for which a penalty has been or could be imposed under sec_6662 in addition there is no indication that taxpayer is using hindsight as defined above in requesting this relief specific facts material to the issue under consideration have not changed since the due_date for making the elections that make the elections advantageous to taxpayer sec_301_9100-3 provides in part that the interests of the government are prejudiced if granting relief would result in the taxpayer having a lower tax_liability in the aggregate for all taxable years affected by the election than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money sec_301_9100-3 provides in part that the interests of the government are ordinarily prejudiced if the taxable_year in which the regulatory election should have been made or any taxable years that would have been affected by the election had it been timely made are closed by the period of limitations on assessment in the present case granting the relief requested will not prejudice the interests of the government under the given criteria taken together the disclosed circumstances indicate that the omission taxpayer now seek to correct originated from an honest mistake on the part of its tax advisors and not from a desire to avoid taxes granting this application will not prejudice the interests of the government accordingly the consent of the commissioner is hereby granted for an extension of time to file the forms necessary to make the sec_565 consent_dividend elections for each of the years taxpayer has requested this extension shall be for a period of days from the date of this ruling please attach a copy of this ruling to the returns schedules and forms filed in connection with making the election under sec_565 when such forms are filed we enclose a copy of the letter for this purpose also enclosed is a copy of the letter_ruling showing the deletions proposed to be made in the letter when it is disclosed under sec_6110 of the internal_revenue_code no opinion is expressed as to the application of any other provision of the code or the regulations which may be applicable under these facts this office makes no determination of taxpayer's status as a phc and relies on the determination of status as represented in taxpayer's application_for relief this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that a private_letter_ruling may not be used or cited as precedent sincerely clifford m harbourt senior technician reviewer branch office of associate chief_counsel income_tax accounting enclosures


internal_revenue_service number info release date cc psi 1-cor-132483-01 date uilc we are responding to your correspondence requesting relief in order to re-elect s_corporation status effective beginning with the taxable_year the information submitted explains that although revocation was processed by the internal_revenue_service it appears that although we are unable to respond to to your request as submitted this letter provides useful information relating to your request based on the instructions to form_2553 taxpayers are generally notified of acceptance or nonacceptance of their election within three months of date of filing_date mailed if the irs questions whether the election was filed acceptable proof of filing is a certified or registered mail receipt b form_2553 with an accepted stamp c form_2553 with stamped irs received date or e an irs letter stating the election has been accepted announcement copy enclosed provides guidance on seeking relief for late s_corporation elections and inadvertent invalid s_corporation elections generally to request relief for a late or invalid s_corporation_election you must request a private_letter_ruling from the national_office the procedures for requesting a private_letter_ruling are set out in revproc_2001_1 copy enclosed in addition revproc_2001_1 requires taxpayers to submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their last-filed tax_return qualify for a reduced user_fee in the amount of dollar_figure if you are eligible to use the reduced fee provision you must include the statement described in b b of appendix a with your request please review appendix b for a sample format for requesting a private_letter_ruling if you decide to submit a formal request for a private_letter_ruling please include the proper user_fee if applying under the reduced fee provisions send a statement certifying gross_income and refer your request to our office by adding the following to the address attn cc pa t p o box ben franklin station washington dc direct to cc psi room by way of introduction the irs has a new small_business website which provides specific information and various links to useful non-irs sites visit this new site at www irs gov smallbiz additionally you can order a single free copy of the small_business resource guide cd-rom by calling the cd- rom provides critical tax information including forms instructions and publications as well as valuable business information from a variety of government agencies non-profit organizations and educational institutions please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful sincerely yours s dianna k miosi dianna k miosi chief branch associate chief_counsel passthroughs and special industries enclosures announcement revproc_2001_1


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 plr-132349-09 date date legend x --------------------------------------------------------------------------------------------- ------------------------ state -------- shareholder --------------------------------------------------------------------------------------------- -------------------------- d1 ------------------ dear ---------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code facts x was incorporated under state law on d1 x’s sole shareholder shareholder intended for x to be an s_corporation effective d1 however a form_2553 election by a small_business_corporation was not filed timely x requests a ruling that it will be recognized as an s_corporation effective d1 law and analysis plr-132349-09 sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides that an election under sec_1362 may be made by a small_business_corporation for any taxable_year a at any time during the preceding_taxable_year or b at any time during the taxable_year and on or before the 15th day of the third month of the taxable_year sec_1362 provides that if a small_business_corporation makes an election under sec_1362 for any taxable_year and the election is made after the 15th day of the third month of the taxable_year and on or before the 15th day of the third month of the following taxable_year then the election is treated as made for the following taxable_year sec_1362 provides that if an election under sec_1362 is made for any taxable_year determined without regard to sec_1362 after the date prescribed by sec_1362 for making the election for the taxable_year or no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for the taxable_year and sec_1362 shall not apply conclusion based on the facts submitted and representations made we conclude that x has established reasonable_cause for failing to make an s_corporation_election thus we conclude that x is eligible for relief under sec_1362 accordingly if x makes an election to be an s_corporation by filing with the appropriate service_center a completed form_2553 within days following the date of this letter containing an effective date of d1 the election shall be treated as timely made a copy of this letter should be attached to the form_2553 filed with the service_center a copy is enclosed for that purpose 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 specifically we express or imply no opinion concerning whether x is otherwise eligible to be an s_corporation for federal tax purposes this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative plr-132349-09 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 sincerely s tara p volungis senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date cc intl b01 --------- genin-104613-13 number release date uil ----------------------- --------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------- -------------------------- reference request for information regarding article government service of the u s -germany income_tax treaty dear -------------- this letter responds to your recent request for information regarding application of article government service of the u s -germany income_tax treaty the treaty to individuals residing in the united_states who are hired by a u s -based german government office to perform services for that office in the united_states article of the treaty provides in relevant part notwithstanding the provisions of article sec_15 dependent_personal_services directors' fees and artistes and athletes a salaries wages and other similar remuneration other than a pension paid_by a contracting state or a political_subdivision local authority or an instrumentality thereof to an individual in respect of services rendered to that contracting convention between the government of the united_states of america and the federal republic of germany for the avoidance of double_taxation and the prevention of fiscal evasion with respect to taxes on income and capital and to certain other taxes signed on aug as amended by the protocol signed on date reprinted in tax_treaties cch genin-104613-13 b state or a political_subdivision local authority or an instrumentality thereof shall subject_to the provisions of subparagraph b be taxable only in that state such remuneration however shall be taxable only in the other contracting state if the services are rendered in that state and the individual is a resident of that state who is a national of that state or did not become a resident of that state solely for the purpose of rendering the services aa bb in this article the term instrumentality means any agent or entity created or organized by a contracting state one of its states or a political_subdivision or local authority thereof in order to carry out functions of a governmental nature which is specified and agreed to in letters exchanged between the competent_authorities of the contracting states pursuant to paragraph b bb of article an individual who is a resident_of_the_united_states at the time he or she is hired by a u s -based german government office to perform services for that office in the united_states is not eligible for the exemption from u s federal_income_tax provided in paragraph a of article this is because the individual is already a resident_of_the_united_states at the time of employment by the german government office and therefore did not become a resident_of_the_united_states solely for purposes of performing services for the german government office this information_letter calls attention to certain general principles of the law it is intended for informational purposes only and does not constitute a ruling see revproc_2013_1 sec_2 2013_1_irb_1 date if you have any additional questions please contact --------------at ---------------------- sincerely by _________________________ m grace fleeman senior technical reviewer branch international


