internal_revenue_service department of the treasury wa yok telephone number washington dc contact person in reference to date t ep ra t3 may legend taxpayer a taxpayer b ira x ira y company m month l month m dear in letters dated date and date you requested a ruling in which you request relief under sec_301_9100-3 of the procedure and administration regulations the following facts and representations support your ruling_request taxpayer b maintained ira x an individual_retirement_arrangement described in code sec_408 with company m during month l taxpayer b converted ira x toa roth_ira ira y also with company m taxpayer a is married to taxpayer b taxpayers a and b's adjusted_gross_income for exceeded the limit found at sec_408a b of the internal_revenue_code however until month m taxpayer b was not aware that her adjusted_gross_income for calendar_year precluded her converting ira x to roth_ira y furthermore taxpayer b became aware of the time limits found in announcements and only after discovering that her adjusted_gross_income exceeded permissible limits taxpayers a and b timely filed a calendar_year joint federal_income_tax return based on the above you request the following letter_ruling that pursuant to sec_301_9100-3 of the regulations taxpayer b is granted a period not to exceed six months from the date of this ruling letter to recharacterize her roth_ira ira y to a traditional_ira with respect to your request for relief under sec_301_9100-3 of the regulations sec_408a of the intemal revenue code and sec_1_408a-5 of the income_tax regulations provide that except as otherwise provided by the secretary a taxpayer may elect to recharacterize an ira contribution made to one type of ira as having been made to another type of ira by making a trustee-to trustee transfer of the ira contribution plus earnings to the other type of ira in a recharacterization the ira contribution is treated as having been made to the transferee ira and not the transferor ira under sec_408a and sec_1_408a-5 this recharacterization election generally must occur on or before the date prescribed by law including extensions for filing the taxpayer’s federal_income_tax returns for the year of contributions sec_1_408a-5 question and answer -6 describes how a taxpayer makes the election to recharacterize the ira contribution to recharacterize an amount that has been converted from traditional_ira to a roth_ira the taxpayer must notify the roth_ira trustee of the taxpayer’s intent to recharacterize the amount the taxpayer must provide the trustee and the transferee trustee if different from the transferor trustee with specified information that is sufficient to effect the recharacterization and the trustee must make the transfer sec_1_408a-4 q a-2 provides in summary that an individual with modified_adjusted_gross_income in excess of dollar_figure for a taxable_year is not permitted to convert an amount to a roth_ira during that taxable_year sec_1_408a-4 q a-2 further provides in summary that an individual and his spouse must file a joint federal tax_return to convert a traditional_ira to a roth_ira and that the modified_adjusted_gross_income subject_to the dollar_figure limit for a taxable_year is the modified agi derived from the joint_return using the couple’s combined income sec_301_9100-1 sec_301_9100-2 and of the procedure and administration regulations in general provide guidance concerning requests for relief submitted to the service on or after date section c of the regulations provides that the commissioner of the internal_revenue_service in his discretion may grant a reasonable extension of the time fixed by a regulation a revenue_ruling a revenue_procedure a notice or an announcement published in the internal_revenue_bulletin for the making of an election or application_for relief in respect of tax under among others subtitle a of the code bly sec_301_9100-2 lists certain elections for which automatic extensions of time to file are granted sec_301_9100-3 of the regulations generally provides guidance with respect to the granting of relief with respect to the elections not referenced in sec_301_9100-2 the relief requested in this case is not referenced in section sec_301_9100-3 of the regulations provides that applications for relief that fall within sec_301_9100-3 will be granted when the taxpayer provides sufficient evidence including affidavits described in sec_301_9100-3 to establish that the taxpayer acted reasonably and in good_faith and granting relief would not prejudice the interests of the government sec_301_9100-3 of the temporary regulations provides that a taxpayer will be deemed to have acted reasonably and in good_faith i if its request for sec_301_9100-1 relief is filed before the failure to make a timely election is discovered by the service ii if the taxpayer inadvertently failed to make the election because of intervening events beyond the taxpayer's control iii if the taxpayer failed to make the election because after exercising reasonable diligence the taxpayer was unaware of the necessity for the election iv the taxpayer reasonably relied upon the written advice of the service or v the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election sec_301_9100-3 ii of the temporary regulations provides that ordinarily the interests of the government will be treated as prejudiced and that ordinarily the service will not grant relief when tax years that would have been affected by the election had it been timely made are closed by the statute or limitations before the taxpayer's receipt of a muling granting relief under this section announcement lr b date provided that a taxpayer who timely filed his her federal_income_tax return would have until date to recharacterize an amount that had been converted from a traditional_ira to a roth_ira announcement lr b date provided that a taxpayer who timely filed his her federal_income_tax return would have until date to recharacterize an amount that had been converted from a traditional_ira to a roth tra taxpayer b timely filed her federal_income_tax return as a result she was eligible for relief under either announcement or announcement however she missed the deadlines found in said announcements therefore it is necessary to determine if she is eligible for relief under the provisions of sec_301_9100-3 of the regulations in this case taxpayer b was ineligible to convert her ira x to roth_ira y since her and taxpayer a’s adjusted_gross_income exceeded dollar_figure for calendar_year however taxpayer b believed that she was eligible to convert her ira x to a roth_ira until she discovered otherwise at which time the deadline in announcement had passed taxpayers a and b filed this request for sec_301 relief shortly after discovering that taxpayer b was ineligible to convert ira x to a roth_ira calendar_year is not a closed tax_year with respect to your request for relief we believe that based on the information submitted and the representations contained herein the requirements of sec_301_9100-1 and sec_301_9100-3 of the regulations have been met and that you have acted reasonably and in good_faith with respect to making the election to recharacterize your roth_ira as a traditional iras specifically the service has concluded that you have met the requirements of clause ii of sec_301_9100-3 of the regulations therefore you are granted an extension of six months from the date of the issuance of this letter_ruling to so recharacterize no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section or either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it section j of the code provides that it may not be used or cited as precedent sincerely yours on dleon frances v sloan manager employee_plans technical group tax_exempt_and_government_entities_division


