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-117088-15 date date legend x --------------------------------------------------- -------------------------------------------------- country d1 d2 ---------- ---------------------- ----------------------- dear ------------------ this responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a disregarded_entity for federal tax purposes facts according to the information submitted x was organized under the laws of country on d1 x represents that it is a foreign_entity eligible to elect to be classified as a disregarded_entity effective d2 x failed to timely file a properly executed form_8832 plr-117088-15 entity classification election to be treated as a disregarded_entity for federal tax purposes effective d2 x represents that it acted reasonably and in good_faith x also represents that granting the relief requested will not prejudice the interests of the government law and analysis sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with at least two members can elect to be classified as either an association or a partnership and an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association if all members have limited_liability unless the entity makes an election to be treated otherwise a foreign eligible_entity with a single member having limited_liability may elect to be treated as a disregarded_entity pursuant to the rules of sec_301_7701-3 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date the form is filed sec_301_7701-3 provides that an entity classification election must be signed by a each member of the electing entity who is an owner at the time the election is filed or b any officer manager or member of the electing entity who is authorized under local law or the entity's organizational documents to make the election and who represents to having such authorization under penalties of perjury sec_301_7701-3 provides that if an entity classification election is to be effective for any period prior to the time that it is filed each person who was an owner between the date the election is to be effective and the date the election is filed and who is not an owner at the time the election is filed must also sign the election sec_301_7701-3 generally provides that if an entity classification election is made to change the classification of an entity each person who was an owner on the day before the effective date of the election and who is not an owner at the time the election is filed must also sign the election under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure plr-117088-15 notice or announcement 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 conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make an election to be treated as a disregarded_entity for federal tax purposes effective d2 x should make the election by filing a properly executed form_8832 with the appropriate service_center a copy of this letter should be attached to the form this ruling is contingent on the owner of x filing within days of this letter all required returns including amended returns for all open years consistent with the requested relief these returns may include but are not limited to the following forms i forms information_return of u s persons with respect to certain foreign_corporations ii forms return of u s persons with respect to certain foreign_partnerships and iii forms information_return of u s persons with respect to disregarded entities such that these forms reflect the consequences of the relief granted in this letter a copy of this letter should be attached to any such returns except as specifically set forth above we express no opinion concerning the federal tax consequences of the facts described above under any other provision of the internal_revenue_code plr-117088-15 this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representatives sincerely associate chief_counsel passthroughs special industries by laura c fields laura c fields senior technician reviewer branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes


internal_revenue_service number release date index number ----------------------------------- -------------------------------------------------------- --------------------------- ---------------------------------------- ----------------------------- in re --------------------------------------------------- ----------------- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact ---------------------------- id no ------------ telephone number --------------------- refer reply to cc p si plr-112531-08 date date legend cooperative ----------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------- -------------------------------------------------------------- --------------------------------------------- -------------------- --------- ------------------------------------------------ ------- act product metropolitan area retail dear ------------------ this is in response to a request for a ruling dated date submitted by your authorized representatives concerning the federal_income_tax consequences of a transaction involving a cooperative under subchapter_t of the internal_revenue_code as described below cooperative was formed in --------------------as a corporation operating as a non- stock cooperative association pursuant to the act the articles of incorporation as originally filed in --------------------have not been altered modified or otherwise amended plr-112531-08 according to the cooperative’s articles of incorporation it was organized to operate a system to distribute product of its members for their exclusive and mutual benefits as patrons of the cooperative article fourth of the articles of incorporation specifically provides that the association is organized to operate a system to distribute the products of its members for their exclusive and mutual benefit as patrons of the association the association shall have the power to purchase lease build maintain and operate warehouses garages and all other facilities for use in connection with operating said system and to exercise all such powers in any capacity and on any cooperative basis as agreed on and permitted by law the metropolitan area consists of numerous local areas both urban and suburban the metropolitan area covers over ------square miles and includes the -------- -----------------------------and parts of ------------- and ----------- with a population over --------- -------------people there are multiple cities towns and neighborhoods across the metropolitan area and travel between locations is extremely time consuming pursuant to article fifth of the articles of incorporation membership in the cooperative is restricted to retail merchants located in the metropolitan area who patronize the association applicants are eligible for membership in the cooperative if they meet the qualifications stated in the articles of incorporation and the by-laws including making the required_payment of a minimum membership fee of dollar_figure----- article sixth of the articles of incorporation provides that the property rights and interests of each members in the association shall be equal and shall be determined by the proportion that the patronage of each member shall bear to the total patronage of all the members with the association membership of the cooperative currently consists of approximately --- independent local retail shops in the metropolitan area approximately --- such shops have been members of the cooperative at one time or another the purpose of the cooperative is to consolidate and share the delivery resources of its members to develop a spoke-hub distribution network and thereby increase the efficiency of deliveries throughout the metropolitan area the spoke-hub distribution network allows the cooperative’s members which are independent local businesses to drop off their product at a central location to facilitate deliveries by other members in their respective local areas for instance a --------------based member will take product deliveries that are not destined for its primary delivery area to the central location hub in turn the ------------- shop will pick up any product destined for its primary delivery area the cooperative’s spoke-hub distribution network has allowed its members to more efficiently serve customers in the metropolitan area plr-112531-08 to cover the operating costs of the cooperative each member is charged a certain amount for each item dropped off for delivery and is paid for the deliveries made for other members to reduce the cooperative’s exposure to inflation in rental rates for centrally located urban warehouse space to better manage the cooperative’s overhead for its spoke-hub distribution network and to provide more permanence for its centrally- located hub the cooperative acquired a warehouse building in --------------------------in --- ------ at a cost of approximately dollar_figure----------- the building was financed by a mortgage which has since been paid off a building fund assessment collected from the membership and through the reinvestment of members’ patronage_dividends that would have otherwise been distributed in cash the aforementioned reasons for acquiring the warehouse building are directly related to the purpose for which the cooperative was formed to maximize collective distribution efficiencies in product deliveries of the members through the establishment of a collective and cooperative spoke-hub distribution network the cooperative’s primary objective in acquiring the warehouse was to establish a certain level of permanence for the centrally located hub of its broad ranging spoke- hub distribution network by acquiring ownership of its physical location the cooperative has enhanced its permanence ensuring the preservation of both delivery patterns and marketing trends in connection with the operation of its spoke-hub distribution network in addition the warehouse acquisition was designed to limit the cooperative’s exposure to inflation in the rental cost of centrally located commercial space by acquiring ownership of the warehouse the cooperative effectively limited its members’ rather broad exposure to inflation in the cost of maintenance and eliminated its rather broad exposure to inflation in the value of commercial real_estate the cooperative’s third objective in acquiring the warehouse was to better control its overhead ownership of the warehouse enhanced the cooperative’s oversight with respect to its physical facilities beyond that which it previously had as an occupying tenant it thereby provided the cooperative with the means to better manage its fixed costs which primarily related