internal_revenue_service number release date index number ---------------------------------- ---------------------------------------- ---------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------- id no ----------------- ---------------------------------------------------- telephone number -------------------- refer reply to cc intl b02 plr-103648-13 date date ty ------ legend taxpayers trust -------------------------------------------- ------------------------------------------ --------------------------------------------------------------- partnership ------------------------------------------------------------------ corporation ---------------------------------------------------------------------- country x firm year date year month --------------------- ------------------------------------- ------ -------------------- ------ ------------------ dear -------------------------- this is in response to a letter dated date requesting the consent of the commissioner of the internal_revenue_service commissioner to make a retroactive qualified_electing_fund qef election under sec_1295 of the internal plr-103648-13 revenue code and sec_1_1295-3 with respect to taxpayers’ investment in corporation the ruling provided in this letter is based upon information and representations submitted by taxpayers and accompanied by a penalty of perjury statement executed by appropriate parties while this office has not verified the material submitted in support of this request_for_ruling such material is subject_to verification on examination the information submitted in the request is substantially as set forth below facts trust is a domestic_trust that was settled by taxpayers via a_trust document executed on date the trust is a grantor_trust and all of the income gains losses and other tax items of the trust are reportable on taxpayers’ federal_income_tax returns in year trust acquired an interest in partnership a limited_partnership organized under the laws of country x to the best of taxpayers’ knowledge partnership has never made an entity classification under sec_301_7701-3 and is classified as a partnership under the default entity classification rules of sec_301_7701-3 partnership invested in corporation a foreign_entity that is understood to be a pfic within the meaning of sections of the code the schedule_k-1 provided by the partnership to the trust discloses that partnership has invested in a pfic and states that as a foreign_partnership the partnership cannot elect to treat the pfic as a qef under sec_1295 of the code the k-1 provided the necessary information to permit taxpayers to make a valid qef election including their share through the trust of corporation’s ordinary_earnings and net capital_gains for the year taxpayers had relied upon firm for over years to advise them with respect to all applicable tax consequences and filing_requirements including their investment in corporation through trust and to prepare their returns firm has been a well-respected accounting firm for over years with ample expertise in providing tax_advice pertaining to the ownership of stock in a foreign_corporation taxpayers had no professionals other than their tax preparer review their tax returns before filing in the course of preparing taxpayers’ year federal_income_tax return on extension firm discovered upon review of the k-1 that taxpayers owned a pfic through their ownership of partnership taxpayers were informed of the pfic issue for the first time in month until that time they were unaware that corporation was a pfic taxpayers have each submitted an affidavit under penalties of perjury that describe the events that led to the failure to make a qef election with respect to plr-103648-13 corporation by the election due_date including the role of firm taxpayers also submitted an affidavit from firm which describes firm’s engagement and responsibilities and firm’s failure to provide advice regarding the tax consequences of taxpayers’ ownership of corporation until firm was preparing taxpayers’ year income_tax returns taxpayers represent that as of the date of this request_for_ruling the pfic status of corporation has not been raised by the irs on audit for any of the taxable years at issue ruling requested taxpayers request the consent of the commissioner of the internal_revenue_service to make a retroactive qef election with respect to corporation for year under sec_1_1295-3 law and analysis sec_1295 of the code provides that any pfic shall be treated as a qef with respect to a taxpayer if an election by the taxpayer under sec_1295 applies to such company for the taxable_year and the company complies with such requirements as the secretary may prescribe for purposes of determining the ordinary_earnings and net capital_gains of such company under sec_1295 a qef election may be made for any taxable_year at any time on or before the due_date determined with regard to extensions for filing the return for such taxable_year to the extent provided in regulations such an election may be made after such due_date if the taxpayer failed to make an election by the due_date because the taxpayer reasonably believed the company was not a pfic under sec_1_1295-3 a taxpayer may request the consent of the commissioner to make a retroactive qef election for a taxable_year if granting consent will not prejudice the interests of the united_states government the shareholder reasonably relied on a qualified_tax professional within the meaning of sec_1_1295-3 as provided in sec_1_1295-3 raises upon audit the pfic status of the corporation for any taxable_year of the shareholder and the shareholder satisfies the procedural requirements of sec_1_1295-3 the request is made before a representative of the internal_revenue_service the procedural requirements include filing a request for consent to make a retroactive election with and submitting a user_fee to the office of the associate chief plr-103648-13 counsel international sec_1_1295-3 additionally affidavits signed under penalties of perjury must be submitted that describe date the events which led to the failure to make a qef election by the election due the discovery of such failure the engagement and responsibilities of the qualified_tax professional and the extent to which the shareholder relied on such professional sec_1_1295-3 and iii conclusion based on the information submitted and representations made we conclude that taxpayers have satisfied the requirements of sec_1_1295-3 consent is granted to taxpayers to make a retroactive qef election with respect to corporation for year under sec_1_1295-3 provided that they comply with the rules under sec_1_1295-3 regarding the time and manner for making the retroactive qef election a copy of this ruling must be attached to any_tax return to which it is relevant 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 jeffery g mitchell branch chief branch international


department of the treasury internal_revenue_service washington d c t a x e x e m p t a n d g o v e r n m e n t e n t i t i e s d i v i s i o n contact person telephone number identification_number number release date se t eo ra t date date uil number employer_identification_number legend p s t dear ------------------- this is in response to a letter from your authorized representative requesting a ruling on p’s behalf concerning p's proposed transfers of all of its assets to s and t pursuant to sec_507 of the internal_revenue_code facts p s and t are exempt from federal_income_tax under sec_501 of the code and are private_foundations under sec_509 which are effectively controlled by the same persons over time differences of opinion have arisen among the board members of p as to the management and charitable activities of p to resolve this discord p proposes to transfer fifty-four percent of its assets to s and forty-six percent to t after the transfers p will notify the service of its intent to terminate its private_foundation_status under sec_509 pursuant to sec_507 p has no expenditure_responsibility grants outstanding under sec_4945 rulings requested the following rulings are requested p’s transfers to s and t will not result in termination of p’s private_foundation_status under sec_507 of the code but instead will constitute a transfer described in sec_507 p's status as a private_foundation will not terminate because of the transfer of its assets to s and t and p will not be liable for any_tax imposed by sec_507 of the code on termination of a private_foundation p's transfers to s and t will not give rise to any net_investment_income or constitute any other taxable sale or disposition under sec_4940 of the code p's transfers to s and t will not constitute any act of self-dealing under sec_4941 of the code by p or p’s foundation_manager as defined in sec_4946 upon p's transfers to s and t they will each succeed to a portion of p's excess qualifying distributions if any based upon each transferee foundation's proportionate share of p's total assets received under sec_4942 of the code and the record-keeping requirements of sec_4942 will not apply to p during any period in which p has no assets p's transfers of all of its assets to s and t will not constitute taxable_expenditures under sec_4945 of the code p will not be required to exercise any expenditure_responsibility under sec_4945 of the code with respect to its transfers of all of its assets to s and t because p will have disposed of all of its assets p will be required under sec_6043 of the code to file its annual return for the year of its dissolution p and its foundation managers will not be required to file the annual information_return required under sec_6033 of the code for any_tax years following the tax_year in which the last transfers of all of p's assets occur if during such subsequent tax years p has neither legal nor equitable_title to any assets nor engages in any activities the payments of legal accounting and other expenses if reasonable in amount incurred by p in connection with this private_letter_ruling request and in carrying out the transfers of assets will be considered qualifying distributions under sec_4942 of the code the payments of legal accounting and other expenses if reasonable in amount incurred by p in connection with this private_letter_ruling request and in carrying out the transfers of assets will not constitute taxable_expenditures under sec_4945 of the code or acts of self- dealing under sec_4941 law sec_501 of the code provides for the exemption from federal_income_tax of nonprofit_organizations organized and operated exclusively for the charitable and or other exempt purposes stated in that section sec_509 of the code describes organizations exempt from federal_income_tax under sec_501 are private_foundations subject_to the provisions of chapter of the code sec_507 of the code and sec_1_507-1 of the income_tax regulations provide that a private_foundation may voluntarily terminate its private_foundation_status by submitting to the internal_revenue_service a statement of its intention to voluntarily terminate its private_foundation_status pursuant to sec_507 of the code and by paying any termination_tax under sec_507 of the code sec_507 of the code impose excise_tax on a private_foundation which voluntarily terminates its private_foundation_status under sec_507 this sec_507 tax is equal to the lower_of a