internal_revenue_service number release date index number --------------------------------------- ----------------------------------------- -------------------------------------- ------------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------- id no ------------- telephone number --------------------- refer reply to cc psi b02 plr-121113-09 date date legend x state d1 ----------------------------------------- ----------------------- ---------- --------------------------- dear ------------------- this responds to your letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election to be classified as an association_taxable_as_a_corporation for federal tax purposes the information submitted states that x was formed in state on d1 as an entity eligible to make a classification election x's default status was a partnership for federal tax purposes x intended to be classified as an association_taxable_as_a_corporation for federal tax purposes effective d1 however a form_8832 entity classification election for x to elect to be treated as an association effective on d1 was not timely filed sec_301_7701-2 generally provides that a business_entity is any entity recognized for federal tax purposes that is not properly classified as a_trust under sec_301_7701-4 or otherwise subject_to special treatment under the internal_revenue_code plr-121113-09 sec_301_7701-3 provides that so long as a business_entity is not classified as a corporation under sec_301_7701-2 or an eligible_entity it may elect its classification for federal tax purposes sec_301_7701-3 further provides that an eligible_entity with at least two members can elect to be classified as either an association and thus a corporation under sec_301_7701-2 or as a partnership and an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing a form_8832 with the appropriate service_center under sec_301_7701-3 this election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date on which the election is filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election with a deadline prescribed by a regulation published in the internal_revenue_bulletin 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 automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that request for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government based solely on the facts submitted and representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly x is granted an extension of sixty days from the date of this letter to elect to be classified as an association_taxable_as_a_corporation for federal tax purposes effective d1 the election should be made by filing form_8832 with the appropriate service_center a copy of this letter should be attached to the election plr-121113-09 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 internal_revenue_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 will be sent to x's authorized representative sincerely curt g wilson associate chief_counsel passthroughs special industries enclosure copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ----------------------------------- ------------------------------------------------- -------------------------- ---------------------------------- legend legend department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------ id no ------------- telephone number --------------------- refer reply to cc psi b01 plr-137909-09 date date x --------------------------------------------------- ------------------------------------- y z date year state a b c d e dear ------------------ -------------------------------- ------------------------------- --------------------------- ------- ------------ -- --- -- --------------- --------------- this letter responds to your letter on behalf of x dated date requesting a ruling that x’s rental income from its rental activities is not passive_investment_income within the meaning of sec_1362 of the internal_revenue_code plr-137909-09 facts the information submitted states that x was formed on date in accordance with the laws of state the members of x are trusts some of the members have multiple beneficiaries those beneficiaries intend to pour the trust assets over to new trusts thus each member will be a_trust with a single beneficiary x also wholly owns a corporations the parent corporations the parent corporations wholly own b subsidiary corporations the subsidiary corporations x also owns c stand-alone corporations the stand-alone corporations the subsidiary corporations and stand- alone corporations hold real properties the properties that are held for rent to tenants x intends to elect to be treated as an s_corporation for federal_income_tax purposes all members of x will elect to be treated as qualified subchapter_s trusts qssts x intends to elect for the parent and subsidiary corporations to be treated as qualified subchapter_s subsidiaries qsubs for federal_income_tax purposes x also intends to elect to treat all of the stand-alone corporations except y as qsubs the corporations for which the qsub elections will be made have accumulated_earnings_and_profits from prior years x has employees who directly perform services relating to the properties from x’s management office x also contracts with a management company z as its agent x through its employees or through z provides certain services with respect to the leasing of the properties including but not limited to hiring and dismissing employees that maintain and operate the properties approving and making expenditures to maintain the properties negotiating contracts for insurance utilities and other services maintaining the properties listing the properties for lease approving leases and subleases collecting rents and handling complaints of tenants and subtenants in year x collected approximately dollar_figured in gross rents and incurred approximately dollar_figuree in relevant operating_expenses law and analysis sec_1361 defines an s_corporation as a small_business_corporation for which an election under sec_1362 is in effect for the taxable_year sec_1362 provides that an s_corporation_election shall be terminated whenever the corporation i has accumulated_earnings_and_profits at the close of each of consecutive taxable years and ii has gross_receipts for each of such taxable years more than percent of which are passive_investment_income the termination is effective on and after the first date of the first taxable_year beginning after plr-137909-09 the third consecutive taxable_year referred to in sec_1362 sec_1362 except as otherwise provided in sec_1362 sec_1362 provides that the term passive_investment_income means gross_receipts derived from royalties rents dividends interest annuities and sales or exchanges of stock_or_securities sec_1375 imposes a tax on the income of an s_corporation if the s_corporation has accumulated_earnings_and_profits at the close of such taxable_year and gross_receipts more than percent of which are passive_investment_income sec_1362 provides that except as otherwise provided the term passive_investment_income means gross_receipts derived from royalties rents dividends interest annuities and sales or exchanges of stock_or_securities sec_1_1362-2 defines arent as amounts received for_the_use_of or right to use property whether real or personal of the corporation sec_1_1362-2 provides that the term rents does not include rents derived in the active trade_or_business of renting property rents are derived in an active trade_or_business of renting property only if based on all the facts and circumstances the corporation provides significant services or incurs substantial costs in the rental business generally significant services are not rendered and substantial costs are not incurred in connection with net leases whether significant services are performed or substantial costs are incurred in the rental business is determined based upon all the facts and circumstances including but not limited to the number of persons employed to provide the services and types and amounts of costs and expenses_incurred other than depreciation conclusion based solely on the facts and representations submitted we conclude that the rental income that x derives from the properties is not passive_investment_income as described in sec_1362 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 specifically no opinion is expressed concerning whether x is a small_business_corporation eligible to make an s_corporation_election whether the members of x are eligible to make an election to be treated as qssts or whether the parent subsidiary and stand-alone corporations are eligible to make an election to be treated as qsubs further the passive_investment_income rules of