internal_revenue_service number release date index number ---------------------- -------------------- ------------------ ------------------------------------ in re ---------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------------------------------ telephone number --------------------- refer reply to cc psi b04 plr-110214-05 date april legend date date date date date date date date date date date grandfather grandmother father taxpayer brother state probate_court state law state law state law state law dear ------------- -------------------------- ---------------------- ------------------ --------------------------- ---------------------- ------------------- ---------------------- ------------------------- -------------------------- ------------------------- ------------------ -------------------------------------- -------------------------- ------------------------------------ ------------------------------------------------ ------------------------------ ---------------- ----------------------------------------------------- ---------------------------------------------------- --------------------------------------------------- ------------------------------------------------------- ------------------------------------------------ this is in response to your date letter and other correspondence requesting rulings concerning the gift and generation-skipping_transfer gst tax consequences of the proposed disclaimer you have requested the following rulings plr-110214-05 sec_25_2511-1 of the gift_tax regulations will apply to the taxpayer’s disclaimer of her remainder_interest in the subtrust taxpayer’s disclaimer of her remainder_interest in the subtrust within nine months after learning of the existence of the subtrust will have been made within a reasonable_time after knowledge of the existence of the transfer for purposes of sec_25_2511-1 taxpayer’s disclaimer of her remainder_interest in the subtrust within nine months after obtaining a copy of grandfather’s will and within nine months after the death of father will not be a taxable gift under sec_2501 of the internal_revenue_code the transfer of property upon the termination of the subtrust to taxpayer’s children as a result of taxpayer’s disclaimer will not be a taxable_termination under chapter and will not be subject_to the gst tax the facts submitted are as follows grandfather died on date before date a resident of state article article third provides that the balance of grandfather’s interests in real_estate be second of grandfather’s will provides that grandfather’s farm is to be held in trust for grandmother during grandmother’s life or until her remarriage the rents profits and income from the farm are to be applied for_the_use_of grandmother upon grandmother’s death or remarriage property in the trust is to be added to the trust established by article fourth held in trust for the benefit of his children and the lineal_descendants of any deceased children during grandmother’s life or until her remarriage during grandmother’s life or until her remarriage the rents profits and income from the real_estate are to be applied for_the_use_of grandfather’s children and the lineal_descendants of any deceased children in equal shares per stirpes upon grandmother’s death or remarriage the property in the trust is to be added to the trust established by article fourth grandmother’s life or until her remarriage with one-third of the income to be paid to grandmother and the balance of the income to be paid to grandfather’s children and the lineal_descendants of any deceased children in equal shares per stirpes during grandmother’s life upon grandmother’s death the principal of the trust is to be divided into equal shares for each child then living and lineal_descendants of any deceased child one share for each child and one share for the lineal_descendants of each deceased child the trustee is to apply the income of each share set apart for a child to the use of that child during his or her life the trustees may in their discretion article fourth provides that the residuary_estate is to be held in trust during father died on date survived by taxpayer brother and two other children grandmother died on date before date never having remarried taxpayer represents that prior to father’s death she was unaware that she had plr-110214-05 accumulate during the minority of the child so much of his or her income as they deem unnecessary for the child’s proper support and maintenance the trustees may in their discretion pay over to such child upon attaining the age of a portion of the principal not exceeding one-third upon the death of the child the trustees are to pay the principal of the trust to the child’s lineal_descendants in equal shares per stirpes or if there are no lineal_descendants of child then to grandfather’s legal heirs survived by father and four other children pursuant to the provisions of grandfather’s will upon grandmother’s death the real_estate held in the article second trust and the article third_trust were added to the principal of the article fourth trust the principal of the article fourth trust was then divided into five equal shares for father and the four other children of grandfather no subsequent additions were made to the article fourth trust or father’s share known as the subtrust pursuant to the provisions of grandfather’s will upon father’s death the subtrust terminated and the remaining principal is to be divided among taxpayer and her three siblings equally a remainder_interest in any trust created by grandfather’s will taxpayer had no knowledge of the existence of the article fourth trust or the subtrust taxpayer had never seen grandfather’s will trustee of subtrust stating that taxpayer had an interest in a_trust created by grandfather’s will and that the interest became possessory upon father’s death the letter stated that as soon as a custody account became active brother planned to distribute of the securities in the subtrust to taxpayer and the other beneficiaries will a copy of an interim account with respect to subtrust and a copy of probate court’s order accepting the interim account taxpayer’s counsel forwarded these letters to taxpayer on date date was the first time that taxpayer saw grandfather’s will several prior interim accounts with respect to subtrust were mailed to taxpayer taxpayer represents that she was not able to ascertain from such notices that she had an interest in any trust under grandfather’s will matter of grandfather fbo father the notice did not set forth taxpayer’s name a description of subtrust or a description of taxpayer’s interest in subtrust taxpayer one such notice was sent out on or about date the notice was issued in the the records of probate_court indicate that notices of applications for approval of on date brother’s counsel sent taxpayer’s counsel a copy of grandfather’s on or about date taxpayer received a letter from brother who served as a taxpayer represents that she neither received nor accepted any income or state law provides in part that a beneficiary under a will may disclaim in plr-110214-05 represents that she was unable to ascertain from the date notice that she had an interest in the subtrust father served as trustee from date until date father did not discuss family finances with taxpayer and discouraged taxpayer from inquiring about family finances father divulged little or no information to her regarding subtrust principal from the subtrust taxpayer intends to disclaim by formula disclaimer under state law before date that portion of her remainder_interest in subtrust as will not subject her to gift_tax and will not cause any gst tax to be imposed on any income or principal of subtrust whole or in part any interest under a will by delivering a written disclaimer disclaimed be executed by the disclaimant in the manner provided for the execution of deeds of real_property either by the laws of this state or by the laws of the place of execution and declare the disclaimer and the extent thereof delivered not later than the date which is nine months after the event that determines that the taker of the interest is finally ascertained and such interest is indefeasibly vested disclaimers made on or after date provided disclaimers respecting transfers of property made before and applicable to estates of persons dying before date shall be valid if made in accordance with the provisions of said sections in effect on date or in accordance with other statutory or common_law_state law provides in part that a disclaimer of a future_interest shall be state law provides that the provisions of state laws shall apply to state law provides that the disclaimer shall describe the interest law and analysis rulings sec_2501 imposes a tax for each calendar_year on the transfer of property by gift by any individual resident or nonresident sec_2511 provides that the tax imposed by sec_2501 shall apply whether the transfer is in trust or otherwise whether the gift is direct or indirect and whether the property is real or personal tangible or intangible sec_25_2511-1 of the gift_tax regulations provides in relevant part that in the case of taxable transfers creating an interest in the person disclaiming made plr-110214-05 before date where the law governing the administration of the decedent's_estate gives a beneficiary heir or next-of-kin a right completely and unqualifiedly to refuse to accept ownership of property transferred from a decedent whether the transfer is effected by the decedent's will or by the law of descent and distribution a refusal to accept ownership does not constitute the making of a gift if the refusal is made within a reasonable_time after knowledge of the existence of the transfer the refusal must be unequivocal