the aggregate tax benefits that have resulted from the private foundation's exempt status under sec_501 or b the value of the net assets of the private_foundation sec_507 of the code concerns the transfer of assets by one private_foundation to one or more other private_foundations and provides that each transferee private_foundation shall not be treated as a newly created organization sec_1_507-3 of the regulations indicates that a transfer under sec_507 of the code includes a transfer of assets from one private_foundation to one or more other private_foundations pursuant to any reorganization including a significant disposition of or more of the transferor foundation's assets sec_1_507-3 of the regulations provides that in a transfer of assets from one private_foundation to one or more private_foundations pursuant to a reorganization each transferee private_foundation shall not be treated as a newly created organization but shall succeed to the transferor's aggregate tax benefits under sec_507 of the code sec_507 of the code indicates that the aggregate tax benefits of a private_foundation refer to the value of its exemption from federal_income_tax and of the deductions taken by its donors during its existence sec_1_507-1 of the regulations provides that a private_foundation which transfers all of its net assets is not required to file annual information returns required by sec_6033 of the code for subsequent tax years after its tax_year of such transfer when it has no assets or activities sec_1_507-3 of the regulations indicates that a transferor private_foundation is required to meet its charitable distribution_requirements under sec_4942 of the code even for any_tax year in which it makes a transfer of its assets to another private_foundation pursuant to sec_507 of the code sec_1_507-3 of the regulations provides that where a private_foundation has transferred all of its assets to another private_foundation in a transfer under sec_507 of the code it is not required to exercise expenditure_responsibility under sec_4945 of the code with respect to such transfer sec_1_507-3 of the regulations provides that if a private_foundation transfers assets to one or more private_foundations which are effectively controlled directly or indirectly within the meaning of sec_1_482-1 of the regulations by the same persons who effectively control the transferor foundation each transferee foundation will be treated as if it were the transferor foundation for purposes of sec_4940 through and sec_507 through of the code each transferee is treated as its transferor in the proportion which the fair_market_value of the transferor's assets transferred to the transferee bears to the fair_market_value of all of the transferor's assets immediately before the transfer sec_1_507-3 of the regulations provides that a transfer of assets under sec_507 of the code does not relieve the transferor private_foundation from filing its own final tax_year return as required by sec_6043 of the code sec_1_507-4 of the regulations provides that the tax on termination of private_foundation_status under sec_507 of the code does not apply to a transfer of assets under sec_507 of the code sec_1_507-1 and sec_1_507-3 of the regulations provide that a transferor foundation's transfer of assets under sec_507 of the code will not constitute any termination of the transferor foundation's private_foundation_status under sec_509 of the code sec_4940 of the code imposes excise_tax on certain investment_income of a private_foundation sec_4941 of the code imposes excise_tax on any act of self-dealing between a private_foundation and any of its disqualified persons under sec_4946 sec_53_4946-1 of the foundation and similar excise_taxes regulations provides that for purposes of self-dealing under sec_4941 of the code an exempt_organization under sec_501 of the code is not a disqualified_person sec_4942 of the code requires that a private_foundation must expend annual qualifying distributions under sec_4942 for the conduct of exempt purposes revrul_78_387 1978_2_cb_270 describes the carryover of a transferor private foundation's excess qualifying distributions under sec_4942 of the code where the transferor and the transferee foundations are controlled by the same persons under sec_1_507-3 of the regulations under that regulation the transferee is treated as the transferor so that the transferee can reduce its own distributable_amount under sec_4942 of the code by its share of the amount if any of the transferor foundation's excess qualifying distributions under sec_4942 of the code revrul_2002_28 2002_1_cb_942 describes the tax effects of a private_foundation distributing all of its assets to other private_foundations under sec_507 of the code under various situations where the transferor and the transferee foundations are controlled by the same persons under sec_1_507-3 of the regulations sec_4942 of the code requires that a private_foundation must expend annual qualifying distributions under sec_4942 for the conduct of exempt purposes sec_4945 of the code imposes excise_tax on any private foundation's making of a taxable_expenditure under sec_4945 sec_4945 of the code requires that in order to avoid making a taxable_expenditure a transferor private_foundation must exercise expenditure_responsibility under sec_4945 on its grants to another private_foundation sec_4945 of the code defines expenditure_responsibility in terms of the grantor private_foundation requiring pre-grant inquiry and post-grant reports as to the grantee private_foundation on its uses of the grant sec_4945 of the code provides that a taxable_expenditure includes any amount expended by a private_foundation for purposes other than exempt purposes sec_53_4945-6 of the regulations allows a private_foundation to transfer its assets to exempt_organizations under sec_501 of the code including private_foundations pursuant to sec_507 of the code without the transfers being taxable_expenditures under sec_4945 of the code sec_6033 of the code provides that exempt_organizations under sec_501 must file an annual return sec_6043 of the code provides that exempt_organizations under sec_501 must file an information_return on liquidation dissolution termination or contraction if it was exempt for any of its last five years analysis ruling_request under sec_1_507-3 of the regulations p's transfers of its assets under sec_507 of the code will not terminate p's private_foundation_status under sec_509 under sec_1_507-3 of the regulations a transfer under sec_507 of the code includes a transfer of assets from one private_foundation to one or more other private_foundations pursuant to any reorganization or liquidation including a significant disposition of or more of the transferor private foundation's assets because p will transfer all of its assets p's transfers will be a significant disposition of its assets under sec_1_507-3 of the regulations and thus will be transfers under sec_507 of the code ruling_request under sec_1_507-3 of the regulations p's transfers of its assets under sec_507 of the code will not terminate p's private_foundation_status under sec_509 under sec_1_507-4 of the regulations p's transfers of its assets under sec_507 of the code will not result in foundation termination_tax under sec_507 p's filing of its voluntary notice of intent to terminate its private_foundation_status under sec_509 of the code pursuant to sec_507 will not result in any termination_tax under sec_507 because under sec_507 the value of p's assets after it has transferred all of its assets will be zero ruling_request under sec_4940 of the code p's transfers of its assets to s and t will not result in any income or tax under sec_4940 ruling_request under sec_4941 of the code p's transfers of its assets will not be acts of self-dealing because p's transfers will be for exempt purposes under sec_501 of the code to organizations s and t which are exempt from federal_income_tax under sec_501 of the code and which are not disqualified persons under sec_4946 of the code for purposes of sec_4941 of the code pursuant to sec_53_4946-1 of the regulations ruling_request as in revrul_78_387 cited above after p transfers all of its assets p's excess qualifying_distribution carryover if any under sec_4942 of the code will carry over to p's transferees s and t in proportion to the assets transferred to each and may be used by each transferee to meet its own distribution_requirements under sec_4942 under sec_1_507-3 of the regulations p's recordkeeping requirement under sec_4942 of the code if any will not apply after p has transferred all of its assets ruling_request under sec_53_4945-6 of the regulations private_foundation p can make transfers of its assets pursuant to sec_507 of the code to exempt_organizations under sec_501 of the code including private_foundations without the transfers being taxable_expenditures under sec_4945 of the code thus p's transfers of its assets to s and t will not be taxable_expenditures under sec_4945 of the code and will not subject p to tax under that section ruling_request sec_1_507-3 of the regulations provides that where a private_foundation transfers all of its assets to an exempt_organization under sec_501 of the code pursuant to sec_507 of the code it has no expenditure_responsibility requirement under sec_4945 of the code on such transfers thus p will not have to exercise expenditure_responsibility under sec_4945 of the code with respect to its transfer of all of its assets to s and t ruling_request upon p's dissolution p will be required under sec_6043 of the code to file its annual return for the year of such dissolution ruling_request under sec_1_507-1 of the regulations p will no longer be required to file its annual return form_990-pf under sec_6033 of the code for any_tax years subsequent to its tax_year in which it transfers all of its assets ruling_request under sec_4942 of the code and sec_53_4942_a_-3 of the regulations qualifying distributions include the reasonable and necessary administrative expenses paid to accomplish one or more exempt purposes the legal accounting and other necessary expenses_incurred to implement p's transfer to s and t if reasonable in amount will be paid to further the exempt purposes of s and t and will be qualifying distributions under sec_4942 of the code ruling_request under sec_53_4945-6 of the regulations private_foundation p can make transfers of its assets pursuant to sec_507 of the code to organizations exempt under sec_501 including private_foundations without the transfers being taxable_expenditures under sec_4945 thus the costs associated with p's transfers of its assets to s and t will not be taxable_expenditures under sec_4945 and will not subject p to tax under that section under sec_4941 of the code p's transfers of its assets and payments for costs associated with such transfers will not be acts of self-dealing because p's transfers will be for exempt purposes under sec_501 to organizations s and t which are exempt from federal_income_tax under sec_501 and which are not disqualified persons under sec_4946 for purposes of sec_4941 pursuant to sec_53_4946-1 of the regulations conclusion accordingly we rule that p's transfers of all of its assets to s and t will qualify as transfers under sec_507 of the code and will not constitute a termination of p's status as a