to the economic cost of its warehouse facilities the building fund assessment was dollar_figure----- per month from each member from ------ --------------------- through ---------------------------- certain subsequently admitted members paid catch-up_contributions from ------- through ------- total contributions to the building fund were accounted for with respect to each member and refunds were issued to members that resigned from the cooperative any remaining building fund balance has since been distributed in accordance with each member’s respective entitlement plr-112531-08 pursuant to article fifth of the articles of incorporation the voting rights of the members are equal and no member has more than one vote pursuant to article sixth of the article of incorporation the property rights and interests of each member in the association are equal and are be determined by the proportion that the patronage of each member shall bear to the total patronage of all the members with the association pursuant to article two paragraph d of the cooperative’s bylaws if a member desires to withdraw from the cooperative the member shall give-----days notice in writing to the members who shall then purchase such member’s holdings in --------------- if and when such purchase can be made without jeopardizing the solvency of the cooperative the cooperative has distributed its annual profits to its members as a patronage_dividend on the basis of the business each member conducted with the cooperative during the year the cooperative’s patronage_dividend distribution has consisted of cash and written notices of allocation as defined in sec_1388 of the code the cooperative generally distributes --- percent of its profit before taxes in the form of an annual patronage_dividend currently by the extended due_date of its corporate_income_tax return with percent of the patronage_dividend paid in cash and the remaining percent allocated to each member in the form of written notices of allocation the cooperative accrues a non-current liability on its financial statements for the unpaid balance reflecting such percent payments are made against this non- current_liability as cash becomes available preceding the acquisition of the building in-------- the members of the cooperative elected to reinvest a substantial portion of the profits to increase funds available for such acquisition such reinvested profits were accounted for as patronage_dividends that were distributed to the members of the cooperative through written notices of allocation following the acquisition of the building significant portions of the then current profits of the cooperative were utilized to satisfy the cooperative’s obligation with respect to patronage_dividends that were reinvested in the cooperative prior to acquisition of the building in other words unpaid prior year patronage_dividends were satisfied with funds attributable to subsequent year profits to avoid taxation at the entity level the cooperative issued written notices of allocation to its members based on patronage during the current_year such accounting enabled the cooperative to pay prior year patronage_dividend repayments out of subsequent year profits without incurring an entity level tax plr-112531-08 as of ------------------------- the non-current liability balance for unpaid patronage_dividends consisted of approximately dollar_figure-----------owed to approximately ----current members and --- former members such former members have resigned and have been paid their dollar_figure----- refundable membership fee but have not been paid in full the balance of their non-current patronage_dividends that were distributed to them in the form of written notices of allocation as noted above article sixth of the articles of incorporation provides that the property rights and interests of each members in the association shall be equal and shall be determined by the proportion that the patronage of each member shall bear to the total patronage of all the members with the association article nine of the cooperative’s bylaws governs patronage and allocation of net_earnings states that t he cooperative’s net earning shall belong to and be held by the cooperative for its members and shall be distributed to them at the close of each fiscal_year on a patronage basis with regard to the disposition of assets for proceeds exceeding dollar_figure----------- article nine paragraph f of the bylaws provides net_earnings from the sale of any major asset over dollar_figure----------- shall be allocated on a compound patronage basis the calculation period for determining this allocation shall be the fiscal years starting with the first full fiscal_year after acquisition and continuing until the end of the fiscal_year including disposal during which the asset was in service ‘compound patronage’ shall be calculated as the sum of each member’s annual patronage percentage divided by the number of years being considered in the calculation article nine paragraph d governs the obligations of members of the cooperative to contribute to the capital of the cooperative it provides members agree to and shall contribute their respective pro_rata shares to the capital of the cooperative such contributions shall be paid from net_earnings due the members by the cooperative in addition such further contributions shall be made as the directors may specify except that a member’s obligation to make such further contribution in any fiscal_year shall be limited to an amount equal to his share of net_earnings for the proceeding fiscal_year and shall be proportionate to the contributions required of other members article thirteen of the cooperative’s bylaws governs the distribution of the assets of the cooperative upon dissolution it provides upon dissolution after all debts and liabilities of the cooperative shall have been paid and all capital furnished through patronage shall have been retired without plr-112531-08 priority on pro_rata basis the remaining property and assets of the cooperative shall be distributed among the members and former members who have left during the current fiscal_year in proportion which the aggregate patronage of each member bears to the total patronage of all such members unless otherwise provided by law the calculation period for such asset will be the patronage during the life of that asset because the cooperative’s membership has declined in recent years as a result of many market and industry factors including internet product deliveries the cooperative has sold its warehouse building receiving proceeds of approximately dollar_figure----- -----------and recognizing a gain of approximately dollar_figure-------------- the cooperative intends to distribute the net_proceeds reflecting the recognized gain to the ----current and former member which patronized the cooperative during the period in which the cooperative owned the building on a compound patronage basis as defined in article nine of the cooperative’s bylaws the compound patronage calculation will be finalized after the cooperative’s financial statements for the fiscal_year ending ------------- ------------------------- have been completed as described above the board_of directors of the cooperative has determined to allocate the gain from the sale of the building to among the current and former members that patronized the cooperative during the period in which the cooperative owned the building based on their respective compound patronage percentages based on the foregoing the taxpayer request a ruling that the cooperative’s distribution of the gain recognized from the sale of its building to the cooperative’s current and former members based on compound patronage their respective average annual patronage percentages for the period commencing -------------------- and ending ------------------------- will be treated as a patronage_dividend and will be deductible by the cooperative for federal_income_tax purposes sec_1388 of the code specifies that a patronage_dividend must be determined by reference to the net_earnings of the organization from business done with or for its patrons that section further provides that the term patronage_dividend does not include any amount_paid to a patron to the extent that such amount is out earnings other than from business done with or for patrons further it does not include earnings from business done with or for other customers to whom no amounts are paid or to whom smaller amounts are paid with respect to substantially identical transactions in revrul_69_576 1969_2_cb_166 a nonexempt farmers’ cooperative borrowed money from a bank for cooperatives itself a cooperative to finance the plr-112531-08 acquisition of agricultural supplies for resale to its members the bank for cooperatives allocated and paid interest from its net_earnings to the nonexempt farmers’ cooperative which it in turn allocated to its members in determining whether the allocation was from patronage sources the ruling states the classification of an item_of_income as from either patronage or nonpatronage sources is dependent on the relationship of the activity generating the income to the marketing purchasing or service activities of the cooperative if the income is produced by a transaction which actually facilitates the accomplishment of the cooperative's marketing purchasing or service activities the income is from patronage sources however if the transaction producing the income does not actually facilitate the accomplishment of these activities but merely enhances the overall profitability of the cooperative being merely incidental to the association's cooperative operation the income is from nonpatronage sources revrul_690_576 pincite the ruling concluded that in as much as the income received by the nonexempt_cooperative from the bank for cooperatives resulted from a transaction that financed the acquisition of agricultural supplies which were sold to its members thereby directly facilitating the accomplishment of the cooperative’s marketing purchasing or service activities the income was patronage sourced sec_1_1382-3 of the income_tax regulations defines income from sources other than patronage nonpatronage income to mean incidental income derived from sources not directly related to the marketing purchasing or service activities of the cooperative association for example income derived from lease of premises from investment in securities or from the sale_or_exchange of capital assets constitutes income derived from sources other than patronage in st louis bank for cooperatives v united 624_f2d_1041 cl_ct the court held that interest on demand deposits in