and effective under the local law there can be no refusal of ownership of property after its acceptance in the absence of the facts to the contrary if a person fails to refuse to accept a transfer to him of ownership of a decedent's property within a reasonable_time after learning of the existence of the transfer he will be presumed to have accepted the property regulation an interest must be disclaimed within a reasonable_time after obtaining knowledge of the transfer creating the interest to be disclaimed rather than within a reasonable_time after the distribution or vesting of the interest 455_us_305 the supreme court has recognized that under the predecessor to this ruling sec_2601 imposes a tax on every generation-skipping_transfer under based on the information submitted and the representations made we conclude that taxpayer's disclaimer within nine months of learning of the existence of subtrust will be made within a reasonable_time after knowledge of the existence of the transfer under sec_25_2511-1 therefore provided that taxpayer's disclaimer is valid under state law and assuming the other requirements of sec_25_2511-1 are met taxpayer's disclaimer of her remainder_interest in the subtrust will not be a taxable gift under sec_2501 section b a of the tax_reform_act_of_1986 and sec_26_2601-1 of the generation-skipping_transfer_tax regulations the tax does not apply to any generation-skipping_transfer under a_trust as defined in sec_2652 that was irrevocable on date the rule_of the preceding sentence does not apply to a pro_rata portion of any generation-skipping_transfer under an irrevocable_trust if additions are made to the trust after date b ii b relating to powers retained by the settlor that would cause the trust to be included in the settlor's gross_estate under sec_2038 or sec_26_2601-1 relating to life_insurance policies includible in the insured's gross_estate under sec_2042 any trust in existence on date is considered an irrevocable_trust additions have been made to subtrust accordingly subtrust is exempt from the subtrust was irrevocable on date and no post-september sec_26_2601-1 provides that except as provided in section plr-110214-05 gst tax as discussed above assuming taxpayer executes the disclaimer as proposed the disclaimer will not constitute a gift subject_to federal gift_tax based on the information submitted and the representations made the transfer of property upon the termination of the subtrust to taxpayer’s children as a result of taxpayer’s disclaimer will not be a taxable_termination under chapter and will not be subject_to the gst tax in accordance with the power_of_attorney on file with this office copies of this except as expressly provided herein no opinion is expressed or implied the rulings contained in this letter are based upon information and letter are being sent to your authorized representatives concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter 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 provides that it may not be used or cited as precedent this ruling is directed only to the taxpayer s requesting it sec_6110 sincerely _________________________ lorraine e gardner senior counsel branch office of the associate chief_counsel passthroughs and special industries enclosure copy of letter for sec_6110 purposes


internal_revenue_service number release date index numbers ------------------------------------- -------------------------- ------------------------ -------------------------- department of the treasury washington dc person to contact --------------------- id no ---------------- telephone number -------------------- refer reply to cc psi b03 - plr-104094-16 date date legend x --------------------------------------------------------------------------- ---------------------------------------------------------- -------------------------- y -------------------------------------------------------------------- ---------------------------------------------------------- -------------- state d1 dear -------------- ------------ -------------------------- this letter responds to a letter dated date 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 under sec_301_7701-3 to be classified as an association for federal tax purposes facts the information submitted discloses that x was a limited_liability_company formed under the laws of state x intended to be classified as an association for federal tax plr-104094-16 purposes effective d1 prior to its conversion to a state corporation however x failed to timely file form_8832 entity classification election x is included in the u s consolidated federal_income_tax returns of y a state corporation law and analysis sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 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 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 except as provided in sec_301 b unless the entity elects otherwise a domestic eligible_entity is i a partnership if it has two or more members or ii disregarded as an entity separate from its owner if it has a single owner sec_301_7701-3 provides in part that except as provided in sec_301_7701-3 and v an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 with the service_center designated on form_8832 sec_301_7701-3 provides in part that an election made under sec_301_7701-3 will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code code except subtitles e g h and i sec_301_9100-1 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register 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 regulatory elections that do not meet the requirements of sec_301_9100-2 plr-104094-16 sec_301_9100-3 provides that requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely on the facts and representations submitted we conclude that x has satisfied the requirements of sec_301_9100-1 and sec_301_9100-3 consequently x is granted an extension of time of one hundred twenty days from the date of this letter to elect under sec_301_7701-3 to be treated as an association effective d1 x must file form_8832 within the extension period with the appropriate service_center with a copy of this letter attached we express no opinion concerning the assessment of any interest additions to tax additional_amounts or penalties for failure_to_file a timely income_tax or information_return with respect to any taxable_year that may be affected by this ruling for example we express no opinion as to whether a taxpayer is entitled to relief from any penalty on the basis that the taxpayer had reasonable_cause for failure_to_file timely any income_tax or information returns except for the specific ruling above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code in addition sec_301_9100-1 provides that the granting of an extension of time for making an election is not a determination that the taxpayer is otherwise eligible to make the election this ruling is directed only to the taxpayer requesting it according to sec_6110 of the code this ruling may not be used or cited as precedent under a power_of_attorney on file with this office we are sending a copy of this letter to x’s authorized representative plr-104094-16 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 associate chief_counsel passthroughs special industries by ___ s __________________________ mary beth carchia senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy 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 3-plr-115805-99 date date acquiring target state a state b state b tax this letter responds to your representative’s date request for rulings on the federal_income_tax consequences of a proposed transaction additional information with respect to the proposed transaction was submitted in letters dated date date and date the information submitted for consideration is summarized below acquiring is organized under the laws of state a and registered under the investment_company act of the act as a non-diversified closed-end management investment_company acquiring has elected to be taxed as a regulated_investment_company ric under acquiring’s investment objective is to provide shareholders with high current income exempt from federal_income_tax and the opportunity to own shares whose value is exempt from state b tax acquiring pursues its investment objective by investing primarily in a portfolio of long-term municipal obligations issued by or on behalf of state b target is organized under the laws of state a and registered under the act as a non-diversified closed-end management investment_company target has elected to be taxed as a ric under target’s investment objective is to provide shareholders with high current income exempt from federal_income_tax and the opportunity to own shares whose value is exempt from state b tax target pursues its investment objective by investing primarily in a portfolio of long-term municipal obligations issued by or on behalf of state b plr-115805-99 acquiring and target each has one class of voting common_stock and one class of voting preferred_stock outstanding both file their income_tax returns based on the accrual_method of accounting acquiring and target have approved a plan_of_reorganization for what are represented to be valid business reasons pursuant to the plan the following transaction is proposed the transaction target will transfer all of its assets and liabilities to acquiring in exchange for newly issued acquiring voting common_stock and voting preferred_stock the transfer target will liquidate and distribute to its shareholders all of the acquiring stock received in the exchange each target shareholder will receive on a pro_rata basis shares of the class of acquiring stock with the same class designation and respective rights as the target stock held by such shareholder immediately