private_foundation under sec_509 pursuant to sec_507 p's transfers of all of its assets to s and t will qualify as transfers under sec_507 of the code and will not constitute a termination of p's status as a private_foundation under sec_509 pursuant to sec_507 p's transfers of assets to s and t will not result in tax under sec_507 p's transfers of its assets to s and t will not result in investment_income or tax under sec_4940 of the code p's transfers of its assets to s and t will not constitute acts of self-dealing and will not subject p's foundation managers or disqualified persons to tax under sec_4941 or sec_4941 of the code as a result of its transfers to s and t p's excess qualifying distributions carryover under sec_4942 of the code will be transferred to s and t in proportion to the assets transferred to each p will not be required to comply with the recordkeeping requirements of sec_4942 with respect to its transfers after it transfers all of its assets p's transfers of its assets to s and t will not constitute taxable_expenditures or subject p to tax under sec_4945 of the code p will not have to exercise expenditure_responsibility under sec_4945 of the code with respect to its transfers of its assets because p will transfer all of its assets to s and t p will be required under sec_6043 of the code to file its annual return for the year of its dissolution p and its foundation managers will not be required to file the annual information_return required under sec_6033 of the code for any_tax years following the tax_year in which the last transfers of all of p's assets occur if during such subsequent tax years p has neither legal nor equitable_title to any assets nor engages in any activities the legal accounting and other expenses if reasonable in amount incurred by p in connection with this private_letter_ruling request and in carrying out the transfers of assets will be considered qualifying distributions under sec_4942 of the code on the basis that they have been made to achieve the charitable purposes of the grants the payments of legal accounting and other expenses if reasonable in amount incurred by p in connection with this private_letter_ruling request and in carrying out the transfers of assets will not constitute taxable_expenditures under sec_4945 or acts of self-dealing under sec_4941 this ruling is based on the understanding there will be no material changes in the facts upon which it is based this ruling does not address the applicability of any section of the code or regulations to the facts submitted other than with respect to the sections described this ruling is directed only to the organization that requested it sec_6110 of the code provides it may not be used or cited by others as precedent this ruling will be made available for public inspection under sec_6110 of the code after certain deletions of identifying information are made for details see enclosed notice notice of intention to disclose a copy of this ruling with deletions that we intend to make available for sincerely debra j kawecki manager exempt_organizations technical group public inspection is attached to notice if you disagree with our proposed deletions you should follow the instructions in notice if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter in accordance with the power_of_attorney currently on file with the internal_revenue_service we are sending a copy of this letter to your authorized representative enclosure notice


internal_revenue_service number release date index number ---------------------- -------------------------------------------- -------------------------------------- -------------- ---------------------------- ---------------------- ------------------------- department of the treasury washington dc person to contact ------------------------------- -------- ------------- ----------------------------------------------------- telephone number --------------------- refer reply to cc psi - plr-150400-04 date date ------------ ---------------------------- ------------------------------------- -------------------------------------- legend x y --------------------------------------------------- country state date dear ----------------- x by x's authorized representative requesting a ruling under sec_301_9100-3 of the procedure and administration regulations that x be granted an extension of time to elect to be classified as an association_taxable_as_a_corporation under sec_301_7701-3 company formed x a country unlimited liability company x is wholly owned by y x intended to be classified as an association_taxable_as_a_corporation for federal tax purposes effective date however x inadvertently failed to timely file form_8832 entity classification election effective date the information submitted states that on date y a state limited_liability this letter responds to a letter dated date submitted on behalf of ------------------ sec_301_7701-3 provides that an eligible_entity may elect to be sec_301_7701-3 provides that for purposes of sec_301_7701-3 a sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301 b or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with a single owner can elect to be classified as an association and thus taxable as a corporation under sec_301_7701-2 or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that unless the entity elects otherwise a foreign eligible_entity is disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability member of a foreign eligible_entity has limited_liability if the member has no personal liability for the debt of or claims against the entity by reason of being a member classified other than as provided under sec_301_7701-3 by filing form_8832 with the service_center designated on the form c i will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or an announcement published in the internal_revenue_bulletin commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic_extension 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 sec_301_7701-3 provides that an election made under sec_301 sec_301_9100-1 defines the term regulatory election as an election sec_301_9100-1 through provide the standards the except as specifically set forth above no opinion is expressed or implied a copy of this letter should be attached to the election a copy is enclosed for this ruling is directed only to the taxpayer who requested it sec_6110 based solely on the facts submitted and the representations made we conclude the government that x has satisfied the requirements of sec_301_9100-3 as a result x is granted an extension of time of sixty days from the date of this letter to file a properly executed form_8832 with the appropriate service_center electing to be treated as an association effective date that purpose concerning the federal tax consequences of the facts described above under any other provision of the code of the internal_revenue_code provides that it may not be used or cited as precedent being sent to x’s authorized representative enclosures copy of this letter copy for sec_6110 purposes associate chief_counsel passthroughs and special industries pursuant to the power_of_attorney on file with this office a copy of this letter is heather c maloy


department of the treasury internal_revenue_service washington d c date offic e of c h ief c o u n sel number info release date index no the honorable trent lott united_states senate washington d c dear senator lott this letter responds to your inquiry dated date in which you ask whether internal_revenue_service regulations allow an organization described in sec_501 of the internal_revenue_code the code to give grant funds to an organization described in sec_501 of the code as long as a sec_501 organization’s disbursement of funds furthers the purposes for which exemption was granted the disbursement would not be prohibited by income_tax regulations governing charitable organizations the following authorities apply to this situation cid organizations recognized as exempt from federal_income_tax under sec_501 of the code because they are described in sec_501 of the code must operate exclusively for one or more exempt purposes sec_1_501_c_3_-1 cid an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities that accomplish one or more of the exempt purposes enumerated in sec_501 an organization’s activities will be considered permissible under sec_501 if they meet the following conditions the purpose of the organization is charitable the activities are not illegal contrary to a clearly defined and established policy or in conflict with express statutory restrictions and the activities further the organization’s exempt_purpose and are reasonably related to the accomplishment of that purpose rev_rul c b while we are unable to comment on the specific taxpayer identified by your constituent i believe the information provided reaches the fundamental question raised and i hope this information is helpful to you if you have additional questions or need further information please contact me at or robin ehrenberg of my staff at we would certainly be happy to respond directly to your constituent as well sincerely nancy j marks acting division counsel associate chief_counsel tax exempt government entities


department of the treasury internal_revenue_service washington d c number release date date date uilc cc dom corp b2 internal_revenue_service national_office chief_counsel_advice case id plr-116967-98 to from district_director chief examination lewis k brickates assistant to the branch chief branch subject notification of withdrawal of ruling_request in plr-116967-98 date of conference of right date legend target acquiring district a district b date z x this letter is to notify your office that target and acquiring collectively referred to as the taxpayer requested a private_letter_ruling on date after considering all of the materials submitted the applicable authorities and upon meeting with the taxpayer at a conference of right the national_office informed the taxpayer that our position was adverse to their requested rulings upon being notified by the national_office of its adverse position the taxpayer withdrew its ruling_request the transaction which is described below was consummated on date z because the taxpayer’s reporting of the transaction may likely reflect the rulings it requested and that such position is contrary to that of the national_office we are forwarding these materials to you in accordance with b of revproc_99_1 1999_1_irb_6 the information contained in this memorandum is not necessarily intended to dictate any treatment of this issue rather we are forwarding a copy of the withdrawal letter and a discussion of the issues in the event that your office wishes to raise the issues presented in the plr request in connection with any future examination of the taxpayer’s federal tax returns in the transaction target merged with and into a subsidiary of acquiring in a transaction represented to qualify under sec_368 and sec_368 of the internal_revenue_code as a result of the merger target shareholders received x shares of acquiring for each share of target they owned generally acquiring’s ruling_request concerned whether the transaction constituted a reverse_acquisition under sec_1_1502-75 of the income_tax regulations specifically acquiring requested rulings as to whether employee restricted_stock