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 ita plr-100402-16 date date re p sec_1 sec_2 sec_3 sec_4 sec_5 firm date ---------------------------------------------------------------- ------------------------------------------------------- --------------------------------------------- ------------------------------------------------------- ------------------------------------------------------------ ------------------------------------------------ ------------------------- -------------------------- dear ------------------ this letter responds to a letter dated date and subsequent correspondence submitted by p on behalf of sec_1 sec_2 sec_3 sec_4 and sec_5 hereinafter sec_1 sec_2 sec_3 sec_4 and sec_5 will be collectively referred to as taxpayer requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election not to deduct the additional first year depreciation under sec_168 of the internal_revenue_code for certain classes of qualified_property placed_in_service in the taxable_year ended date all references in this letter_ruling to sec_168 are treated as a reference to sec_168 as in effect on the day before the date of the enactment of the protecting americans from tax hikes act of path act enacted as part of the consolidated appropriations act division q publaw_114_113 129_stat_2242 date facts plr-100402-16 p represents that the facts are as follows p is the common parent of an affiliated_group_of_corporations including wholly- owned subsidiaries sec_1 sec_2 sec_3 sec_4 and sec_5 that files consolidated federal_income_tax returns with a taxable_year ending december taxpayer’s primary business activity is airline transportation during the taxable_year ended date sec_1 sec_2 sec_3 and sec_4 placed_in_service 5-year and 7-year_property and sec_5 placed_in_service 5-year_property these 5-year_property and 7-year_property are qualified_property as defined in sec_168 after consulting with firm p decided to make the election under sec_168 not to claim the percent additional first year depreciation for these classes of property and for taxpayer on p’s timely filed consolidated federal_income_tax return for the taxable_year ended date taxpayer did not claim the additional first year depreciation deduction for the following qualified_property 5-year_property placed_in_service by taxpayer and year property placed_in_service by sec_1 sec_2 sec_3 and sec_4 during the taxable_year ended date however p and taxpayer inadvertently failed to attach to such return as required by sec_1_168_k_-1 of the income_tax regulations the election statement not to claim the additional first year depreciation deduction for such classes of qualified_property ruling requested taxpayer requests an extension of time pursuant to sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to make the election not to deduct the additional first year depreciation under sec_168 for the following classes of property that qualify for additional first year depreciation 5-year_property placed_in_service by taxpayer and 7-year_property placed_in_service by sec_1 sec_2 sec_3 and sec_4 during the taxable_year ended date law and analysis sec_168 provides a 50-percent additional first year depreciation deduction for the placed- in-service year for qualified_property i acquired by a taxpayer after date and before date or after date or date for qualified_property described in sec_168 or c and before date and ii placed_in_service by the taxpayer before date or after date or date for qualified_property described in sec_168 or c and before date or date for qualified_property described in sec_168 or c plr-100402-16 sec_168 provides that a taxpayer may elect not to deduct the additional first year depreciation for any class of property placed_in_service during the taxable_year the term class of property is defined in sec_1_168_k_-1 as meaning in general each class of property described in sec_168 for example 5-year_property see section dollar_figure of revproc_2008_54 2008_2_cb_722 rules similar to the rules in sec_1_168_k_-1 for qualified_property or for 30-percent additional first year depreciation deduction apply for purposes of sec_168 as currently in effect sec_1_168_k_-1 provides that the election not to deduct additional first year depreciation must be made by the due_date including extensions of the federal tax_return for the taxable_year in which the property is placed_in_service by the taxpayer sec_1_168_k_-1 provides that the election not to deduct additional first year depreciation must be made in the manner prescribed on form_4562 depreciation and amortization and its instructions the instructions to form_4562 for the taxable_year ended date provide that the election not to deduct the additional first year depreciation is made by attaching a statement to the taxpayer’s timely filed tax_return indicating that the taxpayer is electing not to deduct the additional first year depreciation and the class of property for which the taxpayer is making the election under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election 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 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusions based solely on the facts and representations submitted we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied accordingly taxpayer is granted calendar days from the date of this letter to make the election not to deduct the additional first year depreciation under sec_168 for the following classes of property that qualify for additional first year depreciation 5-year_property placed_in_service by taxpayer and 7-year_property placed_in_service by sec_1 sec_2 sec_3 and sec_4 during the taxable_year ended date this election must be made by p filing an plr-100402-16 amended consolidated federal_income_tax return for that taxable_year with a statement indicating that taxpayer is electing not to deduct the additional first year depreciation for 5-year_property placed_in_service by taxpayer and for 7-year_property placed_in_service by sec_1 sec_2 sec_3 and sec_4 during that taxable_year except as specifically set forth above we express no opinion concerning the federal_income_tax consequences of the facts described above under any other provisions of the code including other subsections of sec_168 specifically no opinion is expressed or implied on whether any item of depreciable_property placed_in_service during the taxable_year ended date is eligible for the additional first year depreciation deduction this letter_ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney we are sending a copy of this letter_ruling to p’s authorized representative we also are sending a copy of this letter_ruling to the appropriate operating division director enclosures copy for sec_6110 purposes copy of this letter sincerely kathleen reed kathleen reed branch chief branch office of associate chief_counsel income_tax and accounting


t c memo united_states tax_court alan g bone and kathleen a bone petitioners v commissioner of internal revenue respondent jeffrey m guerrero and genedine r guerrero petitioners v commissioner of internal revenue respondent docket nos filed date james l mcdonald sr for petitioners larry d anderson for respondent memorandum findings_of_fact and opinion gerber judge in separate notices of deficiency ’ respondent determined deficiencies in petitioners’ income taxes as follows ' these cases have been consolidated for purposes of trial briefing and opinion -- - docket no year deficiency dollar_figure big_number after concessions ’ the issues for our consideration are whether a j concrete services inc ajcs is entitled to deduct dollar_figure in expenses whether ajcs overreported its income by dollar_figure whether ajcs is entitled to a dollar_figure deduction for accrued workmen’s compensation expense unless otherwise indicated all section references are to the internal_revenue_code in effect for the periods under consideration and all rule references are to the tax_court rules_of_practice and procedure findings_of_fact petitioners jeffrey and genedine guerrero resided pincite osprey pointe woodstock georgia on the date their petition was filed petitioners alan and kathleen bone resided pincite north lake drive canton georgia at the time their petition was filed respondent concedes that a j concrete services inc ajcs is entitled to dollar_figure in for costs of goods sold this represents the depreciation that ajcs claimed on concrete forming devices the parties’ stipulation of facts is incorporated by this reference we also incorporate by this reference our findings_of_fact in a j concrete pumping inc v commissioner tcmemo_2001_42 and guerrero v commissioner tcmemo_2001_44 a j concrete services and the four affiliates alan bone mr bone and jeffrey guerrero mr guerrero owned percent and percent respectively of ajcs an sdollar_figurecorporation incorporated in and engaged in the business of supplying construction forming equipment and materials to various contractors ajcs a calendar_year taxpayer maintained its books on the percentage_of_completion_method for financial_accounting purposes and the completed_contract_method for tax purposes as of date ajcs owned ongoing construction contracts with a total value of dollar_figure and estimated projected gross_profits of dollar_figure ajcs’ schedule of contracts reflects that as of date it had dollar_figure of recognized gross_profit on its partially completed contracts on date ajcs transferred its incomplete contracts to four c corporations a j concrete forming of georgia inc georgia a j concrete forming central inc petitioners object to this finding of fact and contend that ajcs utilized its own construction forming forms not equipment in the business of concrete forming services our finding however was agreed to and stipulated by the parties a party is not permitted to contradict a stipulation in whole or in part except in the interest of justice see rule 91l e 87_tc_1451 we do not find any injustice to petitioners here and hold the parties to their stipulation q4e- central a j concrete forming east inc east and a j concrete forming west inc west the stock ownership of these four affiliates was as follows georgia was owned percent by mr guerrero percent by jeff klewein and percent by jeff hoylman central was owned percent by jeff klewein percent by rick klewein and percent by dave entinghe east was owned percent by rick klewein percent by mr bone and percent by robb webb and west was owned percent by jeff klewein percent by mr bone and percent by ken ritter on its tax_return ajcs reported the dollar_figure it had recognized on its partially completed contracts on its tax_return ajcs claimed deductions on line totaling dollar_figure after transferring all of its outstanding contracts to the affiliates ajcs was no longer in the construction forming business ajcs’s primary business after the transfer of the contracts was to provide management services to the four affiliates that were