prior to the transfer target will dissolve in accordance with the laws of state a and will terminate its registration under the act acquiring may sell up to of the assets received in the transaction to unrelated purchasers and will reinvest any proceeds consistent with its investment objectives and policies the following representations have been made in connection with the transaction a b the fair_market_value of the acquiring stock received by each target shareholder will be approximately equal to the fair_market_value of the target 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 target immediately prior to the transaction for purposes of this representation amounts paid_by target to dissenters amounts used by target to pay its reorganization expenses and all redemptions and distributions except for regular normal dividends made by target immediately preceding the transfer will be included as assets of target held immediately prior to the transaction c acquiring has no plan or intention to reacquire any of its stock issued in the transaction plr-115805-99 d e f g h i j k l m after the transaction acquiring will use the assets acquired from target except that a portion of these assets may be sold or otherwise_disposed_of in the ordinary course of acquiring’s business any proceeds will be invested in accordance with acquiring’s investment objectives acquiring has no plan or intention to sell or dispose_of any of the assets of target acquired in the transaction except for dispositions made in the ordinary course of business or transfers described in sec_368 target will distribute to its shareholders the stock of acquiring it receives pursuant to the plan_of_reorganization the liabilities of target assumed by acquiring and any liabilities to which the transferred assets of target are subject were incurred by target in the ordinary course of its business following the transaction acquiring will continue the historic_business of target or use a significant portion of target’s historic_business_assets in the continuing business acquiring target and the shareholders of target will pay their respective expenses if any incurred in connection with the transaction there is no intercorporate indebtedness existing between target and acquiring that was issued acquired or will be settled at a discount acquiring and target each meets the requirements of a regulated_investment_company as defined in sec_368 acquiring does not own directly or indirectly nor has it owned during the past five years directly or indirectly any stock of target the fair_market_value of the assets of target 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 cash is being distributed to the shareholders of target in lieu of fractional shares of acquiring solely to save acquiring the expense and inconvenience of issuing and transferring fractional shares such cash does not represent separately bargained for consideration in the transaction the total cash consideration that will be paid to the target 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 shareholders in exchange for their shares of target stock the fractional share interests of each shareholder of target 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 plr-115805-99 n o p q target is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 target and acquiring have elected to be taxed as rics under sec_851 and for all of their taxable periods including target’s last short taxable_period ending on the date of the transaction have qualified for the special tax treatment afforded rics under the internal_revenue_code after the transaction acquiring intends to continue to so qualify 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_368-1 to acquiring to acquire during the five year period beginning on the date of the transaction with consideration other than acquiring stock acquiring stock furnished in exchange for a proprietary interest in target in the transaction either directly or through any transaction agreement or arrangement with any other person except for cash distributed to the target common shareholders in lieu of fractional shares of acquiring common_stock during the five year period ending on the date of the transaction i neither acquiring nor any person related as defined in sec_1_368-1 to acquiring will have acquired target stock with consideration other than acquiring stock ii neither target not any person related as defined in sec_1_368-1 without regard to sec_1_368-1 to target will have acquired target stock with consideration other than acquiring stock or target stock and iii no distributions will have been made with respect to target stock other than regular normal dividend distributions made pursuant to target’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 as required for target’s tax treatment as a ric r the aggregate value of the acquisitions redemptions and distributions described 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 target on the effective date of the transaction based solely on the information submitted and on the representations set forth above we hold as follows the acquisition by acquiring of substantially_all of the assets of target in exchange for voting_stock of acquiring and acquiring’s assumption of target’s liabilities followed by the distribution by target to its shareholders of acquiring stock and any remaining assets in complete_liquidation will qualify as a reorganization within the meaning of sec_368 target and acquiring will plr-115805-99 each be a_party_to_a_reorganization within the meaning of sec_368 target will recognize no gain_or_loss upon the transfer of substantially_all of its assets to acquiring in exchange for voting_stock of acquiring and acquiring’s assumption of target’s liabilities or upon the distribution of the acquiring stock to the target shareholders sec_361 and c and a acquiring will recognize no gain_or_loss on the receipt of the assets of target in exchange for voting_stock of acquiring sec_1032 the basis of target’s assets in the hands of acquiring will be the same as the basis of those assets in the hands of target immediately prior to the transaction sec_362 acquiring’s holding_period for the target assets acquired will include the period during which such assets were held by target sec_1223 the target shareholders will recognize no gain_or_loss on the receipt of voting_stock of acquiring solely in exchange for their target stock including fractional shares to which they may be entitled sec_354 the basis of the acquiring stock received by the target shareholders will be the same as the basis of the target stock surrendered in exchange therefor sec_358 the holding_period of the acquiring stock received by the target shareholders in exchange for their target stock including fractional shares to which they may be entitled will include the period that the shareholder held the target stock exchanged therefor provided that the shareholder held such stock as a capital_asset on the date of the exchange sec_1223 the payment of cash to the target shareholders in lieu of fractional shares of acquiring will be treated as though the fractional shares were distributed as part of the transaction and then redeemed by acquiring the cash payments will be treated as distributions in full payment for the fractional shares deemed redeemed under sec_302 with the result that such target shareholders will have short-term or long-term_capital_gain or loss to the extent that the cash they receive differs from the basis allocable to such fractional shares rev_rul 1966_2_cb_116 and revproc_77_41 c b pursuant to sec_381 and sec_1_381_a_-1 the tax_year of target will end on the effective date of the transaction and acquiring will succeed to and take into account the items of target described in sec_381 subject_to the provisions and limitations specified in sec_381 sec_382 sec_383 and sec_384 and the regulations plr-115805-99 thereunder no opinion is expressed about the tax treatment of the transaction under other provisions of the code and regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the transactions that are not specifically covered by the above rulings specifically no opinion was requested and none is expressed about whether acquiring or target qualify as a ric that is taxable under subchapter_m part of the code the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative a copy of this letter must be attached to any income_tax return to which it is relevant sincerely yours assistant chief_counsel corporate by assistant to the chief branch


