t c memo united_states tax_court robert alan lyons petitioner v commissioner of internal revenue respondent docket no 19739-11l filed date robert alan lyons pro_se brock e whalen and daniel n price for respondent memorandum opinion guy special_trial_judge this collection review case is before the court on respondent’s motion for summary_judgment filed pursuant to rule unless otherwise indicated all section references are to the internal_revenue_code as amended and in effect at all relevant times and all rule continued petitioner filed a response in opposition to respondent’s motion we conclude that there is no genuine dispute of a material fact in this case and respondent is entitled to judgment as a matter of law sustaining the determination of the internal_revenue_service office of appeals appeals_office to proceed with a proposed levy to collect petitioner’s unpaid federal_income_tax liabilities for and years in issue background the record establishes and or the parties do not dispute the following petitioner has failed to file federal_income_tax returns for the taxable years to on date respondent prepared substitutes for returns for the years in issue see sec_6020 on date respondent mailed to petitioner by certified mail separate notices of deficiency determining deficiencies in and additions to his federal_income_tax for the years in issue as follows continued references are to the tax_court rules_of_practice and procedure all monetary amounts are rounded to the nearest dollar the notices of deficiency were addressed to petitioner at the same address that he listed as his current address in the petition that he filed to institute this proceeding additions to tax sec sec year deficiency a a sec dollar_figure dollar_figure dollar_figure dollar_figure big_number big_number big_number big_number big_number big_number big_number petitioner did not file a petition for redetermination with the court pursuant to sec_6213 on date respondent entered assessments against petitioner for the deficiencies and additions to tax determined in the notices of deficiency described above along with statutory interest and issued to petitioner notices and demand for payment for the years in issue petitioner failed to make any payments on date respondent issued to petitioner a final notice_of_intent_to_levy and notice of your right to a hearing for the years in issue petitioner thereafter submitted to respondent a timely form request for a collection_due_process or equivalent_hearing stating the taxpayer wishes to resolve all balances due through an installment_agreement but must first determine the accurate balance due as those presently assessed represent ‘substitute for return’ assessments subsequently the case was assigned to a settlement officer so in the appeals_office the case was soon reassigned to a different so after petitioner complained that the so first assigned to the case had failed to mail official correspondence to him timely during the course of the administrative proceedings the second so and the appeals team manager atm requested that petitioner submit a completed form 433-a collection information statement for wage earners and self-employed individuals and his delinquent tax returns for several years including the years in issue the so sent wage and income transcripts to petitioner to assist him in preparing his delinquent tax returns for to during a telephone conference on date petitioner informed the so that he was suffering from various medical conditions and that he did not have the financial resources or the energy to prepare his delinquent tax returns although petitioner remained in contact with the so he did not submit a form 433-a or other financial statement his delinquent tax returns or documentation that would aid in determining his correct_tax liability for the years in issue on date after consulting with her atm the so issued to petitioner a notice_of_determination concerning collection action s under sec_6320 and or sustaining the proposed levy action for the years in issue the record shows that the so conducted a thorough review of transcripts of petitioner’s account and verified that requirements of applicable law and administrative procedure had been met by confirming the timeliness of assessment of the amounts in dispute and that appropriate collection notices had been sent to petitioner the so balanced the need for efficient collection_of_taxes with the legitimate concern of petitioner that any collection be no more intrusive than necessary by finding that no alternative collection action would be available or proper at that time given petitioner’s failure to submit financial information relevant to such an alternative or to achieve current compliance with filing and payment obligations on date petitioner filed a timely petition commencing this case the petition states in relevant part the irs did not have any information regarding my business_expenses home_office_deductions and the cost_basis of my stock sales for all tax years after respondent filed an answer to the petition the parties filed a joint motion to remand the case to the appeals_office for further consideration of whether petitioner might qualify for an installment_agreement the court granted the parties’ motion and ordered them to cooperatively arrange a further administrative hearing no later than date and file status reports with the court no later than date the administrative record includes various transcripts of account including forms certificate of assessments payments and other specified matters for the years in issue petitioner resided in texas at the time the petition was filed on date respondent filed a status report and attached thereto a supplemental notice_of_determination in which the appeals_office determined that it was appropriate to proceed with the proposed levy action respondent’s status report states that while the case was on remand petitioner failed to submit to the appeals_office a current form 433-a or produce his delinquent income_tax returns petitioner did not file a status report the case was set for trial in san antonio texas on date although there was no appearance by or on behalf of petitioner when his case was called from the trial calendar the court later learned that petitioner was unable to appear because of a medical emergency under the circumstances the court continued the case and directed the parties to file status reports on date respondent filed the motion for summary_judgment presently before the court respondent’s motion is supported by declarations executed by so sean p franklin and respondent’s counsel brock e whalen along with exhibits drawn from the administrative record on date petitioner filed a response in opposition to respondent’s motion petitioner so franklin was assigned to petitioner’s case after the court remanded the case to the appeals_office for further consideration attached exhibits to his response with the aim of challenging the amounts of his tax_liabilities for the years in issue discussion summary_judgment serves to expedite litigation and avoid unnecessary and expensive trials fla peach corp v commissioner 90_tc_678 either party may move for summary_judgment upon all or any part of the legal issues in controversy rule a we may grant summary_judgment only if there are no genuine disputes or issues of material fact rule b 85_tc_527 respondent as the moving party bears the burden of proving that no genuine dispute or issue exists as to any material fact and that he is entitled to judgment as a matter of law 115_tc_554 100_tc_32 in deciding whether to grant summary_judgment the factual materials and the inferences drawn from them must be considered in the light most favorable to the nonmoving party fpl grp inc subs v commissioner t c pincite bond v commissioner t c pincite when a motion for summary_judgment is made and properly supported the party opposing the motion ‘may not rest upon the mere allegations or denials of his pleading but must set forth specific facts showing there is a genuine issue for trial ’ 477_us_242 quoting fed r civ p e see rule d 91_tc_322 i sec_6330 sec_6331 authorizes the secretary to levy upon property and property rights of a taxpayer liable for taxes who fails to pay those taxes within days after a notice_and_demand for payment is made sec_6331 provides that the levy authorized in sec_6331 may be made with respect to unpaid tax only if the secretary has given written notice to the taxpayer days before the levy sec_6330 requires that the written notice include the amount of the unpaid tax and the taxpayer’s right to an administrative hearing if an administrative hearing is requested the hearing is to be conducted by the appeals_office sec_6330 in rendering an administrative determination in a collection review proceeding the appeals_office must verify that the requirements of any applicable law and administrative procedure have been met in processing the taxpayer’s case sec_6330 a the appeals_office also must consider any issues raised by the taxpayer relating to the collection action including offers of collection alternatives such as an installment_agreement appropriate spousal defenses and challenges to the appropriateness of the collection action sec_6330 b a taxpayer may challenge the existence or amount of his or her underlying tax_liability only if the taxpayer did not receive a notice_of_deficiency or did not otherwise have an earlier opportunity to dispute such tax_liability sec_6330 finally the appeals_office must consider whether the collection action balances the need for efficient collection against the taxpayer’s concern that collection be no more intrusive than necessary sec_6330 this court has jurisdiction under sec_6330 to review the commissioner’s administrative determinations sec_6330 see 122_tc_287 where the underlying tax_liability is properly at issue we review the determination de novo 114_tc_176 where the underlying tax_liability is not at issue we review the determination for abuse_of_discretion id pincite ii petitioner’s underlying tax_liabilities the record shows that although respondent mailed notices of deficiency to petitioner for the years in issue petitioner failed to file a petition for redetermination with the court see sec_6213 petitioner has not alleged at any stage of these proceedings that he did not receive the notices of deficiency and under the circumstances we assume that he did receive them it follows that petitioner is barred from challenging the existence or amounts of his underlying tax_liabilities for the years in issue sec_6330 see 114_tc_604 iii collection alternatives petitioner’s request for an administrative