performing on the contracts under agreements ajcs was entitled to charge each affiliate fora portion of ajcs’s general and administrative expenses_incurred in again petitioners object to this finding as misleading despite the fact that it was taken verbatim from the stipulation of facts the term affiliate is used for convenience and is not meant to connote affiliate as it is defined with regard to the application of any internal_revenue_code section - - providing management services to the four affiliates plus a markup percentage in the 3-percent range ajcs was entitled to receive the management fees at the time the affiliates completed the contracts all four affiliates used the completed_contract_method to report income for federal tax purposes for the affiliates’ tax years ending in they reported gross_income as follows affiliate tye gross_income west date dollar_figure georgia date big_number central date --q- rast date big_number georgia deducted dollar_figure as management fees paid to ajcs on its date tax_return central deducted dollar_figure as management fees paid to ajcs on its date tax_return ajcs did not report any management fee income on its tax_return the four affiliates extended loans to ajcs during the calendar_year as of the end of the tax_year the affiliates had outstanding loans to ajcs as follows affiliate loan amount west -o- georgia dollar_figure central big_number rast big_number ajcs reported taxable_income of dollar_figure dollar_figure and dollar_figure for the and tax years respectively ajcs’s and the four affiliates’ schedule of contracts for the - - calendar_year shows a recognized gross_profit of dollar_figure the combined operating loss reflected on the combined income statement for ajcs and the four affiliates is dollar_figure on the combined financial statements and independent auditors report ajcs’s and the four affiliates’ combined statement of earnings is also listed as a loss of dollar_figure ajcs for federal tax purposes reported a dollar_figure loss for its tax_year the four affiliates reported federal tax losses for the tax_year ending as follows affiliate reported loss west dollar_figure georgia big_number central big_number rast -o- the combined federal tax loss reported for the calendar_year by ajcs and the four affiliates is dollar_figure ’ ajcs and the four affiliates reported tax losses in their subsequent reporting periods as follows company tye reported loss ajcs date s577 west date big_number georgia date big_number central date big_number rast date big_number the schedules l balance_sheet attached to ajcs’s and tax returns do not reflect the same ending figures as the amounts reflected for the beginning figures with respect ’ aics and the four affiliates did not file a consolidated_return for the tax periods under consideration - to its assets reported on line and its liabilities reported on line on its schedule m-1 reconciliation of income loss per books with income loss per return ajcs reported a loss of dollar_figure which represents the combined income for ajcs and the four affiliates respondent determined that dollar_figure of the dollar_figure deducted on ajcs’s tax_return was expended for completing the contracts that had been transferred to the four affiliate corporations workmen’s compensation expenses in ajcs had transferred its contracts to the four affiliates and as a result had no employees performing concrete forming work ajcs however deducted dollar_figure as insurance on line of its return ajcs accrued dollar_figure as a workmen’s compensation insurance liability on its return in computing its taxable_income ajcs reversed the workmen’s compensation accrual ajcs made payments of approximately dollar_figure to various insurance_companies west and georgia for their years ended date and and central for its years ended date and did not claim a workmen’s compensation or insurance expense on line of the corporate federal tax returns west reported a relatively large amount of cost_of_goods_sold but no breakdown was provided to reflect whether - - workmen’s compensation or insurance expense had been claimed within cost_of_goods_sold rast was the only affiliate that was shown to have deducted an insurance expense for workmen’s compensation east’s short_year return for the period ended date reflects a dollar_figure deduction on line for w c insurance and east’s schedule m-1 reflects a w c accrual of dollar_figure no workmen’s compensation insurance deduction is listed on east’s date return opinion petitioners were the shareholders of ajcs an s_corporation accordingly any adjustment to ajcs flows through to petitioners respondent determined that several adjustments were necessary to items reported on ajcs’s return resulting in flowthrough adjustments and income_tax deficiencies for petitioners’ taxable_year it ajcs’s expenditures in connection with the contracts transferred to the affiliates the first issue for our consideration is whether ajcs’s expenditure of dollar_figure is deductible as ajcs’s ordinary and necessary business_expenses or whether those expense obligations pertained to the four affiliates with respect to the dollar_figure adjustment respondent has abandoned his alternative argument under which allocations of the dollar_figure in expenses would have been made to the four continued - sec_162 allows a deduction for all ordinary and necessary expenses_incurred in carrying_on_a_trade_or_business as a general_rule payment by one taxpayer of the obligation of another taxpayer is not an ordinary_and_necessary_expense see 290_us_111 generally courts have held that where one taxpayer pays expenses on behalf of another taxpayer the expenses are not deductible see 308_us_488 881_f2d_336 6th cir affg tcmemo_1988_180 respondent contends that ajcs’s claimed dollar_figure deduction on its tax_return represents expenses that ajcs paid to complete the construction projects that had been transferred to the four affiliates and therefore are not deductible expenses of ajucs petitioners agree that the expenses paid_by ajcs were in aid of the completion of the transferred contracts of the four affiliates nevertheless petitioners advance several arguments in support of the position that the expenses are deductible by ajcs first petitioners argue that the facts of this case fit within the narrow exception carved out by this court in 48_tc_679 in lohrke we held that a taxpayer may deduct the expenses of another taxpayer in continued affiliates operational entities pursuant to sec_482 -- - situations in which the taxpayer’s payment of the business_expenses of another serves to protect or promote the taxpayer’s own business id pincite ajcs must show that its motive for paying the affiliates’ expenses was in furtherance or promotion of ajcs’s trade_or_business see id pincite secondly ajcs must show that the expenses are ordinary and necessary expenditures in furtherance of its trade_or_business and not just in furtherance of the affiliates’ trade_or_business see id to determine ajcs’s motive for payment of the affiliates’ expenses we can consider whether there is a clear proximate danger to the taxpayer and a payment made to protect an existing business from harm 410_f2d_1233 the deduction is not available if the paying taxpayer fails to demonstrate a direct nexus between the purpose of the payment and the taxpayer’s business or income-producing activities see 606_f2d_534 5th cir in an attempt to come within this narrow exception petitioners argue that ajcs was bound by contract to pay the costs of completing the contracts and further that the affiliates could not afford the expenses we find petitioners’ arguments unpersuasive petitioners also point out that ajcs was under contract with the affiliates to transfer the contracts and also to pay the expenses in connection with the transferred contracts this contract offered by petitioners was unsigned and undated and is lacking in the usual earmarks of a contract that has been negotiated at arm’s length in addition mr bone and mr guerrero owned significant interests in the affiliates without further explanation the proffered document appears to be little more than an attempt to assign expenses from one related_taxpayer to another more significantly petitioners have not shown that ajcs had a valid business reason for agreeing to pay the costs to complete contracts from which it would not automatically or directly receive any part of the gross_proceeds by way of contrast the amounts of the affiliates’ expenses paid_by ajcs are substantially more than the management services fees that it could have earned or did earn there was no reasonable expectation of recovery by ajcs of enhancement to its business through those expenditures accordingly we find unpersuasive petitioners’ evidence that ajcs was contractually bound to pay the expenses of the affiliates or that any such payment of expenses by ajcs would have furthered or promoted ajcs’s trade_or_business petitioners also argue that the four affiliates could not afford to pay their own expenses that argument is directly contradicted by the record during the period in question three of the four affiliates lent money to ajcs in their first fiscal_year which to some extent paralleled ajcs’s taxable_year ’ the affiliates’ returns disclose outstanding loans to ajcs at the end of their fiscal years totaling more than dollar_figure this fact undermines petitioners’ argument that the affiliates were unable to pay their own expenses arguably some of ajcs’s payments of the affiliates’ expenses could have conferred some benefit on ajcs petitioners however have not shown any such benefit and have failed to show that they satisfied the lohrke test petitioners also argue that ajcs was entitled to deduct the expenses because ajcs could not allocate its general and administrative expenses among the various contracts transferred to the affiliates at trial john snider ajcs’s chief financial officer testified that the affiliates paid ajcs a fee based on the proportional overhead that applies to the revenue and expenses and the overhead for general and administrative expenses was charged to the affiliates based on their revenues accordingly petitioners’ contention that ajcs could not allocate its general and administrative expenses to each transferred contract is in effect incorrect petitioners contend that the amounts listed as loans on the affiliates’ tax returns are actually intercompany accrued expenses reimbursements so as to track what each affiliate and ajcs owed each other petitioners have not presented corroborative evidence to support their characterization petitioners also make the argument that they were advised by their respective professionals that the spin-off of the open jobs in process for would be tax-free pursuant to sec_355 and it was the specific intention of the shareholders of ajcs to avoid a taxable transaction this argument is not supported in the record petitioners have not shown