t c summary opinion united_states tax_court dana l acoba petitioner v commissioner of internal revenue respondent docket no 4002-05s filed date dana l acoba pro_se robert v boeshaar for respondent dean special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case unless otherwise indicated subsequent section references are to the internal_revenue_code as amended and rule references are to the tax_court rules_of_practice and procedure the issue for decision is whether petitioner is entitled to relief from joint_and_several_liability under sec_6015 for and background some of the facts have been stipulated and are so found the stipulation of facts and the exhibits received into evidence are incorporated herein by reference when the petition was filed petitioner resided in the state of washington petitioner jointly filed federal_income_tax returns with her then spouse eugene a acoba mr acoba for and both petitioner and mr acoba earned wages from which federal income taxes were withheld in and both petitioner and mr acoba earned wages and received retirement distributions from which federal_income_tax was withheld in petitioner and mr acoba underpaid their federal_income_tax liabilities for each of the years and considering their respective wages retirement distributions and prepayment_credits the underpayments of taxes are not attributable solely to mr acoba of the total dollar_figure underpayment_of_tax for dollar_figure was attributable to petitioner of the total dollar_figure underpayment_of_tax for 1petitioner’s former husband eugene a acoba was notified that petitioner was seeking relief from joint_and_several_liability and that he had a right to intervene in the matter he has not exercised his right to intervene dollar_figure was attributable to petitioner of the total dollar_figure underpayment_of_tax for dollar_figure was attributable to petitioner on date petitioner filed a form_8857 request for innocent spouse relief the preliminary determination_letter was issued to petitioner on date in response to her request for relief from liability under sec_6015 petitioner is a graduate of the university of washington and ha sec_23 years of experience in healthcare administration mr acoba has some technical college training petitioner and mr acoba divorced on date as part of the judgment of divorce petitioner and mr acoba each agreed to pay of internal_revenue_service debt for back taxes interest and penalties the judgment of divorce also contained an order restraining and enjoining mr acoba from assaulting harassing molesting or disturbing the peace of petitioner or their minor child during the years at issue petitioner and mr acoba shared a joint checking account to which petitioner had full access they each deposited their incomes to the joint account they each paid all of their bills from the joint account petitioner occasionally balanced the checkbook and picked up and opened the household mail 2see infra note petitioner compiled all of the pertinent information for the preparation of their federal_income_tax returns for the years at issue petitioner reviewed the joint federal_income_tax returns before signing them at the time the returns were signed petitioner knew that she and mr acoba could not pay the taxes due because of the dire financial straits in which they found themselves petitioner failed to file federal_income_tax returns for and petitioner’s request for relief under sec_6015 was subsequently denied by respondent’s appeals_office the case was called at a trial session of the court in seattle and was remanded to appeals for further consideration after further consideration a final appeals determination was issued determining again that petitioner was not entitled to relief under sec_6015 discussion except as otherwise provided in sec_6015 petitioner bears the burden_of_proof with respect to her entitlement to relief under sec_6015 see rule a 119_tc_306 affd 101_fedappx_34 6th cir i joint_and_several_liability and sec_6015 relief sec_6013 provides that if a joint_return is filed the tax is computed on the taxpayers’ aggregate income and liability for the resulting tax is joint_and_several see also sec_1_6013-4 income_tax regs but the internal_revenue_service irs may relieve a taxpayer from joint_and_several_liability under sec_6015 in certain circumstances to obtain relief from joint_and_several_liability a spouse must qualify under sec_6015 or if eligible may allocate liability under sec_6015 in addition if relief is not available under sec_6015 or c a spouse may seek equitable relief under sec_6015 114_tc_324 114_tc_276 relief under sec_6015 or c is premised on the existence of a deficiency or an understatement_of_tax sec_6015 and c 120_tc_137 120_tc_62 this case does not involve a deficiency or an understatement_of_tax and therefore relief under sec_6015 and c is not available to petitioner ii relief under sec_6015 where a spouse does not qualify for relief under sec_6015 or c the irs may relieve an individual from joint_and_several_liability under sec_6015 if taking into account all the facts and circumstances it is inequitable to hold the taxpayer liable for any unpaid tax or deficiency in the case of an individual who requests equitable relief under sec_6015 sec_6015 gives jurisdiction to the court to determine the appropriate relief available to the individual under this section the court will apply a de novo scope and standard of review 132_tc_203 as contemplated by sec_6015 the commissioner has prescribed guidelines in revproc_2003_61 2003_2_cb_296 to be used in determining whether an individual qualifies for relief under that section the court also uses the guidelines in analyzing cases under sec_6015 see washington v commissioner supra revproc_2003_61 sec_4 c b pincite sets forth seven threshold conditions that must be 3the tax relief and health care act of trhca publaw_109_432 div c sec_408 120_stat_3061 amended sec_6015 to provide that this court may review the commissioner’s denial of relief under sec_6015 in any case where an individual requested relief under sec_6015 the amendment applies with respect to liability for taxes arising or remaining unpaid on or after the date of the enactment of this act id sec_408 120_stat_3062 the date of enactment of the trhca was date 4rev proc 2003_2_cb_296 supersedes revproc_2000_15 2000_1_cb_447 the guidelines set forth in revproc_2003_61 supra are effective for requests for relief filed on or after date and for requests for relief pending as of date for which no preliminary determination_letter had been issued as of date id sec c b pincite satisfied before the commissioner will consider a request for equitable relief under sec_6015 a threshold conditions petitioner argues that she should be liable for only percent of the liabilities for the years at issue as provided in the divorce decree the seventh of the seven threshold conditions for relief however requires that the liability from which the requesting spouse seeks relief be attributable to the nonrequesting spouse unless one of four exceptions apply none of which is pertinent here petitioner is eligible for relief only from the part of the liability attributable to mr acoba with respect to that part of the liability the threshold conditions have been met b tier where the threshold conditions have been met revproc_2003_61 sec_4 c b pincite states that relief will ordinarily be granted with respect to underpayments of tax if all of the three so-called tier factors are satisfied respondent determined that petitioner satisfied only one of the tier factors that the requesting spouse was no longer married to the 5there is an exception for abuse before the return was signed as a result of which the requesting spouse did not challenge the treatment of items on the return there is an allegation of abuse here that does not meet these requirements see infra pp nonrequesting spouse when relief was requested id sec_4 a c b pincite the other two requirements are that the requesting spouse on the date of signing the joint_return had no knowledge or reason to know that the nonrequesting spouse would not pay the income_tax_liability and the requesting spouse will suffer economic hardship if the irs does not grant relief petitioner admitted at trial that at the time she signed the returns at issue she knew that her husband would not pay the liabilities reported on them petitioner does not satisfy all the tier requirements of revproc_2003_61 sec_4 c tier where the requesting spouse has satisfied the threshold conditions of revproc_2003_61 sec_4 but does not qualify for relief under revproc_2003_61 sec_4 a determination may nevertheless be made under revproc_2003_61 sec_4 c b pincite to grant relief revproc_2003_61 sec_4 contains a nonexhaustive list of factors so-called tier factors that the irs will consider and weigh when determining whether to grant equitable relief under sec_6015 marital status economic hardship whether the requesting spouse did not know and had no reason to know that the nonrequesting spouse would not pay the income_tax_liability the nonrequesting spouse’s legal_obligation significant benefit compliance with income_tax laws abuse and mental or physical health respondent after considering the tier factors found that those not favoring relief outweighed those favoring relief the court after examining the same factors agrees with respondent petitioner was divorced from mr acoba when she requested relief this factor weighs in favor of relief see banderas v commissioner tcmemo_2007_129 economic hardship applies if satisfaction of the tax_liability in whole or in part will cause an individual taxpayer to be unable to pay his or her reasonable basic living_expenses sec_301_6343-1 proced admin regs the determination of a reasonable amount for basic living_expenses will be made by the irs and will vary according to the unique circumstances of the individual taxpayer see revproc_2003_ sec_4 a ii c b pincite referring to revproc_2003_61 sec_4 c citing sec_301_6343-1 proced admin regs in the form questionnaire for requesting spouse that petitioner submitted with her form_8857 petitioner showed that her income exceeded her reasonable basic living_expenses by dollar_figure per month petitioner testified that she owed dollar_figure because of a civil suit but had approximately dollar_figure of equity in her home she testified at trial that her financial situation had changed for the worse since she filed for relief but she offered no other evidence on the issue on the basis of the evidence that was presented the court finds that petitioner would not suffer economic hardship as that term is defined in sec_301 b i proced admin regs if she were required to pay the joint tax_liability the court finds that this factor weighs against relief another tier factor to be considered is whether the requesting spouse did not know or had no reason to know that the nonrequesting spouse would not pay the liability revproc_2003_61 sec_4 a iii a c b pincite