restricted_stock and acquiring shares owned by its subsidiary members affiliate stock are taken into account for purposes of determining whether the transaction was a reverse_acquisition additionally acquiring requested a third ruling that if the restricted_stock and or the affiliate stock is taken into account the transaction will not constitute a reverse_acquisition consequently target’s group would terminate on date z and it would file its final federal tax_return with district a the acquiring group would remain in existence and it would continue to file its federal tax returns with district b on date our office contacted acquiring’s representative concerning the pending ruling_request and informed him that the national_office was tentatively adverse to issuing the requested rulings on date a conference of right was held with the taxpayer following that meeting the taxpayer requested a supplemental conference the national_office obliged the taxpayer’s request and a conference was held on date on date after considering all of the material submitted our office informed acquiring’s representative that the national_office was adverse to their requested rulings subsequently the taxpayer withdrew its ruling_request as stated above acquiring requested a ruling that the restricted_stock be taken into account for purposes of the reverse_acquisition_rules under sec_1_1502-75 based on an assistance received from cc ebeo it was concluded that as long as the restricted_stock granted to the employees has not vested the issuing company is treated as owning the stock the restricted_stock is therefore not treated as outstanding_stock but rather as treasury_stock which is authorized but not issued as a result the restricted_stock is not taken into account for purposes of sec_1_1502-75 the affiliate stock also should not be taken into account for purposes of sec_1 d although the affiliate stock is an asset to the subsidiary that owns the stock counting it for purposes of the reverse_acquisition_rules in this case results in double counting the double counting occurs because the value if any inherent in the affiliate stock is reflected in the fair_market_value of the publicly traded stock based on the stock ownership information submitted by the taxpayer and the conclusions reached with respect to the restricted_stock and the affiliate stock the transaction constituted a reverse_acquisition under sec_1_1502-75 thus the acquiring group terminated at the end of date z and it would file its final federal tax_return with district b the target group would not terminate and it would continue to file its federal tax returns with district a if you need further assistance regarding this matter please contact our office pincite- sincerely yours assistant chief_counsel corporate by _____________________ lewis k brickates assistant to the branch chief branch


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 corp b02 plr-135802-05 date date ------------------ ------------------ ---------------------------------------- ---------------------------------------------------- ty--------------------- legend parent ---------------------------------------------------------------------- electing subsidiary --------------------------------------------------------------------------- year date date company official ---------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------- tax professional ------------------------------------------------------------------------------------------------ dear ------------ subsidiary dated date requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election the extension is being requested in order to allow parent and electing subsidiary to file an election to this letter responds to a letter submitted on behalf of parent and electing ---------------------------- --------------------- ------------------ pursuant to sec_1_382-8 the value of parent stock was reduced by the value plr-135802-05 restore value under sec_1_382-8 of the income_tax regulations hereinafter referred to as the election additional information was received in letters dated june and date the material information submitted in the request and subsequent correspondence is summarized below at the end of year parent was the parent of a controlled_group_of_corporations the parent group and owned directly or indirectly percent or more of the stock of electing subsidiary electing subsidiary is a foreign_entity treated as a corporation for federal tax purposes and is not engaged in the conduct_of_a_trade_or_business within the united_states parent underwent an ownership_change as defined under sec_382 of the code on date therefore the use of the parent’s net operating losses for carryovers are subject_to limitation under sec_382 for year of the stock it owned directly in electing subsidiary sec_382 provides that the amount of the taxable_income of any new_loss_corporation for any post-change_year which may be offset by pre-change losses shall not exceed the sec_382 limitation for such year under sec_382 the sec_382 limitation is determined by multiplying the value of the old_loss_corporation by the applicable long term tax-exempt rate a special rule designed to prevent double counting by controlled groups is set forth in sec_1_382-8 sec_1_382-8 requires the value of the stock of each component_member of the controlled_group be reduced by the value of the stock directly owned by that component_member in any other component_member component members of a controlled_group can elect to restore some or all of the value to another component_member under sec_1_382-8 the election to restore value is made following the procedures set forth in sec_1_382-8 parent and electing subsidiary are component members of a controlled_group under sec_1_382-8 the election to restore the value of electing subsidiary was due on date however for various reasons parent and electing subsidiary failed to make the election in a timely manner 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 commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 under sec_301_9100-1 the commissioner has discretion to grant a reasonable sec_301_9100-1 through provide the standards the in this case the time for filing the election is fixed by the regulations ie based on the facts and information submitted including the representations plr-135802-05 sec_1_382-8 therefore the commissioner has discretionary authority under sec_301_9100-3 to grant an extension of time for parent and electing subsidiary to file the election provided parent and electing subsidiary show they acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the government the information affidavits and representations submitted by parent company official and tax professional explain the circumstances that resulted in the failure to timely file the election the information establishes that parent and electing subsidiary reasonably relied on a qualified_tax professional who failed to make or advise parent and electing subsidiary to make the election and that the interests of the government will not be prejudiced if relief is granted see sec_301_9100-3 made we conclude that parent and electing subsidiary have shown they acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time for parent and electing subsidiary to file the statement described in sec_1_382-8 is granted under sec_301_9100-3 until days from the date on this letter a copy of this letter must be attached to the statement electing subsidiary’s tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers' tax_liability for the years involved a determination thereof will be made upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers' liability is lower sec_301_9100-3 concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in particular we express no opinion with respect to whether an ownership_change occurred whether parent and electing subsidiary are component members of a controlled_group the amount of value if any that may be restored or as to values or amounts of nols in addition we express no opinion as to the tax effects or consequences of filing the election late under the provisions of any other section of the code or regulations or as to the tax treatment of any conditions existing at the time of or effects resulting from filing the election late that are not specifically set forth in the above ruling statements and representations made by parent parent's authorized representative the above extension of time is conditioned on the taxpayers' parent's and except as expressly provided herein no opinion is expressed or implied for purposes of granting relief under sec_301_9100-3 we relied on certain plr-135802-05 company official and tax professional under penalties of perjury however the director should verify all essential facts moreover notwithstanding that the extension is granted under sec_301_9100-3 to file the election any penalties and interest that would otherwise be applicable still apply provides that it may not be used or cited as precedent sent to your authorized representatives pursuant to a power_of_attorney on file in this office copies of this letter are being this letter is directed only to the taxpayer s who requested it sec_6110 sincerely ken cohen senior technician reviewer branch office of associate chief_counsel corporate cc


internal_revenue_service department of the treasury number release date index numbers re washington dc person to contact telephone number refer reply to cc psi b09-plr-132335-01 date date legend decedent date trust date date date date date date date date date caregiver trust trust trust trust trust plr-132335-01 trust trust step-grandchild step-grandchild step-grandchild charity stepdaughter dollar_figurea dollar_figureb dollar_figurec dollar_figured corporation dear this is in response to your letter dated date requesting a ruling under sec_2601 of the internal_revenue_code the facts and representations submitted are summarized as follows decedent executed a revocable_trust agreement trust on date and amended it on date date date date date and date corporation is the trustee of the trust paragraph of the trust as amended provides for the payment of debts and taxes upon decedent’s death paragraph of the trust provides that after providing for the payments contemplated in paragraph the trustee shall divide the remaining trust property including property to which the trustee is entitled under decedent’s will into four separate trusts one of which shall consist of one-half of such trust property and shall be designated the charitable_trust each of the other three shall consist of one- sixth of trust’s property and be designated respectively by the names of decedent’s three step-grandchildren step-grandchild step-grandchild and step-grandchild the trustee is directed to immediately distribute the principal of the charitable_trust to charity paragraph of the trust directs that caregiver a non-skip_person to decedent be paid dollar_figurea per year in monthly installments these payments are to be made out of income and to the extent income is insufficient out of principal of the respective trusts named for decedent’s step-grandchildren plr-132335-01 paragraph subsection a of the trust provides that from the trusts of the step-grandchildren the trustee shall pay to the beneficiary for whom a_trust is named and his or her descendants such