department of the treasury internal_revenue_service washington d c cc dom fs it a uilc number release date date memorandum for assistant chief_counsel field service cc dom fs it a from subject this memorandum responds to your request for advice regarding the following issues issue sec_1 are payments from to family day care providers income from a trade_or_business is required to issue forms to family day care providers who receive payments of dollar_figure or more per year conclusion sec_1 yes payments from to family day care providers income from a trade_or_business yes is required to issue forms to family day care providers who receive payments of dollar_figure or more per year facts the statement of facts is based on information provided by government officials and the taxpayers both in writing and verbally in meetings with district_counsel and district_director personnel the administers a program of subsidizing day care for children from income eligible families and to children who are abused or neglected family day care homes are one of the types of facilities that provide such care in family day care homes which are registered with the state the family day care provider takes care of from three to six children in the provider’s own home on the internal_revenue_service issued a technical_advice_memorandum tam which concluded that payments to family day care providers were made solely to reimburse the providers for incurred expenses that the providers were not engaged in a trade_or_business and that the was not required to file information returns to report payments to the providers pursuant to sec_6041 the conclusions of the tam were essentially reiterated in situation of revrul_77_279 1977_2_cb_12 nonetheless on the informed in essence that payments to a day care provider of dollar_figure or more per year should be reported on form_1099 subsequently began to issue forms to report payments to family day care providers since individual providers who will be designated hereafter as the taxpayers and legislators have requested determinations from the service of whether the tam or revrul_77_279 still apply to the payments to the family day care providers the taxpayers assert that the payments continue to be no more than reimbursement for expenses_incurred in providing day care to children in the program that they have no profit_motive but to provide family day care solely from charitable impulses that they are not operating a trade_or_business and that therefore is not required to report the payments to them on forms the taxpayers are family day care providers who have contracts with the to furnish day care for children from income-eligible homes and for children who have been neglected or abused the taxpayers are about out of registered family day care providers in the family day care provider sends a monthly bill and pays the provider the rate for that category of child care if the provider charges more than the rate paid_by the the parent must pay the additional_amount unless the parent qualifies for assistance all providers may care for children who are not part of the program whose parents pay the full cost of care as well as children who are part of the subsidized child care program the method by which the family day care payment rate is set has varied before rates were determined in accordance with the availability of budget monies roughly speaking the amount of money available was divided by the number of children to be cared for since the federal government has given states annual block grants for child care a state must conduct a survey every years of the rates that regulated child care providers in a particular category actually charge parents and establish a market rate at the 75th percentile of such charges a state may then reimburse its social services districts such as for payments to family day care providers up to the market rate a district may choose to pay its providers more or less than market rate but the state may reimburse it only for the lesser_of the amount actually paid for child care or the state market rate the survey includes profit-motivated child care providers therefore the rates which are based on the actual cost to parents of unsubsidized day care reflect the cost of wages including salaries to owners and overhead as well as out-of-pocket expenses such as food supplies and equipment the state market rates which are the per_diem payment rates used by are as follows type of provider range of rates varies by age of child day care centers family day care group family day care dollar_figure - dollar_figure in-home care dollar_figure - dollar_figure dollar_figure - dollar_figure dollar_figure - dollar_figure although the market rate that applies to the taxpayers is dollar_figure the providers who have contracts with most recently have been paid only dollar_figure per day the taxpayers cite this discrepancy as evidence that they are only being paid an amount sufficient to reimburse them for out-of-pocket expenses in accordance with the tam however officials have stated that in the past the lower rate was due to budget limitations that there has been a lag since in raising the rates for the contract family day care providers and that they expect that the contract providers will be given the same rate of pay as all other providers in that category of care after the cost survey is completed even at dollar_figure per day some taxpayers who care for as many as six children days per week are receiving as much as dollar_figure per week or approximately dollar_figure per year from some taxpayers have claimed that their expenses in connection with providing family day care services include dollar_figure to dollar_figure a year for food a swimming pool dollar_figure air purifier dollar_figure living room furniture dollar_figure refrigerator dollar_figure and roof replacement dollar_figure according to the bureau of labor statistics the average annual cost of food for a family of persons in the united_states is dollar_figure all other social services districts in state issue forms to report payments to family day care providers law sec_61 defines gross_income as all income from whatever source derived sec_6041 requires all persons engaged in a trade_or_business and making payment in the course of the trade_or_business to another person of gains profits and income of dollar_figure or more in a taxable_year to make an information_return sec_1_6041-1 and g provide that payments made by a state or a political_subdivision are subject_to this reporting requirement pursuant to sec_1_6041-1 returns under sec_6041 must be made in general on forms and and a copy furnished to the payee as used in sec_6041 the term gains profits and income means gross_income thus a payor would not be required to make a return under sec_6041 for payments that are not required to be included in the recipient's income sec_162 allows a deduction for the ordinary and necessary expenses paid_or_incurred in carrying_on_a_trade_or_business in 480_us_23 the court stated that t o be engaged in a trade_or_business the taxpayer must be involved in the activity with continuity and regularity and the taxpayer's primary purpose for engaging in the activity must be for income or profit a sporadic activity a hobby or an amusement diversion does not qualify the court rejected a requirement that the taxpayer must offer or hold himself out as offering goods or services to the public in order to be engaged in a trade_or_business sec_1_274-5t provides in general that an independent_contractor that substantiates expenses for travel entertainment including meals gifts or listed_property to a client or customer in the manner provided in sec_1 5t c may exclude reimbursement for such expenses from income reimbursement for expenses under other circumstances must be included in income under sec_61 and the expenses deducted under sec_162 if otherwise qualified situation of revrul_77_279 holds that a day care provider who was reimbursed by a charitable_organization for out-of-pocket expenses_incurred in caring for children placed with the provider by the organization had no profit_motive did not in fact make a profit was not employed by the organization and was not engaged in a trade_or_business therefore the payments were not includible in gross_income so long as they did not exceed expenses the provider was entitled to a charitable_contribution_deduction for unreimbursed expenses the expenses were not deductible as business_expenses and the payments were not subject_to employment or self-employment taxes in contrast situation of revrul_77_279 involves an individual who was not held out to the public as engaging in day care work but received a fixed weekly fee for caring for a child on a daily basis while the parents were at work there was no agreement that a portion of the fee was a reimbursement for expenses the ruling holds that the day care provider had a profit_motive and was