hearing included a statement that he intended to propose an installment_agreement sec_6159 authorizes the commissioner to enter into written agreements allowing taxpayers to pay a tax_liability in installment payments if he deems that the agreement will facilitate full or partial collection of such liability the decision to accept or reject installment agreements lies within the discretion of the commissioner see 140_tc_173 citing kuretski v commissioner tcmemo_2012_262 at and sec_301_6159-1 and c i proced admin regs as a prerequisite for consideration or approval of an installment_agreement it is generally incumbent upon the taxpayer to provide requested financial information to permit an informed evaluation of his or her ability to pay see eg sec_6159 sec_7122 454_f3d_688 7th cir we note that the petition filed to initiate this case contains nothing more than a vague challenge to the amounts of petitioner’s underlying liabilities for the years in issue although we might otherwise conclude that petitioner has conceded the issue we nevertheless will discuss his request for an installment_agreement for the sake of completeness 414_f3d_144 1st cir 125_tc_301 aff’d 469_f3d_27 1st cir similarly internal_revenue_service irs guidelines with respect to collection alternatives direct that the taxpayer must be in compliance with filing and estimated payment obligations see 129_tc_107 moreover it is not an abuse_of_discretion for the appeals_office to decline to consider an installment_agreement where no specific collection alternative proposal is ever placed before the reviewing officer see 138_tc_228 124_tc_69 stated otherwise it is the obligation of the taxpayer not the reviewing officer to start negotiations regarding a collection alternative by making a specific proposal the record reflects that after the case was remanded to the appeals_office for further consideration petitioner failed to submit the financial information necessary to evaluate his ability to pay his tax_liabilities by way of installment payments he likewise failed to submit his delinquent tax returns for taxable years ending after the years in issue the record amply demonstrates that the appeals_office provided clear instructions and multiple opportunities for petitioner to remedy the situation so as to satisfy the conditions and open the door for consideration of collection alternatives generally see eg murphy v commissioner t c pincite an appeals officer does not abuse her discretion when she fails to take into account information that she requested and that was not provided in a reasonable_time dinino v commissioner tcmemo_2009_284 noting consistency of appeals officer’s approach with irs guidelines stating that for purposes of good case management no more than days should be allowed for submission of financial information gazi v commissioner tcmemo_2007_342 there is no requirement that the commissioner wait a certain amount of time before making a determination as to a proposed levy see also sec_301_6330-1 q a-e9 proced admin regs in sum precedent establishes that it is not an abuse_of_discretion for the appeals_office to reject collection alternatives and sustain proposed collection action on the basis of the failure of taxpayers to submit requested financial information or to achieve current compliance with filing obligations see eg giamelli v commissioner t c pincite taylor v commissioner tcmemo_2009_27 roman v commissioner tcmemo_2004_20 iv conclusion the record shows that so franklin conducted a thorough review of transcripts of petitioner’s account and verified that requirements of applicable law and administrative procedure had been met by confirming the timeliness of assessment of the amounts in dispute and verifying that appropriate collection notices had been sent to petitioner petitioner did not raise a spousal defense or present a valid challenge to the appropriateness of respondent’s intended collection action these issues are now deemed conceded see rule b the so also balanced the need for efficient collection_of_taxes with the legitimate concern of petitioner that any collection be no more intrusive than necessary by finding that no alternative collection action would be available or proper at that time given petitioner’s failure to submit financial information relevant to such an alternative or to achieve compliance with his filing and payment obligations under the circumstances we conclude the appeals_office did not abuse its discretion and respondent is entitled to judgment as a matter of law sustaining the supplemental notice_of_determination issued date it is well settled that the appeals_office may rely on forms and similar transcripts of account to satisfy the verification requirements of sec_6330 118_tc_365 ndollar_figure aff’d 329_f3d_1224 11th cir 118_tc_162 117_tc_183 the forms attached as exhibits to respondent’s motion and accompanying declarations along with the so’s statements in the notice_of_determination show that required assessment and collection procedures were followed to reflect the foregoing an appropriate order and decision will be entered


o f f i c e o f c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w ash i n g t o n d c date number release date conex-132268-14 uil the honorable bob goodlatte main street suite lynchburg va dear congressman goodlatte i am responding to your inquiry dated date on behalf of your constituent --------------------- ----- she wrote about the income_tax exclusion for a minister’s rental allowance in an e-mail to your office ------------- stated for years the -----------------------church has had an arrangement with the irs retired pastors can deduct their home expenses prior to taxes ie mortgage utilities repairs etc ------------- further stated that she worked for seven years as a ---------- ------------church pastor that she has used the tax exclusion since she retired in and that she got notification that the irs is challenging this rule and it’s in the courts the following is general information about the minister’s rental allowance exclusion which we hope will be helpful to ------------- a minister may exclude rental allowance paid as part of compensation to the extent the minister uses it to rent or provide a home and to the extent the allowance does not exceed the fair rental value of the home including furnishings and utilities sec_107 of the internal_revenue_code the code a retired minister may exclude rental allowance paid as part of compensation_for past services to the extent the minister uses it for expenses directly related to providing a home revenue_ruling 1963_2_cb_79 and revrul_75_22 c b to qualify for the income_tax exclusion an individual must be a minister a minister is authorized to administer sacraments preach and conduct worship services in addition the conex-132268-14 minister must be licensed commissioned or ordained sec_1_107-1 and sec_1_1402_c_-5 of the treasury regulations the amount of the rental allowance must be designated pursuant to official action taken by the employing church or other qualified_organization before the payment is made sec_1 b of the income_tax regulations --------------stated that she received information that we are challenging the minister’s rental allowance rules however we are not challenging the rules on rental allowances for ministers to the contrary the government is defending the rental allowance in litigation that challenges the constitutionality of the code provision in that litigation the united_states district_court for the western district of wisconsin ruled that the rental allowance is an unconstitutional violation of the establishment clause and enjoined its enforcement finding that it provides a benefit to religious persons that it does not give to others see 983_fsupp2d_1051 w d wis the district court’s order enjoining the irs from enforcing the code provision only applies to the western district of wisconsin and it is effective only at the conclusion of any appeals the government files the government appealed to the united_states court_of_appeals for the seventh circuit docket no the court held oral arguments on date if a minister or retired minister satisfies the requirements for the rental allowance exclusion he or she may exclude the amounts used for housing for income_tax purposes i hope this information is helpful if you need further information please contact me or ------------------- ------------ at ----- ------------ sincerely paul j carlino chief employment_tax branch office of division counsel associate chief_counsel tax exempt government entities o f f i c e o f c h i e f c o u n s e l conex-132268-14 uil department of the treasury i n t e r n a l r e v e n u e s e r v i c e w ash i n g t o n d c date the honorable bob goodlatte member u s house of representatives main street suite lynchburg va attention ------------------------- dear congressman goodlatte i am responding to your inquiry dated date on behalf of your constituent ------------------ she had a follow-up question to our response dated date about the income_tax exclusion for a minister’s housing allowance sec_107 of the internal_revenue_code code provides that in the case of a minister_of_the_gospel gross_income does not include the rental value of a home including utilities furnished to him or her as a part of his compensation the rental allowance paid to him or her as part of his or her compensation to the extent such allowance is used by him or her to rent or otherwise provide a home the minister is not required to actually rent a home if a minister or retired minister satisfies the requirements for the housing allowance exclusion he or she may exclude the amounts actually used for housing from income for federal_income_tax purposes again for ----------------reference below is general information about the minister’s housing allowance exclusion a minister may exclude rental allowance paid as part of compensation to the extent the minister uses it to rent or provide a home and to the extent the allowance does not exceed the fair rental value of the home including furnishings and utilities sec_107 of the internal_revenue_code the code a retired minister may exclude a housing allowance paid as part of compensation_for past services to the extent the minister uses it for expenses directly related to providing a home revenue_ruling 1963_2_cb_79 and revrul_75_22 c b conex-132268-14 to qualify for the income_tax exclusion an individual must be a minister a minister is authorized to administer sacraments preach and conduct worship services in addition the minister must be licensed commissioned or ordained sec_1_107-1 and sec_1_1402_c_-5 of the treasury regulations the amount of the allowance must be designated pursuant to official action taken by the employing church or other qualified_organization before the payment is made sec_1_107-1 of the treasury regulations i hope this information is helpful if you need further information please contact me or -------------------------- at ----- ------------ sincerely paul j carlino chief employment_tax branch office of division counsel associate chief_counsel tax exempt and government entities