farm credit banks or on loans to brokerage funds received by st louis bank for cooperatives was patronage sourced income the court stated that a particular item_of_income is patronage sourced when the transactions involved are directly related to the marketing purchasing or service activities of the cooperative association f 2d pincite in twin county grocers inc v united_states cl_ct a nonexempt_cooperative was denied deductions for patronage_dividends for interest on a certificate of deposit bought from a nonpatron bank because the dividend income was not patronage sourced the court held that the relation of income activity to the cooperative’s business was too tenuous plr-112531-08 courts have ruled in several instances that income from corporations organized by cooperatives to conduct activities related to the cooperative business is patronage sourced in farmland industries v commissioner 78_tcm_846 acq aod citing 765_f2d_1102 675_f2d_988 8th cir 88_tc_238 87_tc_435 the taxpayer a cooperative organized for the purpose of providing petroleum products to its patrons sought to have the proceeds from the disposition of its stock in three subsidiaries classified as patronage-sourced income in reaching its decision the court stated that its task was to determine whether each of the gains and losses at issue was realized in a transaction that was directly related to the cooperative enterprise or in one which generated incidental income that contributed to the overall profitability of the cooperative but did not actually facilitate the accomplishment of the cooperative s marketing purchasing or servicing activities on behalf of its patrons t c m pincite in land o’lakes inc supra the court held that dividends received by the nonexempt_cooperative from the st paul bank for cooperatives was patronage derived and could be allocated to land o’lakes patrons as deductible patronage_dividends the court noted that the taxpayer was required to acquire and hold the stock to obtain a loan the proceeds of which were used to finance cooperative activities on favorable terms finding that the subject transaction was not significantly distinguishable from the transaction in revrul_69_576 sec_1_1382-3 provides that in order that the deduction for amounts with respect to income derived from business done with or for the united_states or any of its agencies or from sources other than patronage may be applicable it is necessary that the amount sought to be deducted be paid on a patronage basis in proportion insofar as is practicable to the amount of business done by or for patrons during the period to which such income is attributable for example if capital_gains are realized from the sale_or_exchange of capital assets acquired and disposed of during a single taxable_year income realized from such gains must be paid to patrons of such year in proportion to the amount of business done by such patrons during the taxable_year similarly if capital_gains are realized by the association from the sale_or_exchange of capital assets held for a period extending into more than one taxable_year income realized from such gains must be paid insofar as is practicable to persons who were patrons during the taxable years in which the asset was owned by the association in proportion to the amount of business done by such patrons during such taxable years in the instant case the warehouse building was used exclusively used in the cooperative’s business to facilitate the efficient distribution of the members’ product through the establishment of a spoke-hub distribution network serving the collective plr-112531-08 interest of the members and accordingly the gain will be patronage sourced further cooperative will distribute the income realized from the sale of the building to persons who were its patrons during the taxable years in which the asset was owned by the cooperative in proportion to the amount of business done by such patrons during such taxable years accordingly based solely on the above we rule that the cooperative’s distribution of the gain recognized from the sale of its building to the cooperative’s current and former members based on compound patronage their respective average annual patronage percentages for the period commencing -------------------- and ending ------------------------- will be treated as a patronage_dividend and will be deductible by the cooperative for federal_income_tax purposes this ruling is directed only to the taxpayer that requested it under sec_6110 of the code it may not be used or cited as precedent in accordance with a power_of_attorney filed with the request a copy of the ruling is being sent to your authorized representatives sincerely yours paul f handleman paul f handleman chief branch office of the associate chief_counsel passthroughs special industries


internal_revenue_service number release date index number ---------------------------------- --------------------- ---------------------------------------- -------------------------------------------- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi b04 plr-132956-06 date july legend settlor trust - - - daughter - grandchild - grandchild - spouse great grandchild - great grandchild - - date date - - date - date - date date - - year - year year - - year - court - trustee state - - state - code cite - - cite -------------------------- ------------------------------------------------------------------------ ------------- ------------------------------- -------------------------------- ------------------------------------------------------ ---------------------------- -------------------------------- --------------------------- ------------------ ---------------------- -------------------------- ---------------------------------- ----------------- ---------------------- ------- ------- ------- -------- --------------------------------------------------------- --------------------------------------- ------------ ----------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ plr-132956-06 - - - - ------------------------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------ -------------------------------------------------------- dear -------------------- representative requesting rulings under sec_1001 sec_2501 and sec_2601 of the internal_revenue_code this is in response to a letter dated date submitted by your authorized cite cite cite cite facts settlor died on date a resident of state item four of settlor’s will will upon the death of daughter and a child of daughter the children of such child of dated date established a_trust trust for the benefit of daughter and her descendants trust provided that the trustee would pay the net_income to daughter for her life the trustee was authorized to make principal distributions to daughter to provide for her support and maintenance and to daughter’s children to provide for their support maintenance and education upon daughter’s death the trustee would expend the net_income for the support maintenance and education of daughter’s children when a child reaches age the trustee may pay the income directly to the child trust also provides that distributions of principal may be made to daughter’s children for their support maintenance and education daughter is entitled to receive such part of the corpus of trust as an equal division between daughter’s children would represent the children of daughter to represent the number of shares into which the corpus of trust is to be divided and the children of such children to take the share so represented by the parent two children great-grandchild born and adopted in year and great-grandchild born in year grandchild died in year survived by three children daughter died in year upon the death of daughter trust was split into two equal shares one share was distributed to the children of grandchild and the other share is held in trust trustee pays the net_income of trust to grandchild every month trust became irrevocable on settlor’s death date which is prior to date and it is represented that no additions have been made to trust after date trust does not define whether child or children includes an adopted_child or children when trust was established state law presumed that bequests to children daughter had two children grandchild and grandchild grandchild has as written trust does not include any language regarding the rule against settlor was a resident of state when he died trust has been administered in plr-132956-06 were intended for natural children which would exclude adopted children cite effective ----------------- state law provides that the rules of construction or presumption provided in the act applies to a governing instrument executed before that date unless there is a clear indication of a contrary intent cite state law provides that in construing dispositive provisions of a transferor an adopted individual is included in class gifts cite for purposes of intestate_succession state law provides that an adopted individual is the child of his or her adopted parents cite perpetuities grandchild was alive at the time of settlor’s death grandchild was born after settlor’s death because grandchild was not alive upon settlor’s death gandchild cannot be a measuring life under state law if a nonvested property interest may be invalid under state law then upon the petition of an interested_party a court shall reform a disposition in the manner that most closely approximates the transferor’s manifested plan of distribution that is within the years allowed by the sections set forth in the state law cite state since settlor’s death the trustee is trustee a corporate successor to the trustee and located in state however the beneficiaries vested or contingent of trust are not residents of state grandchild great-grandchlid and great- grandchild are residents of state none of the trust assets consist of tangible_personal_property or real_property accordingly on date the parties petitioned state court pursuant to cite which provides that on petition of an interested person the court may approve an interpretation construction modification or other settlement that is agreed upon in writing by all presently identified and competent beneficiaries whose interests in the trust may be affected to resolve a contest controversy or question of construction or interpretation concerning the existence administration or termination of an irrevocable_trust the court shall approve the agreement if it appears to have been reached in good_faith and its effects are just and reasonable under all of the relevant facts and circumstances cite spouse spouse entered into an agreement settlement agreement as