engaged in a trade_or_business it concludes that the entire amount of each payment received by the individual from the parents of the child is includible in the individual’s gross_income analysis taxpayers argue that they are providing family day care solely out of charitable motivations they are not in a trade_or_business and they are being paid_by only for their out-of-pocket expenses accordingly they argue that they should not be required to include payments from in income and should not be required to report the payments on forms they rely on the tam and situation of revrul_77_279 for these legal and factual conclusions taxpayers’ reliance on the tam is misplaced the tam was issued to a tam may not be relied on by any taxpayer other than the taxpayer for whom it is issued revproc_99_2 1999_1_irb_73 additionally a taxpayer may not rely on a tam after the law or facts have changed revproc_99_2 dollar_figure and i r b pincite the material facts concerning payments by to family day care providers including taxpayers have changed substantially since the tam was issued accordingly the tam has been rendered obsolete and should be given no effect on the other hand revrul_77_279 is a precedent of general application that may be relied on and used in the disposition of other cases in which the facts and circumstances are substantially the same however based on the information provided we conclude that the facts applicable to taxpayers differ significantly from the facts in situation and are more akin to the facts of situation of revrul_77_279 taxpayers are paid at a rate that is based on a survey of rates charged to the public by family day care providers generally many of these providers have included the cost of services and in some cases profit in addition to out-of-pocket expenses in establishing their rates the actual market rate is then set at the 75th percentile of the rates charged substantially above average it is therefore reasonable to conclude that the market rate is sufficient to cover the cost of services or profit as well as out-of-pocket expenses for most family day care providers although taxpayers have been reimbursed at less than the market rate the discrepancy apparently has been an oversight and is to be rectified in the future even at the lower rate however some of the taxpayers have received almost dollar_figure per year from the expenses that taxpayers have attempted to offset against these receipts to support their contention that they do not make a profit are in many cases excessive or unreasonable the fact that taxpayers may charge some parents more than the rate and may also provide care for private pay children also supports a conclusion that taxpayers are engaged in a trade_or_business several of the taxpayers have argued that regulations prohibit reimbursement to them for more than their expenses for example code of rules regulations states in part payments by a social services district for child day care informal child care and legally-exempt group child care are subject_to reimbursement only when the following requirements are met payments do not exceed the actual cost of such care however officials have stated that the reimbursement referred to in this regulation is not reimbursement of the provider by the but is reimbursement of the by the state in other words the purpose of the regulation is to limit reimbursement of the social services district for the payments it makes to family day care providers to the lesser_of market rate the taxpayers have not claimed that they are substantiating expenses in accordance with sec_1_274-5t and h or that the out-of-pocket expenses they assert are covered by the payments are limited to the types of expenses addressed in that regulation or the actual amount_paid not to limit the amount of the payment to the providers to reimbursement for their out-of-pocket expenses this interpretation is supported by of the regulations which defines actual cost of care as the rate usually charged by the caregiver for non-subsidized child care services when child care services are provided in accordance with the terms of a contract between a social services district and the caregiver the negotiated contract rate is the actual cost of care for such services even if such rate is less than the rate usually charged by the caregiver for non-subsidized child care services additionally a administrative directive of on child care market rates states at page that the actual cost of care is the usual rate charged by the provider for non-subsidized care accordingly we conclude that actual cost in the regulations refers to the cost to the ie the amount the pays the providers for purposes only of its payments from the state not to the out-of-pocket expenses of the providers for purposes of the payments to them by the regulations do not limit payments to the providers to reimbursement for out-of-pocket expenses we are therefore unable to conclude that the family day care program payments are no more than reimbursements to family day care providers for out-of- pocket expenses to the contrary the rates of payment to taxpayers are based on the cost of family day care services to the general_public and are intended to provide essentially a fair market rate of compensation we cannot speculate on the charitable versus profit making motives of taxpayers but the facts indicate that taxpayers are paid more than their out-of-pocket expenses and therefore are in a position to make a profit therefore we conclude that taxpayers in general are engaged in a trade_or_business accordingly the payments should be included in the family day care provider’s income this conclusion does not preclude the possibility that an individual taxpayer may not be profit-motivated or make a profit however because the family day care program rates are established at a level that is at the very least sufficient to compensate taxpayers for the value of their services is required to report payments to family day care providers on form_1099 thus we conclude that in general taxpayers are engaged in a trade_or_business and must include in income the payments they receive is required to report payments to taxpayers for day care services on form_1099 if you have any further questions please call the branch telephone number deborah a butler assistant chief_counsel field service by clifford m harbourt clifford m harbourt senior technician reviewer income_tax and accounting branch field service division


t c memo united_states tax_court sean richards petitioner v commissioner of internal revenue respondent docket no filed date sean richards for himself michael r fiore for respondent memorandum opinion gustafson judge the internal_revenue_service irs determined a deficiency of dollar_figure in the federal_income_tax of petitioner sean richards pursuant to sec_6213 the matter is currently before the court on a motion for summary_judgment filed pursuant to rule by respondent the commissioner of the irs the issues for decision are whether mr richards is liable for the additional tax on early distributions from qualified_retirement_plans pursuant to sec_72 we hold that he is whether he is entitled to education credits against tax for qualified_tuition_and_related_expenses pursuant to sec_25a we hold that he is not and whether we have jurisdiction over his claim that i never received any of the funds that the irs claims they sent me we hold that we do not we will grant summary_judgment in the commissioner’s favor background the following facts are derived from the pleadings or have been asserted and supported by the irs and mr richards has not disputed them mr richards’s transactions in mr richards received a retirement distribution of dollar_figure from a qualified_retirement_plan at that time mr richards had not yet reached the age of unless otherwise indicated all section references are to the internal_revenue_code_of_1986 u s c and all rule references are to the tax_court rules_of_practice and procedure our record does not show whether mr richards made any education expenditures in mr richards’s tax_return for mr richards timely filed a form_1040 u s individual_income_tax_return to his return he attached a form 1099-r distributions from pensions annuities retirement or profit-sharing_plans iras insurance contracts etc which had been sent to him by the payor of the dollar_figure