that ajcs’s transfer of its contracts qualified as a tax-free reorganization or spinoff more importantly whether ajcs’s transfer of open jobs in process gualifies as a tax-free reorganization has no bearing on whether ajcs is entitled to deduct the expenses paid on behalf of other corporations petitioners also cited several cases without attempting to analyze the facts and law of those cases and how they apply to the facts and circumstances in our record petitioners cite 309_f2d_525 9th cir and 435_us_561 those cases deal with the claim_of_right_doctrine anda sale_and_leaseback respectively we fail to see the relevance of the above-referenced cases to the dispute currently before us in the absence of any analysis or explanation by petitioners we find these case citations unhelpful petitioners also attempted to show that respondent’s determination is in error by attempting to show that respondent’s revenue agent’s examination may have been inadequate petitioners have not shown that respondent’s determination is without substance or that it would be appropriate to go behind the notices of deficiency petitioners’ attempt to discredit respondent’s agent appears to be a detour or distraction from petitioners’ failure to present facts and or law that would show their entitlement to the claimed items on the basis of the foregoing we hold that petitioners have failed to show that they are entitled to deduct the expenses paid_by ajcs on behalf of the affiliates accordingly we sustain respondent’s determination that ajcs is not entitled to deduct expenses of dollar_figure that were expenses of the four newly formed affiliates il did ajcs erroneously overstate its income next we consider petitioners’ contention that ajcs overstated its income by dollar_figure on brief and for the first time in the course of the trial petitioners raised an issue as to whether ajcs’s income was overstated because the four affiliates may have mistakenly reported the same income although petitioners included an allegation on this point in their petitions it was not addressed in the opening statement at trial and accordingly was not tried by consent and was untimely we must make assumptions because this matter was not factually developed we assume that petitioners’ argument is based on their factual assumption that contract gross incomes reported by ajcs for periods prior to transfer were also reported by the affiliates -- - raised see 59_tc_551 even if petitioners had timely raised this issue it is well established that the person who earns or otherwise creates the right to receive income is taxed see 281_us_111 the assignment_of_income_doctrine requires compensation to be taxed to the person who earns it regardless of the anticipatory arrangements and contracts however skillfully devised see 104_tc_140 ajcs earned the income at issue even though it might have been erroneously reported by others accordingly ajcs may not reduce its income by dollar_figure til workmen’s compensation insurance expenses finally we consider petitioners’ contention that ajcs is entitled to deduct dollar_figure in workmen’s compensation insurance expenses for its tax_year sec_162 allows a deduction for all the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business under sec_6001 and sec_1_6001-1 and b income_tax regs a taxpayer must keep such permanent books of account or records as are sufficient to establish the amount of gross_income deductions credits or other matters reguired to be shown on the tax_return -- - petitioners must show ajcs’s entitlement to the claimed deduction see rule a petitioners allege in their petitions that they are entitled to deduct accrued workmen’s compensation expenses of dollar_figure respondent contends that under sec_461 petitioners are not entitled to the disputed workmen’s compensation insurance expense deductions because petitioners failed to substantiate that the expenses were incurred petitioners in their posttrial brief state as follows ajcs is also entitled to an additional insurance expense of dollar_figure per sec_162 as this expense was for workers’ compensation insurance premiums not for tort worker’s compensation claims that are not allowed until paid per sec_461 at trial petitioners’ counsel posed to john snider chief financial officer of ajcs a series of generalized questions about workmen’s compensation insurance that is the extent of petitioners’ arguments and proof petitioners made no attempt to explain various exhibits they submitted regarding this issue petitioners submitted copies of checks written from ajcs to various insurance_companies these checks totaled approximately dollar_figure petitioners also offered copies of checks remitted by w j inc to various insurance_companies these checks totaled over dollar_figure on this record we remain unaware of the relevance of checks remitted by w j inc finally petitioners have not provided the means for the court to delineate which insurance payments if any ajcs is entitled to deduct or were ordinary and necessary expenses of ajcs’s business another complicating factor is that ajcs claimed insurance expenses under several different categories on its tax returns it is impossible to tell from the evidence whether the checks petitioners submitted are already claimed on ajcs’s tax_return as insurance under other deductions or whether they are included in other general categories finally the record in this case does not reveal whether the amounts in dispute are ajcs’s expenses or more properly those of the affiliates petitioners have failed to show that ajcs is entitled to deduct workmen’s compensation expenses of dollar_figure and accordingly we hold for respondent on this issue ‘t considering the fact that ajcs transferred its construction contracts to the four affiliates at the beginning of and began operating solely as a management company it is more likely that the affiliates and not ajcs incurred ordinary and necessary workmen’s compensation insurance expense we must note however that east was the only affiliate that obviously claimed a deduction for workmen’s compensation insurance during the period under consideration ‘2 respondent also contends that ajcs is not entitled to the deduction because there had been no economic_performance as required by sec_461 and the regulations thereunder because of our conclusion above however it is unnecessary for us to consider this argument -- - we have considered all other arguments of the parties and to the extent not addressed herein we find them to be moot without merit or irrelevant to reflect the foregoing decisions will be entered under rule


internal_revenue_service number release date index numbers department of the treasury washington dc person to contact telephone number refer reply to cc corp - plr-140796-02 date date legend purchaser target target sub sellers date a date b date c company official tax professional state x state y dear this letter responds to a letter dated date submitted on behalf of purchaser requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election purchaser is plr-140796-02 requesting an extension to file a sec_338 election under sec_338 with respect to purchaser’s acquisition of the stock of target sometimes hereinafter referred to as the election on date b additional information was received in submissions dated september and october and november and the material information is summarized below target is a state x corporation and owner of all the stock of target sub prior to the acquisition described below target and target sub were a consolidated_group acquiring is a state y corporation and the common parent of a consolidated_group on date a purchaser and sellers entered into a purchase agreement for purchaser to acquire all of the outstanding target stock from sellers on date b purchaser acquired all of the stock of target from sellers in exchange for acquiring stock pursuant to the purchase agreement the agreement was structured so as not to qualify as a reorganization as defined in sec_368 it is represented that purchaser’s acquisition of the stock of target qualified as a qualified_stock_purchase as defined in sec_338 purchaser is not seeking to make a sec_338 election for target sub purchaser intended to file the election the election was due on date c but for various reasons a valid election was not filed after the due_date for the election it was discovered that the election had not been filed subsequently this request was submitted under sec_301_9100-1 for an extension of time to file the election the period of limitations on assessment under sec_6501 has not expired for purchaser’s consolidated group’s or target’s consolidated group’s taxable years in which the acquisition occurred the taxable years in which the election should have been filed or any taxable years that would have been affected by the election had it been timely filed sec_338 permits certain stock purchases to be treated as asset acquisitions if the purchasing_corporation makes or is treated as having made a sec_338 election or a sec_338 election and the acquisition is a qualified_stock_purchase under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 plr-140796-02 in this case the time for filing the election is fixed by the regulations ie sec_1_338-2 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for purchaser to file the election provided purchaser acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by purchaser company official and tax professional explain the circumstances that resulted in the failure to timely file a valid election the information establishes that purchaser reasonably relied on a qualified_tax professional who failed to make or advise purchaser to make the election and that the interests of the government will not be prejudiced if relief is granted see sec_301_9100-3 based on the facts and information submitted including the representations made we conclude that purchaser has shown it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time is granted under sec_301_9100-1 until days from the date on this letter for purchaser to file the election with respect to the acquisition of the stock of target as described above within days of the date on this letter purchaser must file the election on form_8023 executed on or after the date on this letter in accordance with sec_1_338-2 and the instructions to the form a copy of this letter must be attached to form_8023 within days of the date on this letter all relevant parties must file or amend as applicable all returns and amended returns if any necessary to report the transaction as a sec_338 transaction for the taxable_year in which the transaction was consummated and for any other affected_taxable_year a copy of this letter and a copy of form_8023 must be attached to the returns the above extension of time is conditioned on the taxpayers' purchaser's consolidated group’s and target’s consolidated group’s tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers’ tax_liability for the years involved a determination thereof will be made by the applicable director’s office upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers’ tax_liability is lower sec_301_9100-3 plr-140796-02 we express no opinion as to whether the acquisition of the target stock qualifies as a qualified_stock_purchase under sec_338 or any other tax consequences arising from the election in addition we express no opinion as to the tax consequences of filing the election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-1 we relied on certain statements and representations made by the taxpayers however the director should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-1 to file the election penalties and interest that would otherwise be applicable if any continue to apply this letter is directed only to the taxpayer s who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative sincerely yours ken cohen senior technician reviewer branch office of associate chief_counsel corporate