described above the settlement agreement states i that trust is held for the benefit of grandchild and his children and that grandchild has a life_estate in trust with a remainder distributable to his children ii on the death of grandchild trust will terminate and the remainder will be distributed per stirpes to the surviving children of grandchild and for purposes of state law grandchild is the designated ancestor and his children are great-grandchild and great-grandchild iii that the remainder_interest will vest on the earlier of the death of grandchild or one day before the 90th anniversary of the death of settlor date and iv the laws of state apply to trust on date grandchild great-grandchildren and and grandchild 2’s the court order interpreting trust as providing a life_estate for grandchild the court order interpreting trust as including adopted children as children on date court signed a conditional order modifying trust as described above you have asked for the following rulings plr-132956-06 subject_to receipt by the petitioners of the rulings set forth below from the internal_revenue_service does not constitute a modification of trust for purposes of sec_2601 and resulting distributions from trust consistent with this interpretation will not result in the loss of trust’s exempt status for purposes of the generations-skipping transfer_tax with the remainder to great-grandchild and great-grandchild does not constitute a modification of trust for purposes of sec_2601 and resulting distributions from trust consistent with this interpretation will not result in the loss of trust’s exempt status for purposes of the generation-skipping_transfer_tax party to the agreement the court order interpreting trust as including adopted children as children and resulting distributions from trust consistent with this interpretation will not result in a gift by any party to the agreement with remainder to great-grandchild and great-grandchild and resulting distributions from trust consistent with this interpretation will not result in a gift by any party to the agreement as a result of entering into the agreement no party to the court-approved settlement agreement will realize gain_or_loss the court order interpreting trust as providing a life_estate for grandchild the court-approved settlement agreement does not result in a gift by any trust is not includible in grandchild 2’s gross_estate under sec_2033 law and analysis rulings and sec_2601 imposes a tax on every generation-skipping_transfer which is defined under sec_2611 as a taxable_distribution a taxable_termination or a direct_skip under of the tax_reform_act_of_1986 the act gst tax is generally applicable to generation-skipping transfers made after date however under b a of the act and sec_26_2601-1 of the generation-skipping plr-132956-06 transfer_tax regulations the tax does not apply to a transfer under a_trust that was irrevocable on date except to the extent the transfer is made out of corpus added to the trust by an actual or constructive_addition after date sec_26_2601-1 provides rules for determining when a modification sec_26_2601-1 provides that a court-approved settlement of a bona judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the generation-skipping_transfer_tax under sec_26_2601-1 will not cause the trust to lose its exempt status these rules are applicable only for purposes of determining whether an exempt trust retains exempt status for generation-skipping_transfer_tax purposes the rules do not apply in determining for example whether the transaction results in a gift subject_to gift_tax or may cause the trust to be included in the gross_estate of a beneficiary or may result in the realization of capital_gain for purposes of sec_1001 fide issue regarding the administration of the trust or the construction of terms of the governing instrument will not cause an exempt trust to be subject_to the provisions of chapter if the settlement is the product of arm’s length negotiations and the settlement is within the range of reasonable outcomes under the governing instrument and applicable state law addressing the issues resolved by the settlement a settlement that results in a compromise between the positions of the litigating parties and reflects the parties’ assessments of the relative strengths of their positions is a settlement that is within the range of reasonable outcomes instrument to resolve an ambiguity in the terms of the instrument or to correct a scrivener’s error will not cause an exempt trust to be subject_to the provisions of chapter if the judicial action involves a bona_fide issue and the construction is consistent with applicable state law that would be applied by the highest court of the state instrument of an exempt trust including a trustee distribution settlement or construction that does not satisfy sec_26_2601-1 b or c by judicial reformation or nonjudicial reformation that is valid under applicable state law will not cause an exempt trust to be subject_to the provisions of chapter if the modification does not shift a beneficial_interest in the trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification and the modification does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust sec_26_2601-1 provides that a modification of the governing sec_26_2601-1 provides that a judicial construction of a governing accordingly based on the facts submitted and the representations made we the issues resolved by the settlement agreement and court order with respect plr-132956-06 to the nature of the beneficiaries’ interests when trust will terminate and what state law will apply to trust are all bona_fide issues regarding the administration of trust and the construction of the terms of trust the settlement agreement is the product of arm’s length negotiations and is within the range of reasonable outcomes under trust and state law further the court’s construction of trust to resolve any ambiguities in the terms of trust involves bona_fide issues and is consistent with state law finally the settlement agreement and court order clarifying trust will not shift a beneficial_interest in the trust to a lower generation beneficiary and will not extend the time for vesting of any beneficial_interest in the trust conclude that the court order interpreting trust as including adopted children as children does not constitute a modification of trust for purposes of sec_2601 and resulting distributions from trust consistent with this interpretation will not result in the loss of trust’s exempt status for purposes of the generations-skipping transfer_tax and the court order interpreting trust as providing a life_estate for grandchild with the remainder to great-grandchild and great-grandchild does not constitute a modification of trust for purposes of sec_2601 and resulting distributions from trust consistent with this interpretation will not result in the loss of trust’s exempt status for purposes of the generation-skipping_transfer_tax sec_2501 provides that a tax is imposed for each calendar_year on the transfer of property by gift during such calendar_year by any individual resident or nonresident sec_2511 provides that the tax imposed by sec_2501 will apply whether the transfer is in trust or otherwise whether the gift is direct or indirect and whether the property is real or personal tangible or intangible which an interest in property is gratuitously passed or conferred upon another regardless of the means or device employed constitutes a gift subject_to tax depends on whether the settlement is based on a valid enforceable claim asserted by the parties and to the extent feasible produces an economically fair result see 674_f2d_761 9th cir citing 387_us_456 thus state law must be examined to ascertain the legitimacy of each party’s claim if it is determined that each party has a valid claim the service must determine that the settlement reflects the result that would apply under state law if there is a difference it is necessary to whether an agreement settling a dispute is effective for gift_tax purposes sec_25_2511-1 of the gift_tax regulations provides that any transaction in rulings and the issues resolved by the settlement agreement and court order with respect plr-132956-06 consider whether the difference may be justified because of the uncertainty of the result if the question were litigated to the nature of the beneficiaries’ interests when trust will terminate and what state law will apply are all bona_fide issues based upon valid enforceable claims by the interested parties the settlement agreement and court order reflect the results that would apply under state law as described above therefore based upon the facts presented and representations made we conclude that the execution of the settlement agreement and approval of the agreement by court the court order interpreting trust to include adopted children as children and the resulting distributions from trust consistent with this interpretation and the court order interpreting trust as providing a life_estate for grandchild with the remainder to great-grandchildren and and the resulting distributions from trust consistent with this interpretation do not result in a gift by any party to the agreement ruling sec_61 provides that gross_income includes gains derived from dealings sec_1001 provides that the amount_realized from the sale or other sec_1001 provides that the gain from the sale_or_other_disposition of in property and under ' a from an interest in a_trust property shall be the excess of the amount_realized over the adjusted_basis provided in sec_1011 for determining gain and the loss shall be the excess of the adjusted_basis provided in sec_1011 for determining loss over the amount_realized disposition of property shall be the sum of any money received plus the fair_market_value of the property other than money received under sec_1001 except as otherwise provided in subtitle a the entire amount of gain_or_loss determined under sec_1001 on the sale_or_exchange of property shall be recognized sec_1_1001-1 of the income_tax regulations provides that the gain_or_loss realized from the conversion of property into cash or from the exchange of property for other_property differing materially either in_kind or in extent is treated as income or loss sustained issue of when a sale_or_exchange has taken place that results in realization of gain_or_loss under sec_1001 in cottage savings a financial_institution exchanged its interests in one group of residential mortgage loans for another lender's interests in a different group of residential mortgage loans the two groups of mortgages were