distribution a code on the form 1099-r indicated that the payment mr richards received was an early distribution with no known exception from taxation on his return mr richards reported the dollar_figure retirement distribution as income but did not report any liability for the additional tax for premature distributions to his return mr richards also attached a form_8863 education credits american opportunity hope_and_lifetime_learning_credits on which he reported qualified expenses of dollar_figure and claimed in addition to a refundable_credit not at issue a nonrefundable education credit of dollar_figure on his return mr richards claimed an overpayment of dollar_figure that he requested be refunded to him administrative proceedings when the irs processed mr richards’s return it corrected mathematical errors assessed the resulting tax greater than mr richards had reported and thereby reduced the overpayment to dollar_figure rather than refunding that overpayment to mr richards the irs applied it to satisfy mr richards’s non- irs debt mr richards’s filings in this case suggest that this debt was for child_support thereafter the irs examined mr richards’s return it determined that mr richards was liable for the additional tax on premature retirement distributions the irs also determined that mr richards’s educational_institution did not verify the amount claimed on his tax_return on form s 1098-t tuitions sic statement consequently the irs recalculated his liability and issued a notice_of_deficiency to him on date court proceedings mr richards then timely filed his petition on date asking this court to redetermine that deficiency as the explanation of mr richards’s disagreement with the irs the petition stated in its entirety i feel i filed an honest tax_return to the best of my ability and i never received any of the funds that the irs claims they sent me at the time he filed his petition mr richards was incarcerated and resided in massachusetts this case was scheduled to be tried at the court’s trial session beginning date in boston massachusetts the commissioner attempted to prepare for trial on date the commissioner mailed a branerton_letter to mr richards requesting documentation to support mr richards’s claim that his dollar_figure retirement distribution should not be subject_to the tax on a premature_distribution see 61_tc_691 in addition the letter requested documentation supporting the education credits mr richards claimed on his return mr richards did not respond on date the commissioner filed a motion to dismiss this case for failure to properly prosecute alleging that mr richards had been unresponsive and uncooperative in pretrial preparation and mr richards responded we denied the commissioner’s motion by order of date stating-- mr richards is incarcerated on the one hand this understandably impedes his ability to participate in this litigation and the court wishes to take that into account as appropriate on the other hand an incarcerated person is not entitled to forestall indefinitely the determination of his tax liability--and mr richards’s response makes no suggestion that his ability or inclination to participate in this litigation is likely to improve any time soon however since this case has not been previously continued we will remove it from the upcoming trial calendar beginning date in order to facilitate if possible a decision of this case on its actual merits it appears likely that the case can be disposed of by summary_judgment under rule and if the irs agrees it can file a motion for summary_judgment thereby putting on mr richards the duty and responsibility to respond with particularity the commissioner filed a motion for summary_judgment on date setting out the facts recounted above on date we ordered as follows on date respondent the irs filed a motion for summary_judgment the irs’s motion asserts that no trial is necessary in this case because the irs says no relevant facts are in dispute the motion contends that on the basis of the undisputed facts the case can be decided in the irs’s favor the court will order petitioner sean richards to file a response to the irs’s motion if mr richards disagrees with the facts set out in the irs’s motion then his response should point out the specific facts in dispute if he disagrees with the irs’s argument as to the law then his response should also set out his position on the disputed legal issues q as that the court has prepared on the subject what is a motion for summary_judgment how should i respond to one are printed on the page attached to this order mr richards should note that tax_court rule d provides if the adverse_party ie mr richards does not so respond to a motion for summary_judgment then a decision if appropriate may be entered against such party --ie against mr richards to resolve the irs’s motion for summary_judgment it is ordered that no later than date mr richards shall file with the court and serve on the irs a response to the irs’s motion for summary_judgment as of this date nine months has elapsed since we issued our order but mr richards has made no responsive filing discussion i standard for summary_judgment under rule the tax court’s analog to rule of the federal rules of civil procedure the court may grant summary_judgment where there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law the moving party here the commissioner bears the burden of showing that no genuine dispute as to any material fact exists and the court will view any factual material and inferences in the light most favorable to the nonmoving party here mr richards 85_tc_812 cf 477_us_242 same standard under fed r civ p the opposing party ie mr richards is to be afforded the benefit of all reasonable doubt and any inference to be drawn from the underlying facts contained in the record must be viewed in a light most favorable to the party opposing the motion for summary_judgment 78_tc_412 however the non-moving party may not sit on his hands he is required by rule d to set forth specific facts showing that there is a genuine dispute for trial if the adverse_party does not so respond then a decision if appropriate may be entered against such party despite having this requirement called to his attention mr richards failed to make any response to the irs’s motion for summary_judgment as a general_rule a petitioner like mr richards bears the burden_of_proof at his trial in a deficiency case see rule a the supreme court has held that where the party who does not have the burden_of_proof the commissioner has attempted discovery but the party with the burden_of_proof mr richards has not responded with evidence sufficient to carry his burden_of_proof summary_judgment may be granted in favor of the party who shows that discovery yielded no evidence 477_us_317 ii additional tax on premature distributions sec_72 imposes a additional tax on any distribution from a qualified_retirement_plan unless that distribution satisfies one of the statutory exceptions in sec_72 mr richards does not dispute that the payor plans were qualified_retirement_plans see sec_4974 since he received the distribution before age he is not eligible for the first and most common of those exceptions see sec_72 and he does not show his eligibility for nor does he even invoke any of the other exceptions see sec_72 ii - viii he is therefore liable for the additional tax iii education credits sec_25a allows several different education credits against tax for qualified_tuition_and_related_expenses paid_by the taxpayer during the taxable_year see sec_25a c i a sec_25a defines the term qualified_tuition_and_related_expenses to include tuition and fees for the taxpayer his spouse or his dependent at an eligible_educational_institution for courses of instruction of such individual at such institution mr richards did not substantiate the payment of such expenses during the irs’s examination nor during the commissioner’s attempts at pretrial discovery nor in response to the commissioner’s motion for summary_judgment he is therefore not entitled to the education credits in dispute iv lack of refund jurisdiction as is noted above mr richards’s petition complains that i never received any of the funds that the irs claims they sent me because the irs evidently applied those amounts to pay for child_support to the extent he asks us to adjudicate his right to a