t c memo united_states tax_court medical weight control specialist petitioner v commissioner of internal revenue respondent docket no filed date kevan p mclaughlin for petitioner michael s hensley for respondent memorandum opinion swift judge this matter is before us on respondent’s motion to dismiss for lack of jurisdiction under rule a unless otherwise indicated all section references are to the internal_revenue_code and all rule references are to the tax_court rules_of_practice and procedure background petitioner was incorporated in california in date its corporate privileges were suspended by the state of california in date pursuant to cal rev tax code sec west for failure to pay state taxes on date respondent mailed to petitioner a notice_of_deficiency determining income_tax deficiencies penalties and additions to tax as follows year deficiency dollar_figure big_number big_number penalty sec_6662 addition_to_tax sec_6651 dollar_figure big_number big_number dollar_figure big_number big_number on date petitioner filed a petition in this court challenging respondent’s above determinations on date respondent filed a motion to dismiss the petition for lack of jurisdiction alleging petitioner lacked the capacity to sue at the time the petition was filed on may and respectively the california franchise tax board issued to petitioner a certificate of revivor and a certificate of relief from contract voidability discussion 114_tc_268 aff’d 22_fedappx_837 9th cir bears a striking similarity to the case at hand david dung le m d inc involved a corporation which filed a petition in this court at a time when its corporate powers rights and privileges were suspended by the state of california for failure to pay income_tax in david dung le m d inc the taxpayer obtained a revival of its corporate powers rights and privileges after the 90-day period for filing the petition for redetermination of the deficiency had passed see sec_6213 the court in david dung le m d inc held that it lacked jurisdiction over the case it concluded that under california law a suspended corporation cannot prosecute or defend an action while it is suspended see cmty elec serv of l a inc v nat’l elec contractors ass’n inc 869_f2d_1235 9th cir abrogated on other grounds by 914_f2d_1136 9th cir united_states v dollar_figure acres of land more or less situated in mariposa cnty state of cal 791_f2d_666 9th cir as a result we held in david dung le m d inc that the corporate taxpayer lacked the capacity to file a valid petition that would confer jurisdiction over the matter on this court see david dung le m d inc v commissioner t c pincite the only difference between david dung le m d inc and the present case even alleged by petitioner herein is that petitioner herein received a certificate of relief from contract voidability from the california franchise tax board however that relief applies only to contracts entered into that have not been rescinded and a ny sale transfer or exchange of real_property in california during the period in which the corporation is not qualified to do business cal rev tax code sec c a and b west the filing of a petition for redetermination of a federal tax_deficiency neither is contractual nor involves the sale of land in california this court’s jurisdiction is statutory not contractual and a party may not confer jurisdiction on this court by agreement or concession see 67_tc_721 see also am airlines inc v commissioner t c ___ ___ slip op pincite date the receipt therefore by petitioner of a certificate of relief from contract voidability by the plain language of california law does not affect the application of david dung le m d inc to the present case without a difference of material fact respondent’s motion to dismiss must be granted unless we are to ignore or overturn david dung le m d inc a departure from that precedent would be especially imprudent given that it was appealed to and affirmed by the court_of_appeals for the ninth circuit and both this court and the court_of_appeals have recently cited it as controlling precedent in holding that a revived california corporation may not retroactively validate the filing of a petition that occurred during the suspension of its corporate powers and where the revival did not occur until after the period for timely filing the petition see 523_fedappx_455 9th cir 140_tc_210 petitioner argues that california law distinguishes between procedural and substantive acts and allows the revival of corporate powers to validate procedural acts undertaken during a suspension of corporate powers see benton v cnty of napa cal rptr ct app a number of california courts have relied on a procedural substantive distinction to allow a revived california corporation to continue a lawsuit filed at a time when a corporation was suspended see peacock hill ass’n v peacock lagoon constr co cal rptr traub co v coffee break serv inc cal rptr further california courts have allowed a corporation to maintain an appeal filed at a time when the corporation was suspended if the corporation later obtained a certificate of revivor even if the corporation did not obtain the certificate until after the statutory period in which the appeal could have been timely filed see bourhis v lord cal rptr 3d aba recovery servs inc v konold cal rptr ct app however california courts have been equally clear that statutes of limitations create substantive defenses which cannot be prejudiced by corporate revival see bourhis cal rptr 3d welco constr inc v modulux inc cal rptr petitioner contends that the timely filing requirement of sec_6213 is procedural and is not intended to be a true statute_of_limitations to the contrary this court lacks jurisdiction regardless of whether the day limitation of sec_6213 is to be regarded as a true statute_of_limitations although sec_6213 provides a taxpayer may file a petition with the tax_court within the 90-day period this language is to be viewed in the light of the sec_7421 proscription of any suit in any court by any person for the purpose of restraining the assessment or collection of any_tax cal rev tax code sec 23305a west provides that corporate revival shall be without prejudice to any_action defense or right which has accrued by reason of the original suspension or forfeiture thus even if sec_6213 is not to be viewed as a statute_of_limitations under the above california law limitation on corporate revival sec_6213 still serves as a limitation on subject-matter jurisdiction and either party or the court sua sponte may question jurisdiction at any time see 78_tc_215 unlike a traditional statute_of_limitations the 90-day period of sec_6213 generally cannot be tolled or extended see 250_f2d_170 5th cir 33_tc_868 jurisdictional statutes such as sec_6213 are conditions on the waiver of the federal government’s sovereign immunity and must be strictly construed see 476_us_467 sec_6213 provides that a petition may be filed by the taxpayer during the 90-day period petitioner’s suspension under cal rev tax code sec deprived it of the capacity to sue under sec_6213 and prevents its corporate revival from prejudicing respondent’s defense of lack of subject matter jurisdiction cases allowing revived corporations to continue prosecuting lawsuits filed at times when the corporations were suspended involve cases in courts of general our interpretation of the california corporate revival statute is supported by the fact that the court of federal claims has held that a suspended california corporation could not maintain an otherwise timely filed claim under the contract disputes act u s c sec if the corporation was suspended under local law when it filed its claim and did not obtain a certificate of revivor until after the period of limitations for filing the claim had expired see computer prods int’l inc v united_states cl_ct jurisdiction and claims that were not barred by a statute_of_limitations or other statutory restriction see eg peacock hill ass’n cal rptr pincite lastly petitioner argues that public policy and equity compel a holding that would allow this case to go forward however this court is a court of limited jurisdiction and as such it lacks general equitable powers see 101_tc_140 we lack the authority to relieve petitioner from the clear jurisdictional requirement of sec_6213 see rich v commissioner f 2d pincite because petitioner lacked the capacity to petition this court during the day period provided by sec_6213 this court lacks jurisdiction over this case respondent’s motion to dismiss for lack of jurisdiction will be granted an appropriate order of dismissal for lack of jurisdiction will be entered