t c summary opinion united_states tax_court hilary harry sax petitioner v commissioner of internal revenue respondent docket no 8363-03s filed date hilary harry sax pro_se mindy s meigs for respondent pajak special_trial_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 the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined a deficiency in petitioner’s federal_income_tax in the amount of dollar_figure and a penalty under sec_6662 in the amount of dollar_figure petitioner conceded that he received long-term_capital_gain income in the amount of dollar_figure in received dollar_figure from social_security received interest_income in the amount of dollar_figure in is liable for an addition_to_tax for pursuant to sec_6651 and is liable for a penalty under sec_6662 after concessions by petitioner this court must decide whether petitioner is entitled to a deduction for expenses from schedule c profit or loss from business in the amount of dollar_figure some of the facts in this case have been stipulated and are so found petitioner resided in los angeles california at the time he filed his petition petitioner i sec_86 years old is an attorney and is currently an active member of the state bar of california petitioner graduated from harvard law school in he has been engaged in the practice of law for years in petitioner was a lawyer operating as a sole_proprietor on occasion he used the sax-brook structural building systems inc sax brook name for his own purposes petitioner requested an extension of time to file a form_1040 u s individual_income_tax_return return for which extension was approved to date on date petitioner untimely filed his return for attaching the relevant schedule c petitioner prepared the return himself he admitted it was a mistake to use the sax-brook name on his schedule c because sax-brook was inactive in and remained inactive until the time of trial petitioner claimed his business activities in were those of a lawyer sec_7491 does not apply in this case because petitioner did not meet the substantiation requirements petitioner received payments in the amount of dollar_figure from the social_security administration in petitioner failed to include any portion of these payments on his return petitioner was the president of sax-brook from to date of trial on date petitioner and a business_associate mr robert l timbrook organized the sax-brook corporation sax-brook was created in order to manufacture and sell building panels that could be used in new home construction mr timbrook had invented a panel made of inexpensive materials to be used in the construction of houses because the inexpensive materials would replace lumber including plywood used in building a house it was projected to be cost-effective unfortunately because the materials did not fit under the requirements of building codes petitioner could not sell the idea to investors the cost of getting building codes revised was prohibitive during petitioner wrote letters to individuals and entities in an attempt to cover the costs of obtaining building permits to build houses and to secure investors in order to begin manufacturing the building panels during sax-brook did not pay any employees or officers to perform services for the business petitioner was not reimbursed by sax-brook for any expenses_incurred by him in connection with the corporation during sax-brook did not file a corporate_income_tax return with respect to with the internal_revenue_service respondent in the notice_of_deficiency among other things disallowed petitioner’s schedule c deductions in full respondent determined that petitioner did not establish that the schedule c expenses were ordinary and necessary business_expenses and that he did not substantiate the expenses sec_162 allows a deduction for all the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business to be deductible as a business_expense the expenditure must relate to activities which constitute the current carrying on of an existing trade_or_business 55_tc_884 whether activities carried on by an individual can be characterized as a trade_or_business is a question of fact id pincite petitioner has the burden_of_proof rule a 290_us_111 deductions are strictly a matter of legislative grace 503_us_79 292_us_435 taxpayers must substantiate claimed deductions 65_tc_87 affd per curium 540_f2d_821 5th cir moreover taxpayers must keep sufficient records to establish the amounts of the deductions 43_tc_824 sec_1_6001-1 income_tax regs generally except as otherwise provided by sec_274 when evidence shows that a taxpayer incurred a deductible expense but the exact amount cannot be determined the court may approximate the amount bearing heavily if it chooses against the taxpayer whose inexactitude is of his own making 39_f2d_540 2d cir the court however must have some basis upon which an estimate can be made 85_tc_731 there are strict substantiation requirements under sec_274 for items such as travel_expenses and meals respondent stated that up to the date of trial petitioner provided no substantiation at trial petitioner offered no substantiation for any of the deductions petitioner did not have any books records receipts or other documents to substantiate expenses claimed on his schedule c petitioner also candidly admitted that we didn’t build anything in and that we were unable to raise the money to do business petitioner acknowledged that he did not maintain a separate bank account to pay expenses he did not maintain a business office he operated out of his own apartment he had no business records no books no checks and no receipts when asked about these he replied no i did not keep them we conclude that petitioner did not prove that the claimed deductions were his ordinary and necessary business_expenses we further conclude that petitioner failed to substantiate any schedule c expenses claimed as deductions in for these reasons the schedule c expenses are disallowed in full contentions we have not addressed are irrelevant moot or without merit reviewed and adopted as the report of the small_tax_case division decision will be entered for respondent


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp plr-130750-02 date date legend parent purchaser purchaser partnership target sellers date a date b date c plr-130750-02 company official tax professionals dear this letter responds to a letter dated date submitted on behalf of parent requesting a second extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election parent previously received an extension of time in a letter dated date plr-110200-02 publication parent is requesting a second extension to file a sec_338 election under sec_338 with respect to the acquisition of the stock of target sometimes hereinafter referred to as the election on date a all citations in this letter to regulations under sec_338 are to regulations in effect on date a parent failed to file the election by the extended due_date date b the material information is summarized below parent is the common parent of a consolidated_group purchaser is a wholly owned subsidiary of parent purchaser is an llc wholly owned by purchaser and disregarded as an entity separate from purchaser for federal_income_tax purposes target is a foreign_corporation wholly owned by partnership a domestic_partnership sellers were the only partners of partnership on date a pursuant to a purchase agreement of the same date purchaser and purchaser acquired all of sellers’ partnership interests in partnership in exchange for cash it is represented that the acquisition of target by means of the acquisition of all of the partnership interests in partnership qualified as a qualified_stock_purchase as defined in sec_338 prior to the acquisition target did not file a united_states income_tax return was not subject_to united_states income_taxation nor was required under sec_1_6012-2 to file a united_states income_tax return target is a controlled_foreign_corporation within the meaning of sec_957 target is not a passive_foreign_investment_company for which an election under sec_1295 was in effect or foreign_investment_company or foreign_corporation the stock ownership which is described in sec_552 plr-130750-02 parent intended to file the election pursuant to sec_1_338-2t d the election was due on date b however for various reasons a valid election was not filed after date b it was discovered that the election had not been filed subsequently a request was submitted under sec_301_9100-1 for an extension of time to file the election plr- granted an extension until date c to file the election however for various reasons the extended due_date was missed and this second request was submitted the period of limitations on assessment under sec_6501 has not expired for parent’s consolidated group’s or target’s taxable_year in which the acquisition occurred the taxable_year in which the election should have been filed or any taxable_year that would have been affected by the election had it been timely filed sec_338 permits certain stock purchases to be treated as asset acquisitions if the purchasing_corporation makes or is treated as having made a sec_338 election or a sec_338 election and the acquisition is a qualified_stock_purchase under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 in this case the time for filing the election is fixed by the regulations ie sec_1 2t d therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for parent to file the election provided parent acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by the parent company official and tax professionals explain the circumstances that resulted in the failure to timely file a valid election the information establishes that parent reasonably relied on a qualified_tax professional who failed to make or advise parent to make the election and that the government will not be prejudiced if relief is granted see sec_301 b v based