refund he did not receive we lack jurisdiction to do so first sec_6402 provides that t he amount of any overpayment to be refunded shall be reduced by the amount of any past-due_support emphasis added see also u s c sec_664 and sec_6402 provides that n o court of the united_states shall have jurisdiction to hear any_action whether legal or equitable brought to restrain or review a reduction authorized by subsection c this bars us from reviewing the reduction of mr richards’s overpayment to pay his child-support debt second we lack refund jurisdiction altogether under the tax litigation regime congress created the tax court’s principal jurisdiction is over so-called deficiency cases that are brought pursuant to sec_6213 before tax is assessed congress has not given us an equivalent jurisdiction over refund suits as we stated in 138_tc_348 congress has indeed established a detailed refund scheme that subjects complaining taxpayers to various requirements before they can bring suit 553_us_1 in post-payment circumstances a taxpayer seeking a refund of taxes erroneously or unlawfully assessed or collected may bring an action against the government either in united_states district_court see u s c sec_1346 or in the united_states court of federal claims see id sec_1346 sec_1491 clintwood elkhorn u s pincite alterations in original to the extent mr richards seeks a refund of the overpayment applied to pay his child-support debt we cannot grant him relief v failure to respond the foregoing discussion resolves this case on its merits in the alternative we would reach the same outcome by dismissing the case on our own motion for mr richards’s failure to comply with our order of date directing him to file a response to the commissioner’s motion for summary_judgment as we advised him in that order tax_court rule d provides if the adverse_party ie mr richards does not so respond to a motion for summary_judgment then a decision if appropriate may be entered against such party -- ie against mr richards in addition rule default and dismissal provides a default if any party has failed to plead or otherwise proceed as provided by these rules or as required by the court then such party may be held in default by the court either on motion of another party or on the initiative of the court thereafter the court may enter a decision against the defaulting party upon such terms and conditions as the court may deem proper b dismissal for failure of a petitioner properly to prosecute or to comply with these rules or any order of the court the court may dismiss a case at any time and enter a decision against the petitioner notwithstanding the commissioner’s allegations of non-cooperation the court showed leniency to mr richards by denying the commissioner’s motion to dismiss and gave mr richards an opportunity to litigate the merits of his case explaining to him the nature of the commissioner’s motion for summary_judgment and the proper manner for responding to the motion mr richards made no filing in response to the court’s order this circumstance warrants dismissal of the case for failure to comply with the court’s order conclusion the commissioner is entitled to summary_judgment to reflect the foregoing an appropriate order and decision will be entered


department of the treasury internal_revenue_service washington d c tax exempt and government entities oivision jul se tier rk tr uniform issue list xxxxxxkxkxkxxkxkk xxxxxxkxkxkxxkxkk xxxxkxxkxkkkxxkx legend taxpayer a xxkkxxkxkxkxkkkkxk ira b xxxkxkxxxxkxkxkkx xxxxkxkxkxkxkxkxkkx xxxkkxxxxkkxkkk financial_institution c xxkxxxkkxkxkxkxkkk company d xxxkxkxxkxkkxkaxk account e amount amount amount amount amount amount amount year xxxxkxkxkxxxkkxkxxk xxxxkxkxkxkxkkxkkk xxxkxkxxxkxkkxkxxk xxkxxxxkxkxkxkxkxkkk xxxkxxxkxkxxkkkkx xxkkkxkxxkxkkxkxkxk xxxxkkxkxkxkxkkxkxx xxxxxkkxxkxkxkxkk xxxxkxxxxxkkkx xxkxkxxkkxxkkkxkk year xxxxxxxxxxxxx dear xxxxxxxxxxxxx this is in response to your request dated date as supplemented by correspondence dated date and date in which you request a waiver of the 60-day rollover requirement contained in sec_408 d of the internal_revenue_code the code’ the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a age represents that he received distributions totaling amount from ira b which he maintained at financial_institution c taxpayer a asserts that his failure to accomplish a rollover of amount within the 60-day period prescribed by sec_408 of the code was due to a medical_condition which impaired his ability to manage his financial affairs taxpayer a represents that after he lost his job in december of year he began using the mutual funds in account e as collateral to finance his daughters’ college expenses in year the mutual funds in account e no longer supported his loan taxpayer a began to receive margin calls regarding account e in order to satisfy the margin calls he sold percent of the funds in his retirement accounts including amount in ira b on october of year he transferred amount from ira b to account e that same week he liquidated a k account maintained with company d and deposited amount into ira b taxpayer a represents further that under normal circumstances he would have been less impulsive and rather than using retirement_funds or transferring ira funds to stop the margin calls he would have reduced the collateralized debt by selling the mutual funds in account e and hi sec_401 or sec_457 accounts but after two thirds of his life savings had evaporated in a single year his anxiety turned into panic he then made a number of transfers from ira b to account e specifically on november and of year amount sec_4 and respectively were transferred complete a timely rollover of amount amount remains in account e a non-ira cd taxpayer a also represents that at the time of the transfers he experienced extreme stress and anxiety due to a number of events to the extent he now suffers from a chronic medical_condition submitted documents from a treating physician shows that the cause of the relapse of cognitive issues which he had been suffering from includes a statement that taxpayer a suffers from a medical_condition which impaired his ability to based on these facts and representations you request a ruling that the internal_revenue_service waive the 60-day rollover requirement with respect to the distribution of amount from ira b sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 i from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers are eligible for the waiver under sec_408 of the code sec_408 of the code provides that the secretary may waive the 60-day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer a including a statement from his treating physician noting that during the period in which the transfer occurred that he was suffering from this cognitive issue -is consistent with his assertion that his failure to accomplish a timely rollover was caused by his medical_condition which impaired his ability to accomplish a timely rollover therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount from ira b taxpayer a is granted a period of days from the issuance of this ruling letter to contribute amount into a rollover ira provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contribution amount will be considered a rollover_contribution within the meaning of sec_408 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent if you wish to inquire about this ruling please contact xxxxxxxxx i d xxxxxxxxx at xxx xxx-xxxx please address all correspondence to se t ep ra t2 sincerely yours enclosures deleted copy of letter_ruling notice of intention to disclose ployee plans technical group