internal_revenue_service number release date index number ---------------------------- -------------------------------------------------- ----------------------------------------------------------- ---------------------------------------------------------- -------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi b02 plr-138972-08 date january x --------------------------------------------------------------------------------------------------- ----------------------- country ---------------------- date --------------------------- dear ------------- this responds to a letter dated date submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for x to elect to be treated as a partnership for federal tax purposes under sec_301_7701-3 the information submitted states that x was formed under the laws of country on date x represents that x is a foreign_entity eligible to elect to be treated as a partnership however x inadvertently failed to timely file a form_8832 entity classification election electing to treat x as a partnership effective date sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if the foreign eligible_entity has more than one owner it may elect to be treated as a partnership pursuant to the rules in sec_301_7701-3 plr-138972-08 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish o the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center and elect to be treated as a partnership effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the internal_revenue_code and the regulations thereunder this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-138972-08 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 curtis g wilson associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc dom corp plr-109432-00 date date distributing sec_1 sec_3 sec_5 uf1 uf2 year year year country u business a business b we respond to your date request for rulings on certain federal_income_tax consequences of a series of proposed transactions the information submitted with the request and in later correspondence is summarized below distributing’s predecessors received rulings on prior transactions during year year and year the prior ruling letters further this ruling letter two other ruling letters issued with this letter plr-109430-00 and plr-109435-00 and a ruling letter issued to distributing on date plr-105240-00 all address aspects of the same overall plr-109432-00 transaction the overall transaction the rulings in this letter are based on the facts and representations submitted under penalties of perjury in support of the request this office has not verified any of the materials submitted in support of the request for a ruling verification of this information may be required as part of the audit process summary of facts publicly traded distributing is the common parent of a corporate group whose includible affiliates join in filing a consolidated_return distributing wholly owns sec_1 a domestic_corporation sec_1 wholly owns sec_3 also domestic sec_3 wholly owns sec_5 domestic and sec_5 wholly owns uf1 and uf2 both country u corporations distributing and sec_5 are holding_companies sec_1 conducts business a sec_3 owns branches and subsidiaries engaged in business a and business b uf1 conducts business b and uf2 conducts business a we have received financial information indicating that each of these business operations has had gross_receipts and operating_expenses representing the active_conduct_of_a_trade_or_business for each of the past five years the operation of business a and business b within the same group creates managerial systemic and other problems and produces no significant synergies distributing’s management has therefore decided based on the advice of consultants and other information that the two businesses should be separated the separation proposed transactions to accomplish the separation distributing proposes the following series of transactions to be carried out in conjunction with the other steps of the overall transaction i sec_3 will organize three new country u entities nu1 nu2 and nu3 nu1 will be liquidated as part of the proposed transactions and nu2 and nu3 both will be disregarded as entities separate from their owners pursuant to sec_301_7701-3 of the procedure and administration regulations ii sec_3 will transfer the stock of sec_5 to nu1 in exchange for all of the stock of nu1 iii sec_5 will transfer the stock of uf1 to nu1 in exchange for a nominal amount of cash and sec_5 will immediately distribute the cash back to nu1 iv nu1 will be placed into liquidation and the liquidator will transfer the shares of uf1 and sec_5 to nu2 and nu3 respectively nu2 and nu3 will issue their plr-109432-00 shares to sec_3 nu1 will complete its liquidation and will be dissolved in due course steps i through iv as recharacterized in ruling below will be referred to hereinafter as distribution v sec_3 will distribute the shares of nu2 to sec_1 distribution vi sec_1 will distribute the shares of nu2 to distributing distribution representations distribution distributing has made the following representations concerning distribution based on the recharacterization of steps i through iv above in ruling below which treats sec_5 as distributing the stock of uf1 directly to sec_3 a no part of the uf1 stock distributed by sec_5 will be received by sec_3 as a creditor employee or in any capacity other than that of an sec_5 shareholder b the five years of financial information submitted for uf1 regarding its business b and uf2 regarding its business a represents the present business operations of uf1 and uf2 and as to each business there have been no substantial operational changes since the date of the last financial statements submitted c immediately after distribution at least percent of the fair_market_value of the gross assets of sec_5 will consist of the stock and securities of uf2 a controlled_corporation that is engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 of the internal_revenue_code following distribution uf1 and uf2 each will continue the active_conduct of its business independently and with its separate employees d distribution is being undertaken to resolve managerial systemic and other problems that have arisen from operating business a and business b within a single affiliated_group distribution is motivated in whole or substantial part by this corporate business_purpose and for other business reasons e except for distribution there is no plan or intention by sec_3 to sell exchange transfer by gift or otherwise dispose_of any stock in sec_5 or uf1 after distribution f there is no plan or intention by sec_5 or uf1 directly or through any subsidiary_corporation to purchase any of its outstanding_stock after distribution g there is no plan or intention to liquidate sec_5 or uf1 to merge either corporation with any other corporation or to sell or otherwise dispose_of any of the plr-109432-00 assets of either corporation after distribution except in the ordinary course of business h any indebtedness owed by uf1 to sec_5 following the separation will not be stock_or_securities under sec_355 i immediately before distribution any items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations see sec_1_1502-13 and sec_1 of the income_tax regulations as in effect before the publication of t d 1995_2_cb_147 and as currently in effect sec_1_1502-13 as published by t d j payments made in any continuing transactions between sec_5 and uf1 will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length k distribution is not a part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of either sec_5 or uf1 stock entitled to vote or stock possessing percent or more of the total value of all classes of stock of either sec_5 or uf1 distribution distributing has made the following representations concerning distribution based on the recharacterization of steps i through iv above in ruling below which treats sec_5 as distributing the stock of uf1 directly to sec_3 l no part of the uf1 stock distributed by sec_3 will be received by sec_1 as a creditor employee or in any capacity other than that of an sec_3 shareholder m the five years of financial information submitted for sec_3 regarding its business a and business b and uf1 represents the present business operations of sec_3 and uf1 and as to each business there have been no substantial operational changes since the date of the last financial statements submitted n following distribution sec_3 and uf1 each will continue the active_conduct of its business independently and with its separate employees o distribution is being undertaken to resolve managerial systemic and other problems that have arisen from operating business a and business b within a single affiliated_group distribution is motivated in whole or substantial part by this corporate business_purpose and for other business reasons p except for distribution and except for the transfer of the sec_3 shares to a plr-109432-00 new corporation that will be distributed to the shareholders of distributing described in step vi of the ruling letter issued to distributing on date plr-105240-00 there is no plan or intention by sec_1 to sell exchange transfer by gift or otherwise dispose_of any stock in sec_3 or uf1 after distribution q there is no plan or intention by sec_3 or uf1 directly or through any subsidiary_corporation to purchase any of its outstanding_stock after distribution r there is no plan or intention to liquidate either sec_3 or uf1 to merge either corporation with any other corporation or to sell or otherwise dispose_of any of the assets of either corporation after distribution except in the ordinary course of business s any indebtedness owed by uf1 to sec_3 following the separation will not be stock_or_securities under sec_355 t immediately before distribution any items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations see sec_1_1502-13 and sec_1 as in effect before the publication of t d and as currently in effect sec_1_1502-13 as published by t d u payments made in any continuing transactions between sec_3 and uf1 will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length v distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of either sec_3 or uf1 stock entitled to vote or stock possessing percent or more of the total value of all classes of stock of either sec_3 or uf1 distribution distributing has made the following representations concerning distribution w no part of the stock of uf1 distributed by sec_1 will be received by distributing as a creditor employee or in any capacity other than that of a sec_1 shareholder x the five years of financial information submitted for sec_1 regarding its business a and uf1 represents the present business operations of sec_1 and uf1 and as to each business there have been no substantial operational changes since the date of the last financial statements submitted y following distribution sec_1 and uf1 each will continue the active_conduct of plr-109432-00 its business independently and with its separate employees z distribution is being undertaken to resolve managerial systemic and other problems that have arisen from operating business a and business b within a single affiliated_group distribution is motivated in whole or substantial part by this corporate business_purpose and for other business reasons aa except for the transfer of sec_1 to a new corporation that will be distributed to the shareholders of distributing described in step vi of the ruling letter issued to distributing on date plr-105240-00 there is no plan or intention by distributing to sell exchange transfer by gift or otherwise dispose_of any stock in sec_1 or uf1 after distribution bb there is no plan or intention by sec_1 or uf1 directly or through any subsidiary_corporation to purchase any of its outstanding_stock after distribution cc there is no plan or intention to liquidate sec_1 or uf1 to merge either corporation with any other corporation or to sell or otherwise dispose_of any of the assets of either corporation after distribution except in the ordinary course of business dd any indebtedness owed by uf1 to sec_1 following the separation will not be stock_or_securities under