on the facts and information submitted including the representations made we conclude that parent has shown it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the plr-130750-02 interests of the government accordingly a second extension of time is granted under sec_301_9100-1 until date for parent to file the election with respect to the acquisition of the stock of target as described above on or before august parent must file the election on form_8023 executed on or before date in accordance with sec_1_338-2t d and the instructions to the form a copy of this letter must be attached to form_8023 on or before august all relevant parties must file or amend as applicable all returns and amended returns if any necessary to report the transaction as a sec_338 transaction for the taxable_year in which the transaction was consummated and for any other affected_taxable_year a copy of this letter and a copy of form_8023 must be attached to the returns the above extension of time is conditioned on the taxpayers' parent’s consolidated group’s and target’s tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers’ tax_liability for the years involved a determination thereof will be made by the applicable director’s office upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers’ tax_liability is lower sec_301_9100-3 we express no opinion as to whether the acquisition of target’s stock qualifies as a qualified_stock_purchase under sec_338 or any other tax consequences arising from the election in addition we express no opinion as to the tax consequences of filing the election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-1 to file the election we relied on certain statements and representations made by the taxpayers however the director should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-1 to file the election penalties and interest that would otherwise be applicable if any continue to apply this letter is directed only to the taxpayer s who requested it sec_6110 provides that it may not be used or cited as precedent plr-130750-02 pursuant to the power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative sincerely yours ken cohen senior technician reviewer branch office of associate chief_counsel corporate


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 intl b02 plr-138066-13 date date ty ------ legend taxpayers corporation country x investment firm investment firm accountant year year year year year year date date ------------------------------------------ ------------------------------------------- ------------------------------- ---------- -------------------------- ----------------------------- ------------------- ------ ------ ------ ------ ------ ------ -------------------------- -------------------------- plr-138066-13 month business a country b ------------------- -------- ---------- dear ------------------------ this is in response to a letter dated date submitted by your authorized representative that requested the consent of the commissioner of the internal_revenue_service commissioner in order to make a retroactive qualified_electing_fund qef election under sec_1295 of the internal_revenue_code and sec_1_1295-3 with respect to corporation taxpayers were shareholders of corporation from year through year taxpayers acquired their shares of corporation in a series of transactions occurring in year year year year and year the shares were acquired through investment firm and investment firm in year corporation entered into a transaction year transaction and all of taxpayers’ shares in corporation were sold on date as part of the year transaction on date corporation issued an information circular to all shareholders notifying them of the likelihood that corporation was a pfic for year and all prior years taxpayers’ son who was also a shareholder of corporation learned of the information circular from another shareholder around the end of year until that time taxpayers were not aware that corporation was a passive_foreign_investment_company pfic and were also unaware of the availability of a qualified_electing_fund qef election prior issuance of the information circular in month taxpayers engaged attorney for advice regarding a qef election taxpayers are not tax professionals and have relied on accountant as their tax advisor concerning all applicable u s tax and filing obligations for many years accountant has been preparing u s individual income_tax returns as a certified_public_accountant for over twenty years taxpayers have submitted affidavits under penalties of perjury that describe the events that led to their failure to make a qef election with respect to corporation by the election due_date including the role of accountant taxpayers also submitted an affidavit from accountant describing accountant’s engagement responsibilities and failure to advise taxpayers to make a qef election for corporation plr-138066-13 taxpayers represent that as of the date of this request_for_ruling the pfic status of corporation has not been raised by the irs on audit for any of the taxable years at issue ruling requested taxpayers request the consent of the commissioner of the internal_revenue_service to make a retroactive qef election with respect to corporation for year and all subsequent years under sec_1_1295-3 law and analysis sec_1295 of the code provides that any pfic shall be treated as a qef with respect to a taxpayer if an election by the taxpayer under sec_1295 applies to such company for the taxable_year and the company complies with such requirements as the secretary may prescribe for purposes of determining the ordinary_earnings and net capital_gains of such company under sec_1295 a qef election may be made for any taxable_year at any time on or before the due_date determined with regard to extensions for filing the return for such taxable_year to the extent provided in regulations such an election may be made after such due_date if the taxpayer failed to make an election by the due_date because the taxpayer reasonably believed the company was not a pfic under sec_1_1295-3 a taxpayer may request the consent of the commissioner to make a retroactive qef election for a taxable_year if the shareholder reasonably relied on a qualified_tax professional within the meaning of sec_1_1295-3 granting consent will not prejudice the interests of the united_states government as provided in sec_1_1295-3 the request is made before a representative of the internal_revenue_service raises upon audit the pfic status of the corporation for any taxable_year of the shareholder and the shareholder satisfies the procedural requirements of sec_1_1295-3 the procedural requirements include filing a request for consent to make a retroactive election with and submitting a user_fee to the office of the associate chief_counsel international sec_1_1295-3 additionally affidavits signed under penalties of perjury must be submitted that describe the events which led to the failure to make a qef election by the election due_date the discovery of such failure plr-138066-13 the engagement and responsibilities of the qualified_tax professional and the extent to which the shareholder relied on such professional sec_1_1295-3 and iii conclusion based on the information submitted and representations made we conclude that taxpayers have satisfied sec_1_1295-3 consent is granted to taxpayers to make a retroactive qef election with respect to corporation for year and all subsequent years under sec_1_1295-3 provided that they comply with the rules under sec_1_1295-3 regarding the time and manner for making the retroactive qef election a copy of this ruling must be attached to any_tax return to which it is relevant in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative 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 sincerely jeffery g mitchell branch chief 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 intl b02 plr-134528-12 date september ty ------- legend taxpayer fc state country year year year year date date date fund x director of tax law firm accounting firm a accounting firm b dear ------------- ------------------------------------------------------- ---------------------------------- -------------- -------------- ------- ------- ------- ------- --------------------- ---------------------------- ---------------------------- ----------------------------------- --------------- ----------------------- ------------ --------- --------------------- this is in response to a letter dated date submitted by taxpayer’s authorized representatives that requested the consent of the commissioner of the internal_revenue_service commissioner to make a retroactive qualified_electing_fund qef election under sec_1295 of the internal_revenue_code the code and sec_1_1295-3 with respect to taxpayer’s investment in fc plr-134528-12 the ruling contained in this letter is based upon information and representations submitted on behalf of taxpayer by its authorized representatives 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 this request_for_ruling such material is subject_to verification on examination the information submitted in the request is substantially as set forth below facts taxpayer is a corporation organized under the laws of state it is classified as an association_taxable_as_a_corporation for u s federal_income_tax purposes taxpayer is a publicly traded company taxpayer is currently taxed as a corporation and pays federal and applicable state corporate taxes on its taxable_income ---------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- -------------------------------------------- in year taxpayer formed fund to hold certain foreign investments fund is a country company that is treated as a corporation for u s federal_income_tax purposes fund has been classified as a controlled_foreign_corporation within the meaning of sec_957 of the code with respect to taxpayer during taxpayer’s entire holding_period -- --------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------- taxpayer maintained greater than x ownership throughout fund’s existence taxpayer holds its investment in fc indirectly through fund taxpayer invested in fc indirectly through fund on date fc has been a pfic with respect to taxpayer since date taxpayer submitted an affidavit under penalties of perjury which describes the events that led to its failure to make a qef election with respect to fc by the election due_date including the roles of law firm accounting firm a accounting firm b and taxpayer’s director of tax at that time taxpayer represents that as of the date of this request_for_ruling the pfic status of fc has not been raised by the irs on audit for any of the taxable years at issue plr-134528-12 ruling requested taxpayer requests the consent of the commissioner to make a retroactive qef election with respect to fc for year under sec_1_1295-3 law sec_1295 provides that a pfic will be treated as a qef with respect to a shareholder if an