internal_revenue_service number release date index number ---------------------------------------------- ----------------------------------- ------------------- ---------------------------- ---------------------- - department of the treasury washington dc person to contact ---------------------------- id no -------------- ---------------------------------------------------- telephone number --------------------- refer reply to cc psi b03 plr-161878-03 date date x w y a a b c r s t v pipeline pipeline ---------------------------------------------- ------------------------ ------------------------------------------ ------------------------------------------- ---------------------------------- -- --- --- ---------------- ------------------------------------------------------------------------- ---------------- --------------- --------------------------- ------------------------ ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ --------------------------------------------------------- ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ -------------------------------------------------------------------- ------- ------------ plr-161878-03 agreement agreement d1 state dear ----------------- this letter responds to your letter dated date and subsequent correspondence submitted on behalf of x requesting a ruling concerning the qualifying_income exception to the publicly_traded_partnership rules of ' of the internal_revenue_code facts x is a limited_partnership organized under the laws of state x is a publicly_traded_partnership within the meaning of sec_7704 x is engaged in the storage transportation and distribution of refined petroleum products and ammonia fertilizer x through various partnerships and disregarded entities owns interests in a marine petroleum_product terminal facilities b inland petroleum_product terminals and c petroleum_product terminals associated with a x represents that it is not engaged in retail activity petroleum_product terminals are centralized locations where fuel is received from major common carrier pipelines or other vessels and stored until transportation through a complex of equipment necessary to load delivery vehicles with the fuel in connection with the petroleum_product terminals x earns income by charging customers a single throughput-fee based on the amount of the fuel delivered through each terminal in addition x earns income by charging customers a fee to inject additives or blend ethanol with the fuel in addition to the operation of the product terminal facilities x is engaged in the operation of pipeline on behalf of w and intends to engage in the operation of pipeline plr-161878-03 on behalf of y the activities and assets of w are limited to the operation of pipeline the activities and assets of y are limited to the operation of pipeline pipeline began operations in d1 for the purpose of transporting natural_gas liquids including propane butane isobutene ethane and natural gasoline from r to s pipeline is currently under construction and once completed will be used for the purpose of transporting refined petroleum productions including gasoline diesel_fuel and jet fuel from t to v pursuant to agreement x is responsible for all transportation of natural_gas liquids through pipeline in this regard x performs all the functions associated with the movement of the natural_gas liquid including contacting customers taking delivery from customers metering the quantity of natural_gas liquids monitoring the specification of the natural_gas liquids offloading the product to customers staffing employing all personnel necessary for the operation of pipeline conducting routine maintenance identifying and purchasing supplies and handling all commercial transactions including the billing accounting and financial reporting for pipeline in consideration for operating pipeline x receives amounts including a management fee and reimbursement for certain operating_expenses from w pursuant to agreement and upon completion x will be responsible for all transportation of refined petroleum products through pipeline in this regard x will perform all the functions associated with the movement of the natural_gas liquid including contacting customers taking delivery from customers metering the quantity of the refined petroleum products offloading the refined petroleum products to customers staffing employing all personnel necessary for the operation of pipeline conducting routine maintenance identifying and purchasing supplies and handling all commercial transactions including the billing accounting and financial reporting for pipeline in consideration for operating pipeline x receives amounts including a management fee and reimbursement for certain operating_expenses from y x requests a ruling that its income derived from the product terminal facilities and the operation of pipeline and pipeline is qualifying_income under ' d law and analysis sec_7704 provides that a publicly_traded_partnership shall be treated as a corporation sec_7704 provides that the term publicly_traded_partnership means any partnership if interests in that partnership are traded on an established_securities_market or interests in that partnership are readily_tradable on a secondary market or the substantial equivalent thereof plr-161878-03 sec_7704 provides that ' a shall not apply to any publicly_traded_partnership for any taxable_year if such partnership met the gross_income requirements of ' c for such taxable_year and each preceding_taxable_year beginning after date during which the partnership or any predecessor was in existence sec_7704 explains that a partnership meets the gross_income requirements of ' c for any taxable_year if percent or more of the gross_income of such partnership for such taxable_year is qualifying_income sec_7704 provides that the term qualifying_income means among other things income or gains derived from the exploration development mining or production processing refining transportation including pipelines transporting gas oil or products thereof or the marketing of any mineral_or_natural_resource including fertilizer geothermal_energy or timber conclusion based solely on the facts submitted and representations made we conclude that the income derived by x from the product terminal facilities and the operation of pipeline and pipeline is qualifying_income within the meaning of sec_7704 except as specifically provided no opinion is expressed or implied as to the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter in particular no opinion is expressed as to whether x meets the percent gross_income requirement of ' c this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-161787-03 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 s james a quinn senior counsel office of associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for ' 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 ita plr-102078-11 date july re request for private_letter_ruling under sec_168 re request for private_letter_ruling under sec_168 ------------------------------------------------------------ taxpayer ------------------------------------------------------------------------- parent location2 -------------- location3 ---------------------- location4 ------------------------ location5 -------------------------------- date1 date2 date3 date4 date5 date6 date7 date8 a b number1 ---- number2 ---- --------------------------- ------- ------------- ---------------- ---------------- -------------------------- ---------------------- ------- -------------------------------- -------------- dear -------------- this letter responds to a letter dated date and supplemental correspondence submitted by taxpayer requesting rulings under sec_168 of the internal_revenue_code facts plr-102078-11 taxpayer represents that the facts are as follows parent is engaged in the industrial gas business with worldwide operations the industrial gas business involves separating the atmosphere into its component parts through cryogenic and high pressure processes and delivering the resulting gases to customers taxpayer is a limited_partnership for federal_income_tax purposes taxpayer is a disregarded_entity that is included in parent’s consolidated federal_income_tax return taxpayer is responsible for providing service to large industry customers in the united_states taxpayer offers gas and energy solutions to these customers to improve their process efficiency and help them with their environmental responsibilities in the united_states this business serves the refining natural_gas chemical and metals industries in connection with its business in the united_states taxpayer operates a network of plants and an extensive pipeline system along the location2 and the location3 taxpayer separates the components of the atmosphere at its plants and transports the resulting gases to its customers via a network of pipelines taxpayer generally constructs and or acquires plant and pipeline assets in order to satisfy the requirements of specific customers and contracts depending on a customer’s geographic location and the