part or all of the income and principal of the trust at such times as the trustee believes desirable for the best interests and welfare of the beneficiary and his or her descendants in that order and as a group considering the desirability of supplementing their respective incomes or assets and all other circumstances and factors the trustee believes pertinent all undistributed_income is to be accumulated and from time to time added to principal paragraph subsection b of the trust provides that if a beneficiary for whom a_trust is named dies before the complete distribution of principal from the trust the principal and undistributed_income of the trust shall be distributed to or for the benefit of his spouse and descendants or such religious charitable scientific or educational_purposes in such proportions and subject_to such trusts powers and conditions that beneficiary may provide and appoint by will specifically referring to this power to appoint paragraph subsection c of the trust provides that any part of a_trust not effectively disposed of by any other provision shall be divided and allocated on the death of the last to die of the beneficiary for whom the trust is named and decedent per stirpes among the living descendants of the beneficiary or if none then per stirpes among the then living descendants of the nearest lineal ancestor of the beneficiary who was also a descendant of stepdaughter and of whom one or more descendants then are living or if none then per stirpes among stepdaughter’s then living descendants paragraph subsection d of the trust provides that when a descendant of a step-grandchild for whom a_trust is named reaches thirty years of age the trustee shall distribute the remaining principal of the trust to him or her paragraph subsection e of the trust provides that on the day preceding the end of twenty-one years after the death of the last to die of decedent’s husband’s descendants living on date and decedent the trustee shall distribute any property then held in a_trust to the beneficiary for whom the trust is named decedent died on date the trustee divided each step-grandchild’s trust into three trusts trust a which consisted of dollar_figureb trust b which consisted of dollar_figurec and an annuity_trust which consisted of dollar_figured the division and allocation were provisional because the trustee was not certain that the generation-skipping_transfer gst tax applied to decedent for step-grandchild trust a has been designated as trust and trust b has been designated as trust for step-grandchild trust a has been designated as trust and trust b has been designated as trust for step- grandchild trust a has been designated as trust and trust b has been designated as trust the annuity trusts have been consolidated into trust and will continue to pay an annuity to caregiver for her life any amount in trust at caregiver’s death will be divided and allocated among the trusts named for decedent’s step-grandchildren plr-132335-01 the executor of decedent’s estate timely filed a federal estate_tax_return form_706 on date in accordance with the requirements of sec_26_2601-1 of the generation-skipping_transfer_tax regulations the executor attached to schedule r of form_706 a sworn statement stating decedent was under a mental_disability to change the disposition of her property from date until her death and certifications of decedent’s physicians stating that decedent was incompetent to handle her own affairs during the period of time that each physician treated decedent the certifications cover the entire period of time from date until decedent’s death the internal_revenue_service service issued an estate_tax closing letter for decedent’s estate on date the trustee proposes to merge trust a and trust b for each step-grandchild into a single trust for the step-grandchild the trustee has requested a ruling under chapter of the internal_revenue_code that under b c of the tax_reform_act_of_1986 act each of the trusts created under trust is exempt from the generation-skipping_transfer gst tax and each trust a and b which are named for a step-grandchild of decedent may be merged into a separate trust that will be exempt from gst tax sec_2601 of the code imposes a tax on every generation-skipping_transfer made after date under b c of the tax_reform_act_of_1986 the tax does not apply to any generation-skipping transfer-- i under a_trust to the extent such trust consists of property included in the gross_estate of a decedent other than property transferred by the decedent during his life after the date of the enactment of the act or reinvestments thereof or ii that is a direct_skip that occurs by reason of the death of any decedent but only if such decedent was on the date of the enactment of the act under a mental_disability to change the disposition of his property and did not regain his competence to dispose_of such property before the date of death sec_26_2601-1 of the generation-skipping_transfer_tax regulations provides in part that if an individual was under a mental_disability to change the disposition of his or her property continuously from date until the date of his or her death the provisions of chapter do not apply to any generation-skipping transfer-- a under a_trust as defined in sec_2652 to the extent such trust consists of property or the proceeds of property the value of which was included in the gross_estate of the individual other than property transferred by or on behalf of the individual during the individual’s life after date or b which is a direct_skip other than a direct_skip from a_trust that occurs by reason of the death of the individual sec_26_2601-1 provides that the term mental_disability means mental incompetence to execute an instrument governing the disposition of the individual’s property whether or not there was an adjudication of incompetence and regardless of whether there has been an appointment of a guardian fiduciary or other plr-132335-01 person charged with either the care of the individual or the care of the individual’s property sec_26_2601-1 provides that if there has not been a court adjudication that the decedent was mentally incompetent on or before date the executor must file with form_706 either- a certification from a qualified physician stating that the decedent was- i mentally incompetent at all times on and after date and ii did not regain competence to modify or revoke the terms of the trust or will prior to his or her death or sufficient other evidence demonstrating that the decedent was mentally incompetent at all times on and after date as well as a statement explaining why no certification is available from a physician and any judgment or decree relating to the decedent’s incompetency that was made after date sec_26_2601-1 provides that the items in sec_26_2601-1 and will be considered relevant but not determinative in establishing the decedent’s state of competency sec_26_2601-1 provides rules for determining when a modification judicial construction settlement agreement or trustee action with respect to a_trust exempt from the gst tax under sec_26_2601-1 sec_26_2601-1 and sec_26_2601-1 will not cause the trust to lose its exempt status under sec_26_2601-1 a modification will not cause a_trust that was irrevocable on date 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 a modification of an exempt trust will result in a shift in beneficial_interest to a lower generation beneficiary if the modification can result in either an increase in the amount of a generation-skipping_transfer or the creation of a new generation-skipping_transfer according to the facts as represented the principal of trust trust trust trust trust trust and trust consists of property that was included in decedent’s gross_estate and decedent’s form_706 included a certification regarding decedent’s mental_disability from each physician who treated decedent from date until her death because the required statements were filed with the form_706 on date and the service issued an estate_tax closing letter on date the service has accepted that decedent was under a mental_disability to change the disposition of her property continuously from date until her death plr-132335-01 because decedent was under a mental_disability to change the disposition of her property continuously from date until her death the provisions of b c of the tax_reform_act_of_1986 apply to each of the trusts and thus the provisions of chapter of the internal_revenue_code will not apply to any generation-skipping_transfer made from the trusts in addition the trustee proposes to merge each step-grandchild’s separate trusts for step-grandchild trust will merge with trust for step-grandchild trust will merge with trust for step-grandchild trust will merge with trust in this case the merger of the trusts will not result in either an increase in the amount of a generation-skipping_transfer or the creation of a new generation-skipping_transfer thus the mergers will not result in a shift in beneficial_interest to a lower generation beneficiary or extend the time for vesting of any beneficial interests in the trusts for purposes of sec_26_2601-1 accordingly we conclude that the merged trusts will continue to be exempt from the gst tax except as specifically ruled herein we express or imply no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent sincerely james f hogan senior technician reviewer branch office of the associate chief_counsel passthroughs and special industries enclosures copy for sec_6110 purposes copy of this letter


internal_revenue_service number release date index number ----------------------------------- ------------------------------------------------ ------------------------------------- ------------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------- id no ------------ telephone number -------------------- refer reply to cc psi b1 plr-103671-07 date date ----------------------------------- legend x -------------------------------------------------- date state dear ---------- ------------------ ------------- this responds to a letter dated date submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts x was incorporated on date under the laws of state the shareholders of x desired that x elect s_corporation treatment effective on date but the election to be treated as an s_corporation was not timely filed accordingly x requests a ruling that it will be treated as an s_corporation effective date law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective sec_1362 provides in relevant part that if an s election is made within the first two and one-half months of a corporation's taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made under plr-103671-07 sec_1362 however if an s election is made after the first two and one-half months of a corporation's taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year and sec_1362 shall not apply x did not timely file an election to be treated as an s_corporation under sec_1362 x has however established reasonable_cause for not making a timely s election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and the representations made and provided that x otherwise qualifies as an s_corporation we conclude that x will be treated as an s_corporation effective date within days from the date of this letter x should submit a properly completed form_2553 effective date with a copy of this letter attached to the relevant service_center except as specifically set forth above no opinion is expressed or implied as to this ruling is directed only to the taxpayer s requesting it sec_6110 of the federal_income_tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed concerning whether x is in fact an s_corporation for federal tax purposes the code provides that it may not be used or cited as precedent plr-103671-07 in accordance with the power_of_attorney on file with this office a copy of this letter is being mailed to your authorized representative sincerely david r haglund senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