in the case of a properly reported but unpaid liability the relevant knowledge is whether the taxpayer knew or had reason to know when the return was signed that the tax would not be paid see washington v commissioner t c pincite see also feldman v commissioner tcmemo_2003_201 affd 152_fedappx_622 9th cir the court has stated that a reasonable belief that taxes would be paid must at minimum incorporate a belief that funds would be on hand within a reasonably prompt period of time see banderas v commissioner supra but see id n the court has found against petitioner on this factor therefore this factor weighs against relief see beatty v commissioner tcmemo_2007_167 applying revproc_2003_61 supra and finding that knowledge or reason to know weighs against relief fox v commissioner tcmemo_2006_22 same cf levy v commissioner tcmemo_2005_92 applying revproc_2000_15 2000_1_cb_447 and stating that lack of knowledge weighs in favor of relief while knowledge or reason to know weighs against relief where the nonrequesting spouse has a legal_obligation to pay the outstanding income_tax_liability pursuant to a divorce decree or an agreement this factor weighs in favor of the requesting spouse revproc_2003_61 sec_4 a iv c b pincite there was no agreement which imposed a legal_obligation on mr acoba to pay all the outstanding income_tax liabilities this is a neutral factor where the requesting spouse significantly benefited beyond normal support from the unpaid income_tax_liability this is a factor against granting equitable relief revproc_2003_61 sec_4 a v c b pincite the facts and circumstances here show and the parties agree that petitioner did not receive any significant benefits beyond normal support from the failure to pay the taxes this factor weighs in favor of relief see 122_tc_32 vacated 439_f3d_1009 9th cir if petitioner made a good_faith effort to comply with income_tax laws following the years to which the request relates this factor may favor relief petitioner failed to file federal_income_tax returns for and she testified at one point that upon the advice of unnamed irs employees she did not file her returns her form and earlier testimony however were to the effect that with respect to the return she had a refund due of dollar_figure that i was withholding until the liability was separated she testified that if that was wrong i should have been told way before appeals the court concludes that petitioner did not make a good_faith effort to comply with the income_tax laws and this factor weighs against relief another tier factor to be considered is whether the requesting spouse was abused by the nonrequesting spouse a history of abuse may according to revproc_2003_61 sec_4 b i c b pincite mitigate a requesting spouse’s knowledge or reason to know the judgment of divorce contained an order restraining and enjoining mr acoba from assaulting harassing molesting or disturbing the peace of petitioner or their minor child but there is no evidence to indicate whether the restraining order was the result of historical abuse or was a prophylactic measure taken by the court as an outcome of the divorce 6under revproc_2000_15 supra abuse was a separate factor to be considered by itself not merely a mitigating factor id sec_4 c c b pincite see nihiser v commissioner tcmemo_2008_135 in part question of form the inquiry about abuse during the years at issue petitioner stated that the nature and extent of the abuse was verbal threats petitioner testified at trial that there was physical abuse and there was mental abuse during those last years of her marriage petitioner provided however no further evidence on the issue because petitioner had by her own admission actual knowledge that the taxes would not be paid whether she had reason to know is not at issue the record does not reveal any nexus between her actual knowledge and any verbal or physical abuse that may have been inflicted upon her the court finds the abuse factor will not weigh for or against equitable relief there is no evidence that petitioner has any mental or physical health problems and this factor will not weigh against equitable relief see revproc_2003_61 sec_4 b ii c b pincite conclusion there are three factors against and two factors in favor of relief the court’s analysis of these factors however is not mechanical nevertheless after weighing all the factors the court concludes that petitioner’s intimate involvement in the financial matters of the marriage and her knowledge of the protracted financial decline of the marriage should have put her on notice that filing a joint federal_income_tax return was for her a poor choice the court sustains respondent’s determination that petitioner is not entitled to relief from liability under sec_6015 to reflect the foregoing decision will be entered for respondent


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division uniform issue list aug - attention legend hospital a university b denomination c board d convention e foundation f affiliated health care provider g affiliated health care provider h affiliated health care provider l affiliated health care provider j affiliated health affiliated health care provider care provider m page affiliated health care provider n affiliated health care provider affiliated health o care provider p care provider q affiliated health directory s hospital z plan x plan y state aa convention bb country dd country cc this is in response to your request for a letter_ruling dated date submitted by your authorized representative that certain plans of hospital a constitute church plans within the meaning of sec_414 of the internal_revenue_code a letter dated date supplemented the request dear hospital a a charitable hospital that is tax-exempt under sec_501 of the code sponsors plan x and plan y for the benefit of its employees and employees of certain of its affiliated health care providers hospital a denomination c hospital a has sponsored plan x since september since january is listed in directory s the official directory of _and plan y from its inception all members of the board_of trustees of hospital a have been required to be members in good standing of registered denomination c churches hospital a has made annual reports to convention e as a denomination c entity since made up of denomination c member churches convention e is page hospital a then known as hospital z and university b asked convention e to in place both entities under one governing board in nomination of its board by changing from a board appointed by convention e to a board_of regents of which percent was appointed by convention e and all were required to be members of denomination c university b obtained a ruling that its tax-deferred annuity plan under sec_403 of the code continued to be a church_plan after the reorganization university b reorganized the on may hospital a separated from university b by amending its articles and bylaws to delete university b’s power to appoint the members of hospital a’s board and replacing it with the requirement that all board members must be members in good standing of a denomination c church hospital a as an entity of denomination c reports to convention e convention e is a tax- exempt_corporation organized under the laws of state aa and its members are members of denomination c churches located in state aa convention e is a convention or association of churches which is organized for purposes which are purely religious missionary educational and beneficent the carrying on of missionary work the support of public worship and the spread of the gospel of jesus christ throughout the world the education training and enlistment of the people and ministering to the needs of the sick helpless aged or infirm hospital a is closely tied to and supports convention e a further supports the furtherance of the training of ministers for denomination c churches through its chaplaincy program which is headed by a denomination c minister and which helps train seminary students to be denomination c chaplains all of hospital a's chaplains are currently certified to provide volunteer chaplain training hospital a's chaplaincy program has supported furthering the ministry of jesus christ by presenting of newborn infants in hospital a in chaplaincy program conducted visited thus hospital a and its chaplaincy program are actively involved in furthering the religious mission of denomination c also hospital a wrote of the chapters in a chaplain training program of convention e to parents of newborns in the chaplaincy program patients in hospital a in ‘ in addition hospital worship services in bibles to parents the and hospital a’s bylaws states that it was founded and continues to carry out a ministry of healing within the humanitarian charitable and religious aims and ideals of denomination c hospital a’s bylaws also state that a major objective of hospital a is to have a christian emphasis throughout its work hospital a as an entity of denomination c has followed denomination c principles and teachings regarding euthanasia and abortion hospital a’s affiliated hospitals adhere to the ethical policies and the guidelines for care that hospital a and denomination c provide as they pursue furthering the healing ministry of jesus christ hospital a receives financial support from foundation f which is governed and controlled by a board_of trustees which has percent of its members being members of denomination c churches all of the contributions received by hospital a are received through foundation f the funds held or invested by foundation f are invested and used to support hospital a in its furtherance of its mission to fulfill the healing ministry of jesus christ page upon dissolution the assets of hospital a pursuant to its agreement with