election by the shareholder under sec_1295 applies to the pfic for the taxable_year and the pfic complies with the requirements prescribed by the secretary for purposes of determining the ordinary_earnings and net capital_gains of the company under sec_1295 a qef election may be made for a taxable_year at any time on or before the due_date determined with regard to extensions for filing the return for the taxable_year to the extent provided in regulations the election may be made after the due_date if the shareholder failed to make an election by the due_date because the shareholder reasonably believed the company was not a pfic under sec_1_1295-3 a shareholder may request the consent of the commissioner to make a retroactive qef election for a taxable_year if the shareholder reasonably relied on a qualified_tax professional within the meaning of sec_1_1295-3 granting consent will not prejudice the interests of the united state sec_3 government as provided in sec_1_1295-3 the request is made before a representative of the internal_revenue_service raises upon audit the pfic status of the company for any taxable_year of the shareholder and the shareholder satisfies the procedural requirements of sec_1 f the procedural requirements include filing a request for consent to make a retroactive election with and submitting a user_fee to the office of the associate chief_counsel international sec_1_1295-3 additionally affidavits signed under penalties of perjury must be submitted that describe the events that led to the failure to make a qef election by the election due_date the discovery of the failure the engagement and responsibilities of the qualified_tax professional and the extent to which the shareholder relied on the professional sec_1_1295-3 and iii plr-134528-12 conclusion based on the information submitted and representations made with taxpayer’s ruling_request we conclude that taxpayer has satisfied sec_1_1295-3 accordingly consent is granted to taxpayer to make a retroactive qef election with respect to fc for year provided that taxpayer complies with the rules under sec_1_1295-3 regarding the time and manner for making the retroactive qef election 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 private_letter_ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office copies of this letter_ruling are being sent to your authorized representatives a copy of this letter_ruling must be attached to any federal_income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling sincerely jeffery g mitchell chief branch office of the associate chief_counsel international cc


internal_revenue_service number release date index number ---------------------------------- ----------------------------------- ------------------------------ ------------ ---------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no telephone number -------------------- refer reply to cc psi b01 plr-165824-04 date date ---------------------------------- ------------------------ legend x ------------------------------------------------- y ------------------------------------------------- country d1 d2 dear --------------------------- ---------------- ---------------- ------------------------- this is in response to a letter dated date requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election to treat y as an entity disregarded as separate from its owner for federal tax purposes under sec_301_7701-3 facts according to the information submitted and representations made within the request x is the ultimate parent of an affiliated_group_of_corporations among this affiliated_group is y which is an entity that was formed under the laws of country on d1 due to inadvertence a form_8832 entity classification election to treat y as an entity disregarded as separate from its owner effective d2 was not filed law and analysis sec_301_7701-3 provides guidance on the classification of a foreign plr-165824-04 eligible_entity for federal tax purposes generally unless the entity makes an election to be treated otherwise a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability if a foreign eligible_entity has only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 if a foreign eligible_entity has more than one owner it may elect to be treated as a partnership pursuant to the rules in sec_301_7701-3 sec_301_7701-3 further provides that an entity classification election must be filed on form_8832 entity classification election and can be effective up to days prior to the date the form is filed or up to months after the date on which the form 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 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 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 conclusion based solely upon the information submitted we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result an extension of days from the date of this letter is granted to elect to treat y as disregarded as an entity separate from its owner for federal tax purposes effective d2 the entity classification election should be made by filing form_8832 with the appropriate service_center a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter except as expressly provided herein no opinion is expressed or implied plr-165824-04 this ruling is directed only to the taxpayer s 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 your authorized representative enclosures copy of this letter copy for sec_6110 purposes cc sincerely heather c maloy heather c maloy associate chief_counsel passthroughs and special industries


internal_revenue_service p o box cincinnati oh number release date department of the treasury employer_identification_number contact person - id number date date contact telephone number uil legend x name y name z name c name d name s amount t amount u dollars amount w dollars-amount dear we have considered your request for advance approval of your grant-making program under sec_4945 and sec_4945 of the internal_revenue_code dated date our records indicate that you are recognized as exempt from federal_income_tax under sec_501 of the code and that you are classified as a private_foundation as defined in sec_509 your letter indicates that you will operate three grant-making programs called x y and z the purpose of x is to support student research leading to new or updated information leading to master’s msc or doctoral phd degrees and exceptional bs honors or bs titulo projects the purpose of y is to encourage outstanding students to pursue a course of study in c leading to a professional master or master's science msc and or phd degree at a recognized college university the recognized college universities are those educational institutions which maintain a regular faculty regular curriculum and offer an undergraduate major in c as well as those institutions offering a course of study leading to a professional masters or masters of science and or phd the purpose of z is to provide students with funding to participate in conferences that focus on c in order to encourage students to pursue studies in c announcements for x y and z are publicized in the quarterly newsletter of d as well as on the d’s website d is a professional society with over worldwide members and over student members d’s membership represents a diverse mix of academic government and industry employed professionals preference will be given to d's student members for awards all awards are competitive and based on merit and qualifications of the applicant grant procedures for x x is an international program and students in study programs throughout the world are eligible and encouraged to apply these grants are for one year and will typically be u dollars you will award approximately t grants under x eligibility requirements include the applicant must be enrolled in an accredited degree granting institution with a course of study in c research project must have the support and approval of a faculty advisor in addition the proposed applicants must complete a multiple part application available on d’s website as part of the application the applicant must describe what the project is why the research is important and how it is to be done in addition a detailed estimate of expenses for the project must be included with the application moreover there is an appraisal which must be completed by the applicant’s advisor who will electronically submit the appraisal directly to you by a specific deadline further the applicant must provide you a letter from any property owners if the field research is conducted on private property this is to verify the applicant has permission to conduct the study on the property and has been granted access to the area and any data required for successful completion of the project your board_of trustees executive committee or your president will appoint the selection committee from d’s diverse membership committee members are not eligible to apply for grants in addition it is very unlikely that members of the selection committee would have any knowledge of the potential recipients prior to or during the evaluation process if a committee member would have a relative apply for a grant the member would excuse himself herself from the evaluation process the selection committee will evaluate each application and provide a score for each of the following general aspects of the presentation of the application n w w k a hypothesis or the definition of the problem significance of the project project plans special circumstances the scores are totaled averaged and ranked numerically by the committee chair once the selection committee concludes the evaluation and selection process the selection committee will submit the recipients’ names to your administrative personnel who will notify the recipients the grant funds are disbursed directly to the recipient along with guidelines for use of the funds the recipient is expected to use the grant prudently within the framework of the proposal in addition the advisor who completed the recipient's appraisal must verify his her support in the research project and agrees to make a reasonable effort to ensure funds are used for the expenses projected in the application all funds are to be expended in the calendar_year awarded if there is a significant modification to the project or budget the recipient must notify the selection committee chair the recipient is required to provide a year-end accounting of how the award was spent along with receipts and a brief summary describing the research project's status and if there are any plans for ongoing research recipients who have been approved for extensions beyond the calendar_year in which the funds were awarded must annually or upon completion of the project whichever is sooner provide receipts for the project recipients may apply for another award in subsequent years but must qualify on a competitive basis with new applicants a maximum of two awards for msc projects and three