sec_1362 are completely independent of the passive_activity rules of sec_469 unless an exception under sec_469 applies the rental_activity remains passive for purposes of sec_469 plr-137909-09 this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter will be sent to the taxpayer’s representative sincerely david r haglund david r haglund acting branch chief branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc dom corp -plr-115784-99 date date acquiring t1 t2 t3 state a dear this is in reply to a letter dated date in which rulings are requested as to the federal_income_tax consequences of a proposed transaction additional information was submitted in letters dated date january and date the facts submitted for consideration are substantially as set forth below acquiring is a closed-end nondiversified management investment_company organized under the laws of state a acquiring elected to be taxed as a regulated_investment_company ric under of the internal_revenue_code in its first tax_return acquiring has outstanding voting common_stock and two series of voting preferred_stock plr-115784-99 t1 is a closed-end nondiversified management investment_company organized under the laws of state a t1 has elected to be taxed as a ric under of the internal_revenue_code t1 has outstanding voting common_stock and two series of preferred_stock t2 is a closed-end nondiversified management investment_company organized under the laws of state a t2 has elected to be taxed as a ric under of the internal_revenue_code t2 has outstanding voting common_stock and two series of voting preferred_stock t3 is a closed-end nondiversified management investment_company organized under the laws of state a t3 will elect to be taxed as a ric under of the internal_revenue_code in its first tax_return t3 has outstanding voting common_stock and one series of voting preferred_stock each of acquiring t1 t2 and t3 is registered under the investment_company act of for what are represented to be valid business reasons the following transaction is proposed i ii t1 t2 and t3 target funds will transfer all of their assets and liabilities to acquiring in exchange for acquiring voting common_stock and voting preferred_stock the target funds will dissolve and distribute the acquiring voting common and voting preferred_stock to their shareholders each target fund common stockholder will be entitled to receive a proportionate number of acquiring common shares equal to the aggregate net asset value of the target fund common_stock owned by such shareholder on the exchange date each target fund preferred shareholder likewise will be entitled to receive a number of acquiring preferred shares having a liquidation preference and value equal to the liquidation preference and value of the target fund shares owned by such shareholder on the exchange date each target fund’s preferred shares have the same terms as the acquiring preferred shares to be issued iii acquiring may sell up to percent of the assets received in the transfers and will reinvest the proceeds consistent with its investment objectives and policies acquiring will not sell more than percent of any target fund’s assets following the transaction no fractional shares will be issued by acquiring in the transaction all fractional shares of acquiring common_stock will be aggregated and sold and the fractional plr-115784-99 shareholder will receive cash in lieu thereof the following representations have been made in connection with the proposed transaction a b c d e f g the fair_market_value of the acquiring stock received by each target fund shareholder will be approximately equal to the fair_market_value of the target fund stock surrendered in the exchange acquiring will acquire at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets held by each target fund immediately prior to the transaction for purposes of this representation amounts paid_by a target fund to dissenters amounts used by each target fund to pay its reorganization expenses amounts paid_by each target fund to shareholders who receive cash or other_property and all redemptions and distributions except for regular normal dividends made by each target fund immediately preceding the transfer will be included as assets of the respective target fund held immediately prior to the transaction acquiring has no plan or intention to reacquire any of its stock issued in the transaction after the transaction acquiring will use the assets acquired from target funds in its business except that a portion of these assets may be sold or otherwise_disposed_of in the ordinary course of acquiring’s business and as set forth above in step iii of the transaction any proceeds will be invested in accordance with acquiring’s investment objectives otherwise acquiring has no plan or intention to sell or otherwise dispose_of any of the assets of target funds acquired in the transaction except for dispositions made in the ordinary course of business or transfers described in sec_368 target funds will distribute to their shareholders the stock of acquiring received pursuant to the plan_of_reorganization the liabilities of target funds assumed by acquiring and any liabilities to which the transferred assets of target funds are subject were incurred by target funds in the ordinary course of their businesses following the transaction acquiring will continue the historic_business of each target fund or use a significant portion of each target fund’s historic_business_assets in the continuing business plr-115784-99 h i j k l m n o target funds acquiring and the shareholders of each target fund will pay their respective expenses if any incurred in connection with the transaction there is no intercorporate indebtedness existing between any of the target funds and acquiring that was issued acquired or will be settled at a discount acquiring and each target fund meet the requirements of a regulated_investment_company as referred to in a f the fair_market_value of the assets of each target fund transferred to acquiring will equal or exceed the sum of the liabilities assumed by acquiring plus the amount of liabilities if any to which the transferred assets are subject acquiring does not own directly or indirectly nor has it owned during the past five years directly or indirectly any stock of target funds cash is being distributed to shareholders of target funds in lieu of fractional shares of acquiring solely to save acquiring the expense and inconvenience of issuing and transferring fractional shares and such cash does not represent separately bargained for consideration in the transaction the total cash consideration that will be paid in each transaction between acquiring and a target fund to the respective target fund shareholders instead of issuing fractional shares of acquiring stock will not exceed one percent of the total consideration that will be issued in the transaction to the target fund shareholders in exchange for their shares of target fund stock the fractional share interests of each shareholder of a target fund will be aggregated and no target shareholder will receive cash in an amount equal to or greater than the value of one full share of acquiring stock target funds are not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 target funds and acquiring have elected to be taxed as rics under sec_851 and for all of their taxable periods including the last short taxable_period ending on the date of the transaction for each target fund have qualified for the special tax treatment afforded rics under the code after the transaction acquiring intends to continue to so qualify p there is no plan or intention for acquiring the issuing_corporation as defined in sec_1_368-1 or any person related as defined in sec_1 plr-115784-99 e to acquiring to acquire during the five year period beginning on the date of the proposed transaction with consideration other than acquiring stock acquiring stock furnished in exchange for a proprietary interest in a target fund in the proposed transaction either directly or through any transaction agreement or arrangement with any other person except for cash distributed to the target fund’s common shareholders in lieu of fractional shares of acquiring common_stock during the five year period ending on the date of the proposed transaction i neither acquiring nor any person related as defined in sec_1_368-1 to acquiring will have acquired a target fund’s stock with consideration other than acquiring stock ii no target fund nor any person related as defined in sec_1_368-1 without regard to sec_1 e i a to a target fund will have acquired such target fund’s stock with consideration other than acquiring stock or the target fund’s stock and iii no distributions will have been made with respect to a target fund’s stock other than ordinary normal regular dividend distributions made pursuant to the target fund’s historic dividend paying practice either directly or through any transaction agreement or arrangement with any other person except for a cash paid to dissenters and b distributions described in sec_852 and sec_4982 of the code as required for each target fund’s tax treatment as a ric the aggregate value of the acquisitions redemptions and distributions discussed in paragraphs p and q above will not exceed percent of the value without giving effect to the acquisitions redemptions and distributions of the proprietary interest in any target fund on the effective date of the proposed transaction at the time of the incorporation of each of t1 t2 and t3 there was no plan or intention to sell or otherwise dispose_of such corporation’s assets except in the ordinary course of business q r s based solely upon the information and representations set forth above we hold as follows the acquisition by acquiring of substantially_all of the assets of each target fund in exchange for voting shares of acquiring stock and acquiring’s assumption of each target fund’s liabilities