availability of plant and pipeline resources taxpayer has a variety of options regarding the method by which it provides the gases to a customer taxpayer may choose to construct a plant at or near a customer’s location to supply the desired product or it may extend existing pipeline or plant resources to a customer location to supply the product on date1 taxpayer entered into a hydrogen supply agreement agreement with a to supply hydrogen to a the agreement requires taxpayer to provide specified quantities of hydrogen to a’s refinery facilities in location4 the agreement also provides specifications regarding the hydrogen to be delivered under the contract as well as a minimum purchase obligation for a and a maximum supply obligation for taxpayer the agreement contemplated that in order to furnish hydrogen to a under the agreement taxpayer would be required to construct and operate a pipeline and meter station for the manufacture transportation and delivery of hydrogen from taxpayer’s facilities to a specifically dollar_figure of the agreement provides that taxpayer shall at its sole cost and expense construct own maintain and operate taxpayer’s facilities and the pipeline network to deliver the quantities of hydrogen contemplated hereunder to a refinery the pipeline network is defined under sec_1 of the agreement as meaning the facilities owned and operated by taxpayer for transportation compression and metering of the hydrogen to its customers including a sec_1 of the agreement plr-102078-11 also defines the taxpayer’s facilities as meaning the production facilities the storage cavern the hydrogen pipeline booster station as required and equipment meters pipelines and related equipment owned leased and or operated by taxpayer and used for the production procurement purification and delivery of hydrogen to a and taxpayer’s other customers to supply hydrogen to a under the agreement taxpayer constructed a pipeline network which cost approximately dollar_figureb it consists of a steel pipeline that is number1- inches in diameter and specially constructed to transport hydrogen and it is approximately number2 miles long and stretches from taxpayer’s plant in location5 to a’s facilities in location4 this pipeline network is the property at issue in this letter_ruling request hereinafter this pipeline network is referred to as the property the property is connected to another of taxpayer’s existing pipelines that were previously placed_in_service by taxpayer and were being used by taxpayer to service other customers taxpayer made the decision to construct the property in early date2 and began putting out contracts to build the property taxpayer’s in-house engineering department acted as general contractor for the construction of the property taxpayer entered into contracts with a number of subcontractors regarding the various aspects of the construction of the property these contracts were negotiated finalized and entered into between date3 and date4 taxpayer began construction of the property in date2 after construction of the property was completed taxpayer commenced supplying hydrogen to a pursuant to the agreement sec_2 of the agreement provided that the date taxpayer would begin supplying hydrogen was to be no earlier than date5 and no later than date6 taxpayer began supplying hydrogen to a in date7 taxpayer represents that the property was placed_in_service by taxpayer in date7 and that the property is included in asset cla sec_46 pipeline transportation of revproc_87_56 1987_2_cb_674 rulings requested the property is property which has a recovery_period of years or less pursuant to sec_168 the original_use of the property commenced with taxpayer in date8 pursuant to sec_168 notwithstanding the fact that the property was attached to property previously placed_in_service and used by taxpayer in its business plr-102078-11 the property was acquired by taxpayer within the requisite period of sec_168 after date and before date and the agreement is not considered a written binding contract to acquire the property assuming the placed_in_service requirement is met a material representation made by taxpayer the property is eligible for the additional first year depreciation deduction under sec_168 law and analysis sec_168 provides a 50-percent additional first year depreciation deduction for the taxable_year in which qualified_property is placed_in_service by a taxpayer sec_168 as amended by tax relief unemployment insurance reauthorization and job creation act of pub_l_no 124_stat_3296 date defines the term qualified_property as meaning property i among other things to which sec_168 applies with a recovery_period of years or less ii the original_use of which commences with the taxpayer after date iii that is acquired by the taxpayer after date and before date but only if no written binding contract for the acquisition was in effect before date or acquired by the taxpayer pursuant to a written binding contract which was entered into after date and before date and iv that is placed_in_service by the taxpayer before date or in the case of property described in sec_168 or c before date issue does the property have a recovery_period of years or less for purposes of sec_168 to be qualified_property under sec_168 the property must satisfy the property description requirement provided in sec_168 in addition to satisfying the other requirements in sec_168 sec_168 is relevant to the facts present here and it provides that the property must be property to which sec_168 applies which has a recovery_period of years or less however property is not qualified_property if the property is required to be depreciated under the alternative_depreciation_system of sec_168 pursuant to sec_168 through d or other provisions of the code sec_168 and sec_1_168_k_-1 of the income_tax regulations for purposes of sec_168 sec_1_168_k_-1 provides that the recovery_period is determined in accordance with sec_168 regardless of any election made by the taxpayer under sec_168 the recovery_period under sec_168 is determined by the property’s classification under sec_168 plr-102078-11 for purposes of sec_168 a property’s classification is determined by reference to the property’s class_life or by statute sec_168 provides that property with a class_life of or more years but less than years is 15-year_property sec_168 defines the term class_life as meaning the class_life if any that would be applicable with respect to any property as of date under sec_167 determined without regard to sec_167 and as if the taxpayer had made an election under sec_167 as in effect on the day before the date of enactment of the revenue reconciliation act of former sec_167 provided that in the case of a taxpayer who elected the class_life_asset_depreciation_range adr system of depreciation the depreciation allowance was based on the class_life prescribed by the secretary that reasonably reflected the anticipated useful_life of that class of property to the industry or other group sec_1_167_a_-11 provides rules for classifying property under former sec_167 property is included in the asset_guideline_class for the activity in which the property is primarily used_property is classified according to primary use even though the activity in which the property is primarily used is insubstantial in relation to all the taxpayer’s activities revproc_87_56 sets forth the class lives of property that are necessary to compute the depreciation allowance under sec_168 this revenue_procedure establishes two broad categories of depreciable assets asset classes dollar_figure through that consist of specific depreciable assets used in all business activities and asset classes through that consist of depreciable assets used in specific business activities an asset that falls within both an asset group that is asset classes dollar_figure through and an activity group that is asset classes through would be classified in the asset group see 111_tc_105 the asset classes described below are set forth in revproc_87_56 asset cla sec_46 pipeline transportation of revproc_87_56 includes assets used in the private commercial and contract carrying of petroleum gas and other products by means of pipes and conveyors the trunk lines and related storage facilities of integrated petroleum and natural_gas producers are included in this class assets in cla sec_46 have a class_life