university b will be allocated as follows percent towards continuation of health care services in the same community percent to university b and percent to convention e the assets would be distributed to continue to further the denomination c principle of furthering the healing ministry of jesus christ and to further other denomination c entities and their denomination c ideals and principles hospital a has a number of affiliated health care providers affiliates they are affiliated health care providers g h j l m n o p and q and foundation f hospital a controls the appointment of the boards of directors of each of the affiliated health care providers all participating affiliated health care providers are listed in directory s all of the affiliated health care providers are tax-exempt under sec_501 of the code each of the boards of the affiliated health care providers is appointed by hospital a’s board_of trustees which is composed solely of members of denomination c hospital a at all times while it has sponsored plan x and plan y has been listed in directory s an entity that is listed in directory s is considered to be associated with denomination c the only entities that participate in plan x are hospital a and affiliated health care providers g h and j the only entities that participate in plan y are hospital a foundation f and affiliated health care providers g h i j l m n o p andq a total of in plan y and employees eligible to participate in plan y are providing services in an unrelated_trade_or_business and none of them perform services solely for an unrelated business no employees participating in plan x provide services in an unrelated_trade_or_business persons are participants in plan x as of december persons are employed by hospital a and a total of persons participated no hospital a adheres to denomination c principles in its operations in that it does not permit any alcoholic beverages at any hospital a sponsored event and it participates in medical missions including those in country cc and country dd in resolving issues where medical_care and denomination c theology teachings or ethics overlap hospital a’s chief_executive_officer participates in the-annual meeting of chief executive officers of denomination c hospitals and hospital a has established an endowment for health related educational programs and for a student health center at university b it uses convention e assistance the administration of plan x and plan y will be the responsibility of their respective administrative committees that are appointed by the board_of trustees of hospital a or if the board approves by the president of hospital a the president of hospital a is appointed by the board_of trustees of hospital a all of whom are members in good standing of denomination c churches and can be removed by the board the administrative committees for plan x and plan y have as their primary function the administration of plan x and plan y respectively pursuant to the terms of article vii of plan x plan x is administered by the plan x administration committee sections and of plan x provide that the plan x administration committee shall have the full power authority and responsibility to construe and interpret plan x to determine benefits thereunder and to perform those other functions generally considered the duties of a plan_administrator plan x is a defined_benefit_plan intended to qualify under sec_401 of the code the administrative committee of pian x has been the administrator since prior to january page pursuant to the terms of article ix of plan y plan y is administered by the plan y administration committee commencing on and after january section of plan y provides that the plan y administrative committee is authorized to take actions necessary to carry out the provisions and purposes of plan y and has the discretionary authority to control and manage the operation and administration of the plan plan y is a tax-deferred annuity plan intended to qualify under sec_403 of the code plan y originally was invested only in a church retirement_income_account under sec_403 and was administered by board d effective as of january participants in plan y have the option to choose between investments in church retirement income accounts and regulated_investment_companies held in a custodial_account under sec_401 of the code in compliance with sec_403 plan y effective as of date is administered by an administrative committee appointed by and removable by the board_of trustees of hospital a and is no longer administered by board d plan y as originally adopted was only offered by board d to entities affiliated with convention bb hospital a still qualifies to participate in the sec_403 accounts offered by board d and in fact will continue to offer some of those funds along with the other investments that are now available _ the based on the foregoing you request rulings that plan x is a church_plan as defined in sec_414 of the code effective on and after january plan y after plan y’s funds are diversified to include investment in regulated_investment_companies under a custodial agreement and trust is a church_plan as defined in sec_414 of the code effective on and after january sec_414 of the code defines a church_plan as a plan established and maintained for its employees or their beneficiaries by a church or by a convention or association of churches which is exempt from taxation under sec_501 of the code sec_414 was added to the code by sec_1015 of the employee_retirement_income_security_act_of_1974 erisa public law’93-406 1974_3_cb_1 enacted date sec_1017 of erisa provides that sec_414 applied as of the date of erisa’s enactment however sec_414 was amended by sec_407 of the multiemployer pension_plan amendments act of public law to provide that sec_414 was effective as of date sec_414 of the code provides that a plan established and maintained for its employees or their beneficiaries by a church or by a convention or association of churches sec_414 of the code provides that the term church_plan does not include a plan a which is established and maintained primarily for the benefit of employees or their beneficiaries of a church_or_convention_or_association_of_churches who are employed in connection with one or more unrelated trades_or_businesses within the meaning of sec_513 or b if less than substantially_all of the individuals included in the plan are church employees as described in sec_414 or sec_414 includes a plan maintained by an organization whether a civil law corporation or otherwise page the principal purpose or function of which is the administration or funding of a plan or program for the provision of retirement benefits or welfare benefits or both for the employees of a church or a convention or association of churches if such organization is controlled by or associated with a church or a convention or association of churches sec_414 of the code defines employee to include a duly ordained commissioned or licensed minister of a church in the exercise of his or her ministry regardless of the source of his or her compensation and an employee of an organization whether a civil law corporation or otherwise which is exempt from tax under sec_501 and which is controlled by or associated with a church or a convention or association of churches sec_414 of the code provides that a church or a convention or association of churches which is exempt from tax under sec_501 shall be deemed the employer of any individual included as an employee under subparagraph b sec_414 of the code provides that an organization whether a civil law corporation or otherwise is associated with a church or a convention or association of churches if it shares common religious bonds and convictions with that church_or_convention_or_association_of_churches in order for an organization to have a qualified church_plan it must establish that its employees are employees or deemed employees of the church_or_convention_or_association_of_churches under sec_414 of the code by virtue of the organization's affiliation with the church_or_convention_or_association_of_churches and that the plan will be administered by an organization of the type described in sec_414 hospital a and its affiliates are organizations described in sec_501 of the code that are exempt from tax under sec_501 hospital a and its affiliates are associated with denomination c by virtue of sharing common religious bonds and convictions as evidenced by the following a hospital a at all times while it sponsored plans x and y was listed in directory s and hospital a’ s bylaws provide that hospital a is required to operate in a manner consistent with the philosophy teachings and practices of denomination c members of the board_of trustees of hospital a must be members of denomination c churches from and after the date of the inception of plan x and plan y hospital a has been an organization which has been associated with denomination c furthermore based on the facts you submitted concerning the participants in plan x and in addition hospital a is associated with convention e a convention or association of churches hospital a as an entity of denomination c reports to convention e convention e's members are members of denomination c churches convention e is organized for purposes which are purely religious missionary educational and beneficent the carrying on of missionary work the support of public worship and the spread of the gospel of jesus christ throughout the world the education training and enlistment of the people and ministering to the needs of the sick helpless aged or infirm hospital a is closely tied to and supports convention e plan y plan x and plan y are not maintained primarily for the benefits of employees who page are employed in