followed by the distribution of each target fund to its shareholders of acquiring shares and any remaining assets in complete_liquidation will qualify as a reorganization within the meaning of sec_368 of the code acquiring and each target fund each will be deemed a_party_to_a_reorganization within the meaning of sec_368 plr-115784-99 no gain_or_loss will be recognized by each target fund upon the transfer of substantially_all of its assets to acquiring solely in exchange for acquiring voting_stock and acquiring’s assumption of such target fund’s liabilities or upon the distribution of such acquiring stock to the target fund shareholder sec_361 and c a acquiring will not recognize any gain_or_loss on the receipt of the assets of each target fund in exchange for voting shares of acquiring sec_1032 the basis of each target fund’s assets in the hands of acquiring will be the same as the basis of those assets in the hands of such target fund immediately prior to the reorganization sec_362 acquiring’s holding_period for the target fund assets acquired will include the period during which such assets were held by the target fund sec_1223 the shareholders of the target funds will not recognize any gain_or_loss on the receipt of voting shares of acquiring including fractional shares to which they may be entitled solely in exchange for their shares in the target funds sec_354 the basis of the acquiring shares received by the target fund shareholders including fractional shares to which they may be entitled will be the same in the aggregate as the basis of the target fund shares surrendered in exchange sec_358 the holding_period of the acquiring shares received by target fund shareholders in exchange for their target fund shares including fractional shares to which they may be entitled will include the period during which the exchanged target fund shares were held provided that the target fund shares are held as a capital_asset in the hands of the target fund shareholder on the date of the exchange sec_1223 any gain_or_loss realized by a shareholder of the target funds upon the sale of fractional share interests of acquiring voting_stock to which the stockholder is entitled will be recognized to the shareholder measured by the difference between the amount of cash received and the basis of the fractional share interest where the stock surrendered qualifies as a capital_asset in the hands of the shareholder such gain_or_loss will be a capital_gain or loss subject_to the provisions and limitations of subchapter_p of chapter of the code plr-115784-99 pursuant to sec_381 and sec_1_381_a_-1 acquiring will succeed to and take into account the items of the target funds described in sec_381 subject_to the conditions and limitations specified in sec_381 and c and no opinion is expressed about the tax treatment of the proposed transaction under other provisions of the code or regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction that are not specifically covered by the above rulings this letter is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent a copy of this letter should be attached to the federal_income_tax return of the taxpayers involved for the taxable_year in which the transaction covered by this letter is consummated pursuant to a power_of_attorney on file in this office a copy of this letter has been sent to the taxpayer’s representative sincerely yours assistant chief_counsel corporate by charles whedbee senior technical reviewer branch


t c summary opinion united_states tax_court scott a and selina r mcclure petitioners v commissioner of internal revenue respondent docket no 14086-08s filed date scott a and selina r mcclure pro_se richard j hassebrock for respondent thornton judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any 1unless otherwise indicated all section references are to the internal_revenue_code in effect for the year at issue and all rule references are to the tax_court rules_of_practice and procedure other court and this opinion shall not be treated as precedent for any other case respondent determined a dollar_figure deficiency in petitioners’ federal_income_tax after concessions the sole issue for decision is whether petitioners are entitled to claim dependency_exemption deductions for two children of scott mcclure petitioner by a previous marriage when they petitioned the court petitioners resided in west virginia background in petitioner divorced deanna mason mcclure the final divorce order awarded custody of their two young children to her and provided that petitioner would have the benefit of the personal exemptions for the children on state and federal income taxes the final order is not signed by petitioner or his former wife but is signed by their attorneys throughout petitioner’s former wife was the custodial_parent of both children on their joint federal_income_tax return petitioners claimed dependency_exemption deductions for the two children petitioners did not attach to their return form_8332 release of claim to exemption for child of divorced or separated parents respondent disallowed the dependency_exemption deductions 2respondent concedes that petitioners are entitled to a dependency_exemption deduction for their granddaughter and are entitled to a child_tax_credit for discussion a taxpayer may claim a dependency_exemption deduction for each dependent sec_151 a divorced noncustodial_parent may claim a dependency_exemption deduction for a child if certain conditions are met one condition is that the custodial_parent must sign a written declaration that he or she will not claim the child as a dependent the noncustodial_parent must attach the written declaration to his or her return on which the child is claimed as a dependent sec_152 the custodial_parent must make the written declaration in such manner and form as the secretary may by regulations prescribe id the regulations provide that the custodial_parent may make the required declaration on form_8332 or in another document that conforms to its substance sec_1_152-4t a q a-3 temporary income_tax regs fed reg date form_8332 requires among other things the signature of the custodial_parent confirming his or her consent to releasing the dependency_exemption to the noncustodial_parent petitioners do not dispute that they attached no form_8332 to their return they contend however that they attached a copy of the final divorce order to their return the record is unclear on this point in any event the final divorce order does not conform to the substance of form_8332 as required by the applicable regulations in 114_tc_184 affd on other grounds sub nom 293_f3d_1208 10th cir this court held that the requirements of sec_152 were not met by the taxpayer’s attaching to his return portions of divorce orders that were not signed by the custodial_parent but were instead signed by her attorney and then only as to form id pincite the court stated satisfying the signature requirement is critical to the successful release of the dependency_exemption within the meaning of sec_152 id pincite unlike the attorney’s signature in miller the signature of deanna mason mcclure’s attorney on the final divorce order was not qualified as indicating approval only as to form we do not believe however that this circumstance provides petitioners any greater relief form_8332 would have required deanna mason mcclure’s signature affirmatively indicating her consent to release the dependency_exemption to petitioner without her 3we need not and do not reach the question of whether a form_8332 could be validly executed on behalf of a custodial_parent by an attorney who was authorized to represent the custodial_parent with respect to federal_income_tax matters there is no indication in the record that the attorney who signed the final divorce order on mrs mcclure’s behalf was authorized to represent mrs mcclure with respect to her federal income taxes signature the final divorce order does not conform to the substance of form_8332 as required by the regulations petitioners rely upon instructions in publication exemptions standard_deduction and filing information for use in preparing their return those instructions are consistent with our holding the instructions indicate at p that for tax_year the noncustodial_parent could satisfy the requirements of sec_152 by attaching to his or her tax_return in lieu of a form_8332 certain pages of a divorce decree or separation agreement made after the instructions specify however that the noncustodial_parent must attach all relevant pages of the divorce decree or separation agreement including the signature page with the other parent’s signature 4we note that an earlier short-lived statutory amendment might have provided petitioners relief specifically sec of the working families tax relief act of publaw_108_311 118_stat_1173 amended sec_152 effective for tax years beginning after date to allow a divorced noncustodial_parent to claim his or her child as a dependent if a decree of divorce or separate_maintenance or written_separation_agreement between the parents provided that the noncustodial_parent would be entitled to any deduction allowable under sec_151 this provision was retroactively eliminated by a subsequent technical correction effective for tax years beginning after date see gulf_opportunity_zone act of publaw_109_135 119_stat_2632 5although not applicable to the case before us final regulations provide that to satisfy the requirements of sec_152 a court order or decree or a separation agreement may not serve as a written declaration sec_1_152-4 continued petitioners suggest that because they were allowed dependency_exemption deductions for petitioner’s children for earlier tax years they should also be allowed the deductions for the record is vague as to what happened in earlier years but the law is clear that respondent’s allowing the deductions in earlier years does not estop him from denying them for see 338_f2d_968 4th cir affg tcmemo_1964_58 to reflect the foregoing and respondent’s concessions decision will be entered under rule continued income_tax regs these final regulations apply to taxable years beginning after date sec_1_152-4 income_tax regs