for phd projects are allowed if a recipient fails to use the award for the stated purpose you will notify the recipient and or his advisor for the repayment of funds you will vigorously pursue reimbursement of grant funds if inappropriately used by the grantee it is determined that funds were the final obligation of a grant recipient upon completion of the research is to submit a brief word abstract suitable for publication describing findings and conclusions of the research grant procedures for y y is an international program for students entering graduate school following completion of a bachelor of science bs degree or equivalent in c moreover students enrolled in their first year of graduate studies are also eligible you will award t fellowships up to w dollars each year and these are not renewable in order to be eligible applicants must have completed or are in the process of completing a bs or equivalent degree in c or related field have been accepted or are in the process of being accepted as a first year graduate at a recognized college or university which offers a graduate program leading to an msc and or phd in c or be currently enrolled as a full time first year student in a graduate program at a recognized college or university which offers a graduate program leading to an msc and or phd in c instructions and the application along with reference forms are found on d's website to apply the following must be prepared and submitted by a specified due_date acurrent application form one reference form completed by the applicant’s undergraduate advisor or the head of the department who will electronically forward the reference to you one reference form completed by a faculty_member familiar with the applicant's academic record and character who will also electronically forward the reference form to you an official transcript of grades from the institution awarding the bs degree it is the applicant’s responsibility to ensure the references and transcripts are sent before the deadline moreover you will notify the applicant when the materials are received your board_of trustees executive committee or your president will appoint the selection committee from d’s diverse membership committee members are not eligible to apply for grants it is very unlikely that members of the selection committee would have any knowledge of the potential recipients prior to or during the evaluation process if a committee member would have a relative apply for a grant the member would excuse himself herself from the evaluation process once the applications are received the application packages are distributed to members of the selection committee each application is reviewed by at least three members of the selection committee the members of the selection committee will score the applications on the following criteria n w r o o n quality of the application quality of the applicant biographical information references desirability of fellowship and need for funding project plans special circumstances the scores are totaled averaged and ranked numerically the amount of funding available in any year determines the cut off for the successful applicant once the evaluation process is concluded the selection committee chair submits the names of the recipients directly to your administrative personnel who are responsible for notifying the recipients and arranging for distribution of funds grant funds are disbursed directly to recipients before funds are disbursed the recipient must provide you the following documents proof that he she has been accepted at a graduate school with a program of study in c or currently enrolled as a graduate student in such a program aletter from a faculty_member in the department in which the recipient will be studying or is studying to insure the recipient is pursuing a course of studying c as described above if a recipient fails to use the award for the stated purpose you will notify the recipient and or his advisor for the repayment of funds on the first anniversary of the award a recipient must submit appropriate documentation of grant fund expenditures which will be kept on file in your office in addition the fact that recipients are currently enrolled in a graduate degree granting program and pursuing a graduate degree in c under the supervision of a faculty_member is evidence the funds are being used for its intended purpose grant procedures for z z is an international program to encourage students to pursue studies in c by funding their travel to participate in educational conferences concerning developments in c the amount and number of grants awarded is variable in order to apply for b students must electronically submit a letter of intent including e e e e e e an abstract of any research findings arésumé contact details of at least one reference or supervisor familiar with the applicant’s research anarrative on how the conference will benefit the applicant in his hers studies and or career anarrative on what the applicant believes he she will contribute to the meeting that will be of interest to the other attendees the anticipated cost of the applicant's airfare to the conference location there is no standing selection committee for this program ad hoc selection committee from the conference organizing committee in you will appoint an advance of the scheduled conference for which these grants are awarded it is very unlikely that members of the selection committee would have any knowledge of the potential recipients prior to or during the evaluation process if a committee member would have a relative apply for a grant the member would excuse himself herself from the evaluation process preference for the student travel grants is given to student members of d and is given to those who will present posters or talks however students typically undergraduates unable to present research will be evaluated based on their narratives in the applications describing how the conference would benefit their studies and or careers and what they will contribute to the meeting that will be of relevance to the other attendees the selection committee will use the following evaluation criteria in selecting recipients of travel grants e e e e has the student submitted a proposed poster oral presentation and or abstract summary of research findings what is the quality of the proposed poster oral presentation and or summary of research findings what is the strength of the faculty reference if the applicant is an undergraduate without a research project has he she adequately explained how attendance participation in the conference would benefit his her academic career development what will the undergraduate student be able to contribute to the conference that will benefit other student participants ls the student a member of d if the applicant is awarded a grant he she will be notified shortly after the deadline at that time the recipient must register for the conference the recipient must also inform you if a formal letter of invitation is needed from you to obtain a visa to enter the united_states as soon as the recipient confirms that he she can visit the united_states you will transfer the funds to the recipient the fact that the recipient is present at the conference establishes that the grant was used for its intended purpose if a recipient fails to use the award for its stated purpose you will notify the recipient to return the funds awarded you will also vigorously pursue reimbursement of grant funds if the funds were used inappropriately in compliance with recordkeeping requirements under sec_4945 for all three of these programs you have agreed to maintain records that include a b information used to evaluate the qualifications of potential grantees identification of the grantees to include the amount and purpose of each grant and c all grantee reports and other follow-up data obtained in administering the private foundation's grant program to ensure that the foreign expenditure of grants is not diverted to support terrorism or the non-charitable activities you have adopted the following practices you will monitor and follow the office of the foreign asset control guidelines with respect to embargoed countries where comprehensive u s sanctions exist grants are not awarded to student applicants in those countries you will conduct due diligence in advance of grant making that includes verification that the potential student recipient is currently enrolled as a full- time student at a recognized college or university you will include provisions in the grant notification letter on how the grant is to be used to ensure grants are used for the intended purposes you do not plan to award repeat grants to the same foreign grantees a foreign grantee would have to apply for a second grant and would be subject_to the same due diligence as applied to the first grant you will require all grant documents including related significant correspondence to be in english you will only disburse grant funds by check or electronic funds transfer no grant funds are disbursed in cash sec_4945 and b of the code impose certain excise_taxes on taxable_expenditures made by a private_foundation sec_4945 of the code provides that the term taxable_expenditure means any amount_paid or incurred by a private_foundation as a grant to an individual for travel study or other similar purposes by such individual unless such grant satisfies the requirements of subsection g sec_4945 of the code provides that sec_4945 shall not apply to individual grants awarded on an objective and nondiscriminatory basis pursuant to a procedure approved in advance if it is demonstrated that the grant constitutes a scholarship or fellowship_grant which is subject_to provisions of sec_117 as in effect on the day before the date of the enactment of the tax_reform_act_of_1986 and is to be used for study at an educational_organization described in sec_170 the grant constitutes a prize or award which is subject_to the provisions of sec_74 if the recipient of such prize or award is selected from the general_public or the purpose of the grant is to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar capacity skill or talent of the grantee sec_53_4945-4 of the regulations provides that to secure approval a private_foundation must demonstrate that i ii iii its grant procedure includes an objective and nondiscriminatory selection process such procedure is reasonably calculated to result in performance by grantees of the activities that the grants are intended to finance and the foundation plans to obtain reports to determine whether the grantees performed activities that the grants are intended to finance based on the information submitted and assuming your award programs will be conducted as proposed with a view to providing objectivity and nondiscrimination in making the awards we have determined that your procedures for granting the awards comply with the requirements contained in sec_4945 