considered substantially identical by the agency that regulated the financial_institution 499_us_554 concerns the the supreme court in cottage savings u s pincite concluded that the rules of the state’s code apply to governing instruments executed prior to --- plr-132956-06 sec_1_1001-1 reasonably interprets sec_1001 and stated that an exchange of property gives rise to a realization event under sec_1001 if the properties exchanged are materially different in defining what constitutes a material difference for purposes of sec_1001 the court stated that properties are different in the sense that is material to the code so long as their respective possessors enjoy legal entitlements that are different in_kind or extent cottage savings u s pincite the court held that mortgage loans made to different obligors and secured_by different homes did embody distinct legal entitlements and that the taxpayer realized losses when it exchanged interests in the loans cottage savings u s pincite ----------------- unless there is a clear indication of a contrary intent cite under state law in construing the dispositive provisions of a transferor an adopted_child is are included in class gifts and thereby treated the same as a child by birth cite sec_3 and further under state’s uniform statutory rule_against_perpetuities act the court may reform a disposition in the manner that most closely approximates the transferor’s manifest plan of distribution that is with the years allowed in the applicable sections in the act cite because court approved the interpretation of trust it is consistent with the supreme court's opinion in cottage savings to find that the interests of the beneficiaries after modification to trust will not differ materially from the interests in trust court order merely clarifies trust to remove ambiguity provides definitive interpretation of trust and ensures trust is not in violation of the rules against perpetuities in under state law accordingly the proposed interpretation and modification of trust will not result in a material difference in_kind or extent of the legal entitlements enjoyed by the beneficiaries and no gain_or_loss is realized by the beneficiaries or trust on the modification for purposes of sec_1001 interpretation and construction of trust provisions are matters of state law ruling sec_2033 provides that the value of the gross_estate shall include the value of sec_2001 provides that a tax is imposed on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states all property to the extent of the interest therein of the decedent at the time of his death in the present case grandchild has an interest in the income and principal of trust during his lifetime grandchild did not transfer the property to trust and does not have any rights in the remainder in trust accordingly based upon the facts presented and representations made we conclude that trust is not includible in the gross_estate of grandchild under sec_2033 plr-132956-06 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically except as noted above we are not ruling on the gift_tax and income_tax consequences of the transaction 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 yours lorraine e gardner senior counsel branch passthroughs and special industries enclosure copy of letter for sec_6110 purposes


internal_revenue_service number release date index number -------------------------------------- --------------------------------------------- ----------------------------------------- ----------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------- id no ---------------- telephone number -------------------- refer reply to cc fip b01 plr-103934-17 date date legend taxpayer -------------------------------------------------------------------- ---------------------------------------------------- parent company accounting firm individual individual individual individual state a city a year year month date date --------------------------------- ------------------------------------- --------------------------------- -------------- ------------------------ -------------- ----------------------- ------------ ------------- ------ ------ ------ ------------------------ -------------------------- plr-103934-17 date date date date a b -------------------------- -------------------- ------------------ --------------------------- --- -- dear --------------- this responds to a letter dated date submitted on behalf of taxpayer taxpayer requests an extension of time under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to make an election under sec_856 of the internal_revenue_code to be treated as a real_estate_investment_trust reit facts taxpayer is a state a single member limited_liability_company that was formed on date to hold through disregarded entities a industrial buildings collectively properties specified in the limited_partnership agreement for parent taxpayer’s owner properties are located in b states across the u s taxpayer commenced operations on date parent is an entity within the company group of funds taxpayer represents that properties are leased to tenants as warehouse space and are used for such things as the storage of goods and manufacturing activities taxpayer represents that it always intended that taxpayer would elect to be treated as a reit by filing form 1120-reit u s income_tax return for real_estate_investment_trusts for its initial taxable_year taxpayer represents that the limited_partnership agreement for parent specifically identifies that a reit subsidiary will be formed the reit subsidiary and notes that parent shall cause each reit subsidiary to elect on its u s federal_income_tax return for the fiscal_year during which such reit subsidiary was formed to be treated as a reit the limited_partnership agreement also provides that parent shall use its commercially reasonable efforts to continue thereafter to cause such reit subsidiary to operate in a manner that would permit such reit subsidiary to continue to qualify as a plr-103934-17 reit excerpts from the limited_partnership agreement for parent were submitted together with the ruling_request taxpayer does not have its own tax department company engaged outside legal advisors to assist in complying with necessary filings when taxpayer was formed this would include creation of the reit entity under local law and purchasing the property to be held by the reit in addition company also engaged accounting firm to provide guidance on tax related matters and assistance with tax compliance for parent and its subsidiaries included within the scope of accounting firm’s engagement was the preparation of certain federal and state tax filings including extensions and returns individual a principal in accounting firm’s city a office was assigned to the engagement accounting firm believed that taxpayer would be formed in year but as a single member limited_liability_company would default to a disregarded_entity in that year and activities if any would therefore be reported on parent’s year tax_return accounting firm believed that taxpayer would not acquire any properties until year and would elect to be treated as a reit in year however due to a miscommunication between taxpayer its legal advisors and accounting firm accounting firm was unaware that taxpayer acquired properties on date pursuant to its engagement and belief as to the operations of taxpayer accounting firm prepared form_7004 application_for automatic_extension of time to file certain business income_tax information and other returns for parent for the tax_year ending date to be filed by its due_date date however because accounting firm was not aware that taxpayer acquired assets prior to date accounting firm did not file a form_7004 to extend the form 1120-reit for taxpayer taxpayer represents that at all times it intended to elect to be treated as a reit in the year in which assets were acquired the chief financial officer of company individual was aware of the need to make an election for taxpayer to be treated as a reit but did not specifically communicate the year for which the reit election should be first effective in month of year individual the controller of company and individual accounting firm director were discussing the group's required filings for the year ended date accounting firm noted that taxpayer was considered a disregarded_entity as of date and that a separate form 1120-reit would not need to be filed taxpayer indicated that assets were acquired in year and therefore a form reit should be filed for the year ended date it was during this discussion that it was identified that the election to treat taxpayer as a reit would not be valid as to year because the election must be made on a timely filed return and as a form_7004 had not been filed to extend the form 1120-reit it could not then be timely filed on date individual discussed the missed election as well as the availability of relief to make the election out of time with individual chief financial officer after learning that such relief was available individual made the determination to proceed with submitting a request for relief to make the late reit election pursuant to sec_301_9100-1 and plr-103934-17 taxpayer filed a form 1120-reit by date for the year year that return contained an election to be treated as a reit and a disclosure that a request for relief would be filed taxpayer makes the following additional representations the request for relief was filed by taxpayer before the failure to make the regulatory election was discovered by the service granting the relief will not result in taxpayer having a lower tax_liability in the aggregate for all years to which the regulatory election applies than taxpayer would have had if the election had been timely made taking into account the time_value_of_money taxpayer did not seek to alter a return position for which an accuracy related penalty has been or could have been imposed under sec_6662 of the code at the time taxpayer requested relief and the new position requires or permits a regulatory election for which relief is requested being fully informed of the required regulatory election and related tax consequences taxpayer did not choose to not file the election taxpayer is not using hindsight in requesting this relief no specific facts have changed since the due_date for making the election that makes this election advantageous to taxpayer the period of limitations on assessment under sec_6501 has not expired for taxpayer for the taxable_year in which the election should have been filed nor for any taxable_year s that would have been affected by the election had it been timely filed the