internal_revenue_service cor-115929-00 number info release date uil the honorable porter j goss u s house of representatives washington d c dear mr goss date thank you for your letter of date signed by you and a number of your colleagues encouraging the internal_revenue_service to immediately readjust the business standard mileage rate to reflect the recent increase in gasoline prices you note that the increased cost has particularly burdened self-employed taxpayers who use automobiles for business purposes gasoline prices we realize increased gasoline prices are an economic burden however the cost of gasoline is only one part of the business standard mileage rate which includes fixed and operating automobile costs these costs include depreciation or lease payments maintenance and repairs insurance and license and registration fees in addition to gasoline and oil less than one-third of the cents per mile rate comes from the cost of gasoline and oil thus an immediate adjustment in the rate taking into account the recent increase in gasoline prices might not be significant setting the business standard mileage rate the rate is a national average amount determined by an annual study performed by an independent_contractor who is an expert in the cost analysis of business use of automobiles the contractor uses recent data from each state on the component costs of operating the most popular automobiles the contractor then combines this data to achieve a national composite cents-per-mile rate advantages of using the business standard mileage rate reducing a taxpayer’s record-keeping burden is the principal advantage of using the rate gasoline prices rise and fall during the year but taxpayers may continue to use the same rate without having to keep records of actual expenses although rising gasoline prices can be a disadvantage for taxpayers who use the rate falling prices can work to their advantage for example although gasoline prices fell in for all of and through date taxpayers were able to use the rate that reflected the earlier higher prices taxpayer’s options to deduct the ordinary and necessary expenses of using an automobile for business purposes a taxpayer must substantiate the cost date place and business_purpose of each use of the automobile by adequate_records for the cost the taxpayer has two options cid substantiate actual cost by keeping records or by other_sufficient_evidence cid use the business standard mileage rate using the rate gives approximate not actual costs taxpayers can deduct the actual business_expenses of using a personally-owned automobile and this may be advantageous when automobile costs are rising publication travel entertainment gift and car expenses contains further information on how taxpayers should substantiate expenses i have enclosed the relevant pages from that publication i am sending a similar letter to your colleagues i hope this information is helpful please call me at or robert a berkovsky at if you have any questions sincerely charles o rossotti enclosure


department of the treasury internal_revenue_service washington d c feb uilc number release date memorandum for director internal_revenue_service center kansas city mo attn entity control from subject chief branch office of the associate chief_counsel employee_benefits and exempt_organizations cc ebeo - railroad retirement act tax status attached for your information and appropriate action is a copy of a letter from the railroad retirement board concerning the status under the railroad retirement act and the railroad unemployment insurance act of we have reviewed the opinion of the railroad retirement board and based solely upon the information submitted concur in the conclusion that ceased to be an employer under the railroad retirement act and the railroad unemployment insurance act effective harry beker cc


t c memo united_states tax_court veronica chu petitioner v commissioner of internal revenue respondent docket no filed date veronica chu pro_se john w strate for respondent memorandum findings_of_fact and opinion vasquez judge respondent determined a deficiency of dollar_figure and additions to tax under sec_6651 and and a of dollar_figure dollar_figure and dollar_figure respectively with all amounts are rounded to the nearest dollar unless otherwise stated all section references are to the internal_revenue_code and all rule references are to the tax_court rules_of_practice and procedure regard to petitioner’s federal_income_tax after concessions the issues for decision are whether petitioner is entitled to a loss carryover whether petitioner is entitled to itemized_deductions for state_income_tax payments and unreimbursed employee_expenses whether petitioner is liable for an addition_to_tax pursuant to sec_6651 and whether petitioner is liable for an addition_to_tax pursuant to sec_6654 findings_of_fact some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference petitioner resided in palo alto california at the time she filed her petition petitioner’s returns during petitioner was an employee of phoenix technologies inc phoenix petitioner was paid dollar_figure by phoenix and had dollar_figure of federal_income_tax withheld by phoenix petitioner also received dollar_figure from the sale of insilicon stock petitioner did not make estimated_tax payments for petitioner did not file a form_1040 u s individual_income_tax_return for the taxable years and petitioner submitted to the court an unfiled form_1040 for respondent conceded the sec_6651 addition_to_tax respondent also conceded that petitioner is entitled to a dollar_figure deduction for state income taxes the year the return was signed on date in the section labeled income petitioner listed dollar_figure of income on line wages salaries tips etc and on line an dollar_figure loss from s_corporations petitioner listed her total income on line and adjusted_gross_income on line as zero petitioner was required to file a schedule e supplemental income and loss to describe the dollar_figure loss schedule e allows taxpayers to list the income or loss of their s_corporation petitioner’s attached schedule e contains only petitioner’s name social_security_number the topaz group inc ’s topaz name an indication that topaz is an s_corporation topaz’s employer_identification_number and an indication that all of petitioner’s investment was at risk petitioner had the authority to request copies of topaz’s bank statements a document dated date and entitled unanimous written consent of the board_of directors of topaz group inc shows big_number topaz shares issued to petitioner and big_number issued to david wood on topaz’s form_1120 u s_corporation income_tax return the schedule k statement shows petitioner holding percent of topaz’s stock topaz’s and schedules k-1 shareholder’s share of income deductions credits etc show petitioner as 100-percent shareholder of topaz’s stock topaz’s and schedules k-1 do not show petitioner’s percent ownership of topaz’s stock topaz’s returns topaz reported a dollar_figure loss on its form_1120s u s income_tax return for an s_corporation for the year on schedule d capital_gains_and_losses topaz reported a dollar_figure gain from the sale of aptus stock topaz reported a dollar_figure loss on its form_1120s for the year the portion of the return labeled tax and payments is blank in the income loss section of schedule k shareholders’ shares of income credits deductions etc topaz claimed an dollar_figure loss on the other income loss line also written on the line is see sch the attached document labeled form_1120s page schedule k line 6-other income loss shows an dollar_figure long-term business loss also on its schedule k topaz claimed a dollar_figure loss on the income loss line in the other section on the attached schedule d capital_gains_and_losses and built-in gains an dollar_figure long-term_capital_loss is listed on the sale of aptus stock reported on the schedule is an dollar_figure basis and the column labeled sales_price is blank topaz did not file a form_1120s for the taxable years and respondent stated at trial that the return was timely filed we note that the return was signed by petitioner on date petitioner submitted to the court topaz’s unfiled forms 1120s for the years and topaz’s unfiled form_1120s for the year shows dollar_figure of ordinary_income topaz’s unfiled return for shows a dollar_figure loss topaz’s unfiled form_1120s for the year was signed by petitioner on date the return contains four zeroes in four different boxes in the income section and on schedule d the description upstream stock and date_of_acquisition date are listed the return does not contain any additional information meetings petitioner did not attend meetings with respondent scheduled for january april and or may and opinion i deficiency a burden_of_proof sec_7491 places the burden_of_proof on the commissioner with regard to certain factual issues involving examinations commenced after date petitioner does not assert that sec_7491 shifts the burden to respondent therefore the burden_of_proof remains on petitioner see maher v commissioner tcmemo_2003_85 petitioner also did not comply with reasonable requests by respondent for meetings in order to shift the burden to respondent sec_7491 b loss carryover petitioner deducted a carryover of topaz’s claimed loss for on her federal_income_tax return taxpayers are required to maintain adequate_records to substantiate claimed losses and taxpayers bear the burden of proving that they are entitled to claimed losses sec_6001 rule a 290_us_111 sec_1366 provides generally that income losses deductions and credits of an s_corporation are passed through pro_rata to its shareholders