connection with one or more unrelated trades_or_businesses and substantially_all of the individuals included in plan x and plan y are considered to be church employees as defined in sec_414 of the code also in the case of a plan established by an organization that is not itself a church ora convention or association of churches but is associated with a church_or_convention_or_association_of_churches as described in sec_414 the organization must establish that its plan is established and maintained by a church or a convention or association of churches or by an organization described in sec_414 of the code since hospital a is not in itself a church or a convention or association of churches plans x and y must be maintained by an organization described in sec_414 of the code to be described in sec_414 of the code an organization must have as its principal purpose the administration of the plan and must also be controlled by or associated with a church or a convention or association of churches as represented above the administration of plan x and plan y will be the responsibility of their respective administrative committees which are appointed by the board_of trustees of hospital a or if the board approves by the president of hospital a the administrative committee of plan x has been the administrator since prior to january and the administrator of plan y has been the administrator since january administrative committees of plan x and plan y are fully controlled by hospital a through its board_of trustees which is composed of members in good standing of denomination c churches the administrative committees thus share common religious bonds and convictions with denomination c and therefore are considered associated with denomination c for purposes of the church_plan rules since the primary purpose of the administrative committees is the administration of plan x and plan y the administrative committees constitute organizations described in sec_414 of the code thus the accordingly with respect to your first ruling_request we conclude that plan x is a church_plan as defined in sec_414 of the code effective on and after january regarding ruling_request number two a plan which would otherwise meet the definition of a church_plan under sec_414 of the code will not be considered other than a church_plan due to the diversification of assets as described in this ruling accordingly with respect to your second ruling_request we conclude that plan y after plan y’s funds are diversified to include investment in regulated_investment_companies under a custodial agreement and trust is a church_plan as defined in sec_414 of the code effective on and after january the above rulings are based on the assumption that plan x will be otherwise qualified under sec_401 of the code and the related trusts will be tax exempt under sec_501 at the time the above transaction takes place no opinion is expressed as to the federal tax consequences of the transaction described the above rulings are based on the assumption that plan y will otherwise meet the requirements of sec_403 at the time that the above transaction takes place above under any other provisions of the code page this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited by others as precedent a copy of this letter is being sent to your authorized representative in accordance with a power_of_attorney on file in this office please contact id - at - not a toll-free number if you have any questions concerning this letter_ruling sincerely yours frances v sloan manager employee_plans technical group enclosures notice of intention to disclose deleted copy of ruling cc


internal_revenue_service number release date index number 468a ----------------------------- ---------------------------------------- ------------------------------ ---------------------------- ----------------------- - 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 b6 plr-113887-06 date date re ------------------------------------------------- --------------------------------------------------- legend taxpayer plant parent director ------------------------------ --------------------------------------------------------------------------------- --------------------------------------------------- -------------------------------- -------------------------------- -------------------------------- ---------------------------------------------------------------------------------- -------------------------------------- -------------------------------------------- ----------------------------------------------------- ------ ---------------------- -------------------------------------------------------------------- --------------------------------------------------------------------------------- location commission a commission b state method order a order b ---------------------------------------------------------------------------------------------------------------- fund dear ---------------- ------------------------------------------ plr-113887-06 this letter responds to your request dated date for a revised schedule of ruling amounts pursuant to ' 468a-3 i of the income_tax regulations taxpayer was previously granted schedules of ruling amounts on ------------------------ commission a and ---------------------- commission b information was submitted pursuant to ' 468a-3 h as set forth more fully below taxpayer now seeks a revised schedule of ruling amounts because the previous schedule was limited to five years taxpayer represents the facts and information relating to its request for a revised schedule of ruling amounts as follows taxpayer incorporated under the laws of state is wholly owned by parent parent files a consolidated_return that includes taxpayer taxpayer has an ownership_interest of --------percent and a leasehold interest of --------percent creating a total interest of --------percent in the plant taxpayer is obligated to pay all expenditures_for the construction operation and maintenance of plant and is entitled to its proportionate share of the electric power produced thereby the plant is situated at location plant s operating license expires in ------- the estimated base cost for decommissioning plant is based on an independent study and the proposed method of decommissioning the plant is method taxpayer is subject_to the jurisdiction of commission a --------percent and commission b --------percent both commission a and commission b have authorized decommissioning costs to be included in taxpayer’s cost of service for ratemaking purposes there have been no new proceedings by either commission a or commission b since those discussed in the prior schedules referred to above further there are no pending proceedings before either commission a or commission b that may result in a change in the amount of decommissioning costs authorized to be included in taxpayer’s cost of service for ratemaking purposes commission a determined in order a that the decommissioning costs to be included in cost of service for ratemaking purposes would be dollar_figure--------------for ------- through ------- commission a estimated an after-tax rate of return on the fund assets of -------percent through ------- and -------thereafter commission a estimated taxpayer’s share of the total cost of decommissioning plant to be dollar_figure------------------in ------- dollars this base cost of decommissioning plant is escalated by commission at a ---------------- percent yearly rate resulting in a total future cost to taxpayer of decommissioning plant of dollar_figure------------------in ------- dollars commission b determined in order b that the decommissioning costs to be included in cost of service for ratemaking purposes would be dollar_figure------------for ------- plr-113887-06 through ------- and estimated an after-tax rate of return on the fund assets of -------- percent commission b estimated the total cost of decommissioning plant including taxpayer’s interest to be dollar_figure------------------in ------- dollars the funding_period for the plant extends from ------- through --------and the level_funding limitation period for the plant extends from ------- through-------- the estimated period for which the fund will be in effect is --- years ------- through ------- the estimated_useful_life of the plant is --- years --------through ------- thus the taxpayer has calculated its qualifying percentage to be-------percent neither commission a nor commission b took the changes made to sec_468a by section of the energy policy act of into account when estimating these costs payments made to a qualified decommissioning fund sec_468a provides that a taxpayer may elect to deduct the amount of sec_468a provides that no deduction shall be allowed for any payment to the nuclear decommissioning fund unless the taxpayer requests and receives from the secretary a schedule of ruling amounts the ruling_amount for any_tax year is defined under ' 468a d as the amount which the secretary determines to be necessary to fund that portion of nuclear decommissioning costs which bears the same ratio to the total nuclear decommissioning costs with respect to the nuclear power plant as the period for which the nuclear decommissioning fund is in effect bears to the estimated_useful_life of the plant this term is further defined to include the amount necessary to prevent excessive funding of nuclear decommissioning costs or funding of these costs at a rate more rapid than level_funding taking into account such discount rates as the secretary deems appropriate sec_468a provides that a taxpayer shall be deemed to have made a payment to the nuclear decommissioning fund on the last day of a taxable_year if the payment is made on account of such taxable_year and is made within months after the close