t c summary opinion united_states tax_court abboud kore petitioner v commissioner of internal revenue respondent docket no 13888-06s filed date abboud kore pro_se michelle m kwon for respondent gerber judge this case was heard pursuant to the provisions of section of the internal_revenue_code in effect at the time the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any unless otherwise indicated all section references are to the internal_revenue_code in effect during the periods at issue and all rule references are to the tax_court rules_of_practice and procedure other court and this opinion shall not be treated as precedent for any other case in a notice_of_deficiency respondent determined income_tax deficiencies of dollar_figure and dollar_figure for petitioner’s and tax years respectively respondent also determined accuracy-related_penalties under sec_6662 of dollar_figure and dollar_figure for the and tax years respectively at trial respondent conceded2 that petitioner’s income_tax deficiencies should be reduced from dollar_figure to dollar_figure for and from dollar_figure to dollar_figure for also respondent conceded the sec_6662 penalties for both years the issues remaining for our consideration are whether petitioner is entitled to a dependency_exemption for his nephew for or is entitled to file using head_of_household filing_status for and or is entitled to an earned_income_credit for or and is entitled to a child_tax_credit for his nephew for and or petitioner married in egypt and he and his wife moved to the united_states during he and his wife had two children and lived in hurst texas at the time his petition was filed petitioner although married during and used the filing_status married_filing_separately in filing his federal respondent also conceded that petitioner is entitled to claimed dependency_exemption for the one child petitioner had claimed on his and income_tax returns respondent also conceded that petitioner is entitled to child care credits for that dependent_child for the years and income_tax returns for those years for and petitioner claimed one of his two children as a dependent for purposes of claiming a dependency_exemption petitioner also claimed a dependency_exemption for his brother’s son nephew who was approximately years old during and petitioner’s brother resided in sudan during and during the nephew lived in petitioner’s home and petitioner provided all of the nephew’s support during the nephew lived in petitioner’s sister’s home and petitioner provided some of the nephew’s support but petitioner did not know whether the amount he provided was more than one- half of the nephew’s support the issues we consider depend largely on the seminal issue of whether petitioner’s nephew was a dependent as defined in sec_152 for or before the amendments to the internal_revenue_code sec_152 defined a dependent as among others a taxpayer’s niece or nephew over half of whose support was received from the taxpayer sec_152 petitioner’s nephew met the sec_152 dependency tests for but not for because petitioner did not establish that he provided over half the nephew’s support accordingly petitioner is entitled to claim a dependency_exemption for his nephew for but not for respondent’s position was that petitioner was not entitled to child tax_credits for his nephew for and solely because respondent determined that the nephew did not qualify as petitioner’s dependent for or see sec_24 because we have found that the nephew was petitioner’s dependent for petitioner is entitled to a child_tax_credit for his nephew for conversely petitioner is not entitled to the child_tax_credit for because his nephew did not qualify as petitioner’s dependent for that year finally we consider with respect to and whether petitioner is entitled to use the head_of_household filing_status and or is entitled to an earned_income_credit petitioner is not entitled to that filing_status or credit because he was married during and an individual who is married at the end of the taxable_year is not entitled to head_of_household filing_status under sec_2 we note that a married individual living with a spouse can choose between joint filing_status or married_filing_separately status likewise a married taxpayer must file a joint_return in order to be qualified to claim the earned_income_credit sec_32 to reflect the foregoing and to account for respondent’s concessions decision will be entered under rule


acknowledged significant advice may be disseminated internal_revenue_service memorandum cc el gl br2 bjuze gl-121602-97 acknowledged sca date feb to assistant regional_counsel gl western region cc wr from cc el gl br2 senior technician reviewer branch general litigation subject termination of installment agreements by service centers this responds to your request for advice dated date regarding the above-captioned matter you state that the taxpayer_advocate pacific-northwest has concerns regarding the ogden service center’s practice of terminating or defaulting installment_payment agreements in situations where the taxpayer does not agree to extend the collection statute_of_limitations letters used by the service_center to solicit statute extensions from taxpayers who have signed installment agreements state that enforcement action may be taken with no further notice if the enclosed waivers are not signed the taxpayer_advocate believes this practice is illegal and suggests that this practice be terminated you state that you agree with the taxpayer advocate’s analysis but are unsure whether other service centers follow this practice you ask for our advice whether this practice of terminating installment_payment agreements when the taxpayer refuses to extend the collection statute is legal disclosure statement unless specifically marked acknowledged significant advice may be disseminated above this memorandum is not to be circulated or disseminated except as provided in paragraphs iii d and iv a of notice n this document may contain confidential information subject_to the attorney- client and deliberative_process privileges therefore this document shall not be disclosed beyond the office or individual s who originated the question discussed herein and are working on the matter with the requisite need to know in no event shall it be disclosed to taxpayers or their representatives issue whether the service can terminate an installment_payment agreement for the sole reason that the taxpayer refuses to extend the collection statute_of_limitations gl-121602-97 gl-121602-97 conclusion the service may not terminate an existing installment_agreement for the sole reason that the taxpayer refuses to extend the collection statute_of_limitations the service may however determine at the onset not to accept an installment_agreement where the taxpayer refuses to sign a waiver form extending the collection statute expiration date csed for a reasonable period background under sec_6159 agreements for payment of tax_liability in installments the service is granted statutory authority to enter into a written installment_payment agreement allowing the taxpayer to satisfy a tax_liability by making scheduled periodic_payments sec_6159 the service generally enters into an installment_payment agreement when it determines that such agreement will facilitate collection of the tax owed sec_301_6159-1 an installment_payment agreement is effective from the date it is executed by the service until the date set forth in the agreement unless sooner terminated for cause by the service sec_6159 the service has the right to terminate an installment_payment agreement if the taxpayer fails to comply with specific terms of the agreement sec_6159 - in situations in which the service is authorized to terminate the agreement it must unless jeopardy exists provide the taxpayer with a minimum of days notice before taking the action sec_6159 the notice must contain a description of the specific reason for terminating the installment_agreement and if the taxpayer disagrees with the service's determination the taxpayer may request independent administrative review sec_6159 the day notice and administrative appeal provisions relating to termination of installment_payment agreements were codified in the taxpayer bill of right sec_2 tbor2 amendments to sec_6159 prior to the enactment of sec_6159 the service generally entered into installment_payment agreements with taxpayers who were unable to pay their delinquency in full if such taxpayers were able to make payments on the delinquent taxes and in addition pay current taxes as they became due see s rep no 100th cong 2d sess date because of the lack of uniformity in modifications and terminations of these agreements congress enacted sec_6159 in order to provide standards with respect to the termination of installment agreements executed by the service id this action by congress provided taxpayers a degree of predictability with regard to the payment of their financial obligations to the service gl-121602-97 on occasion an installment_agreement may have one or more periods in which the collection statute will expire prior to the term of the agreement in such situations you state that it is the current practice of the ogden service_center to terminate the agreement of a taxpayer who refuses to sign a statute extension even if the taxpayer is otherwise current on the installment_agreement in soliciting statute extensions for cases with a pending csed the letter from the service_center also advises the taxpayer that enforcement action may be taken without further notice if the enclosed waivers are not signed discussion under the current regulations the service has the discretion to accept or reject any proposed installment_payment agreement sec_301_6159-1 in exercising that discretion the service may require as a condition_precedent to entering into an installment_payment agreement that the taxpayer agree to a reasonable extension of the csed id while neither the statute nor the regulations define the term reasonable extension the service generally equates that term with a single extension of the csed for up to five years irm b service personnel to extend the csed a maximum of five years beyond of the year the current csed will expire where the service determines that a waiver form extending the csed is appropriate the taxpayer is advised that the installment_payment agreement will not be accepted unless the waiver is signed irm b the importance of protecting the csed while a taxpayer is making monthly installment_agreement payments is set forth in the general installment_agreement guidelines of the service see irm service personnel are instructed to consider these