on their individual income_tax returns sec_1363 sec_1366 sec_1366 provides that the character of each item_of_income is determined as if it were realized directly from the source from which the corporation realized it or incurred in the same manner as it was by the corporation a shareholder’s gross_income includes a pro_rata share of the s corporation’s gross_income sec_1366 the shareholder’s basis once computed limits the amount of losses and deductions that may be taken into account by a shareholder for the taxable_year sec_1366 any losses and deduction that the shareholder is not entitled to deduct currently are carried forward id petitioner submitted as evidence a document entitled unanimous written consent of the board_of directors of topaz group inc that listed big_number topaz shares issued to petitioner for dollar_figure petitioner also testified that she had balance sheets for topaz petitioner did not submit any documents related to the calculation of her topaz stock basis petitioner has not provided evidence sufficient to establish her topaz stock basis therefore petitioner has not established that she is entitled to deduct the carryover loss on her federal_income_tax return c itemized_deductions petitioner argues that she is entitled to deductions for state income taxes and unreimbursed employee_expenses deductions are a matter of legislative grace and petitioner bears the burden of proving that she is entitled to the deductions claimed see rule a 503_us_79 292_us_435 taxpayers are required to maintain records that are sufficient to enable the commissioner to determine their correct_tax liability see sec_6001 sec_1_6001-1 income_tax regs in addition the taxpayer bears the burden of substantiating the amount and purpose of the item for the claimed deduction see 65_tc_87 affd per curiam 540_f2d_821 5th cir state income taxes petitioner claimed a dollar_figure deduction for state income taxes paid during sec_164 provides inter alia that state income taxes are allowed as a deduction for the taxable_year within which they are paid_or_accrued respondent conceded that petitioner was entitled to a dollar_figure state_income_tax deduction petitioner did not produce any evidence at trial to substantiate the additional claimed dollar_figure state_income_tax deduction therefore petitioner cannot deduct the additional dollar_figure unreimbursed employee_expenses petitioner claimed a dollar_figure deduction for unreimbursed employee business_expenses incurred during pursuant to sec_162 a taxpayer may deduct all of the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying_on_a_trade_or_business including a trade_or_business as an employee 79_tc_1 petitioner did not produce any evidence at trial to substantiate the claimed unreimbursed employee business_expenses accordingly we sustain respondent’s determination regarding the unreimbursed employee business_expenses petitioner attached to her posttrial brief documents to support her claimed deduction for unreimbursed employee_expenses evidence must be submitted at trial documents attached to briefs and statements made therein do not constitute evidence and will not be considered by the court rule b 48_tc_704 affd per curiam 413_f2d_1047 9th cir lombard v commissioner tcmemo_1994_154 affd without published opinion 57_f3d_1066 4th cir accordingly we disregard these documents in reaching our decision about the unreimbursed employee_expenses deduction sec_68 limit on itemized_deductions if a taxpayer’s adjusted_gross_income agi exceeds an applicable_amount her itemized_deductions are subject_to a reduction sec_68 the applicable_amount for was dollar_figure revproc_99_42 1999_2_cb_568 we have held that petitioner cannot deduct her claimed carryover on her federal_income_tax return therefore petitioner’s agi for was dollar_figure and her itemized_deductions are subject_to a computational reduction under sec_68 ii additions to tax a burden of production sec_7491 provides that the commissioner will bear the burden of production with respect to the liability of any individual for additions to tax and penalties the commissioner’s burden of production under sec_7491 is to produce evidence that it is appropriate to impose the relevant penalty addition_to_tax or additional_amount 118_tc_358 see also 116_tc_438 if a taxpayer files a petition alleging some error in the determination of an addition_to_tax or penalty the taxpayer’s challenge will succeed unless the commissioner produces evidence that the addition_to_tax or penalty is appropriate swain v commissioner supra pincite the commissioner however does not have the obligation to introduce evidence regarding reasonable_cause or substantial_authority higbee v commissioner supra pincite b sec_6651 respondent determined that petitioner is liable for an addition_to_tax pursuant to sec_6651 for sec_6651 imposes an addition_to_tax for failure_to_file a return on the date prescribed determined with regard to any extension of time for filing unless the taxpayer can establish that such failure is due to reasonable_cause and not due to willful neglect see sec_6651 469_us_241 petitioner stipulated that she did not file a tax_return for accordingly respondent has met his burden of production for the sec_6651 addition_to_tax for petitioner testified that she was unable to timely file her federal_income_tax return because her accounting manager would not give her the information necessary to prepare the return assuming arguendo that we were to accept petitioner’s testimony about why she failed to file a tax_return for the unavailability of information or records does not necessarily establish reasonable_cause for failure_to_file a timely tax_return see 56_tc_1324 affd without published opinion 496_f2d_876 5th cir a taxpayer is required to file timely based upon the best information available and to file thereafter an amended_return if necessary 79_tc_298 petitioner has not established that her failure to timely file for was due to reasonable_cause see higbee v commissioner supra pincite accordingly petitioner is liable for the sec_6651 addition_to_tax for c sec_6654 respondent determined that petitioner is liable for an addition_to_tax pursuant to sec_6654 for sec_6654 imposes an addition_to_tax for failure to pay estimated income_tax the amount of the credit for withholding is deemed to be a payment of estimated_tax see sec_6654 petitioner’s form_w-2 wage and tax statement indicates that petitioner had dollar_figure withheld for her tax_year petitioner stipulated that she did not make any estimated income_tax payments for we have found for respondent on the issue of petitioner’s claimed deductions for the year we conclude that respondent has satisfied his burden of production regarding this issue petitioner has failed to come forward with evidence sufficient to persuade the court that respondent’s determination is incorrect see rule a welch v helvering u s pincite see higbee v commissioner supra pincite we hold that petitioner is liable for the addition_to_tax pursuant to sec_6654 to reflect the foregoing decision will be entered under rule


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-149847-07 date date legend legend trust decedent year niece niece nephew nephew nephew a b c d e f state statute --------------------------------- state statute ------------------------------------- ------------------------------------------- -------------------------------- ------- ------------------------- ------------------------------------- ---------------------- ------------------ ------------------ --------- ------------------------------------ ------------------------------------ -------------- --------- -------------- dear ------------- this responds to your representative’s letter dated date requesting rulings on the income and generation-skipping_transfer gst tax consequences of the proposed modification of trust facts the facts and representations submitted are summarized as follows trust was established under the will of decedent in year a date prior to date under the terms of trust niece niece nephew nephew and nephew decedent’s nieces and nephews are each to receive an annuity of dollar_figurea out of the net plr-149847-07 income of the trust the remaining income of the trust each year is to be divided into six shares to be paid to six identified charitable organizations the charitable remaindermen upon the death of niece nephew nephew or nephew the respective annuity of dollar_figurea allocable to that niece or nephew is payable to the lawful issue of that niece or nephew by right of representation upon the death of niece or upon the death of any named niece or nephew without any surviving lawful issue his or her share of the net_income will augment the amounts provided to be paid to the charitable remaindermen upon the death of the last survivor of the lawful issue of niece nephew nephew and nephew living at the time of decedent’s death the corpus of the trust and any undistributed_income is to be distributed to the charitable remaindermen in equal shares trust was funded with approximately dollar_figureb of assets the assets of the trust are currently valued at dollar_figurec more than four and one half times the original asset value because of the death of niece and the death of nephew without surviving issue only three of the five annuities are currently being paid_by the trust to the annuitant beneficiaries pursuant to the terms of trust the remaining net_income after payment of the annuities is being distributed in equal shares to the charitable remaindermen based on the life expectancy of the youngest measuring life the trust is estimated to terminate years from now it is represented that only dollar_figured which is less than percent of the value of the trust corpus is necessary to fund the annuities for the expected duration of the trust based on the foregoing the charitable remaindermen obtained legal representation to pursue the