sec_355 ee immediately before distribution any items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations see sec_1_1502-13 and sec_1 as in effect before the publication of t d and as currently in effect sec_1_1502-13 as published by t d ff payments made in any continuing transactions between sec_1 and uf1 will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length gg distribution is not a part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of either sec_1 or uf1 stock entitled to vote or stock possessing percent or more of the total value of all classes of stock of either sec_1 or uf1 international representation hh uf1 is a corporation for federal tax purposes and will be a controlled_foreign_corporation within the meaning of sec_957 immediately before and immediately after the proposed transactions plr-109432-00 rulings distribution based on the information submitted and the representations made we rule as follows on distribution for federal_income_tax purposes the transactions described in steps i through iv of the proposed transactions will be treated as if sec_5 had distributed all of the uf1 stock directly to sec_3 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of sec_3 on distribution sec_355 no gain_or_loss will be recognized by sec_5 on distribution sec_355 immediately following distribution the basis of the uf1 stock in the hands of sec_3 will be the lesser_of the adjusted_basis of the uf1 stock in the hands of sec_5 or the substituted_basis allocated to the uf1 stock in accordance with sec_1_358-2 sec_1248 notice_87_64 c b immediately following distribution the holding_period sec_3 has in the uf1 stock received in the sec_355 distribution will be the greater of the holding_period of the uf1 stock in the hands of sec_5 or the holding_period of the sec_5 stock in the hands of sec_3 sec_1248 notice distribution based on the information submitted and the representations made we rule as follows on distribution no gain_or_loss will be recognized by and no amount will otherwise be included in the income of sec_1 on distribution sec_355 no gain_or_loss will be recognized by sec_3 on distribution sec_355 immediately following distribution the basis of the uf1 stock in the hands of sec_1 will be the lesser_of the adjusted_basis of the uf1 stock in the hands of sec_3 or the substituted_basis allocated to the uf1 stock in accordance with sec_1_358-2 sec_1248 notice immediately following distribution the holding_period sec_1 has in the uf1 stock received in the sec_355 distribution will be the greater of the holding_period of the uf1 stock in the hands of sec_3 or the holding_period of the sec_3 stock in the hands of sec_1 sec_1248 notice plr-109432-00 distribution based on the information submitted and the representations made we rule as follows on distribution no gain_or_loss will be recognized by and no amount will otherwise be included in the income of distributing on distribution sec_355 no gain_or_loss will be recognized by sec_1 on distribution sec_355 immediately following distribution the basis of the uf1 stock in the hands of distributing will be the lesser_of the adjusted_basis of the uf1 stock in the hands of sec_1 or the substituted_basis allocated to the uf1 stock in accordance with sec_1 a sec_1248 notice immediately following distribution the holding_period distributing has in the uf1 stock received in the sec_355 distribution will be the greater of the holding_period of the uf1 stock in the hands of sec_1 or the holding_period of the sec_1 stock in the hands of distributing sec_1248 notice miscellaneous the proposed transactions will not adversely affect the prior ruling letters which will retain full force and effect caveats we express no opinion on the tax effects of the proposed transactions under any other provisions of the code or regulations or the tax effects of any conditions existing at the time of or effects resulting from the transactions that are not specifically covered by the rulings in addition no opinion is expressed on whether any or all of the above-described foreign_corporations are passive foreign investment companies within the meaning of sec_1297 and the related regulations to be promulgated if it is determined that any of the above-described foreign_corporations are passive foreign investment companies no opinion is expressed related to the application of sec_1291 through to the proposed transactions in particular in a transaction in which gain is not recognized regulations under sec_1291 may require gain recognition notwithstanding any other provision of the code procedural statements this ruling is directed only to the taxpayers who requested it sec_6110 provides that it may not be used or cited as precedent plr-109432-00 each taxpayer involved in these transactions should attach a copy of this letter to the taxpayer’s federal_income_tax return for the taxable_year in which the transactions covered by this ruling letter are consummated pursuant to a power_of_attorney on file in this office a copy of this letter is being sent to the taxpayer sincerely assistant chief_counsel corporate by __________________________ wayne t murray senior technician reviewer branch


internal_revenue_service number release date index number ------------------------- -------------------------- --------------------------------- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact ----------------------------- telephone number --------------------- refer reply to cc tege eoeg et1 plr-132258-04 date date ------------------------------------------------------------------------------------------------- key firm ------------------------- ------------------------------------------- -------------------------------------------------- worker ---------------------------------- ----------------------------------------------- ------------------------------------------------- ------------------------------------------ x -------------------------------- dear ------------------ this is in reply to a request for a ruling to determine the federal employment_tax status of the above-named worker with respect to services provided to a unit of a federal_agency firm the federal employment_taxes are those imposed by the federal_insurance_contributions_act fica the federal_unemployment_tax_act futa and the collection of income_tax at source on wages according to the information submitted the firm is a federal_agency the worker provided services to the firm as an instructor role player training developer for the period x under a written contract the worker is paid through use of another federal office plr-132258-04 the information provided by both the firm and the worker is in substantial agreement both state that the worker was given specific training and or instruction by the firm the worker received work assignments directly from her supervisor daily in writing or verbally both state that the methods by which the worker’s work assignments were performed were determined by the supervisor that the worker’s services were performed on the firm’s premises that the worker’s services were provided on a full- time basis and that the firm established the work schedules directing when the worker was to perform her services which included some evenings and weekends both parties state that the worker was required to attend twice daily briefings and that she was subject_to verbal or written counseling for missing such briefings both parties state that the worker provided her services personally both parties indicate that the firm provided all supplies equipment materials and property needed by the worker in the performance of services and that no expenses were incurred by the worker in the performance of her services the worker was required to submit daily performance reports to the firm both indicate that the worker was responsible for any damaged or lost equipment during the performance of services that the remuneration for services was an hourly wage and that the worker was not eligible for paid vacation time the information provided indicates that the worker was represented to the public by the firm as a contract employee and that she did not perform similar services for others both parties state that the firm could terminate the relationship at any time however the worker had to provide at least a two week notice and could be responsible for contract completion sec_3121 of the internal_revenue_code the code defines aemployee as any individual who under the usual common_law rules applicable in determining the employer-employee relationship has the status of an employee the question of whether an individual is an employee under the common_law rules or an independent_contractor is one of fact to be determined upon consideration of the facts and the application of the law and regulations in a particular case guidance for determining the existence of that status is found in two substantially_similar sections of the applicable employment_tax regulations sec_31_3121_d_-1 relating to the federal_insurance_contributions_act fica and sec_31_3401_c_-1 relating to federal_income_tax withholding sec_31_3121_d_-1 of the regulations provides that generally the relationship of employer-employee exists when the person for whom the services are performed has the right to direct and control the individual who performs the services not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished it is not necessary that the employer actually direct or plr-132258-04 control the manner in which the services are performed it is sufficient if he or she has the right to do so sec_31_3121_d_-1 of the regulations provides that if the relationship of an employer and employee exists the designation or description of the relationship by the parties as anything other than that of employer and employee is immaterial thus if an employer-employee relationship exists it is of no consequence that the employee is designated as partner co-adventurer agent or independent_contractor or the like in determining whether an individual is an employee or an independent_contractor under the common_law all evidence of both control and lack of control or autonomy must be considered in doing so one must examine the relationship of the worker and the business relevant facts generally fall into three categories behavioral control financial control and the relationship of the parties behavioral control is evidenced by facts which illustrate whether the service_recipient has a right to direct or control how the worker performs the specific tasks for which he or she is hired facts which illustrate whether there is a right to control how a worker performs a task include the