guidelines prior to accepting and executing an installment_payment agreement initially service personnel are instructed not to grant an installment_payment agreement unless it will be paid in full months before the csed irm handbook no accounts resolution handbook sub- sub sec_942 service personnel are further instructed not to extend the statute if the projected date for full payment is at least one year before the csed irm a when the projected full payment_date is later than this personnel are instructed to either request a there are no irm provisions that allow service personnel to grant multiple or consecutive five-year extensions thus a reasonable extension may be incorporated into the terms of the installment_agreement but such extension is limited to a maximum of five years gl-121602-97 financial review within five years from the date of the agreement statute extensions will be reconsidered during the review or extend the statute for up to five years irm b however if the taxpayer refuses to extend the statute service personnel are instructed to either consider other collection avenues or on rare occasions recommend approval without csed protection if a determination is made that an installment_payment agreement is in the government's best interest irm b in those few instances when it is determined that the best interest of the government is to accept an installment_payment agreement without statute protection service personnel are directed to document the file and write the taxpayer's refusal to extend the statute on the installment_payment agreement form before submitting the agreement to a manager for approval irm c once an installment_payment agreement is formally accepted and executed the statute constrains the ability of the service to terminate the installment_payment agreement during its term unless the specific conditions permitting termination as set forth in sub sec_6159 - are implicated as expressed in the words of the statute congress intended that any installment_agreement entered into by the service shall remain in effect for the term of the agreement unless otherwise provided in subsection b sec_6159 sub sec_6159 thus contains the exclusive list of reasons for which an installment_payment agreement may be terminated by the service sec_301_6159-1 hence an installment_payment agreement may the specific terms of the installment_agreement are embodied and executed on form 433-d installment_agreement the terms set forth in form 433-d must comport with the statute and the regulations see generally 610_fsupp_217 s d fla accordingly there is no language in form 433-d allowing the service to terminate an installment_agreement on the grounds that the taxpayer refuses to extend the csed an installment_payment agreement may be terminated if a taxpayer provides inaccurate or incomplete information fails to timely pay an installment accrues additional liabilities fails to comply with a request for a current financial statement has a significant change in financial condition or if the service determines that collection is in jeopardy sec_6159 - sec_301_6159-1 gl-121602-97 not be terminated for a reason not authorized by the statute or the underlying regulations none of the statutory provisions in sub sec_6159 or any other provision in the statute or the applicable regulations authorizes an installment_agreement to be terminated solely because the taxpayer refuses to extend the collection statute an installment_agreement is not a contract because the taxpayer furnishes no consideration in exchange for the service's promise to defer its right to payment the taxpayer's promise is gratuitous since he or she merely agrees to pay in installments that which he or she is already legally obligated to pay thus for all practical purposes when the taxpayer agrees to be bound by the terms and conditions included in the installment_payment agreement his compliance with the agreement is voluntary while it may be in the best interest of the taxpayer to fulfill the terms of the installment_payment agreement a default by the taxpayer will not permit the service to obtain judicial enforcement of the agreement the service's remedy is to terminate the installment_payment agreement pursuant to the conditions codified in sec_6159 and pursue administrative collection action against the taxpayer therefore inserting a statute extension provision as an additional condition on the form 433-d would not be helpful since the waiver would only be binding on the taxpayer to the extent the installment_payment agreement is in effect based on the foregoing the practice of terminating installment_payment agreements solely because the taxpayer refuses to extend the csed is not countenanced by the statute the regulations or the applicable irm provisions moreover this unsanctioned practice may be deemed an unauthorized collection action which subjects the service to an award of civil damages see sec_7433 hence it is strongly recommended that the service centers discontinue such practice under sec_6159 the district_director may terminate any installment_agreement if the collection of the tax is in jeopardy even though termination under such circumstance is not automatic the district_director may take action to terminate the installment_agreement if the taxpayer refuses to extend the collection statute in jeopardy situations sec_6159 sec_301 c however the action to terminate is based on the jeopardy status rather than on the taxpayer's refusal to extend the statute the mere refusal to extend the statute does not by itself create a jeopardy situation see irm p- gl-121602-97 if you have any questions concerning this memorandum please contact barton j uze at joseph w clark cc executive office of service_center operations t e attn dan azzato new carrollton stop c4 - executive office of customer service operations t c attn ron watson headquarters room director office of field programs cp co c fp


t c summary opinion united_states tax_court deschutes road trust robert hogue trustee petitioner v commissioner of internal revenue respondent docket no 3295-02s filed date jeremy l mcpherson and melinda g williams for respondent armen special_trial_judge this case was heard pursuant to the provisions of sec_7463 the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority unless otherwise indicated all section references are to the internal_revenue_code as amended and all rule references are to the tax_court rules_of_practice and procedure - - this matter is before the court on respondent’s motion to dismiss for lack of jurisdiction as supplemented respondent maintains that the petition was not filed by a trustee authorized to bring suit on behalf of deschutes road trust deschutes deschutes opposes respondent’s motion to dismiss as discussed in detail below we shall grant respondent’s motion as supplemented background a notice_of_deficiency respondent issued a notice_of_deficiency to deschutes determining deficiencies in its federal income taxes and accuracy-related_penalties under sec_6662 as follows year deficiency accuracy-related_penalty dollar_figure dollar_figure big_number big_number the deficiencies in income taxes are based on the disallowance of deductions claimed by deschutes on schedules e supplemental income and loss in this regard respondent determined that the deductions are disallowed because you failed to establish the amount if any that was paid during the taxable_year for ordinary and necessary business_expenses and you failed to establish the cost or other basis of the property claimed to have been used in business use of the terms trust and trustee and their derivatives are intended for narrative convenience only thus no inference should be drawn from our use of such terms regarding any legal status or relationship b petition the court subsequently received and filed a petition for redetermination challenging the notice_of_deficiency the petition was signed by robert hogue as deschutes’s trustee paragraph of the petition which sets forth the bases on which deschutes challenges the notice_of_deficiency alleges as follows the district_director issued a statutory_notice_of_deficiency claiming petitioner had a tax_liability without there being a statutorily procedural correct lawful tax_assessment attached to the notice_of_deficiency irs form 4549a income_tax examination changes line states total corrected tax_liability respondent has failed to provide the petitioners sic with the internal_revenue_code section or regulation that was used to calculate this total corrected tax_liability the respondent has failed to provide the petitioners sic with certified assessment information as per internal revenue regulation respondent has failed to identify the individual who will certify to the tax adjustments the determination was based on therefore the deficiency is unenforceable as the determination was based on unfounded evidence there can be no meaningful administrative hearing until respondent provides petitioner with the above requested information and until that time petitioner will disagree with all of the alleged tax_liability there has been no meaningful examination of books_and_records therefore we believe this is a naked assessment c respondent’s motion and supplement respondent filed a motion to dismiss for lack of jurisdiction in the motion respondent asserts that this case should be dismissed for lack of jurisdiction on the ground that the petition was not filed by a trustee authorized to bring suit on behalf of the trust upon the filing of respondent’s motion to dismiss the court issued an order directing deschutes to file an objection if any to respondent’s motion taking into account rule and attaching to its objection a copy of the trust instrument or other documentation showing that the petition was filed on behalf of a fiduciary legally entitled to institute a case on deschutes’s behalf shortly after the issuance of the foregoing order respondent filed a supplement to respondent’s motion to dismiss attaching thereto copies of certain documents that respondent had just received from robert hogue the court then extended the time within which deschutes was to file any objection to respondent’s motion to dismiss as supplemented d deschutes’ s objection ultimately the court received an objection leave for the filing of which was granted to respondent’s motion to dismiss as supplemented the objection which was signed by robert hogue has as its core thesis that this case should be dismissed for lack of subject matter jurisdiction on the grounds that the notice_of_deficiency issued by respondent was issued on heresay sic evidence petitioner demands that respondent provide certified facts or evidence of a statutory correct assessment or tax_liability to support any claimed deficiency lacking a statutory correct assessment or tax_liability the notice_of_deficiency is null and void and this court does not have subject matter jurisdiction - - the objection also states that robert hogue has authority to represent the trust in this matter attached to the objection are copies of two purported trust instruments the first purported trust instrument is dated date and it identifies e e salera d c as the creator of deschutes road trust this instrument states that the trust shall have at least two trustees and it identifies a michael welch and a edmond a salera