acceleration of the charitable_remainder interests the charitable remaindermen noted that the total yearly annuity currently payable to the annuitant beneficiaries is only percent of the value of the corpus of the trust and that the trustee’s fees each year are three times the amount of the annuities distributed under these circumstances the charitable remaindermen have argued that no material purpose is served by continuing the trust until the estimated termination_date in and therefore trust should be fully or partially terminated after lengthy negotiations between counsel for the charitable remaindermen and counsel for the annuitant beneficiaries the parties came to an agreement the agreement as follows a b except to the extent of dollar_figured which is the amount required to fund the annuity payments for the remainder of trust’s duration trust should terminate and the corpus should be distributed to the charitable remaindermen trust will continue to pay the annuities of dollar_figurea out of the trust’s income each year to the annuitant beneficiaries and will continue to distribute any excess income each year to the charitable remaindermen as provided for under the original terms of trust plr-149847-07 c d upon the final termination of trust in accordance with the original terms of trust all of the then-remaining balance will be distributed outright to the charitable remaindermen in equal shares as provided for under the original terms of trust the charitable remaindermen will purchase separate and apart from the trust commercial annuities for the benefit of each of the three annuitant families under the annuity_contracts an annuity amount of approximately dollar_figuree will be paid to each annuitant family for a term identical to the term of trust at a total cost to the charitable remaindermen of dollar_figuref the charitable remaindermen have represented that each annuity policy to be purchased will remain the asset of the purchasing charity and the annuitants will have no rights to the annuity payments superior to those of the purchasing charity’s other creditors pursuant to the agreement counsel for the charitable remaindermen filed a petition for modification of trust with the consent of all beneficiaries under the authority of state statute state statute provides in pertinent part a b except as provided in b if all beneficiaries of an irrevocable_trust consent they may compel the modification or termination of the trust upon petition to the court if the continuance of the trust is necessary to carry out a material purpose of the trust the trust cannot be modified or terminated unless the court in its discretion determines that the reason for doing so under the circumstances outweighs the interest in accomplishing a material purpose of the trust the petition attests that the non-petitioning beneficiaries as well as the petitioning beneficiaries have consented to the proposed modification you have requested the following rulings the implementation of the agreement and court order will not cause trust to lose its exempt status under b a of the tax_reform_act_of_1986 and sec_26_2601-1 of the generation-skipping_transfer_tax regulations the partial_termination of trust and the early distribution to the charitable remaindermen will not result in the immediate realization of capital_gain capital_loss or taxable_income by the annuitant beneficiaries the trust or the charitable remaindermen the purchase of the commercial annuities by the charitable remaindermen for the benefit of the annuitant beneficiaries will not result in the immediate plr-149847-07 realization of capital_gain capital_loss or taxable_income by the annuitant beneficiaries law and analysis ruling sec_2601 of the internal_revenue_code imposes a tax on every generation-skipping_transfer gst which is defined under sec_2611 as a taxable_distribution a taxable_termination or a direct_skip under of the tax_reform_act_of_1986 the act gst tax is generally applicable to generation-skipping transfers made after date however under b a of the act and sec_26 b i of the generation-skipping_transfer_tax regulations the tax does not apply to a transfer under a_trust that was irrevocable on date except to the extent the transfer is made out of corpus added to the trust by an actual or constructive_addition after 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 gst tax under sec_26_2601-1 will not cause the trust to lose its exempt status these rules are applicable only for purposes of determining whether an exempt trust retains exempt status for gst tax purposes the rules do not apply in determining for example whether the transaction results in a gift subject_to gift_tax or may cause the trust to be included in the gross_estate of a beneficiary or may result in the realization of capital_gain for purposes of sec_1001 sec_26_2601-1 provides that a modification of the governing instrument by judicial reformation or nonjudicial reformation that is valid under applicable state law will not cause an exempt trust to be subject_to the gst tax 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 sec_26_2601-1 provides in part that a modification of an exempt trust will result in a shift in a beneficial_interest to a lower generation beneficiary if the modification can result in either an increase in the amount of a gst or the creation of a new gst to determine whether a modification of an irrevocable_trust will shift a beneficial_interest in a_trust to a beneficiary who occupies a lower generation the effect of the instrument on the date of the modification is measured against the effect of the instrument in existence immediately before the modification if the effect of the modification cannot be immediately determined it is deemed to shift a beneficial_interest plr-149847-07 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 modification in the present case trust was irrevocable on date it is represented that no additions actual or constructive have been made to trust after that date accordingly trust is exempt from the gst tax under sec_26_2601-1 in measuring the effect of implementing the agreement we have determined that the interest of the annuitant beneficiaries in trust will not change as a result of the implementation of the agreement the annuitant beneficiaries will receive the same amount under the terms of trust as before implementation of the agreement accordingly provided the agreement is valid under applicable state law we conclude that implementing the agreement will not result in a shift of any beneficial_interest in trust to any beneficiary who occupies a lower generation than the beneficiaries holding the beneficial interests prior to the modification in addition implementing the agreement will not extend the time for vesting of any beneficial interests in the trust beyond the period provided for in the trust therefore the agreement will not affect the status of trust as exempt from the gst tax under sec_2601 ruling sec_2 sec_61 of the internal_revenue_code provides that gross_income includes gains derived from dealings in property and under sec_61 from an interest in a_trust sec_1001 provides that the gain from the sale_or_other_disposition of property shall be the excess of the amount_realized therefrom over the adjusted_basis provided in sec_1011 for determining gain and the loss shall be the excess of the adjusted_basis provided in sec_1011 for determining loss over the amount_realized sec_1001 states that the amount_realized from the sale_or_other_disposition of property shall be the sum of any money received plus the fair_market_value of the property other than money received under sec_1001 except as otherwise provided in subtitle a the entire amount of gain_or_loss determined under sec_1001 on the sale_or_exchange of property shall be recognized sec_1_1001-1 of the income_tax regulations provides that the gain_or_loss realized from the conversion of property into cash or from the exchange of property for other_property differing materially either in_kind or in extent is treated as income or loss sustained in 499_us_554 the supreme court considered whether a sale_or_exchange had taken place that resulted in realization of gain_or_loss under sec_1001 when a financial_institution exchanged its interests in one plr-149847-07 group of residential mortgage loans for another lender's interests in a different group of residential mortgage loans the two groups of mortgages were considered substantially identical by the agency that regulated the financial_institution the court concluded that sec_1_1001-1 reasonably interprets sec_1001 id pincite the court also stated that an exchange of property gives rise to a realization event under sec_1001 if the properties exchanged are materially different in defining what constitutes a material difference for purposes of sec_1001 the court stated that properties are different in the sense that is material to the code so long as their respective possessors enjoy legal entitlements that are different in_kind or extent id pincite the court held that mortgage loans made to different obligors and secured_by different homes did embody distinct legal entitlements and that the taxpayer realized losses when it exchanged interests in the loans id pincite it is consistent with the supreme court's opinion in cottage savings to find that the interests of the annuitants and the six charities in trust will not differ materially as a result of the proposed partial_termination of trust and the early distribution to the charitable remaindermen the legal entitlements of the beneficiaries will not be changed each annuitant beneficiary’s payment from trust will remain unchanged only the timing of the receipt of a large portion of trust corpus by the charitable remaindermen will be modified except for the changes described above all other provisions of trust will remain unchanged accordingly the modification of trust to provide for the