provision of training or instruction financial control is evidenced by facts which illustrate whether the service_recipient has a right to direct or control the financial aspects of the worker s activities these factors include whether a worker has made a significant investment has unreimbursed expenses and makes services available to the relevant market the method of payment and the opportunity for profit or loss the relationship of the parties is generally evidenced by the parties’ agreements and actions with respect to each other including facts which show not only how they perceive their own relationship but also how they represent their relationship to others facts which illustrate how the parties perceive their relationship include the intent of the parties as expressed in written contracts the provision of or lack of employee_benefits the right of the parties to terminate the relationship the permanency of the relationship and whether the services performed are part of the service_recipient s regular business activities based on the information submitted it is determined that the services performed by the worker were sufficiently subject_to the direction and control by the firm to establish an employer-employee relationship accordingly it is held that the worker was the firm’s employee for the period x and that amounts paid to the worker for services provided were wages subject_to federal employment_taxes and income_tax_withholding plr-132258-04 sec_3306 of the code pertaining to the futa provides that service performed in the employ of the united_states government are excepted from the definition of employment the conclusions in this letter are applicable to any individuals engaged by the firm under similar circumstances the firm is responsible for advising all of the affected workers and any other federal office involved in paying the workers of the results of this ruling this ruling is directed only to the taxpayer to whom it is addressed sec_6110 of the code provides that it may not be used or cited as precedent sincerely janine cook chief employment_tax branch division counsel associate chief_counsel enclosure copy of ruling letter for purposes tax exempt and government entities


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 b03 plr-106974-05 date march internal_revenue_service number release date index number ----------------- ------------------------------- ------------------------- ----------------------- - legend x y d1 --------------------------------------------------------------------------------------------------- ----------------------- --------------------------------------------------------------------------------------------------- ----------------------- ------------------------- country --------- ---------------------------- this letter responds to a letter dated date by x’s authorized entity dear ---------------- representative requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for x to elect to treat y as an association_taxable_as_a_corporation effective d1 facts corporation and through intermediaries the parent of y y was formed in country as an entity under country law x intended to elect to treat y as an association taxable as according to the information submitted as of d1 x was a united_states sec_301_7701-3 provides in part that a business_entity that is not sec_301_7701-3 provides that an eligible_entity may elect to be plr-106974-05 a corporation effective d1 however due to inadvertence x did not file form_8832 entity classification election timely law and analysis classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes it further provides that an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides guidance on the default classification of a foreign eligible_entity for federal tax purposes sec_301_7701-3 provides that unless it 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 or is an association if all members have limited_liability classified other than as provided in ' b by filing form_8832 entity classification election with the service_center designated on form_8832 will be effective on the date specified 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 cannot be more than days prior to the date the election is filed and cannot be more than months after the date on which the election is filed sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in and to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register making certain elections determine whether to grant an extension of time for regulatory elections that do not meet the requirements of ' under ' a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-2 provides the rules governing automatic extensions of time for sec_301_7701-3 provides that an election under ' c i sec_301_9100-3 sets forth the standards the commissioner will use to except as specifically set forth above no opinion is expressed or implied as to plr-106974-05 conclusions based on the facts submitted and representations made we conclude that the requirements of ' sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file form_8832 with the appropriate service_center to elect to treat y as an association_taxable_as_a_corporation for federal tax purposes effective d1 a copy of this letter should be attached to the form_8832 the federal tax consequences of the transaction described above under any other provision of the code letter to x’s authorized representative sec_6110 provides that it may not be used or cited as precedent under a power_of_attorney on file with this office we are sending a copy of this this ruling is directed only to the taxpayer on whose behalf it was requested heather c maloy associate chief_counsel passthroughs and special industries sincerely s enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number -------------------------- --------------------------- ---------------------------------------------- ----------------------- --------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------- id no ------------------ telephone number ---------------------- refer reply to cc corp plr-139671-12 date date legend taxpayer ------------------------------------------------------------ ------------------------------------------------ llc ------------------------------------------------------------------------------------------- ------------------------------------------------------------ ------------------------------- sub a ------------------------------------------------------------ ------------------------------------- sub b ------------------------------------------------------------ ---------------------------------------------- sub c ------------------------------------------------------------ --------------------------------------------------------------- sub d -------------------------------------------------------------------- ------------------------------------------------------------ -------------------------------------------- sub e ------------------------------------------------------------ ---------------------------------------------------------------- sub f ------------------------------------------------------------ ------------------------------------------------------------ plr-139671-12 sub g ------------------------------------------------------------ ---------------------------------------------------------- state a country b date amount amount -------------- -------------- ------------------ ---------------- ------------------ company official -------------------------------------------------------------------------------- ---------------------------------------------------------------------------------- ----------------------------- tax professional ----------------------------------------------------- ----------------------------------------------------------- ------------------------ dear -------------------- this letter responds to a letter dated date submitted on behalf of taxpayer requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file certain elections in particular taxpayer is requesting an extension of time for the consolidated_group of which taxpayer was the common parent and is currently the agent pursuant to sec_1_1502-77 to file the following elections collectively the elections for the short tax_year ended date a elections under sec_1_1502-36 to reduce the stock bases in sub f and sub g in amounts equal to their respective attribute reduction amounts b an election under sec_1 d i a to reduce the stock basis of sub d by amount and c an election pursuant to sec_1_1502-36 to specifically allocate sub d’s remaining attribute reduction amount of amount to reduce its category b attributes within the meaning of sec_1_1502-36 additional information was submitted in documents dated date date and date the material information submitted for consideration is summarized below taxpayer was the common parent of a consolidated_group the taxpayer group taxpayer was wholly owned by llc a state a llc that was taxable as a partnership for u s federal_income_tax purposes taxpayer owned all the stock of sub a which owned all the stock of sub b which owned all the stock of sub c and sub d a country b corporation that has elected under sec_953 to be treated as a domestic_corporation for u s federal tax purposes sub c owned all the stock of sub e which owned all the plr-139671-12 stock of sub f and sub g on or about date sub e distributed all the stock of sub f and sub g to sub c sub c distributed all the stock of sub f and sub g to sub b sub b distributed all the stock of sub d sub f and sub g collectively the loss subsidiaries to sub a sub a distributed all the stock of the loss subsidiaries to taxpayer subsequently after a series of contributions of the loss subsidiaries to other entities owned directly or indirectly by taxpayer the loss subsidiaries were indirectly distributed to llc and then to llc’s investors then on date llc sold all of the taxpayer stock to a real_estate_investment_trust reit as a result of the reit’s acquisition of taxpayer taxpayer and its remaining subsidiaries became qualified reit subsidiaries within the meaning of sec_856 under sec_856 upon becoming qualified reit subsidiaries taxpayer and its corporate subsidiaries were no longer treated as separate corporations and the taxpayer group no longer contained any includible corporations within the meaning of sec_1504 and therefore terminated sub e’s distribution of the stock of sub f and sub g and sub b’s distribution of the stock of sub d resulted in capital losses to sub e and sub b that were subject_to the unified_loss_rule of sec_1_1502-36 the indirect distribution of the loss subsidiaries to llc resulted in the