as the trustees the creator of the trust purports to select and appoint michael welch as the trustee michael welch then purports to select and appoint edmond a salera as the trustee a power that welch does not appear to have under the instrument in addition although the instrument refers to schedules a through d that are made a part hereof no such schedules are attached to or otherwise a part of the instrument the second purported trust instrument is dated date and it identifies a carol ruthenberg also identified as carol ruthenburg as the creator or sovereign creator of deschutes road trust and robert hogue as legal trustee or sovereign trustee the instrument also states that there need not be more than one trustee although the instrument refers to e e salera also known as edmond e salera has a case pending before the court assigned docket no it appears that the letters d c following his name in the purported trust instrument are an abbreviation for doctor of chiropractic -- - an attached exhibit a enumerating articles of personal_property subject_to the trust no such exhibit is attached both purported trust instruments represent that they were executed within the state of california and that california state law is controlling ef respondent’s response at the court’s direction respondent filed a response to the foregoing objection simultaneously respondent filed a declaration attaching thereto inter alia copies of form sec_1041 u s income_tax return for estates and trusts filed in the name of deschutes road trust for and these returns which were executed by robert hogue on date and date respectively list the date the entity was created as date and its employer_identification_number as f deschutes’s failure to reply after considering respondent’s response and declaration the court directed deschutes to file a reply deschutes failed to do so g other noteworthy documents as previously mentioned respondent attached to the supplement to his motion to dismiss copies of certain documents that he had just received from robert hogue see supra c although none of these documents included a purported trust - instrument the documents did include various minutes for deschutes road trust federal tax identification_number as well as certain partially completed bank documents bearing the same tax identification_number to the extent that these minutes and bank documents bear a date they all purport to be dated date among the foregoing minutes is one entitled first minutes of the deschutes road trust this document references a robin morgan creator of the trust who purports to appoint robert hogue as legal trustee in the second minutes of the deschutes road trust robert hogue purports to appoint a carol ruthenberg as substitute trustee legal agent in yet another minutes michael welch and edmond a salera identified as old trustees purport to appoint robert hogue as new trustee welch and salera then purport to resign as trustees among the partially completed bank documents is a trustee certification for deschutes road trust this document identifies the settlor of the trust as a robin morgan and the although the second minutes are not dated the first minutes third minutes fourth minutes fifth minutes and sixth minutes are all dated date also we note that the various minutes are followed by an undated document entitled resignation from the deschutes road trust that is executed by robert hogue trustee as robert hogue h hearings on respondent’s motion this matter was called for hearing at the court’s motions sessions held in washington d c on september and date counsel for respondent appeared at the hearings and offered argument and evidence in support of respondent’s motion to dismiss as supplemented there was no appearance by or on behalf of deschutes at either hearing nor did deschutes file any written_statement pursuant to rule c discussion according to respondent deschutes failed to show that robert hogue is its duly appointed trustee respondent asserts that as a result no valid petition has been filed and the court must dismiss this case for lack of jurisdiction we agree it is well settled that the taxpayer has the burden of proving the court’s jurisdiction by affirmatively establishing all facts giving rise to our jurisdiction see patz trust v commissioner 69_tc_497 65_tc_346 35_tc_177 27_tc_837 furthermore unless the petition is filed by the taxpayer or by someone lawfully authorized to act on the taxpayer's behalf we are without jurisdiction see fehrs v commissioner supra pincite rule a requires that a case be brought by and in the name of the person against whom the commissioner determined the deficiency or by and with the full descriptive name of the fiduciary entitled to institute a case on behalf of such person rule c states that the capacity of a fiduciary or other representative to litigate in the court shall be determined in accordance with the law of the jurisdiction from which such person's authority is derived the record shows that california state law is controlling in this case under california law a trustee is authorized to commence litigation on behalf of a_trust cal prob code sec west supp however deschutes has failed to provide the court with the documentary_evidence necessary to support its contention that robert hogue was vested with authority to institute this action on its behalf as it pertains to the guestion of robert hogue’s status as a duly appointed trustee of deschutes the record in this case is at best muddled as previously discussed deschutes presented the court with two versions of the purported trust instrument the first document dated date identifies e e salera d c as creator and a michael welch and an edmond a salera as trustees the second document dated date identifies a carol ruthenberg as creator and robert hogue as -- - trustee significantly deschutes made no attempt to explain the patent discrepancies in the two purported trust documents--- particularly the change in identity of the trust creator and the change in identity of the trustees we note further that although version of the trust instrument required a minimum of two trustees the version required only one trustee as if the foregoing were not sufficiently confusing yet another purported settlor of deschutes road a robin morgan is identified in first minutes received by respondent from robert hogue other minutes described supra g of the background section of this opinion muddle the matter further in the absence of any persuasive basis for concluding that robert hogue was duly appointed as the trustee of deschutes road we shall dismiss this case for lack of jurisdiction consistent with respondent’s motion as supplemented see bella vista chiropractic trust v commissioner tcmemo_2003_8 all of the arguments and contentions that have not been analyzed herein have been considered but they do not require any further discussion in order to give effect to the foregoing an appropriate order will be entered


department of the treasury internal_revenue_service washington d c date number info release date cc tege eoeg et1 - genin-123821-03 uilc memorandum for director internal_revenue_service center cincinnati oh attn technical unit from subject office of division counsel associate chief_counsel tax exempt and government entities cc tege eoeg et1 - genin-123821-03 railroad retirement act tax status in accordance with the coordination procedure established between the service and the railroad retirement board rrb the rrb has provided us with its opinion that the following business is not an employer under the railroad retirement act and the railroad unemployment insurance act we have reviewed the opinion of the rrb and based upon the information submitted to the rrb we also conclude that is not an employer under the railroad_retirement_tax_act please take the appropriate action regarding this business will e mcleod cc


department of the treasury internal_revenue_service washington d c date date uilc number release date internal_revenue_service national_office chief_counsel_advice to from subject legend purchaser district_director chief examination vicki j hyche chief cc dom corp br4 notification of withdrawal of request_for_ruling in purchased subsidiaries year year the attached materials are being forwarded to you in accordance with b of revproc_98_1 1998_1_cb_7 this document is not binding on examination or appeals and is not a final case determination this document is not to be cited as precedent plr-116442-97 in year purchaser purchased the stock of the purchased subsidiaries each purchased subsidiary was a subsidiary of a different consolidated_group at the time of purchase collectively the purchases on the date of purchase each parent_corporation of a purchased subsidiary was in receivership with the fdic and each received federal_financial_assistance ffa from the fdic in connection with its receivership no ffa was provided to or received by purchaser in the purchases in year purchaser submitted a private_letter_ruling request in which it sought to treat the purchases as true stock acquisitions as opposed to deemed asset acquisitions under sec_1_597-5 of the federal_income_tax regulations in its request purchaser asserted that its lack of receipt of ffa precluded the purchases from being subject_to sec_597 of the internal_revenue_code and the regulations thereunder sec_597 provides that the treatment for purposes of sec_1 through 1400c of the internal_revenue_code of any transaction in which ffa is provided with respect to a bank or domestic_building_and_loan_association shall be determined under regulations prescribed by the secretary the regulations under sec_597 govern the treatment of all parties to the transaction in which ffa is provided regardless of which party receives the assistance sec_1_597-5 provides that a transfer of assets is deemed to occur when a consolidated subsidiary becomes a nonmember of its consolidated_group or becomes a member_of_an_affiliated_group of which it was not previously a member while the institution of which it is a consolidated subsidiary is under agency control sec_1 b says an institution is under agency control if agency defined to include the federal deposit insurance corporation is conservator or receiver of the institution or if agency has the right to appoint any of the institution’s directors based on the facts provided to us in the request for private_letter_ruling we took the position that the purchased subsidiaries were consolidated subsidiaries as defined in sec_1_597-1 and that each purchased subsidiary became a nonmember of its consolidated_group while its parent institution was under agency control accordingly sec_1_597-5 requires the purchases to be treated as asset purchases at a conference of right we informed purchaser that the purchases are subject_to sec_597 and the regulations thereunder following its conference of right purchaser withdrew the ruling_request and the case was closed in this office we are now forwarding you this letter and a copy of the materials purchaser submitted with its ruling_request so that you may use the same in connection with any future examination of purchaser’s federal tax returns plr-116442-97 if you need further assistance regarding this matter please contact me pincite-7530 sincerely yours assistant chief_counsel corporate by vicki j hyche chief branch attachments