partial_termination of trust and the early distribution to the charitable remaindermen will not result in a material difference in_kind or extent of the legal entitlements enjoyed by the beneficiaries and no gain_or_loss will be recognized on the modification of trust under sec_1001 as for the purchase of the annuities for the benefit of the annuitant beneficiaries it is represented that each annuity policy to be purchased by the charitable remaindermen will remain the asset of the purchasing charity and the annuitant beneficiaries will have no rights to the annuity payments superior to those of the purchasing charities’ other creditors accordingly the purchase of the annuities by the charitable remaindermen for the benefit of the annuitant beneficiaries will not result in the immediate realization of capital_gain capital_loss or taxable_income by the annuitant beneficiaries 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 your authorized representative plr-149847-07 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 james f hogan senior technician reviewer branch passthroughs special industries enclosures copy for sec_6110 purposes copy of this 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 ----------------------------------------- telephone number --------------------- refer reply to cc tege eoeg teb plr-118291-06 date date ------------------------- ------------------------------- ------------------------------------ ------------------------------------------------ legend tribe town ------------------------------------------------------------- tribal council commission date dear ------------------ this letter is in response to your request for a ruling submitted by your authorized representative on behalf of town that town is a political_subdivision of tribe within the meaning of sec_7871 of the internal_revenue_code the code facts and representations tribe is listed in revproc_2002_64 2002_2_cb_717 as an indian_tribal_government that is to be treated similarly to a state for specified purposes under the code town is not included in the list of political subdivisions of indian tribal governments published in revproc_84_36 1984_1_cb_510 modified revproc_86_17 1986_1_cb_550 ------------------ plr-118291-06 tribal council is the representative governing body of tribe members of tribal council are elected by vote of all voters registered on tribe’s roll of registered voters tribe has authorized tribal council to act on behalf of tribe to exercise a variety of powers including the authority to establish and regulate political subdivisions of tribe town was established by resolution of tribal council on date as a home-rule municipality and political_subdivision of tribe as a home-rule municipality town is authorized to perform all functions and exercise any power necessary for local self- governance consistent with all generally applicable laws and regulations of the federal government and tribe tribal council placed town under the governance of commission an elected governing body and delegated to town all powers necessary for local self-government including the authority to impose and collect a sales_tax commission consists of five commissioners the commissioners each of whom is elected to a term of four years the commissioners are elected by vote of all voters registered to vote in tribe elections in town’s election precinct and who reside within town’s boundaries law and analysis sec_7701 defines the term indian_tribal_government as the governing body of any tribe band community village or group of indians or if applicable alaska natives which is determined by the secretary after consultation with the secretary of the interior to exercise governmental functions sec_7871 treats an indian_tribal_government as a state for certain specified tax purposes sec_7871 provides that for purposes of sec_7871 a subdivision of an indian_tribal_government shall be treated as a political_subdivision of a state if and only if the secretary_of_the_treasury determines after consultation with the secretary of the interior that such subdivision has been delegated the right to exercise one or more of the substantial governmental functions of the indian_tribal_government revproc_84_36 provides a list of political subdivisions of indian tribal governments that are to be treated as political subdivisions of a state for specified purposes of the code revproc_84_37 1984_1_cb_513 modified revproc_86_17 provides procedures for a governmental_unit of an indian_tribal_government not included on the list published in revproc_84_36 to request a ruling qualifying it for treatment as a political_subdivision of a state as provided under sec_7871 section dollar_figure of revproc_84_37 provides that a subdivision of an indian_tribal_government that has been delegated one of the generally accepted sovereign powers may qualify as a political_subdivision of a state as provided under sec_7871 section plr-118291-06 dollar_figure indicates that the generally accepted sovereign powers of states are the power to tax the power of eminent_domain and the police power tribe is an indian_tribal_government that is to be treated as a state for specified purposes under the code tribe established town as a political_subdivision of tribe and town is authorized to exercise taxing powers the portion of tribe’s taxing power delegated to town is not insubstantial this office has consulted with the united_states department of the interior regarding tribe and town the united_states department of the interior has opined that tribe has effectively delegated to town the power to tax accordingly after consultation with the secretary of the interior we conclude that within the meaning of sec_7871 town has been delegated one or more of the substantial governmental functions of tribe therefore for purposes of sec_7871 town will be treated as a political_subdivision of a state conclusion based on the information submitted and representations made we conclude that pursuant to sec_7871 town is a political_subdivision of an indian_tribal_government tribe and accordingly town will be treated as a political_subdivision of a state for purposes of sec_7871 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to town’s authorized representatives plr-118291-06 the ruling contained in this letter is based upon information and representations submitted by town and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the materials submitted in support of the request for a ruling it is subject_to verification upon examination sincerely assistant chief_counsel exempt_organizations employment_taxes government entities by vassiliki tsilas assistant branch chief tax exempt bond branch


internal_revenue_service index nos number release date plr-110964-99 cc dom it a b9 date attention ein dear this is in reference to a form_1128 application to adopt change or retain a tax_year submitted on behalf of the above- named taxpayers requesting permission to change their accounting_period for federal_income_tax purposes from a taxable_year ending to a taxable_year ending effective the taxpayers have requested that the form_1128 be considered timely filed under the authority contained in sec_301_9100-3 of the procedure and administration regulations the taxpayers' form_1128 requesting a change in accounting_period to a tax_year ending was due on or before the information furnished indicates that the application_for the change in accounting_period was filed late because of an error or misunderstanding however the form was filed within days of the due_date sec_1_442-1 of the income_tax regulations provides that in order to secure the commissioner's consent to a change in accounting_period taxpayers must file an application on form_1128 with the commissioner on or before the 15th day of the second calendar month following the close of the short_period sec_301_9100-3 provides that requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 automatic extensions such as the instant case must be made under the rules of sec_301_9100-3 requests for relief subject_to sec_301_9100-3 will be granted when taxpayers provide evidence to establish that the taxpayers acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government based on the facts and information submitted and the representations made it is held that the taxpayers have acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government accordingly the requirements of the regulations for the granting of relief have been satisfied in this case and taxpayers’ late filed form_1128 requesting permission to change to a tax_year ending effective for the short_period of is considered timely filed the ruling contained in this letter is based upon facts and representations submitted by the taxpayers and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling verification of the factual information representations and other data may be required as part of an examination process this ruling addresses the granting of sec_301_9100-3 relief only no opinion is expressed regarding the tax treatment of the instant transaction under the provisions of any other sections of the code or regulations that may be applicable thereto or regarding the tax treatment of any conditions existing at the time of or effects resulting from the instant transaction specifically no opinion is expressed as to whether the taxpayers are permitted under the code and applicable regulations to change to the tax_year requested in the subject form_1128 in accordance with the provisions of a power_of_attorney currently on file we are sending a copy of this letter_ruling to the taxpayers' authorized representative this ruling is directed only to the taxpayers that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent sincerely yours assistant chief_counsel income_tax and accounting s irwin a leib by irwin a leib deputy assistant chief_counsel enclosures copy of this letter copy for sec_6110 purposes