disaffiliation of the loss subsidiaries from the taxpayer group elections under sec_1_1502-36 with respect to sub e’s and sub b’s distributions of the stock of the loss subsidiaries were due by the due_date of the taxpayer group’s consolidated_return for the year that included the distributions however for various reasons no elections were made subsequently taxpayer submitted this request under sec_301_9100-3 for an extension of time to file the elections the period of limitations on assessment under sec_6501 has not expired for the taxpayer group's tax_return for the tax_year that included the date of the distributions taxpayer has represented that it is not seeking to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time taxpayer requested relief and the new return position requires or permits a regulatory election for which relief is requested sec_1502 provides that the secretary shall prescribe such regulations as he may deem necessary in order that the tax_liability of any affiliated_group_of_corporations making a consolidated_return and of each corporation in the group both during and after the period of affiliation may be returned determined computed assessed collected and adjusted in such manner as clearly to reflect the income_tax_liability and the various factors necessary for the determination of such liability and in order to prevent avoidance of such tax_liability in carrying out the preceding sentence the secretary may prescribe rules that are different from the provisions of chapter that would apply if such corporations filed separate returns plr-139671-12 sec_1_1502-36 and c provides rules that may reduce the basis that each consolidated_group member m has in its loss_shares of stock in a subsidiary s when the stock is transferred if the s stock is still loss stock after the application of sec_1_1502-36 and c the rules of sec_1_1502-36 generally reduce the tax_attributes of s to the extent they duplicate a net_loss on shares of s stock transferred by members these rules apply and any required adjustments are given effect immediately before the transfer of the s stock sec_1_1502-36 under the attribution reduction regime s’s attributes will be reduced by the attribute reduction amount as defined in sec_1_1502-36 immediately before the transfer unless the attribute reduction amount is less than five percent of the aggregate value of the s shares transferred sec_1_1502-36 s’s attributes available for reduction are category a capital_loss carryovers category b net_operating_loss carryovers category c deferred deductions and category d attributes basis of assets other than assets identified as class_i_assets in sec_1 b sec_1_1502-36 if s’s attribute reduction amount is less than s’s total category a category b and category c attributes the common parent p may elect to specify the allocation of s’s attribute reduction amount among such attributes to the extent not specified the attribute reduction amount will be applied to reduce category a attributes first oldest to newest then category b attributes oldest to newest and finally category c attributes proportionately sec_1 d ii a in addition notwithstanding the general attribute reduction rule described above p may elect to reduce the potential for loss duplication and thereby reduce or avoid attribute reduction under sec_1_1502-36 p may elect a to reduce all or any portion including any portion in excess of a specified amount of members' bases in transferred loss_shares of s stock b to reattribute all or any portion including any portion in excess of a specified amount of s's category a category b and category c attributes to the extent they would otherwise be subject_to reduction under sec_1 d or c any combination thereof sec_1_1502-36 states that the elections provided by sec_1_1502-36 are irrevocable and made in a statement entitled sec_1_1502-36 statement that must be included on or with the group's timely filed return original or amended if filed by the due_date of the return including extensions for the taxable_year of the transfer of the subsidiary stock to which the election relates under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i plr-139671-12 sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 the elections by a consolidated_group to a specify the allocation of a subsidiary’s attribute reduction amount among its category a category b and category c attributes under sec_1_1502-36 and b reduce a member’s basis in its loss_shares of subsidiary stock under sec_1_1502-36 are regulatory elections therefore the commissioner has discretionary authority under sec_301_9100-3 to grant an extension of time for taxpayer to file the elections provided taxpayer establishes to the satisfaction of the commissioner that it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by taxpayer company official and tax professional explain the circumstances that resulted in the failure to timely file the elections the information establishes that taxpayer reasonably relied on a qualified_tax professional who failed to make or advise parent to make the elections and the request for relief was filed before the failure to timely make the elections was discovered by the internal_revenue_service see sec_301_9100-3 and v based on the facts and information submitted including the affidavits submitted and the representations made we conclude that taxpayer has shown it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly provided the taxpayer group qualifies substantively to file the elections we grant an extension of time under sec_301_9100-3 until ninety days from the date on this letter for taxpayer to file the elections taxpayer should file the elections in accordance with sec_1_1502-36 taxpayer group’s returns must be amended to attach the election statements required by sec_1_1502-36 a copy of this letter must be attached to the election statement alternatively if taxpayer files its returns electronically taxpayer may satisfy the requirement of attaching a copy of this letter by attaching a statement to the taxpayer group's amended_return that provides the date and control number plr-139671-12 of this letter_ruling the above extension of time is conditioned on the taxpayer group's and each of its members’ both before and after the year of the transactions tax_liabilities if any not being lower in the aggregate for all years to which the elections apply than they would have been if the elections had been timely made taking into account the time value of plr-139671-12 money we express no opinion as to the taxpayer group's or any of its members’ tax_liabilities a determination thereof will be made by the director's office upon audit of the income_tax returns involved except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any item discussed or referenced in this letter in particular we express no opinion with respect to whether taxpayer qualifies substantively to make the election 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 internal_revenue_code or regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the election late that are not specifically set forth in this letter for purposes of granting relief under sec_301_9100-3 we relied on certain statements and representations made under penalty of perjury by taxpayer company official and tax professional the director however should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-3 to file the election any penalties and interest that would otherwise be applicable continue to apply this letter_ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file in this office copies of this letter are being sent to your authorized representatives sincerely __________________ ken cohen senior technician reviewer branch office of associate chief_counsel corporate


internal_revenue_service number release date index number 468a department of the treasury washington dc ---------------------------------- ------------------------------------------------------------ -------------- --------------------------- -------------------------- --------------------------------------- person to contact ----------------------- id no ------------- telephone number --------------------- refer reply to cc psi b06 - plr-109824-13 date date legend taxpayer ----------------------------- ------------------------ -------------------------------- ------------------------------------------ ---------------------------------- company a holdco ------------------------------------------------------------ subsidiary ------------------------------------------------------------ state a state b plant location commission a commission b commission c director -------------- -------- ---------------- -------------------- ------------------------------------------- -------------------------------------------------- ------------------------------------------------------ --------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- dear -------------------- this letter responds to your request for private_letter_ruling dated --------------------------- you requested that we rule on certain tax consequences under sec_468a of the internal_revenue_code of the restructuring discussed below facts plr-109824-13 taxpayer has represented the following facts and information relating to the ruling_request taxpayer a corporation organized in state a is the parent of an affiliated_group of subsidiary corporations subsidiary organized in state b is wholly-owned by taxpayer and is a member of the affiliated_group company a a limited_liability_company llc disregarded for federal_income_tax purposes is wholly-owned by taxpayer holdco an llc organized in state a is an indirect wholly-owned subsidiary of taxpayer holdco has elected to be treated as a corporation for federal_income_tax purposes subsidiary is the owner of plant the plant is a nuclear power plant located at location subsidiary is subject_to the jurisdiction of commission a with regard to the operation and maintenance of plant and to the jurisdiction of commission b and commission c with regard to the rates charged to wholesale customers for electricity produced by plant subsidiary maintains a nuclear decommissioning trust that is qualified under sec_468a qdt with respect to plant taxpayer will undertake a series of transactions with respect to plant and its qdt which it characterizes as a separation reorganization step one followed by the holdco contribution step two for step one subsidiary will be merged with and into company a with company a surviving in step company a will merge into holdco with holdco surviving taxpayer represents that the merger of company a into holdco will be treated as a non-taxable capital_contribution