affidavits required by sec_301_9100-3 were provided with taxpayer’s request law and analysis sec_856 provides that a corporation trust or association shall not be considered a reit for any taxable_year unless it files with its return for the taxable_year an election to be a reit or has made such an election for a previous taxable_year and such election has not been terminated or revoked pursuant to sec_1_856-2 of the income_tax regulations the election shall be made by the trust by computing taxable_income as a reit in its return for the first taxable_year for which it desires the election to apply plr-103934-17 sec_301_9100-1 provides that 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 code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to mean an election whose due_date is prescribed by a regulation or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-3 through c sets forth rules that the service generally will use to determine whether under the particular facts and circumstances of each situation the commissioner will grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief subject_to this section will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer i requests relief under this section before the failure to make the regulatory election is discovered by the service ii failed to make the election because of intervening events beyond the taxpayer's control iii failed to make the election because after exercising reasonable diligence taking into account the taxpayer's experience and the complexity of the return or issue the taxpayer was unaware of the necessity for the election iv reasonably relied on the written advice of the service or v reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election a taxpayer will be deemed to have not acted reasonably and in good_faith if the taxpayer i seeks to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time the taxpayer requests relief and the new position requires or permits a regulatory election for which relief is requested ii was informed of the required election but chose not to file the election or iii uses hindsight in requesting relief sec_301_9100-3 provides that a reasonable extension of time to make a regulatory election will be granted only when the interests of the government will not be prejudiced by the granting of relief sec_301_9100-3 provides that the interests of the government are prejudiced if granting relief would result in a taxpayer having a lower tax_liability in the aggregate for all taxable years affected by the election than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money sec_301 c ii provides that the interests of the government are ordinarily prejudiced if the taxable_year in which the regulatory election should have been made or any taxable years that would have been plr-103934-17 affected by the election had it been timely made are closed by the period of limitations on assessment under sec_6501 before the taxpayer's receipt of a ruling granting relief under this section conclusion based on the information submitted and the representations made we conclude that taxpayer has satisfied the requirements for granting a reasonable extension of time to elect under sec_856 to be treated as a reit effective as of the first day of the taxable_year that commenced on date and ended on date this ruling is limited to the timeliness of the filing of taxpayer's election under sec_856 this ruling's application is limited to the facts representations code sections and regulations cited herein no opinion is expressed with regard to whether taxpayer otherwise qualifies as a reit under subchapter_m of the code 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 the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination this ruling is directed only to the taxpayer 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 are being sent to your authorized representatives sincerely _______________________________ jason g kurth assistant to the branch chief branch office of associate chief_counsel financial institutions products enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index numbers ------------------------------------------------------ ----------------- --------------------------------- ------------------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------- id no ------------------ telephone number ---------------------- refer reply to cc psi plr-129685-12 date january legend x ----------------------------------------------------- --------------------------------------------- d1 country ---------------------- ---------------- dear -------------- this is in response to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a disregarded_entity for federal tax purposes facts according to the information submitted x was formed under the laws of country x represents that it was eligible to be treated as a disregarded_entity for federal tax purposes effective d1 however x inadvertently failed to timely file form_8832 entity classification election to be treated as a disregarded_entity for federal tax purposes law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with a single owner can plr-129685-12 elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association if all members have limited_liability unless the entity makes an election to be treated otherwise a foreign eligible_entity with a single owner having limited_liability may elect to be treated as a disregarded_entity pursuant to the rules of sec_301_7701-3 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date 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 internal_revenue_code except subtitles e g h and i section b defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards that the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides rules for requesting extensions of time for regulatory 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 conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make an election to be - treated as a disregarded_entity for federal tax purposes effective d1 x must make the election by filing a properly executed form_8832 with the appropriate service_center a copy of this letter should be attached to the form this ruling is contingent on the x and the owners of x filing all required federal_income_tax and informational returns including amended returns consistent with the requested relief granted in this letter a copy of this letter should be attached to any such return plr-129685-12 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely curt g wilson associate chief_counsel passthroughs special industries by faith colson faith colson senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index number ---------------------------- ----------------------- ------------------------ ---------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------ id no ------------- telephone number ------------------- refer reply to cc intl br1 plr-116369-04 date january ------------------------- ty ------- ty ------- legend a --------------------------------------------------- country b country c year year year date dear ---------------------------- ----------- ---------------- ------- ------- ------- -------------------------- this is in response to a letter dated date requesting a ruling that a’s the rulings contained in this letter are based upon information and loss of united_states citizenship status expatriation did not have for one of its principal purposes the avoidance of u s taxes under subtitle a or subtitle b of the code representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination the information submitted for consideration is substantially as set forth below a was born in and is a citizen of country b in year a moved to the united_states to continue work for his employer at the request of his employer a became a naturalized u s citizen in year for the convenience of international travel required by a’s position in the company in year a was assigned to work in country c a has worked and lived in country c continuously since year and he is fully subject_to tax on his income there a relinquished his u s citizenship at the u s embassy in country a former u s citizen or former u s long-term_resident whose net_worth or sec_877 generally provides that a citizen who loses u s citizenship or a u s plr-116369-04 c on date on the date of a’s expatriation his net_worth exceeded the applicable_amount set forth in sec_877 long-term_resident who ceases to be taxed as a lawful permanent resident individuals who expatriate within the 10-year period immediately preceding the close of the taxable_year will be taxed under sec_877 and the special rules of sec_877 for such taxable_year unless such loss did not have for one of its principal purposes the avoidance of u s taxes sec_2107 and sec_2501 provide special estate and gift_tax regimes respectively for individuals who expatriate with a principal purpose to avoid u s taxes a former u s citizen or former u s long-term_resident will be treated as having expatriated with a principal purpose to avoid u s taxes for purposes of sec_877 sec_2107 and sec_2501 if the individual's average income_tax_liability or the individual's net_worth on the date of expatriation exceeds certain thresholds see sec_877 sec_2107 and sec_2501 average tax_liability exceeds these thresholds however will not be presumed to have a principal purpose of tax_avoidance if that person is described within certain statutory categories and submits a request for a ruling within one year of the date of loss of u s citizenship for the secretary's determination as to whether such loss had for one of its principal purposes the avoidance of u s taxes see sec_877 sec_2107 and sec_2501 former u s citizen or former u s long-term_resident whose net_worth or average tax_liability exceeds the applicable_threshold will not be presumed to have a principal purpose of tax_avoidance if that former citizen or former resident is described within certain categories and submits a complete and good_faith request for a ruling as to whether such loss had for one of its principal purposes the avoidance of u s taxes a is eligible to request a ruling under sec_877 because on the date of his expatriation he was a citizen of country b the country in which he was born see sec_877 notice_98_34 requires that certain information be submitted with a request for a ruling that an individual's expatriation did not have for one of its principal purposes the avoidance of u s taxes accordingly based solely on the facts submitted and the representations made we conclude that a has made a complete and good_faith submission in accordance with sec_877 and notice_98_34 therefore a will not be presumed under sec_877 to have had as one of his principal purposes for expatriating the avoidance of u s taxes however because the information submitted does not clearly establish the under notice_98_34 1998_2_cb_29 modifying notice_97_19 1997_1_cb_394 a while this ruling rebuts a presumption of tax_avoidance under sec_877 plr-116369-04 existence or lack of a principal purpose to avoid taxes under subtitle a or b of the code no opinion is expressed as to whether a's expatriation had for one of its principal purposes the avoidance of such taxes it is not conclusive as to whether a subsequently may be found to have a principal purpose of tax_avoidance under sec_877 sec_2107 and sec_2501 see sec_877 concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in addition no opinion is expressed as to a's u s tax_liability for the taxable years prior to or after his expatriation under sections of the code other than sec_877 sec_2107 and sec_2501 which a obtained the ruling whether or not a is otherwise required to file a return a copy of this letter must be attached to a's u s income_tax return for the year in except as expressly provided herein no opinion is expressed or implied this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely _____________________________ karen a rennie senior technical reviewer branch office of associate chief_counsel international