of years and in accordance with sec_168 are classified as 15-year_property pursuant to sec_168 the recovery_period for 15-year_property i sec_15 years in this case taxpayer represents that it separates the components of the atmosphere at its plants and transports the resulting gases to its customers via a network of pipelines taxpayer entered into the agreement with a to supply hydrogen to a to do this taxpayer constructed the property to transport and deliver hydrogen from taxpayer’s facilities in location5 to a’s facilities in location4 both location5 and plr-102078-11 location4 are in the united_states accordingly the property is included in asset cla sec_46 of revproc_87_56 and is 15-year_property thus for purposes of sec_168 the recovery_period of the property i sec_15 years further sec_168 applies to the property issue does the original_use of the property commence with taxpayer in date8 for purposes of sec_168 notwithstanding the fact that the property is attached to property previously placed_in_service and used by taxpayer in its business to be qualified_property under sec_168 the property must satisfy the original_use requirement provided in sec_168 in addition to satisfying the other requirements in sec_168 sec_168 provides that the original_use of the property must commence with the taxpayer after date sec_1_168_k_-1 provides in part that original_use means the first use to which the property is put whether or not that use corresponds to the use of the property by the taxpayer in the case of any addition to or improvement of any property sec_168 provides that any deduction under sec_168 for such addition or improvement is computed in the same manner as the deduction of such property would be computed if such property had been placed_in_service at the same time as such addition or improvement and the applicable_recovery_period for such addition or improvement begins on the later of i the date on which such addition or improvement is placed_in_service or ii the date on which the property with respect to which such addition or improvement was made is placed_in_service here the property was connected to taxpayer’s existing pipelines after these existing pipelines were placed_in_service by taxpayer as a result the property is an addition to taxpayer’s existing pipelines because the property was connected to taxpayer’s existing pipelines after these existing pipelines were placed_in_service by taxpayer the property also is a separate asset for purposes of sec_168 accordingly under the facts present here we only need to determine whether the property satisfies the original_use requirement under sec_168 in this case taxpayer represents that after construction of the property was completed taxpayer used the property to supply hydrogen to a pursuant to the agreement taxpayer further represents that it began supplying hydrogen to a in date and that the property was constructed placed_in_service and used solely by taxpayer these representations are material representations date is after date and is during date8 based solely on these representations we conclude that taxpayer was the first_user of the property and such use began in date8 which is after date plr-102078-11 issue was the property acquired by taxpayer after date and before date to be qualified_property under sec_168 the property must satisfy the acquisition requirement provided in sec_168 in addition to satisfying the other requirements in sec_168 sec_168 provides that the property must be i acquired by the taxpayer after date and before date but only if no written binding contract for the acquisition was in effect before date or ii acquired by the taxpayer pursuant to a written binding contract that was entered into after date and before date sec_168 as amended by tax relief unemployment insurance reauthorization and job creation act of pub_l_no 124_stat_3296 date provides that in the case of a taxpayer manufacturing constructing or producing property for the taxpayer’s own use the requirements of sec_168 shall be treated as met if the taxpayer begins manufacturing constructing or producing the property after date and before date sec_1_168_k_-1 provides that if a taxpayer manufactures constructs or produces property for use by the taxpayer in its trade_or_business or for its production_of_income the acquisition rules in sec_1_168_k_-1 are treated as met for qualified_property if the taxpayer begins manufacturing constructing or producing the property after date and before date this regulation further provides that property that is manufactured constructed or produced for the taxpayer by another person under a written binding contract as defined in sec_1_168_k_-1 that is entered into prior to the manufacture construction or production of the property for use by the taxpayer in its trade_or_business or for its production_of_income is considered to be manufactured constructed or produced_by_the_taxpayer see sec_1_168_k_-1 for the rules for determining when construction begins before date taxpayer entered into the agreement with a under the terms of the agreement taxpayer agreed to supply hydrogen to a at its facilities in location4 and a agreed to purchase such hydrogen section dollar_figure of the agreement also provided that taxpayer at its sole cost and expense would construct the property in order to supply the hydrogen to a the agreement did not provide any specifications about the construction of the property because taxpayer and a recognized that taxpayer would have to construct the property in order to supply hydrogen to a under the agreement we view section dollar_figure of the agreement as providing which party - taxpayer or a or both - would pay for the cost of the property accordingly we conclude that the agreement is not a contract for the purchase or construction of the property plr-102078-11 taxpayer represents that it was the general contractor for the construction of the property taxpayer further represents that it entered into contracts with subcontractors to construct the property between date3 and date4 and it began constructing the property in date2 these representations are material representations date2 date3 and date are after date and before date based solely on these representations we conclude that taxpayer constructed the property for its own use and the property satisfies the requirements of sec_168 and sec_1_168_k_-1 accordingly the property is treated as meeting the acquisition requirement of sec_168 conclusion based solely on taxpayer’s representations and the relevant law and analysis set forth above we conclude that pursuant to sec_168 the property is property to which sec_168 applies with a recovery_period of years or less pursuant to sec_168 the original_use of the property commenced with taxpayer in date8 notwithstanding the fact that the property was attached to property previously placed_in_service and used by taxpayer in its business and the property is self-constructed property that satisfies the requirements of sec_168 and therefore was acquired by taxpayer after date and before date pursuant to sec_168 and the agreement is not considered a written binding contract to acquire the property therefore assuming the property satisfies the placed-in-service date requirement of sec_168 the property meets all of the requirements to be qualified_property under sec_168 and is eligible for the additional first year depreciation deduction under sec_168 except as specifically set forth above no opinion is expressed or implied concerning the tax consequences of the facts described above under any other provisions of the code including other subsections of sec_168 further no opinion is expressed or implied i concerning the application of sec_168 iii or iv to the facts described above ii concerning the placed-in-service date of the property or iii on whether taxpayer’s determination of when construction of the property and each of its components began satisfies sec_1_168_k_-1 in accordance with the power_of_attorney we are sending a copy of this letter to taxpayer’s authorized representatives we are also sending a copy of this letter to the appropriate operating division director plr-102078-11 this letter_ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent sincerely kathleen reed kathleen reed branch chief branch office of associate chief_counsel income_tax and accounting cc