under sec_351 as a result of these transactions plant as well as its qdt will be owned for federal tax purposes by holdco taxpayer represents that neither company a nor holdco will increase its cost_basis in any assets due to its acceptance of the liability for decommissioning the plants as a result of the transactions described above taxpayer has requested the following rulings requested ruling the qdt will not be disqualified by reason of the transfer described above in step one requested ruling the qdt will continue to be treated as satisfying the requirements of sec_468a and sec_1_468a-5 and -6 of the income_tax regulations after the transfer described above in step one requested ruling the qdt will not recognize any gain_or_loss or otherwise take any income_or_deduction into account by reason of the transfer described above in step one plr-109824-13 requested ruling neither taxpayer nor company a will be required to recognize gain_or_loss or take any income_or_deduction into account as a result of the transfers of the qdt as a result of the transfer described above in step one requested ruling pursuant to sec_1_468a-6 the basis of the assets of the qdt will be unchanged by the transfers described above in step one requested ruling the qdt will not be disqualified by reason of the transfers to holdco described above in step two requested ruling the qdt will continue to be treated as satisfying the requirements of sec_468a and sec_1_468a-5 and -6 after the transfers to holdco described above in step two requested ruling the qdt will not recognize any gain_or_loss or otherwise take any income_or_deduction into account by reason of the transfers to holdco described above in step two requested ruling neither taxpayer subsidiary nor holdco will be required to recognize any gain_or_loss or take any income_or_deduction into account as a result of the transfers of the qdt to holdco described above in step two requested ruling pursuant to sec_1_468a-6 the basis of the assets of the qdt will be unchanged as a result of the transfers to holdco described above in step two law and analysis sec_468a of the code provides that a taxpayer may elect to deduct payments made to a nuclear decommissioning reserve fund that meets the requirements of sec_468a ie a fund that is a qualified nuclear decommissioning fund sec_1_468a-1 provides that a qualified nuclear decommissioning fund is a fund that satisfies the requirements of sec_1_468a-5 sec_1_468a-5 of the income_tax regulations sets out the qualification requirements for nuclear decommissioning funds it provides in part that a qualified nuclear decommissioning fund must be established and maintained pursuant to an arrangement that qualifies as a_trust under state law plr-109824-13 sec_1_468a-5 provides that an electing taxpayer can establish and maintain only one qualified nuclear decommissioning fund for each nuclear power plant if a nuclear power plant is subject_to the ratemaking jurisdiction of two or more public_utility commissions and any such public_utility commission requires a separate fund to be maintained for the benefit of ratepayers whose rates are established or approved by the public_utility commission the separate funds maintained for such plant whether or not established and maintained pursuant to a single trust agreement shall be considered a single nuclear decommissioning fund sec_1_468a-6 provides rules applicable to the transfer of an interest in a nuclear power plant and transfer of the qualified nuclear decommissioning fund where certain requirements are met specifically sec_1_468a-6 provides that sec_1_468a-6 applies if-- immediately before the disposition the transferor maintained a qualified nuclear decommissioning fund with respect to the interest disposed of and immediately after the disposition-- i the transferee maintains a qualified nuclear decommissioning fund with respect to the interest acquired ii the interest acquired is a qualifying interest of the transferee in the nuclear power plant in connection with the disposition either- i the transferee acquires part or all of the transferor’s qualifying interest in the plant and a proportionate amount of the assets of the transferor’s fund all such assets if the transferee acquires the transferor’s entire qualifying interest in the fund is transferred to a fund of the transferee or ii the transferee acquires the transferor’s entire qualifying interest in the plant and the transferor’s entire fund is transferred to the transferee and the transferee continues to satisfy the requirements of sec_1 468a- a iii which permits an electing taxpayer to maintain only one qualified nuclear decommissioning fund for each plant sec_1_468a-6 provides that a disposition that satisfies the requirements of sec_1_468a-6 will have the following tax consequences at the time it occurs plr-109824-13 i neither the transferor nor the transferor’s qualified nuclear decommissioning fund will recognize gain_or_loss or otherwise take any income into account by reason of the transfer of a proportionate amount of the assets of the transferor’s qualified nuclear decommissioning fund to the transferee’s qualified nuclear decommissioning fund or by reason of the transfer of the transferor’s entire qualified nuclear decommissioning fund to the transferee for purposes of the regulations under sec_468a this transfer or the transfer of the transferor’s qualified nuclear decommissioning fund will not be considered a distribution of assets by the transferor’s qualified nuclear decommissioning fund ii notwithstanding sec_1_468a-6 if the transferor has made a special transfer under sec_1_468a-8 prior to the transfer of the fund or fund assets any deduction with respect to that special transfer allowable under sec_468a for a taxable_year ending after the date of the transfer of the fund or fund assets is allowed under sec_468a for the taxable_year that includes the date of the transfer of the fund or fund assets neither the transferee nor the transferee’s qualified nuclear decommissioning fund will recognize gain_or_loss or otherwise take any income into account by reason of the transfer of a proportionate amount of the assets of the transferor’s qualified nuclear decommissioning fund to the transferee’s qualified nuclear decommissioning fund or by reason of the transfer of the transferor’s entire qualified nuclear decommissioning fund to the transferee for purposes of the regulations under sec_468a this transfer or the transfer of the transferor’s qualified nuclear decommissioning fund will not constitute a payment or a contribution of assets by the transferee to its qualified nuclear decommissioning fund transfers of assets of a qualified nuclear decommissioning fund to which this section applies do not affect basis thus the transferee’s qualified nuclear decommissioning fund will have a basis in the assets received from the transferor’s qualified nuclear decommissioning fund that is the same as the basis of those assets in the transferor’s qualified nuclear decommissioning fund immediately before the distribution under sec_1_468a-6 the service may treat any disposition of an interest in a nuclear power plant occurring after date as satisfying the requirements of the regulations if the service determines that such treatment is necessary or appropriate to carry out the purposes of sec_468a conclusions plr-109824-13 based on the information submitted by taxpayer we reach the following conclusions ruling the qdt will not be disqualified by reason of the transfer described above in step one ruling the qdt will continue to be treated as satisfying the requirements of sec_468a and sec_1_468a-5 and -6 of the income_tax regulations after the transfer described above in step one ruling the qdt will not recognize any gain_or_loss or otherwise take any income_or_deduction into account by reason of the transfer described above in step one ruling neither taxpayer nor company a will be required to recognize gain_or_loss or take any income_or_deduction into account as a result of the transfers of the qdt as a result of the transfer described above in step one ruling pursuant to sec_1_468a-6 the basis of the assets of the qdt will be unchanged by the transfer described above in step one ruling the qdt will not be disqualified by reason of the transfer to holdco described above in step two ruling the qdt will continue to be treated as satisfying the requirements of sec_468a and sec_1_468a-5 and -6 after the transfer to holdco described above in step two ruling the qdt will not recognize any gain_or_loss or otherwise take any income_or_deduction into account by reason of the transfer to holdco described above in step two ruling neither taxpayer subsidiary nor holdco will be required to recognize any gain_or_loss or take any income_or_deduction into account as a result of the transfer of the qdt to holdco described above in step two ruling pursuant to sec_1_468a-6 the basis of the assets of the qdt will be unchanged as a result of the transfer to holdco described above in step two while it owns a qualified_interest in plant holdco is eligible to maintain a qualified nuclear decommissioning fund for plant except as specifically determined above no opinion is expressed or implied concerning the federal_income_tax consequences of the transaction described above plr-109824-13 specifically we express no opinion on the tax consequences of either of the steps described above and whether the contribution to holdco in step two qualifies as tax-free under sec_351 in addition the rulings above are specifically conditioned on company a and holdco not increasing their cost_basis in any assets due to their assumption of the liability for decommissioning the plants as a result of the transactions described above in the event that company a or holdco increase their cost_basis in any assets due to the assumption of the liability for decommissioning plant as a result of the transactions described related to the qdt any amount contributed to the qdt based on this ruling would be considered an excess_contribution under sec_1_468a-5 and could result in the disqualification of the qdt under sec_1_468a-5 this letter_ruling is directed only to the taxpayer that requested it sec_6110 provides that this ruling may not be used or cited as precedent in accordance with the power_of_attorney on file with this office the original of this letter is being sent to taxpayer we are also sending a copy of this letter_ruling to taxpayer’ authorized representatives and to the director sincerely peter c friedman senior technician reviewer branch office of associate chief_counsel passthroughs and special industries cc