internal_revenue_service number release date index number ------------------------------------------------ ---------------------------------------------- ---------------------------------------------------- ---------------------- -------------------------------- -------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi plr-121885-09 date date ---------------------------------------------- x -------------------------------------------------- country --------------------- -------------------------- date dear ------------------ this responds to a letter dated date submitted on behalf of x requesting that the service grant x an extension of time under sec_301_9100-3 of the procedure and administration regulations to make an entity classification election the information submitted states that x was formed under the laws of country x represents that x is a foreign_entity eligible to be treated as a disregarded_entity but that it failed to timely file form_8832 entity classification election sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes a business_entity is any entity recognized for federal tax purposes that is not properly classified as a_trust under sec_301_7701-4 or otherwise subject_to special treatment under the internal_revenue_code sec_301_7701-3 provides guidance on the classification of a foreign_entity for federal_income_tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if the 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 plr-121885-09 sec_301_7701-3 provides that to elect to be classified other than as provided in sec_301_7701-3 an eligible_entity must file form_8832 with the designated service_center and that an entity classification election must be filed on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than 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 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief 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 granting relief will not prejudice the interests of the government based solely on the information submitted and representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center and elect to be treated as a disregarded_entity effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter 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 plr-121885-09 in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely curt g wilson associate chief_counsel office_of_chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


number release date id office uilc cca_2012083009525222 ------------ from --------------------- sent thursday date am to -------------------------------------------- cc -------------------------------------- subject advice on the nol_carryback case -----taxpayer ---------------------------- thanks very much for your patience i and the tentative_refund_claim and nol experts in counsel have thoroughly reviewed the facts in this case unfortunately we have concluded that the taxpayer is not entitled to relief the due_date for filing a form_1045 to claim a carryback of the ------ loss to tax years ---- ---------------was ------------------------ although the taxpayer attempted to file form_1045 on a number of occasions prior to ------------------------ each of those filings contained a material omission within the meaning of sec_6411 the claim filed on or about ------------------------ and received by the irs on --------------------------was a complete submission but unfortunately it was filed too late again i appreciate your patience while we reviewed this case please let me know if you have any questions i am copying ------------------------------------- as ------------had asked ----------to look into this case ---------------- ------------- --------------------------- ----------- ---------


tcmemo_2007_241 united_states tax_court bobby j prater petitioner v commissioner of internal revenue respondent docket no 22188-06l filed date paul r tom for petitioner elizabeth downs for respondent memorandum opinion marvel judge this matter is before the court on respondent’s motion for summary_judgment filed under rule 1all rule references are to the tax_court rules_of_practice and procedure and all section references are to the internal_revenue_code in effect for the years at issue background this is an appeal from respondent’s determination upholding the proposed use of a levy to collect petitioner’s unpaid federal_income_tax liabilities for and petitioner resided in hominy oklahoma when the petition was filed petitioner filed income_tax returns for and petitioner did not pay all of his reported tax_liabilities respondent assessed the tax owed on date respondent sent petitioner a final notice_of_intent_to_levy and notice of your right to hearing for the years at issue petitioner timely submitted a form request for a collection_due_process_hearing in his request petitioner asserted that a levy would cause him irreparable harm and requested payment of his tax_liabilities through an installment_agreement on date settlement officer norman e chapman officer chapman sent petitioner a letter acknowledging petitioner’s request for a sec_6330 hearing and scheduled a telephone conference on date to discuss collection alternatives before the conference officer chapman requested that petitioner produce a form 433-a collection information statement for wage earners and self-employed individuals and proof of estimated_tax payments for and the first and second quarters of officer chapman informed petitioner that he could not consider collection alternatives without petitioner’s financial information petitioner failed to submit any of the requested information to officer chapman on date officer chapman held petitioner’s sec_6330 hearing by telephone with petitioner’s representative officer chapman explained that he could not consider an installment_agreement without petitioner’s financial information petitioner’s representative responded that he did not have the requested information on date respondent issued petitioner a notice_of_determination concerning collection action s under sec_6320 and or sustaining respondent’s proposed collection action on date the petition was filed petitioner alleges that although he was unable to obtain all of the requested information before the date telephone conference he now possesses the necessary financial information petitioner thus requests that the court remand his case to the appeals_office to consider an installment_agreement on date we issued petitioner a notice setting his case for trial during the court’s date oklahoma city oklahoma trial session on date respondent filed a motion for summary_judgment on date we ordered petitioner to respond to respondent’s motion for summary_judgment by date petitioner failed to respond i summary_judgment discussion summary_judgment is a procedure designed to expedite litigation and avoid unnecessary time-consuming and expensive trials fla peach corp v commissioner 90_tc_678 summary_judgment may be granted with respect to all or any part of the legal issues presented if the pleadings answers to interrogatories depositions admissions and any other acceptable materials together with affidavits if any show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law rule a and b 98_tc_518 affd 17_f3d_965 7th cir 90_tc_753 the moving party bears the burden of establishing that there is no genuine issue of material fact and factual inferences will be drawn in a manner most favorable to the party opposing summary_judgment 85_tc_812 79_tc_340 the nonmoving party however cannot rest upon the allegations or denials in his pleadings but must set forth specific facts showing that there is a genuine issue for trial rule d dahlstrom v commissioner supra pincite ii sec_6330 sec_6330 provides that no levy may be made on any property or right to property of any person unless the secretary has notified such person in writing of the right to a hearing before the levy is made if the person makes a request for a hearing a hearing shall be held before an impartial officer_or_employee of the internal_revenue_service office of appeals sec_6330 at the hearing a taxpayer may raise any relevant issue including appropriate spousal defenses challenges to the appropriateness of the collection action and collection alternatives sec_6330 a taxpayer may contest the existence or amount of the underlying tax_liability at the hearing if the taxpayer did not receive a notice_of_deficiency for the tax_liability in question or did not otherwise have an earlier opportunity to dispute the tax_liability sec_6330 see also 114_tc_604 following a hearing the appeals_office must make a determination whether the proposed levy action may proceed the appeals_office is required to take into consideration verification presented by the secretary that the requirements of applicable law and administrative procedures have been met relevant issues raised by the taxpayer and whether the proposed levy action appropriately balances the need for efficient collection_of_taxes with a taxpayer’s concerns regarding the intrusiveness of the proposed levy action sec_6330 sec_6330 grants this court jurisdiction to review the determination made by the appeals_office in connection with the sec_6330 hearing where the underlying