of the code and that awards granted in accordance with such procedures will not constitute taxable_expenditures within the meaning of sec_4945 in addition we have determined that awards made under your procedures are ‘scholarship or fellowship’ grants within the meaning of sec_4945 and sec_117 of the code and are excludable from the gross_income of the recipients subject_to the limitations provided in sec_117 of the code including to the extent that such grants are used for qualified_tuition_and_related_expenses within the meaning of sec_117 of the code this determination is conditioned on the understanding that there will be no material_change in the facts upon which it is based it is further conditioned on the premise that no grants will be awarded to foundation managers or members of the selection committee or for a purpose that is inconsistent with the purpose described in sec_170 of the code the approval of your award program procedures herein constitutes a one-time approval of your system standards and procedures designed to result in awards which meet the requirements of sec_4945 and sec_4945 of the code this determination only covers the grant programs described above thus approval shall apply to subsequent award programs only as long as the standards and procedures under which they are conducted do not differ materially from those described in your request any funds you distribute to individuals must be made on a true charitable basis in furtherance of the purposes for which you are organized therefore you should maintain adequate_records and case histories so that any or all award distributions can be substantiated upon request by the internal_revenue_service this determination is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as a precedent you must report any future changes in your grant making procedures please keep a copy of this letter in your permanent records we have sent a copy of this letter to your representative as indicated in your power_of_attorney if you have any questions please contact the person whose name and telephone number are shown above sincerely yours holly o paz director exempt_organizations rulings and agreements


t c summary opinion united_states tax_court katherine witherspoon kannard petitioner and james r kannard jr intervenor v commissioner of internal revenue respondent docket no 5633-07s filed date katherine witherspoon kannard pro_se james r kannard jr pro_se john r bampfield for respondent carluzzo special_trial_judge this case was heard pursuant to the provisions of sec_7463 pursuant to sec_7463 the decision to be entered is not reviewable by any 1unless otherwise indicated section references are to the internal_revenue_code_of_1986 as amended in effect for the relevant period other court and this opinion shall not be cited as precedent for any other case in this sec_6015 proceeding petitioner seeks to be relieved from a federal_income_tax liability assessed against her because she filed a joint federal_income_tax return for that year consistent with respondent’s determination denying her administrative request for relief petitioner’s former spouse james r kannard jr intervenor opposes relief background some of the facts have been stipulated and are so found at the time the petition was filed petitioner and intervenor resided at separate addresses in florida petitioner and intervenor were married in date they separated during and were divorced in date they have a daughter and twin sons all minors and all subjects of a hostile custody dispute during the divorce proceedings a social worker involved in the custody dispute described the relationship between petitioner and intervenor as a whirlwind of animosity riddled with he-said she-said accusations of spousal abuse child abuse deception larceny and adultery from their respective presentations at trial it is clear that the whirlwind has lost none of its force petitioner’s unpaid federal_income_tax liability and the resultant dispute with the internal_revenue_service over that liability no doubt exaggerated the resentment each feels towards the other the trial testimony of each was informed not so much by any good-faith attempt to objectively describe relevant events but by the animosity witnessed and described by the social worker consequently rather than accept one version over the other we reject as incredible their conflicting descriptions of the same events that being so our conclusions are supported by factual findings based almost exclusively upon stipulations undisputed testimony or written records petitioner graduated with a bachelor of arts degree in international political science from emory university in starting in and at all times relevant she was employed as a consultant by uniphy management systems uniphy a company that provides medical insurance services to physicians in after interrupting his college education to serve in the u s navy intervenor graduated with a bachelor of science degree in electrical engineering from the university of 2hostilities carried over from disputed domestic relations matters between former or estranged spouses surface all too frequently in sec_6015 proceedings see eg stergios v commissioner tcmemo_2009_15 tennessee soon after graduation he accepted a position with honeywell international inc honeywell in tampa florida petitioner’s and intervenor’s salaries from their respective employers were deposited into one or the other of two joint checking accounts one of which was maintained at the gte federal credit_union the gte joint account these joint checking accounts in addition to a number of credit card accounts were used to pay the couple’s living_expenses intervenor’s employment with honeywell ended in date soon thereafter he withdrew approximately dollar_figure from his employer-based retirement_plan the pension distribution he also applied for and received unemployment_compensation before starting a new job in date the pension distribution and unemployment_compensation were deposited into the gte joint account for each year that they were married including and the year of their divorce petitioner and intervenor elected to file a joint federal_income_tax return the joint federal_income_tax return was prepared and electronically filed using a computer-based income_tax return preparation program the joint_return the income reported on the joint_return does not include the above-referenced pension distribution or unemployment_compensation the omitted items the tax shown on the joint_return does not include the applicable sec_72 additional tax attributable to the pension distribution email communications between petitioner and intervenor during the relevant period demonstrate that petitioner was aware of the omitted items respondent determined a deficiency in petitioner and intervenor’s federal_income_tax and issued a notice_of_deficiency to them on date the deficiency determined in that notice_of_deficiency takes into account the omitted items and the sec_72 additional tax attributable to the pension distribution neither petitioner nor intervenor petitioned this court in response to that notice_of_deficiency and the deficiency and related amounts were assessed in due course discussion in general spouses may elect to file a joint federal_income_tax return for a year even if one spouse had no obligation to file a return for that year sec_6013 spouses electing to do so are jointly and severally liable not only for the entire amount of tax reported on the return but also for any deficiency subsequently determined as well even if all income giving rise to the tax_liability is allocable to only one of them sec_6013 114_tc_276 see sec_1_6013-4 income_tax regs subject_to various conditions and in a variety of ways an individual who has made a joint_return may elect to seek relief from the joint_and_several_liability arising from that joint_return sec_6015 there are three types of relief available under sec_6015 in general subsection b provides full or apportioned relief from joint_and_several_liability subsection c provides proportionate tax relief to divorced or separated taxpayers and subsection f provides equitable relief from joint_and_several_liability if relief is not available under subsection b or c petitioner requests relief under all of the above-referenced subsections of sec_6015 because she was aware of the omitted items however she is not entitled to relief under subsection b or c see sec_6015 c c 872_f2d_1499 11th cir affg tcmemo_1988_63 114_tc_333 94_tc_126 affd 992_f2d_1132 11th cir that being so we consider de novo her entitlement to equitable relief under subsection f porter v commissioner t c __ a taxpayer is entitled to sec_6015 relief if taking into account all the facts and circumstances it would be inequitable to hold the taxpayer liable for any unpaid tax or deficiency sec_6015 taking into account the factors the commissioner considers in matters such as this see revproc_2003_61 2003_2_cb_296 we find that it would not be inequitable to hold petitioner liable for joint_and_several income_tax_liability that arises from the joint federal_income_tax return filed with intervenor and therefore petitioner is not entitled to relief from that liability under sec_6015 little would be gained by burdening this opinion with a discussion of each of the factors contained in the above- referenced revenue_procedure see sec_7463 last sentence suffice it to note that petitioner’s actual knowledge of the omitted items although not determinative weighs heavily against relief see stolkin v commissioner tcmemo_2008_211 revproc_2003_61 sec_4 a iii c b pincite as does her failure to establish that she did not significantly benefit from the omitted income or she would suffer economic hardship if she were required to pay the income_tax_liability to reflect the foregoing decision will be entered for respondent


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 number release date conex-121156-10 uil the honorable maria cantwell united_states senator henry m jackson federal building 2nd ave suite seattle wa attention ---------------- dear senator cantwell this letter responds to your inquiry dated date on behalf of your constituent -- ------------------------- -----------------asked whether he qualified for the homebuyer tax_credit for long-term homeowners sec_36 of the internal_revenue_code the effective date for sec_36 is date public law sec_11 the specific statutory effective date controls regardless of the date the president signed the law there are no administrative exceptions provided we have no authority to modify the effective date ----------------- said that he purchased his new residence on date therefore based on the facts presented --------------------purchase does not qualify for the credit if you have any questions please contact -------------------------or ------------------- at -------- ------------- sincerely george j blaine associate chief_counsel income_tax accounting