of the tax_year sec_1_468a-1 provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as defined under ' 468a-1 b of the regulations is a taxpayer that has a qualifying interest in among other things a direct ownership_interest sec_1_468a-2 provides that the maximum amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year shall not exceed the lesser_of the cost of service amount applicable to the nuclear plr-113887-06 decommissioning fund for such tax_year or the ruling_amount applicable to the nuclear decommissioning fund for such tax_year sec_1_468a-3 provides that in general a schedule of ruling amounts for a nuclear decommissioning fund is a ruling specifying annual payments that over the tax years remaining in the funding_period as of the date the schedule first applies will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding_period equal to and in no event more than the amount of decommissioning costs allocable to the fund sec_1_468a-3 provides that to the extent consistent with the principles and provisions of this section each schedule of ruling amounts shall be based on the reasonable assumptions and determinations used by the applicable public_utility commission in establishing or approving the amount of decommissioning costs to be included in the cost of service for ratemaking purposes under ' 468a-3 a the internal_revenue_service shall provide a schedule of ruling amounts identical to the schedule proposed by the taxpayer but no such schedule shall be provided by the service unless the taxpayer's proposed schedule is consistent with the principles and provisions of that section sec_1_468a-3 provides that in general the amount for any_tax year in the level_funding limitation period shall not be less than the ruling_amount for any earlier tax_year under ' 468a-3 b the level_funding limitation period begins on the first day of the first tax_year for which a deductible payment is made to the nuclear decommissioning fund and ends on the last day on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes sec_1_468a-3 provides that the amount of decommissioning costs allocable to a nuclear decommissioning fund is the taxpayer's share of the total estimated cost of decommissioning the nuclear power plant multiplied by the qualifying percentage sec_1_468a-3 provides that in general the total estimated cost of decommissioning a nuclear power plant is the reasonably estimated cost of decommissioning used by the applicable public_utility commission in establishing or approving the amount of these costs to be included in cost of service for ratemaking purposes sec_1_468a-3 provides that a taxpayer's share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning such plant multiplied by the taxpayer's qualifying interest in the plant under ' 468a-3 d the qualifying percentage for any nuclear decommissioning fund is equal to a fraction the numerator of which is the number of tax years in the plr-113887-06 estimated period for which the nuclear decommissioning fund is to be in effect and the denominator of which is the number of tax years in the estimated_useful_life of the applicable plant sec_1_468a-3 provides that the estimated period for which a nuclear decommissioning fund is to be in effect begins on the later of the first day of the first taxable_year for which a deductible payment is made to the nuclear decommissioning fund or deemed made or the first day of the taxable_year that includes the date that the nuclear power plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer's rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes according to ' 468a-3 e the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer's rate base sec_1_468a-3 provides that the estimated_useful_life of a nuclear power plant begins on the first day of the taxable_year that includes the date that the plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer's rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes according to ' 468a-3 e the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer's rate base sec_1_468a-3 provides that the internal_revenue_service shall not provide a taxpayer with a schedule of ruling amounts for any nuclear decommissioning fund unless the public_utility commission that establishes or approves the rates for electric energy generated by the plant has determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes and has disclosed the after-tax rate of return and any other assumptions and determinations used in establishing or approving the amount sec_1_468a-3 enumerates the information required to be contained in a request for a schedule of ruling amounts filed by a taxpayer in order to receive a ruling_amount for any taxable_year plr-113887-06 sec_1_468a-3 provides that any taxpayer that has previously obtained a schedule of ruling amounts can request a revised schedule of ruling amounts such a request must be made in accordance with the rules of ' 468a-3 h the internal_revenue_service shall not provide a revised schedule of ruling amounts applicable to a taxable_year in response to a request for a schedule of ruling amounts that is filed after the deemed payment deadline date for such taxable_year we have examined the representations and information submitted by the taxpayer in relation to the requirements set forth in ' 468a and the regulations thereunder based solely upon these representations of the facts we reach the following conclusions taxpayer has a qualifying interest in the plant and is therefore an eligible_taxpayer under ' 468a-1 b of the regulations commission has determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes as required by ' 468a-3 g of the regulations taxpayer as owner of the plant has calculated its share of the total decommissioning costs under ' 468a-3 d of the regulations taxpayer has determined that pursuant to ' 468a-3 d of the regulations the qualifying percentage is ----- percent taxpayer has proposed a schedule of ruling amounts which meets the requirements of 468a-3 a and of the regulations the annual payments specified in the proposed schedule of ruling amounts are based on the reasonable assumptions and determinations used by commission and will result in a projected fund balance at the end of the funding_period equal to or less than the amount of decommissioning costs allocable to the fund the maximum amount of cash payments made or deemed made to the fund during any_tax year is restricted to the lesser amount of the decommissioning costs applicable to the fund or the ruling applicable to the fund as set forth under ' 468a- b of the regulations taxpayer subject_to the jurisdiction of two public_utility commissions for ratemaking purposes has calculated its share of plr-113887-06 the total decommissioning costs as required by ' 468a- f of the regulations based solely on the determinations above we conclude that the taxpayer's proposed schedule of ruling amounts satisfies the requirements of ' 468a of the code year --------- --------- --------- --------- --------- approved schedule of ruling amounts commission a commission b --------------------- - - - - ---------------- ---------------- ---------------- ---------------- ---------------- total --------------------- ---------------- ---------------- ---------------- ---------------- approval of the schedule of ruling amounts is contingent on there being no change in the facts and circumstances known or assumed at the time the current ruling is issued if any of the events described in ' 468a-3 i iii occur in future years the taxpayer must request a review and revision of the schedule of ruling amounts generally the taxpayer is required to file such a request on or before the deemed payment deadline date for the first taxable_year in which the rates reflecting such action became effective when no such event occurs the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline of the tenth taxable_year following the close of the tax_year in which the most recent schedule of ruling amounts was received except as specifically determined above no opinion is expressed or implied concerning the federal_income_tax consequences of the transaction described above the approved schedule of ruling amounts is relevant only to those payments made to the fund payments allocable to any funds other than the fund cannot qualify for purposes of the deduction under the provisions of ' 468a of the code payments made to such fund can qualify only to the extent that they do not exceed the lesser_of the decommissioning costs applicable to such fund or the ruling amounts applicable to this fund in the tax_year effective date amendments were made to sec_468a by the energy tax incentives act of publaw_109_58 119_stat_594 regulations based on these amendments are being developed but have not yet been proposed because the period to which the schedule of ruling amounts above relates began prior to the effective date of these amendments the discussion above is based on the law in effect prior to date however this ruling will be modified or revoked by the adoption of plr-113887-06 temporary or final regulations to the extent the regulations are inconsistent with any conclusion in the letter_ruling see section dollar_figure of revproc_2006_1 2006_1_irb_1 however when the criteria in section dollar_figure of revproc_2006_1 2006_1_irb_49 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer we are also sending a copy of this letter_ruling to the director pursuant to ' 468a-7 a a copy of this letter must be attached with the required election statement to the taxpayer's federal_income_tax return for each tax_year in which the taxpayer claims a deduction for payments made to the fund sincerely peter c friedman senior technician reviewer branch passthroughs special industries cc