tax_liability is not in dispute the court will review the determination of the appeals_office for abuse_of_discretion 117_tc_183 sego v commissioner supra pincite 114_tc_176 an abuse_of_discretion occurs if the appeals_office exercises its discretion arbitrarily capriciously or without sound basis in fact or law 112_tc_19 petitioner does not dispute his underlying tax_liabilities for any of the relevant years accordingly we shall review respondent’s determination for abuse_of_discretion in his petition petitioner alleges that he now has the financial information requested by officer chapman and that the court should remand his case to the appeals_office for consideration of payment through an installment_agreement respondent asserts that the appeals officer did not abuse his discretion by rejecting an installment_agreement because petitioner did not provide the requested financial information at the sec_6330 hearing as we previously stated officer chapman requested that petitioner submit a collection information statement and proof of estimated_tax payments for and the first and second quarters of before the sec_6330 hearing officer chapman warned petitioner that he could not consider an installment_agreement without the requested financial information from petitioner because petitioner failed to submit the requested financial information officer chapman could not consider petitioner’s request to pay his tax_liability through an installment_agreement accordingly respondent did not abuse his discretion in rejecting an installment_agreement and sustaining the proposed collection action see chandler v commissioner tcmemo_2005_99 roman v commissioner tcmemo_2004_20 we conclude that there is no genuine issue of material fact requiring a trial in this case and we hold that respondent is entitled to the entry of a decision sustaining the proposed levy as a matter of law an appropriate order and decision will be entered 2nothing in the record indicates that petitioner or petitioner’s representative requested additional time to submit the requested financial information


internal_revenue_service number release date index number ------------------------------------------------- -------------------------------------------------- ----------------------------------------------- ------------------------------------------------ ----------------------------------------------------------- ----------------------- ---------------------------------- department of the treasury washington dc person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc psi b02 - plr-136101-04 date date trust ---------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ein ---------------- a --------------------- ssn ----------------- b -------------------- ssn ----------------- trustee ------------------------------------------------- charity d1 -------------------------- d2 --------------------------- year court --------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ----------------------------------------------- ------- ------------------------------------ state -------- x -- plr-136101-04 dear -------------- this letter responds to a letter dated date and subsequent correspondence submitted by trust s authorized representative on behalf of trustee and trust requesting rulings under sec_664 and sec_4941 of the internal_revenue_code on the qualification of trust as a net_income charitable_remainder_unitrust nimcrut the information submitted states that on d1 a and b created trust with the intention that trust qualify as a nimcrut under ' d trustee is the trustee of trust a and b established trust with the assistance of trustee and charity a and b intended that trust’s realized post-contribution capital_gains be allocated to trust income trust provided that the unitrust_amount payable to the donors during their lifetimes is the lesser_of trust income during the taxable_year as defined in sec_643 and b x of the fair_market_value of the assets of trust valued as of the first day of each taxable_year of trust a b and trustee were unaware that trust did not contain language directing trustee to allocate realized post-contribution capital_gains to trust income trustee administered trust as though a provision allocating realized post-contribution capital_gains to trust income had been included in trust in year trust’s law firm determined that trust did not contain a provision allocating realized post-contribution capital_gain to trust income because of the error and because trust is irrevocable trustee sought an order from court authorizing an amendment ab initio of trust no parties objected to the proposed reformation on d2 court issued an order that due to a scrivener’s error trust be reformed ab initio the revised language in trust provides that trust income will be determined as defined in sec_643 and allocates post-contribution gain to trust income however pre- contribution gains will be allocated to trust principal sec_664 provides that for purposes of ' a charitable_remainder_unitrust is a_trust a from which a fixed percent which is not less than percent nor more than percent of the initial net fair_market_value of all property placed in trust of the net fair_market_value of its assets valued annually is to be paid not less often than annually to one or more persons at least one of which is not an organization described in sec_170 and in the case of individuals only to an individual who is living at the time of the creation of the trust for a term of years not in excess of years or for the life of or lives of such individual or individuals b from which no amount other than the payments described in sec_664 and other than qualified gratuitous transfers plr-136101-04 described in sec_664 may be paid to or for_the_use_of any person other than an organization described in sec_170 c following the termination of the payments described in sec_664 the remainder_interest in the trust is to be transferred to or for_the_use_of an organization described in sec_170 or is to be retained by the trust for such a use or to the extent the remainder_interest is in qualified_employer_securities as defined in sec_664 all or part of such securities are to be transferred to an employee_stock_ownership_plan as defined in sec_4975 in a qualified_gratuitous_transfer as defined by sec_664 and d the value determined under sec_7520 of such remainder_interest is at least percent of the initial net value of all property placed in the trust sec_664 provides that notwithstanding the provisions of sec_664 and b the trust instrument may provide that the trustee shall pay the income_beneficiary for any year a the amount of the trust income if such amount is less than the amount required to be distributed under sec_664 and b any amount of the trust income which is in excess of the amount required to be distributed under sec_664 to the extent that the aggregate of the amounts paid in prior years was less than the aggregate of such required amounts sec_1_664-3 of the income_tax regulations provides that the trust may not be subject_to a power to invade alter amend or revoke for the beneficial use of a person other than an organization described in ' c sec_4941 imposes excise_tax on any act of self-dealing between a private_foundation and any of its disqualified persons defined in sec_4946 sec_4941 provides that an act of self-dealing includes any transfer to or use by or for the benefit of a disqualified_person of any of the income or assets of a private_foundation however sec_4941 does not prohibit a disqualified person’s cash or donations going for no consideration to such person’s private_foundation sec_53 d e of the foundation and similar excise_tax regulations provides that an incidental or tenuous benefit to a disqualified_person does not constitute an act of self-dealing sec_4947 describes split-interest_trusts as those that are not exempt from federal_income_tax under sec_501 not all of the unexpired interests in which are devoted to purposes in sec_107 and which have amounts in trust for which a deduction was allowed under sec_170 sec_545 sec_556 sec_642 sec_2055 sec_2106 or sec_2522 sec_4947 provides that sec_4941 shall apply as if such split-interest_trusts were private_foundations under sec_509 plr-136101-04 sec_4947 provides that the provisions of sec_4947 do not apply with respect to the amounts payable under the terms of such split-interest trust to its income beneficiaries sec_53_4947-1 example of the regulations indicates that the payments of income by a charitable_remainder_unitrust to its individual income beneficiaries does not result in any_tax on self-dealing under sec_4941 as a nimcrut under sec_664 trust is a split-interest trust described in sec_4947 and is therefore subject_to sec_4941 which imposes an excise_tax on self- dealing a and b are disqualified persons with respect to trust because they are the creators of and substantial contributors to trust under sec_4947 and sec_53_4947-1 example a charitable_remainder unitrust’s payments to its income_beneficiary do not result in any_tax on self- dealing under sec_4941 under the circumstances described a retroactive_amendment in favor of the charitable_remainder beneficiary does not constitute self-dealing under sec_4941 in addition the consistent administration of trust and treatment of realized post- contribution capital_gains provides assurance that the parties to trust intended to include realized post-contribution capital_gains in trust income based solely on the representations submitted we conclude that the judicial reformation of trust ab initio does not violate ' furthermore assuming that the terms of the reformed trust are otherwise valid under sec_664 the reformed trust will be treated as a valid crut under d ab initio additionally we conclude that the judicial reformation of trust to include post-contribution capital_gains realized in trust income will not be an act of self-dealing under sec_4941 with respect to a and b or any other disqualified persons under sec_4946 except as specifically set forth above no opinion is expressed as to the federal tax consequences of the above described facts under any other provision of the code specifically no opinion is expressed concerning whether trust is or was a charitable_remainder_unitrust within the meaning of ' d this ruling is directed only to the taxpayer on whose behalf it was requested sec_6110 provides that it may not be used or cited as precedent plr-136101-04 pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to trust s authorized representative sincerely j thomas hines chief branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for ' purposes